Rathbone Brothers Plc Report and Accounts 2010

Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 109 Company financial statements 61 Consolidated financial statements 27 Governance 1 Review 110 Company statement 62 Independent auditor’s report to the 28 Directors’ report 1 Highlights of the year of comprehensive income members of Rathbone Brothers Plc 32 Corporate governance report 2 Chairman’s statement 110 Company statement of changes in equity 64 Consolidated income statement 38 Remuneration report 3 Chief Executive’s statement 111 Company statement of financial position 65 Consolidated statement of 47 Audit committee report 6 Rathbones at a glance 112 Company statement of cash flows comprehensive income 49 Nomination committee report 8 Strategy and business performance 113 Notes to the Company financial statements 65 Consolidated statement of 50 Corporate responsibility report 11 Business review 131 Five year record changes in equity 60 Statement of Directors’ responsibilities 24 Directors 132 Corporate information 66 Consolidated statement of financial position in respect of the report and accounts 132 Our offices 67 Consolidated statement of cash flows 68 Notes to the consolidated financial statements

Rathbone InvestmentManagement. billionaremanagedby of clientfundswhich £14.59 As at31December2010,Rathbonesmanaged£15.63billion banking services. trust andcompanymanagement,pensionadvice discretionary investmentmanagement,unittrusts,taxplanning, services forprivateinvestorsandtrustees.This includes high-quality, personalisedinvestmentandwealthmanagement Rathbone BrothersPlcisaleadingindependentproviderof

provided onthesite. value anyfeedback youmayhavevia thelink to oursuiteofreportingmaterialsand would need. We hope youfinditavaluableaddition a flexiblewayofaccessingtheinformation you developed anonlineversionwhich presents printed annualreportandaccounts, wehave to shareholderinformation.Aswell asthe We aimtoprovideeasyandtransparentaccess www.rathbonesra2010.com Report andaccountsonline

Highlights of the year

Operational highlights Financial highlights

Funds under management Rathbones’ total funds under management exceed £15 billion for +19.3% the first time in November 2010. 2010 £15.63bn 2009 £13.10bn Highlights of the year

£1.24 billion of net new funds under Operating income 1 1 management gained by Rathbone Continuing operations Investment Management in the year. +8.9% 2010 £127.2m Funds under management in our 2009 £116.8m offices in Scotland grow by 39.4% Underlying profit before tax2 1 from £1.42 billion to £1.98 billion. Continuing operations 17 qualified investment professionals +18.8% 2010 £38.5m join Rathbones during the year. 2009 £32.4m The first Rathbones Charity Profit before tax Continuing operations1 Symposium hosted by the charity team is held at the Royal Society. +2.0% 2010 £30.1m Mark Nicholls joins the Board as 2009 £29.5m Chairman-designate. Underlying earnings per share2 Continuing operations1 The five Rathbone Unit Trust +21.8% Management authorised unit trust 2010 63.76p funds marketed to IFAs all achieve 2009 52.36p first quartile performance in 2010. Basic earnings per share +9.2% 2010 49.76p 2009 45.55p

Dividends per share +4.8% 2010 44.0p 2009 42.0p

1 Continuing operations exclude businesses disposed

of and classified as held for sale in 2009 (see note 10 to the consolidated financial statements). 2 Underlying profit before tax excludes Financial Services Compensation Scheme levies, amortisation of client relationships and Lloyds Banking Group transaction costs. Rathbone Brothers Plc Report and accounts 2010 Chairman’s statement

Results and dividends charging dates was 5528 compared with 4706 in 2009, a rise of 17.5%. Profit before tax from continuing operations for the year to 31 December 2010 was During the year funds under management £30.1 million compared with £29.5 million in Rathbone Unit Trust Management rose by in 2009. This figure is struck after a charge 10.6% to £1.04 billion at 31 December 2010. of £4.8 million (2009: £2.0 million) in Investment performance in our range of connection with the amortisation of intangible Results and dividends Financial markets Composition of the Board Outlook Chairman’s statement publicly marketed unit trusts was very strong assets and a further £3.6 million charge during 2010 and we look forward to returning

2 (2009: £0.2 million) in respect of charges to a satisfactory growth in funds under made by the Financial Services Compensation management in 2011. Scheme. The bulk of this sum is in respect of the failure of Keydata and other financial Composition of the Board services companies regulated by the FSA but in a different sector of the market from During November we announced that Rathbones. I greatly regret reporting to John May, a director of Caledonia Investments our shareholders a significant deduction from Plc, who has been a valuable Non-executive our profits caused by what appears to be Director of our Board for the last three years, mismanagement in a different part of would retire from the Board at the conclusion Mark Powell Chairman the financial sector over which Rathbones of his three year term of office. He has been has no control or influence. a supportive and positive member of our Board and we thank him and wish him well. 2010 basic earnings per share were 49.76p compared with 45.55p in 2009. At the same time it was announced that I

Basic earnings per share from continuing will retire from the Board of Rathbones at the operations were 49.76p (2009: 46.87p). conclusion of our Annual General Meeting in Your Board recommends that a final dividend May 2011. Following a carefully conducted

of 28.0p per share compared with 26.0p last search process, Mark Nicholls has been year, be paid making the total dividends per appointed as a Non-executive Director and share in respect of the 2010 year 44.0p he will succeed me as Chairman after the reflecting the good progress which Rathbones Annual General Meeting. A solicitor by 2010 saw world markets going has made and the strength of our balance training, he was head of investment banking through a period of uncertainty and considerable volatility sheet. The final dividend will be paid on at S G Warburg before joining the Royal Bank but by the year end the FTSE 18 May 2011. of Scotland. He now has a range of board 100 Index had risen by 9.0% year appointments in financial and other companies on year and rallied by 22.8% to 5900 from its mid-year low Financial markets and brings great experience and expertise of 4806. The FTSE APCIMS to us. I have absolutely no doubt that he will As was the case in 2009, most world stock Balanced Index which is the be a thoughtful and effective Chairman. market index which we consider markets ended the year near to their highest most accurately reflects the levels but in the first half many markets mix of assets held by our clients Outlook rose by 9.3% during the course were extremely volatile. Earlier in the year of calendar year 2010. the FTSE 100 Index fell to its low point in The continuing turbulence in the financial During the year, total funds June, but despite the uncertainties connected markets indicates that 2011 will bring more under management within with the measures taken by the Coalition uncertainty, but as the steps taken by the Rathbones rose by £2.53 billion Government to reduce the public sector Coalition Government to reduce the fiscal (19.3%) reflecting £1.24 billion of new net organic and acquired deficit, the market rallied by the year end. deficit combine with the relative attraction funds. By the year end, total During the year interest rates have remained of equities compared with low yielding funds under management very low as governments in many developed government and corporate bonds, this makes exceeded £15 billion for the first time ever. economies have sought to assist the relatively us cautiously optimistic about the future. weak recovery that has been underway. Rathbones continues to exhibit the ability The interest rate environment continues to to grow both organically and by attracting have an adverse effect on Rathbones’ net investment managers with experience interest income as it is very difficult for us and quality to join us. I have no hesitation to place funds in money markets in an in believing that the combination of appropriately cautious and prudent way that Mark Nicholls’ ability and strategic direction also earns an attractive return. and the energy, initiative and foresight

Funds under management in Rathbone of the executive team, led by Andy Pomfret, 2010 Investment Management (including our promises Rathbones a positive and subsidiary based in Jersey) rose by 20.0% to exciting future. accounts £14.59 billion (2009: £12.16 billion). The

and Mark Powell FTSE APCIMS Balanced Index rose 9.3% Chairman over the same period. The average level Rathbone Brothers Plc Report of the FTSE 100 Index on our key quarterly 16 February 2011 Chief Executive’s statement

Key highlights Financial performance development

In spite of the continuing uncertain economic In spite of the overall turmoil in financial climate, 2010 has been a better year than markets, it would appear that 2008 saw the business

business

2009. We have gained a significant amount market and economic low point and 2010 financing

our of new business and at the end of the year showed some signs of resilience and recovery and

in and

our total funds under management exceeded both in stock market terms and in the £15 billion, a notable milestone. With the health of underlying companies. Our overall Key highlights Key Financial performance FTSE 100 Index ending the year at 5900 and operating income grew by 8.9% to Chief Executive’s statement

Marketing Treasury Investing Regulation 3 Outlook strong commission figures, especially in the £127.2 million (2009: £116.8 million) as fees second half of the year, we produced a profit and commissions benefited from stronger before tax of £30.1 million from continuing markets and the growth in funds under operations (2009: £29.5 million). management. As anticipated our net interest income remains low and, although there is an As a result of the 2009 transaction with expectation that interest rates will increase, Lloyds Banking Group more than 3,000 the timing remains uncertain. The overall level clients joined us during 2010 contributing of the market is one of the most important to a total net growth rate for our core drivers of our income line and on our four investment management business of 10.2% charging dates in 2010 the FTSE 100 Index (2009: 12.5%). The acquisition of teams and Andy Pomfret was on average 17.5% higher than on the corporate businesses are important for our Chief Executive same dates in 2009. growth but I have often said that the ‘best’ growth is net organic growth, where our We continue to manage our cost base existing Investment Managers gain new carefully whilst at the same time seeking clients (or attract new business from existing to invest in medium and long term growth clients). This net organic growth figure was a opportunities for the business. Operating very respectable 5.3% in 2010 (2009: 6.7%). expenses (excluding contribution to the

This figure takes account of the withdrawal Financial Services Compensation Scheme of cash from client portfolios; in the first half (FSCS), intangible asset amortisation and there were signs that clients required cash transaction costs) were £88.7 million, up to compensate for lower income earned on 5.2% (2009: £84.3 million). Much of this cost their investments; this reduced over the increase related to newly acquired investment second half. We continue to consider how teams, office costs including those arising we can improve and increase our net organic from office moves in Edinburgh and growth rate. Cambridge, and the costs of additional projects. After two years of very tight salary Mike Webb took over as Chief Executive of cost controls, from January 2011 we have our unit trust business (Rathbone Unit Trust awarded salary increases of 4% overall, Management) on 1 April 2010. This business rewarding our staff who have worked so has developed well since and now has hard in a very difficult economic environment. £1.04 billion of funds under management Many of them had rises either well below and a much improved short term track record inflation or zero over the last two years. on key funds. Indeed at 31 December 2010, all IMA ranked funds were in the top quartile We are aware that in recent years our overall for performance over the one year period. income as a percentage of funds under The three year track record is the most management has reduced below that of many important in obtaining net sales and it will of our competitors. We have consequently take time to rebuild this; however, it has been reviewed our investment management encouraging to see a significant decline in charging structure and are making changes the level of net redemptions. We are now which will come into effect from 6 April 2011. turning our attention to gaining net sales in This is always a difficult and sensitive area but 2011 and investing in this area. we believe it is fair that clients should face small increases for the premium service that We have continued to invest to improve our they receive. We expect these increases to infrastructure, the service to clients and our add approximately 3 – 4 basis points to our overall efficiency. We have also had to average net operating basis point return increase the amount we invest in coping with (85bps for 2010, 95bps for 2009) on an regulatory change. Even simple changes can 2010

annualised basis. have a significant effect on our systems, for example when CGT rates are changed part The financial impact of FSCS levies which accounts way through the year as happened in 2010. arise from other industry failures is wholly and outside our control. The interim levy of

Rathbone Brothers Plc Report Rathbone Brothers Plc Report and accounts 2010 4 Chief Executive’s statement Key highlights Financial performance Marketing and business development Treasury and financing Investing in our business Regulation Outlook of advisersand reduce theuseoftrail which will increasetheprofessionalism RDR We supportthe mainprinciplesofthe developing ourwebportalsfor intermediaries. relationships withIFAs overthe next yearand opportunity wewillbeinvesting moreinour solution. Inordertotakeadvantage ofthis our offering maywellprovideahelpful that isourcorebusiness.We consider that discretionary investmentmanagementservice or willnotwishto,providethebespoke profound andmanyIFAs willbeunableto, the IFA communityareexpected tobemore impact ourbusinessstrategy. The effects on willnotsignificantly be inevitabletheRDR to acustomer. Althoughsomechanges will service toaclientratherthansellingproduct business thatwearein,namelyprovidinga as currentlydrafteddonotreflectfullythe considerable industryconsultationtherules 2013, hasbeenmuch debated.Despite which comesintoforceon1January (RDR), The impactoftheRetailDistributionReview their clients. discretionary investmentmanagersto have asignificantrequirementtointroduce financial plannerswhowebelievewill and arealsotargetinganumberofchartered develop sustainablestrategicrelationships a numberofIFA firmswherewewishto to us.We arenowfocusingoureffortson increasingly importantinreferring business of IndependentFinancialAdvisers(IFAs) is offer compellingsolutionsforclients.The role we havesignificantpresenceandfeel we those targetsegmentsofthemarketwhere We areaimingtofocusourresourceson marketing andbusinessdevelopmentactivity. During 2010wehavereviewedour Marketing andbusinessdevelopment £2.0million). £4.8 millionin2010(2009: with clientrelationshipintangiblesgrowingto this largelyresultedinthecharge associated Asexpected, transaction attheendof2009. arose aspartofourLloydsBankingGroup the amortisationofintangibleassetsthat 2010 hasalsoseenthefullyearimpactof the investmentmanagementindustry. and howcostshavebeensharedacross very closeeyeonfuturedevelopments £0.2million).We(2009: willbekeepinga resulting ina£3.6millioncharge fortheyear £0.4 millionwehadalreadyanticipated 2011 isunwelcomeandaddstothe other intermediariesannouncedinJanuary Keydata InvestmentServicesLimited and £3.2 millionarisingfromthefailureof Financial performance

continued

of fundsundermanagement. billion) £1.39 has some£1.63billion(2009: part ofourbusinessfurtherin2011.Itnow attendees. We lookforwardtogrowingthis withover220 2010 attheRoyalSociety our firstCharitySymposiumintheautumnof some morefocusedmarketingspend.We held Our charities businesshasbenefited from relationships. We alsocontinuetodevelopourpanel million). £40.7 under management(2009: – nowstandingat£73.6 millionoffunds their clientsandhavecontinuedtogrowwell These fundsparticularlyappeal toIFAs and MultiAssetPortfoliothe Rathbone Service. Last yearIhighlightedourdevelopmentof adviser toourclients. sets usapartandenhancesourroleoftrusted with aninvestmentprofessional, isonethat service offering, whereaclient dealsdirectly fairly. We continuetobelievethatourbespoke and which, inourview, doesnottreatclients as anopaquemeansofcharging theclient commission, which wehavelong viewed to befew savings inmovingtoaclientmoney costs ofregulation. Indeedwefoundthere we wouldachieve morethanoutweighsthe interest rateenvironment,the margin client moneyalternativeandthat, inanormal form remainsattractivecompared tothe was thatthebankingregimein its current competitors andconsultants.Our conclusion regulators andtheexternal viewsof Investment Managers,clients,investors, which tookaccountoftheviewsour of banks.This wasanextensive exercise changing regulationandpublicperception it wassensibletoretaininthelightof of ourbankinglicencetoestablishwhether During theyearweundertookamajorreview Treasury andfinancing has alsobeenimproved. Investment Managersacrossthecountry investment processiscommunicatedto volatile markets.The waythecentral has helpedthemmanageclientfundsin to lookatportfoliodiversificationwhich process promptsInvestmentManagers investing furtherin2011.Ourassetallocation for privateclientsandcharities. We willbe have thewidestpossibleinvestmentchoice research toensureourInvestmentManagers products meanswearespendingmoreon The proliferation ofcomplex investment the increasinglyimportantintermediaryclients. theendclients andto present thistoboth investment processandthewayswe We continuetoimproveouroverall

which hasenhancedoursettlementefficiency. our dealingactivitiesintoLiverpooloffice improved thewaywedealandconsolidated our primaryclientdocumentation.We have packs andsignificantworkrewritingallof notes optionalforclients,upgradingourtax business efficiency, such asmakingcontract progress in2011relatetoimprovingour we havebeenworkingonandwhich wewill oftheareas to driveourdevelopment.Some We havebeenlookinghardatinvestment Investing inourbusiness £1.5 millionat31December2010. indemnity risks.This heldnetassetsof additional coveragainstprofessional toprovide cell withHarlequinInsurancePCC In 2010weestablishedaninsurance indicating thestrengthofourcapitalbase. basis, onaBaselIII 36.3%) (2009: capital ratiois28.3%at31December2010 effectively ungeared.OurGroupTier 1 £6.2million)sothebusiness is (2009: £3.1 millionat31December2010 wereonly Our external borrowings there isatriennialvaluationduein2011. £21.2 millionoverthenext sevenyearsand committed contributionstotheschemes are June 2010). Our were £15.7millionat30 (but to £9.4millionat31December2009 end of2010were£6.6millioncompared very volatileoverthelastyearandat Our pensionscheme deficitshave been finance forahousemove. way ofobtainingreasonablypricedbridging often seenbyclientsasaveryattractive of theportfoliothatwemanageandare loans aregenerallysecuredagainstthevalue £26.7million).These end of2010(2009: millionatthe to clientsincreased£40.0 more troubledbanks.The level ofloansmade troubled countriesintheEurozoneand seeking waystoavoidexposure tothemore remains cautiousandweareconsistently £0.77(2009: billion).Ourtreasury policy were £0.76 billionattheendof2010 Overall clientcashlevelsremainstaticand regulation orcapitalrequirements. due tomateriallyadversechanges in should weneedtosurrenderitinfuture regime. However, wearealsowellprepared Treasury andfinancing for controloverthewaywedeal. present needforsecurityofclient dataand can workremotely, bearinginmindtheever We havealsoformalisedthewayourstaff

continued

is nowinanappropriatehomehistoric measured byfundsundermanagementand Edinburgh isoursecondlargestoffice what hadbecomeacrampedanddatedoffice. St AndrewSquareinEdinburghreplacing We havemovedtoanewofficein 16 February 2011 Chief Executive Andy Pomfret take advantageofthechallenges ahead. professionalism makeuswellplacedto the successitis.Their experience and hard overthelastyeartomakebusiness like tothankallstaffwhohaveworkedso and togrowthebusinessfurther. Iwould take advantageofsomeclearopportunities at anincreasedratein2011orderto markets. We willbeinvestingin ourbusiness withalargerbusinessandpositive than 2009 We haveended2010inabetter position Outlook be passedontoclients. processes expenditure, which mayultimately time, orthroughhighersystemsand either directlyorindirectly, inmanagement to ourbusinessmodelbuttheydocostus present fundamentalproblemsorchallenges it. Noneofthese what wemustdiscloseabout the morehighlypaidclientfacingstaffand the wayweshouldstructureremunerationfor currently dealingwithconsultationpaperson way wemonitorandreportrisk.We are changes incorporategovernanceandthe There arealso reporting andtheRDR. rules oncapital,liquiditymanagementand levy (againnoimpactduetooursize),new impact us),thepossibleofabank hard atthebankpayrolltax(which didnot charged, overtheyearwehavealsolooked levieswe have been the significantFSCS with which wemustcomply. Asidefrom some commentsonthelevelofregulation These daysnoreportiscomplete without Regulation occupation andthemovingcoststhemselves. associated withanyperiodofdouble this mayresultinadditionalcosts2011 our London office;intheevent ofamove, we anticipatefinalisingarrangementsfor of theleaseonouroldpremises.In2011 our Cambridgeofficeduetotheexpiry business andinNovember2010wemoved in Liverpooltocopewiththegrowing location. We havealsotakenmorespace

Key highlights Financial performance Marketing and business development Treasury and financing Investing in our business Regulation Outlook Rathbone Brothers Plc 5 Chief Executive’s statement Report and accounts 2010 Rathbones at a glance

Total Rathbones Investment Management

Funds under management Investment Management teams provide mainly discretionary investment management services to private investors and

charities with portfolios held in discretionary accounts, trust structures, ISA accounts or self-invested personal pensions (SIPPs) from offices in the UK and Jersey. The service we offer is bespoke with a well researched performance driven 2010 2009 Rathbones at a glance £bn £bn process servicing individual client needs.

6 Investment Management 14.59 12.16 Our fees and charges are transparent, with our banking status Unit Trusts 1.04 0.94 allowing access to a range of services including currency, fixed 15.63 13.10 rate term deposits and loans secured against portfolios. Our charities team advises over 500 charities, with funds Operating income (continuing operations) under management worth £1.63 billion. In 2010 we held our

first Charity Symposium with 130 charities in attendance. Rathbone Greenbank Investments continues to grow, building up extensive expertise in understanding how financial and ethical issues can be integrated within portfolios to meet the 2010 2009 overall objectives of clients. £m £m Investment Management 114.7 104.3 Rathbone Pension & Advisory Services advises clients on Unit Trusts 7.4 7.7 retirement planning options and offers the Rathbone SIPP. Trust and Tax Services 5.1 4.7 Principal trading names 1 127.2 116.7 • Rathbone Investment Management 1 Includes rounding • Rathbone Investment Management International • Rathbone Pension & Advisory Services Key measures 2010 2009 Direct employees (average full time equivalents) Market capitalisation • 453 at 31 December 2010 (£m) 474.5 346.4 Total assets (£m) 1,028.1 1,037.1 Offices Cash held in client portfolios (£bn) 0.76 0.77 • Aberdeen • Chichester • Kendal Total equity (£m) 185.4 182.5 • Birmingham • Edinburgh • Liverpool Basel III Tier 1 ratio (%) 28.3 36.3 • Bristol • Exeter • London Profit before tax (£m) 30.1 29.5 • Cambridge • Jersey • Winchester

Funds under management Head of Investment Management • Richard Lanyon 16 2010: 15.63 15 2009: 13.10 2008: 10.46 Websites 14 2007: 13.12 • General: www.rathbones.com 13 2006: 12.24 £bn • Ethical investment: www.rathbonegreenbank.com 12 10 Number of Investment Management clients 0 2006 2007 2008 2009 2010 39 2010: 37.4 37 2009: 33.8 2008: 31.2 Total shareholder return 35 2007: 30.3

’000 33 2006: 29.2 50 2010: 43.8 2009: 0.8 31 40 2008: (17.3) 29 30 2007: (9.8) 2006 2007 2008 2009 2010 20 2006: 24.2

% 10

0 -10 -20 2006 2007 2008 2009 2010

Rathbone Brothers Plc Report and accounts 2010 Unit Trusts

Client base breakdown We offer a range of Unit Trusts which are distributed mainly through independent financial advisers in the UK. Discretionary vs non-discretionary by client numbers We invest directly or via collectives, employing a multi-asset approach. The Rathbone Managed Asset Portfolio was launched this year. Rathbones at a glance As at December 2010 % Funds cover the UK stock market, embracing small,

medium and large companies to achieve growth and income. 7 Discretionary 92.8 In addition we manage an ethical bond fund and one global Non-discretionary 7.2 fund focused on international opportunities.

Account type by funds Principal trading name under management • Rathbone Unit Trust Management

Direct employees (average full time equivalents)

As at December 2010 % • 24 Private client 46.4 Offices Trust and settlements 15.1 • London ISAs 13.2 Charities 11.0 Head of Unit Trusts Pensions including SIPPs 11.0 • Mike Webb Other 3.3

Website Account size by value • www.rutm.com

Trust and Tax Services

The Trust and Tax Services division is based in the UK As at December 2010 % and provides taxation services (compliance and planning), Over £1 million 52.8 probate services, trust services (trust formation, £500,000 – £1 million 17.3 administration, accounting and provision of trustees and £250,000 – £499,999 15.8 protectors), and family office services. £100,000 – £249,999 11.0 £50,000 – £99,999 2.4 Principal trading name Up to £50,000 0.7 • Rathbone Trust Company

Direct employees average (full time equivalents) Top ten UK private client wealth managers • 43 (ranked by discretionary assets under management as at 31 December 2009) Offices Discretionary AUM3 Total AUM • Liverpool Company (£bn) (£bn) • London Coutts & Co 36.93 43.45 GLG Partners 13.92 13.92 Head of Trust and Tax Services Brewin Dolphin Ltd 12.18 21.00 • Ian Buckley Rathbones1 11.43 12.16 2 HSBC 10.08 20.95 Website Schroders 9.31 12.58 • www.rathbones.com Rensburg Sheppards 8.86 12.13 Newton Investment Management Limited 7.61 7.61 Smith & Williamson 7.36 9.20 Goldman Sachs International 7.11 23.78*

Source: Private Asset Managers directory, 2010

1 Rathbones internal data 2 Combined data for HSBC Global Asset Managers and HSBC Private Bank 3 Barclays Wealth, St. James’s Place and Lloyds TSB Private Banking (total assets under management: £50.76bn, £21.40bn and £11.14bn respectively) do not provide a breakdown of their discretionary assets under management. * Private Asset Managers directory estimate Rathbone Brothers Plc Report and accounts 2010 Strategy and business performance

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

8 What is important to us The UK wealth management industry is an exciting place to a quality service to all of our clients and this is core to our be with many opportunities available to firms that can deliver strategy. Rathbones has developed services targeted not only a tailored and personal service to clients at reasonable cost. to individual private clients but also to professional investors, This is exactly what we do. Our reputation depends on providing intermediaries and charities.

How we achieve our aims Measuring our success • Focus our efforts in the UK on providing discretionary Key measures of our success are our growth in total funds under investment services, which allows us to streamline our spending management and the underlying rate of net organic funds growth decisions and concentrate on what we do best. in Rathbone Investment Management. This net organic growth rate takes account of cash or assets withdrawn by clients and • Consistently benchmark the price of our services against excludes any new funds we acquire. These measures reflect the others in the market to ensure we deliver what we do at a prevailing economic conditions and are important indicators of competitive cost. how successful we are in attracting new clients and retaining • Provide a whole of market investment approach which existing client relationships. allows our investment managers to select from a full range • Total funds under management as at 31 December 2010 were of investments. £15.63 billion, up 19.3% compared with 31 December 2009. • Build a research capability to provide structured investment • Funds managed by Rathbone Investment Management support to investment managers in making their asset allocation were £14.59 billion as at 31 December 2010, up 20.0% from and stock selection decisions. 31 December 2009 (FTSE 100 Index up 9.0% and FTSE • Continually invest in people and systems to support quality APCIMS Balanced Index up 9.3%). service levels and breadth of investment choice. • An underlying net organic growth rate of 5.3% in Rathbone • Manage our own administration and treasury functions Investment Management (2009 6.7%). in-house to ensure that risks are managed and service levels are • The number of Rathbone Investment Management clients maintained to our high standards. grew 10.7% in the year to 37,400 and account closure rates • Encourage regular feedback from our clients and act remain small. upon it. • Funds under management in Rathbone Unit Trust Management • Offer unit trust funds tailored to private client investment. rose 10.6% to £1.04 billion at 31 December 2010. • Help to meet the needs of our private clients by providing quality tax, trust and financial planning services.

Key performance indicators

Net organic growth rates in Investment Management funds under management % Unit Trust funds under management £m 2010: 5.3 2010: 1,043 2009: 6.7 2009: 935 2008: 7.4 2008: 1,029 2007: 7.8 2007: 1,887

2006: 7.2 2006: 1,856

Total funds under management £bn Number of clients ’000 2010: 15.63 2010: 37.4 2009: 13.10 2009: 33.8 2008: 10.46 2008: 31.2 2007: 13.12 2007: 30.3 2006: 12.24 2006: 29.2 Rathbone Brothers Plc Report and accounts 2010

07 47,302 2007: 42,306 2008: 29,468 2009: Profittax (continuing) before Key performanceindicators Maintainoptimalcapitalandliquiditylevelsasalicenced UK • Provideclearmanagementaccountabilityforoperational and • Conservativelymanagetreasuryassets(proprietary fundsand • Regularlyre-evaluatesupplierrelationshipstoensure we • InvestinsystemsandITtodriveongoingcostefficiency, and • Manageoperatingcostlevelsinlinewithgrowththe sizeof • Aspiretoearnaveragerevenuemarginsofapproximately • Pursueacquisitionopportunitieswhichenhanceearningsper • How weachieve ouraims population ofclientswhohavearangedifferentneeds. and continuallyenhancewhatweoffertoanincreasinglydiverse strong reputation.Weaimtoinvestinthebusinessgrowit consistantly highlevelofservicetoclientsandmaintainingour We believethatsustainablegrowthcomesfromprovidinga What in earningspershareasmarketconditionsallow. of dividendincome,deliveredbysteadyandconsistentgrowth Our aimistoprovideshareholderswithagrowingstream Shareholders 33.5 2006: 35.2 2007: 32.3 2008: 25.2 2009: Operating margin 44,720 2006: 2010: 2010: requirements andgrowthopportunities. deposit taker,havingregardtomarketconditions,regulatory business risks. clear risk-basedguidelines. client cashbalancesheldbyusasabankinginstitution)within are receivingvalueformoneyandtherightservicelevels. automated whereverpossible. ensure thatsettlementandadministrationprocessesare the businessandmarketmovementsovertime. 1% onfundsundermanagementovertheeconomiccycle. share withintwoyearsandfitourculture. isimportanttous 30,083 23.7 %

£’000

Atotalnetfundsgrowth(bothorganicand acquired) • which ishighlycashgenerative. These arestandardmeasures,butparticularlysuitourbusiness, under management,earningspershareanddividendsshare. We measureoursuccessprincipallybythetotalgrowthinfunds Measuring oursuccess OurBaselIIITier1ratioof28.3%at31December2010 • Wehaveincreasedourdividendpershareto44.0pkeeping • Earningspersharefromcontinuingoperationsisup6.2% • Wehaveinvested£4.1millionofcapitalexpenditurein • Underlyingoperatingexpensesof£88.7millionin2010are • Anoperatingmarginof23.7%in2010vs25.2%2009 • content ofwhatwedisclose. and takeregularsoundingsfrominvestorsonthequality We believeinopenandtransparentcommunicationtothemarket possible believingthatthishelpstosecurefuturelongtermvalue. We aimtobeverymindfulofregulatorydevelopmentswhere 06 35.0 2006: 41.0 2007: 42.0 2008: 42.0 2009: Dividend pershare 76.62 2006: 77.79 2007: 67.57 2008: 46.87 2009: Earnings pershare targeted acquisitions. continues alongertermtrendofgoodorganicgrowthand rate of10.2%inRathboneInvestmentManagement2010 required bytherecentBaselIIIaccord. (2009: 36.3%)remainshealthyandwellabovestandards up alongtermtrendofmaintainingorincreasingdividends. £3.6 millionofFSCSlevies. to 49.76pin2010from46.87p2009notwithstanding property andcommunicationsinfrastructure. business developmentspendandimprovementstoourIT, up 78.3%fromthe£2.3millionspentin2009reflectingboth 2010 tosupportbusinessefficiencyandclientservice.Thisis of investmentandcostcontrolin2010. 5.2% upfromthe£84.3millionin2009reflectingabalance from theFinancialServicesCompensationScheme. principally reflectsincreasesinamortisationchargesandlevies 2010: 2010:

49.76 44.0 (continuing) p p

Rathbone Brothers Plc 9 Strategy and business performance Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 10 Strategy and business performance Key 1,136,132 2006: 1,270,641 2007: 1,290,392 2008: 1,346,948 2009: participants Number ofshares heldbySIP 67.1 2006: 68.2 2007: 65.1 2008: 64.8 2009: operating expenses of costs(note8)asapercentage Staff Actasafairemployertostaff. • Shareideasandbestpracticethroughoutthe organisation • Ensureallstaffareappropriatelyqualifiedtostandards required • Provide extensive trainingforalllevelsofstaffseekingthe • Ensurethatrecruitmentprocessesaresettoensure thatnew • Offer share-basedincentivestostaffacrossthebusiness • Provide mechanisms forallseniorDirectorstobuildup • Regularlybenchmark rewardswherepossibletoensurethat • Ensurethatallremunerationschemes are • How weachieve ouraims developing rapidlyinlinewithinvestmentmarketsasawhole. with ourclients.We promotearobustinvestmentculturethatis staff thatwealsobelievereflectshowbuildrelationships We promoteastrongsenseofintegrityandtrustamongour What isimportanttous reward organicgrowth. in theequityandprofitsofRathbones,toencourage career environment,involvingacommitmentforallstafftoshare Our aimistoprovidestaffwithaninterestingandstimulating Employees 2010: 2010: through timelyconsultationandcommunication. by theRetailDistributionReview. highest professional andpersonalstandards. to furthertheircareer. employees fittheexisting cultureandhaveampleopportunity amongst employees. where feasible toencouragewidershareownership a meaningfulshareholdingoverfiveyearperiod. shareholder interests. awards remainreasonable,competitiveandinlinewith appropriate behaviours. consistent, meetregulatoryrequirementsandfoster performance 1,316,557 60.8

(continuing) indicators %

ownership levelsyeartoyear. this regularlytoexplore opportunitiestoimproveonstaff We encourageshareownershipacrossthebusiness andassess join andleavetheorganisationlearningfromthisexperience. measure oursuccessprincipallybylookingathowmanypeople who arehappytopromoteandrepresentthefirm.We therefore client servicemoreoftenthannotmeanscontinuityofemployees As aservicebasedbusiness,werecognisethatcontinuityof Measuring behaviour thatwillproducevalueoverthemediumtolongerterm. quality servicetoourclients.Remunerationstructuresencourage We havededicatedandloyalemployeeswhoaredrivenbyproviding 06 11 2006: 8 2007: 6 2008: 3 2009: turnover(allstaff) Staff 606 2006: 644 2007: 675 2008: Average fulltimeequivalentemployees The numberofsharesheldbyShareIncentivePlan • The overallnumberofsharesheldbycurrentandformer • 11,334hoursoftrainingweredeliveredin2010compared to • Turnover ininvestmentprofessionals hasalsoremainedlowat • Total staffturnovercontinuestobelowat6.4%in2010 • 2010: 2010: 09 681 2009: 2010: 1.3million). (2009: participantswas1.3millionat31December 2010 (SIP) 20%). total issuedsharecapitalat31December2010(2009: employees andtheirfamiliesrepresentapproximately 20%of hours). (11,301 2009 2.4% comparedto0%in2009. compared to3.4%in2009. 6 699 oursuccess % (continuing)

reconciling openingandclosingbalances. have impactedfundsundermanagementby acquired growthandmarketmovements Table 2demonstrateshoworganicand during 2010. indices were9.0%and9.3%respectively Balanced FTSE 100andtheFTSE APCIMS the yearto£14.59billion.Increasesin under managementsome20.0%higherover levels todriveInvestmentManagementfunds This growthcombinedwithhighermarket to privateclients. model which provideshighqualityservices acquisitions andatriedtestedbusiness throughout 2010largelyreflectingsuccessful continued toattractfundsatahealthyrate InvestmentManagement has Rathbone attheendofyear. June2010to5900 30 with theFTSE at 100Index risingfrom4917 half oftheyearwitnessedawelcomerally After avolatilefirsthalfof2010,thesecond Business environment Seetable5 Seetable2 2 1 point return Average netoperatingbasis 31 December Funds undermanagementat funds undermanagement growth inInvestmentManagement Underlying rateoftotalnet funds undermanagement growth inInvestmentManagement Underlying rateofnetorganic Table 1.Key performanceindicators Investment Management other partyorforanypurpose. shareholders andshouldnotberelieduponbyany BrothersPlctoprovideinformationits Rathbone statements. The businessreviewhasbeenpreparedby factors, underlyinganysuch forwardlooking including economic,regulatoryandbusinessrisk with somecautionduetotheinherentuncertainties, contained withinthebusinessreviewshouldbetreated time oftheirapprovalthisreview. Statements faith basedontheinformationavailabletothemat statements which aremadebytheDirectorsingood This businessreviewcontainscertainforward-looking nature ofcommerciallysensitiveinformation. and prospects,withoutprejudicingtheconfidential business to provideabalancedpictureofRathbones’ guidance providedbytheAccountingStandardsBoard This businessreviewhasbeenpreparedinlinewith Business review us recently. Investment Managers whohavejoined new fundseitherfromacquisitions orfrom from newclients.Acquiredgrowth represents Managers, eitherfromexisting clientsor new fundsbroughtinbyexisting Investment Organic inflowsrepresenttheamount of 2

1 1

£14.59bn

85bps 10.2% 5.3% 2010 95bps £12.16bn 12.5% 6.7%

2009

As at31December Market adjustment Inflows Charityfundsundermanagementof • parts ofourbusiness,including: We arecontinuingtoseegrowthacrossall opening yearfundsannualised. fourth quarterof2010wassome7.4% of annualised netorganicgrowthrateinthe the secondhalfasmarketsrecovered.The quarter’s experience. This effect dwindledin rate to3.2%annualisedbasedonthat which reducedthenetorganicfundsgrowth their portfoliostosupplementincome, evidence ofclientswithdrawingcashfrom 6.7%). Inthefirstquarterof2010wesaw remained healthyat5.3%in2010(2009: requirements, orclosetheiraccount) income fromportfoliostomeetotherfinancial because clientswithdrawcapitaland/or after fundoutflowswhich naturallyoccur throughout 2010.Netorganicgrowth(stated have remainedatconsistentlyhighlevels 13.9%)and at 1January2010(2009: represent 12.0%offundsundermanagement billion Gross organicinflowsof£1.46 Netorganicandacquiredbusinessasa%ofopening 5 Net Organicinflowslessoutflows 4 Impactofmarketmovementsandrelativeperformance 3 Value2 atthedateoftransfer in/out 1 Underlying Underlying Net organicnewbusiness Outflows – acquired – organic A under management Table 2.InvestmentManagement–funds Pension Rathbone &AdvisoryServices • funds,which SIPP The valueofRathbone • The valueoffundsmanagedasaresult • s a funds undermanagement under 941). to 1,010(2009: which ithasadvisedincreaseby7.3% upon which sawthenumberofnewSIPPs at thestartofyear;and 31 December2010from£279 million increased by19.7%to£334millionat at thestartofyear; 31 December2010from£1.01billion billionat increased by28.7%to£1.30 of providerpanelrelationshipswhich 31 December2009; up 17.3% billionat onthe£1.39 £1.63 t 1January

1 organic

management 1

rate rate billion at31December2010

new

of of

business

total net 2

organic

net

as 3

growth

opening

10.2% 14.59 12.16

(0.82) funds 5.3% 0.60 1.46 2.06 0.64 1.19 2010 £bn

1.55 9.43 12.5% 6.7% 0.63 12.16 0.55 1.31 1.86 (0.68)

2009 £bn

Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquiduty and cash flow Pensions Risks Going concern basis Rathbone Brothers Plc 11 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 12 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis ee Average FTSE 100level Average – 31December September – 30 June – 30 – 5April Valuation datesforbilling under management Table 4.InvestmentManagement–averagefunds in 2009. below tobe27.0% higherthan£10.55billion billioncanbeseenfromtable4 £13.40 Average fundsundermanagementof 13.7% onthesamebasis. BalancedIndex increased FTSE APCIMS anincreaseofsome17.5%.in 2009; The in 2010comparedwithanaverageof4706 on ourquarterlybillingdates)was5528 The averageFTSE 100Index (measured andhighermarket levels. mentioned above fromthehealthygrowthlevels both millionin2010benefiting to£68.5 2009 £55.8 millionintheyearended31December Net fee incomeincreasedby22.8%from Underlyingprofitbeforetaxdividedbynetoperatingincome Seetable6formoredetail 4 3 Interestandotherincomeispresentednetofinterestexpense 2 Netfee incomeisstatedafterdeductingfees andcommission 1 Underlying operating%margin Profit beforetax Transaction costs Amortisation ofclientrelationships Scheme levies Financial ServicesCompensation Underlying profitbeforetax Underlying operatingexpenses Net operatingincome Interest andotherincome Commission Net fee income – financialperformance Table 3.InvestmentManagement Financial performance 12.5%). growth rateof10.2%(2009: management in2010representinga has added£1.24billionoffundsunder Total netorganicandacquiredgrowth millionoffundsintotal. some £800 This transactionhasnowbrought us with LloydsBankingGroupin2009. business resultingfromourtransaction million)includingmore £546 (2009: funds undermanagementin2010 We millionof acquiredsome£600 Investment Management paid onclientaccounts expenses paidtointroducers 1

continued 3

32.8% 13.40 14.59 13.59 114.7 12.41 13.02 5528 (77.1) 36.2 68.5 10.0 29.5 2010 2010 37.6 (3.3) (4.8) £bn £m – 32.2 104.3 19.8 28.7 55.8 4706 10.55 12.16 11.23 9.69 9.11 30.9% 29.2 (0.8)

(0.2) (72.1) (2.0)

2009 2009

£bn

£m

Basis pointreturnfrom Table 5.Revenue margins at £0.76 £0.77 billion(2009: billion). cash heldinclientportfoliosendedtheyear in responseto2010marketconditions, Bank ofEngland.Whilst amountsfluctuated emergency baseratecutsmadebythe benefitedfromthethree half of2009 low levelsthroughout2010andthatthefirst given thatinterestratesremainedatvery This isunsurprising £19.8 millionin2009. comparedto £10.0 millionfell by49.5% In contrast,interestandotherincomeof 31 December2009. 31 December2010comparedto6.3%at cash represented4.9%ofportfoliosat portfolios becamemorefullyinvestedas Client than the£28.7millionin2009. 2010 was,asaresult,some26.1%higher millionin Commission incomeof£36.2 to makepositiveinvestmentdecisions. Investment Managerswithmanyopportunities Marke Operating expenses beforetheFinancialServicesCompensation 2 RepresentsthecostsofInvestmentManagersandteams directly 1 Underlying cost/incomeratio Operating expenses Transaction costs Amortisation ofclientrelationships Scheme levies Financial ServicesCompensation Underlying operatingexpenses Other operatingexpenses Total staffcosts – variable – fixed Staff costs – operatingexpenses Table 6.Investment Management year fallinnetinterestincome. largely reflectingthesignificantyearon points fell from95basispointsin2009 Total 2010revenuemarginsof85basis Excludinginterestonownreserves 2 Netoperatingincome(seetable3)excluding interestonown 1 Total margin – interest – commission – fee income costs dividedbynetoperatingincome Scheme levies,amortisationofclientrelationships andtransaction involved inclientfacingactivities in 2009 acquired asaresultofthetransactionwithLloydsBankingGroup quarterly billingdates.Funds undermanagementexclude funds reserves dividedbytheaveragefundsundermanagementon t conditionsin2010presented 2

1 2

67.2% 40.0 85.2 13.8 26.2 2010 2010 77.1 37.1 bps 4.8 3.3 £m 85 53 27 – 5 69.1% 75.1 0.8 2.0 0.2 72.1 33.0 39.1 13.9 25.2 95 14 28 53

2009 2009

bps £m

We stronglybelievethatclients value investments intheirbestinterests. individuals andtrustustomanagetheir Private clientswanttobetreatedas distinction. a service.Forus,thatisanimportant We donotsellproducts–weoffer Relationships individuals, theirfamiliesandadvisers. to buildlongtermrelationshipswith managing theirinvestmentsandwe aim having directaccesstotheperson who is

Rathbone Brothers Plc 13 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 14 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis anincreaseof13.4%.Fixedstaffcosts 2009, £85.2 million,comparedto£75.1 millionin Investment Managementfor2010were Total operatingexpenses inRathbone Investment Management from anumberofindustrysectors.Ascosts ispotentiallyexposed tolevies Rathbones management groupwithabankinglicence tocompensateinvestors. Asanasset (FSCS) Financial ServicesCompensationScheme failing which inturnplacesdemandsonthe in anumberoffinancialservicesbusinesses Recent marketconditionshaveresulted and additionalprojectexpenditure. costs of£0.6million,mostlyinEdinburgh, Group transaction,oneoffofficemoving costs associatedwiththeLloydsBanking line withincreasedprofitability, operational variable awardpaymentstosupportstaffin £4.1 million(12.4%)largelyreflectshigher services costs.The yeartoincreaseof IT, financeandothercentralsupport include property, depreciation,settlement, Other operatingexpenses of£37.1 million compared to145in2009. client facingactivitieswas184in2010 Investment Managersandteamsinvolvedin Average fulltimeequivalentheadcountof Index. theFTSE APCIMS and above performanceover improved Rathbones’ marketswhich as aresultofresurgentbond Performance awardswerehighin2009 Index. against theFTSE APCIMS of organicgrowthandoutperformance awards aredesignedtorewardstronglevels funds-based growthawards.These latter than offsetbyreductionsintheamountof profit-based awardsin2010weremore marginally downyearonashigher and salaryinflation.Variable staffcostswere addition ofnewrevenuegeneratingstaff year principallyreflectingthesuccessful of £26.2millionincreasedby4.0%yearon size ofbanking levies. of continuedlowinterestrates on the somewhat offsetbythefavourable impact Services Limitedandotherintermediaries, result ofthefailureKeydata Investment This largelyreflectsadditionalleviesasa £3.4 millionhigherthantheprioryear. costsof£3.6millionin2010are FSCS before tax. table andexcluded fromunderlyingprofit been highlightedseparatelyintheabove levycostshave associated withRathbones, conditions affecting businessesnot largely arisefromexceptional market

continued

Funds undermanagementat Table 7. Key performanceindicators Unit Trusts which wereexpensed in2009. incurred transactioncostsof£0.8million are beingamortisedover10years,and intangible assetsof£21.5millionwhich resulted inthecreationofaportfolio The LloydsBankingGrouptransaction the of acquiredgrowthandthetransactionwith £2.0 millionto£4.8largelyasaresult relationship intangibleshaveincreasedfrom Amortisation charges inrespect ofclient largely cash-basedearnings. profit toseparatelyhighlightwhatare this hasbeenexcluded fromunderlying represents asignificantnon-cashitem, charges associatedwiththese assets under management.Astheamortisation created inthecourseofacquiringfunds Client relationshipintangibleassetsare to theoutsourcingthemeabove. launched twomultiassetfunds,which play UnitTrustRathbone Managementpublicly to adaptmarketchanges. InJune2010, andisrefocusingdistribution difficult 2008, rebuilding itsperformancerecordaftera Chief Executivein2010thebusinessis Following thearrivalofMikeWebb as dominated byinstitutionalbuyingpractices. market thatisbecomingincreasingly fundamental toattractingfundsgrowthina Performance remains in reactiontotheRDR. IFAs tooutsourcingtheirinvestmentservices were verystrong,signallingagreatermoveby Throughout theyearsalesintofundsof latterly investorsbegantomoveintoequities. sectors, although dominated bysalesinbond Much oftheyearwas (source:IMA). 2009 £87 billionin billionin2010comparedto£68 including throughplatforms,weresome recent years.Grossintermediarysales, recovered somewhatfromdifficulttimesin The retailassetmanagementsectorhas Business environment Seetable8 1 in fundsundermanagement Underlying rateofnetgrowth 31 December Lloyds Banking Group 1

at the £1.04bn (3.2%) 2010 end of £0.94bn (22.3%)

2009

2009.

Our highstaffretentiongivesclients committed todevelopingtheirskills. We valueourpeopleandare and integrity. reputation forhigh-qualityservice generations. We haveatrusted We havelookedafterclientsfor Stability to ourclients. and permanenceprovidereassurance In anever-changing world ourheritage remain withusforyearstocome. Rathbones theyknowandtrustwill confidence thattheindividualsat

Rathbone Brothers Plc 15 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 16 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis – outflows ud 3 1 3 Performance RecoveryFund is datafortheRathbone 1 Recovery Fund 1 Income Fund Global OpportunitiesFund Ethical BondFund Growth Fund Blue ChipIncomeand Quartile rankingover: Table 10. Unit Trusts –fundperformance records toplatformsandinstitutions. the importanceofthreeyearperformance Efforts willcontinueinearnestrecognising early signsofimprovementacrosstherange. throughout 2010withperformanceshowing O Other Multi AssetPortfolio Servicefunds Recovery Fund Ethical BondFund Blue ChipIncomeandGrowthFund Global OpportunitiesFund Income Fund Table 9.Unit Trusts –fundassets 9 and10below. million. Fund detailsareoutlinedintables quarter sawnetfundinflowsof£18.3 fund performanceimprovedandthefourth over thecourseofyearassalesand most of2010,theyslowedconsiderably year. Whilst netredemptionscontinuedfor 2010 from£0.94billionatthestartof 10.6% to£1.04billionat31December Funds undermanagementincreased Netoutflowsasa%ofopeningfundsundermanagement Impactofmarketmovementsandrelativeperformance 3 Valued2 atthedateoftransfer in/out 1 Underlying rateofnetgrowth As at31December Market adjustments – inflows Net outflows As at1January Table 8.UnitTrusts –fundsundermanagement Unit Trusts verall, fundshavebeenwellpositioned on 13July2009 not yetavailablebeyond1yearasthefundwaslaunched 1

continued 1

er 5years 3years 1 year 3

3 3 2 3 2 2 2 1 1 1 na n/a n/a 1 31 December

(3.2%) 1,043 (0.18) (0.03) 1.04 0.94 0.15 0.13 2010 2010 199 483 105 £bn £m 69 54 59 74 0.11 0.94 0.14 1.03 935 152 41 69 42 52 76 503 (22.3%) (0.34) (0.23) 31

December

2009 2009 £bn £m

to£0.94billionin2010. Annual in 2009 billion management increasingfrom£0.88 in 2010withaveragefundsunder to£12.5million 31 December2009 7.8% from£11.6millioninthe yearended Annual managementcharges increased UnitTrusts underlyingprofitbeforetaxdividedbynet 1 Operating %margin Profit beforetax Scheme levies Financial ServicesCompensation Underlying profitbeforetax Underlying operatingexpenses Net operatingincome Rebates andtrailcommissionpayable Initial commissionpayable Interest andotherincome Net dealingprofits Annual managementcharges Initial charges netofdiscounts Table 11.UnitTrusts –financialperformance Financial performance Operating expenses excluding FinancialServicesCompensation 2 Representsthe costsofInvestmentManagersandteamsdirectly 1 Underlying cost/incomeratio Operating expenses Scheme levies Financial ServicesCompensation Underlying operatingexpenses Other operatingexpenses Total staffcosts – variable – fixed Staff costs Table 12. Unit Trusts –operatingexpenses to 0.9%in2009. management was0.8%in2010compared percentage ofaveragefundsunder redemptions. Netoperatingincomeasa 5.2%)asaconsequence offund (2009: 2.7% ofnetoperatingincomeintheyear dealingprofitsconstituted Managers’ box 47.2% comparedto45.7% in 2009. charge incomewasbroadlyconsistentat as apercentageofannualmanagement Rebates andtrailcommissionpayable year onyear. 1.3%) are consistentat1.3%(2009: of averagefundsundermanagement management charges asapercentage operating income Scheme leviesasa%ofnetoperatingincome (seetable11) involved ininvestmentordistributionactivities 1

89.2% 10.8% 13.3 12.5 2010 2010 (0.3) (6.6) (5.9) 0.5 0.8 0.1 0.2 0.5 6.9 0.3 6.6 3.2 3.4 1.2 2.2 £m £m 7.4 – 1.3% 0.1 0.1 7.7 (0.1) 13.1 0.1 0.4 11.6 1.0 98.7% 7.6 – 7.6 3.7 3.9 1.8 2.1 – (7.6) (5.3)

2009 2009 £m £m

conflicting interests. clients’ behalf,unconstrainedby to makeinvestmentdecisionsonour We prideourselvesonbeingfree at theheartofourthinking. listed companyandindependencelies Rathbone BrothersPlcisaFTSE250 Independence investments. including collectivesandalternative from thefulluniverseofopportunities, assets basedonmeritandsuitability We selectinvestmentproducts and

Rathbone Brothers Plc 17 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 18 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis private clients andfamily offices. opportunities to providequalityadviceto continuestoprovide environment inthe UK A rapidlychanging legalandtaxation thetaxationservicesbusinessbasedin • thefamilyofficeservicebasedinLondon • management business.Itcomprises: with ourcorediscretionaryinvestment trustbusinessisclosely aligned The UK Business environment Seetable15 1 Operating %margin and Tax Services Table 14.Key performanceindicatorsforTrust Trust andTax Services merger in 13.5% to£3.2million,ascostsof£3.7million Other operatingexpenses havereducedby total underlying profitbefore deferred profitshareasa%of Variable staffcostsexcluding deferred profitshare Variable staffcostsexcluding Deferred profitshareadjustment Total variablestaffcosts Table 13.Unit Trusts –variablestaffcosts on 2010variablecosts. impact ofdeferred profitshare awards in 2010.Table 13demonstratesthe performance havebeenputinplace which arealsolinkedwithgrowth and New profit-basedawardschemes employees wasconsiderablyreduced. spread overtheserviceperiodsofrelevant year profitshareschemes which are down 33.3%astheimpactofhighprior Variable staffcostsof£1.2millionwere more investmentinthesalesteam. year endheadcountwas28,reflecting although2010 at 24in2010and2009, equivalent headcountwasunchanged of headcountchanges. Average fulltime salary inflationandthefullyeareffect £2.1 million)grewmarginallydueto year ended31December2010(2009: Fixed staffcostsof£2.2millionfor Unit Trusts

2009 and capitaltaxplanningservices. individuals andtrusts,provides income Liverpool, which preparestaxreturnsfor administration andtaxationplanning; substantial familygroupsincludingtrustee which providesadvisoryservicesto

variable

costs,

included

staff continued

redundancies

ot costs 1

£0.5

tax

and

million

and

of 45.0%

recruitment 2.0%

2010 2010 (0.3) one 0.9 1.2 £m

4.3% 21.1% 0.4 1.8 (1.4)

off

fund

2009 2009

£m fees. Representsthecostsoffee earningstaffandteamsinvolvedin 1 Cost/income ratio Operating expenses Other operatingexpenses Total staffcosts – variable – fixed Staff costs operating expenses Table 16.Trust and Tax Services– practitioners andtheirteamin2010. following therecruitmentoftwosenior reflectinghigheradvisoryfees earned 2009 £5.1 millionin2010from£4.7 Operating incomegrewby8.5%to Profit beforetaxdividedbynetoperatingincome 1 Operating %margin Profit beforetax Operating expenses Net operatingincome financial performance Table 15.Trust and Tax Services– to securefuture efficiencies. will continueto invest inourcoreprocesses unit trustandoverseassettlement rates,and We continuedtoachieve excellent CREST, improvingouronlinereportingfunctionality. • implementinganewclientdocumentation • significantlyupgradingourMicrosoft • improvingourvoiceoverIP • decommissioningofourPershing dealing • more significantexamples in2010havebeen: forward andimproveefficiency. ofthe Some and oursupportsystemstodrivethebusiness of developmentsinourinvestmentsystems infrastructure. has continuedtoprovidearobustoperations Rathbones’ Operations andresources 37.8%).(2009: 42.0% oftotaloperatingexpenses in2010 costs which arelargelyfixed,andwere depreciation, finance,ITandothersupport Other operatingexpenses representproperty, in2009. headcount of43comparedto40 reflecting ahigheraveragefulltimeequivalent compare tocostsof£2.5millionin2009 Fixed staffcostsof£2.7millionfor2010 Operatingexpenses dividedbynetoperatingincome 2 management system;and Exchange servercapacity; telephone technology; in Liverpool; platform andcentralisingalldealingactivity client facingactivities 1

information 1

There 2

have

technology

been

98.0% a 2.0%

2010 2010 (5.0) large 5.0 2.9 0.2 2.7 5.1 2.1 0.1 £m £m

department 95.7% 4.5 1.7 2.8 0.3 2.5 4.3% 0.2 4.7

(4.5)

number

2009 2009 £m £m

The RathboneInvestmentProcess specific clientrequirements. take investmentdecisionsbasedon Investment Managersthelatitudeto non-prescriptive andallows for InvestmentManagers.Thisis structure andwell-researchedguidance Our InvestmentProcessprovides Skill are achieved. and fulfilmentof clientobjectives that theappropriate qualityofservice and riskcontrolprocesses ensure Internal performance monitoring traditional investmentchoices. including alternativesaswellmore growing rangeofinvestmentoptions, supports managersintheirchoice of a

Rathbone Brothers Plc 19 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 20 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis monthly basistoensure thatdividendsand levels aremonitored andforecastona reporting forregulatory purposes,capital work, anddaily performed aspartofICAAP In additiontoavarietyofstress tests operational riskcomponent. basic indicatorapproach tocalculatingits its PillarIcreditriskcomponent andthe the standardisedapproach tocalculating on anannualbasis.The Grouphasadopted Adequacy AssessmentProcess (ICAAP) group andperformsanInternalCapital Capital RequirementsDirectiveasabanking isclassifiedunderthe Rathbones Capital management earnings pershare(seenote12). per shareand1.4timesbybasicunderlying covered 1.1timesbyreportedbasicearnings 42.0p)fortheyear.(2009: This dividendis This resultsinatotalpaymentof44.0p dividend of28.0pbepaidon18May2011. the Boardisrecommendingthatafinal paid toshareholderson6October2010and An interimdividendof16.0ppersharewas Dividend financial statements. is includedinnote9totheconsolidated A fullreconciliationofincometaxexpense over-provision fortaxinprioryears. of disallowableexpenses andasmall rate of28.0%dueprincipallytotheimpact standard higher thanthecompositeUK The effective rateoftaxin2010is £29.5million). (2009: million on continuingoperationsof£30.1 divided bytheprofitbeforeincometax £9.3million) of £8.5million(2009: total taxcharge oncontinuing operations 31.5%),calculatedasthe 28.4% (2009: The effective taxratefortheyearis Taxation lease breakopportunitiesin2012. on ourLondon locationinadvance of in 2011willbeonfinalisingourposition up anewofficeinAberdeen,ourfocus Cambridge officesinNovemberandset Having relocatedourEdinburghand overall planstomanagecostscarefully. optimal useofspaceaspartour We willcontinuetoworkhardsecure our treasurymanagementsystems. practices andefficiencies,upgrade centre toensurewebenefitfrombest In 2011weplantooutsourceadata Operations andresources

continued

As alicenceddeposittaker, Rathbone Treasury andfinancing consolidated financialstatements. processes canbefoundinnote29tothe Further detailsoncapitalmanagement on ourwebsiteatwww.rathbones.com. disclosure is presented PillarIII Rathbones’ 36.3%). (2009: assets, was28.3%at31December2010 capital asaproportionoftotalriskweighted Group’s Tier 1ratio,calculated asTier 1 basis,the fund itsoperations.OnaBaselIII does notrelyonthewholesalemarketto remainswellcapitalisedand Rathbones treasury team. proprietary fundsiscontrolledbythe structures remainoptimal.Investmentof exercises areruntoensurethat Group transferable acrosstheGroup and regular to regulatoryminimums,capitalisfreely against adversebusinessconditions.Subject managed andappropriatebuffers arekept investment requirementsareappropriately from banking/treasury operationswhen Larger cash flows areprincipallygenerated with amodestamount ofworkingcapital. operates large arepredictable,Rathbones from clientportfoliosandexpenses byand As fee incomeislargelycollecteddirectly andcashﬂowLiquidity which willberepaidinfullby4April2011. from BarclaysBankPLC £6.2million), (2009: facility of£3.1millionat31December2010 arelimitedtoatermloan External borrowings and itisanticipatedthatthiswillnotchange. wholesale fundingtofinanceitsoperations doesnotrelyon markets Rathbones As anetproviderofliquiditytothebanking ratings remainappropriate. Fitch andareregularlyreviewedtoensure Counterparties mustbe‘A’ ratedorhigherby relatively widenumberofcounterparties. of appropriateinstrumentsissuedbya The treasurydepartmentinvestsinarange the consolidatedfinancialstatements. and liquidityrisk,assetoutinnote28to and monitorsexposure tomarket,credit set outinaBoard-approvedtreasurymanual operates inaccordancewithprocedures the BankingCommitteetoBoard, Investment Management,reportingthrough The treasurydepartmentofRathbone held onasegregatedclientmoneybasis. position togetherwithanyclients’cashnot surplus liquidityonitsstatementoffinancial Investment ManagementholdstheGroup’s

expectations atreasonablecost. administration whichexceedsclient Our aimistoprovidefirst-class administration. must beunderpinnedbyhigh-quality long termrelationshipsourservices We believethattosustainsuccessful, Operational excellence intermediaries evolve. charity trusteesandprofessional we seetheneedsofourprivateclients, We continuetoinvestinthis areaas

Rathbone Brothers Plc 21 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 22 Business review Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis Liquidity risksaremanagedonadailybasis of cashtobeheldinclientportfolios. theamount asset allocationdecisionsabout Investment Managersmakeinvestmentand andcashfowLiquidity of futureliabilities.Basedontheprevious based onmanagement’sbestestimate used forfinancialreportingwhich mustbe are typicallymoreprudentthanvaluations schemes in2011.Fundingboth valuations andwillbeperformed againfor and 2008, were undertakenasat31December2007 Actuarial fundingvaluationsoftheschemes financial statements. included innote25totheconsolidated valuation andassociatedsensitivitiesare the assumptionssupportingaccounting £9.4million). Detailsof £6.6 million(2009: two definedbenefitschemes totalled the combinedaccountingdeficitfor pension scheme. At 31December2010, to newmembers)andadefinedcontribution ofwhichpension schemes areclosed (both operatestwodefined benefit Rathbones Pensions £2.7millioncapitalexpenditure on • outflowsrelatingtointangibleasset • outflowsrelatingtothepaymentof • flows duringtheyearwereasfollows: The mostsignificantnon-operating cash Assessment regime. FSA’s InternalLiquidityAdequacy issubjecttothe As abank,Rathbones and dependontransactionactivity. additional detail onfinancialrisks. consolidated financial statementsprovides impact thebusiness.Note28to the governance processesandkey risksthat riskframework, outlines Rathbones’ The Corporategovernancereportonpage32 Risks consolidated financialstatements. contributions issetoutinnote25tothe schemes remainingindeficit.The timingof contributions of£3.6million,subjecttothe years, inadditiontoregularannual totalling £21.2millionoverthenext seven schemesa schedule ofcontributionsforboth funding valuations,theCompanyhasagreed £1.1million). (2009: property, plantandequipment Lloyds BankingGrouptransaction;and £2.2 million)mainlyinrespectofthe additions of£27.7 million(2009: £18.1million); (2009: dividends of£18.2million

continued

The riskofunexpected additionallevies mitigate this. we haveplannedresourcescarefullyto new ruleshascertainlyincreased,although the business,riskofnotcomplyingwith has donelittletoimpacttheriskprofileof considerable effort.Whilst regulationitself to ensurecompliancehastakensome refining systemrequirementsandprocesses Responding intimetothisregulationand remunerationandclientmoney. RDR, capital, liquidity, paymentservices,the FSA andECpronouncementsonbanking perspective withanumberofwideranging 2010 wasaverybusyyearfromregulatory Negative impactofregulation Business risks these areoutlinedbelow. particularly impactedourriskprofileand year presentedanumberoffactorswhich business. Asidefrommarketchanges, this rates, which inherentlyimpacts theriskof behaviour ofinvestmentmarketsandinterest incomeisdependentonthe Rathbones’ of newregulatory andaccountingreporting There continues tobeasignificantamount Accounting orregulatory reporting error desire toimproveefficiency. significant external change and acontinued abating aswecontinuetorespond to The paceofchange showsno signsof ensure skillsareuptodate. complex change andinvestintrainingto resources wherenecessarytomanage to deployskilledprojectmanagement commentary onpage18.We have continued as notedintheoperationsandresources 2010 hasbeenabusyyearforprojects Inappropriate ITstrategy Operational risks reputation issueswereinsignificantin2010. Operational lossesarisingfrompotential of theinvestmentmanagementindustry. remainsahighlyregarded member Rathbones risk Reputational opportunities forRathbones. It isexpected topresentadditionalbusiness although itsfulleffects remainuncertain. landscape forprovidingfinancialadvice, will undoubtedlychange thecompetitive competition wasthemostsignificant The RDR Competition risk assessed andquantified. are institutions which failedin2008/9 significantly in2010asinvestorlossesfrom hasincreased being charged bytheFSCS risk event

in 2010.

This

regulation

significantly change intheyear. other investment securitiesdidnot default issues.Creditrisksassociated with policy throughouttheyearexperiencing no retaineditsconservativetreasury Rathbones or lowercashlevelsrespectively. increases ordecreasesdirectly withhigher 31 December2010.Creditriskcapital June2010returningto£0.7630 billionat portfolios risetoover£0.95billionat A volatilefirsthalfof2010sawcashinclient Greece, IrelandandotherEurozonecountries. institutions andsovereignjurisdictionsin profile adverseeventsinvolvingbanking Credit marketshaveseenanumberofhigh Credit risk financial statements. reported innote2totheconsolidated sources ofestimationanduncertaintyare Critical accountingjudgementsandthekey dependent upontheexercise ofjudgement. additional liabilityisincurredsometimes The riskthatanassetvaluefallsor Financial risks resulted inlitigationtheyear. Nonehave 39). recorded in2010(2009: very lowlevelswith22formalcomplaints Complaints fromclientshaveremainedat Client litigation low Investment Managerturnoverhasbeenvery Loss ofaninvestmentmanagementteam Manager rewardstofundperformance. scheme revisedtobetteralignInvestment been improvedandadeferred remuneration During 2010,investmentprocesseshave unit trustfundsrelativetothatofcompetitors. correlated tothelongertermperformanceof The volumeofunittrustsales is closely Poor performanceinUnitTrusts of fundstransferred wasasexpected. June2010.The amount systems from30 InvestmentManagement fully onRathbone and theacquiredbusinesswasoperating appropriately appliedtomanagethechange were transferred. Additionalcontrols were area inthefirsthalfof2010asnewclients increased riskindicatorsintheoperations the LloydsBankingGrouptransactionwhich related risksin2010wereassociatedwith management teams,theprincipalacquisition Whilst wecontinuetoacquireinvestment Adverse impactofapooracquisition non-compliance. requirements, which increasethe riskof Risks

historically

continued

and

this

has

continued

2010.

the financialstatements areapproved. period exceeding 12monthsfromthedate considered theCompany’sprospects fora In formingtheirview, thedirectors have in preparingtheannualfinancial statements. adopt thegoingconcernbasisof accounting for theforeseeablefuture,they continueto resources tocontinueinoperationalexistence expectation thattheCompanyhasadequate As theDirectorshaveareasonable economic andpoliticaloutlook. successfully despitethecurrentuncertain well placedtomanageitsbusinessrisks The DirectorsbelievethattheCompanyis turmoil, andthisisexpected tocontinue. management inspiteoftherecentmarket generate organicgrowthinclientfundsunder In 2010,theGrouphascontinuedto operations. debt facilitiestocontinuefinanceits Company isnotreliantontherenewalof £6.2million). The of totalequity(2009: 31 December2010which represents1.7% unsecured termloanof£3.1millionat statements showsthattheCompanyhasan annually. Note21totheconsolidatedfinancial disclosures Company publishesPillarIII of certainextreme stressscenarios.The assessments which includethemodelling and performsannualcapitaladequacy The CompanyisregulatedbytheFSA further details. consolidated financialstatementsprovide page 11.Inaddition,notes28and29tothe are alsodescribedinthebusinessreviewon facilities liquidity position,risksandborrowing position oftheGroup,itscashflows,capital, set outinthebusinessreview. The financial development, performanceandpositionare with thefactorslikelytoaffect itsfuture The Group’sbusinessactivities, together Going concernbasis to £3.1millionin2010. investment securitiesincreasedby6.9% remained minimal.The valueof ourequity throughout theyear. Currencyriskshave rate riskadheringtoagreedtolerancelimits policy inrespectofmanaginginterest hasmaintaineditsconservative Rathbones Market risk Adequacy Assessmentregime. in respectoftheFSA’s InternalLiquidity the year. hasmetall deadlines Rathbones managed wellwithintolerancesthroughout with astrongliquidityprofile.Liquiditywas remainshighlycashgenerative Rathbones Liquidity risk

Investment Management Unit Trusts Trust and Tax Services Operations and resources Taxation Dividend Capital management Treasury and financing Liquidity and cash flow Pensions Risks Going concern basis Rathbone Brothers Plc 23 Business review Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 24 Directors Chairman Directors Chief Executive Board Committees Executive Directors Non-executive Directors more The for analyse Group Committee Paul Ian Chief The Executive Committee on from annual reviewed have by a authority Committees. Executive, The Committees Board Nomination of Stockbrokers of plc. and Non-executive appointed following Board Executive In CL-Alexanders Lyonnais 1968 for He on from purposes and Mark Powell Chairman

list

1989

the Private

the

the 11

submission private Buckley, has

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four Executive Executive

Stockton.

the the of formal

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basis.

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principal Company’s Board

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2011.

former joined

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monitor Investment

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all

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Chavasse, and throughout

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delegated Richard

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Plc

Stockbrokers Private plc also Chief to private Director Financier, 13 joining Marwick, qualified Social Andy Pomfret Chief Executive

out Andy Kathryn Caroline are Current Nomination Committee Remuneration Full Kathryn Kate Committee Current Remuneration Committee in Matthews. Caroline are Current Audit Committee

the the

years and

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members members members

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Powell Director Nomination Venture

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are a Oliver committee

chartered (APCIMS). Investment its

Kleinwort

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Capitalist

October in and details

Mark Co.

the

the the the its the

July are

committee day

Harrel

Corbett, Mark report.

1999

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work accountant

Pomfret,

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Burton Chief

Nomination Remuneration Audit

Association Nicholls

set

and Managers

1999,

Committee.

to management

David

2004.

was

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Director

its Nicholls. out

Kate day

KPMG).

are of

and

which Kate

Executive. Committee the

David

role (chairman),

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appointed

latterly in

affairs aged Harrel, set report.

and

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the

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He Harrel, Prior

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to investment to pension he to Richard Lanyon appointed Portfolio the NatWest After NatWest, for Paul Chavasse Assurance 2001. Plc. of to of (now accountant Committee. and responsible Ian Buckley Executive Directors

the concentrate Framlington 1995, EFG Smith

was

the

Group He is

KPMG) a

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institutional period the was

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funds.

Management & and and

which

is to

Friendly Williamson chairman

management Board with

He for appointed

2001 the

in Coutts, subsequently

in in committee

Group He on Bank risk

March qualified

was

1975.

Peat, the Board

private member Laurence business. Investment responsibility the Richard He infrastructure investment responsible the Paul business. its the Trust Chief Ian

joined

fund was management Society.

private later

of his Limited pensions

Plc

started Buckley, Marwick,

Director Chief Director

1996. for He in

Chavasse, the in

as and

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as final

Bristol. and

the

member the client

merged in ten

September

was

Lanyon,

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responsible

Chief

Group’s

client 1986 Initially He Operating Tax Prust,

Group

and Board chartered role was his years

operations, Management

responsible for

Chief aged with

and

Mitchell discretionary

for business

and

career

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Tenon

businesses the before with

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appointed aged of

where

aged

advisory Rathbones’

NatWest

with overall from IT

was

60,

facilities. Executive Family

the

2001. marketing Group’s

moved Director

arm Steering 1992 December

Gartmore. Officer

for

46,

working

Group

59,

1985 joining Group’s

IT and

Co.

for of

Andrew Morris to Rathbones Finance for in later. Finance becoming Old Paul Stockton Asset 2000. He to Bank, client Jersey. Richard Smeeton Competence Group’s in management career client Liverpool.

November 2003, its the

Euroclear

was Mutual

Following acquisition

portfolios. portfolios. he Committee.

Board He

at He

appointed Business

Director Director

he joined

Rathbones

He chairs Director

also in

Plc left

2000. Committees. in and also August

the September

manages Brussels in Laurence

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by the of of

was Continuity

Group 2005 business Investment management responsibility, has, Richard Edinburgh, Aberdeen, Management for is in PricewaterhouseCoopers chartered He is Paul Andrew

manages

sale

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the the Group’s

1992.

the

2008 Finance Rathbones’

qualified

appointed

private Stockton,

is Pearl

trained of

spent

Director Finance

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Board and

a chairman his

Keen

Gerrard Smeeton, Morris,

2008.

large In

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2001

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entire

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November Division 1988 Controller, the to

number the

eight

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appointed and Barclays

the

and Group’s

and

45,

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working

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prior

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months

46,

Chairman Chief Executive Board Committees Executive Directors Non-executive Directors 25 Directors Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 26 Directors Chairman Chief Executive Board Committees Executive Directors Non-executive Directors

David Harrel Non-executive Directors 2000 Scottish until Director Caroline Burton and appointed of Holdings She until Non-executive wealth 2009, on joined Barclays Kate Avery Independent independent. December Foundation. Opera member Wichford appointments. consultant Remuneration to the Investment She Criminal for

be the

its

the

Board

is is is 1999. its

independent.

main

and Newcastle

considered

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management. National sale

in Non-executive Metropolitan Intelligence of

Stockbrokers. Plc Limited

to in was

to charge 2007 a the board Trust She

and

November trustee the Director and

He the

He Committee.

an Director a

Board

was Chairman was Crime

Group

Board member Plc. was General and

firm.

and

Building The

for infrastructure to is of one David Plc with industry. within is Caroline Bank Managing eighteen where her role in and Kate of

She

appointed a

of a

also 1992. be Service

investments

She

She eight

appointed in

Property a of Kyte

where David Non-executive career highly

was Squad in of

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the

She

on with Non-executive Executive Director considered Avery, is 2003 independent.

December

Trust

Harrel, the

the Berwin

2006 she

a the Group

was of also

chairman

of Society.

years Clore Group

She Director made Burton,

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asset

until January Director experienced she Openwork

with founding

worked

and

Company

and aged

appointed

served

to Plc

relinquished

and

spent

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fund

service of

Plc

LLP a

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until

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was

Senior the March from

Limited, Director

Barclays

National becoming

is variety

She

management until Group TR

the aged 2008.

of is

51, of

and National

considered

Director in Board 2010

for 62, of January

Executive as

26 be now

the Property The

partners Director

1990 Senior

Exchange

was

June

2008. began 1982,

and

authority

Barclays

2006. Partner served

a 61, some to

years was of

plc

figure

for a

Plc,

this

in other

Investment appointments International. Kathryn Matthews Committee He 2006 He before Managing Kleinwort Donaldson Oliver Corbett to Board Company a of pursue their Royal Investment He Mark Nicholls 2010 She and UK Limited, companies Non-executive and

Non-executive

be the

was was became

Smaller J Baring

was private

independent.

Bank P and and

West on

joining a

appointed appointed Morgan Fidelity

appointed

plural

PLC. Wasserstein, Director is is

Lufkin including

Managers, Banking

in Asset

December of Companies Bromwich

a equity

considered considered

Prior

December Director with Novae

Scotland

Director career. He

Asian

Chinese Director

Management.

Jenrette)

Kathryn Oliver Mark Pacific Investment most in has Phoenix worked chartered Novae Group S at Cambridge After lawyer

to as to William group,

was of to

in G

investment Linklaters Hermes

that, the Group

chairman

investment

the Values Santander spent

in He Building Warburg 1994. 2010

where

appointed of

recently Investment studying

Nicholls, and

Corbett,

2008.

1984

Board Finance Group and Investment

(ex

leaving

Board she is a

for

M Matthews, be be Securities

and

in Northern number became

accountant currently her

Mercer, and

Japan)

In Plc,

Fund corporate SG

Officer,

he he independent. independent. held October

before and of

Society

in in 1996

She

management, plc. Dresdner

entire

aged law

took

was aged banking, Global

in is

Warburg,

Montanaro Director the to March 1976.

Managers

senior Chief Trust

considered Head

2003 6

is the

for Trust

head at

AXA

aged

(later Asia Investors

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January articles

joining

61,

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Plc. is

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51,

Governance

28 Directors’ report 32 Corporate governance report 38 Remuneration report 47 Audit Committee report 49 Nomination Committee report 50 Corporate responsibility report 60 Statement of Directors’ responsibilities in respect of the report and accounts Rathbone Brothers Plc 27 Governance Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 28 Directors’ report requires aspecialresolutionof shareholders. Association, theCombinedCode,CompaniesActsandrelated legislation.AmendmentoftheArticlesAssociation Regarding theappointmentandreplacementofDirectors, Company isgovernedbytheCompany’sArticlesof back upto2.1millionsharesundercertainstringentconditions. The Boardcurrentlyhastheauthoritytobuy guidance issuedbytheAssociationofBritishInsurerson31December 2008. February 2010)withtheauthoritytoallotafurther14.2million sharesbywayoffullypre-emptiverightsissuesinlinewith The Boardcurrentlyhastheauthoritytoallot14.2millionshares(approximately onethirdoftheissuedsharecapitalat23 provisions oftheArticlesAssociationandprevailinglegislation. There arenospecificrestrictionsonthesizeofashareholdingortransfer coveredbythe ofshares,which areboth vote atgeneralmeetings.Allsharesarefullypaid. The sharescarrynorightstofixedincomeandeach sharecarriestherighttoone 43,296,330). shares wereinissue(2009: The Company’ssharecapitaliscomprisedofoneclassordinaryshares5peach. At 31December2010,43,376,790 Capital structure These dividendsamountto£19,067,000 £18,159,000)–seenote11totheconsolidatedfinancialstatements. (2009: 42.0p)perordinarysharefortheyear.register on17September2010.This resultsintotaldividendsof44.0p(2009: 42.0p)waspaidon6October2010toshareholdersthe register on3May2011.Aninterimdividendof16.0p(2009: nil)on18May2011toshareholdersthe The Directorsrecommendthepaymentofafinaldividend28.0p(2009: £19,628,000). The Groupprofitaftertaxationfortheyearended31December2010was£21,552,000(2009: Group results andCompanydividends Details ofeventsafterthestatementfinancialpositiondatearesetoutinnote33toconsolidatedstatements. Post statementoffinancialpositionevents environmental, A fullreviewoftheGroup’sbusinessactivitiesaresetoutinonpage11.Informationabout Business review planning services. administrationandotherfinancial PensionRathbone &Advisory Services Limitedoffers apensionadviceservice,SIPP TrustRathbone CompanyLimitedprovidesawiderangeoftrust,companymanagementandtaxationservicesintheUK. MultiAssetPortfolio, includingtheRathbone RetailScheme. aNon-UCITS (OEICs) Trust ManagementLimitedandistheAuthorisedCorporateDirectorofanumberOpen EndedInvestmentCompanies Unit manageseightauthorisedunittruststhroughRathbone the investmentadvisertofiveventurecapitaltrusts.Rathbones private bankingservices.The GreenbankInvestments)andis company alsooffers anethicalinvestmentservice(Rathbone InvestmentManagementLimitedisauthorisedandregulatedbytheFinancialServicesAuthorityprovides Rathbone International inJersey. InvestmentManagement andbyRathbone InvestmentManagementLimitedfromelevenofficesintheUK Rathbone The Group’sprincipalactivityis discretionaryinvestmentmanagementforprivateclients,charities andtrustscarriedoutby administration services. of theseclients.The Groupalso providesfinancialplanning,privatebanking,offshorefundmanagementandtrust services andrelatedprofessional advicetoprivateindividuals,trustees,charities, pensionfundsandtheprofessional advisers BrothersPlcistheparentcompanyofagroupcompanieswhich offersRathbone arangeofinvestmentmanagement Group activities Committee report,CorporateresponsibilityreportandDirectors’ statementformpartoftheDirectors’report. business performance,review, Directors’profiles,Corporategovernancereport,AuditCommitteeNomination ataglance,strategyand The informationcontainedinthe Chairman’sstatement,ChiefExecutive’sRathbones Directors’ report

employee

and

social

and

community

issues

are

set

out

the

Corporate

responsibility

report

page

50.

ihls – – – – – themselves forre-election. – – Ian Buckley, Paul ChavasseandDavidHarrelretirebyrotationatthenext AnnualGeneralMeetingand,beingeligible, offer – 8 160 Retirement andre-appointment ofDirectors – addressed tohim.The Boardconsidersthat,withtheexception ofMarkPowell, allNon-executive Directorsareindependent. – The SeniorIndependentDirectorisDavidHarrelandanycommentorenquiryregardingtheaffairs oftheCompanymaybe 1,849 3,623 – – Mark Nicholls willtakeonthisrole. 2,457 – – – Director andChairmanattheconclusionofAnnualGeneral Meetingon11May2011,whenitisintendedthat Meeting on5May2010.JohnsteppeddownfromtheBoard1DecemberMarkPowell istoretireasa – 5,114 Board on1December2010.JamesBarclayandMarkRobertshawsteppeddownfromtheatAnnual – – – Kate Avery andKathryn MatthewswereappointedtotheBoardon6January2010.MarkNicholls wasappointedtothe – – – Kathryn MatthewsandMarkNicholls. Their biographiesareonpages24and26. 116,856 – 55,475 8 101,034 The Directorswithnon-executive responsibilitiesareMarkPowell, Kate Avery, Caroline Burton,OliverCorbett,DavidHarrel, – Non-executive Directors 203,961 1,437 – 3,183 36,813 – 54,218 on 31March – 2010. 8,500 2,457 Richard SmeetonandPaul Stockton. Their biographiesareonpages24and25.Peter Pearson Lund retiredfromtheBoard – The Directorswithexecutive responsibilitiesareAndyPomfret, IanBuckley, Paul Chavasse, Richard Lanyon,Andrew Morris, 379 – Executive Directors – 113,334 116,475 91,490 There werenochanges betweenthedateofthisreportand1March 2011. 50,070 ordateofappointmentiflater 1 212,052 M PNicholls 12,500 K AMatthews 33,056 51,411 D THarrel O RPCorbett C MBurton 251,397 C RAvery Non-executive R PStockton R ISmeeton A DPomfret A TMorris R PLanyon P DGChavasse I MBuckley Executive G MPowell Chairman Table 1.Directors’shareholdings 8 onpage43. changes between31December 2010and16February 2011.DetailsofDirectors’shareoptionsareshownintables7and The interestsofDirectorsand connected personsinthesharecapitalofCompanyareshowntable1.There wereno Directors andtheirinterests

Beneficial Number of5pordinaryshares at 1January2010 1 Non-beneficial Beneficial Number of5pordinaryshares at

31 December2010 General

Non-beneficial

Rathbone Brothers Plc 29 Directors’ report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 30 Directors’ report year was£7.625 to£9.60). £6.68 to£10.94(2009: £8.00)andtherangeduring The midmarketpriceoftheCompany’ssharesat31December2010was£10.94(2009: Share price Secretary bywayofdeed. reflect theseprovisions.Specificindemnities,which areuncapped,havebeengrantedtoallDirectors andtheCompany on2May2007,At theAGM shareholdersapprovedchanges totheCompany’sMemorandumandArticlesofAssociation to repayable ifthecaseislost). associated company, pensionfund orsharescheme. The legislationalsopermittedthefunding ofdefence costs(which are negligence, default,breach ofdutyorbreach oftrust(butnotcriminalfinesorregulatorypenalties)inrespectthatcompany, against anyliabilityincurredbythemtoperson(otherthanthecompanyorassociatedcompany)inconnectionwith On 6April2005changes tocompanylawcameintoeffect which allowedcompaniestoindemnifytheirDirectorsandofficers Indemnification ofDirectors The riskmanagementobjectivesandpoliciesoftheGrouparesetoutinnote28toconsolidatedfinancialstatements. Financial instrumentsandriskmanagement 13days).The31 December2010represented14daysofannualpurchases Company itselfhasnotradecreditors. (2009: daysoftheirinvoicedate.Tradeterms agreedwithsuppliersareforpaymentwithin30 subsidiariesat creditorsoftheUK terms andabidesbythemsubjecttotheresolutionofanydisagreementregardingsupply. Inthemajorityofcases, ensuresthatsuppliersareawareofthose supplier inaccordancewithitsrequirementsandfinancialprocedures.Rathbones doesnotfollowapublished codeorstandardonpaymentpractice.Itspolicyistofixtermsofwitheach Rathbones Policy onthepaymentofcreditors 1,477,812 in 2001andaSaveAsYou EarnScheme launched in2009. aShareIncentivePlanlaunchedThe Companyencouragestheinvolvementofitsemployeesinperformancethroughboth 6,938,467 2,173,950 1,700,574 1,344,818 involvement practicescanbefoundintheCorporateresponsibilityreportonpage57. 15March 2007 Details oftheCompany’semploymentpractices,itspolicyregardingdisabledpersonsandemployee 15October2010 17November2009 Employees 23January2009 13October2009 can befoundintheCorporateresponsibilityreportonpage59. nil).DetailsoftheCompany’scharitable donations No contributionsweremadeforpoliticalpurposesduringtheyear(2009: Political andcharitabledonations There werenochanges betweenthedateofthisreportand1March 2011. Mawer InvestmentManagementLtd. Lloyds BankingGroupplc Legal &GeneralGroupPlc Lindsell Train Ltd. BlackRock Inc. Notifier Table 2.Substantialshareholdingsat16February 2011 and Transparency Rule5.1.2ofthefollowinginterests3%ormoreinvotingrightsCompany. At 16February 2011,theCompanyhadreceivednotificationsinaccordancewithFinancialServicesAuthority’sDisclosure Substantial shareholdings

Date ofnotification Ordinary shares % ofvotingrights 16.03% 3.96% 3.12% 3.50% 5.04%

Registered office:159NewBondStreet,London W1S2UD 16 February 2011 Company Secretary Richard Loader By OrderoftheBoard andavailabletoanswerquestions. the AGM It isanticipatedthatallDirectors,includingthechairmen oftheAudit,RemunerationandNominationCommittees,willbeat withnotlessthan14days’noticeisalsoproposed. seeking theauthoritytoconveneageneralmeeting(otherthanAGM) subjecttolimits).Themarket purchases annualspecialresolution ofordinarysharesundercertainstringentconditions(both The Boardarealsoseekingtorenew, byspecialresolution,theexisting authoritiestowaivepre-emptionrightsandmake Long Term IncentivePlan.Full detailsareintheRemunerationreportandNoticeofAGM. (with anaggregatenominalamountofupto£715,000). They alsoincludeanordinaryresolutionseekingapprovalofanew The resolutionsproposedinclude anordinaryresolutiontogivetheDirectorsauthorityallotup14.3millionshares Special business separate noticeofthemeeting. Full detailsofallresolutionswithaletterexplanation fromtheChairmanandexplanatoryW1S 2UD. notesaresetoutinthe The 2011AnnualGeneralMeeting willbeheldonWednesday 11May2011at12.00noon159NewBondStreet,London Annual General Meeting information andtoestablishthattheauditorisawareofinformation. auditor isunawareandthateach Directorhastakenallreasonablestepstomakehimorherselfawareofanyrelevantaudit The Directorsinofficeatthedate ofsigningthisreportconfirmthatthereisnorelevantauditinformationwhich the Directors tosettheirremunerationwillbeproposedatthe2011AGM. indicated theirwillingnesstocontinueinofficeandordinaryresolutionsreappointingthemasauditorauthorisingthe AuditPlchave AuditPlc,bereappointed.KPMG Committee hasrecommendedtotheBoardthatexisting auditor, KPMG details oftheauditor’sremuneration.Havingreviewedindependenceandeffectiveness oftheexternal auditor, theAudit monitoring theGroup’suseofauditorfornon-auditservices.Note7toconsolidatedfinancialstatementssetsout The AuditCommitteereviews the appointmentofexternal auditorandtheirrelationshipwiththeGroup,including Auditor

Rathbone Brothers Plc 31 Directors’ report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 32 Corporate governance report Non-executive Directors,ledbytheSeniorIndependent Director, carryoutan appraisaloftheperformance theChairman. or Chairman(fortheNon-executive Directors)each yearandinvolvesmeetingswitheach Directoronaonetobasis.The Individual appraisalofeach Director’sperformanceisundertaken eitherbytheChiefExecutive(forDirectors) gain afreshperspectiveonthe operationoftheBoardfromnewNon-executive Directors. oversight duringthe‘creditcrunch’. The 2010questionnairewasofamoregeneralnature andwasparticularlydesignedto andonBoard London reviewfocused onthemajorcorporatetransactionin2009 basedcorporateadvisoryfirm.The 2009 In 2010,aninternalquestionnairewasusedwhich wasdevelopedandexecuted withassistancefromLintstock Limited,a The Board,AuditandRemunerationCommitteescarryoutappraisalsoftheiroperationperformance onanannualbasis. performanceBoard ofsubsidiarycompanies. by theboards and financialstatements,companyacquisitionsdisposals, major capitalexpenditure and thereviewofdecisionstaken These includedeterminationoftheGroup’saimsandstrategytobeadoptedinachieving thoseaims,reviewsofbudgets The Boardhasaformalschedule ofmattersreservedforitsattention,which coverskeyareasoftheGroup’sbusiness. Chairman orExecutiveDirectorswhich remainunresolvedafteranapproach throughthenormalchannels. Director isDavidHarrelwhoavailabletoshareholdersiftheyhaveconcernsthatwouldrathernotaddressthe as wellmanagementactionsandperformance,includingresourcingstandardsofconduct.The SeniorIndependent information theyneedtoperformtheirduties.They bringanindependentjudgementtobearonGrouppoliciesandstrategies The Non-executive Directorsparticipatefullywiththeirexecutive colleaguesinBoardmeetingsandhaveaccesstoany (as explained above). The BoardconsidersthatalloftheNon-executive Directorsareindependentwiththeexception ofMarkPowell and theChiefExecutiveforrunningofbusinessimplementationBoardstrategypolicy. and agreedbytheBoard.The ChairmanisprimarilyresponsiblefortheworkingofBoardanditsdevelopmentstrategy The rolesofChairman,MarkPowell, andChiefExecutive,AndyPomfret, areseparatedandclearlydefinedinwriting The BoardcurrentlyconsistsofaNon-executive Chairman,sevenExecutiveDirectorsandsixotherNon-executive Directors. membership Board Chief Executivepresent. Chief Executiveisgenerallyheld.The Non-executive DirectorsalsohaveinformalmeetingswithouttheChairmanor where noformalBoardmeetingisscheduled, aninformalmeetingoftheNon-executive DirectorsandtheChairman The Boardmeetsaminimumofseventimesperannumwithonemeetingdevotedentirelytostrategicissues.Inmonths meetings Board Code andappliestoaccountingperiodsbeginningonorafter29June2010. CorporateGovernanceCodeinJune2010which replacestheCombined The FinancialReportingCouncilissuedtheUK willbeindependentNon-executive therewillbe13DirectorsontheBoardofwhich Directors. six(46%) AGM, making theachievement ofthe Codetargetdifficult.Following theretirementofMarkPowell fromtheBoardafter2011 practitioners fromwithintheoperatingsubsidiariesonBoarddoesresultinasizeablenumberofExecutiveDirectors, least halftheBoard,excluding theChairman,shouldbeindependentNon-executive Directors.The numberofsenior There arecurrently14Directors, ofwhich six(43%)areindependentNon-executive Directors. The Coderequiresthatat (Provision A.3.2) Composition oftheBoard employee andExecutiveDirectoroftheCompanysince1995. The currentChairmandidnot, on appointment,meettheindependencecriteriasetoutinCodesincehehadbeenan Independence oftheChairmanonappointment(Provision A.2.2) two exceptions which appliedthroughouttheyear: The DirectorsbelievetheCompany wasincompliancewithSection1oftheCodethroughoutyearfollowing and supportingprincipleshavebeenappliedaresetoutintheGovernancesectionsofreportaccounts. Council bytheFinancialReporting The revisedCombinedCodeon CorporateGovernance(theCode)wasissuedinJune2008 The CombinedCodecompliancestatement 16 February 2011. In relationtocompliancewiththeCombinedCodethisreporttogetherDirectors’statespositionat Corporate governancereport (FRC) and applies for reporting periods beginning on or after 29 June 2008. Explanations of how the Code

principles

A registerofactualorpotentialconflictsnotifiedandauthorised ismaintainedandreviewedregularlybytheBoard. the Company’ssuccess.The Directorsarealsoabletoimposelimitsorconditionswhengiving authorisation. and intakingthedecisionDirectorsmustactawaywhich theyconsider, ingoodfaith, willbemostlikelytopromote independent Directors(thosewhohavenointerestinthematter beingconsidered)areabletotaketherelevantdecision, There aresafeguards which applywhenDirectorsdecidewhethertoauthoriseaconflictorpotentialconflict.Only of duty. on7May2008. Shareholdersapprovedthenecessarychanges totheCompany’sArticlesofAssociationatAGM allows theArticlesofAssociationtocontainotherprovisionsfordealingwithDirectors’conflictsinterestavoidabreach a Director’sconflictorpotentialofinterestwheretheArticles indirect interestthatconflictsorpossiblymayconflictwiththeCompany’sinterests.The ActallowstheBoardtoauthorise (theAct)toavoidasituationwherehehas,orcanhave,direct A DirectorhasadutyundertheCompaniesAct2006 Conficts ofinterest Committee report. David Harrel,Kathryn Matthews,MarkNicholls andAndyPomfret. Full detailsofitsroleare setoutintheNomination Current membersoftheNominationCommitteeareMarkPowell (chairman), Kate Avery, CarolineBurton,OliverCorbett, Nomination Committee Kathryn MatthewsandMarkNicholls. Full detailsofitsrolearesetoutintheRemunerationreport. Current membersoftheRemunerationCommitteeareCarolineBurton(chairman), Kate Avery, OliverCorbett,DavidHarrel, Remuneration Committee Kathryn Matthews.DetailsofitsworkaresetoutintheAuditCommitteereport. Current membersoftheAuditCommitteeareOliverCorbett(chairman), Kate Avery, CarolineBurton,DavidHarreland Audit Committee by theBoard.The ExecutiveCommittee meetsmonthlyandmorefrequentlywhenrequired. businesses onacontinuingbasisandtoanalyseplanallbusinessproposalsindetailforsubmissionconsideration Richard LanyonandPaul Stockton. The purposeoftheExecutiveCommitteeistomonitoreveryaspectGroup The ExecutiveCommitteeischaired bytheChiefExecutive,AndyPomfret, andcomprisesIanBuckley, Paul Chavasse, Executive Committee annual basis.These areavailable onrequestfromtheCompany’sregisteredofficeandGroupwebsite. Board. The otherBoardCommittees haveformaltermsofreference, which arereviewedand approvedbytheBoardonan delegated fullauthoritytotheExecutiveCommittee,subjectalistofmatters The fourprincipalBoardCommittees aretheExecutive,Audit,RemunerationandNominationCommittees.The Boardhas Committees Board of systemsandkeybusinessprocesses. business. This includesmeeting staffinanumberofkeybusinessareas,attendanceatroutinemeetingsanddemonstrations New Directorsareinvolvedinathoroughinductionprocessdesignedtoenablethembecomequickly familiarwiththe specificissuesandindustry,Rathbones’ marketandregulatorychanges. standards forthisexceed regulatory requirements.Training anddevelopmentincludeactivitiestokeepupdatewith enhanced. AllDirectorsarerequiredtodedicateacertainnumberofhourstheirowndevelopment–internallyestablished iscommittedtothetraininganddevelopmentofallstaffensureprofessional standardsaremaintainedand Rathbones trainingBoard ofAssociationcontainaprovisiontothiseffect andalso which arereservedfordecision bythefull

Rathbone Brothers Plc 33 Corporate governance report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 34 Corporate governance report Process withsomeoftheriskscoveredsetoutbelow. (ICAAP) The overallriskappetiteis assessed tobelowmedium. The BoardhavearticulatedtheirdetailedriskappetitetotheFSA aspartoftheIndividualCapitalAdequacyAssessment Risk appetite canvasses theviewsofNon-executive Directorsupontheadequacyofmanagementinformation. sufficient andtimelyinformationregardingcorporatebusiness issuestoenablethemdischarge theirdutiesand and notabsoluteassuranceagainstmaterialmisstatementorloss. The Chairmanensuresthat Boardmembersreceive designed tomanageratherthaneliminatetheriskoffailure achieve businessobjectivesand canonlyprovidereasonable The BoardofDirectorshasoverallresponsibilityfortheGroup’ssystemsinternalcontrol.However, such systemsare Risk managementandinternalcontrol vote andonthewebsite. Votes aretakenonashowofhands (unlessapollisrequested)andfulldetailsofproxy votingfiguresaredisclosedafterthe welcomes questionsandcommentsfromshareholders. Every effortismadetoensurethatallBoardmembers,andinparticularcommitteechairmen, areatthemeeting.The Board for each substantiallyseparateissue. isgiventoallowtimeforproperconsiderationoftheresolutionsbyshareholders.Separateareproposed the AGM AtAll shareholdershavetheopportunitytomeetNon-executive least20businessdays’noticeof DirectorsattheAGM. and tointroduceotherDirectorsincludingNon-executive Directors.Feedback fromthesemeetingsisreportedtotheBoard. are alsoonthewebsite.Meetingswithmajorshareholdersprovideanopportunitytodiscussgovernanceandstrategyissues given tomajorshareholders,investmentmanagers,analystsandemployees.The presentationpacks usedandanywebcasts report andaccountswillbeavailableonline.Following thepublicationofinterimandfullyearresults,presentationsare versionofthe2010 announcements, pressreleasesandfinancialreportsareavailableontheGroupwebsite.AnHTML The Companyiscommittedtoensuringthatthereeffective communicationwithallshareholders.Allregulatorynews Shareholder relations Scheduled monthlymeeting 2 Scheduled bi-monthlymeeting 1 R PStockton R ISmeeton M Robertshaw G MPowell A DPomfret P GPearson Lund M PNicholls A TMorris J MMay K AMatthews R PLanyon D THarrel O RPCorbett P DGChavasse C MBurton I MBuckley J CBarclay C RAvery Table meetingandcommitteeattendancein2010 1.Board is decidedbytheBoard. and compliancewithrulesregulationsapplicabletotheCompany. AnyremovalorappointmentoftheCompanySecretary at theCompany’sexpense. The CompanySecretaryisresponsibletotheBoardforensuringproceduresarefollowed access totheadviceandservicesofCompanySecretarymayseekindependentprofessional advice,ifnecessary, The Companyhasappropriate insurancecoverinplacerespectoflegalactionagainstitsDirectors.AnyDirectorhas issues Other Board

Plc Board 2/2 2/2 1/1 6/6 6/7 6/7 6/7 6/7 6/7 2/2 5/7 7/7 7/7 7/7 7/7 7/7 7/7 7/7 1

Executive Committee 12/12 12/12 11/12 12/12 11/12 – – – – – – – – – – – – – 2

Audit Committee 2/2 5/5 3/5 5/5 5/5 1/2 4/5 – – – – – – – – – – – Remuneration Committee 2/2 1/1 5/5 4/5 4/5 5/5 1/2 4/5 – – – – – – – – – – Nomination Committee

0/0 1/2 2/2 0/0 1/2 2/2 2/2 2/2 2/2 0/0 2/2

– – – – – – -

C Very low Low Medium Will occur High Very high Table 2.Riskscoring theAuditCommitteewhich, ontheBoard’sbehalf,examines theeffectiveness ofthesystemscontrolas • anappropriatelyskilledandstaffed internalauditdepartment;and • independentreviewsofoperationalsystemsandcontrols; • aconfidentialreportingpolicy, acolleague’sorGroup which encouragesemployeestoraiseseriousconcernsabout • adefinedsetofpoliciesandproceduresfortreasuryoperationswithlimitsregularlybytheBankingCommittee; • requiredbyFSAprudentialruleswhich anICAAP requiresregularassessmentsoftheamounts,typesanddistribution • themonitoringofkeyriskandperformanceindicators; • dailymonitoringofregulatorycapitalandliquiditylevels,interestratecounterpartyexposures; • anannualbudgeting,regularforecastingandmonthlyfinancialreportingsystemforallGroupdivisions,which enables • whereseniorstaffoverseetheoperationof aformalstructureofcommitteesandsubsidiarycompanyboards • The otherkeyelementsofthe Group’soverallcontrolsystemsinclude: possible forregulatorycapitalassessmentpurposes. risks identifiedtogetherwithalistofotheremergingandissues.The financialimpactsofrisksarealsoassessedwhere if theriskisreducedbyinternalcontrolsorinsurancetogivearesidualscore.Risksarethenrankedandtopten probability ofoccurringanditsimpactifitdoesoccurusinga1–5scoringsystem.The inherentriskscoreisthenreduced A riskregisterismaintainedwhich istheprincipaltoolformonitoringrisks.Each riskisratedbyassessingeach risk’s The riskmanagementprocess to controlormitigatesuch risks. Riskreviewprocedureshavebeeninplacethroughouttheyearandupto16February 2011. ontheidentificationofrisksandstepsbeingtaken at itsquarterlymeetings.ItreportsonaregularbasistotheBoardboth This Committeeisanimportant elementintheGroup’soverallcontrolsystemandundertakesareviewofriskwithinGroup personnel, complianceandinternalaudit.Non-executive Directorsarealsoofteninattendance. which reportstotheBoard.Itcomprises allmembersoftheExecutiveCommitteetogetherwithGroupheads Ian Buckley istheDirectorwith specificresponsibilityforriskmanagement.He chairs theRiskManagementCommittee Risk ManagementCommittee Risk governance Risk managementandinternalcontrol 0 0

Probability of occurrence hart 1.Riskimpact/probabilitymap explained below. company’s practice; of capitalthattheGroupconsidersadequatetocovernatureandlevelriskswhich itisormightbeexposed; trends tobeevaluatedandvariancesactedupon; business onaregularbasis; Very high Very low Medium High Low

2 4 3 1 5

Probability cnro Insignificant 1 A potential1in50yearscenario 10 yearperiod Unlikely tooccurina 2 –5yearperiod Less than50%chance ina a 2yearperiod Greater than50%chance in

continued Very low 1

Low levelrisks Low 2 Impact ofrisk Very severe 5 Score Less than£1.0million Low £1.0million–£2.5million Moderate 2 £2.5million–£10.0 Severe 3 Over£10.0million 4 Medium levelrisks Impact Medium 3 High 4 High levelrisks

Very high 5

5 Score 2 3 4 1

Rathbone Brothers Plc 35 Corporate governance report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 36 Corporate governance report open analysisand discussionofperformance. performance ofthefundsitmanages. These risksarereduced byarobustinvestmentprocesswhich includesregularand UnitTrustIn commonwithallunittrustmanagers, thesuccessofRathbone Managementis highly dependentonthe Poor performance ofRathboneUnitTrust Managementfunds to rigorousreviewandassessment beforeanyrecommendationtotheBoardismade. operational disruptionandtothecultureofbusiness which canbecostly. Potential acquisitionsaresubject Acquisitions createafinancialriskassociatedwiththelowerthan anticipatedtakingonofclients.They canalsocreate Adverse impactofapooracquisition such errors. increase theriskoferror. Documentedprocessesandcontrols andclosemanagementoversightreducetheriskof Increasingly complex accountingandreportingdemands,particularlyintheareasoffinancial andregulatoryreporting, Accounting orregulatoryreportingerror with thecloseinvolvementofuserstoreduceriskcostly developments but continualchange anddevelopmentisneededwhich canbechallenging. Systemchanges areevolutionaryandmade In anincreasinglyITledbusiness,ourcoreinvestmentmanagementsystemisconsideredbymanytobeamarketleader Inappropriate ITstrategy Operational risks professionals alsoreducetheriskofreputationaldamage. and transparentresolutionofanyissuesthatarise.Businessmarketingtheusepublicmediarelations negative publicity. This riskisreducedbygreatermanagementmonitoringofhigheractivitiesandtheswift,open Reputational riskcouldariseformanyreasonsincludingpoorperformanceorservice,regulatorycensureleadingto Damage toRathbones’reputation investment inmarketingordistribution,thelossofkeyprofessionals. new clientsduetopoorperformanceorservice,failurerespondchanges anddemandsinthemarketplace,inadequate operatesinacompetitive marketandthereforethereisariskoflossexisting clientsorfailuretogain Rathbones Competition risk other regulators. andmaintainsclosecontactwiththeFSA isinvolvedwithanumber ofrepresentativeindustrybodies Rathbones significant finesandpenalties.The Group’sprofitabilitycouldbereduced(orincreased)byfutureregulatorychanges. operateinaheavily regulated industryinwhich failure tocomplywithregulatoryrequirementscanlead Rathbones Negative impactofregulation Business risks Clientlitigation Loss ofaninvestmentmanagementteam 10 reputation DamagetoRathbones’ 9 Poor UnitTrust performanceofRathbone funds 8 Competitionrisk 7 Treasury counterpartydefault 6 Adverseimpactofapooracquisition 5 Accountingorregulatoryreportingerror 4 InappropriateITstrategy 3 Negativeimpactofregulation 2 1 Table 3.The top10risks with theirriskcategoriesareshownintable3. are drawnfromeach ofthese risk categoriesandareupdatedmonthly. Top 10risksidentifiedat31December2010together Risks canbebroadlycategorisedunderoneofthreeheadings,businessrisk,operationalriskandfinancialrisk.Top 10risks The top10risks Risk managementandinternalcontrol

continued notmeetingtheneedsofbusiness. Operational Operational Operational Operational Operational Operational

Business Business Business Financial

Category

provisions toallemployees. The Companyhasitsowninternaldealingruleswhich extend theFinancialServicesAuthorityListingRulesModelCode Model code to ensureadherencethestatutesandregulationsrelevanteach oftheGroupcompanies. The BoardtogetherwiththeExecutiveCommitteeandAudithaveimplementedsystemsprocedures InvestmentManagement InternationalLimitedisregulatedbytheJerseyFinancialServicesCommission. Rathbone Exchange Commission. InvestmentManagement LimitedisregisteredasaninvestmentadviserwiththeUSSecuritiesand Rathbone Services LimitedareallauthorisedandregulatedbytheFinancialAuthority. UnitTrust InvestmentManagement Limited,Rathbone Rathbone Pension ManagementLimitedandRathbone &Advisory Regulation summarises howtheGroupmanagesitsfinancialrisk. 31 December2010aresummarisedinthebusinessreviewonpage11.Note28toconsolidatedfinancialstatements The Company’sbusinessactivities,risksanduncertainties,financialperformancein2010thepositionat Going concern andrevisedinOctober2005. published inSeptember1999 identified fromthatreview. This processmeetstherequirementsof‘GuidanceonInternalControl(The Turnbull Guidance)’ since theyearend.Necessaryactionshavebeenorarebeingtakentoremedyanysignificantfailingsweaknesses control inexistence intheGroupforyearended31December2010andhastakenaccountofmaterialdevelopments On behalfoftheBoard,AuditCommitteeconfirmsthatithasreviewedeffectiveness ofthesystemsinternal The riskprofile. businessreviewonpage11 highlightsfactorsintheyearwhich havehadanimpactonRathbones’ other financialrisksarealsoconsideredindetailnote28totheconsolidatedstatements. limits foreach institution.Exposures aremonitoreddailyandreviewedbytheBankingCommitteeeach month.This and aminimumlevel,withexposure It isreducedbytheuseofawiderangefinancialinstitutionswithlongtermratingsabove This riskmainlyarisesfromthe placementofsurplusinvestmentclientcashwhich isheldunderabankingrelationship. Treasury counterpartydefault Financial risks businesspracticereducestheriskofclientdissatisfactionandcomplaint. products. Sound well asrise.Ourinvestmentprocessprovidesguidanceonassetallocationandresearch oninvestmentsandinvestment aim toprovideaninvestmentportfoliothatissuitablefortheirneeds,recognisingthevalueofallinvestmentscanfallas Litigation canbecostly. theirclientsandwill InvestmentManagerswillgatheragooddealofbackground informationabout Client litigation incentive scheme withdeferred awards. by employmentcontractprovisionsandcompetitiveremunerationpackages includingprofitshareandanewbusiness The impactofthelossaninvestment managementteamwouldclearlydependonitssizeandlocation.This riskismitigated Loss ofaninvestmentmanagementteam Risk managementandinternalcontrol

continued

Rathbone Brothers Plc 37 Corporate governance report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 38 Remuneration report of 7.8% toreflect significantadditionalresponsibilities takenonduringthe year. effect from1January2011which wasinlinewiththeaverageincreaseforallemployees. Ian Buckley receivedanincrease oron1January2010.With1 January2009 oneexception, allDirectorsreceivedasalary increase ofapproximately 4% with Directors’basicsalarieswerenotincreasedon andin2009, In viewofthetradingconditions experienced inlate2008 throughout theGroupasawhole andtheinformationobtainedoncomparablecompaniesin financialsector. year orwhenanindividualchanges positionorresponsibility. Indecidingappropriatelevels,the Committeeconsiderssalaries An ExecutiveDirector’sbasicsalaryisdeterminedbytheCommittee andanychange implemented on1Januaryofeach Basic salaryandbenefits The elementsofremunerationpackages aresummarisedbelow. increase risksintheseareasbyinadvertentlymotivatingirresponsible behaviour. issues whenconsideringtheremunerationofExecutiveDirectors butitissatisfiedthattheincentivestructuredoesnot The Committeedoesnotspecificallytakeintoaccountcorporateperformanceonenvironmental, socialandgovernance Retentionprovisionsanduptodate,best practicecontracts – Deferred awards(profitsharingscheme andLTIP) – Directorsareincentivisedtoincrease thedeferred shareelementoftheprofit share – To motivateandretainkeyexecutives. • Deferred awards(LTIP andpartialdeferral ofprofitshare) – Profits forthesepurposesarerealisedandincash – Profit shareratherthanincomebasedbonus – To alignremunerationpracticeswitheffective riskmanagement. • BrothersPlcshares Deferred profitshareinvestedinRathbone – Participation inaLTIP anduseofthetotalshareholderreturnperformancecondition – To aligntheinterestsofDirectorswithshareholdersingeneratinglongtermshareholder value. • Remuneration packages aredesignedtohavethefollowingthreekeycharacteristics: Pension. • Equityincentives. • Profit share. • Basicsalaryandbenefits. • The currentremunerationpackage foranExecutiveDirectorhasfourmainelements: Remuneration packages 11 May2011.Full detailsarebelow. now reached theendofits10yearlife andshareholderapprovalofareplacementLTIP on willbesoughtattheAGM element ofdeferral shares.The withdeferred currentLong awardsinvestedinRathbone Term IncentivePlan(LTIP) has Following consultationwithmajorshareholdersinearly2010,theprofitsharingscheme wasrevisedtointroducean financial servicesindustry. This hasprovidedanopportunitytoreviewandupdateremunerationarrangements. and2010,particularlyinthe There hasbeenconsiderablegovernment andregulatoryfocusonremunerationin2009 develop theCompanysuccessfully. companies inthefinancialsector, which issufficienttoattractandretainthequalityofDirectorneededmanage The aimoftheremunerationpolicy istoprovideacompetitiveremunerationpackage, havingregardtocomparable Remuneration policyfor Executive Directors at meetingsareshownonpage34. five).Detailsofattendance own remunerationisdiscussed.The Committeemetonfiveoccasionsin2010(2009: The ChairmanandChiefExecutive, attheinvitationofCommittee,attendmeetingsbutarenotpresentwhentheir and MarkNicholls joinedtheCommittee ontheirappointmenttotheBoard. (chairman), Kate Avery, OliverCorbett,DavidHarrel,Kathryn MatthewsandMarkNicholls. Kate Avery, Kathryn Matthews (the Committee).The currentmembers oftheCommitteeareindependentNon-executive DirectorsCarolineBurton The Boardhasdelegatedthedetermination ofExecutiveDirectorremunerationtotheRemunerationCommittee Remuneration Committee The BoardpresentstheRemuneration reportfortheyearended31December2010. Remuneration report

26,061 £703,000 23,493 £217,000 2,282 £83,000 £125,666 £8.326 £137,667 6,245 £54,000 £133,000 £8.326 £87,667 4,804 £19,000 £82,000 £8.326 £202,000 2,093 £52,000 2,642 £8.326 £40,000 £8.597 £22,000 5,699 £8.326 £50,000 6,005 £8.597 £19,000 £8.326 4,303 £18,000 £15,000 2,282 £8.597 £8.326 £49,000 2,326 £8.597 £37,000 1,801 Cash equivalent £20,000 £8.597 Final 5,467 £47,000 £8.597 £18,000 Deferred shareaward(shares) 2,093 £13,000 £8.597 Market priceataward £561,000 1,512 Cash equivalent Second interim Deferred shareaward(shares) £1,122,000 £60,000 Market priceataward £113,334 £107,333 £48,000 Cash equivalent £115,000 £62,333 First interim £55,000 £120,000 £226,666 £214,667 – 3yeardeferral £96,000 Deferred shareawards £230,000 £124,667 £110,000 Total award Total deferred shareaward Total cashaward Table 1.Profit share(auditedinformation) 2010. The finalawardwillbemadefollowingtheannouncementof2010results. For 2010,afirstinterimdeferred shareawardwasmadeon31March 2010andasecondinterimawardon6September exercised withinsevenyearsofgrant. additional sharesrepresentingthevalueofdividendsreceivedandreinvestedinrelationtovestedshares).This optionmaybe year endatwhich pointanilpaidoptionwillbegrantedoverthedeferred shareaward(includingafurthernumberof over thedeferral periodfromtheendoffinancialyearaward.Awards vestonthethirdanniversaryoffinancial share awardswilllapseifaDirectoris‘badleaver’. Deferred shareswillattractthemonetaryequivalentofdeclareddividends reflect theperformanceofbusinessandthereforefurtherconditionswerenotnecessary. Halfofdeferred No performancecriteriaareattached tothedeferred shareawards.The Committee’sviewisthatsharepricemovements award. Individualawardsarecappedat200%ofbasicsalary. will bereducedbyamaximumofone-thirdif100%theawardistakenincash.In2010,allparticipantstook cash maybeincreasedattherequestofparticipantbutthiswillcauseoverallawardtoreducedsuch thatthetotal financial year, andfinalawardsmadeshortlyaftertheannouncementofGroup’sresultsforyear. The proportionpaidin cash(onethird)anddeferredAwards shares(twothirds)withinterim,onaccountawardspayableduringthe aremadeinboth Director hasresponsibility(whererelevant)andmarketdatawherethisisavailable. Chairman. They arecalculated takingintoaccounttheperformanceofDirector, theresultsofbusinessforwhich the Awards toindividualDirectors are determinedbytheCommitteefollowingrecommendationsChiefExecutiveand leviesof£3.6millionshouldbeexcluded fromthecalculation. FSCS ensure thatitappropriatelyreflectsunderlyingbusinessperformance.For 2010,theCommitteeagreedthatexceptional The Committeehasthediscretion toadjustthecalculationofGroupprofitbeforetaxforpurposesshare in 2010. in anormalyearthepercentagewouldbearound4%.The percentagefor2010was5%reflectingthestrongperformance awards toallExecutiveDirectorsaremadefromapoolofprofits3–5%Groupprofitbeforetaxwithanexpectation that financialstatements,changesAs explained weremadetotheoperationofthisarrangement.From inour2009 2010, Profit share provision ofcompanycarsisbeingphasedoutasleasecontractsend. providesarangeofbenefitsincludinglife, privatemedicalandpermanenthealthinsurance.TheIn additionRathbones of theChairmanandChiefExecutivearealsotakenintoconsiderationinrespectotherBoardpositions. When settingsalarylevels,useismadeofsurveydataandinformationprovidedbytheadviserstoCommittee.The views Basic salaryandbenefits qiaet £1,0 £2,6 £3,0 £600 2467 2666 1000 £1,122,000 £120,000 £226,666 £214,667 £96,000 £230,000 £124,667 £110,000 (cash equivalent) Total deferred shareaward

1500 1700 3500 1400 3200 3000 1000 £1,683,000 £180,000 £340,000 £322,000 £144,000 £345,000 £187,000 £165,000

continued

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

Total

Rathbone Brothers Plc 39 Remuneration report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 40 Remuneration report (via most appropriate andTSR is with straightlinevestingbetween thesetwopoints.The Committee considerthatthecombinationofEPS matched. TSR There exceeds isfullvesting iftheRathbones thatoftheIndex by10%(in absoluteratherthanrelativeterms) is comparedwiththeFTSE AllShareTotal withthresholdvestingof 25%oftheawardifIndex is ReturnIndex (TRI) performancetargetisunchanged,Whilst theTSR performancetargethasbeenrevised.The theEPS TSR oftheCompany of salaryotherthaninexceptional circumstanceswhentheCommitteeconsiderthata100% limitwouldbeappropriate. arebroadlyunchanged.of theproposedplan,which Awards aresetoutindetailtheNoticeofAGM, arelimitedto 75% Whilst therulesofproposednewLTIP havebeenupdatedandrevisedtoreflectcurrentpractice,themainfeatures are reinvested. thechange inthesharepriceanddividends,assumingthatthey of theoverallreturntoshareholders.Itreflectsboth andrelativetotalshareholderreturn(TSR) measuredagainsttheFTSE AllShareIndex.per share(EPS) TSR isameasure to each participant(theactualaward).The performancetargetsusedtodatehavebeenamixtureofgrowthinearnings that cycle.The extent towhich thetargetshavebeenachieved determinestheactualnumberofshares(ifany)attributable basic salary. At theendofeach plancycle,theCompany’sperformanceisassessedagainst the performancetargetsfor the Under thecurrentLTIP arrangements,ExecutiveDirectorsareprovisionallyawardedrightstoacquireordinarysharesat the AGM. therefore proposedtointroduceareplacementLTIP witheffect from1January2011,subjecttoshareholderapprovalat The currentLTIP wasapprovedbyshareholdersin2000andnoawardsmaybemadeafterNovember2010.Itis Long Term IncentivePlan(LTIP) Equity incentives Duringtheyear, retirementbenefitsaccruedundermoneypurchase three) schemes inrelationtothreedirectors(2009: 4 matching sharesawardedonaoneforbasisto Benefitsincludetheprovision ofacompanycarandmedicalinsurance.They alsoincludethevalueofSIP 3 This isthecashequivalentofdeferred shareawardsatthedateofaward.Deferred shareawardsvestafterthreeyears 2 Reviewedannuallyon1January 1 oethw Total M Robertshaw M PNicholls J MMay K AMatthews D THarrel O RPCorbett C MBurton J CBarclay C RAvery Non-executive R PStockton R ISmeeton P GPearson Lund A TMorris R PLanyon P DGChavasse I MBuckley A DPomfret (ChiefExecutive) Executive G MPowell Chairman Table 2.Directors’remuneration(auditedinformation) Profit share match partnershipsharesacquired uptoamaximumof£1,500perannum

start TSR). of

continued a three

as year

ensures plan cycle

not

only (the

focus provisional

on 2,029 Salary or fee £’000 188 230 184 219 210 231 311 165

a 40 40 12 32 35 43 12 35 37

key 5 award). 1

financial sharing – cash Profit £’000 561 114 115 107 The 60 48 62 55 – – – – – – – – – – –

maximum driver – deferred 1,122 sharing shares Profit

£’000 230 226 120 125 110 215 (via 96 – – – – – – – – – – –

2 value EPS), Benefits

£’000 of but 43 17 a – – – – 1 2 – – – 2 3 3 3 3 3 3 3

also

provisional

alignment 3,755 349 £’000 168 402 636 553 421 352 578 2010 total 36 40 12 32 45 12 35 42 37 5 – 40 45 42 37 – 298 418 156 287 429 311 272 469 168 £’000 total 2009 37 – 35

award

of 3,044

shareholder is 75%

contributions pension of £’000 2010 a 21 21 37 79

interests

– – – – – – – – – – – – – – – participant’s – – – – – – 21 – – – – – 24 37 – £’000 pension 2009 4 – – –

contributions

to 49.76p in2010andsonoawardwaspayableforthiselement oftheplan. decreasedfrom76.54pof theFTSE oftheTSR AllShareIndex element.BasicEPS resultinginanawardof48.8% in2007 The TSR forthethreeyearperiodwas19.8%,which rankedtheCompanyat62.2percentilerelativetoconstituents plancycle 2008/10 37.5% orover Over 15%butlessthan37.5% 15% Less than15% growthovertheplancycle EPS EPS b plus10% Equal toorgreaterthanthepercentagechange intheFTSE AllShareTRI by0.1%to9.9% Greater thanthepercentagechange intheFTSE AllShareTRI Equal tothepercentagechange intheFTSE AllShareTRI Below thepercentagechange intheFTSE AllShareTRI All ShareTRI relativetotheFTSE Rathbone BrothersPlcTRI TSR a growthovertheplancycle EPS b TSR overtheplancycle a Table 4.Proposed LTIP performancetargets (2011/13onwards) 37.5% orover Over 15%butlessthan37.5% 15% Less than15% growthovertheplancycle EPS EPS b the75thAt orabove percentile Between the50thand75th percentiles Below the50thpercentile All ShareIndex rankingrelativetotheconstituentsofFTSE TSR TSR a growthovertheplancycle EPS b TSR overtheplancycle a Table 3.LTIP performancetargets(2005/07 to2010/12) will notbeexercised. ordinaryshares).Dividendentitlementsinrespect ofthisholdinghavebeenwaivedandvotingrights 42,693 (2009: 31 December2010,thetrustee,InvestecTrust BrothersPlcordinaryshares Rathbone (Jersey)Limited,held112,693 theprofitsharingscheme andLTIPShares forboth BrothersPlcSettlementinJersey. areheldbyThe Rathbone On lapse oncessationofemployment. participant wasnotanExecutiveDirectorforthewholeplancycle.Inallothercircumstances,anyprovisionalawardwould the awardbasedonperformanceduringplancycleasawholebutreducedproratatoreflectfactthat deems tobeappropriate,theawardshallnormallycontinueineffect andvestontheoriginaldatesetforvestingbutwith (or earlierwiththeCompany’sconsent),ill-health,redundancyordeath,any If aparticipantceasestobeemployedasanExecutiveDirectorbyreasonofretirementatnormalage Equity incentives and2010/12 plancyclesaresetoutintable5. Details oftheprovisionalawards forthe2009/11 and2010/12 plancycles 2009/11

continued othercircumstanceswhich the Committee Vesting of award (EPS element) Vesting ofaward(EPS element) Vesting ofaward(EPS Vesting of award (TSR element) Vesting ofaward(TSR element) Vesting ofaward(TSR Straight lineincrease Straight lineincrease Straight lineincrease Straight lineincrease

% ofaward % ofaward

100% 100% 100% 100% 25% 25% 50% 50% 25% 50% 50%

0% 0% 0% 0%

Rathbone Brothers Plc 41 Remuneration report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 42 Remuneration report It isanticipatedthatafurthergrantwillbemadeinMarch 2011followingtheannouncement ofthe2010results. As You EarnorSAYE Plan)onthesametermsasallotheremployees.DetailsofgrantstoDirectors areshownintable7. SavingsRelatedShareOptionPlan (commonlyknownasaSave Executive DirectorsmayalsoparticipateintheRathbones are includedinthetableofDirectors’shareinterestsonpage29. shares growthovertherateofinflation.SIP sharesarealsooffered toemployeesifthereisyear onyearEPS related SIP purchase sharesintheCompanyandcurrentlythesearematched onaoneforbasisbytheCompany. Performance onthesametermsasallotheremployees.This allowsallemployeesto All DirectorsareentitledtotakepartintheSIP andSavingsRelatedShareOptionPlan(SaveAsYouShare IncentivePlan(SIP) Earn) Total 2009 2008 2007 2006 Year ofaward (audited information) Table 6.Awards heldbyPeter Pearson Lund undertheRathboneUnitTrust Plan ManagementDeferredBonus his retirement. Management Limiteddeferred profitsharingplanratherthantheLTIP. Asa‘goodleaver’hisoutstanding awardsvestedon Peter Pearson Lund, UnitTrust whoretiredfromtheBoardon31March 2010,participatedintheRathbone Long termincentivearrangementsforPeter Pearson Lund March 2011.The performanceconditionsforthe2007/09 planwerenotsatisfiedandnoawardwasthereforemadein2010respectofthisplan. planwillbemadein provisional awardistheaveragemid-marketpriceover20dealingdayspriortostartofplan. Actualawardsforthe2008/10 Director forthewholeplancycle.The valueoftheseawardswhenmadewas75% ofaparticipant’sbasicsalary. The marketvalueofsharesatthedate The provisionalLTIP arethemaximumawardsachievable assumingallperformancetargetsaremetandthattheparticipantisanExecutive awardslistedabove Market valueofsharesatdateprovisionalaward Total R PStockton R ISmeeton A DPomfret A TMorris R PLanyon P DGChavasse I MBuckley Status Plan cycle Table 5.LTIP actualandprovisionalawardsofordinaryshares(auditedinformation) in trust.Expectedactualawardsaredifficulttopredictwithanyaccuracy. at 31December2010.Inpractice,awardsundertheLTIP areintendedtobesatisfiedusingmarketpurchased sharesheld 0.9%)oftheissuedsharecapital wouldbeawarded,representing0.7%(2009: 393,346) ordinaryshares(2009: 285,149 Were themaximumpossibleprovisionalawardstobemadeinsharescurrentandformerDirectorsasshowntable5, Participation intheLTIP isconditionalontheDirectorsigninganewserviceagreement. will betreatedashavingbeenmadeon1March 2011usingtheaveragesharepricein20dealingdayspriortothatdate. on11May2011.Ifapproved,theawards The 2011/13awardsaresubject toshareholderapprovaloftheplanatAGM 2011/13 plancycle Equity incentives

continued 9,5 – 9,5 193,493 191,950 158,659 – – – 48,050 191,950 158,659

6,5 – 6,5 489,485 462,557 – 462,557 Awards outstandingat

(£ valueonaward) 1 January2010

861,216

Award madein2010 (£ valueonaward)

–

00 31December2010 Awards vestingin2010 Awards vestingin2010 wr) (£valueoffundsreleased) (£ valueonaward) wr Maximumprovisionalaward Maximumprovisionalaward Actual award 861,216 48,050 £10.75 26,397 2008/10 3,098 5,404 3,617 3,617 3,957 3,957 2,747

908,326 177,296 142,079 18,460 48,052 20,685 20,685 18,905 18,905 16,192 28,247 2009/11 £8.43 Awards outstandingat

(£ valueonaward) 143,070 18,909 19,365 16,904 16,585 28,933 21,187 21,187 2010/12 £8.23

– – – – –

ud ,6 – 996 40/1 40/4 40/1 2.0 – – – – – £10.18 – Table 9.Potential dilutionoverarolling10yearperiod – 10/11/10 827.50p 852.00p guidelines. in linewithABI 813.50p 15/03/15 theLTIPallotted underboth 24/04/11 andSIP. on11May2011 the 15%limitwillbereducedto10%, ItisproposedthatattheAGM 932.50p 15/03/08 24/04/04 than 10%appliestosharesallottedundershareoptionschemes (includingtheSAYE 15/03/05 Plan)andnotmorethan5%toshares 24/04/01 22/08/18 – 9,966 10/04/10 22/08/11 should beissuedforallshareincentiveschemes operatedbytheCompanyinanytenyearperiod. Ofthat15%,notmore 22/08/08 10/04/03 10/04/00 30,000 Currently, andrightsissues) notmorethan15% of theissuedordinarysharecapitalCompany(adjustedforbonus – – – – Dilution – 12,000 P 3 – 10,000 – £8.00)andtherangeduringyearwas£7.625 The mid-marketclosingpriceoftheCompany’sshareson31December2010was£10.94(2009: to 2 10,000 ordateofappointmentiflater 9,966 1 30,000 12,000 P GPearson Lund P GPearson Lund Former Director R PStockton R ISmeeton A TMorris Table 8.Outstandingshareoptionsandmovementsintheyear(auditedinformation) set outintable8.The termsandconditionsofalloptionshaveremainedunchanged duringtheyear. Details ofoutstandingoptionsatthestartandendyeartogetherwithdetailsexercised duringtheyearare may notnormallybeexercised beforethethirdanniversaryofdategrantandexpire onthetenthanniversaryofgrant. of performanceconditionsintheeventachange ofcontrolortheearlyterminationaparticipant’semployment.Options Option grantstoaparticipantintenyearrollingperiodarecappedatfourtimesremuneration.There isnoautomaticwaiving plus3%perannum(orpro rataforanypartthereof). increased inpercentagetermsbymorethantheincreaseRPI immediately priortotheoptiongrantandaccountingperiodthirdanniversaryofhas Options grantedafter21June2004canbeexercised iftheearningspershareofGroupbetweenaccountingperiod plus2%perannum(orprorataforanypartthereof). (RPI) to thedateofnotificationexercise hasincreasedinpercentagetermsbymorethantheincreaseRetailPrice Index Options grantedpriorto21June2004canbeexercised iftheearningspershareofGroupduringperiodfromgrant grants maynowbemade. The Company’sshareoptionscheme wasapprovedbyshareholdersinNovember2000withatenyearlife andsonofurther Share options ordateofappointmentiflater 1 R PStockton R ISmeeton A DPomfret A TMorris R PLanyon P DGChavasse I MBuckley Table 7. (auditedinformation) The RathboneBrothersSavingsRelatedShareOptionPlan2009 Equity incentives Shares allottedinrespectofthe SIP SAYE grants Share optiongrants being to£9.60) £6.68 £10.94 (2009:

Pearson

satisfied

Lund

continued

retired

f xrie xrie xrie xrie date of Exercise Exercise exercise exercise Dateof 31December Lapsed 2010 Exercised At 1January 000 1,0 – 00/0 00/3 00/0 3.0 – – – 932.50p 10/04/10 10/04/03 10/04/00 – 10,000 – 10,000

from 71,966

the

Board 1 2010 Grantedin 1January 5 – – 5 2/20 0/21 0/81 696p 696p 01/08/13 696p 01/02/13 696p 23/12/09 01/08/13 651 696p 01/02/13 01/08/13 01/08/13 23/12/09 01/02/13 696p 01/02/13 1,303 23/12/09 23/12/09 696p – 01/08/13 651 1,303 01/02/13 01/08/13 – 23/12/09 01/02/13 01/08/13 1,303 – 23/12/09 01/02/13 – 1,303 23/12/09 – 1,303 – – – – – – – – – – – – – 651 – 1,303 – 1,303 – 651 1,303 1,303 1,303

ae rc date price date date grant 2010 in2010 in2010

on 10,000

7,817 31

At March

1 00 00 00 00 rn dt dt price date date grant 2010 2010 2010 2010

2010. 22,000 31 December2010

His – (ordinary shares) 1,139,465 2,012,537 Exercised

3,345,587

options 193,585 10 yearsto 39,966

may At f xrie xrie Exercise exercise exercise Dateof 31December Lapsedin in –

exercised 31December2010 % ofissuedshare –

before

alet Latest Earliest t 31December2009 capital at

31 .% 1,071,167 193,585 2,314,537 2.6% 0.4% 4.6% 7.6% 7,817

March At

2011,

subject hrs 31December2009 (ordinaryshares)

alet Latest Earliest

3,579,289

to 10 yearsto

the

performance

condition % ofissuedshare

valueatthe Market

capital at exercise 2.5% 0.4% 5.3% 8.3%

Rathbone Brothers Plc 43 Remuneration report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 44 Remuneration report The increase intransfer valuerepresentstheadditionalcapitalamount lessaDirector’scontributions necessarytofundtheincreaseinaccrued pension 4 inflation The additional pensionearnedintheyearincludingUK 3 inflation The additional pensionearnedintheyearexcluding UK 2 or65basedonservice forthefour participatingDirectorsisthatwhich The wouldbepaidannuallyonretirementatage60 pensionentitlementshownabove 1 five)accruedbenefitsunderdefinedbenefitschemes During 2010,fourDirectors(2009: R ISmeeton A TMorris R PLanyon P DGChavasse Table 10.Directors’accruedbenefitsunderdefinedbenefit schemes(auditedinformation) employees,deathinservicecoverhasbeenextended toage65forthosethatstayinservicebeyond60. for allUK taken action,whererequired,toensurethatthepensionarrangements forstaffconformtothenewregime.Where possible, Following assumptions forinflation,post-retirementdiscountratesandfuture mortality. unfunded pensionpromisesorsimilararrangementsforDirectors. The increasesintransfer valuesaremainlyduetochanged shown intable10.There havebeennochanges inthetermsofDirectors’pensionentitlementsduringyear. There areno The changes ListingAuthority, inpensionentitlementsarisingthefinancialyear, requiredtobedisclosedbytheUK are Customs maximumlimits,whereapplicable. Revenueand pays annualcontributionsof11.5%salarytothoseschemes, subjecttoHM contribution plan.Rathbones arrangements underself-investedpersonalpensionschemes whilstPaul Stockton isamemberoftheGroupdefined and Paul Stockton participateintheScheme fordeathinservicebenefitsonly. IanBuckley andAndyPomfret have Paul Chavasse,Richard Lanyon,AndrewMorrisandRichard SmeetonaremembersoftheScheme. IanBuckley, AndyPomfret Scottish Since 1April2002,newemployeeshavebeenoffered membershipofaGroupdefinedcontributionplan,establishedwith Details oftheCompany’scontributionsaresetoutinnote25toconsolidatedfinancialstatements. withanormalretirementageof65ratherthan60. revalued earnings(CARE) (but continuingtocontributeat5%).With futureservicebenefitsarebasedoncareeraverage effect from1July2009, orswitching toa1/70th andto8%from 1January2008) at 1April2006 accrualrateforfuturepensionableservice accrual rate(butincreasingtheircontributionfrom5%to6.5% were giventhechoice ofeitherremainingona1/60th foreach yearofmembership.With theaccrualratewas1/60th Prior to1April2006, employees effect from1April2006, (the Scheme). The withapensionbasedonfinalpensionablesalary. Scheme providesformemberstoretireattheageof60 1987 priorto1April2002wereoffered Pension membershipoftheRathbone employeeswhojoinedRathbones SchemeUK Dec2008 31 Pension arrangements 31Dec2007 used asaperformancecomparatorforLTIP plancyclessince2005/07. on receipt.The FTSE AllShareIndex hasbeenselectedasacomparatoritissuitablybroad marketindex andhasbeen Chart 1showstheCompany’sTSR againsttheFTSE AllShareIndex. TSR iscalculatedassumingthatdividendsarereinvested 31Dec2006 FTSE AllShare–Total ShareholderReturn 31 Dec2005 -20 -10 0 10 20 30 40 Chart 1.Total overthelastfivefinancialyears ShareholderReturn(TSR) Dilution % that aDirectorwould takewithhimaspartofthetotaltransfer value ifheweretoleavetheCompanyand movehisbenefitstoanotherscheme to 31December2010(ornormalretirement date,ifearlier) BrothersPlc–TotalRathbone ShareholderReturn

continued

Widows. the introduction

the

case of

of the Directors’ less benefitsat benefitsat Directors’ including excluding benefit at 31/12/10 serviceat 31/12/10 Ageat 31/12/10 6 2 797 ,2 794 148 ,5,6 9995 185,503 156,322 949,965 65,834 954,767 291,765 1,152,468 51,438 1,125,649 429,967 1,640,578 18,034 1,950,109 514,401 7,984 92,427 4,826 23,222 7,310 4,627 4,542 1,903 4,142 77,917 2,993 65,722 22 73,302 22 36,813 19 10 46 46 59 46

certain Government’s

Directors cre transfer value ofaccrued ofaccrued of2less benefits benefits Accrued Years of

simplification and

senior

staff, of au Increasein Transfer value accrued Transfer value Transfer value accrued Increasein Increasein 1 inflation

the the

pension Group 2 inflation

contributes taxation 3 otiuin 3/21 3/20 contributions 31/12/09 31/12/10 contributions regime

their 09 31Dec2010 31Dec2009 on

personal

6 April

2006 pension

the

arrangements. Company

has

remuneration. Deloittealsoprovides occasionaladhocadvice,particularlyonsharescheme issues.The appointmentis one RemunerationCommitteemeetingperannumandadvise on bestpracticeandlatestdevelopmentsinseniorexecutive The RemunerationCommitteehasappointedDeloitteLLP (Deloitte)asadviserstotheCommittee.Deloitteattendatleast Advisers totheRemuneration Committee reduced accordingly. whilstheretainsthefee paidof£27,35014 December2009, £27,350), perannum(2009: salaryhasbeen hisRathbones on1January2011.Followingboard hisappointmentasacommitteememberoftheFamily on AssuranceFriendly Society In2010,IanBuckley Plc £41,250).HeresignedfromtheNXT receivedfeesRathbones. Plc(2009: of£45,833fromNXT An exception isIanBuckley, Plc(nowHiWave ofNXT whowasappointedtotheboard Technologies PLC) priortojoining generally beingpayabletotheCompany. holding morethanonepositioninamajorcompany. Prior approvalofanynewappointmentisrequiredbytheBoardwithfees Executive Directorsareencouragedtotakeonexternal appointmentsasnon-executive directors,butarediscouragedfrom External appointments basic salarywithinfiveyearsoftakinguptheirappointment. New ExecutiveDirectorsareencouragedtobuildupandmaintainashareholdingatleastequivalentthevalueofoneyear’s Shareholdings which includedetailsofremuneration,willbeavailableforinspectionattheAnnualGeneralMeeting. in contractsamendingemploymenttermsandconditionsonachange ofcontrol.ExecutiveDirectors’contractsservice, the BoardwilltakestepstoimposealegalobligationonDirectormitigatelossincurred.There arenoclauses contractual benefitsbutmitigationwillbeappliedwhereappropriate.Intheeventofenteringintoaterminationagreement, determined onacasebybasisinthelightofcurrentmarketpractice.Compensationwillincludelosssalaryandother payment ofliquidateddamagesoranystatementsinrespectthedutymitigation.Compensationpaymentswillbe Payment inlieuofnoticewouldincludebasicsalary, pensioncontributionsandbenefits.There arenoprovisionsforthe termination bytheCompanyandnopre-determinedcompensationpackage exists intheeventofterminationemployment. There arenoprovisionswithinthecontractstoprovideautomaticpaymentsinexcess ofpaymentinlieunoticeupon R PStockton R ISmeeton A DPomfret A TMorris R PLanyon P DGChavasse I MBuckley Executive Director Table 11.ExecutiveDirectors’servicecontracts serving duringtheyearareasshownbelow: normally containnoticeperiodsofmorethan12months.DetailsthecontractsemploymentExecutiveDirectors The Companyhasservicecontracts withitsExecutiveDirectors.ItisCompanypolicythatsuch contractsshouldnot Service contracts for Executive Directors for anyotherpensionbenefittobearrangedDirectorbytheCompany. RevenueandCustomslimits.ThereMinimum Pension) isnoundertakingorexpectation afterearlyretirementsubjecttoHM after 1April2001orforpensionaccruedundertheLaurenceKeen Scheme andbeinginexcess oftheGuaranteed 5% perannum(orthelesseroforriseinRetailPrice Index iflessforpensionentitlementaccrued would reduceby0.5%permonthofearlyretirementorotheractuariallybasedrates.Pensions willincreaseatarateof The Directorshavetheoption to takeearlyretirementonoraftertheir50thbirthday, inwhich casetheirpensionbenefits Pension arrangements reviewed annually. The Committee isalsoassistedbythepersonneldepartmentandCompany Secretary.

continued

03 6months 27 November2003 02 6months 5 December2002 97 12 months 10 October1997 08 6months 18 August2008 04 12 months 1 October2004 95 6 months 9 March 1995 03 6months 1 July2003 Date ofcontract Noticeperiod

Rathbone Brothers Plc 45 Remuneration report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 46 Remuneration report Chairman oftheRemunerationCommittee Caroline Burton Approved bytheBoardon16February 2011andsignedonitsbehalfby circulated separately. hasbeen anordinaryresolutionseekingapprovaloftheDirectors’Remunerationreportfor2010.The NoticeofAGM AGM The andeffective Boardwillmoveatthe foraccountingperiods beginning onorafter29June2008. published inJune2008 with thoseofshareholdersandconformtotheprincipleslaiddowninrevised CombinedCodeonCorporateGovernance The Committeeconsidersthat,takentogether, thesevariousremunerationcomponentshelptoaligntheinterestsofDirectors Annual The additionalfee fortheSeniorIndependentDirectorisonlypaidifheorshenotaCommitteechairman 2 MarkNicholls perannum,increasingto£120,000annumonhisappointment asChairman istoreceiveafee of£60,000 1 SeniorIndependentDirector • ChairmanoftheRemunerationCommittee • ChairmanoftheAuditCommittee • Additional fees Basic fee Table 12.Non-executiveDirectors’fees Fees wereunchanged in2010butwereincreasedwitheffect from1January2011asshownbelow. Non-executive Directors’ fees incentive scheme, otherthanthe SIP. the Non-executive Directors,who donotreceivepensionorotherbenefitsfromtheGroupandparticipateinany executive Directorsissubjectto anannualassessment.The ExecutiveDirectorsareresponsiblefordeterminingthefees of at theAnnualGeneralMeetingfollowingtheirappointmentandthereaftereverythreeyears.The effectiveness oftheNon- Non-executive Directorsdonot havecontractsofemploymentbut,aswithallotherDirectors,arerequiredtostandforelection Non-executive Directors General 1

Meeting(AGM) 2

and2010 2009 3,0 £38,000 £35,000 £5,000 £5,000 £7,500

£8,000 £8,000 £7,000 2011

on higherriskareas,allpartsofthebusinessarecoveredoverathreeyearcycle.RegularupdatesgiventoCommittee by aninternalrisk-basedauditprogrammewhich isapprovedbytheAuditCommittee.This ensuresthatwhilstthefocusis The Groupinternalauditdepartmentreviewsoperationsonacontinuingbasis.The frequencyofreviewsisdetermined Internal audit A separateRiskManagementCommitteeconsidersriskmanagementissues(seepage34). in Bristol,Exeter, LiverpoolandWinchester aswellLondon. updateforauditcommitteesonissuesarisingfromcurrenteconomicconditions.Committeemembersvisitedoffices (FRC) Italsoconsidered aFinancialReportingCouncil GAAP)toInternationalFinancialReportingStandards(IFRS). Principles (UK GenerallyAcceptedAccounting on theconversionofbasisaccountingforGroupsubsidiarycompaniesfromUK Group financialstatementsconsolidationprocess,segmentalreportingandcapitalplanning.Itwasinvolvedinconsulted During 2010,theCommitteereceivedanumberofreportsonfinancialreportingissuesincludingfinancedepartment’s statements, thescopeandfindingsofannualexternal auditandperiodicreviewswithseniormanagement. work oftheGroupinternalauditdepartment,reportsproducedbycompliancefunctions,halfyearandannualfinancial The reviewoftheeffectiveness oftheGroup’sinternalfinancialcontrolsisachieved primarily bytheassessmentof Internal controlsandriskmanagementsystems narrativestatementsanddisclosures,toensurethattheyarereasonableconsistentwiththereportedresults. • theGroup’saccountingpoliciesandanyproposedchanges; • thesignificantfinancialreportingissuesandjudgementsmadeinconnectionwithCompany’sreporting; • The Committeeconsiders: Financial reporting These aresetoutintheterms of reference oftheCommittee,which arereviewedannually. Role andresponsibilities oftheCommittee seven).Detailsofattendancebymembersaresetoutonpage34. The Committeemetonfiveoccasions in2010(2009: is achartered accountantwhilst othermembershaveconsiderableexperience offinancialmatters. The Boardissatisfiedthatatleast onememberoftheCommitteehasrecentandrelevantfinancialexperience. The chairman Kate Avery, CarolineBurton,DavidHarrelandKathryn Matthews. The currentmembersoftheAudit CommitteearetheindependentNon-executive DirectorsOliverCorbett(chairman), Committee members costsin2010. high non-auditKPMG of Transactions byServiceOrganisations.The costofthisworktogetherwithpensionadvice wasprimarilyresponsibleforthe Institute ofCertifiedPublic Accountants(AICPA) Statement onAuditingStandardNo.70 (SAS70) ReportontheProcessing fortheprovisionofanindependentopiniononAmerican In 2010theCommitteeandBoard approvedtheuseofKPMG non-audit services. recognises that,giventheirknowledge ofthebusiness,thereareoftenadvantagesinusing auditortoprovidecertain The Committee £185,000,51.4% of£360,000). includes theauditofregulatoryreturnsandinterimstatement (2009: ThisNon-audit fees represents67.3% payabletotheauditorin2010were£301,000. of the auditfees of£447,000 which of theauditfee inanyyearwithoutthepriorwrittenapprovalofAuditCommittee. service isexpected toexceed £25,000.Fees fornon-auditservicespaidtotheauditorshouldnot,inaggregate,exceed 50% fee levelsrelativetotheauditfee. Prior approvalbytheAuditCommitteeisrequiredwherefee foranindividualnon-audit The AuditCommitteereviewstheindependenceandnatureofnon-auditservicessupplied bytheauditorandnon-audit auditpartner. Plc withtheKPMG Audit LLP andKPMG inspectionofKPMG AuditInspectionUnitontheir2009/10 September 2010publicreportbytheFRC and thescope,qualitycost-effectiveness oftheirwork.At theirDecember2010meeting,theCommitteediscussed regarding change ofauditfirm.This reviewincludesconsiderationoftheexternal auditor’speriodinoffice,theircompensation The AuditCommitteeisresponsibleforreviewingexternal auditarrangementsandforanyrecommendationtotheBoard External audit internal auditdepartment. request ofmanagementortheCommittee.The CommitteealsoregularlyreviewstheresourcesandauthorityofGroup recommendations areacteduponpromptly. The internalauditdepartmentwillalsoundertakeoccasionaladhocreviewsatthe on thefindingsofinternalauditreviews,statusscheduled workandonthefollowupofreviewstoensurethatagreed Audit Committeereport

Rathbone Brothers Plc 47 Audit Committee report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 48 Audit Committee report it necessary. The CommitteeperformsanannualreviewofitsperformanceandthisisalsoreviewedbytheBoard. meetings toassisttheCommitteefulfilitsduties.The Committeecanaccessindependentprofessional adviceifitconsiders On invitation,thefinanceandotherdirectors,complianceofficers,seniorinternalauditstaffexternal auditorattend Other approves anychanges tothedocument. Italsoreceivesdetailsofanyreportsmade. confidentialreportingpolicyand The AuditCommitteeannually reviewstheGroup’sPublic InterestDisclosureAct1998 Confidential and unadjustederrors. Regarding the2010audit,presentationswerereceivedfromauditoronauditprogress,findingsandrecommendations audit engagementletterseach yearandhasdiscussionswiththeauditornomanagementpresent. Details oftheauditor’sfees are showninnote7totheconsolidatedfinancialstatements.The Committeealsoreviewsthe The Committeeissatisfiedthat theindependenceofauditorhasnotbeenimpairedbyprovidingtheseservices. Role andresponsibilities oftheCommittee reporting policy

continued

progressive refreshingoftheBoard. Non-executive Directorshouldbesubjecttoparticularlyvigorousreviewand takeintoaccounttheneedfor CorporateGovernanceCoderequirementthatanytermbeyondsixyearsfora The CommitteearemindfuloftheUK than nineyears. three years.ANon-executive Directorisnotappointedforafixedtermbutwouldnormallyserveasmore followingtheirappointment,andre-electionevery All DirectorsarerequiredtoseekelectionbythemembersatAGM Mark Nicholls beappointed. four candidatesselectedforinterview. Following thoseinterviews,theCommittee’srecommendationtoBoardwasthat view tohimorherbecomingChairmanontheretirementofMarkPowell in2011.Alonglistofcandidateswasreviewedand In June2010,afirmofheadhunterswasapproached regardingtherecruitmentofanewNon-executive Directorwitha attendance atinternalmeetingsandpresentationsbyseniormanagerstotheBoard. Regarding successionplanning,theBoardisexposed toseniormanagementbelowBoardlevelduringvisitsotheroffices, recent Boardappointments. is mindfulofthebenefitsadiverseBoardwithbroadrangeskillsandexperience andthishasbeenreflectedin experience ofthecandidatesand, inthecaseofnon-executive appointments,theirothercommitments.The Committee recruiting newDirectors.When consideringpossiblecandidates,theCommitteeevaluatesskills,knowledgeand a wholedecidesuponanysuch appointment.Anexternal search consultancyand/oropen advertisingareusedwhen The Committeeconsidersand makesrecommendationstotheBoardforappointmentofDirectors;as Role page 34.Italsohadinformaldiscussionsonanumberofotheroccasionsduringtheyear. two).Detailsofattendancebymembersaresetouton The Committeemetformallyon twooccasionsin2010(2009: the CommitteeontheirappointmenttoBoard. David Harrel,Kathryn Matthews, MarkNicholls andAndyPomfret. Kate Avery, Kathryn MatthewsandMarkNicholls joined The currentmembersoftheNomination CommitteeareMarkPowell (chairman), Kate Avery, CarolineBurton,OliverCorbett, Committee Nomination Committeereport oftheCommittee members

Rathbone Brothers Plc 49 Nomination Committee report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 50 Corporate responsibility report have largelyaddressedanyreasonable measureswecouldbeexpected totake. considersthatthestepswehavealreadytakenin courseofrefurbishingourLiverpoolandLondon offices Rathbones The needtocomplywithanyfuturetighteningofenergyefficiency standardswouldbeofgreaterimpact.However, there wouldbeanysignificantimpactonourbusiness. business environmentalissuessuch asresourceuse,buildingprocurementandbusinesstravel, thenwedonotconsiderthat emitter ofsuch gases,norisitanexcessive consumerofresources.Unlessfutureregulationsimposerestrictionsonuniversal as climatechange astheymightrelatetorestrictionsonemissionsofmajorgreenhousegases. The Companyisnotalarge considersitselftobeatlimitedriskfromanychangeAs such, inregulationorgovernmentpolicyonissuessuch Rathbones travel relatedemissions,resourceconsumptionandwastegeneration. Our directenvironmentalimpactsarethosetypicalofanoffice-based business,forexample, energyconsumptionofbuildings, business, andallduecareconsiderationshouldbegivento reducingourimpactontheenvironment. believesthatenvironmentalconcernsshouldbecentral tothedayrunningofits As aresponsiblebusiness,Rathbones Environment • • • • • corporateresponsibility strategycanbesummarisedasfollows: Rathbones’ Our strategy We footprintintermsofCO haveexpressed ourcarbon 1 Chairman oftheSEC Chief Executive Andy Pomfret a FTSE 250company. The CompanyremainsaconstituentcompanyintheFTSE4Good Index Series. Hermes Transparencynominated fortheICSA inGovernanceAward forbestsustainabilityandstakeholderdisclosureby reports Finally, and2009 the2008 Iamdelightedthatourcorporateresponsibilityreportinghasbeenrecognisedwithboth It Looking more below, hasincreasedawarenessofenvironmentalissuesinourkeyLiverpooloffice. always proveddifficultandinefficientinourNewBondStreetoffices.The creationofa‘greenteam’inLiverpool,which third partyproviderwhich should leadtoareductioninenergyusageassociatedwiththecoolingofequipmentwhich has the disposalofouroffshoretrustbusinesses.PlansarewelladvancedformoveLondon datacentretoaspecialist tonnesCO to2,439 2008/09 footprinthasfallenby3.3%from2,521tonnesCO The pastyearhasbeenoneof progress.Ourtotalestimatedcarbon hasidentifiedandassessedthesignificantriskstoCompany’sshortlongtermvalue. SEC With mattersastheyaffect ourbusiness,theBoardbelievesthat regardtoenvironmental,socialandgovernance(ESG) It meetsonaquarterlybasisandreportsdirectlytotheGroupExecutiveCommitteeofBoard. members ofstafffromkeyfunctionssuch asfacilitiesmanagement,personnel,marketing,ITandinvestmentmanagement. effectivelyThis managesitssustainabilityissues.Itisformedby Committeeisresponsible forensuringthatRathbones which Ichair. andEnvironmentalCommittee(SEC) reflected inthisreportoftheSocial citizen andtakesitsresponsibilitiesasinvestmentmanager, employerandconsumerseriouslyIbelievethatthisis iscommittedtoactasagoodcorporate I ampleasedtointroduceourthirdannualcorporateresponsibilityreport.Rathbones Introduction Corporate responsibilityreport

will Engage inthecommunitieswhich weoperate. Motivate andrewardappropriately, encouragingtheirdevelopment. Consider corporateresponsibilityissuesinthecompanieswhich weinvestonbehalfofourclients. Maintain anddeveloptherelationshipswehavewithourclients,treatthemfairlycontinuetomeettheirneeds. footprintbytheefficientuseofresources. Manage ourenvironmentalimpactandreducecarbon Communities Employees Investments Clients Environment

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Our environmental performance

Scope

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

Data has been collected and calculated in accordance with the requirements set in the following standards: the World Resources Institute (WRI) Greenhouse Gas (GHG) Protocol (revised version), DEFRA Guidance on How to Report GHG Emissions (September 2009) and ISO 14064 – part 1. We have used the financial control approach in setting the organisational boundary, and measured our total direct Scope 1, 2 and significant Scope 3 emissions. Scope 1 includes all direct operational emissions (primarily from the use of gas for office heating), Scope 2 covers electricity consumption and Scope 3 includes all indirect operational emissions including business travel.

Base year

Our base year is 2007/08, which is the first year for which verifiable emissions data is available. Base year emissions for 2007/08 and 2008/09 have been recalculated in order to provide a means of consistent comparison across the years. Our base year recalculation policy is to recalculate prior year emissions for relevant significant changes which meet our significance threshold of 5% of total base year emissions. This year, recalculation was undertaken to include three offices which had previously been excluded from the analysis; Birmingham, Jersey and Kendal. We have also included the newly acquired office in Aberdeen.

It should be noted that we have used the emissions factors for 2009 to recalculate the emissions figures stated for Corporate responsibility report

2007/08 and 2010 emissions factors to recalculate 2008/09 figures. This is in accordance with the Government’s guidance 51 on incorporating updated emissions factors into previous carbon accounting, to ensure data accuracy and comparability.

Our carbon footprint

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

Chart 1. Tonnes of CO2e by emissions source

Tonnes CO2e Electricity 1,745 Gas 247 Flights 214 Non-company cars 120 National rail 95 Company cars 14 Taxis 4

Total 2,439

Table 1. Absolute and relative CO2e from Rathbones’ offices under scope 2007/08 2009/10 2008/09 (Base year)3 Office floor space (m2) 11,461 11,461 10,496 Number of employees as at 31 December4 689 683 673 Scope 1 (Gas, company cars) 261 267 308 Scope 2 (Electricity) 1,745 1,763 1,688 Scope 3 (Business travel) 433 491 505

Total CO2e (tonnes) 2,439 2,521 2,501

Intensity measurement CO2e (tonnes) per employee 3.54 3.69 3.72

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

Government Guidelines 4 Employee numbers have been restated following the collection of improved data Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 52 Corporate responsibility report practical andcost-effective. all ofouroffices.We willseektoidentifyopportunitiesimprove ourenergyefficiencyandwillimplementthesewhere We willcontinuetoimproveourdatacollectionprocessessothat accuratedataonenergy Objectives for2011 calculated forthosesites. Gas usefromanumberofofficeshasbeencalculatedusingbenchmark data,andaccurate estimates ofreductioncannotbe reduction inconsumptiontheLiverpoolofficeof126,900kWh, which hascontributedsignificantlytotheoverallreduction. Natural gasconsumptionhasdecreasedby3%overthepastyear. Improveddataqualityhasallowedustomeasurea Natural gas use 10%ofthepoweranormalPC. as theenergyefficiencyofITequipmentimproves.For example, 155disklessPCsweredeployed duringtheyear, which decrease wasfromtheLondon office.OurITinfrastructureisamajoruserofelectricitybutconsumption levelsarefalling Total electricityuseandassociatedCO Electricity Energy Per 2007/08 andhaveachieved azero-to-landfillpolicy. footprintoftheLiverpoolofficeby8%since As aresultoftheseactionswehavemanagedtoreducetheenergycarbon agreenteamhasbeencreatedtoencouragerecycling,reduceenergyusageandmakepeoplemoreawareofthe • wehaverunanumberofstaffengagementprojectstoraiseawarenessandsharelearning; • andcostsaving footprintandidentifiedcarbon helped usmeasureourcarbon anenvironmentalassessmentin2009 • wasteandrecyclingfacilitiesintheofficewereupgraded.We recycleourpaper, card,plastic,metal,glassandtonerwaste; • allowedusto investinenergyefficientandsensor-controlledlightingtechnologies; anofficerefurbishmentin2006 • operation. Highlightedbelowaresomeofourmilestones: programme wasintroducedanumberofyearsagotostrategicallyaddresstheenvironmentalperformanceLiverpool could bemadebyaddressingtheenergy, travel,wasteandresourceimpactsassociatedwiththe Liverpooloffice.Astructured ofemployeesbasedthere. ItwasidentifiedthatsignificantimprovementsintheGroup’senvironmentalperformance 46% listedPort ofLiverpoolbuilding.ItisthelargestofficeinGroupwith occupiestwofloors intheiconicGradeII Rathbones Liverp Tonnes CO 5 Funds undermanagement(FUM) Operating income Table 2.Carbonintensity funds undermanagement. intensityagainstouroperatingincomeand In linewiththeAccountingforSustainabilitymodel,wearereportingourcarbon Intensity measurement emissions. In addition,wearecurrentlyevaluatingthebusinesscaseforoffsettingsomeofourcarbon Further reducetheneedfortravelthroughuseof videoconferencing systems. • Monitorandreducetheenergyconsumptionofourofficesthroughimprovedefficiency, managementand • intensiveactivities.These include: addressing carbon possible, toachieve savingsyear onyear. Inordertoachieve thisgoal,wehaveagreedaseriesofactionsfocusedon emissionsduringbaselineyear2007/08,Based onourcarbon footprintwhere ouroverallgoalistoreducecarbon Targ Our environmental performance environmental impactoftheiractions. opportunities; staff engagement; formance ets ool casestudy

e per£mofoperatingincomeorFUM analysis

continued 2 e emissionshavedecreasedby1%comparedtotheprevious year. The main

15,630 127.2 2010 £m

13,100 116.8 2009 £m

consumptioncanbeprovidedfor Carbon intensity 0.16 19.2 2010

0.19 21.6

2009

% 3 14% 44% 33 30% 104 7% 70 45% 16 30% 106 72 Residual landfillwaste Waste toenergy Total recycling Other materials Secure shredding Paper andcardboard This hascontributedtoareduction in3tonnesCO to15,113kmwithstaffencouragedusepublictransportwherepossible. Our useoftaxishasdecreasedby46% Taxis andnon-companycars of 3%inassociatedCO from1,732,000kmNational railtraveldecreasedby3%in2009/10 to1,675,000km, withaconcurrentreduction Rail which wasthelargestreduction inCO A reductioninthetotalnumberoflonghaulflightscontributedtoa28%onpreviousyear’semissions, Flights The emissionsfromoursmallfleet ofcompanycarshaveremainedstablethisyear. Company cars data qualityandreportingaccuracyinthecurrentyear. arenowfully centralised,andthishasresultedinahigherlevelof footprint.Ourbusinesstravelbookings the carbon the baselineyear, anda12%decreaseonlastyear. These representasignificantproportionoftheoverallsavingswithin Overall, wearepleasedtoreportatotaldecreaseof14.4%inCO Business travel Performance analysis k) 4 343 344 Per employee(kg) Total waste Table 3.Waste andrecyclingdata to achieve atotalreductionintheamountofresidualwastesenttolandfill. We remainfocusedonreducing themassofwastegenerationandimprovingrecyclinglevelsinouroffices.Overall,weseek Objectives for2011 to landfill. waste toenergyproduction.Asaresult,inLondon andLiverpoolwehaveachieved ourobjectiveofsendingnowaste ofournon-recycled In London andLiverpoolwehavealsoseenwastetoenergyinitiativesfullyimplementedsend69% recyclable materialsacrossthebusiness. from oursuppliers.We continuetoimproveourrecyclinglevel,achieving anestimatedaverage93%recyclinglevelof We havecarriedoutwidesamplingofourwastestreamsinmainofficesandimproved thequalityofdatareceived mobile telephones. for re-useorrecycling.Wherever possiblewecontinuetorecyclefluorescenttubes,batteries,tonercartridgesand disposalagentwithazero-to-landfillpolicy) ITServices(anapprovedWEEE Redundant ITequipmentispassedtoEOL employee perannum,itisestimatedthat271kg isrecycled. In mostofficesshreddedpaper, andcansarealsorecycled.Ofthe344kgofwasteproducedper glass,plasticbottles All officeshaveactiverecyclingprogrammeswithhighlevelsofparticipationthatcoverataminimumpaperandcardboard. Waste andrecycling in thosesmallerGroupofficeswhich currentlydonothavethefacility. We willcontinuetoencouragetheuseofpublictransportwherepractical.Video conferencing facilitiesarebeinginstalled Objectives for2011 management businessandinparticulartheacquisitionofclientsfromLloydsBankingGroup. with acorrespondingincreaseof31tonnesCO

continued 2 e.

4 1 8% 4% 78% 18 9 183 14% 79% 4% 34 187 9

2 footprint. e madethroughoutthetotalcarbon

2 emissions.This isdueinparttothegrowthofinvestment e incarbon 2 e. Non-companycarusehasincreasedby34%onthepreviousyear, Mass collected 2009/10 (tonnes) 237 2 e emissionsassociatedwithbusinesstravelfrom

% oftotal 100%

Masscollected

2008/09 (tonnes) 234

% oftotal 100%

Rathbone Brothers Plc 53 Corporate responsibility report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 54 Corporate responsibility report osmto electronicmedia options fordeliveringourclient inincreasedprintconsumption addressed.However, increased Considerresourceefficient Stationery usehasbeensuccessfully other offices London andLiverpooloffices client communication Ontrack particularly for printed stationeryuse, beensuccessfullyinitiatedinour Seek waystoreduce Seekwaysofreducingwastein dataqualitysignificantly Paper usage Ourzero-to-landfillprogrammehas providerhasincreasedour London andLiverpool Ontrack waste inofficesotherthan facilities toalloffices Seek waysofreducing The useofasingletravel Waste Achieved with onlineaccess emissionshavedecreasedby17% numberofflights.OurScope3 system travel booking Enhance thecentral videoconferencing Introduce conferencing We havereportedareduction inthe increasing theuseofvideo Investigate environmentalbenefits Achieved policy andseekwaysof We willreviewourtravel 24 Travel AnenergyauditfortheBristol 78% Ontrack 84 160 Energy auditinBristol 18 85% Energy Our objectivefor2010 104 Table 5.Performance versusourobjectives 179 use ofvirginstock toachieve orexceed our2007/08 levelof78% recycledstock. 40 69% a moreresourceefficientmanner, andwillconsiderelectronicmediaaspartofthisreview. We willalsoseektoreduceour To addresstheissueofourincreasingprintconsumption, we willconsidermeansofdeliveringourclientcommunicationsin 88 We remainfocusedonimprovedpapermanagementinourofficesandwillincreaseeffortsto reduce ourprintedpaperuse. 186 Objectives for2011 emissionsforpaper, footprint. wehaveexcludedstandard currentlyexists thisfromtheoverallcarbon forGHG We haveestimatedthatourpaperconsumptionthisyearhascausedemissionsof178 tonnesCO levels ofclientcommunication.This hasresultedinanetincreaseouroverallpaperconsumption. printing has,however, asaresultofthegrowthinvestmentmanagementbusinessandincreased increasedby38% We havemanagedtoreduceourstationerypaperusebyapproximately 4millionsheetssince2007/08. Paper usedfor post-consumerwaste. a 100%recycledproductmadeexclusively fromUK ofourpaperconsumptionbyweightisrecycledstock. The69% majorityofthestationerypaperpurchased isEvolvebrand, and10tonnesfor2007/08 Asaresultofdataqualityimprovements,increases24tonnesinthepaperconsumptionfor2008/09, reportingyearswere 6 Total paperusageperemployee(kg) Recycled percentage Total paper Virgin paper Recycled paper Paper weight(tonnes) Table 4.Paper usage to workwithourprintsuppliersreducewasteintheprintingofreportsandbrochures. intensiveproducttoproduce.Weenergy andcarbon aim,wherepossible,toreduceusage,purchase recycledpaperand Total paperconsumptionamountsto128tonnes,which isapproximately equivalentto17.1 millionA4sheets.Paper isan Paper usage Performance analysis identified. These havebeenaddedintothecalculationtoreflectbestavailabledata.

continued

Performance eutd communications, including clientcommunicationhasresulted ofoutsourcingtheLondon IT officehasbeencommissioned

Comment

2009/10 128 Total (see dataqualityratingbelow) quality ratingto4by2011 Increase internaldata Our objectivefor2011 and communicationsfacilities

2 2008/09 e. However, asnoagreed 122 Total 6

2007/08 108

Total

6 1% 3 2 2 3 2 2.6 3 3 4 2 3.2 4 3 4 3 3.6 18% – 71% 11% 100% Murray Ben Mostofourgasusedatacomesfrommeterreadingsorinvoices.DataforconsumptionintheBirmingham, CambridgeandChichester officeswasnot 7 Waste andrecycling Paper Scope 3 Scope 2 Scope 1 Overall Scope Table 6.Dataqualityrating from thebaseyearof2.6. rated 1(poorest)to5(best).For thisyear, overalldataqualityhasbeenrated3.6which reflectsaconsistentimprovement Protocol principles.Datafromeach emissionsourcehasbeen Smarthasassessedthe dataqualityagainsttheGHG Carbon To ourknowledge,dataisconsideredaccuratewithinthelimits ofthequalityandcompletenessdataprovided. Accuracy estimations andre-baseliningperformed. Where relevant,wehaveincludedappropriatereferences totheaccountingandcalculationmethodologies,assumptions, Transparency changes intheGovernment’semissionsfactors. We havere-baselineddatatoaccountforfouradditionalofficeswhich wereincludedunderscopethisyear, aswell In ordertoensurecomparability, wehaveusedthesamecalculationmethodologiesandassumptions aspreviousyears. Consistency collection processes. or significantinfluenceofthereportingorganisation.We continuestoimproveitsdata recommendthatRathbones Reported environmentaldatacoversallemployeesandentitiesthatmeetthecriteriaofbeingsubjecttocontrol Completeness internalandexternal totheCompany.making needsofusers,both emissionsoftheCompanyandservesdecision inventoryappropriatelyreflectstheGHG We haveensuredtheGHG Relevance We haveconcludedthefollowing: interrogation ofsourcedataandcollectionsystemsincludingcomparisonswiththepreviousyears. personnel,areviewofinternalandexternal documentation, Our workhasincludedinterviewswithkeyRathbones’ completeness, consistencyandaccuracy. Protocol principlesof GHG –part1standardandverifiedagainsttheWRI 14064 calculated followingtheISO is credible,coherentandcompliantwithappropriatestandardsindustrypractices.Datahasbeencollected footprintisrepresentative ofthebusinessandthatdatapresented thatthereportedcarbon has assuredRathbones footprintforallofficesits2010Corporateresponsibilityreport.Smart Throughcarbon thisengagementCarbon Brothers Plc forthethirdconsecutiveyeartomeasureRathbones’ SmarthasbeencommissionedbyRathbone Carbon managementapproach tosustainability.of Rathbones’ September2010.Itdoesnotrepresentanindependent thirdpartyassurance to30 2009 footprintdatafor thereportingperiod1October carbon the qualityandreliabilityofRathbones’ anditsstakeholderswithathirdpartyassessmentof This statementprovidesRathbones Smartopinionstatement Carbon SmartLimited Carbon 16 February 2011 SmartLimited Carbon Director miscalculation discoveredinthedataset.Paper consumptionwasbasedonpaperpurchased andprintingrecords Birmingham, Chichester, JerseyandKendal wasestimatedbasedonofficesamples.London paperdatafromlastyearhasbeenrecalculatedbasedona The wastedatafromAberdeen, 40%). has improvedsignificantlyfromlastyear;approximately 5%oftrainjourneyswereestimatedbasedoncost(2008/09: Mostelectricitydatacomesfromprimarysourcesandiscomplete. Travelpro ratatogiveestimatedfiguresforthespaceoccupiedbyRathbones. data quality available andsoagovernmentbenchmark wasused.InthecaseofLiverpool,gasdataonlyavailableforwholebuildingandhadtobeadjusted

4 4 4 4 – 7 Director Louise Quarrell

footprint % Carbon 2008/09 Data qualityrating 2009/10

Data qualityrating 2008/09

Data qualityrating

2007/08

Rathbone Brothers Plc 55 Corporate responsibility report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 56 Corporate responsibility report consultant toassist inthisprocess. StewardshipCode(as publishedbytheFinancialReportingCouncilinJuly2010), weareappointingaproxy voting of theUK As partofongoingeffortstoenhance theGroup’sgovernanceandvotingpolicyensurethat wemeetthekeyprinciples undertaken onanycompanyifrequested byanunderlyingshareholder. BrothersPlc).Votingthose whereitholds3%ormore oftheissuedsharecapital(withexception ofRathbone isalso During 2010,theGroupcontinued toimplementitspolicyonproxy voting,which coversall companies intheFTSE 350and Voting Forest Footprint DisclosureProject. aswellbeingafoundingendorserofthe and theEcumenicalCouncilforCorporateResponsibility(ECCR), SustainableandInvestmentFinanceassociation(UKSIF) long-standing memberofinfluentialgroupssuch astheUK Greenbank Investmentsisa Inaddition,Rathbone Principles forResponsible InvestmentinSeptember2009. the UN andbecameasignatoryto DisclosureProject since2006 BrothersPlchasbeenasignatorytotheCarbon Rathbone Affiliations or services. able toparticipateinnewshareissuesoffered bycompaniesthatprovideenvironmentallyorsociallybeneficialproducts able toprovideinvestmentservicestailoredclients’interestsintheseareas.Where appropriate,theCompanyisalso UnitTrust GreenbankInvestmentsandRathbone Through Rathbone Management’sEthicalBondFund, theCompanyis bespoke portfoliomanagement. opportunities forprivateinvestorstoinvestdirectlyincompaniesaddressingsocialandenvironmentalchallenges through investment trusts),ethicalbankingandmortgagestendstobequitewidespread,lessattentionisgiventhe or sociallyresponsibleinvesting.However, whilecoverageofsociallyresponsibleinvestmentproducts(such asunitor issues(especiallyclimatechange) continuetoraisetheprofileofethical Media coverageandconsumerawarenessofSEE InvestmentManagement. Rathbone Investments had£434.5millionoffundsundermanagement,representingsome3%thetotalmanagedby Greenbank GreenbankInvestments.Asat31December2010,Rathbone specialist ethicalinvestmentservice,Rathbone considerationsaretakenintoaccountforspecificmandatesthroughouttheGroup, butparticularlybyour ethical (SEE) Although generalinvestmentactivitiesarenotcoveredbyaformalresponsiblepolicy, social,environmentaland Responsible investment of clientobjectivesareachieved. Internal performancemonitoringandriskcontrolprocessesensurethattheappropriate qualityofserviceandfulfilment order tohelpourInvestmentManagersselectindividualholdings. Managers toassisttheminconstructingportfoliossuitableforindividualclients.Recommendedlistsarealsoproduced To producesin-housestrategicandtacticalassetallocationmodelsforitsInvestment supportthisapproach, Rathbones fundofhedgefunds,structuredproductsandsoon. equities, funds,giltsandcorporatebonds, that encompassesthefullrangeofassetsyouwouldexpect fromaprofessional investmentmanagementfirm,including Clients arenotinvestedinpre-determinedmodelportfoliosbutbenefitfromastructuredportfolioconstructionprocess are met. draw guidanceandinvestmentideaswhilstretainingthenecessaryflexibility toensurethattheirclients’individualneeds InvestmentProcessAsset allocationandstock fromwhich selection formpartoftheRathbone allourInvestmentManagers Investments to accesstheirinvestmentportfolio. guide totheprocesswhilstourtermsofbusinesshavebeenre-written.Ourclientwebportalisincreasinglyusedbyclients electronic communication.Ourproceduresfornewclientshavebeensimplifiedandrevisedwiththeintroductionofaclient were thatmostclientsreallyvaluedthepersonalcontactfromanInvestmentManager. Manywantedlesspaperandmore weundertookatelephonesurveyofsampleclients.FeedbackDuring 2009, wasgenerallypositive.Lessons learned raised duringinternalpeerreviewsofclientfiles. produced andmonitoredatBoardlevel.This coversstafftraining,clientcomplaints,accountclosuresandanyTCF issues for ensuringouradherencetotheFSA’s Treating CustomersFairly (TCF) principlesoroutcomes.Managementinformationis aim toreportclientsinaclearandunderstandableway. Each FSAregulatedsubsidiaryhasadirectorwhoisresponsible The fairtreatmentofourclients iscentraltoourculture.We provideapersonalservicewithclearcharging structureand Clients

benefits andbriberyconflictsofinterest. codeofbusinessconductandanumberpolicydocumentsincludingpolicies on dealing,giftsandbusiness the Rathbone compliancemanual. The manualincludes FSA registeredstaffarerequiredtoadhererulesand theRathbones Code ofconduct as averageannualsickness ratesandstaffturnover. The uptakeandeffectiveness ofthesepoliciesismonitoredtogetherwithotherindicatorsstaffsatisfactionlevelssuch as pensionordeathinservicecover. opportunity totakeupthreemonths’unpaidleaveonceinevery tenyearswithoutanylossofservice-relatedbenefitssuch applications, particularlyfromparentswithyoungchildren. Oncompletionoffiveyears’service,employeeshavethe available forthosewithchildcare responsibilities.Flexible workingpoliciesareoffered withahighnumberofsuccessful Maternity benefitsremaininexcess ofthoserequiredunderstatutoryprovisions.Careerbreaksuptotwoyearsarealso leave andpaternityhaveachildcare voucher scheme inplace. up tofiveadditionaldaysofleavewiththeagreementtheirmanager. We alsoprovidetimeofffordependants,parental daysafterfiveyears’service.Employeesareabletobuy to thebusiness.Holidayentitlementsare25daysincreasing30 tothehealthandwelfareofemployees recognisestheimportance ofanappropriatework-life balanceboth Rathbones Work-life balance and employee. insurance scheme which paysamonthlyincomeinlieuofsalaryandpensioncontributionsonbehalftheemployer continue theiremploymentandtraining.Shouldthisnotbepossibleweprovidesupportintheformofapermanenthealth whereverpracticable,arrangementsandadjustmentsaremadeto become disabledduringtheirservicewithRathbones, It isourpolicyandpracticetogivefullfairconsiderationapplicationsforemploymentbydisabledpeople.Ifemployees treated fairlyandonmeritregardlessoftheirrace,gender, maritalstatus,age,disability, religiousbelieforsexual orientation. isanequalopportunities employeranditisourpolicytoensurethatalljobapplicantsemployeesare Rathbones Equality anddiversity and legalconcerns. also providesanindependentandconfidentialemployeeassistanceprogrammeoffering adviceonemployment,personal cover paidforbytheCompany. staffhavetheopportunitytoattendanannualmedicalexamination andRathbones AllUK employees(and theirdirectfamilymembers)areeligibleforprivatemedical Upon completionofaqualifyingperiod,allUK and safety standardsaremaintained. Itischaired byIanBuckley. group comprisingrepresentativesfromallourofficesmeetstwiceayeartoshareknowledgeandensurethathealth best practice.We providearangeoftrainingcoursesforthosestaffwithhealthandsafety responsibilitiesandasteering officesisregularlyupdatedtoreflectcurrentlegislationand external consultantsourhealth andsafety policyfortheUK iscommittedtoprovidingasafe andhealthyenvironmentinwhichRathbones itsemployeescanwork.With thehelpof Health andwelfare remuneration andinvolvementareallvitaltothecontinuingsuccessofbusiness. greatestassetisitspeople.TheirAs withallprofessional health,well-being,development, services firms,Rathbones’ Employees Clearinghouseproject. PRI’s ortheUN interest groupssuch asUKSIF effortsinitiatedby becauseofcollaborative data,oritmaycomeabout a resultoffundamentalanalysiscompanies’ESG These activitiesmayoccur as disclosure toparticipationinco-filingandvotingonshareholderresolutionsatcompanyAGMs. Greenbank Investments’ethicalresearch team.This rangesfromlowlevelcontactwithcompaniesonissuesrelatingtoESG mattersislargelyundertakenbyRathbone Engagement withcompaniesonenvironmental,socialorgovernance(ESG) Engagement Investments

continued

Rathbone Brothers Plc 57 Corporate responsibility report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 58 Corporate responsibility report maximise thepotential ofourITsystems. small groupsor use onetosessionsensure thatstaffcanlearninaway suitabletothemandwhich enables themto advantage ofhavingin-housetrainers, inadditiontotheirknowledgeofthebusiness,isthatthey canpersonalisecoursesfor Our ITsystemsarefundamental toourbusinessandtheITtrainingteamoffer trainingthatiscompletelybespoke.The great IT skills 4 The delegateshavetheopportunitytosharetheirexperiences andconstantlylearnfromeach other. The trainingisverypracticalandconcentratesondevelopingskillsthatcanbeimmediatelyused back attheworkplace. term programmesthatarelinkedtonationallyrecognisedqualifications providedbytheCharteredManagementInstitute. The developmentofgoodleadershipandmanagementskillswithintheCompanyisvital we continuetorunlong 11 4 Management andleadershipdevelopment 6 Executive PA magazineawards. This initiativecontributedtooursuccessasbeingarunnerupintheemployerofyearcategory atthe2010 system. example, theintroductionofanewclientrelationshipmanagementsystemandanonlinetravel booking the business.Itisdesignedtoensurethatsecretarialstaffare aware ofbusinesschanges that willaffect them,for 23 4 The secretarialtrainingandnetworkingprogrammehascontinuedtogrowwiththeaimofengaging secretariesin training Secretarial 6 standards ofprofessional developmentandethicalbehaviour. to becomeindividuallychartered membersandindoingsoaredemonstratingacommitmenttomaintainingthehighest 147Following InvestmentManagershaveupgraded theirmembership thegrantingofRoyalChartertoCISI, 38 Chartered Membership CISI with aviewtoincreasingtheirbusinessawareness. was verypositiveandweplantoholdasimilarprogrammenext yearwhich willincludestafffromthesupportdepartments of thestrategicissuesfacedbybusinessandtogaintheirinputchallenges comingupinthefuture.The feedback 17 Investment DirectorsfromaroundtheGroup.The aimwastoengagetheminthebusinessimprovetheirunderstanding DevelopmentProgrammes ofpreviousyearsthiscoursewastargetedat19 Using asimilarformattotheRathbone Senior InvestmentManagementProgramme construction technique courseswereheldin2010which 164investmentmanagementstaffattended. Following coursewhich focusedontheuseoffinancialratiosinstock onfroma2009 selection,anumberofportfolio Financial training Total Other Project Management InvestmentAdviceDiploma CISI Chartered InstituteofManagementAccountants DiplomaandMastersinWealth Management CISI Chartered FinancialAnalyst IT Qualifications Private ClientInvestmentAdviceandManagementCertificate CISI Management Qualifications InvestmentAdministrationQualification CISI Qualification appropriate qualifications.The tablebelowshowsthevarietyofqualificationstaken. staffstudiedtowards continuestosupportitsstaffgainqualificationsrelevanttheirroles.During2010,136 Rathbones Qualifications covered below. A numberofsuccessfulinitiativescontinuetogainmomentumwithexcellent feedback from participants,someofwhich are needs ofthebusiness. senior managersandtheuseofbusinesssponsorstoensurethatcontenttrainingisabsolutelytailoredrelevant wereparticularlyimpressedbythesupportfortraininganddevelopmentfrom standards expected bytheinstitute. The CISI continuous professional development scheme. This requiredustodemonstratehowourtraining measureduptotherigorous forour we weresuccessfulingainingaccreditationfromtheCharteredInstituteofSecurities andInvestment(CISI) We areverymuch apeoplebusinessandthereforetrainingdevelopmentcontinuestobehighpriority. InSeptember Training anddevelopment Employees

continued

Number ofstaffstudying

136

During theyear, employeeshaveundertakenawidevarietyofcommunityandfundraising events. Rathbone would supportfor2010and2011.During2010,£8,000hasbeenraisedbyemployeesthesetwocharities. In 2010,ChildrenwithLeukaemia andThe AnthonyNolanTrust wereselectedbyanemployeeballotasthecharities we GAYE £81,000)tocauseschosen byemployeesthroughthismethod. andin2010donated£85,000(2009: administered bytheCharitiesAidFoundation. The Companymatched staffdonationsofupto£200permonthmadethrough employeesmadepaymentstotalling £107,000scheme. In2010,Rathbone throughthisscheme, which £384,000) is (2009: Employees areencouragedtodonatecharity inataxefficientmannerthroughtheGiveAsYou Earn(GAYE) payrollgiving £174,098,profits (2009: representing 0.59%ofcontinuingGrouppre-taxprofits). During theyear, theGroupmadetotalcharitable donationsof£162,000,representing0.54%continuingGrouppre-tax Donations andfundraising Communities the minimumregulatoryrequirements. now available.The decisionhasbeenmadethatwewillcontinuetoencouragestaffcompletequalificationsoverandabove We haverecentlyreviewedourexamination requirementsforInvestmentManagersinlightofthenewupgradedqualifications areas ofknowledge.This isanopportunityforthebusinesstoprovidesomehighlyrelevantandinspiringcourses. between thenewstandardsandqualificationsgainedbystaffaresupportingthemwithtrainingneededtorefresh The FSA’s hasincreasedthefocusonprofessional standards.We RetailDistributionReview(RDR) arereviewingthe gaps Challenges forthefuture Chart 2.Expenditurebytypeoftraining 2.3days). and2.2days(2009: £480) to anaverageof£562perperson(2009: £327,000). ondevelopment(2009: continuestoinvestintraining,2010wespent£393,000 Rathbones This equates Investment now havequalifiedcoaches within thetrainingteam. amount ofcoaching thatisavailable foronetoperformanceenhancement.We havebeenabletodothisbecausewe We strivetoprovidearangeofdevelopmentopportunitiesallstaffacrosstheGroupandhaverecentlyincreased Coaching Employees continued

Other IT Coaching skills Soft Continuousprofessional development Qualifications

14 17 28 29 % 6 6

Rathbone Brothers Plc 59 Corporate responsibility report Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 60 Statement of Directors’ responsibilities in respect of the report and accounts 16 February 2011 Chief Executive A DPomfret By OrderoftheBoard theDirectors’report,togetherwithinformationprovidedinbusinessreview, includesafairreviewofthe • thefinancialstatements,preparedinaccordancewithapplicablesetofaccountingstandards,giveatrueandfair • We confirmthattothebestofourknowledge: Statement asaresult oftheDisclosure andTransparency RulesoftheFinancialServicesAuthority the Company’sauditorisawareofthatinformation. he orsheoughttohavetakenasaDirectormakehimherselfawareofanyrelevantauditinformationandestablishthat is norelevantauditinformationofwhich theCompany’sauditorsareunaware;andeach Directorhastakenallthestepsthat The DirectorswhoheldofficeatthedateofapprovalthisDirectors’reportconfirmthat,sofarastheyareeach aware,there Disclosure ofinformation toauditor legislation inotherjurisdictions. governingthepreparationanddisseminationoffinancialstatementsmaydiffer from Group website.Legislation intheUK The Directorsareresponsibleforthemaintenanceandintegrityofcorporatefinancialinformationincludedon and Corporategovernancereportthatcomplieswithlawthoseregulations. Under applicablelawandregulations,theDirectorsarealsoresponsibleforpreparingaDirectors’report,Remunerationreport and otherirregularities. for takingsuch stepsasarereasonably opentothemsafeguard theassetsofGroupandtopreventdetectfraud They havegeneralresponsibility enable themtoensurethatitsfinancialstatementscomplywiththeCompaniesAct2006. company’s transactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionofparentcompany The Directorsareresponsible for keepingadequateaccountingrecordsthataresufficienttoshowandexplain theparent parentcompanywillcontinueinbusiness. preparethefinancialstatementsongoingconcernbasisunlessitisinappropriatetopresumethatGroupand • and asadoptedbytheEU; statewhethertheyhavebeenpreparedinaccordancewithIFRS • makejudgementsandestimatesthatarereasonableprudent; • selectsuitableaccountingpoliciesandthenapplythemconsistently; • each oftheGroupandparent company financialstatements,theDirectorsarerequiredto: and fairviewofthestateaffairsGroupparentcompanytheirprofitorlossforthatperiod.Inpreparing Under companylawtheDirectorsmustnotapprovefinancialstatementsunlesstheyaresatisfiedthatgiveatrue applicable lawandhaveelectedtopreparetheparentcompanyfinancialstatementsonsamebasis. and asadoptedbytheEU that lawtheyarerequiredtopreparetheGroupfinancialstatementsinaccordancewithIFRS Company lawrequirestheDirectorstoprepareGroupandparentcompanyfinancialstatementsforeach financialyear. Under accordance withapplicablelawandregulations. The Directorsareresponsible for preparingtheannualreportandGroupparentcompanyfinancialstatementsin Statement of Directors’ responsibilities in respect of the report and accounts consolidation takenasawhole,togetherwithdescriptionoftheprincipalrisksanduncertaintiesthattheyface. development andperformanceofthebusinesspositionCompanyundertakingsincludedin consolidation takenasawhole;and view oftheassets,liabilities,financialpositionandprofitorlossCompany

andtheundertakingsincludedin

Consolidated financial statements position

cash flows financial

statement

comprehensive income in equity changes Consolidated financial statements

62 Independent auditor’s report to the 64 members of Rathbone Brothers Plc Consolidated income statement 65 Consolidated statement of 65 Consolidated statement of 66 Consolidated 67 Consolidated statement of 68 Notes to the consolidated 61 financial statements

Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 62 Independent auditor’s report to the members of Rathbone Brothers Plc • • • In ouropinion: Opinion onothermattersprescribedbytheCompaniesAct2006 • • • • In ouropinion: Opinion onfinancialstatements www.frc.org.uk/apb/scope/UKP.cfm websiteat: A descriptionofthescopeanauditfinancialstatementsisprovidedonAPB’s Scope oftheauditfinancialstatements EthicalStandardsforAuditors. Practices Board’s(APB’s) andIreland). Those standardsrequireustocomplywiththeAuditing law andInternationalStandardsonAuditing(UK and fairview. Ourresponsibilityistoaudit,andexpress anopinionon,thefinancialstatementsinaccordancewithapplicable the Directorsareresponsibleforpreparationoffinancialstatementsandbeingsatisfiedthattheygiveatrue As explained morefullyinthe Directors’ responsibilitiesstatementinrespectofthereportandaccountssetoutonpage60, Respective responsibilitiesofDirectorsandauditor audit work,forthisreport,ortheopinionswehaveformed. not acceptorassumeresponsibilitytoanyoneotherthantheCompanyandCompany’smembers,asabody, forour are requiredtostatetheminanauditor’sreportandfornootherpurpose.To thefullestextent permittedbylaw, wedo OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematters Act 2006. This reportismadesolelytothe Company’smembers,asabody, inaccordancewithChapter3ofPart 16oftheCompanies the parentCompanyfinancialstatements,asappliedinaccordancewithprovisionsofCompaniesAct2006. and,asregards asadoptedbytheEU preparation isapplicablelawandInternationalFinancialReportingStandards(IFRS) Company statementofcashflowsandtherelatednotes. The financialreportingframeworkthathasbeenappliedintheir and Companystatementofchanges inequity, consolidatedandCompanystatementoffinancialposition, comprise theconsolidatedincomestatement,andCompanystatementofcomprehensiveincome, We BrothersPlcfortheyearended31December2010which haveauditedthefinancialstatementsofRathbone Independent auditor’s report tothemembers ofRathboneBrothers Plc the financialstatements. sharecapitalstructures isconsistentwith management systemsinrelationtofinancialreportingprocesses andabout consistent withthefinancialstatements;and Companies Act2006; and and asappliedinaccordancewiththeprovisionsofCompaniesAct2006; at 31December2010andoftheGroup’sprofitforyearthenended; information givenintheCorporategovernancereportsetouton page32withinternalcontrolandrisk the informationgiveninDirectors’reportforfinancialyearwhich thefinancialstatementsarepreparedis the partofDirectors’Remunerationreporttobeauditedhasbeenproperlypreparedinaccordancewith as regardstheGroupfinancialstatements,Article4ofIAS Regulation. and, the financialstatementshavebeenpreparedinaccordancewithrequirementsofCompaniesAct2006 EU asadoptedbythe IFRS the parentcompanyfinancialstatementshavebeenproperlypreparedinaccordancewith EU; asadoptedbythe IFRS the Groupfinancialstatementshavebeenproperlypreparedinaccordancewith the financialstatementsgiveatrueandfairviewofstateGroup’sparentcompany’saffairsas

16 February 2011 15 CanadaSquare,London E145GL Chartered Accountants Audit Plc,StatutoryAuditor for andonbehalfofKPMG I Cummings(SeniorStatutoryAuditor) • • • Under theListingRuleswearerequiredtoreview: • • • • • wearerequiredtoreportyouif,inouropinion: Under theCompaniesAct2006 We havenothingtoreportinrespectofthefollowing: Matters onwhichwearerequiredtoreportbyexception of the June 2008 CombinedCodespecifiedforourreview;and of theJune2008 agreement withtheaccountingrecordsandreturns;or received frombranches notvisited byus;or certain elementsofthereporttoshareholdersbyBoardonDirectors’remuneration. the partofCorporategovernancereportonpage32,relatingtoCompany’scompliancewithnineprovisions inrelationtogoingconcern; the Directors’statement,setoutonpage60, a CorporateGovernanceStatementhasnotbeenpreparedbytheCompany. we havenotreceivedalltheinformationandexplanations werequireforouraudit;or certain disclosuresofDirectors’remunerationspecifiedbylawarenotmade;or the parentcompanyfinancialstatementsandpartofDirectors’Remunerationreporttobeauditedarenotin adequate accountingrecordshavenotbeenkeptbytheparentcompany, orreturnsadequateforouraudithavenotbeen

Rathbone Brothers Plc 63 Independent auditor’s report to the members of Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 64 Consolidated income statement The accompanyingnotesformanintegralpartoftheconsolidatedfinancialstatements. – – period attributabletoequityholdersoftheCompany: Earnings persharefromprofitcontinuingoperationsforthe – – holders oftheCompany: Earnings persharefortheperiodattributabletoequity Dividends paidandproposedfortheyear Dividends paidandproposedfortheyearperordinaryshare Profit fortheperiodattributableto Net lossfromdiscontinuedoperations Loss recognisedonre-measurementofassetsthedisposalgroup Income taxcreditonlossbeforefromdiscontinuedoperations Loss beforetaxfromdiscontinuedoperations Discontinued operations Profit aftertaxfromcontinuingoperations Taxation Profit beforetaxfromcontinuingoperations Operating expenses Other operatingexpenses Transaction costs Amortisation ofclientrelationships Levies fortheFinancialServices CompensationScheme Operating income Other operatingincome Net tradingincome Dividend income Net feeandcommissionincome Fee andcommissionexpense Fee andcommissionincome Net interestincome Interest expense andsimilarcharges Interest andsimilarincome for theyearended31December2010 Consolidated incomestatement diluted basic diluted basic

equityholdersoftheCompany

Note 20 12 12 11 10 9 7 7 7 6 6 6 5 4

124,432 116,670 127,184 (88,681) (97,101) 44.00p 49.35p 49.35p 49.76p 49.76p 30,083 19,067 21,552 21,552 10,274 (4,845) (1,445) (8,531) (3,575) (7,762) 1,369 8,829 £’000 226 2010 90 – – – – –

103,735 116,757 (84,311) (87,289) 96,384 18,496 29,468 29,468 19,628 21,502 18,159 20,197 46.85p 45.53p 45.55p 42.00p 46.87p (3,006) (1,967) (9,271) (7,351) 1,439 (569) (391) (211) (229) (782) 358 £’000 2009 80 33 Reclassification oftranslationreserve Issue ofsharecapital Dividends paid of othercomprehensiveincome Deferred taxrelatingtocomponents investment securities Revaluation ofavailableforsale benefit obligation Net actuariallossonretirement Exchange translationdifferences Profit fortheyear At 1January2010 – – – – Share-based payments: on disposalofsubsidiaries Reclassification oftranslationreserve Issue ofsharecapital Dividends paid of othercomprehensiveincome Deferred taxrelatingtocomponents investment securities Revaluation ofavailableforsale benefit obligation Net actuariallossonretirement Exchange translationdifferences Profit fortheyear At 1January2009 for theyearended31December2010 Consolidated statementofchangesinequity attributable toequityholdersoftheCompany Total comprehensiveincomefortheyear, netoftax Other comprehensiveincomefortheyear, netoftax – – – Revaluation ofavailableforsaleinvestmentsecurities: Net actuariallossonretirementbenefitobligation Exchange translationdifferences Other comprehensiveincome: Profit fortheyearattributabletoequityholders oftheCompany for theyearended31December2010 Consolidated statementofcomprehensiveincome The accompanying notes formanintegral partofthe consolidated financial statements. At 31 December2010 – – – Share-based payments: on liquidationofsubsidiaries tax onshare-basedpayments costs ofsharesissued/purchased settled awards transfer toliabilitiesforcash value ofemployeeservices actuarial gainsandlosses available forsaleinvestmentsecurities Deferred taxrelatingtocomponents ofothercomprehensiveincome: net gain/(loss)fromchanges in fairvalue tax onshare-basedpayments costs ofsharesissued/purchased value ofemployeeservices

Note 19 10 26 11 16 25 10 26 11 16 25 19

2,143 2,169 2,165 capital Share £’000 22 4

28,957 32,488 31,756 premium 2,799

£’000 732

31,835 31,835 31,835 reserve Merger £’000

Available 2,119 2,219 2,077 for sale reserve £’000 155 (59) (13) Note 17 16 25

Translation reserve (359) (182) (254) 786 £’000 245 – 9

34,054 19,480 34,157 21,552 34,740 (3,005) (2,072) reserves (359) (182) (254) £’000 £’000 155 155 other 782 Total (59) 2010 (13) (13) 17 9 9

116,663 118,791 114,411 (18,066) (18,167) 19,628 21,552 (1,096) (8,626) (3,005) Retained earnings 2,415 1,219 1,054 (119) (569) 359 £’000 254 351 782 (94)

184,631 182,489 185,374 (18,066) (18,167) 19,628 13,193 19,628 21,552 (1,096) (8,626) (8,626) (6,435) (3,005) 2,821 2,432 1,219 2,415 1,054 (182) (119) (182) (569) equity £’000 £’000 736 769 351 155 2009 Total (94) (59) (59) 17 – – 9

Rathbone Brothers Plc 65 Consolidated statement of comprehensive income Report and accounts 2010 Consolidated statement of changes in equity Consolidated statement of financial position as at 31 December 2010

2010 2009 Note £’000 £’000 Assets Cash and balances at central banks 13 4 315 Settlement balances 18,169 17,305 Loans and advances to banks 14 39,565 92,661 Loans and advances to customers 15 40,025 26,745 Investment securities – available for sale 16 42,587 86,932 – held to maturity 16 751,085 694,000 Prepayments, accrued income and other assets 17 36,368 29,878 Property, plant and equipment 18 6,143 5,676 Deferred tax asset 19 2,474 1,603 Intangible assets 20 91,702 81,973

Total assets 1,028,122 1,037,088

Liabilities Deposits by banks 21 3,304 7,379 Settlement balances 23,712 22,157 Due to customers 22 762,026 766,361 Accruals, deferred income, provisions and other liabilities 23 42,455 46,875 Current tax liabilities 4,608 2,414 Retirement benefit obligations 25 6,643 9,413

Total liabilities 842,748 854,599

Equity Share capital 26 2,169 2,165 Share premium 26 32,488 31,756 Other reserves 34,054 34,157 Retained earnings 116,663 114,411

Total equity 185,374 182,489

Total liabilities and equity 1,028,122 1,037,088 The financial statements were approved by the Board of Directors and authorised for issue on 16 February 2011 and were Consolidated statement of financial position

signed on its behalf by:

66 A D Pomfret R P Stockton Chief Executive Finance Director

Company registered number: 01000403.

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

Rathbone Brothers Plc Report and accounts 2010 Consolidated statement of cash flows for the year ended 31 December 2010

2010 2009 Note £’000 £’000 Cash flows from operating activities Profit before income tax from continuing operations 30,083 29,468 Net interest income (8,829) (18,496) Impairment losses on loans and advances 15 95 22 Profit on disposal of plant and equipment (37) (20) Depreciation and amortisation 8,405 5,340 Defined benefit pension scheme charges 25 1,510 1,852 Share-based payment charges 8 1,729 1,219 Interest paid (1,413) (3,889) Interest received 11,754 33,819

43,297 49,315 Changes in operating assets and liabilities: – net decrease/(increase) in loans and advances to banks and customers 24,572 (42,557) – net increase in settlement balance debtors (864) (1,554) – net (increase)/decrease in prepayments, accrued income and other assets (7,980) 3,436 – net decrease in amounts due to customers and deposits by banks (8,410) (265,751) – net increase in settlement balance creditors 1,555 8,109 – net increase/(decrease) in accruals, deferred income, provisions and other liabilities 6,598 (8,723)

Cash generated from/(used in) operations 58,768 (257,725) Defined benefit pension contributions paid 25 (7,285) (6,788) Tax paid (6,089) (9,625) Discontinued operations 10 – (1,522)

Net cash inflow/(outflow) from operating activities 45,394 (275,660)

Cash flows from investing activities Disposal of businesses, net of cash transferred 32 – (1,341) Purchase of property, equipment and intangible assets (30,417) (3,319) Proceeds from sale of property, plant and equipment 128 65 Purchase of investment securities 16 (1,679,090) (1,796,282) Proceeds from sale and redemption of investment securities 16 1,622,005 1,977,261

Discontinued operations 10 – (4) Consolidated statement of cash flows

Net cash (used in)/generated from investing activities (87,374) 176,380 67

Cash flows from financing activities Purchase of shares for share-based schemes (286) (468) Issue of ordinary shares 32 453 2,193 Dividends paid 11 (18,167) (18,066)

Net cash used in financing activities (18,000) (16,341)

Net decrease in cash and cash equivalents (59,980) (115,621) Cash and cash equivalents at the beginning of the period 139,044 255,021 Effect of exchange rate changes on cash and cash equivalents 5 (356)

Cash and cash equivalents at the end of the period 32 79,069 139,044 The accompanying notes form an integral part of the consolidated financial statements.

Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 68 Notes to the consolidated financial statements of consolidation. For subsidiarieswithnon-coterminous yearends,financialstatementsaredrawnupto31December forthepurposes Unrealised lossesarealsoeliminated unlessthetransactionprovidesevidenceofimpairment of theassettransferred. Intercompany transactions,balances andunrealisedgainsontransactionsbetweenGroupcompanies areeliminated. the difference isrecogniseddirectlyintheincomestatement. is recordedasgoodwill.Ifthecostofacquisitionlessthan fairvalue ofthenetassetssubsidiaryacquired, interest. The excess ofthecostacquisitionoverfairvalueGroup’sshareidentifiablenetassetsacquired combination aremeasuredinitiallyattheirfairvaluestheacquisition date,irrespectiveoftheextent ofanyminority at thedateofexchange. Identifiableassetsacquiredandliabilitiescontingentassumedinabusiness acquisition ismeasuredasthefairvalueofassetsgiven,equity instrumentsissuedandliabilitiesincurredorassumed The purchase methodofaccountingisusedtoaccountfortheacquisitionsubsidiariesbyGroup.The costofan ceases. The resultsofsubsidiariesareincludedintheconsolidatedfinancialstatementsup to thedatethatcontrolceases. consolidated fromthedateonwhich controlistransferred totheGroup.They aredeconsolidatedfromthedatethatcontrol or convertibleareconsideredwhenassessingwhetheranentity isasubsidiaryoftheCompany. Subsidiariesarefully of morethanonehalfthevotingrights.The existence andeffect ofpotentialvotingrightsthatarecurrentlyexercisable Subsidiaries areallentitiesinwhich theCompanyhasacontrollinginterest,generallyaccompanyingshareholding the Company(itssubsidiaries),togetherGroup,madeupto31Decembereach year. The consolidatedfinancialstatementsincorporatetheofCompanyandentitiescontrolledby Basis ofconsolidation The Groupdoesnotplantoadoptthisstandardearlyandtheextent oftheimpacthasnotbeendetermined. 2013 consolidatedfinancialstatementsandcould change theclassificationandmeasurementoffinancialassets. 9‘FinancialInstruments’, andisexpected tobecomemandatoryfortheGroup’s whichIFRS isnotyetadoptedbytheEU None oftheseisexpected tohaveasignificantaffect ontheconsolidatedfinancialstatementsofGroup, exceptfor after 1January2010,andthereforehavenotbeenappliedinpreparingtheseconsolidatedfinancialstatements. A numberofnewstandards,amendmentstoStandardsandInterpretations,areeffective forannualperiodsbeginning New StandardsandInterpretations • • • • (2009)’: The followingamendmentsweremadeaspartof‘ImprovementstoIFRS • • • • for futuretransactionsandarrangements: has nothadanysignificantimpactontheamountsreportedinthesefinancialstatementsbutmayaccounting The followingnewandrevised StandardsandInterpretationshavebeenadoptedinthecurrentyear. Their adoption notaffectingthereportedStandards results orthefinancialposition affected theamountsreported inthesefinancialstatements. In thecurrentyear, therehavebeennoneworrevisedStandardsandInterpretationsthatadopted affectingthefinancialstatements Standards Developments inreportingStandardsandInterpretations been applied;theCompanyfinancialstatementsarepresentedonpage109. 1‘FirsttimeadoptionofInternationalFinancialReportingStandards’has IFRS forthefirsttimeandconsequently IFRS The Companyhaselectedtoprepareitsfinancialstatementsinaccordancewith (IFRS). as adoptedbytheEU The consolidatedfinancialstatements havebeenpreparedinaccordancewithInternationalFinancialReportingStandards the CompaniesAct2006. BrothersPlc(theCompany)isapubliccompanyincorporatedanddomiciledinEnglandWalesRathbone under 1 Notes totheconsolidatedfinancialstatements Share-based Payment Transactions’ Amendments to IAS 36 ‘ImpairmentofAssets’ Amendments toIAS 36 Amendments toIAS 7‘StatementofCashFlows’ 8‘OperatingSegments’ Amendments toIFRS ‘IntangibleAssets’ Amendments toIAS 38 2,‘Share-basedPayments: Vesting ConditionsandCancellations&GroupCash-settled Amendments toIFRS 17,IFRIC ‘DistributionsofNon-cashAssetstoOwners’ IAS 27, ‘ConsolidatedandSeparateFinancialStatements(revised2008)’ 3,‘BusinessCombinations(revised2008)’ IFRS Principal accountingpolicies

Plant, equipmentandcomputer hardware: Leasehold property: using thestraightlinemethod,onfollowingbases: Depreciation ischarged soastowriteoffthecostofassetstheirestimatedresidualvalue overtheirestimatedusefullives, Historical costincludesexpenditure thatisdirectlyattributabletotheacquisitionofitems. All property, plantandequipment isstatedathistoricalcostlessaccumulateddepreciationandimpairmentlosses. Property, plantandequipment income onastraightlinebasisovertheestimatedaveragelife oftheunitholding. the incomeisrecognisedonperformanceofthatservice.Other retainedinitialcharges are deferred andrecognisedas To theextent thatretainedinitial charge incomereceivedon thesaleofunitsarisesfromanidentifiablebrokerageservice, Commissions receivableandpayableareaccountedforintheperiodwhich theyareearned. Asset managementfees arerecognisedevenlyovertheperiodserviceisprovided. Portfolio andothermanagementadvisoryservicefees arerecognisedovertheperiodserviceisprovided. Fees andcommissions impact ofanyleaseincentives. on astraightlinebasisoverthetermoflease.Lease expense recognisedintheincomestatementisadjustedfor the Groupareclassifiedasoperatingleases. Payments madeunderoperatingleasesarerecognisedintheincomestatement Lease agreementswhich donottransfer substantiallyalloftherisksandrewardsownershipleasedassetsto Operating leases Interim dividendsarerecognisedwhenreceived. Dividend incomefromfinaldividendsonequitysecuritiesisaccountedforthedatesecuritybecomes ex-dividend. Dividend income the impairmentloss. interest incomeisrecognisedusingtherateofusedtodiscountfuturecashflowsforpurposemeasuring Once afinancialassetorgroupofsimilarassetshasbeenwrittendownasresultanimpairmentloss, the contractthatareanintegralpartofeffective interestrate,transactioncostsandallotherpremiumsordiscounts. but doesnotconsiderfuturecreditlosses.The calculationincludesallfees andinterestpaidorreceivedbetweenpartiesto the effective interestrate,the Group estimatescashflowsconsideringallcontractualtermsofthefinancialinstrument or, whenappropriate,ashorterperiodtothenetcarryingamountoffinancialassetorliability. Whencalculating that exactly discountsestimated futurecashpaymentsorreceiptsthroughtheexpected life ofthefinancialinstrument and ofallocatingtheinterestincomeorexpense overtherelevantperiod.The effective interestrateisthe The effective interestmethodisaofcalculatingtheamortisedcostfinancialassetorliability money marketfundsareincludedwithinnetinterestincome. amortised costandforavailablesaledebtinstrumentsusingtheeffective interestmethod.Dividendsreceivablefrom Interest incomeandexpense are recognisedasearnedintheincomestatementforallinstrumentsmeasuredat Net interestincome business reviewonpage23. to adoptthegoingconcernbasisofaccountinginpreparingfinancialstatements. Further detailiscontainedinthe the Grouphaveadequateresourcestocontinueinoperationalexistence fortheforeseeablefuture.Thus theycontinue The Directorshave,atthetime ofapprovingthefinancialstatements,areasonable expectation thattheCompanyand have, unlessotherwisestated,beenappliedconsistentlytoallperiodspresentedintheconsolidatedfinancialstatements. measured atfairvalue.The principal accountingpoliciesadoptedaresetoutbelow. The accountingpoliciessetoutbelow The financialstatementshave beenpreparedonthehistoricalcostbasis, except forcertainfinancialinstrumentsthatare Basis ofpreparation 1 income statement. Gains andlossesondisposalsare determinedbycomparingproceedswiththecarryingamount. These areincludedinthe The assets’residuallivesarereviewed,andadjustedifappropriate, ateach statementoffinancial positiondate. Principal accountingpolicies continued over threetotenyears over theleaseterm

Rathbone Brothers Plc 69 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 70 Notes to the consolidated financial statements with revenuerecognisedonan effective yieldbasis. Held tomaturityinvestmentsare measuredatamortisedcostusingtheeffective interestmethodlessanyimpairment, definition ofloansandreceivables orthattheGrouphasclassifiedasavailableforsalefair valuethroughprofitorloss. that theGroup’smanagementhaspositiveintentionandability toholdmaturity, otherthanthosethatmeetthe Held tomaturityinvestmentsarenon-derivativefinancialassets withfixedordeterminablepaymentsandmaturities c any impairment. of tradingthereceivable.Loans andreceivablesaremeasuredatamortisedcostusingtheeffective interestmethod,less active market.They arisewhentheGroupprovidesmoney, goods orservicestoadebtorpurchases aloanwithnointention Loans andreceivablesarenon-derivativefinancialassetswithfixedordeterminablepayments thatarenotquotedinan b assets orotherliabilities. term orifsodesignated.Derivatives,which arecategorisedasfairvaluethroughprofitorloss,reportedwithinother or lossatinception.Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellinginshort This categoryhastwosub-categories:financialassetsheldfortrading,andthosedesignatedatfairvaluethroughprofit a is determinedatinitialrecognition.Financialassetsareinitiallyrecognisedfairvalue. loans andreceivables,heldtomaturityinvestmentsavailableforsalefinancialassets. The classificationoffinancialassets The Groupclassifiesitsfinancialassetsinthefollowingcategories:atfairvaluethroughprofitorloss, Financial assets immediately andtheintangibleassetisderecognised. useful lives(tentofifteenyears). When clientrelationshipsarelostthefullamountofunamortisedcostisrecognised Amortisation iscalculatedusingthestraightlinemethodtoallocatecostofclientrelationshipsovertheirestimated recognised atfairvalue.Clientrelationshipshaveafiniteusefullife andarecarriedatcostlessaccumulatedamortisation. Client relationshipsacquiredareinitiallyrecognisedatcost.Those inrespectofbusinesscombinationsareinitially c recognised asanexpense asincurred. Costs associatedwithdevelopingormaintainingcomputersoftwareprogramsthatarenotrecognisedasassets costs recognisedasassetsareamortisedusingthestraightlinemethodovertheir usefullives(notexceeding fouryears). aremet.Computersoftwaredevelopment are recognisedasintangibleassetswhentherecognitionrequirementsofIAS 38 Costs thataredirectlyassociatedwiththeproductionofidentifiableanduniquesoftwareproductscontrolledbyGroup specific software. These costs areamortisedonthebasisof expected usefullives(threetofouryears). Acquired computersoftwarelicencesarecapitalisedonthebasisofcostsincurredtoacquireandbringuse b subject tobeingtestedforimpairmentatthatdateandannuallythereafter. GAAPamounts hasbeenretainedatthepreviousUK Goodwill arisingonacquisitionsbeforethedateoftransitiontoIFRS determination oftheprofitorlossondisposal. On disposalofasubsidiarytheattributedamountgoodwillthathasnotbeensubjecttoimpairmentisincludedin assets thatgeneratescashinflowsarelargelyindependentofthefromotherorgroupsassets. goodwill forpurposesofimpairmenttesting.Cashgeneratingunitsareidentifiedasthesmallestidentifiablegroup correspond withtheGroup’ssegments,astheserepresentlowestlevelwithinGroupatwhich managementmonitor and isnotsubsequentlyreversed.Goodwillarisingonacquisitionallocatedtogroupsofcashgeneratingunitsthat changes incircumstancesindicate thatitmightbeimpaired.Anyimpairmentisrecognisedimmediatelyinprofitorloss Goodwill isrecognisedasanassetandreviewedforimpairmentatleastannually, orwhenotheroccasions value oftheidentifiableassets,liabilitiesandcontingentasubsidiaryatdateacquisition. Goodwill arisingonconsolidationrepresentstheexcess ofthecostacquisitionoverGroup’sinterestinfair a Intangible assets 1 Principal accountingpolicies Held tomaturity Loans andreceivables Financial assetsatfairvaluethrough profit orloss Client relationships Computer software andsoftware developmentcosts Goodwill

continued

An impairmentlossinrespectof aheldtomaturityinvestmentsecurityorloansandreceivables isreversedonlyifthevalue a revaluedamount,inwhich casethereversalofimpairmentlossistreatedasarevaluation increase. in prioryears.Areversalofanimpairmentlossisrecognisedas incomeimmediately, unlesstherelevantassetiscarriedat amount thatwouldhavebeendeterminedhadnoimpairmentloss beenrecognisedfortheassetorcashgeneratingunit or cashgeneratingunits,isincreasedtotherevisedestimateof itsrecoverableamount,which isnogreaterthanthecarrying Where animpairmentlosssubsequentlyreverses,thecarrying amountofanyasset,except for goodwill,equityinstruments expense immediately. amount oftheassetorcashgeneratingunitisreducedtoitsrecoverable amount.Impairmentlossesarerecognisedasan If therecoverableamountofanassetorcashgeneratingunitis estimatedtobelessthanitscarryingamount,the in equityatthetimethatobjectiveevidenceofimpairmentisidentified. Impairment ofavailableforsalesecuritiesiscalculatedasthecumulativelossthathasbeenpreviouslyrecogniseddirectly the Companyestimatesrecoverableamountofcashgeneratingunittowhich theassetbelongs. rate oftheassetonrecognition.Where anassetdoesnotgeneratecashflowsthatareindependentfromotherassets, and receivablesiscalculatedasthepresentvalueofestimatedfuturecashflows,discountedateffective interest of futurecashflowshavenotbeenadjusted. The recoverableamountofheldtomaturityinvestmentsecuritiesandloans reflects currentmarketassessmentsofthetimevaluemoneyandrisksspecifictoassetforwhich theestimates value inuse,theestimatedfuturecashflowsarediscountedtotheirpresentvaluesusingapretaxdiscountratethat The recoverableamountofnon-financialassetsisthehigherfairvaluelessanycosttosellandinuse.Inassessing receivables areconsideredindividuallyforimpairment. in ordertodeterminetheextent oftheimpairmentloss(ifany).Heldtomaturityinvestmentsecuritiesandloans of impairmentduringtheaccountingperiod.Ifanysuch indicationexists, therecoverableamountofassetisestimated Financial assetsandotherwithfiniteusefullivesareassessedatthereporting dateorifthereisobjectiveevidence indication ofimpairment. Goodwill andotherintangibleassetswithindefiniteusefullivesaretestedforimpairmentannually, andwhenthereisan Impairment other valuationtechniques commonlyusedbymarketparticipants. These includetheuseofrecentarm’slengthtransactions,discountedcashflowanalysis,optionpricingmodelsand financial assetisnotactive(andforunlistedsecurities),theGroupestablishesfairvaluebyusingvaluationtechniques. The fairvaluesofquotedfinancialinstrumentsinactivemarketsarebasedoncurrentbidprices.Ifthemarketfora interest calculatedusingtheeffective interestmethodisrecognisedintheincomestatement. time thecumulativegainorlosspreviouslyrecognisedinequityshouldbeincomestatement.However, presented intheavailableforsalereserveequity, untilthefinancialassetissold,derecognisedorimpairedatwhich in thefairvalueofavailableforsalefinancialassetsarerecognisedstatementothercomprehensiveincomeand category areincludedintheincomestatementperiodwhich theyarise.Gainsandlossesarisingfromchanges method. Gainsandlossesarisingfromchanges inthefairvalueoffinancialassets‘atthroughprofitorloss’ value. Loans andreceivables heldtomaturityinvestmentsarecarriedatamortisedcostusingtheeffective interest Available forsalefinancialassets andfinancialliabilitiesatfairvaluethroughprofitorlossaresubsequentlycarried all risksandrewardsofownership. flows fromthefinancialassetshave expiredorbeeneffectively transferred, orwherethe Grouphastransferred substantially assets notcarriedatfairvaluethroughprofitorloss.Financialarederecognised whentherightstoreceivecash Financialassetsareinitiallyrecognisedatfairvalueplustransactioncostsforallfinancial cash isadvancedtotheborrowers. recognised ontradedate–thewhich theGroupcommitstopurchase orselltheasset.Loans arerecognisedwhen Purchases andsalesoffinancialassetsatfairvaluethroughprofitorloss,heldtomaturityavailableforsaleare which maybesoldinresponse toneedsforliquidityorchanges ininterestrates,exchange ratesorequityprices. any oftheothercategories.Available forsaleinvestmentsarethoseintendedtobeheldanindefiniteperiodoftime, Available forsalefinancialassets arenon-derivativesthateitherdesignatedinthiscategoryornotclassified d 1 reversed through profitorloss. be objectivelyrelatedtoanevent occurringaftertheimpairmentlosswasrecognisedinprofit orloss,theimpairmentis through profitorloss.Ifthefair valueofadebtinstrumentclassifiedasavailableforsaleincreases andtheincreasecan An impairmentlossinrespectof aninvestmentinequityinstrumentsclassifiedasavailablefor saleisnotreversed increase canberelatedobjectively toaneventoccurringaftertheimpairmentlosswasrecognised. Principal accountingpolicies Available forsale

continued

Rathbone Brothers Plc 71 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 72 Notes to the consolidated financial statements in respectofpreviousyears. enacted orsubstantively atthestatementoffinancialpositiondate,andanyadjustment totaxreceivableorpayable Current taxreceivableorpayable istheexpected taxreceivable orpayableonthetaxableincomeforyear, usingtaxrates to theextent thatitrelatestoitemsrecogniseddirectlyinequity, inwhich caseitisrecognisedinequity. Tax ontheprofitorlossforyearcomprisescurrentanddeferred tax. Tax isrecognised intheincomestatement except Taxation Payments todefinedcontributionretirementbenefit schemes are chargedasan expenseastheyfalldue. reduced bytheextent towhich anyfutureliabilitieswillbemetbyinsurancepolicies. statement offinancialpositionfordeathinservicebenefitsrepresents thepresentvalueofestimatedobligation, Death inservicebenefitsareprovidedtoallemployeesthrough thepensionschemes. The amountrecognisedinthe refunds andreductionsinfuturecontributionstotheplan. reduced bythefairvalueofplanassets.Anyassetresultingfrom thiscalculationislimitedtothepresentvalueofavailable The amountrecognisedinthestatementoffinancialpositionrepresentspresentvalue of thedefinedbenefitobligation on astraightlinebasisovertheaverageperioduntilamendedbenefitsbecomevested. Past servicecostisrecognisedimmediatelytotheextent thatthebenefitsarealreadyvested,andotherwiseisamortised in fulltheperiodwhich theyoccur, inthestatementofcomprehensiveincome. actuarial valuationsbeingcarriedoutateach statementoffinancialpositiondate.Actuarialgainsandlossesarerecognised The costofprovidingbenefitsunderdefinedbenefitplansaredeterminedusingtheprojectedunitcreditmethod,with Retirement benefitobligations and theyaretranslatedusingtheexchange rateappliedonthedateofacquisition. asnon-monetaryforeigncurrencyitems functional currencyarisingonacquisitionsbeforethedateoftransitiontoIFRS reserve. The GrouphaselectedtotreatgoodwillandfairvalueadjustmentsdenominatedinacurrencyotherthantheGroup’s foreign entityandtranslatedattheclosingrate.GainslossesarisingontranslationaretakentoGroup’stranslati Goodwill andfairvalueadjustmentsarisingontheacquisitionofaforeignentityaretreatedasassetsliabilities translation reserve.Such translationdifferences aretransferred toequityintheperiodwhich theoperationisdisposed. at theaverageexchange ratesfortheperiod.Exchange differences arising,ifany, arerecognisedinequitywithintheGroup’s currency atexchange ratesprevailingonthestatementoffinancialpositiondate.Incomeand expense itemsaretranslated On consolidation,theassetsandliabilitiesofGroup’soverseasoperationsaretranslatedintopresentational arising onnon-monetaryassetsandliabilitieswherethechanges infairvaluearerecogniseddirectlyequity. Gains andlossesarisingonretranslationareincludedinnetprofitorlossfortheperiod, except for exchange differences was determined. fair valuethataredenominatedinforeigncurrenciestranslatedattheratesprevailingdatewhen retranslated attheratesprevailingonstatementoffinancialpositiondate.Non-monetaryassetscarried At each statementoffinancialpositiondate,monetaryassetsandliabilitiesthataredenominatedinforeigncurrencies relevant Groupentity’sfunctionalcurrencyarerecordedattheratesofexchange prevailingonthedatesoftransactions. The Company’sfunctionaland theGroup’spresentationalcurrencyisSterling.Transactions incurrenciesotherthanthe Foreign currencies to thepassageoftimeisrecognisedwithininterestexpense. market assessmentsofthetimevaluemoneyandrisksspecifictoobligation. The increaseintheprovisiondue present valueoftheexpenditures expected toberequiredsettletheobligationusingapretaxratethatreflectscurrent it isprobablewillresultinanoutflowofeconomicbenefitsthatcanbereliablyestimated. Provisionsaremeasuredatthe Provisions arerecognisedwhen theGrouphasapresentobligation(legalorconstructive)asresultofpasteventwhich Provisions recognised asanexpense inthe periodinwhich theyareincurred. cost iscalculatedbytakingintoaccountanyissuecostsanddiscountsorpremiaonsettlement.Borrowingare aresubsequentlymeasuredatamortisedcostusingtheeffective interestratemethod.Amortised deposits andborrowings areinitiallyrecognisedatthefairvalueofconsiderationreceived.After initialrecognition, All depositsandborrowings Deposits andborrowings 1 Principal accountingpolicies continued

or lossfortheyear. grant dateandsettlement,thefairvalueofliabilityisremeasured withanychanges infair valuerecognisedinprofit value oftheliability. At thedateonwhich theliabilityissettled,andateach statementoffinancialpositiondatebetween For cashsettledshare-basedpayments,aliabilityisrecognised fortheservicesreceived,measuredinitiallyatfair met, providedthatthenon-marketvestingconditionsaremet.Shares purchased andissued are charged directlytoequity. the charges fortheservicesreceivedarerecognisedregardlessofwhetherornotmarket related vestingconditionis shares orshareoptions,withacorrespondingadjustmenttoequity. Where vestingconditionsarerelatedtomarketconditions, cost ofemployeeservicessothatultimately, theamountrecognisedinincomestatementreflectsnumberofvested conditions aretakenintoaccountbyadjustingthenumberofshares orshareoptionsincludedinthemeasurementof vesting conditionsincludedinthetermsofgrantarenottaken intoaccountinestimatingfairvalue.Non-marketvesting the life oftheoption/awardandotherrelevantfactors.Exceptforthosewhich includetermsrelatedtomarketconditions, of theoption,currentshareprice,riskfreeinterestrate,expected volatilityoftheCompany’ssharepriceover The fairvalueoftheoptionsgrantedisdeterminedusingoptionpricingmodels,which takeintoaccounttheexercise price to equity. shares orshareoptionsgrantedisrecognisedintheincomestatementovervesting period,withacorrespondingcredit of thesharesorshareoptionsgrantedondategrant.The costoftheemployeeservicesreceivedinrespect to equitysettledshare-basedpayments,thefairvalueofservicesreceivedismeasuredbyreference tothefairvalue The Groupengagesinshare-basedpaymenttransactionsrespectofservicesreceivedfromcertainemployees.Inrelation Share-based payments net ofoutstandingbankoverdrafts. equivalents asdefinedabove, For thepurposesofconsolidatedstatementcashflows,andequivalentsconsist maturity oflessthanthreemonthsfromthedateacquisition. Cash equivalentscomprisemoneymarketfundswhich arerealisableondemandandloansadvancestobankswitha Cash comprisescashinhandanddemanddepositswhich maybeaccessedwithoutpenalty. Cash andcashequivalents Group intendstosettleitscurrenttaxassetsandliabilitiesonanetbasis. Deferred taxassetsandliabilitiesareoffsetwhentheyrelatetoincometaxesleviedbythesametaxationauthority which casethedeferred taxisalsodealtwithinequity. is charged orcreditedintheincomestatement,except whenitrelatestoitemscreditedorcharged directlytoequity, in of financialpositiondateandare expected toapplywhentheliabilityissettledorassetrealised.Deferred tax Deferred taxisdeterminedusing taxrates(andlaws)thathavebeenenactedorsubstantivelybythestatement to berecovered. to theextent thatitisnolonger probablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheasset The carryingamountsofdeferred taxassetsarereviewedateach statementoffinancial position dateandreduced not toreversethetemporarydifference intheforeseeablefuture. associates, except wheretheGroup isabletocontrolthereversaloftemporarydifference anditistheGroup’sintention Deferred taxliabilitiesarerecognised fortaxabletemporarydifferences arisingoninvestmentsinsubsidiariesand • • liabilities arenotrecognisedifthetemporarydifference arises: taxable profitswillbeavailableagainstwhich deductibletemporarydifferences maybeutilised.Such assetsand recognised foralltemporarydifferences anddeferred taxassetsarerecognisedtotheextent thatitisprobable and thecorrespondingtaxbasisusedincomputationoftaxableprofit.Inprinciple,deferred taxliabilitiesare differences arisingfromdifferences betweenthecarryingamountofassetsandliabilitiesinfinancialstatements Deferred taxisaccountedfor using thestatementoffinancialpositionliabilitymethodinrespecttemporary 1 Group thatengages inbusinessactivitiesfrom which itmayearnrevenuesand incurexpenses, includingrevenues and Executive Committee,which istheGroup’schief operatingdecisionmaker. Anoperatingsegment isacomponentofthe The Groupdeterminesandpresentsoperatingsegmentsbased ontheinformationthatisprovidedinternallytoGroup Segmental reporting the accountingprofit,otherthaninabusinesscombination. from theinitialrecognitionofotherassetsandliabilitiesinatransaction,which affects neitherthetaxprofitnor from theinitialrecognitionofgoodwillforwhich amortisationisnotdeductiblefortaxpurposes;or Taxation Principal accountingpolicies continued continued

Rathbone Brothers Plc 73 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 74 Notes to the consolidated financial statements principally therefinancing oftheoperationsdisposed of. The notesarerepayableontheoccurrence ofcertainevents, acquirer oftheGroup’sJerseytrust operationsin2008. As describedinnote15,theGroup hasissuedvendorloannotes(notes)withanominalvalue of£5,000,000tothe Vendor loannotes levieschargedThe totheincome statementduring2010was£3,575,000. totalamountrelatingtoFSCS of anyrecoveriesmade. compensation isbeingpaid.However, thetimingandtotalamount oftheserecoveriesisuncertain,astheGroup’sshare willmakefuturerecoveriesfromthirdpartiesandtheunderlying assetsforwhich It ispossiblethattheFSCS This costhasbeencharged toprofitinthefinancialstatementsandrecognisedwithinaccruals. On 24January2011theGroupreceivedinvoicestotalling£3,203,000 fortheKeydata and other intermediaryfailures. cost ofcompensatinginvestorsfromthefailureKeydata InvestmentServicesLimited(Keydata) andotherintermediaries. announcedon20January2011thatitwouldberaisinganinterimlevyof£326million,principallytocoverthe The FSCS leviesarelargelyoutoftheGroup’scontrolastheyresultfromotherindustryfailures. The financialimpactofFSCS FSCS leviesontheindustry.investors fromlossintheeventoffailurefinancialinstitutions haveresultedinsignificant The toprotectdepositorsand arrangementsputinplacebytheFinancialServicesCompensationScheme (FSCS) Financial ServicesCompensationScheme levies the existence ofotherretainedfamilyrelationships. In determiningwhetheraclientrelationshipislostmanagementconsiderfactorssuch astheleveloffundswithdrawnand period of1yearwouldincreasetheamortisationcharge byapproximately £410,000. a 10–15yearperiod.Amortisationof£4,845,000wascharged duringtheyear. Areductionintheaverageamortisation rates andmanagement’sexpectations forthefuture.Duringyearclientrelationshipintangibleassetswereamortisedover intangible assetsareamortised.The amortisationperiodisestimatedwithreference tohistoricaldataonaccountclosure theexpectedThe durationofclientrelationshipstodetermine theperiodoverwhich Groupmakesestimatesabout related Client relationshipintangibles including expectations offutureeventsthatarebelievedtobereasonableunderthecircumstances. financial year. Estimatesandjudgementsarecontinuallyevaluatedbasedonhistorical experience andotherfactors, The Groupmakesestimatesandassumptionsthataffect thereportedamountsofassetsandliabilitieswithinnext 2 recognised lesscumulativeamortisation,which isrecognisedoverthelife ofthecontract. measured atthehigherofbestestimateanyamounttobepaidsettleguaranteeandinitially Financial guaranteesareinitiallyrecognisedinthestatementoffinancialpositionatfairvalue.Guaranteessubsequently The Groupprovidesalimitednumberoffinancialguaranteeswhich arefullybacked byassetsinclients’portfolios. Financial guarantees financial positionastheGroupisnotbeneficiallyentitledthereto. Authority. Such moniesandthecorrespondingamountsduetoclientsarenotshownonfaceofstatement The Groupholdsmoneyonbehalf ofsomeclientsinaccordancewiththeClientMoneyRulesFinancialServices excluded fromthesefinancial statements,astheyarenotassetsoftheGroup. behalf ofindividuals,trusts,retirementbenefitplansandotherinstitutions.Such assetsandincomearisingthereonare The Groupcommonlyactsas trustee andinotherfiduciarycapacitiesthatresulttheholdingorplacingofassetson Fiduciary activities that isgeneratedbyeach segment. Indirect costsareallocatedbetweensegmentsinproportiontotheprincipalcostdriverforeach categoryofindirectcosts statements. Transactions betweenoperatingsegmentsarereportedwithintheincomeorexpenses forthosesegments. ataglanceonpage6.NooperatingsegmentshavebeenaggregatedintheGroup’sfinancial segment isgiveninRathbones Operating segmentsareorganisedaroundtheservicesprovidedtoclients,adescriptionofbyeach performance, andforwhich discrete financialinformationisavailable. resourcesallocatedtothesegmentandassessits regularly bytheGroupExecutiveCommitteetomakedecisionsabout expenses thatrelatetotransactions withanyoftheGroup’sothercomponents,whoseoperatingresultsarereviewed 1 Segmental reporting Principal accountingpolicies Critical accountingjudgementsandkeysourcesofestimationuncertainty continued continued

Allocation ofindirectexpenses Unallocated assets Segment totalassets Profit fortheyearattributabletoequityholdersofCompany Income taxexpense Profit beforetaxattributabletoequityholders Transaction costs Amortisation ofclientrelationships Levies fortheFinancialServicesCompensationScheme Underlying profitbeforetax Underlying operatingexpenses Other directexpenses Total staffcosts Staff costs–variable Staff costs–fixed Operating income Net interestandotherincome Net commission Net fee income 31 December2010 the presentationforinternalreportingtoGroupExecutiveCommittee. the financialstatementscomparedtopresentationforinternalreporting. The informationpresentedinthisnotefollows to theExecutiveCommittee.Certainitemsofincomearepresentedwithindifferent categoriesofoperatingincomein ata glanceonpage6.These segments arethebasisonwhichare describedinRathbones theGroupreportsitsperformance Unit Trusts andTrust andTax Services.The productsandservicesfromwhich each reportablesegmentderivesitsrevenues For managementpurposes,theGroupiscurrentlyorganisedintothreeoperatingdivisions:InvestmentManagement, Operating segments 3 and informationonthesensitivityofretirementbenefitobligationto changes inunderlyingestimatesissetoutnote25. surplus ordeficitinrespectofretirementbenefitobligationsmaybemateriallydifferent. Thehistoryof experienceadjustments significantly different tothose forecast.IfactualeventsdeviatefromtheassumptionsmadebyGroupthenreported Long termforecastsandestimates arenecessarilyhighlyjudgementalandsubjecttoriskthatactualeventsmaybe The principalassumptionsunderlying thereporteddeficitof£6,643,000aregiveninnote25. on itsretirementbenefitschemes, basedontheGroup’s expectations ofthefutureandadvicetakenfromqualifiedactuaries. arangeoflongtermtrendsandmarketconditionstodeterminethevaluedeficit The Groupmakesestimatesabout Retirement benefitobligations the carryingvalueofloanbyapproximately £96,000. £250,000. A1%increase/decreaseintheassumedrateatwhich interestaccruesundertheloanwouldincrease/decrease repayment dateofthenotesbyoneyearwouldresultinanincreaseordecreasetheircarryingvalueapproximately estimated repaymentdate,usingadiscountrateequaltotheinitialeffective interestrateoftheloan.Changingestimated The carryingvalueofthenotes hasbeencalculatedas£3,267,000 usingadiscountedcash flowmodelbasedonthe 2 Total assets Vector loannotes Critical accountingjudgementsandkey sources ofestimationanduncertainty Segmental information

continued

oftheCompany

continued

Management Management 995,501 114,695 Investment Investment (39,995) (26,239) (11,907) (25,151) (13,756) (77,053) 36,180 68,485 29,465 10,030 37,642 (4,845) (3,332) £’000 £’000 –

Unit Trusts Unit Trusts 12,923 (3,394) (1,686) (1,545) (2,161) (1,233) (6,625) 7,417 7,074 (243) 549 £’000 £’000 343 792 – – –

Trust andTax Trust andTax (2,905) (1,481) (5,003) (2,673) Services Services 9,416 4,931 5,072 (232) (617) £’000 £’000 141 69 69 – – – –

1,028,122 1,017,840

127,184 (46,294) (88,681) (14,069) (28,318) (15,221)

(31,073) 80,490 30,083 36,180 38,503 10,514 21,552 10,282 (4,845) (8,531) (3,575) £’000 £’000 Total Total –

Rathbone Brothers Plc 75 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 76 Notes to the consolidated financial statements Jersey United Kingdom Operating incomebygeographicalmarket (continuingoperations) The following table presents operating income analysed by the geographical location of the Group entity providing the service. Geographic analysis the expenditure. Centrally incurredindirectexpenses areallocatedtooperatingsegmentsonthebasisofcostdriversthatgenerate at prevailingmarketprices. offees receivablefromInvestmentManagement.Intersegmentsalesarecharged £86,000) is £31,000(31December2009: of fee andcommissionreceivablefromUnitTrusts. IncludedwithinTrust andTax Servicesnetfee andcommissionincome £1,028,000) Included withinInvestmentManagementnetfee andcommissionincomeis£1,225,000(31December2009: Total assets Unallocated assets Segment totalassets Profit fortheyearattributabletoequityholdersofCompany Income taxcreditfromdiscontinuedoperations Income taxexpense fromcontinuingoperations Profit/(loss) beforetaxattributabletoequityholders Discontinued operations Profit beforetaxfromcontinuingoperations Transaction costs Amortisation ofclientrelationships Levies fortheFinancialServices CompensationScheme Underlying profitbeforetax Underlying operatingexpenses Allocation ofindirectexpenses Other directexpenses Total staffcosts Staff costs–variable Staff costs–fixed Operating income Net interestandotherincome Net commission Net fee income 31 December2009 3 Operating segments Segmental

information

continued continued

oftheCompany

1,002,284

104,313 Management Management (23,406) (13,900) (72,201) (25,170) (39,070) 32,112 29,151 29,151 Investment Investment 19,789 55,784 28,740 (1,967) (9,725) (212) (782) £’000 £’000 –

123,119 127,184 15,947 Unit Trusts Unit Trusts (2,086) (2,138) (3,938) (1,852) (1,479) (7,555) 4,065 7,590 7,720 148 148 130 165 £’000 £’000 £’000 (17) 2010 – – – –

Trust andTax Trust andTax (2,483) (4,555) (1,292) (2,798) 4,657 9,472 4,724 Services Services (602) (465) (315) (433) 169 169 £’000 £’000 67 – – – –

1,037,088 1,027,703 113,121 116,757 116,757 (45,806) (16,067) (84,311) (12,328) (26,177) (29,739) 29,468 28,866 19,986 32,446 68,031 19,628 28,740

(1,967) (9,271) 3,636 3,636 9,385 (602) (229) (782) £’000 £’000 £’000 2009

Total Total 33

Other operatingincome £358,000)comprisesunittrustnetdealingprofits. Net tradingincomeof£226,000(2009: Net tradingincome £80,000). (2009: Dividend incomecomprisesfromavailableforsaleequity securitiesof£90,000 Dividend income 6 Net feeandcommissionincome Unit Trusts Investment Management Fee andcommissionexpense Trust andTax Services Unit Trusts Investment Management Fee andcommissionincome 5 Net interestincome Banks andcustomers Interest expense Loans andadvancestobankscustomers Available forsaleinvestmentsecurities Held tomaturityinvestmentsecurities Interest income 4 The Groupisnotreliantonany oneclientorgroupofconnectedclientsforgenerationrevenues. Major clients Jersey United Kingdom Non-current assetsbygeographicallocation(continuingoperations) assets arelocated: The followingisananalysisof thecarryingamountofnon-currentassetsanalysedbygeographicalareainwhich the 3 leased byGroupcompaniesand sundryincome. comprisesrentalincomefromsub-leases oncertainproperties £1,439,000) (2009: Other operatingincomeof£1,369,000 Geographic analysis Segmental Dividend, nettradingandotheroperatingincome Net feeandcommissionincome Net interestincome information

continued continued

106,602 124,432 116,670 12,930 10,274 97,845 97,053 (1,445) (3,131) (4,631) (7,762) 1,636 8,083 4,900 8,829 £’000 £’000 £’000 555 792 2010 2010 2010

103,735 96,384 18,496 18,496 21,502 16,250 12,587 86,577 87,649 87,645 (3,006) (3,023) (4,328) (7,351) 3,669 1,583 4,571

£’000 £’000 £’000 2009 2009 2009 4

Rathbone Brothers Plc 77 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 78 Notes to the consolidated financial statements £72,000).the interimstatement(2009: Fees forotherservicespursuanttolegislationinclude£77,000 fortheauditofGroup’s regulatoryreturnsandreviewof Total Fees payabletotheCompany’sauditorsinrespectofprioryear – – – – services totheGroup: Fees payabletotheCompany’sauditorsandtheirassociatesforother annual financialstatements Fees payabletotheCompany’sauditorsforauditof A moredetailedanalysisofauditor’sremunerationisprovidedbelow: 2 1 Total operatingexpenses Transaction costs Amortisation ofclientrelationshipintangibleassets(note20) Levies fortheFinancialServices CompensationScheme Other operatingexpenses Other Operating leaserentals Impairment lossesonloansandadvances(note15) Auditor’s remuneration(seebelow) Amortisation ofpurchased software (note20) expenses (note20) Amortisation ofinternallygeneratedintangibleassetsincludedinoperating Depreciation ofproperty, plantandequipment(note18) Staff costs(note8) 7 other services tax services other servicespursuanttolegislation audit oftheCompany’ssubsidiariespursuanttolegislation during 2009 and operations(note20).Legal andprofessional fees andstaffincentivepaymentstotalling£782,000 wererecognised 30). by financialinstitutionsarelikelytobeincurredinfutureyearsandtheultimatecostremainsuncertain(note uncertain andnoallowancehasbeenmadefortheseincalculatingthisliability. Further charges forhistoricalfailures may becomeavailabletooffsetthisliabilitybuttheamountandtimingoftheseishighly in futureyearsbytheFSCS for the2010/2011levyyear, ofwhich £3,203,000relatestoKeydata andotherintermediaries(note23).Recoveries The Grouphasaccrued£3,575,000 includingaprovision borrowings in2010respectofitssharethecostFSCS totheGroup. (Keydata) andotherintermediariesresultedinaconsiderableincreasethelevymadebyFSCS leviesontheindustry.failed institutionsresultedinsignificantFSCS The failureof Keydata InvestmentServicesLimited During 2009, theGroupentered intoanagreementtoacquirecertaindiscretionaryinvestmentmanagementassets During 2009, The toprotectdepositorsof arrangementsputinplace bytheFinancialServicesCompensationScheme (FSCS) Operating expenses inrelationtothis.There werenofees inrelationtothisduring2010. 2

£’000 286 192 748 Total 2010 86 84 53 47

88,681 58,997 19,982 97,101 4,845 5,299 3,575 2,207 998 £’000 £’000 355 748 2010 PwC 91 78 95 6 7 – – – –

KPMG 104 203 454 £’000 62 85 – –

84,311 56,594 18,738 87,289

5,039 2,180 2,180 1,967

104 203 545 915 229 545 782 278 £’000 £’000 2009 2009 Total

68 85 22 78 7

8 Staff costs

2010 2009 £’000 £’000 Wages and salaries 48,671 47,063 Social security costs 5,771 5,407 Share-based payments 1,729 1,219 Pension costs (note 25)

– defined benefit schemes 1,510 1,852 – defined contribution schemes 1,316 1,053

2,826 2,905

58,997 56,594

The average number of employees during the year was as follows: 2010 2009 Investment Management 453 438 Unit Trusts 24 24 Trust and Tax Services 43 40 Shared Services 179 179

Continuing operations 699 681

9 Income tax expense

2010 2009 £’000 £’000 Current tax 8,200 5,899 Adjustments in respect of previous years 82 154 Deferred tax (note 19) 249 3,218

8,531 9,271

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

2010 2009 Notes to the consolidated financial statements

£’000 £’000 79 Tax on profit from ordinary activities at the standard rate of 28.0% (2009: 28.0%) 8,423 8,251 Effects of: – disallowable expenses1 340 566 – share-based payments (30) 30 – tax on overseas earnings (77) (22) – (over)/under provision for tax in previous years (136) 446 – other (35) – Effect of change in corporation tax rate 46 –

8,531 9,271 1 The tax effect of disallowable expenses in 2009 included £219,000 in respect of the Lloyds Banking Group transaction (note 20). The UK Government has proposed that the UK corporation tax rate is reduced to 24.0% over the four years from 2011. At 31 December 2010 only the first step of this reduction, to 27.0%, had been substantively enacted. Consequently deferred tax assets and liabilities are calculated at 27.0%. In addition to the amount charged to the income statement, deferred tax relating to actuarial gains and losses, share-based payments and gains and losses arising on available for sale investment securities amounting to £1,120,000 has been credited directly to equity (2009: £2,338,000).

Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 80 Notes to the consolidated financial statements 11 May2011andhasnotbeen includedasaliabilityinthesefinancialstatements. business on3May2011.The finaldividendissubjecttoapproval byshareholdersattheAnnualGeneralMeetingon A finaldividenddeclaredof28.0ppershareispayableon18 May 2011toshareholdersontheregisteratcloseof 16.0p). on 17September2010(2009: An interimdividendof16.0ppersharewaspaidon6October 2010 toshareholdersontheregisteratcloseofbusiness secondinterimdividendof26.0p)pershare (2009: Proposed finaldividendfortheyearended31December2010of28.0p – – Amounts recognisedasdistributionstoequityholdersintheyear: 11 transferred fromthetranslationreservetoretainedearnings. £359,000)was £254,000(2009: As aresultoftheliquidationsanddisposalssubsidiariesinyearasdescribedabove, Net decreaseincashandequivalents Net cashusedininvestingactivities Net cashoutflowfromoperatingactivities were asfollows: Cash flowsarisingfromdiscontinuedoperations,which havebeenincludedintheconsolidatedstatementofcashflows, The operationsofthesebusinessesareincludedwithinTrust andTax Servicesinthesegmentalanalysisnote3. Loss fromdiscontinuedoperations Attributable taxexpense Loss recognisedonre-measurementofassetsthedisposalgroup Loss aftertaxfromdiscontinued operations Attributable taxcredit Loss beforetaxfromdiscontinued operations Operating expenses Operating income The resultsofthediscontinued operations,which havebeenincludedintheconsolidatedincomestatement,wereasfollows: exit fromoverseastrustactivities. werecompletedon6July2010and5Novemberrespectively.in 2009, This completedthefinalstageofGroup’s TrustThe voluntaryliquidationsofRathbone CompanyB.V. ofwhich commenced Bank(BVI)Limited,both andRathbone InternationalFinanceB.V.The Groupceasedtoconsolidate theresultsofRathbone witheffect fromthatdate. Group’s tradingagreementswiththatcompanywereterminatedandtheGroupceasedtohaveeffective controloverit. InternationalFinanceB.V., theGroupceasedtoberepresentedonBoardofRathbone On 12November2009, the Trust theGroupdisposedofitssubsidiaryRathbone and on17November2009 InternationalB.V. Group disposed TrustOn 10February theGroup disposedofitssubsidiaryRathbone 2009 the CompanyS.A.,on31March 2009 10 16.0p)pershare (2009: 26.0p)pershare (final dividendfortheyearended31December2008: first interimdividendfortheyearended31December2010of 16.0p of26.0p second interimdividendfortheyearended31December2009 Dividends Disposal groupsanddiscontinuedoperations of its subsidiaries Rathbone Trust ofitssubsidiariesRathbone Trust Company(BVI)LimitedandRathbone (Singapore)Pte.Limited

12,146 11,246 18,167 6,921 £’000 £’000 £’000 2010 2010 2010 – – – – – – – – – – –

18,066 11,164 11,257 (1,350) (1,526) (1,522)

6,902

(569) (391) (211) (358)

959 £’000 £’000 £’000 2009 2009 2009 33 (4) – Cash inhand,balanceswithcentralbanksandmandatoryreserve depositsarenon-interestbearing. Mandatory reservedeposits,which areheldwithcentralbanks,notavailableforuseinthe Group’sdaytooperations. Mandatory reservedeposits Cash inhand(note32) 13 – – equity holdersoftheCompany: Underlying earningspersharefromcontinuingoperationsfortheyearattributableto – – equity holdersoftheCompany: Earnings persharefromdiscontinuedoperationsfortheyearattributableto Earnings persharefromdiscontinuedoperationsandunderlyingearningswereasfollows: Diluted ordinaryshares Effect ofcontingentlyissuableordinarysharesundertheLong Term IncentivePlan Effect ofdilutivesharesissuableundertheShareIncentivePlan Effect ofordinaryshareoptions Weighted averagenumberofordinarysharesinissueduringtheperiod–basic the ShareIncentivePlan,weightedforrelevantperiod(seetablebelow): Long Diluted earningspershareisthebasicshare,adjustedforeffect ofcontingentlyissuablesharesunderthe throughout theperiodof43,307,423 43,087,369). (2009: Basic earningspersharehasbeencalculatedbydividingtheweightedaveragenumberofsharesinissue Profit attributabletoshareholders Loss fromdiscontinuedoperations Amortisation ofclientrelationships Compensation Scheme Levies fortheFinancialServices Underlying profitattributabletoshareholders Earnings usedtocalculateearningspershareonthebasesreportedinthesefinancialstatementswere: 12 Profit fromcontinuingoperations Transaction costs diluted basic diluted basic Cash andbalancesatcentralbank Earnings pershare Term IncentivePlan,employeeshareoptionsremainingcapableofexercise andanydilutivesharestobeissuedunder

30,083 30,083 38,503 (4,845) (3,575) Pre tax £’000 2010 – –

(10,889) (8,531) (8,531) Taxation 1,001 1,357 £’000 2010 – –

21,552 21,552 27,614 (3,488) (2,574) Post tax £’000 2010 – – 43,669,520 43,307,423

169,580 116,364 28,866 29,468 32,446 63.23p 63.76p 76,153 (1,967) (602) (229) (782) Pre tax £’000 £’000 2009 2010 2010 2010 – 4 4 – –

(9,886) (9,238) (9,271) Taxation 551 £’000 2009 33 64 43,111,294 – 43,087,369

22,560 22,560 15,948 15,948 19,628 20,197 (1,416) (1.32)p (1.32)p 52.36p 52.33p 7,977 Post tax (569) (165) (782) 315 310 £’000 £’000 2009 2009 2009 2009

– 5

Rathbone Brothers Plc 81 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 82 Notes to the consolidated financial statements market expectations. During theyear, management’s estimateoftheinterestrateapplicableforthesenoteswasreduced inlinewithcurrent flow modelandinterestincome isrecognisedoverthe expected life ofthenotesunder effective interestratemethod. value attheBankofEnglandbase rate.The carryingvalueof thenoteshasbeencalculatedbasedonadiscountedcash rate onhalfofthenotes’nominal valueforthefollowingtwoyears.Thereafter, interestisrolled-uponthenotes’fullnominal The notesbearnointerestforthreeyearsfromissue.Interest isthenrolled-upintotheloanatBankofEnglandbase and arerepayableontheoccurrenceofcertainevents,principally therefinancingofoperationsdisposedof. andunsecured, The notesaresubordinated and wereissuedbytheacquirerofGroup’sJerseytrustoperations in2008. at amortisedcostof£3,267,000 £3,267,000). at31December2010(2009: The noteshaveanominalvalueof£5,000,000 Included withinloansandadvancestocustomersrepayableafter morethanfiveyearsarevendorloannotes(notes)carried £850,000). (2009: trust andpensionservicesincludedinloansadvancestocustomers asat31December2010amountto£1,062,000 allowance forlossesonloansandadvancesrelatetodebtors trustandpensionservices.The totaldebtorsinrelationto noneimpaired).The No bankingloansandadvancestocustomerswereimpairedas at31December2010(2009: Debtors arisingfromthetrustandpensionsbusinessesarenon-interest bearing. calculated asthediscountedamountofestimatedfuturecashflows expected tobereceivedusingcurrentmarketrates. The fairvalueofloansandadvancestocustomersisnotmateriallydifferent totheircarryingamount.Fair valuehasbeen – – – Amounts includeloanswith: Less: allowanceforlossesonloansandadvances – – – – – Repayable: 15 The Group’sexposure tocreditriskarisingfromloansandadvancesbanksisdescribedinnote28. £55,039,000). (2009: (note32) Loans andadvancestobanks includedincashandequivalentsat31December2010were£39,565,000 discounted amountofestimatedfuturecashflows expected tobereceivedusingcurrentmarketrates. The fairvalueofloansandadvances isnotmateriallydifferent totheircarryingamount.Fair valuehasbeencalculatedasthe – – – Amounts includeloanswith: – – – Repayable: 14

non-interest bearing fixed interestrates variable interestrates over 5years 5 yearsorlessbutover1year 1 yearorlessbutover3months 3 monthsorlessexcluding ondemandoratshortnotice on demandoratshortnotice non-interest bearing fixed interestrates variable interestrates 1 yearorlessbutover3months 3 monthsorlessexcluding on demandoratshortnotice on demandoratshortnotice Loans andadvancestobanks Loans andadvancestocustomers

39,565 28,084 39,565 22,040 40,025 11,430 31,305 40,025 35,182 10,129 8,260 4,843 4,461 3,267 (143) £’000 £’000 271 2010 2010 51 – –

92,661 92,661 40,625 92,661 40,003 52,036 12,016 21,387 51,873 26,745 26,745 5,358 4,043 3,267 6,670

831 163 622 £’000 £’000 2009 2009 (82) – sharesinLondonThe Stock Groupcontinuestohold300,000 Exchange GroupPlc. any financialassetas‘atfairvaluethroughprofitandloss’. nonereclassified). TheGrouphasnotdesignatedatinitialrecognition value throughprofitandloss’duringtheyear(2009: The Grouphasnotreclassifiedanyfinancialassetbetweenbeingmeasuredatamortised cost andbeingmeasured‘atfair are realisableondemand,havebeenincludedwithincashequivalents (note32). bear interest.Moneymarketfunds,which declaredailydividendsthatareinthenatureofinterest atavariablerateandwhich Available forsalesecuritiesincludemoneymarketfundsanddirectholdingsinequitysecurities. Equitysecuritiesdonot maturity assetsisbasedonmarketbidprices. Fair valueforheldto The £699,881,000). fairvalueofdebtsecuritiesat31December2010was£754,893,000 (2009: debtsecuritiesonlycomprisebankandbuildingsocietycertificatesofdeposit. In 2009, Debt securitiescomprisebankandbuildingsocietycertificatesofdeposit,which havefixedcouponsandtreasurybills. Due aftermorethan1year Due within1year Maturity ofdebtsecurities – Debt securities–atamortisedcost: Held tomaturitysecurities – Money marketfunds–atfairvalue: – – Equity securities–atfairvalue: Available forsalesecurities 16 The Group’sexposure tocreditriskarisingfromloansandadvancescustomersisdescribedinnote28. Charge totheincomestatement Amounts writtenoff Exchange rateadjustment At 1January Allowance forlossesonloansandadvances ending inFebruary 2012. £831,000).The loandoesnotbearinterestandisrepayableinthreeapproximately(2009: equalannualinstalments acquirer oftheGroup’sSwitzerlandtrustoperationswithanominalvalueequivalentto£565,000at31December2010 Included withinloansandadvancestocustomersrepayablefiveyearsisaSwiss Franc denominatedloantothe 15 unlisted unlisted unlisted listed Loans andadvances tocustomers Loans Investment securities

continued

751,085 731,085 751,085 751,085 39,500 20,000 42,587 2,513 £’000 £’000 £’000 £’000 143 574 (34) 2010 2010 2010 2010 95 82 –

694,000 694,000 694,000 654,000 40,000 40,000 86,932 84,000

2,153

(112) 175 £’000 £’000 £’000 £’000 779 2009 2009 2009 2009 82 22 (3)

Rathbone Brothers Plc 83 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 84 Notes to the consolidated financial statements Disposals Disposals Additions At 1January2010 Disposals Additions At 1January2009 Cost 18 investment managementactivities(note20)which wasrepaidbyLloydsBankingGroupon24January2011. £nil)ofadvancepayments toLloydsBankingGroupinrelationthetransferPrepayments of includes£3,100,000(2009: Accrued income Prepayments Trust workinprogress 17 At 31December2010 Disposals (salesandredemption) Additions At 1January2010 Loss fromchanges infairvalue Disposal (salesandredemption) Additions At 1January2009 The movementininvestmentsecurities maybesummarisedasfollows: 16 Carrying amountat1January2009 Carrying amountat31December2009 Carrying amountat31December2010 At 31December2010 Charge fortheyear At 1January2010 Disposals Charge fortheyear At 1January2009 Depreciation At 31December2010 Gain fromchanges infairvalue

Investment securities Property, plantandequipment Prepayments, accruedincomeandotherassets

continued

Available forsale

improvements (601,000) (525,000) 606,000 480,500 Short term 81,991 86,932 leasehold 42,587 6,637 3,358 2,921 3,682 4,329 3,716 3,478 7,040 7,807 (100) (100) 403 761 £’000 £’000 867 155 747 (59) – –

Held tomaturity (1,622,005) (1,977,261)

1,679,090 1,796,282 694,000 751,085 874,979 equipment 13,635 10,535 36,368 13,864 25,064 10,606 11,546 Plant and 11,772 (3,899) (3,990) 1,419 3,100 2,318 1,460 1,898 2,665 9,107 (408) (453) 682 698 £’000 £’000 £’000 2010 – –

(2,578,261) (2,147,005) 2,402,282 2,402,282

2,159,590 956,970 780,932 780,932 793,672 23,235 13,456 20,272 20,904 20,904 13,436 29,878 15,228 19,579 (3,999) (4,090) 2,180 2,180 1,085 1,085 6,816 6,023 6,143 5,676 2,207 2,765 (408) (453) 620 £’000 £’000 £’000 155 2009 Total Total (59)

Other provisions Intangible assets Unremitted overseasearnings Pensions Staff relatedcosts Share-based payments Excess ofdepreciation The deferred taxcharge intheincomestatementcomprisesfollowingtemporarydifferences: Unremitted overseasearnings Staff relatedcosts Intangible assets Available forsalesecurities Deferred taxliabilities Deferred income Pensions Share-based payments Excess ofdepreciation Deferred taxassets – – Effect ofchange incorporationtaxrateondeferred tax: – – – – Other movementsindeferred tax: – – Adjustments inrespectofprioryears: At 1January The movementonthedeferred taxaccountisasfollows: of 27.0% 28.0%). (2009: Deferred incometaxesarecalculated onalltemporarydifferences undertheliabilitymethodusinganeffective taxrate 19 charged directlytoequity charged totheincomestatement fair valuemeasurementofavailableforsalesecurities share-based payments actuarial gainsandlosses amounts charged totheincome statement credited directlytoequity credited/(charged) totheincome statement Net deferredtaxasset

(1,514) 1,909 2,306 1,561 1,603 4,035 2,474 (269) (269) (421) (100) £’000 £’000 £’000 £’000 738 841 249 820 919 313 218 116 214 527 376 (46) (43) 2010 2010 2010 2010 (47) 56 72 –

(2,984)

1,603 2,483 4,558 2,415 3,218 2,955 3,434 1,728 1,778 (135) (234) 638 638 208 208 269 188 298 266 266 382 382 583 151 807 £’000 £’000 £’000 £’000 2009 2009 2009 2009 (70) 41 17 71 – –

Rathbone Brothers Plc 85 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 86 Notes to the consolidated financial statements small sizeoftheTrust andTax ServicesCGU. 10%and12%respectively) basedonariskadjustedweightedaveragecostofcapitalandreflectingtherelatively (2009: rate usedtodiscounttheforecastcashflowsis10%forInvestmentManagementand12% Trust and Tax Services year extrapolation periodischosen basedonmanagement’sexpectation ofthedurationclientrelationships.The pretax 3%and2%respectively)basedonmanagement’sexpectation offutureindustrygrowthrates.Aten (2009: Services CGU and 2%fortheTrustbased onamediumtolongtermgrowthrateof3%fortheInvestmentManagementCGU andTax on flatmarketassumptionsandorganicgrowthinlinewithhistoricalrates.Budgetsare extrapolated foruptotenyears forecasts derivedfromthemostrecentfinancialbudgetsapprovedbymanagement,coveringforthcomingyearbased The growthratesarebasedonindustryforecasts. The Grouppreparescashflow CGUs. and therisksspecificto Management estimatesdiscountratesusingpretaxthatreflectcurrentmarketassessmentsofthetimevaluemoney assumptions forthevalueinusecalculationsarethoseregardingdiscountratesandgrowthduringperiod. aredeterminedfromvalueinusecalculations.The key The recoverableamountsofgoodwillallocatedtotheCGUs Trust andTax Services Investment Management expected tobenefitfromthatbusinesscombination. The carryingamountofgoodwillhasbeenallocatedasfollows: thatare Goodwill acquiredinabusinesscombinationisallocated,atacquisition,tothecashgeneratingunits(CGUs) followingdeterminationofthefinalconsiderationpayment. in 2008 representanadjustmenttothegoodwillacquiredwithCitywallFinancialManagementLimited Additions togoodwillin2009 Net carryingamountofgoodwillat31December At 1Januaryand31December Accumulated impairmentlosses At 31December Additions At 1January Cost Goodwill Other intangibleassets Goodwill 20 Intangible assets

44,461 45,287 91,702 47,241 47,241 47,241 47,241 47,241 1,954 £’000 £’000 £’000 2010 2010 2010 – –

45,287 81,973 34,732

47,241 47,241 47,241 47,241 47,023 1,954 218

£’000 £’000 £’000 2009 2009 2009 – value totalling £185,000 have been recognised as a result of the transaction in 2009. Nootherassetswereacquired. value totalling£185,000havebeen recognisedasaresultofthetransactionin2009. ofconsiderationwaspaidon25September2010.Intangibleassetsforclient relationshipswithafair A further£60,000 theGroupacquiredtradeofTrustOn 25September2009 FinancialLimitedfor£125,000incashconsideration. Lloyds BankingGroup. £782,000)(2009: No goodwillhasbeenrecognisedat31December2010inrelation tothetransaction.Transaction costsof£nil (note24). £11,486,000) in relationtothetransaction(2009: £nil)(note17).£1,576,000£3,100,000 (2009: hasbeenprovided forfinalpaymentsoutstandingat31December2010 £197,000)in theyear(2009: inrelationtothetransaction,includingadvancepaymentsLloydsBankingGroupof waspaid In total,£21,522,000ofclientrelationshipshavebeenrecognised asaresultofthetransaction.£22,849,000 client assetstransferred at31December2010andhasbeenincludedwithinprepayments(note17). was madeon26February 2010.Afinalrebateof£2,632,000wasreceivedon24January2011basedthevalue relationships In addition£5,750,000 £nil)inrelationtonew ofacquiredclientrelationshipshavebeenrecognisedintheyear(2009: prepayments (note17). was to theGroupatthosedates.Arebateof£468,000 and 31December2010inproportiontothetotalvalueoffundsundermanagementforclients whohaveagreedtotransfer Consideration paymentsforPortfolio June2010 ManagementServiceclientsweremadeininstalmentsshortlyafter30 Service clientsfromwhomconsenttotransfer theiraccountshadbeenreceivedandportfoliotransfer valuesdetermined. inrelationtonewrelationshipswiththoseformerBankofScotlandPortfolio £11,683,000) Management year (2009: ofacquiredclientrelationshipswhich havebeenrecognisedinthe Included withinclientrelationshipsis£4,089,000 discretionaryinvestmentmanagement activities. legacy discretionaryinvestmentmanagementassetsandHBOS’s theGroup agreedtermswithLloydsBankingGroupforthetransfer ofelementsLloydsTSB’sOn 20October2009, Carrying amountat1January2009 Carrying amountat31December2009 Carrying amountat31December2010 At 31December2010 Disposals Charge fortheyear At 1January2010 Charge fortheyear At 1January2009 Amortisation At 31December2010 Disposals Purchased intheyear Internally developedintheyear At 1January2010 Purchased intheyear Internally developedintheyear At 1January2009 Cost Other intangibleassets 20 Purchased softwarewithacost of£7,957,000 £7,732,000) (2009: hasbeenfullyamortised butisstillinuse. Intangible assets

with former Lloyds TSB legacy discretionary investment management clients. An initial payment of £8,382,000 withformerLloydsTSB legacydiscretionaryinvestmentmanagementclients.Aninitialpaymentof£8,382,000

havebeenrecognisedintheconsolidatedincomestatement connectionwiththetransaction

continued

relationships 31,540 15,130 21,168 18,377 40,988 36,298 14,293 49,713 receivedon24January2011andhasbeenincludedwithin 1,967 4,845 4,758 8,725 2,791 (878) (878) Client £’000 – –

development Software 1,858 1,147 2,236 1,425 2,520 1,780 811 711 278 378 £’000 284 355 740 costs – – – –

Purchased 10,582 12,468 11,757 software 8,461 2,381 2,121 1,175 1,350 9,376 9,735 2,733 (639) (639) 915 998 £’000 – –

12,399 12,399 33,608 33,608 16,305 16,305 21,209 44,461 44,461 15,559 15,559 20,240 20,240 50,291 15,643 34,732 64,701 (1,517) (1,517)

3,160 3,160 6,198 6,198

378 £’000 284 284

Total

Rathbone Brothers Plc 87 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 88 Notes to the consolidated financial statements Non-current Current Utilised/paid duringtheperiod Other movements Net charge toprofitorloss Unused amountcreditedtoprofitorloss Charged toprofitorloss At 1January2010 24 including aprovisionforthe2010/11levyyear, ofwhich £3,203,000relatestoKeydata andotherintermediaries(note7). Accruals anddeferred incomeincludes£3,575,000 levies in2010respectoftheGroup’ssharecostFSCS Other provisions(note24) Accruals anddeferred income Creditors 23 with similarremainingmaturity. estimated fairvalueoffixed-interestbearingdepositsisbasedondiscountedcashflowsusinginterestratesfornewdebts of depositswithnostatedmaturity, which includesnon-interestbearingdeposits,istheamountrepayableondemand.The The fairvalueofamountsduetocustomerswasnotmateriallydifferent totheircarryingvalue.The estimatedfairvalue – – – Amounts include: – – – Repayable: 22 discounted amountofestimatedfuturecashflows expected tobepaidusingcurrentmarketrates. The fairvalueofdepositsbybanks wasnotmateriallydifferent tothecarryingvalue.Fair value hasbeencalculatedasthe £1,224,000). banks includedovernightoverdraftbalancesof£215,000(2009: theLondon Inter-BankOfferInterest ispayableontheloanat0.7%above Rate.On31December2010,depositsby equal instalments.OneoftheseinstalmentswaspaidinJanuary2011andthefinalinstalmentispayableon4April2011. £6,155,000)ofanunsecuredtermloanwhich isrepayableintwo (2009: The Grouphasdrawndown£3,089,000 21 non-interest bearing fixed interestrates variable interestrates 1 yearorlessbutover3months 3 monthsorlessexcluding on demandoratshortnotice on demandoratshortnotice Other provisions Accruals Due tocustomers Deposits bybanks , deferredincome,provisionsandotherliabilities

(26,019) 14,294 16,817 payables 3,158 1,934 5,092 5,092 Other £’000 – – –

compensation (466) (243) Client 530 801 622 £’000 622 622 64 – –

Litigation related

712,260 718,168 762,026 762,026 44,288 25,083 43,335 42,455 11,182 and other 6,190 5,478 (163) 508 508 131 £’000 £’000 £’000 476 523 476 476 2010 2010 – – –

766,361 766,361 705,071 702,705 (26,425)

59,060 59,060 23,525 14,294 46,875 59,736 17,749 17,749

5,601 5,601 4,596 4,596 1,038 1,038 3,032 1,554 3,158 6,190 6,190 (466) £’000 £’000 £’000 572 2009 2009 Total

Rate ofincreasedeferred pensions Rate ofincreasepensionsinpayment Rate ofincreaseinsalaries used, which reflectthedifferent membershipprofilesofthe schemes, were: due tothetimescalecoveredbyliability, outinpractice.The principalactuarialassumptions maynotnecessarilybeborne The assumptionsusedbytheactuariesarebestestimateschosen fromarangeofpossibleactuarialassumptionswhich, Laurence Keen Scheme 1987 SchemeRathbone out asatthefollowingdates: updated ateach statementoffinancialpositiondateinbetweenfullvaluations. The latestfullactuarialvaluationswerecarried of services,discountedtoapresentvalueusingratethatreflectsthe characteristics oftheliability. The valuationsare the value The schemes arevaluedbyindependentactuarieseverythreeyearsusingtheprojectedunitcreditmethodwhich looksat eliminated theuninsuredelementofthisbenefit. in longtermemployeebenefitsliabilities.DuringtheyearGroup changed itsinsurancearrangementsandsubstantially £547,000).statement intheyear(2009: The estimatedpresentvalueoftheuninsureddeathinservicebenefitsisincluded is purchased forthebenefitswherepossibleand£519,000ofrelatedinsurancepremiawere expensed totheincome 1987The Scheme. GroupprovidesdeathinservicebenefitstoallemployeesthroughtheRathbone Third partyinsurance 1987benefits forfurtherservice. SchemeThe Rathbone wasclosedtonewentrantswitheffect from31March 2002. active membersoftheLaurenceKeen 1987 Scheme Scheme wereincludedundertheRathbone foraccrualofretirement Past allthe servicebenefitscontinuetobecalculatedbyreference1999, tofinalpensionablesalaries. From1October The LaurenceKeen Scheme September1999. wasclosedtonewentrantsandfutureaccrualwitheffect from30 trustees shouldbenominatedbymembersoftheschemes. trustees isdeterminedbytheschemes’ trustdocumentationandlegislation.The Grouphasapolicythatonethirdofall The trusteesoftheschemes arerequiredtoactinthebestinterestofschemes’ beneficiaries. The appointmentof are heldseparatelyfromthoseoftheGroup. discretionary basis,inaccordancewiththestatementsofinvestmentprinciplesagreedbytrustees.Scheme assets InvestmentManagementLimited,withinvestmentsmanagedona The clientsofRathbone schemes arecurrentlyboth The 1987 Groupoperatestwofunded pensionschemes, Scheme theRathbone andtheLaurenceKeen Scheme. £32,000). £52,000)ofwhich £nilrelatestodiscontinuedoperations(2009: the totalcontributionswere£21,000(2009: £1,033,000).The Groupalsooperatesdefinedcontributionschemes£1,295,000 (2009: foroverseasemployees,which arrangements forcertainDirectorsandemployees.The totalofcontributionsmadetothisscheme duringtheyearwas The Groupoperatesadefined contributiongrouppersonalpensionscheme andcontributestovariousotherpersonalpension 25 of financialpositiondate. negotiations withthirdparties.Non-currentprovisionsareexpected tobesettledwithin27monthsofthestatement The timingofsettlementprovisions forclientcompensationorlitigationisdependent,inpart,onthedurationof loss totheGroup. Provisions havealsobeenmade inrelationtoanumberofcaseswherelegalproceedingsareexpected toresultin Complaints areassessedonacasebybasisandprovisionsforcompensationmadewherejudgednecessary. In theordinarycourseofbusiness,Groupcanreceivecomplaintsfromclientsinrelationtoservicesprovided. agreement toacquirecertaindiscretionaryinvestmentmanagementactivitiesfromLloydsBankingGroup(note20). of clientrelationships,which have beencapitalisedandinclude£1,576,000 inrelationtothe £11,486,000) (2009: Other movementsinprovisionsrelatetodeferred paymentstoinvestmentmanagersandthirdpartiesfortheintroduction 24 1 Inflation Expected returnonscheme assets Discount rate Inflation assumptionsarebasedonthe Retail Prices Index Other provisions Long termemployeebenefits 1

ofbenefitsaccruingovertheyearsfollowingvaluationdatebasedonprojectedsalarytotermination

continued

LaurenceKeen Scheme % 3.60 5.90 5.40 3.60 4.85 3.70 2010

Laurence Keen Scheme % 3.60 3.60 6.00 4.85 5.70 3.70 2009

Rathbone 1987 Scheme % 3.60 3.50 3.60 5.40 4.85 6.70 2010

31 December2008 31 December2007

Rathbone 1987 Rathbone

Scheme %

3.60 3.60 3.50 4.85

5.70 7.00 2009

Rathbone Brothers Plc 89 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 90 Notes to the consolidated financial statements At 31December Net actuariallossrecognisedinyear At 1January is asfollows: The cumulativeactuarialgainsandlossesreportedinthestatementofcomprehensiveincomesinceadoptionIFRS £9,791,000 (2009: £9,084,000 1987 Scheme. rise)fortheRathbone rise)fortheLaurenceKeen Scheme £1,403,000 andariseinvalueof (2009: assets wasariseinvalueof£1,206,000 Actuarial gainsandlosseshavebeenreportedinthestatementofcomprehensiveincome.The actualreturnonscheme Expected returnonscheme assets Interest cost Current servicecost The amountsrecognisedintheincomestatement,withinoperatingexpenses, areasfollows: Total deficit Death inservicebenefitreserve–unfunded Deficit inschemes Fair valueofscheme assets Present valueofdefinedbenefitobligations as follows: The amountincludedinthestatement offinancialpositionarisingfromtheGroup’sobligationsinrespectschemes is – – Retiring in20years: – – Retiring today: expectations onretirementwere: assumed life actuarialtables.The schemes expectancy assumedlife isbasedonthePNA00 forthemembershipofboth fromthatdate. following theintroductionofpensionbenefitsbasedonCareer The Average RevaluedEarnings(CARE) and65fromthatdate 1987 forservicepriorto1July2009 Schemeretirement ageformembersoftheRathbone is60 The normalretirementagefor membersoftheLaurenceKeen forcertainformerDirectors).The Scheme normal is65(60 weighted averageofthereturnsexpected oneach classofassetheldbythescheme, as disclosed below. 1987 24years).The Schemeduration fortheRathbone overallexpected is24years(2009: returnonscheme assetsisa The assumeddurationoftheliabilities fortheLaurenceKeen 18years)andtheassumed Scheme is18years(2009: 25 aged 65 aged 60 aged 65 aged 60 Long termemployeeLong benefits

continued

LaurenceKeen LaurenceKeen LaurenceKeen (12,041) 11,951 Scheme Scheme Scheme (405) (631) (472) 23.7 28.6 22.1 26.9 Males £’000 £’000 £’000 623 (90) (90) 2010 2010 2010 2010 (67) (8) – – 1987 Scheme 1987 Scheme 1987 Scheme (89,312) (10,487) Rathbone Rathbone Rathbone 82,759 (4,985) (2,938) (6,553) (6,553) (7,549) 2,129 1,518 4,374 £’000 £’000 £’000 2010 2010 2010 –

(101,353) (10,959) 94,710 (6,643) (6,643) (5,616) (3,005) (7,954) Females 2,129 1,510 4,997 30.4 25.4 24.3 29.1 £’000 £’000 £’000 Total Total Total 2010 2010 2010 2010 –

Laurence Keen Laurence Keen Laurence Keen (11,086) 10,299 Scheme Scheme Scheme (405) (463) (110) (295) (787) (787) 23.6 28.5 22.0 26.8 590 127 £’000 £’000 £’000 Males 2009 2009 2009 2009 – – 1987 Scheme 1987 Scheme 1987 Scheme (74,491) 66,955 (1,090) (8,516) (8,626) (3,477) Rathbone Rathbone Rathbone (7,549) (7,536) 3,462 1,725 1,740 967 £’000 £’000 £’000 2009 2009 2009

(85,577) 77,254 (1,090) (3,940) (8,626) (9,413) (8,323) (7,954) 4,052 1,852 1,740 Females 30.3 25.4 24.2 29.1 £’000 £’000 £’000 672 2009 2009 2009 2009

Total Total Total return toshortdatedgovernment bonds. Cashhasbeenassumed togenerateasimilar the riskofdefaultandfuturedowngradeinrelationtocorporate bonds. The expected rateofreturnondebtinstrumentsisbasedlongtermyieldsatthestartyear, withanadjustmentfor 3.25%above). The thereturnonlongdatedgilts(2009: expected returnonequitieswasassumedtobe3.25%above which isintendedtobroadlyalignwiththedurationofscheme’s liabilities. £3,812,000)inaninterestrateswapfund.The fundisinvestedinlongdatedinterestrateswaps,thedurationof (2009: 1987At 335)witha nominalvalueof£4,808,000 Scheme 31December2010theRathbone held335 shares(2009: At 31December Cash Interest rateswapfunds Laurence Keen Scheme of financialpositiondatewasasfollows: The analysisofthescheme assets,measuredatbidprices,andexpected ratesofreturnonthoseassetsatthestatement At 31December Benefits paid Contributions fromscheme members Contributions fromthesponsoringcompanies Actuarial gain Expected returnonscheme assets At 1January Movements inthefairvalueofscheme assetswereasfollows: At 31December Benefits paid Actuarial loss Contributions frommembers Interest cost Debt instruments Equity instruments Rathbone 1987 Scheme At 31December Cash Debt instruments Equity instruments Service cost(employer’spart) At 1January Movements inthepresentvalueofdefinedbenefitobligationswereasfollows: 25

Long termemployeeLong benefits

continued

LaurenceKeen LaurenceKeen 11,086 10,299 12,041 11,951 Scheme Scheme (310) (310) £’000 £’000 756 642 631 623 575 2010 2010 – – –

1987 Scheme 1987 Scheme 66,955 75,581 89,312 Rathbone Rathbone 82,759 Expected Expected (1,054) (1,054) 4,099 4,985 1,245 1,245 2,129 6,529 4,374 7,037 0.50 0.50 4.60 4.60 4.20 return return 7.45 7.45 1.1.10 1.1.10 £’000 £’000 2010 2010 % %

101,353 86,667 94,710 77,254 (1,364) (1,364) Expected Expected 1,245 1,245 2,129 5,616 4,997 4,674 7,285 7,679 4.90 4.90 0.50 4.50 0.50 1.1.09 1.1.09 7.75 7.75 £’000 £’000 return return Total Total 2010 2010 % %

64,971 11,928 11,951 82,759 1,348 5,538 6,082 4,512 £’000 £’000 331 value value 2010 2010 Fair Fair

Laurence Keen Laurence Keen 11,086 66,955 66,955 10,299 10,299 52,219 1,050 1,356 4,537 8,843 4,204 5,252 8,760 9,750 Scheme Scheme (304) (304) 440 940 590 463 843 £’000 £’000 £’000 £’000 2009 2009 2009 2009 value value Fair Fair – – –

1987 Scheme 1987 Scheme 14,830 66,955 50,551 55,284 75,581 allocation allocation Rathbone Rathbone 6,348 3,462 6,314 1,245 1,245 3,477 1,740 Current Current (980) (980) £’000 £’000 2009 2009 2010 2010 46 14 51 79 % % 2 5 3

15,880 15,880 86,667 59,311 65,034 77,254

(1,284) (1,284) allocation allocation 3,940 3,940 4,052 1,245 1,245 6,788 7,254 1,740 Current Current

£’000 £’000 2009 2009 2009 2009 Total Total 13 41 51 78 2 7 % 8 %

Rathbone Brothers Plc 91 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 92 Notes to the consolidated financial statements entrants and,consequently, thecurrentpension costwillincreaseasthemembers ofthescheme approach retirement. to thescheme of£2,750,000 June 2017. until30 After 1987 31March Scheme 2002 theRathbone wasclosedtonew £2,750,000)£2,958,000 were paidin2010(2009: andtheGrouphascommitted tomakeadditionalannual contributions 22.6%).Additionallumpsumcontributionsof basedon 22.6% ofpensionablesalaries(2009: £3,598,000) (2009: 1987The Scheme totalregularcontributionsmadebytheGrouptoRathbone during the yearwere£3,571,000 – – Experience adjustmentsonscheme assets: – – Experience adjustmentsonscheme liabilities: Deficit inthescheme Fair valueofscheme assets Present valueofdefinedbenefitobligations Rathbone 1987 Scheme – – Experience adjustmentsonscheme assets: – – Experience adjustmentsonscheme liabilities: Deficit inthescheme Fair valueofscheme assets Present valueofdefinedbenefitobligations Laurence Keen Scheme The historyofexperience adjustmentsisasfollows: – – – – 0.5% change in: out below: The sensitivitiesregardingthe principalassumptionsusedtomeasurethetotaloftwoschemes’ liabilitiesareset may beinvestedincompaniesoutsidetheFTSE 350andnotmorethan15%oftheassetsmaybeheldinalternativeassets. equities In theLaurenceKeen Scheme, notmorethan55%oftheassetsmaybeheldinequities.Amaximum15%UK funds. The trusteeshaveinitiated aprocessofde-riskingtheportfolioovernext 10yearsasthescheme matures. may beinvestedincompaniesoutsidetheFTSE 350andnotmorethan5%ofthetotalportfoliocanbeinvestedinhedge equities 1987 oftheassetsmaybeheldinequities.Amaximum5%UK Scheme,In theRathbone notmorethan80% 2 Cash deposits Fixed intereststocks Overseas equities equities UK balanced portfoliointhefollowingsectorsandproportions: The statementofinvestmentprinciples setbythetrusteesrequiresthatassetsofschemes areinvestedina 25 asset classesinthestatementofinvestmentprinciples percentage ofscheme assets amount percentage ofscheme liabilities amount percentage ofscheme assets amount percentage ofscheme liabilities amount 1 yearincreasetolongevityat60 rate ofsalarygrowth rate ofinflation discount rate The totalallocationofassetsintheLaurenceKeen Scheme tofixedintereststocks andcashdepositsis expressed asacombinedpercentageofthetwo Long termemployeeLong benefits

continued

(89,312) (12,041) 11,951 82,759 (6,553) 4,099 (635) (1%) £’000 £’000 575 (90) 2010 2010 5% 5% 0% –

(11,086) (75,581) 66,955 10,299 (8,626) Laurence Keen Scheme 6,314 (787) (Decrease)/increase 940 395 305 £’000 £’000 2009 2009 9% 9% 4% 0% Combined impactonschemes’ liabilities 45% –65% 45% –65% 35% –55% 0% –20% (55,284) (11,359) (10,677) 50,551 (1,715) (9,750) (4,733) 2,937 2,824 4,202 6,844 8,760 (21%) (990) (248) 20% (3%) £’000 £’000 £’000 2008 2008 5% 2 2

(10,301) (60,274) 54,415 (1,264) (5,859) Rathbone 1987 Scheme 9,708 (104) (593) (Decrease)/increase (1%) (2%) £’000 £’000 2007 2007 (90) 0% 1% 70 14% –28% 21% –35% 43% –57%

0% –8%

(53,982) (10,423) 44,646 44,646 (9,336) (1,427) 8,996 8,996 3,038 3,038 1,592 (11.2) 15% 753 £’000 £’000 2006 2006 2% 1% 6% 2.8 4.1 6.8 85 %

In March 2009, the Group elected to settle substantially all of the 2006/08 LTIP theGroupelected tosettlesubstantiallyallofthe2006/08 In March 2009, awardincashasanalternativetoshares. market-based vestingconditions. The totalshareholderreturnbasedperformancecriteriahavebeentreated as set outintheRemunerationreportonpage38. theLong Termfor both IncentivePlan(LTIP) anddeferred profitshareawards.Detailsofthegeneraltermstheseplansare BrothersPlcsharesareheldbyInvestecTrustRathbone BrothersPlcSettlement (Jersey) LimitedastrusteeoftheRathbone Long Term IncentivePlan employees. been waived.Ofthetotalnumberofsharesheldbytrustees 267,592 havebeenconditionallygiftedto 341,138) (2009: £10,851,000).Nodividendsontheseshareshave (2009: BrothersPlcwithatotalmarketvalueof£14,403,000 Rathbone held1,316,557 1,356,417)ordinarysharesof5peach in (2009: As at31December2010,thetrusteesofSIP dividends arepaidincash. dividends arereinvestedandusedtopurchase dividendshareswhilstforJerseyemployees employees,SIP For UK uptoamaximumof£3,000perannum. £100 per1%realincreaseinEPS The Groupalsoprovidesperformance-relatedfreeshares,witheligibleemployeesreceivingsharesvaluedattherateof The Groupcurrentlymatches employeecontributionsonaoneforbasistoacquirematching shares. £125 permonthtoacquireshareswhich arepurchased orallottedtwiceayearattheendofsixmonthaccumulationperiods. which isavailabletoallemployees.Employeescancontributeup The GroupoperatesaShareIncentivePlan(SIP), Share IncentivePlan 27 in retainedearnings. £2,232,000)which isincluded (2009: unvestedshareswithanaggregatecostof£1,665,000 383,831) (2009: 380,285 Unvested sharesintheEmployeeBenefit Trust (note27)aretreasuryshares. At 31December2010thetrustheld the Company. per shareatmeetingsoftheCompany. The ordinaryshareholdersareentitledtoanyresidualassetsonthewindingupof The holdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetime,andonevote At 31December2010 – – – Shares issued: At 1January2010 – – Shares issued: At 1January2009 The followingmovementsinshare capitaloccurredduringtheperiod: 26 increase asthemembersofscheme approach retirement. December 2017. thecurrentpensioncostwill Asthescheme wasclosedtonewentrantswitheffect from1October1999, to bemadetheLaurenceKeen Scheme untilApril2013.Thereafter, willbemadeuntil annualcontributionsof£336,000 £20,000).Annualcontributionsof£756,000No additionallumpsumcontributionswerepaidin2010(2009: willcontinue The totalcontributionsmadeby theGrouptoLaurenceKeen Scheme duringtheyear were£756,000 £420,000). (2009: 25 with a total market value of £1,233,000 (2009: £342,000).Dividendsonthese shareshavebeenwaivedby the trustees. with atotalmarket valueof£1,233,000(2009: BrothersPlc ordinarysharesof5peach inRathbone 42,693) (2009: At 31December2010,thetrusteesheld112,693 has beenrecognisedfortheestimated fairvalueoffutureawards. settled ratherthanequity witheffect At from31March theyearend,aliability of£795,000 2009. £119,000) (2009: As aconsequenceofthis,theGroup changed thebasisofaccounting fortheawardsunderLTIP totreatthemascash on exercise ofoptions to SaveAsYou Earnscheme to ShareIncentivePlan on exercise ofoptions to ShareIncentivePlan Long termemployeeLong benefits Share-based payments Share capital

continued

42,858,196 43,296,330 43,376,790

165,800 272,334 Number of 11,250 68,851 shares 359

415.0 –852.0 795.0 –796.0

Exercise 696.0 852.0 926.5 price p

2,143 2,169 2,165 capital Share £’000 14 8 – 1 3 28,957 32,488 31,756 premium 1,488 1,311 Share £’000 635 95 2

31,100 34,657 34,657 33,921 1,502 1,319

£’000 638

Total

Rathbone Brothers Plc 93 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 94 Notes to the consolidated financial statements At 31December Exercised intheyear Lapsed intheyear Granted intheyear At 1January theSAYEMovements inthenumberofshareoptionsoutstandingforboth planandtheshareoptionscheme wereasfollows: Exercisable 2008 2006 2006 2005 2004 2003 2002 2001 2001 2001 2000 Year ofgrant granted andtheperiodsinwhich theymaybeexercised aregivenbelow: The numberofshareoptionsoutstandingfortheoptionscheme attheendofyear, theperiodsinwhich theywere repurchase orsettletheoptionsincash. term ofsevenyearsfromthedatetheybecomeexercisable. The Grouphasnolegalorconstructiveobligationto years’ service(thevestingperiod)andareexercisable threeyearsfromgrantdate.The optionshaveacontractualoption shares intheCompanyatpricesrangingfrom415pto1,172p. Optionsareconditionalonthe employeecompletingthree Under theshareoptionscheme approvedbyshareholdersin2000,certainemployeesholdoptionstosubscribefor Share optionscheme 2009 Year ofgrant the dateonwhich theymaybe exercised aregivenbelow: The numberofshareoptionsoutstanding fortheSAYE planattheendofyear, theperiodinwhich theyweregrantedand Expected dividendyield Risk freerate Expected volatility Exercise price(pence) Share price(pence) asatthedateofissue,werefollows: model foroptionsgrantedduring2009, toDirectorsandstaffundertheSAYEdividends, weregrantedon23December2009 plan.The inputsintothebinomial Options withanaggregateestimatedfairvalueof£323,000,determinedusingabinomialvaluationmodelincludingexpected cash. Further informationonthe scheme isgivenintheRemunerationreportonpage38. period. At theendofsavings period,employeescanelecttoacquiresharesorreceivetheirsavings,includinginterest,in Under theplan,employeescancontributeupto£250permonthacquiresharesatendofthreeyearsavings Savings relatedshareoptionorSaveAsYou Earn(SAYE) plan 27 Share-based payments

continued

(116,798) 648,807 777,214 (11,609) of share Number options 2010 –

Weighted average

exercise price 1,116.00 1,172.00 915.80 985.00 813.50 852.00 415.00 810.00 932.50 743.50 827.50 Exercise 8.47 9.11 8.02 8.19 2010 price – £ p

696.00 Exercise price 2009–2016 2009–2016 2008–2015 2006–2013 2004–2011 2004–2011 2011–2018 2005–2012 2003–2010 2004–2011 2007–2014 p

(272,334) 906,963 193,585 777,214 (51,000) Exercise Exercise 2013 of share Number options period period 2009 2010 – – – – –

144,648 184,988 463,819 15,948 66,184 30,000 61,956 64,851 38,110 22,500 10,000 Number Number 9,622 2010 2010

Weighted average –

exercise price 161,148 193,585 583,629 101,810 30,000 15,948 66,351 38,110 66,184 10,000 61,956 22,500 32.0% 9,622 Number Number 5.3% 2.1%

6.96 8.19 5.52 9.71 696 803 7.74 2009 2009 2009 2009 £ ongoing monitoring. In additiontoformalexternal ratings,theBankingCommitteealsoutilisesmarketintelligence informationtoassistits or Moody’sCorporation(‘Moody’s’).Each exposure isassessedindividually, atinceptionandinongoingmonitoring. both The Groupcategorisesitsexposures basedonthelongtermratingsawardedtocounterpartiesbyFitch RatingsLtd(‘Fitch’) regularly, tomeetrepayment obligations. andpotential borrowers takingintoaccountthe abilityofborrowers Exposure tocreditriskismanagedthroughsettingappropriate ratingsrequirementsandlendinglimits.Limitsarereviewed clients aresecuredagainstclients’assetsthatheldandmanaged byGroupcompanies. financial institutions.Investmentsarespreadtoavoid excessive exposure toanyindividualcounterparty. Loans madeto It istheGroup’spolicytoplacefundsgeneratedinternallyand from depositsbyclientswitharangeofhighquality and2009. operations in2008 guaranteesgiven onclients’behalfandloansmadetotheacquirersofGroup’sJerseySwitzerland its loanbooks, placing fundswithotherbanksandholdinginterestbearingsecurities.The Groupalsohasexposure tocreditriskthrough due, throughitsbanking,treasury, trustandpensionsadvisoryactivities.The principalsourceofcreditriskarisesfrom The Grouptakesonexposure tocreditrisk,which istheriskthatacounterpartywillbeunabletopayamountsinfullwhen (i) to otherfinancialrisksinaccordancewiththeGroup’sriskappetite. the Group’streasurypolicyistomanageshorttermliquidityrequirementswhilstmaintaininganappropriatelevelofexposure and policydocumentsareinplacetocoverthemanagementmonitoringofeach typeofrisk.The primaryobjectiveof to creditrisk,liquidityriskandmarketrisk.Procedures anddelegatedauthoritiesaredocumentedinaGrouptreasurymanual The Treasury Department,reportingthroughtheBankingCommittee,hasprincipalresponsibilityformonitoringexposure Investment Management. Management CommitteeandtheBankingCommittee,which isastandingcommitteeoftheBoardDirectorsRathbone for theidentification,mitigationandmanagementofrisksareExecutiveCommittee,AuditRisk operating subsidiariesandcertainoftheBoard’sstandingcommittees.The principalcommitteesthathaveresponsibility ofdirectorstheGroup’s (the Board).The Boardhasembeddedriskmanagementwithinthebusinessthroughboards The Group’soverallstrategyandpoliciesformonitoringmanagementoffinancialriskaresetbytheBoardDirectors business, counterparties,marketsandtherangeoffinancialinstrumentsthatitutilises. information systems.The Groupregularlyreviewsitsriskmanagementpoliciesandsystemstoreflect changes inthe appropriate risklimitsandcontrolstomonitortherisksadherencebymeansofreliableup-to-date risk. The Group’sriskmanagement policiesaredesignedtoidentifyandanalysetherisksthatGroupfaces,set The sectionsbelowoutlinethe Group’sriskappetiteandexplain howitdefinesandmanageseach categoryoffinancial (iii) (ii) (i) control sectiononpage34.The Groupcategorisesitsfinancialrisksintothreeareas: items in The Grouphasidentifiedthe risks arisingfromitsactivitiesandhasestablishedpoliciesprocedurestomanagethese 28 £1,219,000). (2009: The Grouprecognisedtotalexpenses of£1,729,000 inrelationtoequity-settledshare-basedpaymenttransactions2010 £7.53).(2009: Nooptionsweregrantedduringtheyear. 3.3years).Optionsexercisable at31December2010hadaweightedaverageexercise(2009: priceof£7.71 £7.93).(2009: The optionsoutstandingat31December2010hadaweightedaveragecontractuallife of3.5years The weightedaverageshareprice atthedatesofexercise forshareoptionsexercised during theyearwas£10.04 27 outside standard termsaremonitoredonadaily basis. payment a correspondingdeliveryofsecurity orreceiptofcash.The majority oftransactionsarecarriedoutonadeliveryversus Settlement riskarisesinanysituation whereapaymentincashortransfer ofasecurityismadeintheexpectation of Settlement balances Share optionscheme Share-based payments Credit risk market risk(which includesfair valueinterestraterisk,cashflowforeign exchange riskandpricerisk). liquidity risk;and credit risk(which includescounterparty defaultrisk); Financial riskmanagement accordancewithitsriskappetite,asdescribedintheCorporategovernancereport’sRiskmanagementandinternal basis,which resultsinsecuritiesandcashbeingexchanged withinaveryclosetimeframe.Settlementbalances

continued

Rathbone Brothers Plc 95 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 96 Notes to the consolidated financial statements impairment Impairment provisionsforcredit risk,which relatesolelytotrust andpensiondebtors,aresetoutinnote15.Noother changes totheexternal credit ratingandtheanticipatedreceiptsforeach individualexposure. position dateonacasebybasis.The assessmentconsiders,whereapplicable,thevalue ofanycollateralheld, Impairment allowancesoncreditexposures aredeterminedbyanevaluationoftheincurred loss atthestatementoffinancial All creditexposures arereviewedindividually, atleastannually ormoreregularlywhenindividualcircumstancesrequire. of financialpositiondate,basedonobjectiveevidenceimpairment. Impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the statement Impairment andprovisioning policies (note15). anditsSwitzerlandtrustoperationsin2009 operations in2008 Other loansandadvancestocustomersareconstitutedby madetotheacquirersofGroup’sJerseytrust Otherdebtors (d) doubtful forcollection. Trust andPension Advisorycompanies.Impairmentprovisionsaremadeforanydebtswhich areconsideredtobe ageing oftrustandpensiondebtorsarereviewedonamonthlybasisbytheManagementCommitteesGroup’s Trust andpensiondebtorsrelatetofees which havebeeninvoicedbutnotyetsettledbyclients.The collectionand Trust andpensiondebtors (c) £5,260,000). been committed(2009: ofwhich £31,957,000 £30,000,000) (2009: £18,712,000) hadbeenadvanced(2009: andafurther£7,724,000 had At 31December, was£45,000,000 thetotallending exposure limitfortheInvestment Managementloanbook plans areestablishedwithclientsbeforeloansbecomeoverdueoruncovered. The BankingCommitteereviewsallloansonamonthlybasisandapprovesloanextensions. Where necessary, repayment granted subjecttocreditcriteria. nomineename andareadvancedforamaximumofoneyear.held inRathbones’ Extensionstotheinitialloanperiodmaybe but have Loans andshorttermoverdraftsareprovidedasaservicetoInvestmentManagementclientswhogenerallyassetrich InvestmentManagementloanbook (b) Committee onamonthlybasis. between the Overdrafts onclients’investmentmanagementaccountsarisefromtimetodueshorttermtimingdifferences Overdrafts (a) (trust andpensiondebtors). The Groupisalsoexposed tocreditriskontradedebtorsarisingfromtheTrust andTax andPensions Advisorybusinesses The Groupprovidesloanstoclients throughitsInvestmentManagementoperations(theloanbook). Loans andadvancestocustomers counterparty, orliquidatespecificholdings,inthelightofadversemarketinformation. and reviewedbytheBankingCommitteeonamonthlybasis.The BankingCommitteemaysuspenddealinginaparticular an individualcounterpartyorconnectedgroupofcounterparties.Counterpartyexposures aremonitoredonadailybasis long termratingof‘A’ byFitch orequivalentratingbyMoody’s.Counterpartylimitsarealsoinplacetolimitexposure to The Group’spolicyrequiresthat allsuch exposures areonlytakenwithcounterpartiesthat havebeenawardedaminimum own reserves. placement ofsurplusinvestmentmanagementclientcash,which isheldunderabankingrelationship,andtheGroup’s bonds. These deposits, certificatesofdeposit,moneymarketfundsandgovernment exposures principallyarisefromthe The Grouphasexposures toawiderangeoffinancialinstitutionsthroughitstreasuryportfoliowhich includesbank Loans andadvancestobanksdebtother securities byclients. settlement isborne Settlement balancesarisingintheInvestmentManagementsegmentareprimarilyrelationtoclienttradesandriskofnon- The InvestmentManagement and UnitTrust businesseshaveexposure tomarketcounterpartiesinthesettlementoftrades. 28 (i) Financial riskmanagement shorttomediumtermcashrequirements.Such loansarenormallymadeonafullysecuredbasisagainstportfolios Credit risk losses arose during the year (2009: none). lossesaroseduringtheyear(2009: purchase andsaleofassetsonaclients’behalf.OverdraftsareactivelymonitoredreportedtotheBanking

continued

nil). No loansandadvanceshavebeen renegotiated(2009: Net carryingvalue Less allowanceforimpairment(note15) Gross carryingvalue Impaired Past duebutnotimpaired Neither pastduenorimpaired Loans andadvancesaresummarisedasfollows: Loans andadvances Net carryingvalue Less allowanceforimpairment Gross carryingvalue Impaired days Past duebutnotimpaired>90 days Past duebutnotimpaired<90 Neither pastduenorimpaired Settlement balancesaresummarisedasfollows: Settlement balances 82.4%). represents investmentsindebtsecurities(2009: 12.9%)and85.1% 8.8% ofthetotalmaximumexposure isderivedfromloansandadvancestobankscustomers(2009: arebasedonnetcarrying amountsasreportedinthestatementoffinancialposition. above account ofanycollateralheldorothercreditenhancementsattached. For on-balancesheetassets,theexposures setout withouttaking tablerepresentsthegrosscreditriskexposureThe totheGroupat31December2010 and2009, above Financial guarantees Loan commitments Credit riskrelatingtooff-balancesheetexposures: Other financialassets – Debt securities – – – – Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Credit riskrelatingtoon-balancesheetexposures: Maximum exposure tocredit risk 28 Unlisted debtsecuritiesandmoneymarketfunds Other debtors Trust andpensiondebtors Investment Managementloanbook Overdrafts (i) Financial riskmanagement Credit risk continued

continued

Loans and 39,565 39,565 39,565 advances to banks £’000 2010 – – –

to customers Loans and 40,169 39,318 40,026 advances (143) £’000 708 143 2010

929,049 790,585 92,661 92,661 92,661 39,565 18,169 18,169 30,265 18,169 31,957 13,267 Loans and advances 3,306 5,822 1,073 to banks 4,877 7,724 £’000 £’000 £’000 583 2009 2010 2010 25 – – – – –

944,641 to customers 778,000 22,663 22,663 12,300 12,300 92,661 92,661 26,827 26,235 18,712 17,305 17,305 17,305 Loans and 26,745 advances 4,980 5,260 5,260 6,018 3,167 850 510 £’000 £’000 £’000 2009 2009 2009 (82) 25 82 5 – –

Rathbone Brothers Plc 97 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 98 Notes to the consolidated financial statements £nil). (2009: £82,000).There werenootherimpairedcreditexposuresand pensiondebtorsis£143,000 (2009: at31December2010 Allowance hasbeenmadeforindividuallyimpairedtrustandpension debtors.The balanceof individuallyimpairedtrust Impaired (c) daysoverdue > 365 270 daysoverdue –365 –270180 daysoverdue daysoverdue –180 90 daysoverdue < 90 At 31December2009 daysoverdue > 365 270 daysoverdue –365 –270180 daysoverdue daysoverdue –180 90 daysoverdue < 90 At 31December2010 gross amountofloansandadvancesbyclasstocustomersthatwerepastduebutnotimpairedat31December2010were: Loans andadvancesthatarepastdueassessedforimpairmentprovidedagainstwhereconsideredappropriate.The Pastduebutnotimpaired (b) AA- toAA+ statement offinancialpositiondate. analysed below The creditqualityofloansandadvancestobanksthatwereneitherpastduenorimpairedat31December2010is Outside standardlendingcriteria Standard lendingcriteria At 31December2009 Outside standardlendingcriteria Standard lendingcriteria At 31December2010 been repaid,except inthecase oftrustandpensiondebtorswhereanormalsettlementperiodsevendaysisexpected. An exposure isreportedaspast duewhenthecontractualdateforsettlementhaspassedandbalancenot at theinception are all The creditqualityofloansand advancestocustomersthatwereneitherpastduenorimpairedat31December2010,which Neitherpastduenorimpaired (a) 28 (i) Financial riskmanagement externally unrated,isanalysed belowbetweenthoseloansthatremainwithinthestandardlendingcriteriarequired Credit risk byreference tothelongtermcreditratingawardedbyFitch, orequivalentratingbyMoody’sasatthe of the loan, which are described on page 96, andthoseloansthatnolongermeettheinitiallendingcriteria. oftheloan,which aredescribed onpage96, continued

continued

Overdrafts Overdrafts Overdrafts Overdrafts 3,167 3,167 3,306 3,306 £’000 £’000 £’000 £’000 – – – – – – – – – – – – – –

Management Management Management Management Investment Investment loan book loan book Investment Investment 18,712 18,712 31,957 31,957 loan book loan book £’000 £’000 £’000 £’000 – – – – – – – – – – – – – –

39,565 Trust and Trust and Trust and Trust and pension pension debtors debtors pension pension debtors debtors 258 510 120 201 258 £’000 £’000 £’000 £’000 £’000 184 708 141 255 223 223 2010 40 58 91 85 43 – –

4,098 4,098 3,832 3,832 debtors debtors debtors debtors Other Other £’000 £’000 £’000 £’000 Other Other – – – – – – – – – – – – – –

advances to advances to advances to advances to customers customers 92,661 92,661 22,137 26,235 35,486 39,318 loans and loans and customers customers loans and loans and

4,098 4,098 3,832

510 120 201 £’000 £’000 £’000 £’000 £’000 184 141 255 708 2009 Total Total Total Total 40 40 58 91 85 43

Other financialassets – Debt securities – – – – Loans andadvancestocustomers Loans andadvancestobanks Settlement balances At 31December2009 Other financialassets – Debt securities – – – – Loans andadvancestocustomers Loans andadvancestobanks Settlement balances At 31December2010 the counterparty. statement offinancialpositiondate.Inthisanalysis, exposures arecategorisedbasedonthecountryofdomicile The followingtableanalysestheGroup’screditexposures, attheircarryingamounts,bygeographicalregionasthe Geographicalsectors (a) or sector. Fitch orMoody’sratingdowngrade. This mayhappeninrelationtospecificbanksorwithinaparticularcountry liquidating investmentsinthelightofadversemarketinformation,forexample inanticipationoforresponsetoanyformal institutions. The BankingCommittee activelymonitorscounterpartiesandmayreduceriskbyeithersuspendingdealingor The Grouphascounterpartyconcentration riskwithinitstreasuryassetsinthatexposure istoanumberofsimilarcredit Concentration ofcredit risk A to+ AA –to+ AAA Fitch orMoody’slongtermrating designation. The tablebelowpresentsananalysis ofdebtsecuritiesbyratingagencydesignation,asat31December2010,basedon Debt securities 28 Unlisted debtsecuritiesandmoneymarketfunds Other debtors Trust andpensiondebtors Investment Managementloanbook Overdrafts Unlisted debtsecuritiesandmoneymarketfunds Other debtors Trust andpensiondebtors Investment Managementloanbook Overdrafts (i) Financial riskmanagement Credit risk continued

continued

Government securities £’000 2010 – – – –

39,500 39,500 market Money funds £’000 2010 – –

303,085 448,000 751,085 Certificates of deposit £’000 2010 –

303,085 448,000 790,585 39,500 £’000 Total 2010

314,000 409,388 305,000 410,727 Government 40,892 19,168 15,621 30,462 25,562 16,953 17,975 27,706 Kingdom securities 2,303 Kingdom 2,775 United United 768 £’000 £’000 £’000 930 2009 – – – – – –

84,000 84,000 4,215 3,267 3,697 3,267 market Jersey Money Jersey 289 162 funds 497 £’000 £’000 £’000 251 131 2009 48 – – – – – – – – – –

694,000 464,000 263,000 431,000 522,432 485,585 505,524 Certificates 51,480 14,003 the World of deposit the World 1,684 3,333 1,244 1,216 2,511 Rest of Rest of 367 831 737 £’000 £’000 £’000 400 565 2009 – – –

263,000 431,000

778,000 778,000 918,609 918,609 790,585 937,374 92,661 92,661 22,663 84,000 39,565 18,169 30,265 18,712 17,305 31,957 4,098 4,098 3,167 3,306 3,832 768 £’000 £’000 £’000 930 2009 Total Total Total

Rathbone Brothers Plc 99 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 100 Notes to the consolidated financial statements The Groupdoesnotrelyonexternal fundingforitsactivities. quality counterparties. The Groupoperatesastrictsetofcriteriaforcounterpartiestoensurethatinvestmentsareliquid andplacedwithhigh Liquidity riskisprimarilymanagedbyholdingcashandmarketable instrumentsthatarerealisableatshortnotice. be reviewedbytheFinancialServicesAuthorityin2011. requirements applicabletothe2010financialyear. This assessmentprocesswasimplemented in2010andis expected to inresponsetoadditionalregulatory are metnowdocumentedinanInternalLiquidityAdequacyAssessment(ILAA) no significantriskthatitsliabilitiescannotbemetastheyfalldue. The controlsandpoliciesthatensuretheserequirements Investment Management(thebank)alsohasaregulatoryrequirementtomaintainadequateliquidityensurethatthereis The primaryobjectiveoftheGroup’streasurypolicyistomanageshortmediumtermliquidityrequirements.Rathbone are settledbydeliveringcashoranotherfinancialasset. Liquidity riskisthethatGroupwillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilities (ii) Other financialassets – Debt securities – – – – Loans andadvancestocustomers Loans andadvancestobanks Settlement balances At 31December2009 Other financialassets – Debt securities – – – – Loans andadvancestocustomers Loans andadvancestobanks Settlement balances At 31December2010 counterparties operate,were: The Group’screditexposures atthestatementoffinancialpositiondate,analysedbyprimaryindustrysectorsinwhich our Industry sectors (b) 28 Unlisted debtsecuritiesandmoneymarketfunds Other debtors Trust andpensiondebtors Investment Managementloanbook Overdrafts Unlisted debtsecuritiesandmoneymarketfunds Other debtors Trust andpensiondebtors Investment Managementloanbook Overdrafts (i) Financial riskmanagement Liquidity risk Credit risk continued

continued

Public sector sector Public £’000 £’000 – – – – – – – – – – – – – – – – – –

893,939 778,000 790,585 855,083 institutions 92,661 39,565 institutions 18,169 17,305 Financial Financial 5,973 6,764 £’000 £’000 – – – – – – – –

16,690 43,435 23,501 18,712 63,526 31,957 and other and other 4,098 3,167 3,306 3,832 Private clients Private clients 768 £’000 £’000 930

– – – – – –

918,609 778,000 790,585 937,374 39,565 39,565 92,661 92,661 22,663 22,663 18,169 30,265 30,265 18,712 17,305 31,957

4,098 4,098 3,167 3,306 3,832 768 £’000 £’000 930 Total Total

£nil). The Groupdidnotholdanyderivativeinstrumentsat31December2010(2009: flows(derivativessettledon a netbasis) Derivative cash or thatdo arebalances that arerepayableondemand Included withintheamountsduetocustomersondemand disclosedabove Net liquiditygap Cash flowsarisingfromfinancialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Cash flowsarisingfromfinancialliabilities Cash flowsarisingfromfinancialassets Other financialassets Debt securitiesandmoneymarketfunds Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Cash flowsarisingfromfinancialassets At 31December2009 Net liquiditygap Cash flowsarisingfromfinancialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Cash flowsarisingfromfinancialliabilities Cash flowsarisingfromfinancialassets Other financialassets Debt securitiesandmoneymarketfunds Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Cash flowsarisingfromfinancialassets At 31December2010 assets andliabilitiesbyremainingcontractualmaturitiesatthestatementoffinancial positiondate. The tablebelowpresentstheundiscounted cashflowsreceivableandpayablebytheGroupundernon-derivativefinancial flows Non-derivative cash 28 (ii) Financial riskmanagement Liquidity risk nothaveacontractualmaturitydate,which historicalexperience showsareunlikelytobecalledintheshortterm.

continued

(642,809) (555,771) 101,166 156,427 712,198 710,972 718,171 718,517 52,036 31,306 39,522 75,708 3,198 1,224 demand 1,483 3,393 demand £’000 £’000 131 215 22 On On 2 – – 5 – – 4

451,860 350,538 368,257 101,322 434,268 342,016 371,307 40,109 55,185 22,447 22,157 25,369 18,169 23,642 11,159 43,353 92,252 17,305 17,829 23,712 Not more 3 months 3 months Not more 1,533 8,050 1,545 8,264 310 £’000 £’000 than than –

272,960 366,369 280,711 385,197 389,172 285,745

more than 12,151 22,793 3 months more than 3 months 1,898 5,034 1,562 1,888 1,562 3,975 1,574 but not but not 1 year 1 year 628 £’000 £’000 525 After After 10 – 6 – – – – – – 36,690 40,301 46,566 1 yearbut 20,454 25,777 17,906 1 yearbut not more 6,250 3,104 not more 5,229 9,876 6,772 7,871 7,871 5 years 5 years £’000 £’000 After After than than 15 94 – – – – – – – – – – –

5 years 5 years £’000 £’000 After After – – – – – – – – – – – – – – – – – – – – – – – – – –

940,598 940,598 828,430 828,430 112,168 112,168 782,684 762,049 102,310 822,615 924,925 797,652 767,719 29,649 29,649 31,119 22,157 18,169 26,956 33,532 17,305 39,570 23,712 92,773 42,574 17,872 3,322 7,435 315 £’000 £’000 Total Total

Rathbone Brothers Plc 101 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 102 Notes to the consolidated financial statements it whentheyieldcurveisexpected tofall. by theBankingCommittee,which generallylengthensthemismatch whentheyieldcurveis expected toriseandshortens varies dependingonthematurity profileoftheGroup’streasuryportfolio. The averagematuritymismatch iscontrolled rates, whereastheyieldon Group’s interest-bearingassetsiscorrelatedtothefutureexpectation ofbaseratesand assets andliabilities.Inparticular, customeraccountsandloan balancesarerepricedveryshortlyafterchanges inbase The Group’sprincipalexposure tocashflowinterestrateriskarisesfromthemismatch betweentherepricingofitsfinancial of changes inmarketinterestrates. in marketinterestrates.Fair valueinterestrateriskisthethatofafinancialinstrument willfluctuatebecause Cash flowinterestrateriskisthethatfuturecashflows ofafinancialinstrumentwillfluctuatebecause of changes Interest raterisk (iii) Total off-balancesheetitems Cash flowsarisingfromfinancialliabilities At 31December2009 Total off-balancesheetitems Cash flowsarisingfromfinancialliabilities At 31December2010 Total liquidityrequirement Total off-balancesheetitems Capital commitments Operating leasecommitments Financial guarantees Loan commitments At 31December2009 Total off-balancesheetitems Capital commitments Operating leasecommitments Financial guarantees Loan commitments At 31December2010 expected dateofpayment. operating leasesarereportedbytheircontractualpaymentdates.Capitalcommitmentssummarisedtheearliest guarantees areanalysedbythedurationofcommitment.Future minimumleasepaymentsundernon-cancellable The contractualvalueoftheGroup’s commitmentstoextend credittoclientsandmaximumpotentialvalueoffinancial 30)aresummarisedinthetablebelow.Cash flowsarisingfromtheGroup’soff-balancesheetfinancialliabilities(note Off-balance sheetitems 28 (ii) Financial riskmanagement Market risk Liquidity risk

continued

712,198 712,198 718,517 718,517 demand demand £’000 £’000 On On – –

121,834 101,322 101,880 20,512 20,512 14,002 92,252 Not more Not more 3 months 3 months 3 months 3 months Not more Not more 5,260 1,245 1,305 9,628 9,628 7,724 £’000 £’000 594 £’000 £’000 than than than than 5 5

more than more than 3 months 3 months more than more than 3 months 3 months 8,668 3,634 3,634 5,034 3,634 3,910 3,910 3,910 3,975 7,885 but not but not but not but not 1 year 1 year 1 year 1 year £’000 £’000 £’000 £’000 After After After After – – – – – – 13,065 13,065 13,065 22,941 1 yearbut 1 yearbut 11,206 19,655 11,784 11,784 1 yearbut 1 yearbut not more not more not more not more 9,876 7,871 5 years 5 years 5 years 5 years £’000 £’000 £’000 £’000 578 After After After After than than than than – – – – –

8,655 8,655 8,655 8,655 7,749 7,749 7,749 7,749 5 years 5 years 5 years 5 years £’000 £’000 £’000 £’000 After After After After – – – – – – – –

828,430 828,430 855,686 855,686 874,296 822,615

45,866 45,866 45,866 45,866 26,599 26,599 14,002 33,071 33,071 24,170

5,260 5,260

7,724 594 £’000 £’000 £’000 £’000 583 Total Total

Total Total

of daystorepricingtheinterest bearingliabilitiescomparedwiththeperiodtorepricingon a correspondingamountof bank, theprincipaloperatingsubsidiary. The potentialtotalprofit orlossiscalculatedonthebasisofaveragenumber total profitorlossresultingfromanunexpected immediateandsustained2%movementin Sterling interestratesforthe The £5,000,000)forthe BankingCommitteehassetanoverallpre-taxinterestrateexposure limitof£5,000,000(2009: Interest raterepricinggap Total financialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Liabilities Total financialassets Other financialassets – – Investment securities Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Assets At 31December2009 Interest raterepricinggap Total financialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Liabilities Total financialassets Other financialassets – – Investment securities Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Assets At 31December2010 amounts, categorisedbytheearlierofcontractualrepricingormaturitydates. The tablebelowshowstheconsolidated repricingprofileoftheGroup’sfinancialassetsandliabilities,statedattheircarrying 28 rates. The Group held no forward rate agreements at 31 December 2010 (2009: none). rates. The Group heldnoforwardrateagreements at31December2010(2009: atthestatement offinancialpositiondate for a2%decreaseorincreasein interest £2,088,000) £2,542,000 (2009: repricing, creatinganexposure of87 72 days(2009: days). The totalpotentialimpactonprofit aftertaxandequitywas 74 twodays)torepricingwhich days(2009: werematchedtwo days(2009: bySterlingassetsaveraging89 days)to At 31December2010,thebankhad£734.2 £738.5 million(2009: million)ofSterlinginterestbearingliabilitiesaveraging interest bearingassets. debt securitiesandmoneymarketfunds equity securities debt securitiesandmoneymarketfunds equity securities (iii) Financial riskmanagement

Market risk

continued

(186,986) (276,143) 580,604 760,211 408,585 759,454 756,025 483,311 467,000 767,590 21,418 39,536 35,190 91,876 Not more 3 months 3 months Not more 3,304 7,379 310 £’000 £’000 125 than than – – – – – – – – – –

138,068 139,000 139,000 216,850 217,000 217,000 more than 6 months 3 months more than 3 months 6 months but not but not 932 932 £’000 £’000 150 150 After After – – – – – – – – – – – – – – – – – – 132,000 132,622 132,000 148,267 145,000 147,894 more than 6 months more than 6 months 3,267 but not but not 1 year 1 year 622 622 622 £’000 £’000 373 373 After After – – – – – – – – – – – – – – – – 40,000 43,267 43,267 1 yearbut 20,000 20,000 20,000 1 yearbut not more not more 3,267 5 years 5 years £’000 £’000 After After than than – – – – – – – – – – – – – – – – – – – – – 5 years 5 years £’000 £’000 After After – – – – – – – – – – – – – – – – – – – – – – – – – – – –

(12,806) 22,663 31,181 45,128 22,157 30,265 18,169 32,130 61,320 53,122 17,305 23,712 57,934 (8,198) 2,060 4,596 2,932 1,568 3,087 5,478 bearing interest bearing interest 163 £’000 £’000 Non- Non- 29 – 5 – 4 – –

940,621 940,621 113,543 766,361 778,000 790,585 100,403 100,403 821,297 762,026 921,700 827,078

22,663 22,663 92,661 92,661 31,181 22,157 39,565 30,265 18,169 40,025 40,025 32,255 17,305 23,712 26,745 2,932 3,304 3,087 7,379

315 £’000 £’000 Total Total 4

Rathbone Brothers Plc 103 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 104 Notes to the consolidated financial statements variables, inparticular other strengthening oftheUSDollar or Eurowouldhavehadanequalandoppositeeffect. This analysis assumesthatallother £35,000and£29,000respectively).A10% reduced equityandprofitafter tax by£42,000or£85,000respectively(2009: A 10%weakeningoftheUSDollar orEuroagainstthePound Sterling,occurringon31December 2010,wouldhave Loan commitments Net on-balancesheetposition Total financialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Liabilities Total financialassets Other financialassets – – Investment securities Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Assets At 31December2009 Loan commitments Net on-balancesheetposition Total financialliabilities Other financialliabilities Due tocustomers Settlement balances Deposits bybanks Liabilities Total financialassets Other financialassets – – Investment securities Loans andadvancestocustomers Loans andadvancestobanks Settlement balances Cash andbalancesatcentralbanks Assets At 31December2010 assets andliabilities,atcarryingamounts,categorisedbycurrency. Group’s exposure toforeigncurrency translationriskat31December2010.IncludedinthetableareGroup’sfinancial The Groupdoesnothaveany material exposure totransactionalforeignexchange risk.The tablebelowsummarisesthe Singapore, BritishVirgin and2010(note10). IslandsandDutch operationsduring2009 minimal amount.The Group’sstructural currencyexposure wassubstantiallyeliminatedonthedisposalofitsSwitzerland, exposures aremanagedthrough theuseofspotcontracts,fromtimetotime,soasreduceanycurrencyexposure toa The Groupmonitorsitscurrency exposures thatariseintheordinarycourseofbusinessonadailybasisandsignificant Foreign exchange risk 28 debt securitiesandmoneymarketfunds equity securities debt securitiesandmoneymarketfunds equity securities (iii) Financial riskmanagement

Market risk

continued

exchange rates, remainconstant.

continued

112,463 798,824 911,287 778,000 891,554 790,585 793,363 738,751 742,557 26,060 66,853 29,512 15,564 22,647 19,376 28,606 38,421 14,662 28,941 22,582 98,191 16,758 5,260 2,158 3,089 2,518 Sterling 7,379 7,724 Sterling £’000 £’000 5 4 10,189 10,671 16,450 16,439 18,003 US Dollar US 17,421 US Dollar 9,353 1,671 1,252 7,684 482 165 834 833 310 £’000 £’000 288 582 789 193 10 13 – – – – – – – – – 13,060 13,198 15,184 14,779 1,348 6,895 1,831 3,633 4,224 1,070 5,718 1,177 686 405 649 520 569 £’000 £’000 146 115 774 747 Euro Euro – 6 – – – – – – – 3,060 3,286 3,257 5,248 1,531 2,612 3,479 2,724 1,773 4,795 186 193 222 Other 569 £’000 £’000 215 424 195 453 Other 40 – – – – – – – – – – – 940,621 940,621 113,543 766,361 778,000 790,585 100,403 100,403 762,026 821,297 921,700 827,078 22,663 22,663 92,661 92,661 31,181 22,157 39,565 18,169 30,265 40,025 32,255 17,305 23,712 26,745 5,260 5,260 2,932 3,304 3,087 7,379 7,724 315 £’000 £’000 Total Total 4

to estimates There havebeennotransfers betweenlevelsduringtheyear. Moneymarketfundsaredemandsecuritiesandchanges The fairvalueofmoneymarketfundsistheirdailyredemptionvalue. The fairvalueofunlistedequitysecuritiesiscalculatedbyreference tonetassetvalueswithaliquiditydiscountapplied. Total financialassets – – Available forsalesecurities Assets At 31December2009 Total financialassets – – Available forsalesecurities Assets At 31December2010 • • • technique usedtodeterminethe fairvalue: The tablebelowanalysesfinancial instrumentsmeasuredatfairvalueintoahierarchy basedonthevaluation exception ofheldtomaturityinvestment securities(note16). The fairvaluesoftheGroup’s financial assetsandliabilitiesarenotmateriallydifferent fromtheircarryingvalues,withthe Fair values equal andoppositeeffect. £293,000);therewouldbenoimpactonprofitaftertax.A10%riseinglobalmarketshavean (2009: £309,000 £2,932,000).A10%fallinglobalequitymarketswould,isolation,resultapre-taximpactonnetassetsof (2009: At 31December2010,thefair valueofequitysecuritiesrecognisedonthestatementfinancialpositionwas£3,087,000 through itsholdingsofequityinvestmentsecurities,which arereportedattheirfairvalue(note16). market prices(otherthanthosearisingfrominterestrateriskorforeignexchange risk).The Groupisexposed topricerisk Price riskisthethatfair valueorfuturecashflowsofafinancialinstrumentwillfluctuatebecause changesin Price risk 28 directly orindirectly. money marketfunds equity securities money marketfunds equity securities Level 3:inputsfortheassetor liabilitythatarenotbasedonobservablemarketdata. Level 2:inputsotherthanquoted pricesincludedwithinLevel 1thatareobservablefortheassetorliability, either Level 1:quotedprices(unadjusted) inactivemarketsforidenticalassetsorliabilities. (iii) Financial riskmanagement

Market risk

ofinterestrateswillnotaffect theirfairvalue. continued

continued

2,153 2,153 2,513 2,513 Level 1 Level 1 £’000 £’000 – – 84,000 39,500 40,074 84,779 Level 2 Level 2 £’000 £’000 779 574 Level 3 Level 3 £’000 £’000 – – – – – –

86,932 86,932 84,000 39,500 42,587

2,932 3,087

£’000 £’000 Total Total

Rathbone Brothers Plc 105 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 106 Notes to the consolidated financial statements Regulatory capital requirements have been met throughout the financial year ended 31 December 2009 and2010. Regulatory capitalrequirementshavebeenmetthroughoutthefinancialyearended31December2009 also runtoensurethattheGroupstructuresremainoptimal. are appropriatelymanagedandappropriatebuffers arekeptagainstadversebusinessconditions.Regularexercises are activity, capitallevelsaremonitoredandforecastedonamonthlybasistoensurethatdividends andinvestmentrequirements process,anddailyreportinginrespectoftreasury In additiontoavarietyofstresstestsperformedasparttheICAAP The reductionisprincipallyduetotheincreaseinintangibleassetsduring2010. £94,462,000). (2009: At 31December2010theGroup’sregulatorycapitalresources,includingretainedearningsfor2010,were£85,250,000 Groupandentitylevel. operational riskcomponent.Capitalmanagementpolicyandpracticesareappliedatboth standardised approach tocalculating itsPillarIcreditriskcomponentandthebasicindicatorapproach tocalculatingits methodology. PillarIandII The Grouphasadoptedthe against regulatorycapitalrequirementsderivedusingtheCRD’s from accountingcapital,thelatterlargelyinrespectofintangibleassets.The comparesregulatorycapitalresources ICAAP rules.These requirecertainadjustmentstoanddeductions purposesarecalculatedinaccordancewithCRD ICAAP Adequacy AssessmentProcess which (ICAAP) ispresentedtotheFSAonanannualbasis.Regulatorycapitalresourcesfor asabankinggroupandperformsanInternalCapital isclassifiedundertheCapitalRequirementsDirective(CRD) Rathbones • • • • • The Group’sobjectiveswhenmanaging capitalareto: part ofaccountingcapitalgiventheirveryshortmaturity. £6,155,000)(note21)which arenotconsideredtobe at31December2010(2009: of£3,089,000 external borrowings earnings andotherreserves.Asat31December2010thistotalled£185,374,000 The Companyhas £182,489,000). (2009: BrothersPlc’scapitalisdefinedforaccountingpurposesasthetotalofsharecapital,premium,retained Rathbone 29 and benefitsforotherstakeholders; comply withregulatoryrequirementsatalltimes. strive tomakecapitalfreelytransferable acrosstheGroupwherepossible;and optimise thedistributionofcapitalacrossGroupcompaniesreflectingrequirementseach business; maintain astrongcapitalbasetobeablesupportthedevelopmentofbusinesswhenrequired; safeguard theGroup’sabilityto continueasagoingconcernsothatitcantoprovidereturnsforshareholders Capital management

or received.Noprovisionshavebeenmadefordoubtfuldebts in respectoftheamountsowedbyrelatedparties. All amountsoutstandingwithrelatedpartiesareunsecuredandwillbesettledincash.Noguaranteeshavebeengiven £3,000). the pensionschemes (2009: The Group’stransactionswiththepensionfundsaredescribedinnote25.At 31December2010£4,000wasduefrom underwrites partoftheGroup’sprofessional indemnityinsurancepolicy. One oftheGroup’sNon-executive Directorsisanexecutive directorofNovaeGroupPlc,arelatedentitywhich such servicesaremadeatvariousstaffrates. Directors andtheirclosefamilymembersmakeuseoftheservicesprovidedbycompanieswithinGroup.Chargesfor £193,000)weremadeonnormalbusinessterms.AnumberoftheCompany’s (2009: £193,000),ofwhich £490,000 (2009: £1,178,000) (2009: members hadgrossoutstandingdepositsof£904,000 andgrossoutstandingloansof£490,000 At 31December2010keymanagementandtheirclosefamily in theauditedpartofRemunerationreportonpage38. The remunerationofthekeymanagementpersonnelGroup,whoaredefinedasCompany’sDirectors,issetout 31 (e) Later than5years Later than1yearandnolater5years No laterthan1year (d) £nil). The fairvalueoftheguarantees is£nil(2009: Undrawn commitmentstolendof1yearorless Guarantees (c) (b) (a) 30 may beincurredinfutureyearsalthoughtheultimatecostremainsuncertain. were asfollows: have varyingtermsandrenewalrights.The futureminimumleasepaymentsundernon-cancellableoperatingleases amounted to £594,000 (2009: £592,000). amounted to£594,000(2009: noindemnities). the year(2009: with themactingasdirectorsonclientstructuresinthenormalcourseofbusiness.Noindemnitieswererequiredduring Related partytransactions In additiontotheFinancialServicesCompensationScheme leviesaccruedintheyear(note7)furtherlevycharges The Groupleasesvariousoffices andotherassetsundernon-cancellableoperatingleaseagreements. The leases The contractualamountsofthe Group’scommitmentstoextend credittoitsclientsareasfollows: Capital expenditure authorised andcontractedforat31December2010butnotprovidedinthefinancialstatements Indemnities areprovidedtoanumberofdirectorsandemployeesinourTrust andTax Servicesdivisioninconnection Contingent liabilitiesandcommitments

11,206 24,170 8,307 5,215 7,724 7,749 £’000 £’000 583 2010 2010

26,599 26,599 13,064

5,260 5,260 8,656 5,265

4,879

£’000 £’000 2009 2009

Rathbone Brothers Plc 107 Notes to the consolidated financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 108 Notes to the consolidated financial statements this report. There havebeennomaterialeventsoccurringbetweenthestatementoffinancialpositiondate andthedateofsigning 33 Cash andcashequivalentsdisposedof Consideration receivedincashandequivalents Net cashflowarisingondisposal: Cash andcashequivalents Satisfied by: Total considerationreceivable Loss ondisposal Accruals, deferred income,provisionsandotherliabilities Due tocustomers Prepayments, accruedincomeandotherassets Property, plantandequipment Loans andadvancestocustomers Loans andadvancestobanks Cash andbalancesatcentralbanks The aggregatenetassetsofentities disposedofduringtheyear(note10)atdatesdisposalwereasfollows: no cashconsiderationwasreceived Shares issuedinrelationtoshare-basedschemes forwhich Share premiumonsharesissued(note26) Share capitalissued(note26) Cash flowsarisingfromissueofordinarysharescomprise: Available forsaleinvestmentsecurities areamountsinvestedinmoneymarketfundswhich arerealisableondemand. Available forsaleinvestmentsecurities (note16) Loans andadvancestobanks (note14) Cash andbalancesatcentralbanks(note13) three monthsuntilmaturityfromthedateofacquisition: For thepurposesofstatementcashflows,andequivalentscomprisefollowingbalanceswithlessthan 32 Events afterthestatementoffinancialpositiondate Consolidated statementofcashflows

39,500 39,565 79,069 (283) £’000 £’000 £’000 453 732 2010 2010 2010 – – 4 4 – – – – – – – – – – – –

139,044 139,044 (15,744) 55,039 55,039 84,000 17,374 (1,341) (1,654) (4,623)

1,638 1,638 2,193 2,799 1,721 (211) (628) 313 313 313 524 123 £’000 £’000 £’000 2009 2009 2009 35 22 5

Company financial statements

110 Company statement of comprehensive income 110 Company statement of changes in equity 111 Company statement of financial position 112 Company statement of cash flows 113 Notes to the Company financial statements 131 Five year record 132 Corporate information 132 Our offices Rathbone Brothers Plc 109 Company financial statements Report and accounts 2010 Rathbone Brothers Plc Company statement of comprehensive income Report and accounts 2010 110 Company statement of changes in equity The accompanyingnotesformanintegralpartoftheCompanyfinancialstatements. At 31December2010 – – – Share-based payments: Issue ofsharecapital Dividends paid comprehensive income Deferred taxrelatingtocomponentsofother Net actuariallossonretirementbenefitobligation Profit fortheyear At 1January2010 – – – – Share-based payments: Issue ofsharecapital Dividends paid other comprehensiveincome Deferred taxrelatingtocomponentsof Revaluation ofavailableforsaleinvestmentsecurities Net actuariallossonretirementbenefitobligation Profit fortheyear At 1January2009 for theyearended31December2010 Company statementofchangesinequity attributable toequityholdersoftheCompany Total comprehensiveincomefortheyear, netoftax Other comprehensiveincomefortheyear, netoftax – – Deferred taxrelatingtocomponents ofothercomprehensiveincome: – Revaluation ofavailableforsaleinvestmentsecurities: Net actuariallossonretirementbenefitobligation Other comprehensiveincome: Profit fortheyear for theyearended31December2010 Company statementofcomprehensiveincome Revaluation ofavailableforsaleinvestmentsecurities tax onshare-basedpayments costs ofsharesissued/purchased value ofemployeeservices tax onshare-basedpayments costs ofsharesissued/purchased transfer toliabilitiesforcashsettledawards value ofemployeeservices actuarial gainsandlosses available forsaleinvestmentsecurities net gain/(loss)fromchanges in fairvalue

Note 26 11 26 11

2,143 2,169 2,169 2,165 capital Share £’000 Note 22 16 44 4

28,957 32,488 32,488 31,756 premium 2,799 Share £’000 732

39,192 37,111 Available (2,081) (3,005) 2,119 2,219 2,077 for sale reserve £’000 £’000 155 155 782 (59) (13) (13) 2010 17

(18,066) (18,167) 11,693 20,922 39,192 39,192 27,886 (1,096) (8,626) (3,005) Retained earnings 2,415 1,219 1,054 1,054 8,248 8,248 (119) (569) £’000 351 782 (94)

(18,066) (18,167) 14,669 44,912 20,922 20,922 44,246 44,246 39,192 39,192 64,762 (1,096) (8,626) (6,253) (8,626) (3,005) 2,432 1,219 2,821 2,415 1,054 (119) (569) equity £’000 £’000 736 736 769 351 155 2009 Total (94) (59) (59) 17

The accompanyingnotesformanintegralpartoftheCompanyfinancialstatements. Company registerednumber:01000403. Chief Executive A DPomfret signed onitsbehalfby: The financialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueon16 February 2011andwere Equity shareholders’funds Retained earnings Available forsalereserve Share premiumaccount Share capital Equity Net assets Total liabilities Employee benefits Non-current liabilities Net currentassets Trade andotherpayables Borrowings Current liabilities Total assets Cash andcashequivalents Current taxasset Trade andotherreceivables Current assets Deferred tax Trade andotherreceivables Other investments Investment insubsidiaries Non-current assets as at31December2010 Company statementoffinancialposition

Finance Director R PStockton

Note 40 40 39 38 43 42 41 45 45 44

(12,502) 32,488 30,259 29,380 24,400 24,400 64,762 64,762 27,886 77,264 47,005 37,975 (3,089) (6,643) (5,859) (2,770) 2,405 3,538 2,169 2,219 3,087 £’000 469 469 410 2010

(16,962) 22,999 61,208 44,246 44,246 28,254 32,954 31,756 20,705 (1,394) (6,155) (9,413) 27,746 (7,549) 4,098 8,248 2,925 2,932 2,165 2,077 323 185 £’000 2009

(16,464) (10,741) 30,944 30,944 11,693 22,562 31,119 44,912 44,912 30,257 28,957 20,378 61,376 (1,540) (9,201) (5,723) 1,436 2,991 3,268 2,119 2,143 135 £’000 2008 40

Rathbone Brothers Plc 111 Company statement of financial position Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 112 Company statement of cash flows The accompanyingnotesformanintegralpartoftheCompanyfinancialstatements. Cash andcashequivalentsattheendofperiod Cash andcashequivalentsatthebeginningofperiod Net increaseincashandequivalents Net cashusedinfinancingactivities Dividends paid Repayments ofborrowings Issue ofordinaryshares Purchase ofsharesforshare-basedpayments Cash flowsfromfinancingactivities Net cashgeneratedfrominvestingactivities Investment insubsidiaries Liquidation ofsubsidiary, netofcashtransferred Other dividendsreceived Intercompany dividendsreceived Interest received Cash flowsfrominvestingactivities Net cashusedinoperatingactivities Tax received Defined benefitpension scheme contributionspaid Cash generatedfromoperations – – – Changes inoperatingassetsandliabilities: Interest paid Share-based paymentcharges Defined benefitpension scheme charges Finance costs Investment revenues Profit beforeincometaxfrom continuingoperations Cash flowsfromoperatingactivities for theyearended31December2010 Company statementofcashflows provisions andotherliabilities net increase/(decrease)inaccruals,deferred income, net (increase)/decreaseinprepayments,accruedincomeandotherassets net decrease/(increase)intradedebtors

Note 38 11 25 50 42 32 8 8

(39,984) (21,066) (15,250) (18,167) 25,009 39,781 39,877 (3,066) (1,360) (3,718) (7,285) 3,124 1,510 2,758 1,729 (286) 809 £’000 266 410 185 225 453 114 728 274 (75) 2010 90 67

(18,066) (19,387) (21,572) 21,488 21,488 21,393 21,393 21,134 (3,046) (1,697) (6,788) 4,995 4,995 3,095 3,095 1,219 1,852 2,193 2,764 (468) (831) (314) (450) 186 186 185 135 £’000 2009 2009 (33) 80 80 96 13 50 3

the consolidatedfinancialstatements. Details oftheCompany’sdividendspaidandproposedforapproval attheAnnualGeneralMeetingaresetoutinnote11to 37 Shared Services Trust andTax Services Unit Trusts Investment Management The averagenumberofemployeesduringtheyearwasasfollows: financial statements. Auditor’s remunerationforauditandotherservicestotheCompanyaresetoutinnote7consolidated £20,922,000). (2009: £39,192,000 statement fortheyear. BrothersPlcreportedaprofitaftertaxforthefinancialyearended31December2010of Rathbone theCompanyhaselectednottopresent itsownincome oftheCompaniesAct2006 As permittedbySection408 Profitfortheyear 36 financial statements. benefit pensionschemes andloannotesissuedtoformersubsidiaries. These aredescribedinnote2totheconsolidated The criticalaccountingjudgementsandkeysourcesofestimationuncertaintyarisefromtheCompany’sdefined Criticalaccountingjudgementsandkeysourcesofestimationuncertainty 35 accounting policiessetoutinnote1totheconsolidatedfinancialstatements. currency, retirementobligations,taxation,cashandequivalentsshare-basedpayments arethesameas foreign Accounting policiesinrelationto:impairment,interestincome,dividendoperatingleases,borrowings, the Companyandthenrecharged tootherGroupcompanies,whenincurred. Intra-group managementcharges by ariseinrelationtostaffcostsandotheradministrativeexpenses thatareinitiallyborne Management charges Investments insubsidiariesarestatedatcostless,whereappropriate,provisionforimpairment. Investments insubsidiaries financial instruments. The principal accountingpoliciesadoptedareassetoutbelow: statements. The financialstatements havebeenpreparedonthehistoricalcostbasis, except fortherevaluationofcertain Developments inreportingstandardsandinterpretationsarethesameasthosesetoutnote1toconsolidatedfinancial Developments inreportingstandardsandinterpretations related notesthatformapartoftheseapprovedfinancialstatements. nottopresentitsindividualincomestatementand oftheCompaniesAct2006 taking advantageoftheexemption ins408 On publishingtheparentcompanyfinancialstatementsheretogetherwithGroupstatements,Companyis reported financialposition,performanceandcashflowsoftheCompanyisprovidedinnote51. hasaffected the International FinancialReportingStandards’hasbeenapplied.Anexplanation ofhowthetransitiontoIFRS 1‘Firsttimeadoptionof IFRS and IFRS These aretheCompany’sfirst financialstatementspreparedinaccordancewith asadoptedbytheEuropeanUnion. been preparedinaccordancewithInternationalFinancialReportingStandards(IFRS) andhave The individualfinancialstatements oftheCompanyarepresentedasrequiredbyCompaniesAct2006 Statement ofcompliance Significantaccountingpolicies 34 for theyearended31December2010 Notes totheCompanyfinancialstatements Dividends

689 443 179 2010 43 24

428 671 179 2009 40 24

Rathbone Brothers Plc 113 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 114 Notes to the Company financial statements the period. The loansduring Grouphas nothadanydefaultsofprincipal, interestorotherbreaches with respecttoitssubordinated to therepayment. written noticetothesubsidiary undertaking andtheFSA. The FSAhastherightunderagreementtorefuseconsent or part,earlierthanfiveyearsfrom thedateloanwasmade,orfiveyearsfrom on which theCompanygives Group’s capitalmanagementactivities. Interestispaidmonthlyinarrears.Norepaymentofthe loanshallbemadeinwhole, loantoa subsidiary aspartofthe £250,000) subordinated During 2010theCompanyissued a£15,000,000(2009: loansisnotmateriallydifferentThe totheircarryingamount. fairvalueofthesubordinated Advisory ServicesLimited PensionRathbone & Management Limited Investment Rathbone Counterparty loanagreementsareshownbelow: The amountssubjecttosubordinated Subordinated loanstoGroupundertakings subsidiaries willbeincludedintheCompany’sannualreturntoCompaniesHouse. The Companyowns,directlyorindirectly, 100%oftheordinarysharecapitalallsubsidiaries.AfulllistCompany’s 1 PensionRathbone &AdvisoryServicesLimited UnitTrustRathbone ManagementLimited TrustRathbone CompanyLimited InvestmentManagement InternationalLimited Rathbone InvestmentManagement Limited Rathbone Subsidiary undertaking At 31December2010theprincipalsubsidiaryundertakingswereasfollows: of £13,000. Trust theCompany disposedofitssubsidiaryRathbone On 17November2009 InternationalB.V. forcashconsideration Pensionowned subsidiaryRathbone &AdvisoryServicesLimitedforcashconsideration. theCompany acquiredafurther200,000shares(withnominalvalueof£1each) initswholly On 25September2009 Limited CellRAT36’sHarlequin InsurancePCC yearendis31March 2011. Limited CellRAT36,Harlequin InsurancePCC which representstheentiresharecapitalofthatcell,forcashconsideration. On 19July2010,theCompanyacquired250,000non-votingredeemablepreference sharesof£1each (issuedatpar)in included intheresultsfor2010. Limited.The disposalofthesecompaniesis Limitedandon18January2011forRathbones Bros&Co(UK) for Rathbone struck offon14September2010 andon22September2010respectively. This processwascompletedon11January2011 Limitedtobe LimitedandRathbones Bros&Co(UK) 2010. The Companyappliedfor itswhollyownedsubsidiariesRathbone December InsuranceLimitedon30 Bank(BVI)Limited(heldindirectly)on5November2010andRathbone 2010, Rathbone TrustThe Companycompletedthevoluntary liquidationofitswhollyownedsubsidiariesRathbone CompanyB.V. on6July Equities At 31December2010 Disposals Additions At 1January2010 Disposals Additions At 1January2009 Investmentinsubsidiaries 38 held bysubsidiaryundertaking

None None Repayment date

Bank ofEnglandbaserateplus2.50% Bank ofEnglandbaserateplus2.50% to amaximumof5% to amaximumof5% Interest rate 1

Country ofincorporation England &Wales England &Wales England &Wales England &Wales to Groupundertakings Subordinated loans

15,250 15,000 Jersey 250 £’000 250 – – –

Investment managementand 22,562 15,250 15,000 22,725 22,749 Equities (274) Pension advisoryservices 200 £’000 £’000 250 250 (13) Investment management 2010 Unit trustmanagement

banking services Activity andoperation 250 250 £’000 2009 2009 Trust services –

22,562 22,999 15,250 37,975

(274) 450 £’000 £’000

2008 Total (13)

– – –

– – Effect ofchange incorporationtaxrateondeferred tax: – – – – Other movementsindeferred tax: – – Adjustments inrespectofprioryears: At 1January The movementonthedeferred taxaccountisasfollows: 27.0% 28.0%). 28.0%;2008: (2009: Deferred incometaxesarecalculatedonalltemporarydifferences undertheliabilitymethodusinganeffective taxrateof 41 interest andisrepayableinthreeapproximately equalannualinstalmentsendinginFebruary 2012. £nil).The loandoesnotbear £831,000;2008: with anominalvalueequivalentto£565,000at31December2010(2009: Included withinloansissuedisaSwissFranc denominatedloantotheacquirerofGroup’sSwitzerlandtrustoperations in linewiththeDirectors’revisedexpectations fortheBankofEnglandbaserateinmediumterm. effective interestratemethod.Duringtheyearforecastattaching tothesenoteswasreviewedandreduced £3,267,000;(2009: andinterestincomeisrecognisedovertheexpected life £3,268,000) ofthenotesunder 2008: at the on halfofthenotes’nominalvalueforfollowingtwoyears.Thereafter, interestisrolled-uponthenotes’fullnominalvalue The notesbearnointerestforthreeyearsfromissue.Interestisthenrolled-upintotheloanatBankofEnglandbaserate principally therefinancingofoperationsdisposedof. The notes arerepayableontheoccurrenceofcertainevents, acquirer oftheGroup’sJerseytrustoperationsin2008. Included withinloansissuedareVendor loannotes(notes)withanominalvalueof£5,000,000thatwereissuedtothe Non-current Current Amounts owedbyGroupundertakings Prepayments andotherreceivables Loans issued 40 – – Equity securities–atfairvalue Available forsalesecurities Otherinvestments 39 Tradeandotherreceivables credited directlytoequity charged totheincomestatement fair valuemeasurementofavailableforsalesecurities share-based payments actuarial gainsandlosses amounts charged totheincomestatement directly toequity to theincomestatement unlisted listed Deferred BankofEnglandbaserate.The carryingvalueofthenoteshasbeendiscountedto£3,267,000 at31December2010 tax

29,380 28,607 32,918 32,918 (1,534) 3,538 2,405 2,513 3,832 2,925 3,087 £’000 £’000 £’000 841 313 479 574 (64) (42) (43) 2010 2010 2010 (47) 56

31,844 31,844 27,060 27,746 4,098 4,098 1,436 2,932 2,153 2,925 2,415 (135) (790) 686 £’000 £’000 £’000 779 2009 2009 2009 2009 (59) 41 17 – –

30,944 30,103 34,212 34,212 (1,551) 1,462 2,991 3,268 3,268 1,436 1,108 1,108 1,529 2,414 (418) 841 £’000 £’000 £’000 2008 2008 2008 (32) (97) 12

– –

Rathbone Brothers Plc 115 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 116 Notes to the Company financial statements 1 Inflation Expected returnonscheme assets Discount rate Rate ofincreasedeferred pensions – – Rate ofincreasepensionsinpayment Rate ofincreaseinsalaries used, which reflectthedifferent membershipprofilesofthe schemes, were: due tothetimescalecoveredbyliability, outinpractice.The principalactuarialassumptions maynotnecessarilybeborne The assumptionsusedbytheactuariesarebestestimateschosen fromarangeofpossibleactuarialassumptionswhich, financial statements. Details ofthedefinedbenefitpension schemes operatedbytheCompanyareprovidedin note 25totheconsolidated 44 All amountsowedtoGroupundertakingsarerepayableondemandandnon-interestbearing. The fairvalueoftradeandotherpayablesisnotmateriallydifferent totheircarryingamount. Other taxesandsocialsecuritycosts Amounts owedtoGroupundertakings Accruals, deferred incomeandothercreditors 43 theLondon Inter-BankOffer4 April2011.Interestispayableontheloanat0.7%above Rate. repayable intwoequalinstalments.OneoftheseinstalmentswaspaidJanuary2011andthefinalinstalmentispayableon £9,201,000)ofanunsecuredtermloanwhich is £6,155,000;2008: (2009: The Companyhasdrawndown£3,089,000 42 £3,804,000). 2008: £3,601,000; at31December 2010(2009: totalled £2,492,000 Unremittedearnings unremitted earningsofcertainsubsidiariesassuch amountsarenotexpected toberemittedtheUK. havenotbeenrecognisedinrespectof £684,000) 2008: £648,000; (2009: Deferred incometaxliabilitiesof£448,000 Accelerated capitalallowances Pensions Share-based payments The deferred taxcharge intheincomestatementcomprisesfollowingtemporarydifferences: Available forsalesecurities Deferred taxliabilities Pensions Share-based payments Deferred taxassets Deferred tax 41 Inflation assumptions arebasedontheRetail Prices Index, inaccordance withtheschemes’ rulesandrelated documentation 1987 SchemeRathbone Laurence Keen Scheme Employee Trade Borrowings 1

andotherpayables benefits continued

1,909 2,306 1,640 1,503 1,209 3,225 2,770 (269) 3.60 6.60 5.40 3.60 3.50 4.85 3.70 £’000 £’000 £’000 £’000 919 820 2010 2010 2010 2010 2010 58 % –

1,394 3,434 3,732 3.60 3.60 3.50 4.85 6.87 5.70 3.70 849 298 895 266 583 421 807 £’000 £’000 £’000 £’000 2009 2009 2009 2009 2009 78 % –

2,260 1,602 1,540 1,583

2.80 2.80 3.40 2.80 6.15 6.24 4.05 906 661 217 824 658 182 452 705 £’000 £’000 £’000 £’000 2008 2008 2008 2008 2008

is asfollows: The amountincludedinthestatement offinancialpositionarisingfromtheCompany’sobligationsinrespectschemes Retiring in20years Expected returnonscheme assets At 1January Movements inthefairvalueofscheme assetswereasfollows: At 31December Benefits paid Actuarial losses/(gains) Contributions frommembers Interest cost Service cost(employer’spart) At 1January Movements inthepresentvalueofdefinedbenefitobligationswereasfollows: At 31December Net actuariallossesrecognisedinyear At 1January is asfollows: The cumulativeactuarialgainsandlossesreportedinthestatementofcomprehensiveincomesinceadoptionIFRS £7,764,000 £11,194,000rise;2008: (2009: assets wasariseinvalueof£10,290,000 rise). Actuarial gainsandlosseshavebeenreportedinthestatementofcomprehensiveincome.The actualreturnonscheme Total deficit Death inservicebenefitreserve–unfunded Deficit inschemes Fair valueofscheme assets Present valueofdefinedbenefitobligations Retiring today expectations onretirementwere: assumed life actuarialtables.The schemes expectancy assumedlife isbasedonthePNA00 forthemembershipofboth fromthatdate. following theintroductionofpensionbenefitsbasedonCareer The Average RevaluedEarnings(CARE) and65fromthatdate 1987 forservicepriorto1July2009 Schemeretirement ageformembersoftheRathbone is60 The normalretirementagefor membersoftheLaurenceKeen forcertainformerdirectors).The Scheme normal is65(60 note 25totheconsolidatedfinancialstatements. on scheme assetsisaweighted averageofthereturnsexpected oneach classofassetheldbythescheme, asdisclosedin 25years).The 1987 overallexpected 24years;2008: Schemeassumed durationfortheRathbone return is24years(2009: The 25years)andthe assumeddurationoftheliabilities fortheLaurenceKeen 18years;2008: Scheme is18years(2009: Employee benefits 44 At 31 December Benefits paid Contributions fromscheme members Contributions fromthesponsoring companies Actuarial gains/(losses)

– aged65 – aged60 – aged65 – aged60 continued

23.7 28.6 22.1 26.9 Males 2010

(101,353) 101,353 (10,959) 86,667 94,710 94,710 77,254 (1,364) (1,364) (6,643) (6,643) (3,005) (7,954) Females 4,997 1,245 5,616 1,245 2,129 4,674 7,285 7,679 30.4 25.4 24.3 29.1 £’000 £’000 £’000 £’000 2010 2010 2010 2010 2010 –

23.6 28.5 22.0 26.8 Males 2009

(85,577) 15,880 86,667 59,311 65,034 77,254 77,254 (1,090) (8,323) (1,284) (1,284) (8,626) (9,413) (7,954) 3,940 1,245 1,245 4,052 6,788 7,254 1,740 Females 30.3 25.4 24.2 29.1 £’000 £’000 £’000 £’000 672 2009 2009 2009 2009 2009 23.5 21.9 26.7 28.4 Males 2008

(63,993) (12,348) (12,392) 59,311 59,311 65,034 64,123 70,575 (4,682) (1,030) (1,030) (1,041) (5,723) 2,556 4,628 4,014 1,267 1,267 2,715

Females 30.3 25.3 24.1 29.0

716 £’000 £’000 £’000 £’000 672 2008 2008 2008 2008 2008 (44)

Rathbone Brothers Plc 117 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 118 Notes to the Company financial statements and seniormanagement. Directors (theBoard).The Boardhasembeddedriskmanagementwithinthebusinessthrough theExecutiveCommittee The Company’soverallstrategyandpoliciesformonitoringmanagementoffinancialrisk aresetbytheBoardof business andthewiderindustry. information systems.The Companyregularlyreviewsitsriskmanagementpoliciesandsystemstoreflect changes inthe appropriate risklimitsandcontrolstomonitortherisksadherencebymeansofreliableup-to-date The Company’sriskmanagementpoliciesaredesignedtoidentifyandanalysetherisksthatCompanyfaces,set and manageseach categoryoffinancialrisk. The sectionsbelowoutlinetheGroupriskappetite,asapplicabletoCompany, andexplain howtheCompanydefines (iii) (ii) (i) financial risksintothreeareas: established policiesandprocedurestomanagetheseitemsinaccordancewithitsriskappetite.The Companycategorisesits Grouphasidentifiedtherisksarising fromallofitsactivities,includingthosetheCompany,process. The Rathbone andhas Group’sriskmanagement The Company’sriskmanagementpoliciesandproceduresareintegratedwiththewiderRathbone 46 financial statements. statements. DetailsofoptionsontheCompany’ssharesandshare-basedpaymentsaresetoutinnote27toconsolidated Details ofthesharecapitalCompanytogetherwithchanges theretoareprovidedinnote26totheconsolidatedfinancial 45 to shortdatedgovernmentbonds. Cashhasbeenassumedtogenerateasimilarreturn the riskofdefaultandfuturedowngradeinrelationtocorporatebonds. The expected rateofreturnondebtinstrumentsisbasedlongtermyieldsatthestartyear, withanadjustmentfor 3.25%above). 3.25%;2008: thereturnonlongdatedgilts(2009: on equitieswasassumedtobe3.25%above rate swaps,thedurationofwhich isintendedtobroadlyalignwiththedurationofscheme’s liabilities.The expected return £5,000,000)inaninterestrateswapfund.The fundisinvestedinlongdatedinterest £3,812,000;2008: (2009: £4,808,000 withanominalvalueof 496) 1987At 335;2008: Scheme 31December2010theRathbone held335shares(2009: At 31December Cash Interest rateswapfunds Debt instruments Equity instruments financial positiondatewasasfollows: The analysisofthescheme assets,measuredatbidprices,andexpected ratesofreturnon thoseassetsatthestatementof Employee benefits 44 Financial Share market risk(which includesfairvalueinterestraterisk,cashflowforeign exchange riskandpricerisk). liquidity risk;and credit risk; capitalandshare-basedpayments instruments

continued

Expected 0.50 4.60 4.20 return 7.45 1.1.10 %

Expected 4.90 0.50 4.50 1.1.09 7.75 return % Expected 2.00 4.10 6.15 1.1.08 7.35 return % 71,053 94,710 17,466 4,512 1,679 £’000 value 2010 Fair

13,047 77,254 57,471 2,199 4,537 £’000 2009 value Fair 10,125 59,311 36,726 3,325 9,135 £’000 2008 value Fair allocation Current 2010 18 75 % 5 2

allocation Current 2009 17 74 3 6 %

allocation

Current 2008 15 17 62 6 %

AA –to+ to thelongtermcreditratingawardedbyFitch, orequivalentratingbyMoody’sasatthestatement offinancialpositiondate. All balancesatbankswereneitherpastduenorimpaired.The creditqualityofthesebalances isanalysedbelowbyreference Balances atbanks repayment datesandarepaiddownperiodicallyastradingrequires. The AmountsowedtoGroupundertakingsdonothavespecific termsattached toloansissuedaresetoutinnote40. allwithinnormaltermsoftrade). and2008: statement offinancialpositiondate(2009 All tradeandotherreceivablesareneitherpastduenorimpaired andarewithinnormaltermsconditionsoflendingatthe taking accountofanycollateralheldorothercreditenhancementsattached. without and2008, tablerepresentsthegrosscreditriskexposureThe oftheCompanyat31December 2010,2009 above Balances atbanks – – – Trade andotherreceivables Maximum exposure tocredit risk none). and2008: No impairmentlossesaroseduringtheyear(2009 position dateonacasebybasis. Impairment allowancesoncreditexposures aredeterminedbyanevaluationoftheincurredlossatstatementfinancial All creditexposures arereviewedindividually, atleastannuallyormoreregularlywhenindividualcircumstancesrequire. statement offinancialpositiondate,basedonobjectiveevidenceimpairment. Impairment provisionsarerecognisedforfinancialreportingpurposesonlylossesthathavebeenincurredatthe Impairment andprovisioning policies Impairment provisionsaremadeforanydebtswhich areconsideredtobedoubtfulforcollection. subsidiaries. The collectionand ageingoftradeandotherreceivablesarereviewedonaperiodicbasisbymanagement. Trade andotherreceivablesrelatetoamountsplacedwithsubsidiariesloansprovidedformer Trade andotherreceivables exposures principallyarisefrom theplacementofCompany’sownreserves. The Companyhasexposure tofinancialinstitutionsthroughitsbankdeposits(reportedwithincashequivalents). These Cash equivalents(balancesatbanks) counterparties byFitch Ratings Ltd(Fitch) orMoody’sCorporation(Moody’s). For thepurposesoffinancialreportingCompanycategorisesits exposures basedonthelongtermratingsawardedto to avoidexcessive exposure toanyindividualcounterparty. policies. Grouppolicyrequiresthatfundsareplacedwitharangeofhighqualityfinancialinstitutions.Investmentsspread The Companyplacessurplusfunds withitsbankingsubsidiary, which operatesundertheGroup’screditriskmanagement and2009. the provisionofloansaspartdisposalitssubsidiariesinJerseyandSwitzerland2008 through providing long term and working capital financing for subsidiaries. The Company also took on credit exposure through when due,throughitstradingactivities.The principalsourcesofcreditriskarisefromdepositingfundswithbanksand The Companytakesonexposure tocreditrisk,which istheriskthatacounterpartywillbe unabletopayamountsinfull (i) Financialinstruments 46 Other financialassets Amounts owedbyGroupundertakings Loans issued Credit risk

continued

28,607 28,607 34,974 5,822 £’000 £’000 135 410 410 2010 2010

33,263 27,060 6,018 185 185 £’000 £’000 2009 2009 2009 –

30,103 30,103 35,238 35,238

5,000

135 135

£’000 £’000 2008 2008

–

Rathbone Brothers Plc 119 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 120 Notes to the Company financial statements Balances atbanks – – – Trade andotherreceivables At 31December2009 Balances atbanks – – – Trade andotherreceivables At 31December2010 our counterpartiesoperate,were: The Company’screditexposures atthestatementoffinancialpositiondate,analysedbyprimaryindustrysectorsinwhich (b) – – – – Trade andotherreceivables At 31December2008 Balances atbanks – – – Trade andotherreceivables At 31December2009 Balances atbanks – – – Trade andotherreceivables At 31December2010 of thecounterparty. at thestatementoffinancialpositiondate.Inthisanalysis, exposures arecategorisedbasedonthecountryofdomicile The followingtableanalysesthe Company’screditexposures, attheircarryingamounts,bygeographicalregionas (a) placement offundswitharangehighratedfinancialinsitutions. banking subsidiary. The BoardsetsandmonitorstheGrouppolicyformanagementoffunds,which includethe The Companyhascounterparty concentrationriskwithinitsbalancesatbanksinthattheprincipalexposure istoits Concentration ofcredit risk Financialinstruments 46 Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialassets Amounts owedbyGroupundertakings Loans issued Balances atbanks Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialassets Amounts owedbyGroupundertakings Loans issued (i) Industry sectors Geographical sectors Credit risk

continued

institutions 24,522 24,337 institutions 25,321 24,911 Financial Financial 185 £’000 £’000 410 – – – –

26,961 28,658 28,523 28,485 28,923 27,146 Kingdom Kingdom Kingdom United United United 185 135 £’000 £’000 £’000 410 28 – – – – –

Subsidiaries Subsidiaries companies companies and other and other 4,098 3,366 3,268 3,268 6,821 3,267 3,389 3,696 3,832 3,267 2,723 7,663 Jersey Jersey Jersey £’000 £’000 £’000 £’000 £’000 122 135 99 – – – – – – – – – –

the World the World the World 1,580 1,580 Rest of Rest of Rest of 831 831 £’000 £’000 £’000 565 565 672 107 – – – – – – – –

33,506 30,103 31,343 31,343 32,984 32,984 27,060 27,060 28,607 28,607

4,098 4,098 4,098 3,268 3,832 3,832 185 135 185 £’000 £’000 £’000 £’000 £’000 410 135 135 410 Total Total Total Total Total – – –

Borrowings Cash flowsarisingfromfinancialliabilities Cash flowsarisingfromfinancialassets Balances atbanks – – – Trade andotherreceivables Cash flowsarisingfromfinancialassets At 31December2009 Net liquiditygap Cash flowsarisingfromfinancialliabilities – – Trade andotherpayables Borrowings Cash flowsarisingfromfinancialliabilities Cash flowsarisingfromfinancialassets Balances atbanks – – – Trade andotherreceivables Cash flowsarisingfromfinancialassets At 31December2010 liabilities byremainingcontractualmaturitiesatthestatementoffinancialpositiondate. The tablebelowpresentsthe undiscounted cashflowsreceivableandpayablebytheCompanyonitsfinancialassets April 2011,butdoesnotrelyonexternal fundingforitsactivities. with that aresettledbydeliveringcashoranotherfinancialasset. The Companyplacesitsfundsinshorttermordemandfacilities Liquidity riskisthethatCompanywillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilities (ii) Liquidityrisk Balances atbanks – – – Trade andotherreceivables At 31December2008 Financialinstruments 46 Net liquiditygap Cash flowsarisingfromfinancial liabilities – – Trade andotherpayables Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialliabilities Amounts owedtoGroupundertakings (i) financial institutionstoensureliquidity. which isduetoberepaidin The Companyhasabankloanof£3,089,000 Credit risk

continued

28,845 27,060 28,607 29,028 27,245 27,167 demand demand 185 £’000 £’000 183 125 410 58 58 78 78 11 On On – – – – – –

more than 23,929 institutions 23,794 3 months more than (1,033) (1,152) 3 months 1,533 1,533 Financial 1,545 1,545 500 135 500 £’000 £’000 £’000 393 355 38 Not Not – – – – – – – – – – –

more than 3 months more than (1,198) (1,574) 3 months 1,562 1,562 1,574 1,574 but not but not 1 year 1 year 360 364 £’000 £’000 After After – – – – – – – 4 – – – –

Subsidiaries 1 yearbut companies more than not more and other 6,309 3,268 6,250 3,104 6,250 3,027 3,223 5,311 5,229 5,311 9,577 5 years 5 years but not 1 year 119 £’000 £’000 £’000 After After than 82 – – – – – – – – – – – – 5 years 5 years £’000 £’000 After After – – – – – – – – – – – – – – – – – – – –

33,995 33,506 30,103 31,806 35,096 27,060 28,607 27,587 6,408 3,268 6,211 5,944 3,290 3,107 6,750 185 119 135 £’000 £’000 £’000 135 125 410 Total Total Total 58 58 78 – –

Rathbone Brothers Plc 121 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 122 Notes to the Company financial statements Total off-balancesheetitems Cash flowsarisingfromfinancial liabilities At 31December2008 Total off-balancesheetitems Cash flowsarisingfromfinancialliabilities At 31December2009 Total off-balancesheetitems Cash flowsarisingfromfinancialliabilities At 31December2010 Total liquidityrequirement At 31December2008 At 31December2009 At 31December2010 Operating leasecommitments their contractualpaymentdates. are summarisedinthetablebelow. Future minimumleasepaymentsundernon-cancellableoperatingleasesarereportedby 48)and Cash flowsarisingfromtheCompany’soff-balancesheetfinancialliabilitiesarisesolelyoperatingloans(note Off-balance sheetitems have acontractualmaturitydate,which historicalexperience showsareunlikelytobecalledintheshortterm. arebalancesthatrepayableondemandordonot Included withintheamountsduetotradecreditorsdisclosedabove Net liquiditygap Cash flowsarisingfromfinancialliabilities – – Trade andotherpayables Borrowings Cash flowsarisingfromfinancialliabilities Cash flowsarisingfromfinancialassets Balances atbanks – – – Trade andotherreceivables Cash flowsarisingfromfinancialassets At 31December2008 Financialinstruments 46 Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued (ii) Liquidity risk

continued continued

30,238 30,103 30,056 demand demand demand demand 182 135 182 182 182 £’000 £’000 £’000 £’000 183 183 78 78 On On On On – – – – – – –

more than more than 3 months 3 months more than more than more than (1,533) 3 months 3 months 3 months 1,533 1,533 1,533 1,533 1,545 1,713 1,701 1,701 168 168 168 168 168 £’000 £’000 £’000 £’000 £’000 168 168 168 Not Not Not Not Not – – – – – – –

more than more than (1,901) 3 months 3 months more than more than more than 3 months 3 months 3 months 2,406 1,901 1,901 1,901 1,562 2,067 2,079 1,574 but not but not but not but not but not 1 year 1 year 1 year 1 year 1 year 505 505 505 505 £’000 £’000 £’000 £’000 £’000 505 505 505 After After After After After – – – – – – – more than 1 yearbut more than more than more than (1,317) not more 2,692 2,692 5,199 5,199 2,692 2,692 2,692 9,208 6,516 6,516 6,516 5,915 3,223 2,692 2,692 2,692 2,692 but not 5 years 5 years 5 years 5 years 5 years but not but not but not 1 year 1 year 1 year 1 year £’000 £’000 £’000 £’000 £’000 After After After After After than – – – – – – 5,040 5,040 5,040 5,040 4,367 4,367 4,367 4,367 3,694 3,694 3,694 3,694 5 years 5 years 5 years 5 years 5 years £’000 £’000 £’000 £’000 £’000 After After After After After – – – – – – – – – – – – –

30,103 25,305 14,140 10,132 10,132 35,437 18,537 10,349 6,408 8,405 5,199 8,405 8,405 9,950 3,290 7,059 7,059 7,732 7,732 135 182 £’000 £’000 £’000 £’000 £’000 Total Total Total Total Total – –

Interest raterepricinggap Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2009 Interest raterepricinggap Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2010 categorised bytheearlierofcontractualrepricingormaturitydates. The tablebelowshowstherepricing profileoftheCompany’sfinancialassetsandliabilities,statedattheircarryingamounts, financial assetsandliabilities. The Company’sprincipalexposure tocashflowinterestrateriskarisesfromthemismatch betweentherepricingofits changes inmarketinterestrates. in marketinterestrates.Fair value interestrateriskisthethatvalueofafinancialinstrumentwillfluctuatebecause Cash flowinterestrateriskisthethatfuturecashflowsofafinancialinstrumentwillfluctuatebecause of changes Interest raterisk (iii) Market risk Financialinstruments 46 Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued

continued

more than 3 months more than (2,810) (5,976) 3 months 6,155 6,155 3,089 3,089 3,214 179 179 404 404 £’000 404 404 £’000 125 Not Not – – – – – – – – – – –

more than 6 months 3 months more than 3 months 6 months but not but not £’000 £’000 After After – – – – – – – – – – – – – – – – – – – – – – more than 6 months more than 6 months 3,267 3,267 3,267 but not but not 1 year 1 year £’000 £’000 After After – – – – – – – – – – – – – – – – – – – more than more than 3,267 3,267 3,267 but not 5 years 5 years but not 1 year 1 year £’000 £’000 After After – – – – – – – – – – – – – – – – – – – 5 years 5 years £’000 £’000 After After – – – – – – – – – – – – – – – – – – – – – –

30,632 30,632 30,829 30,829 32,342 32,342 32,400 27,060 28,607 2,932 3,087 bearing interest interest bearing 119 831 197 £’000 £’000 565 135 Non- Non- 58 58 58 58 78 – – 6 6 – –

34,275 27,060 28,607 36,071 27,923 32,799 4,098 4,098 6,155 2,932 6,352 3,089 3,832 3,087 3,272 119 185 £’000 £’000 410 135 125 Total Total

58 78

–

Rathbone Brothers Plc 123 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 124 Notes to the Company financial statements Net on-balancesheetposition Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2010 financial assetsandliabilities,atcarryingamounts,categorisedbycurrency. Company’s exposure toforeigncurrencytranslationriskat31December2010.IncludedinthetableareCompany’s The Companydoesnothaveanymaterialexposure totransactionalforeignexchange risk.The tablebelowsummarisesthe Foreign exchange risk £25,000). equity of£70,000 2008: £69,000; (2009: A 1%parallelincrease/decreaseintheSterlingyieldcurvewouldresultanprofitaftertaxand Interest raterepricinggap Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2008 Financialinstruments 46 Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued (iii)

Market risk

continued

more than (9,072) 3 months 9,201 9,201 129 129 £’000 Not – – – – – –

more than 3 months 6 months but not £’000 After – – – – – – – – – – –

more than 6 months but not 1 year £’000 After – – – – – – – – – – –

34,830 31,558 28,607 28,607 more than 3,268 3,268 3,268 3,268 3,268 3,268 3,089 2,518 Sterling 3,272 3,267 5 years but not 1 year £’000 £’000 125 410 After 58 28 – – – – – – – –

5 years 569 569 £’000 £’000 107 676 676 Euro After – – – – – – – – – – – – – – – – – –

30,103 30,103 33,100 32,918 2,991 2,991 interest bearing 182 182 Other £’000 £’000 565 565 565 565 565 Non- – – 6 – – – – – – – – – –

30,103 30,103 36,497 36,497 28,607 36,071 27,114 32,799 9,383 2,991 2,991 3,268 3,268 9,201 3,089 3,832 3,087 3,272 135 182 £’000 £’000 125 410 135 Total Total 58 – –

global marketswouldhavehadanequalandoppositeeffect. therewouldbenoimpactonprofit aftertax.A10%risein £299,000); £293,000;2008: (2009: net assetsof£309,000 A10%fallinglobalequitymarketswould,isolation,resultapre-taximpacton £2,991,000). £2,932,000;2008: (2009: At 31December2010,thefairvalueofequitysecuritiesrecognisedonstatementfinancial positionwas£3,087,000 through itsholdingsofequityinvestmentsecurities,which arereportedattheirfairvalue(note 39). market prices(otherthanthosearisingfrominterestrateriskor foreignexchange risk).The Companyisexposed topricerisk Price riskisthethatfairvalueorfuturecashflowsofafinancialinstrumentwillfluctuate becauseof changesin Price risk and oppositeeffect. This analysisassumesthatallothervariables,inparticularexchange rates,remainconstant. £105,000).A10%strengtheningofthe Eurowouldhavehadanequal £56,000;2008: (2009: profit aftertaxby£49,000 A 10%weakeningoftheEuroagainstPound Sterling,occurringon31December2010,wouldhavereducedequityand Net on-balancesheetposition Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2008 Net on-balancesheetposition Total financialliabilities – – Trade andotherpayables Borrowings Liabilities Total financialassets Balances atbanks – – – Trade andotherreceivables Investments Assets At 31December2009 Financialinstruments 46 Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued Other financialliabilities Amounts owedtoGroupundertakings Other financialassets Amounts owedbyGroupundertakings Loans issued (iii)

Market risk

continued

30,103 35,040 26,318 25,657 32,670 27,060 3,268 9,383 9,383 9,201 1,534 6,155 2,158 6,352 3,267 Sterling Sterling 135 185 182 119 £’000 £’000 78 – – – 1,457 1,457 1,457 £’000 £’000 774 774 774 Euro Euro – – – – – – – – – – – – – – – – 831 831 831 £’000 £’000 Other Other – – – – – – – – – – – – – – – – – – – 30,103 30,103 36,497 36,497 34,275 27,060 27,923 27,114 4,098 4,098 3,268 3,268 9,383 9,383 2,991 2,991 9,201 6,155 6,352 2,932 135 185 182 119 £’000 £’000 Total Total 78 – – –

Rathbone Brothers Plc 125 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 126 Notes to the Company financial statements Later than5years Later than1yearandnolater5years No laterthan1year Total financialassets Available forsaleequitysecurities At 31December2010 • • • technique usedtodeterminethe fairvalue: The tablebelowanalysesfinancial instrumentsmeasuredatfairvalueintoahierarchy basedonthevaluation exception ofequityinvestments insubsidiarieswhich arecarriedathistoricalcost(note38). The fairvaluesoftheCompany’s financialassetsandliabilitiesarenotmateriallydifferent fromtheircarryingvalues,withthe Fair values Financialinstruments 46 renewal rights.The futureminimumleasepaymentsundernon-cancellableoperatingleases were asfollows: The Companyleasesvariousofficesundernon-cancellableoperatingleaseagreements. The leaseshavevaryingtermsand Contingentliabilitiesandcommitments 48 There werenochanges intheCompany’sapproach tocapitalmanagementduringtheyear. the yearthenended,issetoutinCompanystatementofchanges inequity. quantitative targetsarenotset.The Company’stotalcapitalatthe31December2010,togetherwithmovementsduring of capitalheldinrelationtoforecastperformance,dividendpaymentsandwiderplansforthebusiness,althoughformal operating subsidiariesonatimelybasistoensuresufficientcapitalismaintained. The BoardofDirectorsconsidersthelevel distributable reservesonamonthlybasisandcomparethistoforecastdividends.CapitalisdistributedtheCompanyfrom For monitoringpurposes,theCompanydefinescapitalasequityshareholders’funds.Managementmonitorlevelof • • The Company’sobjectiveswhenmanagingcapitalare: 47 There havebeennotransfers betweenlevelsduringtheyear. Total financialassets Available forsaleequitysecurities At 31December2008 Total financialassets Available forsaleequitysecurities At 31December2009 or indirectly. shareholders andbenefitsforotherstakeholders; Level 3:inputsfortheassetor liabilitythatarenotbasedonobservablemarketdata. Level 2:inputsotherthanquoted pricesincludedwithinLevel 1thatareobservablefortheassetorliability, eitherdirectly Level 1:quotedprices(unadjusted) inactivemarketsforidenticalassetsorliabilities. to maintainastrongcapitalbasesupportthedevelopmentofitsbusiness. to safeguard theCompany’sabilitytocontinueasagoingconcernsothatitcanprovidereturnsfor (iii) Capital Market risk

management

continued

3,694 3,694 2,692 7,059 £’000 673 2010

1,529 2,153 2,153 1,529 2,513 2,513 Level 1 Level 1 Level 1 £’000 £’000 £’000

1,462 1,462 1,462 1,462 2,692 4,367 7,732 Level 2 Level 2 Level 2 £’000 £’000 £’000 £’000 673 779 779 574 2009 574 Level 3 Level 3 Level 3 £’000 £’000 £’000 – – – – – –

2,991 2,991 5,040 5,040 2,692 2,692 8,405 2,932 2,932 3,087 3,087

£’000 £’000 £’000 £’000 673 2008 Total Total Total

Investments insubsidiaries schemes sincethedateoftransitioninothercomprehensiveincome. The Companyhaschosen torecogniseallcumulativeactuarialgainsandlossesassociatedwithitsdefinedbenefitpension Employee benefits 1 January2004. on IFRS amounts thatwereincludedintheGroup’sconsolidatedfinancial statements,basedontheGroup’stransitionto 1tomeasureitsassetsand liabilities atthecarrying The CompanyhastakenadvantageoftheoptiongiveninIFRS Assets andliabilitiesmeasured attheGroup’s transitiondatetoIFRS optional exemptions isasfollows: inthetransitionperiod.The Company’sapplicationofthe time totakecertainexemptions fromthefullrequirementsofIFRS forthefirst 1‘FirstTime AdoptionofInternationalFinancialReportingStandards’permitscompanies adoptingIFRS IFRS Transitional arrangements performance andcashflowsissetoutinthefollowingnotestables. hasaffected theCompany’sreported financialposition, GAAPtoIFRS of howthetransitionfrompreviousUK GAAP).An explanation UK generallyacceptedaccountingprinciples(UK financial statementspreparedinaccordancewith statementoffinancialposition,theCompanyhasadjustedamountsreportedpreviouslyin In preparingitsopeningIFRS thedateof theCompany’stransitiontoIFRS). on 1January2009, (theopeningposition statementoffinancialpositionat31December2008 andinpreparationofanopening IFRS 2009 31 December2010,thecomparativeinformationpresentedinthesefinancialstatementsforyearended The accountingpoliciessetoutinnote34havebeenappliedpreparingthefinancialstatementsforyearended IFRS. As statedinnote34,thesearetheCompany’sfirstsetoffinancialstatementspreparedaccordancewith 51 Cash andcashequivalents three monthsuntilmaturityfromthedateofacquisition: For thepurposesofstatementcashflows,andequivalentscomprisefollowingbalanceswithlessthan 50 due fromfellow Groupcompanies. settled All transactionsandoutstandingbalanceswithfellow Groupcompaniesarepricedonanarm’slengthbasisandtobe The and43. Company’sbalanceswith fellow Groupcompaniesat31December2010aresetoutinnotes40 Charges formanagementservices Interest During theyear, theCompanyenteredintofollowingtransactionswithfellow subsidiaries: (ii) Full detailsoftheremuneration oftheCompany’sdirectorsaregiveninRemunerationreportonpage38. controlling theoperationsofCompany. The Company’skeymanagementpersonnelareitsdirectors. Key managementpersonnelare definedasthosepersonshavingresponsibilityandauthorityforplanning,directing (i) Relatedpartytransactions 49 sale investments. The Companyhaselectedtoclassifyequityinstrumentswith a previouscarryingvalueof£2,932,000asavailablefor Other investments GAAP.value underUK The Companyhaselectedtorecogniseitsinvestmentsinsubsidiaries attheirdeemedcost,which wasthehistoricalcarrying Explanation Statement Other relatedpartytransactions Transactions withkey managementpersonnel incash.Noneofthebalancesaresecuredandnoprovisionshavebeenmadefordoubtfuldebtsanyamounts ofcashflows oftransitiontoIFRS

£’000 410 2010

Receivable 3,487 3,374 £’000 113 2010

Payable 185 £’000 £’000 2009 2009 2010 – – –

Receivable 3,200 3,197 £’000 2009 2009 3

Payable

135 £’000 £’000 2008 2008 2009 2009 – – –

Rathbone Brothers Plc 127 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 128 Notes to the Company financial statements cash flows. GAAP,risk ofchange invalue.UnderUK theCompanywas exempt fromtherequirement toprepareastatementof highly liquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhich aresubjecttoaninsignificant flows showsthemovementincashandequivalents,beingdefinedashand,demanddepositsshortterm The CompanyhasprepareditsstatementofcashflowsinaccordancewithIAS 7. UnderIAS 7, thestatementofcash ofCashFlows IAS 7–Statement IFRS. wasreclassifiedontransitionto £1,602,000) (2008: deferred taxisshownwithotherdeferred taxassetsorliabilities.Accordinglyadeferred taxassetof£3,434,000 GAAP,Under UK IFRS, the thedeficitondefinedbenefitpension schemesisshownnetofrelated deferred tax.Under –EmployeeBenefits IAS 19 wasincreasedby£807,000.by £824,000andstatementoffinancialpositionequityat31December2009 wasincreased consequently beenincreasedby£2,321,000.Statementoffinancialpositionequityat31December2008 GAAP.No such deferred taxisrecognisedunderUK has Reportedprofitaftertaxfortheyearended31December2009 deferred tax IAS 12requiresthatdeferred taxonequityitemsisrecogniseddirectlyinequity. GAAP requiresthatallsuch UK IAS 12–IncomeTaxes in othercomprehensiveincome. theCompanyhasrecognisedgainsorlossesonrevaluationofavailableforsaleequitysecurities In accordancewithIAS 39, –FinancialInstruments:RecognitionandMeasurement IAS 39 required byIAS 1andIAS 39. The statementoffinancialposition andapplicablenoteshavebeenamendedtoreflectthepresentationaldisclosures andFinancialInstruments:RecognitionMeasurement ofFinancialStatements –Presentation IAS 1and39 financial which impactontheCompany’sreportedfinancialposition, IFRS UK GAAPand The significantdifferences between Key impactsofIFRS Explanationoftransition toIFRS 51 performanceandcashflowsaresetoutbelow:

isrecognisedinprofitorloss.Inaddition,deferred taxisrecognisedonavailableforsaleassetsunderIAS 12.

continued

Total equity Retained earnings Profit andlossaccount Available forsalereserve Share premium Share capital Equity Net assets Total liabilities Employee benefits Pension liability Non-current liabilities Net currentassets Trade andotherpayables Accruals anddeferred income Other taxesandsocialsecuritycosts Amounts owedtoGroupundertakings Borrowings Current liabilities Total assets Cash andcashequivalents Current taxassets Trade andotherreceivables Prepayments anddeferred income Other debtors Amounts owedbyGroupundertakings Current assets Deferred taxasset Trade andotherreceivables Available forsaleequitysecurities Other investments Investments insubsidiaries Non-current assets IFRS) (dateoftransitionto Reconciliation ofthestatementfinancialpositionat1January2009 Explanationoftransition toIFRS 51

continued

(10,619) (14,740) 11,693 30,103 34,923 25,553 22,562 28,957 24,304 60,476 45,736 45,736 UK GAAP UK (4,121) (4,121) (9,201) 3,966 2,991 2,943 2,143 (906) (330) (182) 1.1.09 1.1.09 841 £’000 13 – – – – – – – –

(IAS 1&IAS 39)

Presentation (11,693) (30,103) 11,693 30,944 statements of financial (3,966) (2,991) (1,540) (3,804) (4,121) (3,926) 3,268 2,991 4,121 3,926 (841) (122) (122) 906 330 182 122 658 £’000 122 40 – – – – – – – –

Income taxes (1,602) (1,602) (1,602) (IAS 12) (824) (824) (824) £’000 778 778 778 – – – – – – – – – – – – – – – – – – – – – – –

(16,464) (10,741) 11,693 11,693 30,944 31,119 22,562 30,257 28,957 44,912 44,912 61,376 20,378 (1,540) (9,201) (5,723) (5,723) 1,436 1,436 3,268 3,268 2,991 2,143 2,119 1.1.09 1.1.09 135 £’000 IFRS IFRS 40 40 – – – – – – – – –

Rathbone Brothers Plc 129 Notes to the Company financial statements Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 130 Notes to the Company financial statements Total equity Retained earnings Profit andlossaccount Available forsalereserve Share premium Share capital Equity Net assets Total liabilities Employee benefits Pension liability Non-current liabilities Net currentassets Trade andotherpayables Accruals anddeferred income Other taxesandsocialsecuritycosts Amounts owedtoGroupundertakings Borrowings Current liabilities Total assets Cash andcashequivalents Current taxassets Trade andotherreceivables Prepayments anddeferred income Other debtors Amounts owedbyGroupundertakings Current assets Deferred taxasset Trade andotherreceivables Available forsaleequitysecurities Other investments Investments insubsidiaries Non-current assets GAAPfinancialstatements) (date ofmostrecentUK Reconciliation ofthestatementfinancialpositionat31December2009 Explanationoftransition toIFRS 51

continued

(13,411) 25,681 58,464 31,756 45,053 45,053 25,351 32,783 27,310 22,749 UK GAAP UK (6,155) (5,979) (5,979) (7,432) 31.12.09 8,248 2,884 2,165 2,932 4,719 (304) (895) 686 £’000 (78) 68 – – – – – – – –

(IAS 1&IAS 39)

Presentation (27,310) statements of financial (1,394) (8,248) (4,646) (4,529) (2,932) 27,746 (4,719) (5,979) 4,098 8,248 4,646 2,932 5,979 (686) (117) (117) 304 895 298 250 117 323 £’000 117 78 – – – – – – –

Income taxes (3,434) (3,434) (3,434) 2,627 2,627 2,627 (IAS 12) (807) (807) (807) £’000 – – – – – – – – – – – – – – – – – – – – – – –

(16,962) 22,999 22,999 28,254 32,954 44,246 44,246 61,208 31,756 20,705 (1,394) (9,413) (9,413) (6,155) 27,746 (7,549) 31.12.09 31.12.09 4,098 4,098 8,248 8,248 2,165 2,925 2,932 2,077 185 323 £’000 IFRS IFRS – – – – – – – – –

Five year record

2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000 Operating income 127,184 116,757 131,166 134,480 133,686 Underlying operating profit 38,503 32,446 45,020 47,302 44,720 Exceptional items (8,420) (2,978) (2,714) – – Profit before tax 30,083 29,468 42,306 47,302 44,720 Tax (8,531) (9,271) (13,421) (14,212) (12,582) Profit after tax 21,552 20,197 28,885 33,090 32,138 Equity dividends paid and proposed 19,067 18,159 17,984 17,479 14,786

Basic earnings per share 49.76p 46.87p 67.57p 77.79p 76.62p

Diluted earnings per share 49.35p 46.85p 67.02p 76.54p 74.71p

Net dividends per ordinary share 44.0p 42.0p 42.0p 41.0p 35.0p

Equity shareholders’ funds 185,374 182,489 184,631 184,750 159,149

Total funds under management £15.63bn £13.10bn £10.46bn £13.12bn £12.24bn The amounts disclosed for 2006 include the results of operations that were discontinued in 2008 and 2009. The amounts disclosed for 2007 include the results of operations that were discontinued in 2009.

Corporate information

Company Secretary and registered office

R E Loader FCA Rathbone Brothers Plc 159 New Bond Street London W1S 2UD

Company No. 01000403 www.rathbones.com [email protected]

Registrars and transfer office

Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA www.equiniti.com

Corprorate information Five year record

131

Rathbone Brothers Plc Report and accounts 2010 Rathbone Brothers Plc Report and accounts 2010 132 Our offices Fax +44 (0)1539 561367 Fax +44(0)1539 Tel 561457 +44(0)1539 Cumbria LA80PB Kendal Levens Hall The Stables 201001 Fax +44(0)1392 Tel 201000 +44(0)1392 Exeter Gardens Southernhay The Senate Fax +44(0)1315501360 Tel +44(0)1315501350 Edinburgh 28 StAndrewSquare Fax +44(0)1243776 103 Tel +44(0)1243775 373 West Sussex PO191AT Chichester 1 Northgate Fax +44(0)1223229228 Tel +44(0)1223229 Cambridge HillsRoad 126 –130 North Wing, CityHouse Fax +44(0)1179291939 Tel +44(0)1179291919 4NT BS1 Bristol 10 QueenSquare 7966Fax +44(0)121236 Tel +44(0)1212332626 Birmingham 1 Temple Row Temple Point Fax +44(0)1224218181 Tel +44(0)1224218180 AB25 1XX Aberdeen 1 AlbertStreet Fax +44(0)207399 0011 Tel +44(0)207399 0000 London 159 NewBondStreet Rathbone InvestmentManagementLimited Investment Managementoffices Fax +44(0)207399 0011 Tel +44(0)207399 0000 London 159 NewBondStreet Head office Our offices EX1 1UG EX1 W1S2UD W1S 2UD

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