Speirs & Jeffrey acquisition helps lift Rathbone results
By Josh White
Date: Thursday 21 Feb 2019
(Sharecast News) - Rathbone Brothers issued its preliminary for the year ended 31 December on Thursday, reporting a 12.8% increase in total funds under management and administration to £44.1bn.
The FTSE 250 firm noted that over the same period, the FTSE 100 index decreased by 12.5% and the MSCI WMA Private Investor Balanced Index fell by 7.2%.
It said its total net annual growth rate of funds under management and administration for investment management was 23.5%, compared to 3.9% in the 2017 financial year.
That comprised £1.1bn of net organic growth, up from £0.9bn, and £6.8bn of acquired inflows - with £6.7bn of that related to the acquisition of Speirs & Jeffrey - compared to acquired growth of £0.3bn in 2017.
The underlying rate of net organic growth was 3.4% in 2018, up from 3.0% year-on-year.
Underlying operating income in Rathbone's investment management division totalled £275.3m for the year, up from £254.6m, and included £8.7m of income in relation to Speirs & Jeffrey.
Rathbone noted that the average FTSE 100 index was 7269 on quarterly billing dates in 2018, compared to 7426 in 2017 - a decrease of 2.1%.
Funds under management in unit trusts totalled £5.6bn as at 31 December, up from £5.3bn, and net inflows totalled £543m, down from £883m in 2017.
Underlying operating income in unit trusts was £36.7m for the year - an increase of 16.9% from the £31.4m in 2017 - with the firm's operating margin stable at 34.6%, compared to 34.1%.
Rathbone Brothers said its underlying operating expenses were up 11% to £220.4m, which the company said not only reflected £5.9m of Speirs & Jeffrey operating costs in the year, but also underlying investment in the business as additional capability is added.
Underlying profit before tax improved 4.7% to £91.6m, from £87.5m, with profits of £2.8m from Speirs & Jeffrey included for the four month period since completion of the transaction.
Rathbone's underlying profit margin remained strong at 29.4%, down from 30.6%, while the company's underlying earnings per share improved 2.7% to 142.5p.
Profit before tax increased 4.1% to £61.3m from £58.9m.
The board said work to integrate Speirs & Jeffrey into Rathbones was progressing "well", and the migration to common systems was planned to be completed by mid-2019, as it had previously guided.
It recommended a final dividend of 42p for 2018, up from 39p, making for a total of 66p for the year - an increase of 8.2% on 2017.
Rathbone Brothers also confirmed some board changes, with Philip Howell set to retire as chief executive by 9 May, and Paul Stockton - current group finance director and managing director of Rathbone Investment Management - to take on the role of chief executive.
Jennifer Mathias would take on the role of group finance director when she joined the company on 1 April.
"Our priorities for 2019 will be the successful integration of Speirs & Jeffrey, the roll-out of the next phase of our growth and the smooth transition of our executive management team," said chairman Mark Nicholls.
"Despite political and economic uncertainties, we remain confident in the underlying strength of our business and its longer-term prospects."
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