Rathbone Brothers reaches new funds under management record

Investment and wealth management company Rathbone Brothers reported a 16.8% increase in its underlying profit before tax for 2017 on Thursday, to £87.5m from £74.9m.

The FTSE 250 firm said its underlying profit margin remained strong at 30.6%, compared to 29.8% in the prior year.

Underlying earnings per share improved 13.7% to 138.8p.

Rathbone said its profit before tax was ahead 17.6% at £58.9m, while basic earnings per share were up 17.5% to 92.7p.

Its board recommended a final dividend of 39p for the year, rising from 36p, and making for a total of 61p for the year - an increase of 7.0% on 2016.

Total funds under management were £39.1bn at year-end on 31 December, up 14.3% from £34.2bn at the end of 2016.

The FTSE 100 Index increased by 7.6% and the MSCI WMA Private Investor Balanced Index increased by 7.2% over the same period.

Rathbone said the total net annual growth rate of funds under management for its investment management unit was 3.9%, slowing from 4.5% in 2016.

That comprised £0.9bn of net organic growth, up from £0.8bn, and £0.3bn of acquired inflows, down from £0.4bn, with the board reporting that the underlying rate of net organic growth was 3.0%, slightly ahead of the 2.9% reported in the prior year.

Underlying operating income in investment management was £254.6m for the year - a 12.5% improvement - which the board said was driven by higher investment markets and continued organic and acquired growth in all business areas.

The average FTSE 100 Index was 7,426 on quarterly billing dates in 2017, compared to 6,659 in 2016, an increase of 11.5%.

Funds under management in unit trusts were £5.3bn at 31 December, rising from £4b, and net inflows totalled £883m in the same period, an increase from £554m.

Underlying operating income in unit trusts was £31.4m in the year ended 31 December, an uptick of 25.6% from £25m in 2016.

The board said underlying operating expenses were £198.5m - up 12.5% year-on-year, which was said to largely be due to continuing investment in strategic initiatives and underlying growth in the business.

“UK and global investment markets performed well in 2017, with some indices reaching record levels towards the end of the year,” said chairman Mark Nicholls.

“This outcome has been positive for both Rathbones and our clients, with our funds under management reaching a record £39.1 billion, up 14.3% in the year.

“Notwithstanding some caution, which naturally emerges at a time of high investment markets and political uncertainty, we enter 2018 well positioned to provide long-term value for shareholders.”