Wealth management firm celebrates significant milestone
Private wealth manager Rathbone Brothers said it achieved a significant milestone after total funds under management and administration passed the £50bn level during the year to December 31, 2019.
Announcing its annual results today, the firm, which has a base at The Port of Liverpool Building on the city’s waterfront, said the £50.4bn figure compared with £44.1bn the same time the previous year, an increase of 14.3%.
By contrast, the FTSE 100 Index increased 12.1% and the MSCI PIMFA Private Investor Balanced Index increased 13.1% over 2019.
Funds in Rathbone Investment Management grew 11.7% to £43bn (31 December 2018: £38.5bn).
Operating income in Investment Management was strong, increasing 12.9% to £310.9m for the year ended December 31 (2018: £275.3m), reflecting a full year of income of Speirs & Jeffrey.
The average FTSE 100 Index was 7456 on quarterly billing dates in 2019, compared with 7269 in 2018.
Net organic outflows for the year totalled £600m (2018: net inflows £1.1bn).
Rathbone Unit Trust Management continued to perform exceptionally well with funds under management increasing 32.1% to £7.4bn at December 31 (31 December 2018: £5.6bn).
Net inflows increased 73.7% to £943m during 2019 (2018: £543m) and operating income totalled £37.2m in the year ended December 31 (2018: £36.7m).
Underlying operating expenses of £259.4m (2018: £220.4m) not only included the full year impact of a number of growth-led investments and Speirs & Jeffrey, but also software impairment costs of £3.1m and a considerable increase in the Financial Services Compensation Scheme levy – 2019: £4.5m, 2018: £2.8m.
Underlying profit before tax of £88.7m compared with £91.6m previously, reflecting the increase in operating expenses and levy, addition to the expected cessation of ‘risk-free’ managers’ box dealing profits in the unit trusts business from mid-January 2019, and the acceleration of some deferred executive awards in relation to recent executive retirements.
The statutory profit before tax of £39.7m, down from £61.3m in 2018, reflected anticipated items, most notably the costs associated with the acquisition of Speirs & Jeffrey.
The majority of these costs were in relation to deferred consideration payments to former shareholders of the business which have been treated as remuneration in accordance with accounting standards.
The board recommends a final dividend of 45p for 2019 (2018: 42p), making a total of 70p for the year (2018: 66p), an increase of 6.1% on 2018.
Chairman Mark Nicholls said: “2019 may well be remembered for political reasons more than any other, but investment markets finished the end of the year strongly.”
He added: “Rathbones has taken a number of positive steps forward this year and, having outlined our strategic priorities in 2019, we look forward to implementing them in 2020 and beyond.
“Whilst investment markets will undoubtedly present a number of unforeseen challenges this year, I am confident that our renewed focus will stand us in good stead to drive our business forward.”
Meanwhile, chief executive Paul Stockton said the business will embark on a recruitment drive: “Improving organic growth rates will remain a priority over the next few years and increasing the number of experienced client-facing individuals will be fundamental to this.
“Not only will we focus on recruiting more investment managers, but we will also continue to invest in our graduate and apprenticeship programmes to identify and develop future talent.”
He said: “Rathbones has grown considerably in the past five years, nearly doubling its funds under management and administration during that time.
“Opportunities to build our market share remain. Delivering on our strategy will be our focus in the near term as we balance greater productivity with an ongoing desire to invest and grow.”
