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Rathbones' AUM on brink of £20bn driving profits up 17%

by James Phillipps on Aug 01, 2013 at 07:40

Rathbones' AUM on brink of £20bn driving profits up 17%

Rathbones’ pre-tax profits rose by 17.2% in the first half of the year as asset growth of 10.6% pushed its assets under management to the brink of £20 billion.

Profit before tax rose to £23.2 million over the six months to the end of June, up from £19.8 million in the period last year as assets reached £19.9 billion, prompting the board to increase Rathbones' interim dividend by 5.8% to 18p.

Rathbones’ discretionary business saw assets under management rise by 9.3% on annualised growth rate basis to reach £780 million. The company said the acquisition of Taylor Young added £358 million to its private client book and stripping this out the division achieved £327 million of net organic growth, equivalent to 3.9% on an annualised basis.

Rathbones’ fund arm saw net inflows of £67 million in the first half, more than double the £32 million investors’ poured into its range in the same period last year, which pushed its total unit trust assets up to £1.44 billion, with the unit generating £5.1 million of profit, up 15.9% from £4.4 million year-on-year.

Chief executive Andy Pomfret (pictured) said: ‘Rathbones' outlook remains positive. Our continued focus on client service and controlled investment in people and systems ensures that Rathbones is well placed to take advantage of healthier investment markets and future growth opportunities.’

The firm’s operating expenses rose 13.6% to £62 million, which it said ‘largely reflects salary inflation’, with average salaries rising by 4.4%, a 5.8% increase in headcount to 821 to 776 and the £800,000 cost of new offices it opened in Newcastle and Lymington.

The group also injected a further £2 million into its pension scheme after pouring in an additional £3.6 million in the second half of last year.

Rathbones’ ongoing legal action in Jersey looks set to cost more than expected. Initially anticipated to cost around £1 million, the group said it had spent £0.8 million on legal fees arising in the first half as in connection with its proceedings to confirm insurance cover against the insurers of the excess layer of professional indemnity policy and the related proceedings in Jersey.

It said: ‘These costs are likely to increase in the second half, not least because the trial of the insurance claim will start on 7 October 2013.’

Rathbones' shares were broadly flat in early morning trading, down 0.36% or 6p at 1,664p.

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