Uncertainty among retail investors is a familiar story post-referendum. For Rathbone Brothers' (RAT) investment management business, new inflows during 2016 were flat on the previous year. The good news was that fewer people withdrew their funds, resulting in net organic new business of £0.8bn, up from £0.7bn. Management says the wealth manager has experienced a similar level of hesistancy among retail investors since the year-end.
That core segment also benefited from £0.4bn of funds acquired, as a result of the 2015 purchase of financial planning company Vision. However, this was down from £0.7bn the previous year. Costs associated with this acquisition - as well as the relocation of the group's head office - dragged on statutory pre-tax profits. But with market movements helping, investment management funds increased to £30.2bn, up £4.1bn on 2015.
Rathbones is carrying out an increasing amount of discretionary fund management, where a client hands over the day-to-day running of their portfolio, improving revenue predictability. Net fee income increased 14 per cent to £163m, while commission income continued to decline. The unit trusts also put in a solid performance, generating net inflows of £0.6bn (from £0.4bn outflows in 2015).
Analysts at Canaccord Genuity expect adjusted pre-tax profits of £80.4m during the 12 months to December 2017, giving EPS of 126p (from £74.9m and 121p in 2016).
RATHBONE BROTHERS (RAT) | ||||
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ORD PRICE: | 2,256p | MARKET VALUE: | £1.14bn | |
TOUCH: | 2256-2257p | 12-MONTH HIGH: | 2,329p | LOW: 1,577p |
DIVIDEND YIELD: | 2.5% | PE RATIO: | 29 | |
NET ASSET VALUE: | 641p* |
Year to 31 Dec | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 156 | 38.5 | 66.5 | 47 |
2013 | 176 | 44.2 | 76.1 | 49 |
2014 | 209 | 45.7 | 76.0 | 52 |
2015 | 230 | 58.6 | 97.4 | 55 |
2016 | 251 | 50.1 | 78.9 | 57 |
% change | +9 | -15 | -19 | +4 |
Ex-div: 20 Apr Payment: 16 May *Includes intangible assets of £167m, or 330p a share |