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Rathbone set fair

RESULTS: Rathbone Brothers' broad customer base continues to pull in new funds
February 20, 2014

Growing investor interest provided the necessary catalyst for Rathbone Brothers (RAT) last year, but the wealth management specialist went one better. For while the FTSE 100 grew by 14 per cent and the balanced index by 11 per cent, Rathbone's assets under management rose 22 per cent to £22bn.

IC TIP: Hold at 1770p

Crucially, Rathbone has managed to broaden its revenue base. Private clients remain the backbone of fee income, but relationships also grew with professional intermediaries, trustees, charities and institutions, pushing client numbers up by 1,500. Investor demand was notably strong on the unit trust side, where funds under management jumped 39 per cent to £1.8bn. On the investment management side, funds grew from £16.7m to £20.2bn. That included a £2.7bn net inflow of funds, of which £0.4bn came from the acquisition of Taylor Young Investment Management's private client base - up from £2.1bn the previous year.

Operating expenses grew by 14 per cent to £126m, reflecting an increased headcount and higher performance awards. But this was more than offset by a 13 per cent increase in fee and commission income to £174m, even though the low interest rate environment cut interest income from £11.2m to £9.2m.

Analysts at broker Numis Securities expect underlying pre-tax profits of £55.6m this year, giving diluted EPS of 94.3p (from £50.5m and 86.1p in 2013).

RATHBONE BROTHERS (RAT)
ORD PRICE:1,770pMARKET VALUE:£818m
TOUCH:1,770-1,773p12-MONTH HIGH:1,785pLOW: 1,355p
DIVIDEND YIELD:2.8%PE RATIO:23
NET ASSET VALUE:543p* 

Year to 31 DecPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200929.546.942
201030.149.844
201139.266.746
201238.566.547
201344.276.149
% change+15+14+4

Ex-div: 23 Apr

Payment: 19 May

*Includes intangible assets of £105m, or 227p a share