Wealth manager Rathbone Brothers did well to boost operating income by nearly 6 per cent to £77.7m in the first half, helped by a 5 per cent increase in total funds under management (FUM) to £16.7bn. This is even more impressive when you consider that over the same period the FTSE 100 index was flat, a fact not lost on investors who have pushed the shares up 21 per cent since the start of this year, leaving the quality performance factored in.
Reported profits were lower as a result of a 10.5 per cent increase in operating expenses, partly reflecting a 5.5 per cent rise in staff numbers as Rathbone expanded its investment teams, and the £8.3m cost relating to a new London head office and additional pension costs.
Total funds managed by the investment management business grew by £497m, or by 6.7 per cent on an annualised basis, which boosted net fee income by 8.9 per cent to £47.6m. However, a further squeeze on yields in the money market meant that net interest income fell 2 per cent to £5.06m. FUM at Rathbone Unit Trust Management clocked up the seventh consecutive quarter of net inflows, albeit a modest £32m to £1.15bn, helping underlying operating income to grow 7 per cent.
Peel Hunt is forecasting flat full-year adjusted pre-tax profits of £46.1m and EPS of 77.6p.
| RATHBONE BROTHERS (RAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,289p | MARKET VALUE: | £565m | |
| TOUCH: | 1,285-1,290p | 12-MONTH HIGH: | 1,384p | LOW: 950p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 447p* | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2011 | 20.6 | 34.3 | 17.0 |
| 2012 | 19.9 | 34.8 | 17.0 |
| % change | -3 | +2 | - |
Ex-div: 12 Sep Payment: 3 Oct Includes intangible assets of £95m, or 218p a share | |||
