In 2019, Rathbone Brothers (RAT) posted a 14.3 per cent rise in total funds under management and administration to £50.4bn. This is of course a positive for the independent wealth manager’s top line, which is based on fee income earned from invested client money.
It’s also reassuring that £5.8bn of this increase came from the combined market performance of the investment management and unit trust businesses, which amounts to 13.1 per cent of opening funds. As Rathbones points out, this was one percentage point ahead of the rise in the FTSE 100, suggesting the group’s managers collectively have a small edge.
However, these comparisons tell us a limited amount about the underlying business. In the core investment management division, net outflows of £0.6bn were explained away as the continued integration of the 2018 purchase of Speirs & Jeffrey, although it is clear that organic positive flows are proving harder to come by.
And while the unit trust business posted impressive net organic growth of 16.7 per cent – making Rathbones the ninth biggest seller to retail investors in the period – fee income here is around 50 basis points of total funds, rather than 70 basis points in the investment management arm.
Analysts at Numis flagged the possibility for downgrades, but kept their adjusted earnings per share forecasts at 140p for 2020, and 152p for 2021.
Rathbone Brothers (RAT) | |||||
ORD PRICE: | 1,960p | MARKET VALUE: | £1.1bn | ||
TOUCH: | 1,958-1,962p | 12-MONTH HIGH: | 2,560p | LOW: | 1,918p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 39 | ||
NET ASSET VALUE: | 904p* |
Year to 31 Dec | Fee/Commission Income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2015 | 223 | 58.6 | 97.4 | 55.0 |
2016 | 253 | 50.1 | 78.9 | 57.0 |
2017 | 292 | 58.9 | 92.7 | 61.0 |
2018 | 314 | 61.3 | 88.7 | 66.0 |
2019 | 353 | 39.7 | 50.3 | 70.0 |
% change | +12 | -35 | -43 | +6 |
Ex Div: | 23-Apr | |||
Payment: | 12-May | |||
*Includes intangible assets of £228m or 424p per share |