Rathbone Bros posts strong growth but misses forecasts

1st Aug 2013 12:28

Rathbone Brothers' funds under management (FuM) rose strongly in the first half, helping lift profits 17.2 per cent.In the six months to the end of June, growth in funds under management continued from 2012 as positive investment markets helped to grow Rathbones' profit before tax to £23.2m.Chief Executive Andy Pomfret said: "Total net growth in funds managed by our investment management business was £780m in the first half of 2013, representing an annualised growth rate of 9.3% compared to 6.7% in the first half of 2012." Including the impact of market movements, Rathbones' total funds under management at the period-end were £19.9bn.Pre-tax profits were 2.0% shy of consensus forecasts, while analyst David McCann at broker Numis noted that said the rise in FuM was 3.0% light of his estimate. Net organic growth of £327m in FuM for the first half represents an underlying annualised rate of net organic growth of 3.9%, down from 2012's 3.7%. Rathbone's has completed the acquisition of the private client base of Taylor Young Investment Management, which added £358m of funds under management by period end.Underlying operating expenses were up 13.6% to £62m, which the company attributed largely to business growth and investment."Rathbones' outlook remains positive," said Pomfret. "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."Reflecting their optimism, the board has recommended an increase in the interim dividend to 18p per share.Analyst McCann said: "Whilst this is a slightly disappointing result, we would not expect to downgrade materially, since the market is [up circa 6%] since we last marked to market, which should offset these cost pressures."He added: "We regard Rathbones as one of the quality names in the wealth management sector and thus we believe it merits a slight premium rating, due to its consistent net inflow record, consistent circa 30% operating margin and significant bias towards recurring fee income."Shares in Rathbone Brothers were down 1.3% to 1,648p at 13:02 on Thursday. OH