Rathbone Brothers grew its assets under management to above £50bn in 2019, despite seeing just £600m of net inflows.
Total funds under management and administration for the group reached £50.4bn at 31 December, up from £44.1bn the year before.
The firm’s investment management business saw FUMA reach £43bn, up from £38.5bn in 2018, while the unit trust arm clocked up £7.4bn, compared with £5.6bn in 2018.
Net flows across the investment management business were just £600m compared with £8.5bn in 2018, although Rathbones noted 2018’s figure was largely down to the acquisition of Speirs and Jeffrey which added £6.8bn.
It said gross flows of £3.3bn remained resilient compared with £3.8bn in 2018, considering weaker investor sentiment, the repositioning of some pension and institutional mandates and the exit of some lower-margin mandates following the integration of Speirs and Jeffrey.
Net flows into Rathbones Unit Trust Management totalled £943m compared with £543m the year before with all nine onshore funds, as well as offshore funds, seeing net inflows.
Speirs and Jeffrey costs hit profit
The group booked a profit before tax of £39.7m, down from £61.3m in 2018. It said this reflected planned costs for the acquisition of Speirs and Jeffrey, particularly £26m in relation to deferred consideration payments to former shareholders.
Underlying profit before tax was £88.7m, down from £91.6m the year before which Rathbones said reflected the previously flagged cessation of box profits in the unit trust business from mid-January. Box profit dropped to £200,000 in 2019, from £3.4m the year before. Overall net annual management charges netted the firm £36.1m in 2019, compared with £32.9m in 2018.
Abandoned software project and FSCS levy hike
The firm also canned a software project aimed at improving internal workflow after concluding it did not offer value for money, resulting in £3.1m hit. It also saw a £1.7bn increase in the Financial Services Compensation Scheme levy from the previous year.
Rathbones chief executive Paul Stockton (pictured) said: “Rathbones has grown considerably in the past five years, nearly doubling its funds under management and administration during that time. Opportunities to build our market share remain. Delivering on our strategy will be our focus in the near term as we balance greater productivity with an ongoing desire to invest and grow.”
Search for chairman to replace Mark Nicholls underway
The results also revealed the search is underway for a chairman to replace Mark Nicholls who has been in the post since May 2011 and as a non-executive director for more than nine years. Nicholls’s tenure has exceeded requirements outlined in the 2018 UK corporate governance code.
Nicholls said: “I will however remain as chairman during 2020, working with both Paul and Jennifer [Mathias, group finance director] in their new roles and will ensure an orderly handover to my successor in due course. The nomination committee have assessed and confirmed my continuing independence for 2020.”
