The Curzon Street leases were assigned to US investment bank Houlihan Lokey resulting in a net write-back of non-underlying head office relocation costs of £2.9m. Rathbones moved to Finsbury Circus in February 2017.
The net costs of the empty offices resulted in a £15.8m hit to the balance sheet for the same reporting period last year.
The lease assignment significantly reduces Rathbones’ exposure to property risk and triggers a release of £3.7m from the onerous lease provision, the results said.
Chief executive Philip Howell had previously said Brexit had resulted in a softening of demand for prime central London property.
Assets flat
The net write-back of costs on the old offices contributed to a 64.3% rise in profits before tax, which jumped to £43.7m from £26.6m in December 2017.
Underlying profit before tax reached £48.3m, up 11.5% from £43.3m despite assets under management remaining relatively flat at £39.9bn, up from £39.1bn in December 2017.
Rathbones’ investment management business attracted £400m net flows, while the unit trust business attracted £299m. The Rathbone Income, Global Opportunities and Ethical Bond funds have experienced positive momentum in terms of sales and all now manage more than £1bn in assets, the results said.
The acquisition of Speirs & Jeffrey, announced in June, still awaits regulatory approval and is not due to complete until later this year. The Scottish wealth manager had funds under management of £6.7bn in May 2018.
Box profits contributed £1.8m, but will not recur in the next financial year results due to the Financial Conduct Authority (FCA) banning the practice in its asset management market study guidance and remedies.
Speirs & Jeffrey
Howell said the Speirs & Jeffrey acquisition had resulted in a busy first half.
The results said the migration of the two businesses’ systems would take place towards the middle of 2019.
Rathbones said its priority is that bringing the businesses together results in minimal disruption. In June, the company said the transaction is expected to generate an underlying earnings per share accretion of at least 8% and return on investment of approximately 13% by the end of 2021.
