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Rathbones' profit rockets 64% as it lets go of old London HQ

Rathbones' profit rockets 64% as it lets go of old London HQ

Rathbones’ profit before tax for the half year jumped 64.3% from £26.6 million to £43.7 million.

The significant increase in profit over the first half to 30 June compared with the same period in 2017, was due to a number of factors, the business said.

The main driver was that at the beginning of June, the firm managed to assign all its legacy Curzon Street leases, its old London HQ, to a third party. This has meant that it could write-back office relocation costs of £2.9 million. Last year the cost that was on the balance sheet was almost £16 million.

Total funds under management were only slightly up over the period, by 2%, to £39.9 billion.

Assets in the investment management arm reached £34.1 billion, up 6.6% year-on-year.

In the unit trusts business, there were net inflows of £299 million over H1 driving assets up to £5.8 billion, from £5.3 billion in December 2017. Operating income in the division was up 20.1% compared to the first half of 2017, to £17.9 million.

Net flows from external IFA networks were £153 million over the period, up from £108 million year-on-year. While Vision Independent Financial Planning, a subsidiary of Rathbones, has seen funds under advice reach £1.5 billion.

The board has recommended a 24p interim dividend for 2018.

Philip Howell (pictured), chief executive, said: 'The first half of 2018 has been a busy one for Rathbones as we progressed a full project agenda and announced the acquisition of Speirs & Jeffrey whilst maintaining our focus on day-to-day operations. We remain confident in the outlook for the business.'

While in the results there was no mention of the private office, which Rathbones has been working on, Howell told Wealth Manager that it was taking longer than expected to take off, however highlighted that the pipeline for the business is encouraging. 

Speirs & Jeffrey acquisition

Rathbones announced last month that it would be acquiring Scotland-based Speirs & Jeffrey. While still waiting regulatory approval, it said the business has started creating a detailed plan to ‘bring the business seamlessly into our group’.

It noted: ‘As we announced in June, we expect this transaction to generate an underlying earnings per share accretion of at least 8% and return on investment of approximately 13% by the end of 2021.’

It added that the £60 million equity placing that took place in June, to fund the acquisition, meant that shareholders equity rose 23.3% since the year end to £447.8 million.  

Going forward, the company said: ‘During the second half of the year, we will continue to prioritise the investment of time and financial resources in our investment management business, seeking to improve our services and the efficiency of our infrastructure. Alongside this, we will also focus on completing the Speirs & Jeffrey acquisition and planning for its successful transition into the Rathbones family.’

Howell added that the acquisition helps to rebalance the split between the firm's London location and regional offices and 'reinforces our position in Scotland'. 

In terms of the regional footprint, he said that the only they will look to now is around the Manchester, Sheffield area, but pointed out that the business has not been able to find the right fit yet.  

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