20th Feb 2014 08:40
LONDON (Alliance News) - Rathbone Brothers PLC Thursday said its pretax profits rose by 15% last year, as the investment manager took advantage of buoyant financial markets and rising funds under management.
In a statement, Rathbone Brothers said it made a GBP44.2 million pretax profit for the year ended December 31 2013, compared with GBP38.5 million in 2012, with basic earnings per share showing a similar increase to 76.1 pence from 66.5 pence.
Rathbone said it recommends a dividend increase of 4.3% to 49 pence.
Operating expenses rose to GBP132.2 million from GBP117.1 million because of investment in the company's systems, it said, which it expects to deliver benefits in the coming years, as well as on its research process, which will increase headcount in that area. The company also put the higher costs to a rise in variable awards which are performance-related.
"2013 was a positive year for investment markets generally, benefiting both Rathbones and our clients," March Nicholls, Chairman, said in a statement.
"This positive backdrop, combined with better levels of new business, meant that our total funds under management grew by 22.2% over the year to GBP22.0 billion," Nicholls added.
The company said its unit trust business was another highlight of its results, growing 39% to GBP1.8 billion. Outgoing Chief Executive Andy Pomfret said 2014 has started "positively" with significant inflows into the Income and Global Opportunities funds in particular.
With a change in senior management on the way, with Philip Howell set to succeed Pomfret, who in December said he'd be retiring on March 1, Nicholls said Rathbones is "well-placed" to take advantage of future growth opportunities and noted his optimism for the company.
Nicholls said one of Howell's top priorities will be to develop Rathbones' strategic processes and formalise its risk and capital planning disciplines to a greater degree, as it turns its attention to develop its risk management structure.
"We plan to establish an independent risk management structure to supplement our historic and proven practice of ensuring that our investment teams take responsibility for the risks in their areas of business," Nicholls said.
He said the biggest risks facing Rathbones arise from its ambition to grow and from regulatory intervention.
Over the past couple of years regulators have made an effort to increase transparency around commission and fees in the investment sector, with Rathbones being regulated by the new 'twin peaks' of the Financial Conduct Authority and the Prudential Regulation Authority.
By Samuel Agini; [email protected]; @samuelagini
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