Rathbones cuts jobs as profits drop
Rathbone Brothers' pre-tax profit fell almost 65% last year from £61.3m to £39.7m primarily due to £26.1m in deferred staff payouts relating to its 2018 purchase of Scottish wealth manager Speirs & Jeffrey.
Total funds under management at Rathbone Brothers surged 14.3% in 2019, reaching £50.4bn, according to its preliminary results. Funds in its investment management arm grew 11.7% to £43bn, while operating income increased 12.9% to £310.9m for the year ended December 31, 2019.
Rathbone Unit Trust Management saw its funds under management rise to £7.4bn over the year to December, 31 2019, up from £5.6bn a year prior.
Opportunities to build our market share remain"
Rathbone Brothers has cut 58 back office staff in relation to its 2018 Speirs & Jeffrey acquisition. The firm's staff costs rose by 15.4% to £110.8m last year. Speirs & Jeffrey staff contributed £6.8m of this increase, and headcount across the firm increased by 13.5% to 1,509 in 2019.
The group also warned that it had written off a £3.1m tech project in the year however, and assumed £4.1m in acquisition integration costs.
In a statement, the company said: "Although we continue to expect macro-economic conditions to drive volatility more generally across investment markets in the shorter term, we remain focused on pursuing the strategic objectives we set out in October 2019."
However, the Rathbone Investment Management arm suffered net organic outflows of £600m, reversing its better fortunes of 2018 which saw net inflows of £1.1bn.
The underlying profit before tax for the business as a whole was slightly lower in 2019 than the previous year, at £88.7m versus £91.6m, reflecting higher operating expenses coming from a number of "growth led investments and Speirs & Jeffrey", as well as "software impairment costs" and a considerable increase in the FSCS levy.
The statutory profit before tax was also lower at £39.7m, compared to £61.3m in 2018, reflecting the costs of the Speirs & Jeffrey acquisition.
Commenting on his outlook for the business, CEO Paul Stockton 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."
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