* Funds under management up 17.1 pct to 34.2 bln pounds
* Helped by rise in UK stocks after Brexit vote
* Underlying pretax profit up 6.4 percent, shares steady
(Adds detail from statement, background, bullet points)
By Simon Jessop
LONDON, Feb 23 British wealth manager Rathbone
Brothers reported higher than expected underlying pretax
profit for 2016 on Thursday, helped by stock market gains
following Britain's vote to leave the European Union.
Rathbones, which can trace its roots to a timber merchants
in Liverpool in the 18th century, is over half way through a
five-year plan to develop its investment, research and IT
capabilities. While associated costs weighed on its pretax
profit the company said the strategic overhaul was on track.
The company flagged an additional 5 million pounds ($6.2
million) of costs for 2017, though it could trim this estimate
if markets endure a prolonged downturn. Rathbones said it would
also consider new acquisitions.
"After a nervous start to 2016, the FTSE 100 performed
increasingly strongly as the year progressed, largely reflecting
the impact of a sharp fall in sterling after the EU referendum
vote," Rathbone Brothers Chairman Mark Nicholls said.
"Nevertheless, the recovery in the second half had a favourable
impact on our financial performance."
The company confirmed that total funds under management
stood at 34.2 billion pounds at the end of 2016, up from 29.2
billion a year earlier, helped by stock markets. The FTSE 100
index of leading UK shares rose 14.4 percent in 2016.
Rathbones said net organic growth at its investment
management division was 2.9 percent, down from 3 percent, though
fee income rose 14.5 percent to 184.8 million pounds.
Costs related to its acquisition of Vision Independent
Financial Planning, a move to a new headquarters and charges in
relation to client relationships and goodwill all weighed on
pretax profit, which fell 14.5 percent.
Stripping out those costs, underlying pretax profit rose 6.4
percent to 74.9 million pounds, ahead of a market consensus of
71 million pounds, Peel Hunt analyst Stuart Duncan said in a
note to clients.
That helped underpin a final dividend of 36 pence giving a
total dividend for the year of 57 pence a share, up 3.6 percent.
"The results this morning were ahead of our expectations,"
said Duncan. "This was achieved during a period of transition
and investment in distribution initiatives and the private
"These will contribute to full-year 2017 ... growth,
supporting our continuing positive stance on the shares," he
said, raising his target price 2,450 pence a share.
Shares in Rathbones were down 0.3 percent at 2,243 pence at
0810 GMT, broadly in line with the FTSE mid-cap index.
($1 = 0.8037 pounds)
(Editing by David Clarke)