Rathbones Group Plc · LSE:RAT
Rathbones — Rathbone Brothers — H1 2015 Earnings Presentation
35 slides from Rathbones's earnings presentation, Jun 30, 2015
Slide 1: Rathbone Brothers Plc Interim results
Rathbone Brothers Plc Interim results 30 June 2015 Rathbones Look forward
Slide 2: Results highlights
Results highlights Funds under management Underlying profit before tax Profit before tax +18.4% +27.0% +3.9% £28.3bn £37.2m £31.8m £29.3m £30.6m £23.9bn H1 2014 H1 2015 H1 2014¹ H1 2015 H1 2014¹ H1 2015 Dividends per share Underlying² earnings per share Basic earnings per share +10.5% +27.6% +3.9% 2
Slide 3: Underlying profit before tax
Underlying profit before tax H1 2015 H1 2014¹ % FY 2014¹ (£m) (£m) change (£m) Average FTSE 100 Index 6677 6720 (0.6) 6657 Net investment management fee income 77.7 63.0 23.3 133.8 Net commission income 26.3 23.5 11.9 43.7 Net interest income 5.5 4.4 25.0 9.2 Fees from advisory services and other in
Slide 4: Underlying operating expenses
Underlying operating expenses H1 2015 H1 2014¹ % FY 2014¹ (£m) (£m) change (£m) Fixed staff costs 36.9 30.7 20.2 61.9 Average FTE² employees during the period 956 853 12.1 880 Actual FTE² employees at the period end 988 878 12.5 929 Variable staff costs 20.7 17.2 20.3 35.2 Variable staff costs as a
Slide 5: Capital expenditure
Capital expenditure 17% 24% 21% 44% 31% 83% 76% 56% 69% 79% 10 Investment¹ 9 Maintenance/replacement² 8 7 6 5.2 £ million 5 1.7 0.2 4 0.7 3 1.5 2.3 0.3 1.7 1.6 2 0.8 1 2.4 1.7 1.7 1.7 1.1 0 2011 2012 2013 2014 H1 2015 Property³ IT & other Purchases software ¹ Investment represents capital expenditur
Slide 6: Summary balance sheet
Summary balance sheet 30/06/15 31/12/14¹ 30/06/14¹ Assets (£m) (£m) (£m) Balances with central banks 703.3 727.2 591.0 Other cash, deposits and investments 897.1 605.8 643.2 Loans and advances to customers² 101.0 101.6 91.8 Prepayments, accrued income and other assets 66.5 62.3 83.9 Property, plant
Slide 7: Understanding our capital position
Understanding our capital position 30/06/15 31/12/14¹ Assets (£m) (£m) Total own – Total equity less intangibles and other funds capital adjustments² Total own funds² 112.4 112.8 Pillar 1 own funds requirement 63.6 50.6 Pillar 1 own – Credit risk funds – Market risk Surplus before Pillar 2A 48.8 62.
Slide 8: Supporting growth and lowering the cost of capital
Supporting growth and lowering the cost of capital Background – 2012 and 2014 share placings fully utilised on recent acquisitions – Capital rules – Favourable interest rate environment – Opportunity to lower cost of capital Tier 2 debt issue – £20 million subordinated notes (maximum Tier 2 capacity
Slide 9: Funds under management
Funds under management Investment Unit Trusts Total Total Management H1 2015 H1 2015 H1 2014 H1 2015 (£bn) (£bn) (£bn) (£bn) Opening funds under management 24.7 2.5 27.2 22.0 Inflows 1.4 0.4 1.8 2.4 - Organic¹ 1.1 0.4 1.5 1.6 - Purchased² 0.3 - 0.3 0.8 Outflow of money (0.8) (0.3) (1.1) (0.9) - Reta
Slide 10: Half year highlights
Half year highlights Rathbone Investment Management – Charging structure for private clients realigned – New Glasgow office opened, extending our presence in Scotland Rathbone Unit Trust Management – £2.7bn funds under management – Planned launch of multi-asset Strategic Income fund Strategic initia
Slide 11: Focus for second half of 2015
Focus for second half of 2015 – Organic growth and distribution strategy – Inorganic opportunities – regional bias – Vision option – Private Office – Pensions and advisory – Investment process – Research – Risk framework – Regulation and tax – Senior Manager Regime – MiFID II – Bank corporation tax
Slide 12: Appendices
Appendices 12
Slide 13: Strategy
Strategy Our vision is to be the UK’s leading independently-owned provider of wealth management services to private clients, charities, professional intermediaries and trustees by building trusted relationships with our clients and delivering outstanding client service, value for money and investmen
Slide 14: Analysing the balance sheet
Analysing the balance sheet 30/06/15 31/12/14¹ 30/06/14¹ 30/06/15 31/12/14¹ 30/06/14¹ Assets (£’000) (£’000) (£’000) Liabilities (£’000) (£’000) (£’000) Cash and balances with central Deposits by banks 10,522 - 4,202 703,338 727,178 591,005 banks Settlement balances 55,593 22,584 65,298 Settlement b
Slide 15: Dividend history
Dividend history 60 52 49 50 46 47 40 pence 30 21 20 10 0 2011 2012 2013 2014 2015 Interim Final Full year 15
Slide 16: Underlying profits before tax (£m) and EPS (p)
Underlying profits before tax(£m) and EPS (p) 70 60 61.6 53.2 Underlying PBT¹ (£m) / EPS (p) 51.2 50 50.5 46.2 44.8 38.6 40 34.3 34.6 37.5 37.2 30 32.4 32.3 31.9 29.3 26.1 24.2 24.4 24.8 20 22.0 23.1 21.7 10 0 2011 2012 2013 2014² H1 2015 H1 UPBT (£m) H2 UPBT (£m) FY UPBT (£m) H1 EPS (p) H2 EPS (p)
Slide 17: Earnings per share
Earnings per share H1 2015 H1 2014 Post tax EPS Post tax EPS (£m) (p)¹ (£m) (p)² Underlying profit attributable to shareholders 29.7 62.4 22.8 48.9 Gain on disposal of financial securities - - 4.6 9.9 Charges in relation to client relationships and goodwill (4.4) (9.2) (2.8) (5.9) Transaction costs
Slide 18: Shareholders at 30 June 2015
Shareholders at 30 June 2015 Rathbones staff, former staff and directors Lindsell Train¹ 15.7% BlackRock Investment Management² 32.7% MFS Investment Management³ Aberdeen Asset Management 13.2% Heronbridge Investment Management Mawer Investment Management Troy Asset Management 8.7% Aviva Investors 2.
Slide 19: Board and Executive Committee
Board and Executive Committee Rathbone Brothers Plc - Board Executive directors: Philip Howell Paul Stockton Paul Chavasse Chief Executive Finance Director Head of Investment Management Non-executive directors: Mark Nicholls David Harrel¹ James Dean Chairman Kathryn Matthews Sarah Gentleman² Executi
Slide 20: Segmental results
Segmental results Investment Indirect Management Unit Trusts expenses Total H1 2015 (£m) (£m) (£m) (£m) Net investment management fee income 69.1 8.6 77.7 Net commission income 26.3 - 26.3 Net interest income 5.5 - 5.5 Fees from advisory services and other income 5.9 1.4 7.3 Operating income 106.8 1
Slide 21: Reconciliation of equity to total own funds
Reconciliation of equity to total own funds H1 2015 FY 2014¹ H1 2014¹ (£m) (£m) % change (£m) Equity Share capital and share premium 98.6 95.4 3.4 94.0 Reserves 189.8 181.4 4.6 186.7 Less: - Unverified year to date earnings (8.4) - (1.4) - Own shares (6.0) (5.5) (5.4) - Intangible assets² (161.7) (1
Slide 22: Capital ratios
Capital ratios – Common Equity Tier 1 ratio: Common Equity Tier 1 capital as a proportion of total risk exposure amount – Leverage ratio: Tier 1 capital resources as a percentage of total assets, excluding intangible assets, plus a proportion of off-balance sheet exposures 30/06/15 31/12/14¹ (£m) (£
Slide 23: Total operating expenses
Total operating expenses H1 2015 4% 2% 3% 9% 2% 4% 6% Staff - Payroll (Excl. Variable) H1 2014 8% Staff -Variable Staff - Other 42% 44% Property 12% 12% Depreciation & Amortisation Professional 2% Settlements 2% IT 24% 24% 23
Slide 24: Key metrics
Key metrics H1 2015 H1 2014 % change FY 2014 Investment management Total annualised rate of net growth in funds under management 5.1% 12.2% 19.6% Revenue margin on FUM (excluding Charities team) (bps) 79.6 83.1 (4.2) 80.9 Revenue margin on Charities team FUM (bps) 47.5 46.0 3.3 46.0 Underlying opera
Slide 25: Total comprehensive income
Total comprehensive income H1 2015 H1 2014¹ FY 2014¹ % change (£m) (£m) (£m) Underlying profit before tax 37.2 29.3 27.0 61.6 Refund of levies for the Financial Compensation Scheme - - 1.0 Gain on disposal of financial securities - 5.9 6.8 Gain on disposal of pension administration business - - 0.7
Slide 26: Rathbone Investment Management
Rathbone Investment Management H1 2015 H1 2014² FY 2014² % change (£m) (£m) (£m) Average FTSE 100 index¹ 6677 6720 (0.6) 6657 Net investment management fee income 69.1 56.8 21.7 120.5 Net commission income 26.3 23.5 11.9 43.7 Net interest income 5.5 4.4 25.0 9.2 Fees from advisory services and other
Slide 27: Analysis of operating income
Analysis of operating income Rathbone Investment Management Basis point return - fees Basis point return - commission 60 30 56 55 54 53 54 25 24 40 20 22 20 20 20 10 0 0 2011 2012 2013 2014 H1 2015 2011 2012 2013 2014 H1 2015 Basis point return – interest and other income Advisory fee income (£m) 10
Slide 28: Revenue margin
Revenue margin Rathbone Investment Management Basis points (bps) H1 2015 H1 2014 % change FY 2014 Return on fees 53.4 53.7 (0.6) 54.2 Return on commission 20.3 22.2 (8.5) 19.7 Return on interest and other income 2.6 3.2 (18.3) 3.3 Total revenue margin 76.3 79.1 (5.0) 77.2 Average funds under managem
Slide 29: Analysis of client base and funds under management
Analysis of client base and funds under management¹ Rathbone Investment Management Service level Service level 4.0% 4.4% Discretionary 8.2% Private client Advisory 11.3% ISA Execution-only Trust & settlements 39.5% Charities 13.2% Pensions & SIPPs Other 12.4% 91.6% 15.4% Size of client relationship
Slide 30: Asset allocation
Asset allocation¹ Rathbone Investment Management 5.8% 4.7% 4.2% 5.1% 5.6% 7.2% 6.5% 7.2% 7.9% 8.4% 48.5% 51.5% 22.7% 25.1% 27.3% 29.8% 29.5% Direct holdings Collectives 45.4% 45.0% 47.4% 43.7% 43.0% Cash Alternatives² 18.2% 18.0% 14.6% Overseas equities 14.2% 13.5% UK equities FY 2011 FY 2012 FY 201
Slide 31: Offices
Offices Number of investment Funds under management Office location professionals¹ (£bn at H1 2015)² London 123 16.33 Liverpool 26 2.24 Edinburgh 28 2.05 Winchester 17 1.43 Bristol 16 1.28 Other offices³ 49 2.85 Total 259 26.18 ¹ At 30 June 2015, these figures include investment directors, investmen
Slide 32: Annual management fees
Annual management fees¹ Rathbone Investment Management Discretionary Management fees (subject to VAT) Applied across Main Funds and ISA funds (pa)² First £250,000 1.20% Next £500,000 1.00% Next £750,000 0.75% Balance over £1,500,000 0.50% Illustration of fees (how our management fees are applied to
Slide 33: Performance
Performance Rathbone Unit Trust Management Performance¹ & Quartile Ranking Size of fund 1 year 3 year 5 year at 30 June 2015 (i-class units) (£m)* FTSE 100 Index 0.20 n/a 30.38 n/a 58.51 n/a n/a Rathbone Income Fund 9.12 2 56.42 1 98.50 1 1,072.85 Rathbone Global Opportunities Fund 16.66 1 56.35 1 9
Slide 34: Performance
Performance Rathbone Unit Trust Management Discrete year performance Size of fund 2010 2011 2012 2013 2014 At 31 December 2014 (i-class units) (£m)* Rathbone Income Fund 19.60 0.60 15.84 24.88 6.95 994.61 Rathbone Global Opportunities Fund 27.55 (3.96) 10.41 27.04 9.56 504.17 Rathbone Ethical Bond F
Slide 35: Disclaimer
Disclaimer The information contained in these slides has been prepared by Rathbone Brothers Plc (the “Company”). No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company or by any of its a