Slide 1: Preliminary Results for the twelve months ended 31 March 2019
TATTON ASSET MANAGEMENT Preliminary Results for the twelve months ended 31 March 2019 INVESTOR AND ANALYST PRESENTATION June 2019
Slide 2: Disclaimer
DISCLAIMER The information contained in this document (“Presentation”) has been prepared by Tatton Asset Management plc (the “Company”). The content of this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. The information c
Slide 3: Agenda
AGENDA • Introduction to the team • Key highlights • Financial performance • Market overview • Investment and fund update • Divisional analysis • Summary 3
Slide 4: Introduction to the team
INTRODUCTION TO THE TEAM 4
Slide 5: Introduction to the team
INTRODUCTION TO THE TEAM Paul Hogarth, CEO Lothar Mentel, CIO Paul Edwards, CFO • Over 30 years’ experience at Board • Co-founder of Tatton Capital Limited • Joined Tatton Asset Management level in the financial services sector in 2012 Plc as Group CFO in May 2018 • Founder of Tatton Asset • Ex CIO
Slide 6: Group structure
GROUP STRUCTURE Tatton Asset Management PLC (“TAM” or “Group”) Tatton Investment Management Paradigm Consulting Paradigm Mortgage Services (“Tatton” or “TIML”) (“Paradigm” or “PPC”) (“PMS”) Challenger model DFM IFA support services Adviser support services • On-platform only • Compliance services •
Slide 7: Key highlights
KEY HIGHLIGHTS 7
Slide 8: Key highlights - Financial
KEY HIGHLIGHTS Financial • Tatton’s assets under management (“AUM”) increased 24.5% to £6.1bn (2018: £4.9bn) • Average AUM inflows of over £90m per month maintained in difficult markets • Group revenue increased 12.9% to £17.5m (2018: £15.5m) • Adjusted operating profit* up 12.3% to £7.3m (2018: £6.
Slide 9: Key highlights - Operational
KEY HIGHLIGHTS Operational • Tatton increased its member firms 30.5% to 445 (2018: 341) and the number of accounts increased 19.9% to 58.5k (2018: 48.8k) • Tatton wins significant long-term investment mandate from Tenet, one of the UK’s largest Adviser support Groups giving access to 474 additional
Slide 10: Financial performance
FINANCIAL PERFORMANCE * 10
Slide 11: Profit & Loss
PROFIT & LOSS £000’s 2019 2018 Growth % Revenue 17,518 15,507 12.9% Admin expenses (10,210) (8,981) • Group revenue increased +12.9% Adjusted Operating profit* 7,308 6,526 12.3% • Group adjusted operating profit* increased Margin %* 41.7% 42.1% +12.3% Share based payments (IFRS2) (874) (986) • Excep
Slide 12: Balance sheet & cash flow
BALANCE SHEET & CASH FLOW BALANCE SHEET CASH FLOW 2019 2018 2019 2018 £’000 £’000 £’000 £’000 Goodwill 4,917 4,917 Cash from operations before 8,011 5,652 exceptional items Fixed assets & deferred tax 676 104 Exceptional (509) (1,964) Cash from operations 7,502 3,688 Trade & other receivables 2,508
Slide 13: Divisional analysis
DIVISIONAL ANALYSIS Performance Commentary Guidance Tatton Mar Mar % • Net AUM inflows £1.1bn or average +£90m pm • Net AUM inflow target at average +£90m pm 2019 2018 • New firms +30.5% to 445 • Costs Investment (Bus Dev / Marketing & Revenue £8.7m £6.3m +38.1% compliance resource) • Cost - investm
Slide 14: Revenue progression and margin growth
REVENUE PROGRESSION AND MARGIN GROWTH TIML PPL PMS TIML PPL PMS TIML PPL PMS 15.1% 15.3% 15.3% Revenue split Revenue split Revenue split 36.4% 34.5% 50.1% Mar-17 43.7% Mar-18 41.0% Mar-19 48.5% Contribution £m / Margin % £5.0m 53% £4.0m 53% 50% 48% 50% £3.0m £2.0m 58% 28% 58% £1.0m 46% £0.0m Mar-17
Slide 15: Dividend & capital allocation
DIVIDEND & CAPITAL ALLOCATION Dividend • Dividend policy remains c.70% of adjusted earnings • Interim 1/3; Final 2/3 • 18/19 = Proposed final dividend of 5.6p totalling 8.4p for the year +27.3% increase YoY ✓ 1/3 2/3 split ✓ 76% of adjusted earnings ✓ 1.3x cover ✓ Yield 3.9% Capital • Capital light
Slide 16: The IFA market
THE IFA MARKET • Adviser platform market currently at £500 billion* estimated £1 trillion 2023** • 1/3rd of the total in advisory model portfolios • DFM MPS on platform £41.6 billion* • MiFID II convincing IFA principals of need to outsource investment decisions • Tatton continues to be the largest
Slide 17: MiFID II – consequences and impact
MiFID II – CONSEQUENCES AND IMPACT* • Death knell of advisory model portfolios • One Portfolio 20 funds. 2 switches per quarter & a quarterly rebalance • 4 suitability reports + • 4 cost/benefit analysis + • 4 ex-ante costs & charges disclosures + • 28 key investor information documents (kiids) + •
Slide 18: UK fund distribution model portfolios on platform – July 2018
UK FUND DISTRIBUTION MODEL PORTFOLIOS ON PLATFORM – JULY 2018 Factors considered by IFAs when selecting a DFM • Fees and charges – Tatton the least expensive and best value • Investment performance – Good, consistent performance track record • Service – Consistent high quality and knowledge based se
Slide 19: Tatton universe (update)
TATTON UNIVERSE (update) Total number of IFA 13,690 Total FUM £500 billion* firms Tatton number of user 445 Tatton FUM £6.1 billion firms Each IFA firm has approximately £40m under control on platform 19 *Source Platforum –May 2019
Slide 20: TIML - asset pipeline update
TIML - ASSET PIPE LINE UPDATE Source of assets £bn £7.00bn • £500bn Assets held on platform* and growing £6.00bn • £41.6bn** Assets held in DFM and growing 256 Non- Paradigm or 58% of • Tatton £6.1bn from 445 firms total Firms, £5.00bn 25% of 176 Non-PPC or AUM • Paradigm firms = 189 or 42% firms =
Slide 21: Dedicated Tatton sales team
DEDICATED TATTON SALES TEAM Justine Randall SALES DIRECTOR Chartered financial planner with nearly 20 year’s financial services experience, Justine joined Tatton from Retirement Advantage where she spent 8 years as Head of Sales and Strategic Partnerships Ryan Seaton Simon Church Steve Martell Scott
Slide 22: Tatton Investment Management
TATTON INVESTMENT MANAGEMENT WHAT WE DO • Discretionary investment management • Segregated, fund based, non-bespoke private investor portfolios (MPS based DFM) • Bespoke investment services, as long as using scalable building blocks + platform (BPS based DFM) • Exclusively available on adviser platf
Slide 23: Distribution of AuM across proposition matrix
DISTRIBUTION OF AuM ACROSS PROPOSITION MATRIX Globally diversified multi-asset portfolio choices that satisfy multi-manager, index tracker, income drawdown and ethical investment choices across 6 standard UK risk profiles (3 to 8 out of 1-10) Defensive (3) Cautious (4) Balanced (5) Active (6) Aggres
Slide 24: What's changed? – not much
WHAT’S CHANGED? – NOT MUCH Comparison of DFM (on-platform) charges DFM Annual Fee % (inc vat) Tatton Investment Management (on 11 UK adviser-led platforms) 0.15 AJ Bell (On AJ Bell platform only) 0.18 LGT Vestra 0.30 Momentum 0.30 Seven Investment Management 0.30 FE Invest 0.33 Bordier UK 0.36 Brewi
Slide 25: Platforum's OCF analysis – welcome addition to our sales tool kit
PLATFORUM’S OCF ANALYSIS – WELCOME ADDITION TO OUR SALES TOOL KIT Table 4: DFM charges, OCF of underlying funds and total cost of models on platform – active models DFM AMC OCF of underlying funds Total DFM cost (incl. VAT) Low risk Medium risk High risk Low risk Medium risk High risk AJ Bell Invest
Slide 26: Growth in assets under management
GROWTH IN ASSETS UNDER MANAGEMENT +£1.2bn over 12 months Tatton Assets under Management in £ million Assets under management 6,200 6,000 5,800 5,600 Key AuM milestones 5,400 5,200 5,000 • By June 2014: £1 bn 4,800 4,600 4,400 • By June 2015: £2 bn 4,200 4,000 • By June 2016: £3 bn 3,800 £ Million 3,
Slide 27: Investment portfolio returns
INVESTMENT PORTFOLIO RETURNS Since launch 1/2013 1 April 2018 – to 31 March 2019 TIML* Fund Performance (per cent.) - core produce set TIML* Fund Performance (per cent.) - core produce set (1/1/2013 - 31/03/2019, (1/4/2018 - 31/03/2019, annualised, after DFM charge and fund costs) after DFM charge a
Slide 28: Investment portfolio returns - ethical
INVESTMENT PORTFOLIO RETURNS Since launch (28/01/2018 / 31/07/2017) 1 April 2018 – to 31 March 2019 TIML* Fund Performance (per cent.) - ethical produce set TIML* Fund Performance (per cent.) - ethical produce set, (1/4/2018 - 31/03/2019, annualised, after DFM charge and fund costs) after DFM charge
Slide 29: Paradigm Consulting
PARADIGM CONSULTING Income analysis £000's • New members increased 6.0% to 390 (2018: 368) £3,789K • Membership price increases implemented Q4 2018/19 Paradigm wrap income • Negotiation of revised terms for the Paradigm wrap for £3.2bn of AUI £2,013K Membership income • New marketing firm appointed
Slide 30: Paradigm Mortgage Services
PARADIGM MORTGAGE SERVICES Income Analysis £000's • Gross lending £8.4bn +23.5% £1,264k • 1,392 members +14.1% - including 331 PPC firm cross sell Mortgage procuration income • Deliver aggregation services and compliance to Directly Authorised (DA) advisers only • M&P and IFA’s firms with high volum
Slide 31: Business developments – delivering against the plan
BUSINESS DEVELOPMENTS – DELIVERING AGAINST THE PLAN • Pipeline developments • Tenet – strategic AR partner for legacy back book of assets • Appointed as MPS DFM by Frenkel Topping – first outsourced win • Other strategic partnerships in discussion • White label successes • AMFA £172m • Accord £90m •
Slide 32: Summary
Summary Growing the IFA relationships to grow AUM • Organic; signing up more new firms • Continued back book migration • More white labelling arrangements • Strategic IFA partnerships • Further broadening the asset management proposition • Disciplined M & A activity to support AUM growth 32