Close Brothers Group Plc · LSE:CBG
Close Brothers — H1 2011 Earnings Presentation
34 slides from Close Brothers's earnings presentation, Mar 15, 2011
Slide 1: Interim Results 2011
Interim Results 2011 15 March 2011
Slide 2: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, unc
Slide 3: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business Update – Preben Prebensen, Group Chief Executive 4. Q&A Strictly private and confidential 3
Slide 4: Introduction: First half 2011 highlights
Introduction First half 2011 highlights • Good overall performance – adjusted operating profit from continuing operations up 5% to £65.4 million • Strong performance in Banking, 33% increase in adjusted operating profit • Overall good performance from Securities, particularly Winterflood – 9% reduct
Slide 5: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business Update – Preben Prebensen, Group Chief Executive 4. Q&A Strictly private and confidential 5
Slide 6: Financial Highlights
Financial Highlights Continuing operations First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Adjusted operating income 280.1 249.1 12% 505.9 Adjusted operating profit 65.4 62.0 5% 120.6 Adjusted EPS 34.1p 32.1p 6% 60.8p Dividend per share 13.5p
Slide 7: Financial Highlights: Exceptional items, tax and discontinued operations
Financial Highlights Exceptional items, tax and discontinued operations First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Adjustments to operating profit: (9.6) (0.2) (15.8) Of which: Exceptional items1 (4.5) - (15.0) Impairment losses on goodwi
Slide 8: Financial Highlights: Performance by division
Financial Highlights Performance by division Adjusted operating profit (continuing operations) • Banking had a strong performance – 33% increase in adjusted operating profit First half First half % Full year – Loan book increased 9% to £3.2 billion £ million 2011 2010 Change 2010 – Strong net intere
Slide 9: Financial Highlights: Summary Balance Sheet
Financial Highlights Summary Balance Sheet • Maintained strong balance sheet with Summary Balance Sheet1 improved efficiency 31 January 31 July – 4% growth in total assets to £6.5 £ million 2011 2010 Change billion Assets Treasury assets2 1,575.8 2,034.8 (459.0) Loans and advances to • Focus on loan
Slide 10: Capital
Capital Strong capital position maintained % • Strong capital position maintained 18 Total capital ratio 15.8% Total capital ratio – Core tier 1 ratio of 13.1% 16 14.9% – Flexibility to grow business 14 12 10 • Employing capital for growth 8 Core tier 1 Core tier 1 – 4% increase in RWAs largely refl
Slide 11: Funding
Funding Increasing diversity and enhancing maturity profile Funding position at 31 January 2011 • Strong overall funding position at 1.6x £ million loan book of £3.2 billion 6,000 5,018 5,018 • Further diversification in H1 including 5,000 £1.0 billion raised through syndicated facility, securitisat
Slide 12: Treasury assets
Treasury assets Improved efficiency and strong liquidity Loan book and treasury assets1 • Strategic focus of funding is on loan book and £ million maintaining appropriate level and mix of liquid 5,000 assets • Improved balance sheet efficiency with 23% 4,000 reduction in treasury assets to £1.6 bill
Slide 13: Banking: Key figures
Banking Key figures First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Adjusted operating income 158.7 128.3 24% 272.0 Adjusted operating expenses (72.9) (61.2) 19% (129.1) Impairment losses on loans and advances (37.2) (30.6) 22% (63.4) Adjusted
Slide 14: Banking: Income analysis
Banking Income analysis Adjusted operating income by type Key figures £ million First half First half Full year 158.7 +24% 2011 2010 % change 2010 160 Net interest and 7.3 -18% fees on loan Property 140 21.1 book (£ million) 151.4 119.4 27% 255.6 128.3 +23% Average loan 8.9 3,041 2,471 23% 2,639 120
Slide 15: Banking: Loan book analysis
Banking Loan book analysis Loan book size by business unit • 9% organic growth in loan book to £3.2 billion £ million 3,500 • Retail loan book increased 12% 3,170 +9% – Motor finance benefited from expansion of 2,913 branch network 3,000 571 +4% – Good demand in premium finance, particularly 548 in
Slide 16: Banking: Key ratios
Banking Key ratios Margin and bad debt analysis • H1 2011 bad debt ratio down at 2.4% – Modest improvements in Commercial 12.0% – Retail remains at low levels – Property impacted by legacy loan bad debt 9.9% 10.0% 10.0% 9.7% • Return on net loan book increased to 3.2% (H1 2010: 3.0%) 8.0% • Full yea
Slide 17: Securities: Key figures
Securities Key figures First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Adjusted operating income 86.7 89.6 (3)% 162.2 Adjusted operating expenses (55.6) (55.6) - (102.9) Adjusted operating profit 31.1 34.0 (9)% 59.3 Of which: Winterflood 25.0
Slide 18: Securities: Income analysis
Securities Income analysis Adjusted operating income by business Key figures First half First half Full year £ million % change 2011 2010 2010 100 Winterflood 48k 45k 7% 47k 89.6 bargains per day 90 86.7 -3% 3.4 1.2 -65% Winterflood 80 13.2 income per £11.24 £12.80 (12%) £11.18 16.4 +24% bargain 70
Slide 19: Asset Management: Key figures
Asset Management Key figures (continuing operations)1 First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Adjusted operating income 34.8 30.8 13% 71.2 Adjusted operating expenses (38.8) (28.6) 36% (68.6) Adjusted operating (loss)/profit (4.0) 2.2
Slide 20: Asset Management: Income analysis
Asset Management Income analysis (continuing operations) Adjusted operating income by type Key figures £ million 40 First half First half Full year 2011 2010 % change 2010 34.8 +13% 35 Average FuM 2.5 +19% (£ million) 7,636 6,623 15% 6,684 30.8 30 2.1 5.3 -4% Revenue margin1 71 bps 70 bps 72 bps 5.5
Slide 21: Asset Management: Asset gathering gaining momentum
Asset Management Asset gathering gaining momentum Funds under Management • 20% increase in FuM due to: Private – Positive net new funds of £127 million £ million Clients Institutional Total – Positive market movements – Chartwell acquisition (£705 million) 1 August 20101 3,397 3,557 6,954 New funds
Slide 22: Outlook: 2011 financial year
Outlook 2011 financial year • The group remains strongly capitalised and well positioned to support future growth opportunities • In Banking we expect a good performance in the second half of the year with a modest improvement in bad debts for the year as a whole • The Securities division remains we
Slide 23: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business Update – Preben Prebensen, Group Chief Executive 4. Q&A Strictly private and confidential 23
Slide 24: Business Update: Strategic priorities
Business Update Strategic priorities What we do Strategic priorities • We lend in our Banking division • Focus activities around three core businesses • We make markets in our Securities division – Capture growth in the Banking division – Maintain leadership in Securities, principally • We advise an
Slide 25: Banking: Strategic priorities and implementation
Business Update Banking Strategic priorities and implementation • Focus on growth opportunities and maintaining distinctive business model – Expand geographic footprint in the UK › Currently 12 motor finance branches, Property opened in Scotland – Investing in resources and infrastructure › Increasi
Slide 26: Securities: Strategic priorities and implementation
Business Update Securities Strategic priorities and implementation • Winterflood – Retained position as the leading market-maker for UK retail brokers – Largest player across each of the main UK indices from AIM to FTSE 100 – Good performance in first half underscores leadership – Consistent trading
Slide 27: Asset Management: Strategic priorities and implementation
Business Update Asset Management Strategic priorities and implementation • Transformation of division to achieve leadership in UK wealth and asset management • Addressing non-core activities – Disposal of Property funds business – Sale of UK offshore business • Building core proposition – Developing
Slide 28: Business Update: Conclusion
Business Update Conclusion • Banking – continue to focus on growth opportunities • Securities – maintain leadership, principally through Winterflood • Asset Management – transformation to become a leader in UK wealth and asset management Strictly private and confidential 28
Slide 29: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Financial review – Jonathan Howell, Group Finance Director 3. Business Update – Preben Prebensen, Group Chief Executive 4. Q&A Strictly private and confidential 29
Slide 30: Interim Results 2011
Interim Results 2011 15 March 2011
Slide 31: Appendix
Appendix Page 32 Loan book and lending statistics by business 33 Funding maturity profile 34 Discontinued operations Strictly private and confidential 31
Slide 32: Banking: Loan book and lending statistics by business
Banking Loan book and lending statistics by business 31 January 31 July 2011 2010 Change £ million £ million £ million % Retail 1,348.2 1,201.9 12% Premium finance 611.3 553.6 10% Motor finance 736.9 648.3 14% Commercial 1,250.4 1,162.9 8% Invoice finance 270.1 262.1 3% Asset finance 980.3 900.8 9%
Slide 33: Funding maturity profile
Funding maturity profile Enhanced funding maturity 3-12 £ million Total <3 months months 1-2 years 2-5 years >5 years Loans and overdrafts from banks1 509 - 225 - 284 - Non-recourse borrowings 350 - - 350 - - Debt securities in issue 219 - - - 21 198 Subordinated loan capital 75 - - - - 75 Loans aga
Slide 34: Discontinued operations – UK offshore
Discontinued operations – UK offshore Sale announced 10 March 2011, cash consideration £29 million1 First half 2011 First half 2010 Full year 2010 £ million to 31 January to 31 January % change to 31 July Operating income 14.1 12.7 11% 25.8 Operating expense (14.2) (12.2) 16% (25.1) Operating (loss)