Rathbones Group Plc · LSE:RAT
Rathbones — Rathbone Brothers — H1 2017 Earnings Presentation
32 slides from Rathbones's earnings presentation, Jul 25, 2017
Slide 1: Interim results
Rathbone Brothers Plc Interim results 25 July 2017
Slide 2: 2017 financial highlights
Rathbone Brothers Plc | Interim results Page 2 2017 financial highlights FUM growth continues Stable underlying operating A growing balance sheet — total funds under management margin — total assets rise by 17.7% to up 7.0% to £36.6bn — underlying PBT up 22.7% to £43.3m £2.8 billion — total net orga
Slide 3: Funds under management
Rathbone Brothers Plc | Interim results Page 3 Funds under management Investment Unit Total Total Management Trusts H1 2017 H1 2016 H1 2017 H1 2017 (£bn) (£bn) (£bn) (£bn) Investment Management Opening funds under management 30.2 4.0 34.2 29.2 — adjusting for low margin outflows Inflows 1.8 0.7 2.5
Slide 4: Improving income quality
Rathbone Brothers Plc | Interim results Page 4 Improving income quality Investment management and advisory and other income represents 80.7% of underlying operating income (H1 2016: 79.0%) H1 2017 H1 2016 % FY 2016 (£m) (£m) change (£m) H1 2017 vs. H1 2016 Investment Management basis point return on
Slide 5: Balancing expenditure
Rathbone Brothers Plc | Interim results Page 5 Balancing expenditure H1 2017 H1 2016 % FY 2016 (£m) (£m) change (£m) Fixed staff costs 44.7 40.2 11.2 79.8 Fixed staff costs — inflation rate c. 3.0% Average FTE1 employees 1,123 1,045 7.5 1,066 — FTE increases from strategic during the year growth ini
Slide 6: Profit before tax
Rathbone Brothers Plc | Interim results Page 6 Profit before tax H1 2017 H1 2016 % FY 2016 (£m) (£m) change (£m) Pension Underlying operating income 142.4 120.2 18.5 251.3 — plan amendment gain of £5.5m arising from the closure of the defined benefit Underlying operating expenses (99.1) (84.9) 16.7
Slide 7: Balance sheet management
Rathbone Brothers Plc | Interim results Page 7 Balance sheet management 30/06/17 31/12/16 Assets (£m) (£m) Total own funds1 182.4 174.2 Pillar 1 own funds requirement 72.9 71.5 Surplus before Pillar 2A 109.5 102.7 — Pillar 1 capital requirements grow in line with balance sheet and turnover — Capital
Slide 8: Progressing as planned
Rathbone Brothers Plc | Interim results Page 8 Progressing as planned Initiative Half year highlights — distribution net inflows £108m in H1 2017, up 96% from £55m H1 2016 — Defaqto 2017 report shows number of advisers using Rathbones DFM more than doubled in 12 months — Defaqto 2017 report ranks Ra
Slide 9: What to expect in the second half…
Rathbone Brothers Plc | Interim results Page 9 What to expect in the second half… “The first six months of 2017 have seen another busy period for Rathbones as we continue to deliver our strategic plans without detracting from our high standards of service to our clients. “We remain confident in the
Slide 10: Appendix
Rathbone Brothers Plc | Interim results Page 10 Appendix
Slide 11: Rathbones at a glance
Rathbone Brothers Plc | Interim results Page 11 Rathbones at a glance Rathbone Brothers Plc, through its subsidiaries, is a leading provider of high-quality, personalised investment and wealth management services for private clients, charities and trustees. Our services include discretionary investm
Slide 12: Our business model
Rathbone Brothers Plc | Interim results Page 12 Our business model What makes us different How we do it What makes us different Scale and expertise Individual relationships with clients For investors — 288 highly trained investment professionals — our service is delivered directly through investment
Slide 13: Current growth strategy
Rathbone Brothers Plc | Interim results Page 13 Current growth strategy Client referrals Intermediaries Specialist Unit Trusts Strategic Acquisitions services initiatives — new client — leveraging vision — charities — investment — Private Office — company or introductions — B2B panels - — Greenbank
Slide 14: Leading UK private client wealth managers
Rathbone Brothers Plc | Interim results Page 14 Leading UK private client wealth managers Private client AUM (£m) Private client AUM (£m) Total Disc. Adv. Total Disc. Adv. 1 St. James's Place Wealth Management 58,600 -¹ - 21 Thesis Asset Management 9,998 9,198 800 2 Coutts 49,239 47,269 1,970 22 Clo
Slide 15: Analysing the balance sheet
Rathbone Brothers Plc | Interim results Page 15 Analysing the balance sheet 30/06/17 31/12/16 30/06/16 30/06/17 31/12/16 30/06/16 Assets (£’000) (£’000) (£’000) Liabilities (£’000) (£’000) (£’000) Cash and balances with central banks 1,480,932 1,075,673 960,115 Deposits by banks 9,065 294 3,434 Sett
Slide 16: Underlying PBT (£m) / EPS (p)
Rathbone Brothers Plc | Interim results Page 16 Underlying profits before tax¹ (£m) and EPS (p) 70 60 53.2 Underlying PBT (£m) / EPS (p) 51.2 50 43.2 38.6 40 44.2 41.6 37.5 35.7 30 20 24.8 10 26.1 24.4 50.5 29.3 32.3 61.6 37.2 33.2 70.4 35.3 39.6 74.9 43.3 0.0 0 2013 2014 2015 2016 2017 1st Half UPB
Slide 17: Earnings per share
Rathbone Brothers Plc | Interim results Page 17 Earnings per share H1 2017 H1 2016 Pre tax Post tax Pre tax Post tax EPS (p)1 EPS (p)2 (£m) (£m) (£m) (£m) Underlying profit attributable to shareholders 43.3 34.5 68.4 35.3 27.0 56.5 Gain on plan amendment of defined benefit pension schemes 5.5 4.5 8.
Slide 18: Shareholders at 30 June 2017
Rathbone Brothers Plc | Interim results Page 18 Shareholders at 30 June 2017 Rathbones staff, former staff & directors Lindsell Train Investment Mgt¹ 14.3% MFS Investment Mgt² Mawer Investment Mgt 27.0% Aviva Investors Troy Asset Mgt Heronbridge Investment Mgt 13.6% Franklin Templeton Investments Bl
Slide 19: Segmental results
Rathbone Brothers Plc | Interim results Page 19 Segmental results H1 2017 Investment Management Unit Trusts Indirect expenses Total (£m) (£m) (£m) (£m) Net investment management fee income 92.5 13.0 - 105.5 Net commission income 21.9 - - 21.9 Net interest income 5.6 - - 5.6 Fees from advisory servic
Slide 20: Reconciliation of equity to total own funds
Rathbone Brothers Plc | Interim results Page 20 Reconciliation of equity to total own funds H1 2017 FY 2016 H1 2016 (£m) (£m) % change (£m) Equity Share capital and share premium 145.3 142.5 2.0 103.9 Reserves 202.5 188.5 7.4 182.4 Less: - Unverified year to date earnings1 (13.9) - 23.9 - Own shares
Slide 21: Capital expenditure
Rathbone Brothers Plc | Interim results Page 21 Capital expenditure Investment¹ Maintenance/replacement² 11% 15% 24% 31% 44% 56% 69% 76% 89% 85% 16 14 12 9.7 10 £ million 8 6 0.8 0.7 0.2 4 2.4 1.3 1.5 1.7 1.6 1.7 2 2.4 2.7 2.5 1.7 1.7 0 2013 2014 2015 2016 H1 2017 Purchased software IT & other Prope
Slide 22: Total operating expenses
Rathbone Brothers Plc | Interim results Page 22 Total operating expenses H1 2017 H1 2016 4% 2% 3% 4% 4% 4% 8% 10% 38% 41% £121.3m 11% £97.4m 21% 3% 2% 21% 24% Staff - payroll (excluding variable) Staff - variable Staff - other Property Depreciation & amortisation Professional Settlements IT
Slide 23: Other information
Rathbone Brothers Plc | Interim results Page 23 Other information H1 2017 H1 2016 % change FY 2016 Investment Management Total rate of net growth in funds under management 4.0% 4.2% 4.5% Revenue margin on FUM (excluding Charities team) (bps) 77.2 78.4 (1.5) 77.3 Revenue margin on Charities team FUM
Slide 24: Analysis of operating income
Rathbone Brothers Plc | Interim results Page 24 Analysis of operating income Basis point return from fees Basis point return from commission 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0.0 10.0 20.0 30.0 Basis point return from interest Advisory fee income (£m
Slide 25: Investment Management client base
Rathbone Brothers Plc | Interim results Page 25 Investment Management client base Analysis of funds under management¹ Service level Service level 3.1% 4.1% 9.5% Private clients Discretionary 11.5% ISAs Advisory 37.2% Charities Execution-only 12.1% Pensions Trusts 13.2% Other 92.8% 16.5% Size of clie
Slide 26: Where our clients’ assets are invested
Rathbone Brothers Plc | Interim results Page 26 Where our clients’ assets are invested¹ Direct FY 2014 14.2% 43.7% 29.8% 7.2% 5.1% holdings 52.8% H1 2015 13.5% 43.0% 29.5% 8.4% 5.6% Collectives FY 2015 13.1% 42.6% 30.3% 8.9% 5.1% 47.2% H1 2016 13.7% 39.1% 31.2% 9.4% 6.6% FY 2016 13.4% 38.8% 31.8% 10
Slide 27: Offices
Rathbone Brothers Plc | Interim results Page 27 Offices Funds under Number of investment Office location management professionals¹ (£bn at 30/06/17)² London 130 17.4 Liverpool 26 2.1 Edinburgh 26 2.5 Winchester 18 1.8 Bristol 18 0.8 Other offices³ 56 8.3 Total 274 32.9 ¹ As at 30 June 2017 excluding
Slide 28: Annual management fees
Rathbone Brothers Plc | Interim results Page 28 Annual management fees¹ 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 fee
Slide 29: Performance: retail funds
Rathbone Brothers Plc | Interim results Page 29 Performance: retail funds Performance¹ and Quartile Ranking at Size of fund YTD 2017 1 year 3 year 5 year 30 June 2017 (I-Class units) (£m)† Rathbone Global Opportunities Inst Acc in GB 11.75 1 25.66 2 66.65 1 123.34 1 1,064.9 Sector : IA Global TR in
Slide 30: Performance: outcome oriented funds
Rathbone Brothers Plc | Interim results Page 30 Performance: outcome oriented funds Discrete year performance1 at Size of fund 1 year 3 years 5 years 30 June 2017 (S-class shares) (£m)† Rathbone Multi Asset Total Return Portfolio S Inc TR in GB2 6.10 16.40 30.39 218.9 Offset Instrument : LIBOR GBP 6
Slide 31: Reference sheet
Rathbone Brothers Plc | Interim results Page 31 Reference sheet Common Equity Common Equity Tier 1 capital as a proportion of total risk Tier 1 ratio: exposure amount. Leverage ratio: Tier 1 capital resources as a percentage of total assets, excluding intangible assets and investment in associates,
Slide 32: Important information
Rathbone Brothers Plc | Interim results Page 32 Important information The value of investments and the income from them may go down as well as up and you may not get back your original investment. Past performance should not be seen as an indication of future performance. Changes in rates of exchang