Tatton Asset Management PLC · LSE:TAM
Tatton Asset Management — FY2018 Earnings Presentation
30 slides from Tatton Asset Management's earnings presentation, June 2018
Slide 1: Tatton Asset Management Preliminary Results
TATTON ASSET MANAGEMENT Preliminary Results for the twelve months ended 31 March 2018 INVESTOR AND ANALYST PRESENTATION June 2018
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 • Divisional analysis • Strategy for growth • 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 Capital Limited Paradigm Partners Paradigm Mortgage Services (“Tatton” or “TCL”) (“Paradigm” or “PPL”) (“PMS”) Challenger model DFM IFA support services Adviser support services • On-platform only • Compliance services • Mortgage
Slide 7: Key Highlights
KEY HIGHLIGHTS 7
Slide 8: Key Highlights
KEY HIGHLIGHTS EXCELLENT DEBUT • Revenue and profit growth in all three divisions • Tatton Capital’s discretionary assets under management (“AUM”) increased 25.6% to £4.9bn (2017: £3.9bn) • Average AUM inflows of over £80m per month maintained • Group Revenue increased 30.7% to £15.5m (2017: £11.9m)
Slide 9: Key Highlights (Continued)
KEY HIGHLIGHTS (CONTINUED) • Successful IPO on AIM completed on 6 July 2017 raising £51.6m • TCL, the Group’s investment management business, has continued to expand, delivering strong organic growth in AUM and has introduced three new blended funds • TCL increased its member firms to 341 (2017: 237
Slide 10: Financial Performance
FINANCIAL PERFORMANCE & 10
Slide 11: Profit & Loss
PROFIT & LOSS Year ended 31 March 2018 2018 2017 Currency: £'000 Revenue 15,507 11,864 Revenue increased 30.7% Admin expenses (8,981) (7,354) Investment in cost base of 22.1% Adjusted Operating profit* 6,526 4,510 Operating profit increased 44.7% Margin %* 42.1% 38.0% Margin increased 410 bps Share
Slide 12: Revenue
REVENUE CHANGING SHAPE OF GROWTH 15.26% 40.79% MAR ‘18 MAR ‘17 MAR ‘18 43.72% +£0.6m £15.5m ◼ TIML TCL ◼ PPL PPL ◼ PMS PMS +31.9% +£1.0m +17.9% +£2.0m 15.1% +46.5% £11.9m 36.4% MAR ‘17 48.5% TAM TCL PPL PMS TAM ◼TIML TCL ◼ PPL PPL ◼ PMS 12
Slide 13: Operating Profit
OPERATING PROFIT* GROWTH / LEVERAGE 20.99% 46.32% MAR ‘18 MAR ‘17 MAR ‘18 +£0.5m +65.5% 54.75% (£1.0m) £6.5m +£0.7m +23.9% ◼TIML PPL ◼ PMS TCL ◼ PPL PMS +£1.8m +147.4% 18.4% 27.1% £4.5m MAR ‘17 63.9% TAM TCL PPL PMS CENTRAL TAM ◼TIML PPL ◼ PMS TCL ◼ PPL PMS 13 * Adjusted for exceptional items and sh
Slide 14: Divisional Analysis
DIVISIONAL ANALYSIS £000’s TCL PPL PMS Revenue 6,325 6,780 2,366 Growth 46.5% Growth 17.9% Growth 31.9% EBIT* 3,023 3,573 1,370 Margin % 47.8% 52.7% 57.9% £4.9bn AUM - £6.8bn gross lending +25.6% +41.7% KPI’s 341 Firms & 48,800 368 Members 1,220 Members & Clients +4.5% +14.1% Attributes Recurring =
Slide 15: Cash Flow
CASH FLOW £m 11.0 £10.0m £10.6m 10.0 9.0 8.0 • Highly cash generative 7.0 £6.6m £2.0m Group 6.0 • Delivered dividend commitment 5.0 £1.4m • £10.6m of cash for future 4.0 investment £1.7m 3.0 • New facilities to be put in place this year 2.0 £0.9m 1.0 (£10k) Net Overdraft EBITDA IPO Costs Tax Dividen
Slide 16: Our Market
OUR MARKET • TAM plc champions of the IFA sector • Consumer demand and ineffective competition means IFA sector in rude health - TAM plc helps meet this demand • Adviser platform market continues strong growth with asset growth of 22.4% to £520 billion* • DFM MPS on platform £25 billion • Increased
Slide 17: Tatton Universe
TATTON UNIVERSE Total number of IFA 13,250 Total FUM £520 billion firms Tatton number of user 341 Tatton FUM £5 billion firms Each IFA firm has an average £40m under control on platform 17
Slide 18: Dedicated Tatton Sales Team
DEDICATED TATTON SALES TEAM Justine Randall SALES DIRECTOR Chartered financial planner with nearly 20 years 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 Jack B
Slide 19: What's Changed
WHAT’S CHANGED Comparison of DFM (on-platform) charges DFM Annual Fee % (inc VAT) Tatton IM 0.15 Seven Investment Management 0.30 Vestra 0.30 Brewin Dolphin MPS 0.36 Tilney Investment Management 0.36 Quilter Cheviot MPS 0.36 Charles Stanley 0.36 Brooks Macdonald MPS 0.36 19
Slide 20: Tatton Investment Management
TATTON INVESTMENT MANAGEMENT WHAT WE DO • Discretionary investment management ▪ Segregated, fund based, non-bespoke private investor portfolios (MPS based DFM) • Exclusively available on adviser platforms and only B2B through directly FCA authorised advisers • Platform agnostic, now available on 11
Slide 21: Growth in Assets Under Management
GROWTH IN ASSETS UNDER MANAGEMENT +£1bn Tatton Assets under Management in £ million Assets under management 5,200 5,000 4,800 4,600 Key AuM milestones 4,400 4,200 • By June 2014: £1 bn 4,000 3,800 • By June 2015: £2 bn 3,600 3,400 • By June 2016: £3 bn 3,200 £ Million 3,000 2,800 • By May 2017: £4 b
Slide 22: Investment Portfolio Returns
INVESTMENT PORTFOLIO RETURNS Ytd 2018 – to 31 May Since launch 1/2013 TCL* Fund performance (per cent.) – core produce set TCL* Fund performance (per cent.) – core produce set (1/1/2013 – 31/05/2018, (1/1/2013 – 31/05/2018, after DFM charge and fund costs) annualised after DFM charge and fund costs)
Slide 23: Business Developments
BUSINESS DEVELOPMENTS • Extension of ESG/Ethical portfolio range across all risk profiles • Launch of Tatton Blended MM fund range, replicating Hybrid portfolios for legacy platforms that cannot accommodate MPS DFM services; • Low AMC of 0.3%, leading to one of the lowest OCF levels for MM funds in
Slide 24: Paradigm Partners
PARADIGM PARTNERS • Paradigm Partners the DNA of TAM Plc • Re-brand to Paradigm Consulting • Member growth grew by 4.5% • Recent regulatory changes, MiFID 2, GDPR • Increased levels of consulting with Paradigm firms • Organic growth pipeline • IFA member firms performing strongly • IFA academy requi
Slide 25: Paradigm Mortgage Services
PARADIGM MORTGAGE SERVICES • 31.9% increase in revenue to £2.4m • £6.8bn lending, up 43.0% from 16/17 • 264% increase in Product Transfers, now earning commission • £7.4bn applications, up 21.9% from 16/17 • Average £720m apps in last two months of year • Apps/comps ratio of 71.5% (PT’s excluded) •
Slide 26: Strategy for Growth
STRATEGY FOR GROWTH & 26
Slide 27: The Opportunity
THE OPPORTUNITY • Growing strength of the IFA sector • IFA profitability up by 23%* • Growing adviser wrap platform market up by 22%** • Growing understanding of need to outsource cost effective solution for mass affluent 27 * Source FCA Data Bulletin Issue 13 ** Source Platforum
Slide 28: Strategy for Growth
STRATEGY FOR GROWTH Growing the IFA relationships to grow AUM • Organic – Signing up more new firms • Continued back book migration • White labelling • Strategic Partnerships • Explore other territories • M & A activity under consideration 28
Slide 29: Summary
SUMMARY & 29
Slide 30: Summary
SUMMARY • Transformational year for the Group following the IPO in July 2017 • Strong financial performance for the full year to March 2018 • Continued growth delivered in AUM, revenues and profitability • Balance sheet strong and ready to seize opportunities for acquisitive growth • Firm path to gr
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