Rathbones Group Plc · LSE:RAT
Rathbones — Rathbone Brothers — FY2015 Earnings Presentation
43 slides from Rathbones's earnings presentation, Feb 24, 2016
Slide 1: Preliminary results
Rathbone Brothers Plc Preliminary results 24 February 2016
Slide 2: Agenda
Rathbone Brothers Plc | Preliminary results February 2016 Page 2 Agenda Mark Nicholls Philip Howell Paul Stockton Mike Webb Chairman Chief Executive Finance Director CEO of RUTM
Slide 3: 2015 in context
Rathbone Brothers Plc | Preliminary results February 2016 Page 3 2015 in context Focus for 2015 Achievements in 2015 — organic growth — Investment management net organic growth of 3.0% — distribution strategy launched — strategic growth initiatives — Vision — Glasgow — Private office — resource mana
Slide 4: Results highlights
Rathbone Brothers Plc | Preliminary results February 2016 Page 4 Results highlights Funds under management Rate of total net growth in funds under Underlying¹ profit before tax management2 + 14.3% + 7.4% FTSE100 FTSE100 6566 6242 £61.6m £70.4m £29.2bn 19.6% £27.2bn 5.7% 2014 2015 2014 2015 2014* 201
Slide 5: Underlying profit before tax
Rathbone Brothers Plc | Preliminary results February 2016 Page 5 Underlying profit before tax FY 2015 FY 2014* % change (£m) (£m) Average FTSE 100 Index (on quarterly billing dates) 6415 6657 (3.6) Net investment management fee income 161.4 133.8 20.6 Net commission income 43.1 43.7 (1.4) Net intere
Slide 6: Total comprehensive income
Rathbone Brothers Plc | Preliminary results February 2016 Page 6 Total comprehensive income FY 2015 FY 2014* % change (£m) (£m) Underlying profit before tax 70.4 61.6 14.3 Charges in relation to client relationships and goodwill (11.0) (8.3) Contribution to legal settlement - (15.0) Other items¹ (0.
Slide 7: Underlying operating expenses
Rathbone Brothers Plc | Preliminary results February 2016 Page 7 Underlying operating expenses FY 2015 FY 2014* % (£m) (£m) change Fixed staff costs 73.5 61.9 18.7 Average FTE1 employees during the year 981 880 11.5 Actual FTE1 employees at the year end 1,014 929 9.1 Variable staff costs 39.7 35.2 1
Slide 8: Capital expenditure
Rathbone Brothers Plc | Preliminary results February 2016 Page 8 Capital expenditure 17% 24% 44% 31% 24% Investment¹ 76% Maintenance/replacement² 83% 76% 56% 69% 10 9 8 7 6 5.2 £ million 0.8 5 1.7 4 0.2 0.7 1.7 3 1.5 2.3 1.7 1.6 2 2.4 2.7 1 1.7 1.7 1.7 0 2011 2012 2013 2014 2015 Purchased software I
Slide 9: Summary balance sheet
Rathbone Brothers Plc | Preliminary results February 2016 Page 9 Summary balance sheet 31/12/15 31/12/14* Assets (£m) (£m) Balances with central banks 583.2 727.2 Other cash, deposits and investments 887.9 605.8 Loans and advances to customers1 117.3 101.6 Prepayments, accrued income and other asset
Slide 10: Understanding our capital position
Rathbone Brothers Plc | Preliminary results February 2016 Page 10 Understanding our capital position Total own funds – total equity less intangibles 31/12/15 31/12/14* and other capital Assets (£m) (£m) adjustments² Total own funds1 146.1 111.8 Pillar 1 own funds requirement 63.5 50.6 – credit risk
Slide 11: Investment Management in 2015
Investment Management | Preliminary results February 2016 Page 11 Investment Management in 2015 — net organic growth of 3.0% Investment Investment Management Management — Charity funds under management FY 2015 FY 2014 (£bn) (£bn) continued to grow Opening funds under management 24.7 20.2 — average i
Slide 12: Investment Management - future developments
Investment Management | Preliminary results February 2016 Page 12 Investment Management- future developments Organic Strategic Resource Investment Regulatory growth growth management process initiatives — team — recruitment — training and — research and — MiFID II composition management central proc
Slide 13: Unit Trusts in 2015
Unit Trusts | Preliminary results February 2016 Page 13 Unit Trusts in 2015 — funds under management increased Unit Unit Trusts Trusts — strong gross sales FY 2015 FY 2014 (£bn) (£bn) — good net sales Opening funds under management 2.5 1.8 — revamp of multi-asset funds and launch of Inflows - Organi
Slide 14: Unit Trusts - building on strong performance
Unit Trusts | Preliminary results February 2016 Page 14 Unit Trusts - building on strong performance — maintain strong investment performance against very volatile markets — increase penetration, awareness and usage across the range — increasing the distribution resource by a further two individuals
Slide 15: Unit Trusts - future developments
Unit Trusts | Preliminary results February 2016 Page 15 Unit Trusts - future developments Launch of Luxembourg Other key Investment initiatives feeder funds process — key pillar for European — further development of a more distribution integrated research approach — addresses demand from Global — as
Slide 16: Plans for 2016
Rathbone Brothers Plc | Preliminary results February 2016 Page 16 Plans for 2016 Growth Client Rathbone Inorganic Property services Private Office — distribution — financial — proposition — uncertainty in — reflection of planning investment growth — Vision — 3rd party markets aspirations in — client
Slide 17: Progressing our strategy
Rathbone Brothers Plc | Preliminary results February 2016 Page 17 Progressing our strategy Additional Non-underlying Non-underlying underlying operating operating operating expenses in 2016 expenses post expenses in 2016 2016 -Vision London property London property Strategic -Private office £9.5m c.
Slide 18: Appendix
Rathbone Brothers Plc | Preliminary results February 2016 Page 18 Appendix
Slide 19: Funds under management
Rathbone Brothers Plc | Preliminary results February 2016 Page 19 Funds under management Investment Unit Trusts Total Total Management FY 2015 FY 2015 FY 2014 FY 2015 (£bn) (£bn) (£bn) (£bn) Opening funds under management 24.7 2.5 27.2 22.0 Inflows 3.0 0.9 3.9 6.5 - Organic¹ 2.3 0.9 3.2 3.3 - Purcha
Slide 20: Market movements and growth
Rathbone Brothers Plc | Preliminary results February 2016 Page 20 Market movements and growth Group funds under management 35 30 29.2 27.2 25 22.0 20 18.0 £bn 15.8 15 10 5 0 YE 2011 YE 2012 YE 2013 YE 2014 YE 2015 Funds under management FTSE 100¹ FTSE WMA Balanced¹ ¹ FTSE 100 and FTSE WMA Balanced l
Slide 21: Analysing the balance sheet
Rathbone Brothers Plc | Preliminary results February 2016 Page 21 Analysing the balance sheet 31/12/15 31/12/14* 31/12/15 31/12/14* Assets (£’000) (£’000) Liabilities (£’000) (£’000) Deposits by banks 299 - Cash and balances with central banks 583,156 727,178 Settlement balances 21,481 22,584 Settle
Slide 22: Dividend and earnings per share
Rathbone Brothers Plc | Preliminary results February 2016 Page 22 Dividend and earnings per share 120 100 97.4p 80 pence 76.1p 76.0p 60 66.7p 66.5p 52.0p 55.0p 40 46.0p 47.0p 49.0p 20 0 2011 2012 2013 2014* 2015 Basic EPS Dividend per share Dividend cover 1.5x 1.4x 1.6x 1.5x 1.8x Dividend payout rat
Slide 23: Underlying PBT (£m) / EPS (p)
Rathbone Brothers Plc | Preliminary results February 2016 Page 23 Underlying profits before tax¹ (£m) and EPS (p) 70 60 Underlying PBT (£m) / EPS (p) 51.2 53.2 50 44.2 38.6 40 34.6 34.3 37.5 30 32.4 31.9 20 24.8 10 24.2 22.0 46.2 23.1 21.7 44.8 26.1 24.4 50.5 29.3 32.3 61.6 37.2 33.2 70.4 0 2011 201
Slide 24: Earnings per share
Rathbone Brothers Plc | Preliminary results February 2016 Page 24 Earnings per share FY 2015 FY 2014* Pre tax Post tax Pre tax Post tax EPS (p)1 EPS (p)2 (£m) (£m) (£m) (£m) Underlying profit attributable to shareholders 70.4 55.7 117.0 61.6 48.1 102.4 Gain on remeasurement of non-controlling intere
Slide 25: Shareholders at December 2015
Rathbone Brothers Plc | Preliminary results February 2016 Page 25 Shareholders at 31 December 2015 Rathbones staff, former staff and directors Lindsell Train¹ 15.4% BlackRock Investment Management² 28.9% MFS Investment Management³ Aberdeen Asset Management Mawer Investment Management 13.4% Franklin
Slide 26: Board and Executive Committee
Rathbone Brothers Plc | Preliminary results February 2016 Page 26 Board and Executive Committee Rathbone Brothers Plc - Board Executive directors: Philip Howell Paul Stockton Paul Chavasse Chief Executive Finance Director Head of Investment Non-executive directors: Mark Nicholls David Harrel¹ James
Slide 27: Segmental results
Rathbone Brothers Plc | Preliminary results February 2016 Page 27 Segmental results y/e 31 December 2015 Investment Management Unit Trusts Indirect expenses Total (£m) (£m) (£m) (£m) Net investment management fee income 143.8 17.6 - 161.4 Net commission income 43.1 - - 43.1 Net interest income 10.8
Slide 28: Reconciliation of equity to total own funds
Rathbone Brothers Plc | Preliminary results February 2016 Page 28 Reconciliation of equity to total own funds FY 2015 FY 2014* (£m) (£m) % change Equity Share capital and share premium 100.1 95.4 4.9 Reserves 206.3 181.4 13.7 Less: - Own shares (6.2) (5.5) - Intangible assets1 (170.4) (159.5) Total
Slide 29: Total operating expenses
Rathbone Brothers Plc | Preliminary results February 2016 Page 29 Total operating expenses 31 December 2015 31 December 2014* 4% 4% 2% 2% 4% 9% 13% 39% 43% 8% 12% £171.4m £163.6m 3% 10% 2% 23% 22% Staff - payroll (excluding variable) Staff - variable Staff - other Property Depreciation & amortisatio
Slide 30: Consistent growth in funds under management
Investment Management | Preliminary results February 2016 Page 30 Consistent growth in funds under management 4 3 2 £ billion 1 0 -1 -2 Organic growth¹ Purchased growth Outflows¹ 30 26.1 24.7 25 20.2 20 16.7 £ billion 14.8 15 10 5 0 2011 2012 2013 2014 2015 ¹ Organic growth is new business from curr
Slide 31: Other information
Rathbone Brothers Plc | Preliminary results February 2016 Page 31 Other information FY 2015 FY 2014* % change Investment Management Total rate of net growth in funds under management 5.7% 19.6% Revenue margin on FUM (excluding Charities team) (bps) 79.4 80.9 (1.9) Revenue margin on Charities team FU
Slide 32: Investment Management
Investment Management | Preliminary results February 2016 Page 32 Investment Management FY 2015 FY 2014* % change (£m) (£m) Average FTSE 100 Index1 6415 6657 (3.6) Net investment management fee income 143.8 120.5 19.3 Net commission income 43.1 43.7 (1.4) Net interest income 10.8 9.2 17.4 Fees from
Slide 33: Underlying operating income
Investment Management | Preliminary results February 2016 Page 33 Underlying operating income¹ 5% 5% 21% 69% Investment Commission² Interest³ Management Fees Rathbones 100p 100p 100p Net investment management fee income Cost to client 120p 100p (or 72p) 55p Net commission income Net interest income
Slide 34: Analysis of operating income
Investment Management | Preliminary results February 2016 Page 34 Analysis of operating income Basis point return from fees Basis point return from commission 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 0 10 20 30 40 50 60 0 10 20 30 Basis point return from interest Advisory fee income (£m) 20
Slide 35: Revenue margin
Investment Management | Preliminary results February 2016 Page 35 Revenue margin Basis points (bps) FY 2015 FY 2014 Return on fees 56.0 54.2 Return on commission 16.8 19.7 Return on interest and other income 3.4 3.3 Total revenue margin 76.2 77.2 Average funds under management (£bn)¹ 25.7 22.2 Portf
Slide 36: Investment Management client base
Investment Management | Preliminary results February 2016 Page 36 Investment Management client base Analysis of funds under management¹ Service level Service level 3.9% 4.2% Discretionary 8.6% Private clients Advisory 11.5% ISAs Execution-only Trusts 39.4% Charities 13.2% Pensions Other 12.0% 91.9%
Slide 37: Where our clients' assets are invested
Investment Management | Preliminary results February 2016 Page 37 Where our clients’ assets are invested¹ H1 2013 15.8% 45.6% 27.4% 6.5% 4.7% FY 2013 14.6% 47.4% 27.3% 6.5% 4.2% Collectives Direct holdings H1 2014 14.8% 45.9% 27.7% 6.8% 4.8% 47.1% 52.9% FY 2014 14.2% 43.7% 29.8% 7.2% 5.1% H1 2015 13
Slide 38: Offices
Investment Management | Preliminary results February 2016 Page 38 Offices Office location Number of investment Funds under management professionals¹ (£bn at 31/12/15)² London 123 16.98 Liverpool 26 1.79 Edinburgh 27 2.05 Winchester 15 1.45 Bristol 16 1.37 Other offices³ 53 3.11 Total 260 26.75 ¹ As
Slide 39: Annual management fees
Investment Management | Preliminary results February 2016 Page 39 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
Slide 40: Performance: Rathbone Unit Trust Management
Unit Trusts | Preliminary results February 2016 Page 40 Performance: Rathbone Unit Trust Management Performance¹ and Quartile Ranking at Size of fund 1 year 3 year 5 year 31 December 2015 (I-Class units and S-class shares) (£m) † FTSE 100 Index -1.32 - 17.96 - 26.89 - Rathbone Income Fund 9.36 1 46.
Slide 41: Performance: Rathbone Unit Trust Management
Unit Trusts | Preliminary results February 2016 Page 41 Performance: Rathbone Unit Trust Management Discrete year performance at Size of fund 2011 2012 2013 2014 2015 31 December (I-Class units and S-class shares) (£m) Rathbone Income Fund 0.60 15.84 24.88 6.95 9.36 1,188.12 Rathbone Global Opportun
Slide 42: Reference sheet
Rathbone Brothers Plc | Preliminary results February 2016 Page 42 Reference sheet 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 and investmen
Slide 43: Important information
Rathbone Brothers Plc | Preliminary results February 2016 Page 43 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 i