Rathbones Group Plc · LSE:RAT
Rathbones — Rathbone Brothers — H1 2012 Earnings Presentation
38 slides from Rathbones's earnings presentation, Jul 26, 2012
Slide 1: Interim Results to 30 June 2012
RATHBONE BROTHERS PLC fon INTERIM RESULTS TO 30 JUNE 2012 ~*~ 26 JULY 2012 RATHBONES Established 1742
Slide 2: The Presentation Team
THE PRESENTATION TEAM ee 4 MARK NICHOLLS PAUL STOCKTON PAUL CHAVASSE ANDY POMFRET CHAIRMAN FINANCE HEAD OF CHIEF DIRECTOR INVESTMENT EXECUTIVE MANAGEMENT
Slide 3: H1 2012 Highlights
H1 2012 £23.2m H1 2012 6.7% H1 2011 £24.2m H1 2011 8.4% H1 2012 40.6p H1 2012 £16.6bn H1 2011 40.6p FY 2011 £15.9bn H1 2011 £16.4bn H1 2012 34.8p H1 2012 17p H1 2011 34.3p H1 2011 17p ¹ Total annualised net organic and purchased growth in funds under management managed by Rathbone Investment Managem
Slide 4: Income Statement H1 2012
H1 2012 H1 2011 FY 2011 % change (£m) (£m) (£m) Average FTSE 100 Index 5647 5976 (5.5) 5663 Net fee income 47.6 43.6 9.2 87.6 Net commission income 19.8 20.0 (1.0) 36.2 Net interest income 5.1 5.2 (1.9) 10.0 Fees from advisory services and other income 5.2 4.7 10.6 9.5 Underlying operating income 77
Slide 5: Operating Expenses and Staff Costs
H1 2012 H1 2011 FY 2011 % change (£m) (£m) (£m) Staff costs - Fixed 25.9 22.9 13.1 45.2 - Variable 11.0 10.8 1.9 19.3 Total staff costs 36.9 33.7 9.5 64.5 Other operating expenses 17.6 15.6 12.8 32.6 Total underlying operating expenses 54.5 49.3 10.5 97.1 Total operating expenses 57.8 52.9 9.3 105.2
Slide 6: Employee Numbers Growth, Investment, Support
Growth Investment Support 790 780 9 785 8 776 770 3 4 760 17 750 740 744 730 720 H1 2011 Client facing Marketing & Projects Administration Ongoing Walkden H1 2012 (30 June) business & other (30 June) (30 June) development ¹ Number of full time equivalent employees 6
Slide 7: Summary Balance Sheet
30/06/12 30/06/11 (£’000) (£’000) Assets Cash, deposits and investments (including loans to clients) 1,064,097 930,740 Prepayments, accrued income and other assets 42,000 38,105 Property, plant and equipment 12,741 5,806 Intangible assets 95,312 91,743 Total assets 1,214,150 1,066,394 Liabilities De
Slide 8: Funds Under Management Movement
H1 2012 H1 2011 FY 2011 (£bn) (£bn) (£bn) Opening funds under management 14.8 14.6 14.6 Inflows 1.1 1.1 2.0 - organic 0.9 1.0 1.7 - purchased 0.2 0.1 0.3 Outflow of money (0.6) (0.5) (0.9) Market effect 0.2 0.1 (0.9) Closing funds under management 15.5 15.3 14.8 Net organic inflows 0.3 0.5 0.8 Under
Slide 9: Sources of Potential Growth and Brand Development
• Diverse sources of potential growth Private clients Professional intermediaries Charity trustees Targeted advertising Focussed IFA Group Trustee training Sponsorship & events CPD training Charity Symposium Financial awareness training E-news letter Charity Review • Brand development • Promoting ou
Slide 10: Investment in People, Process and Systems
• People - Recruitment of 11 investment managers in last 12 months • Investment process - Resource to support investment managers on a wider range of assets • Systems - Portfolio management tools - Client meeting packs and improved online client reporting 10
Slide 11: Unit Trusts Update
• Funds under management increased 5.5% to £1.15bn (31 December 2011: £1.09bn) • Net inflows in the last seven quarters • Broader product range appropriate for the post-RDR world • Launch of „i-class‟ (institutional) units across fund range • Three year anniversary of primary Multi Asset Funds and R
Slide 12: Key Issues and Risks
• Economic backdrop and markets • Credit risk • Cavanagh Asset Management • Legal proceedings • RDR • Regulation – “twin peaks” now effectively operating • Bank ring fencing • Continued investment 12
Slide 13: Capital Expenditure
10 9 8 7 6 5.2 £’m 5 1.4 4 0.9 3 1.8 2.4 1.9 1.7 2 0.4 0.7 1.6 1 1.7 1.3 1.2 1.4 0.7 0 2008 2009 2010 2011 H1 2012 Property IT & other Purchased software 13
Slide 14: Conclusion and Current Trading
CONCLUSION AND CURRENT TRADING “IN SPITE OF CHALLENGING INVESTMENT CONDITIONS, OUR FIRST HALF PERFORMANCE HAS BEEN RESILIENT, AND WE ARE CONTINUING TO INVEST IN PEOPLE AND SYSTEMS. WHILST INVESTMENT MARKETS ARE EXPECTED TO REMAIN UNCERTAIN, RATHBONES IS AS WELL PLACED AS EVER TO DEVELOP FUTURE GROWT
Slide 15: Appendices
APPENDICES 15
Slide 16: Rathbone Brothers Plc Strategy
RATHBONE BROTHERS PLC STRATEGY TO BE A LEADING PROVIDER OF HIGH-QUALITY, PERSONALISED INVESTMENT MANAGEMENT, TRUST, TAX AND PENSION ADVISORY SERVICES TO PRIVATE CLIENTS, CHARITIES AND TRUSTEES - PRIMARY FOCUS WILL REMAIN ON PRIVATE CLIENTS - ENCOURAGE AND REWARD ORGANIC GROWTH - CONTINUING DEVELOPME
Slide 17: Detailed Balance Sheet
30/06/12 30/06/11 30/06/12 30/06/11 Assets Liabilities (£’000) (£’000) (£’000) (£’000) Cash 5 3 Deposits by banks - 4,068 Settlement balances 41,857 30,376 Settlement balances 30,754 53,598 Loans and advances to banks 126,864 69,590 Due to customers 930,246 772,109 Loans and advances to customers 55
Slide 18: Dividends per Share
50 46 45 44 42 42 40 35 30 pence 25 20 17 15 10 5 0 2008 2009 2010 2011 2012 Interim Final/2nd interim Full year 18
Slide 19: Underlying PBT and EPS
50.0 45.0 40.74 40.0 Underlying PBT (£m) / EPS (p) 34.28 34.83 35.0 30.0 25.48 32.44 26.83 23.92 25.0 22.95 24.28 20.0 15.0 10.0 5.0 24.4 20.6 45.0 15.5 17.0 32.5 18.1 20.4 38.5 24.2 22.0 46.2 23.2 0.0 2008 2009 2010 2011 H1 2012 1st Half PBT (£m) 2nd Half PBT (£m) Full Year PBT (£m) 1st Half EPS (p
Slide 20: Underlying to Reported Earnings Reconciliation
H1 2012 H1 2011 Post tax Post tax EPS (p)¹ EPS (p)² (£m) (£m) Underlying profit attributable to shareholders 17.5 40.6 17.5 40.6 Amortisation of client relationships (2.3) (5.3) (1.9) (4.3) Head office relocation costs (0.2) (0.5) (0.9) (2.0) Profit attributable to shareholders 15.0 34.8 14.7 34.3 ¹
Slide 21: Shareholder Analysis
Rathbone staff, former staff and directors BlackRock Investment Management 17.8% Lindsell Train MFS Investment Management 39.6% Aviva Investors 12.5% Legal & General Investment Management Kames Capital 9.2% Heronbridge Investment Management Franklin Templeton Investment Management 2.6% 5.6% 2.8% 3.6
Slide 22: Board and Executive Committee
* Member of the Executive Committee ¹ Took over the role of Head of Investment Management on 1 March 2012 and was replaced as Chief Operating Officer by Andrew Butcher* on 13 March 2012 ² Senior Independent Director 22
Slide 23: Business Units Overview
Investment Management Trust, Tax and Pensions Unit Trusts Discretionary investment Tax and trust services, including the Funds: management: formation and administration of Income Investment portfolios trusts, family office services and Ethical Bond ISA portfolios estate planning. Global Opportunitie
Slide 24: Segmental Results
Investment (£ million) Unit Trusts Unallocated Total Management At 30 June 2012 Net fee income 43.6 4.0 47.6 Net commission income 19.8 - 19.8 Net interest income 5.1 - 5.1 Fees from advisory services and other income 4.8 0.4 5.2 Operating income 73.3 4.4 77.7 Staff costs and direct expenses (37.2)
Slide 25: Operating Expense Breakdown
30 June 2012 30 June 2011 2%4% 3% 4% 4% Staff - payroll (excluding variable) 4% 9% Staff - variable 8% Staff - other 45% 43% Property 14% 15% Depreciation & amortisation Professional 3% 2% Settlements 19% IT 21% £57.8m £52.9m 25
Slide 26: Funds Under Management vs FTSE Indices
18.0 15.85 16.65 15.63 16.0 14.0 13.10 12.0 10.46 10.0 £ bn 8.0 6.0 4.0 2.0 0.0 2008 2009 2010 2011 H1 2012 Funds under mangement FTSE 100* FTSE APCIMS Balanced* * FTSE 100 and FTSE APCIMS lines show how funds under management would have changed between 2008 and H1 2012 if they had tracked each inde
Slide 27: Income Sources and Cost to Client
7% 7% Investment Management Commission² Interest³ Fees 27% Rathbones 100p 100p 100p 59% Cost to client 120p 100p 50p (or 72p) Net fee income Net commission income Fees from advisory services Net interest and other income ¹ 6 months to 30 June 2012 ² Allowable cost for CGT ³ Assumes 50% marginal tax
Slide 28: Basis Point Returns by Income Type
Basis point return from fees¹ Basis point return from commission 2008 2008 2009 2009 2010 2010 2011 2011 H1 2012 H1 2012 0 10 20 30 40 50 60 0 10 20 30 40 Basis point return from interest Advisory fee income (£m) 2008 2008 2009 2009 2010 2010 2011 2011 H1 H1 2012 2012 H2 0 5 10 15 20 25 30 0 2 4 6 8
Slide 29: Investment Management Results
H1 2012 H1 2011 % FY 2011 (£m) (£m) change (£m) Average FTSE 100 Index¹ 5647 5976 (5.5) 5663 Net investment management fee income 43.6 39.8 9.5 80.1 Net commission income 19.8 20.0 (1.0) 36.2 Net interest income 5.1 5.2 (1.9) 10.0 Fees from advisory services and other income 4.8 4.4 9.1 8.8 Underlyi
Slide 30: Funds Under Management by Client Type
3.5% 6.4% 11.5% 11.5% 45.1% 14.2% 93.6% 14.2% Private client Discretionary Trust and settlements Advisory ISAs Charities • 28.8% invested in collectives Pensions (including SIPPs) • 2.04% invested in in-house funds Others 30
Slide 31: Client Portfolios by Size
0.6% 2.4% 11.0% 15.7% 53.1% < £50,000 17.2% £50,000 - £99,999 £100,000 - £249,999 £250,000 - £499,999 £500,000 - £1m > £1m 31
Slide 32: Asset Allocation of Client Portfolios
31/12/09 18.2% 47.4% 20.2% 7.9% 6.3% 30/06/10 18.6% 44.9% 20.8% 8.4% 7.3% 31/12/10 16.7% 46.7% 23.6% 8.1% 4.9% 30/06/11 16.7% 46.9% 23.9% 7.7% 4.8% Fixed income UK equities 31/12/11 18.2% 45.4% 22.7% 7.9% 5.8% Overseas equities Alternatives² 30/06/12 18.2% 44.8% 23.7% 7.6% 5.7% Cash ¹ Total Investme
Slide 33: Investment Professionals and Funds by Office
Number of investment Funds under management Office location professionals¹ (£bn at 30/06/12)² London 84 9.36 Edinburgh 22 1.72 Liverpool 21 1.68 Bristol 18 0.92 Winchester 15 0.91 Other offices³ 29 1.28 Total 189 15.87 ¹ As at 30 June 2012 excluding RUTM fund managers. ² Figures include circa £324m
Slide 34: Investment Management Fee Schedule
(subject to VAT) Main funds (pa) ISA funds (pa) Fixed charge (not applicable for funds valued below £15,000) £100 £100 First £100,000 0.70% 1.00% Next £150,000 0.70% 0.70% Next £250,000 0.30% 0.30% Balance over £500,000 0.25% 0.25% UK equities & Fixed interest & Overseas equities & collective funds*
Slide 35: Unit Trust Performance and Quartile Ranking
Performance¹ and Quartile Ranking at Size of fund 30 June 2012 (R-Class Units) 1 year 3 year 5 year (£m) FTSE 100 Index -2.66% N/A 45.69% N/A 1.86% N/A N/A Rathbone Income Fund 2.71% 1 49.95% 1 -6.78% 3 488.21 Rathbone Global Opportunities Fund -4.41% 1 49.49% 1 6.37% 2 165.59 Rathbone Ethical Bond
Slide 36: Unit Trust Calendar Year Performance
Calendar year performance at Size of fund 2008 2009 2010 2011 2012 30 June 2012 (R-Class Units) (£m) Rathbone Income Fund -20.54% -21.76% 19.97% 21.69% 2.71% 488.21 Rathbone Global Opportunities Fund -3.35% 26.38% 22.67% 27.49% -4.41% 165.59 Rathbone Ethical Bond Fund -4.64% -8.58% 23.20% 11.04% -0.
Slide 37: Rathbone Brothers Plc Contact Details
Rathbone Brothers Plc 1 Curzon Street London W1J 5FB Telephone +44 (0)20 7399 0000 Facsimile +44 (0)20 7399 0011 www.rathbones.com Issued by Rathbone Brothers Plc for use by professional investors only. Registered office: 1 Curzon Street, London, W1J 5FB. Registered in England No. 01000403 No part o
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