Rathbones Group Plc · LSE:RAT
Rathbones — Rathbone Brothers — H1 2016 Earnings Presentation
36 slides from Rathbones's earnings presentation, Jul 27, 2016
Slide 1: Interim results
Rathbone Brothers Plc Interim results 27 July 2016
Slide 2: Results highlights
Rathbone Brothers Plc | Interim results July 2016 Page 2 Results highlights Funds under management Underlying earnings per share Underlying¹ profit before tax 30 June 2015 30 June 2016 FTSE100 index FTSE100 index 6521 6504 £30.6bn 62.4p £28.3bn £37.2m £35.3m 56.5p H1 2015 H1 2016 H1 2015 H1 2016 H1
Slide 3: Underlying profit before tax
Rathbone Brothers Plc | Interim results July 2016 Page 3 Underlying profit before tax H1 2016 H1 2015 FY 2015 % change (£m) (£m) (£m) Average FTSE 100 Index (on quarterly billing dates) 6298 6677 (5.7) 6415 Net investment management fee income 87.1 77.7 12.1 161.4 Net commission income 19.5 26.3 (25
Slide 4: Underlying operating expenses
Rathbone Brothers Plc | Interim results July 2016 Page 4 Underlying operating expenses H1 2016 H1 2015 % FY 2015 (£m) (£m) change (£m) Fixed staff costs 40.2 36.9 8.9 73.5 Average FTE1 employees during the period 1,045 956 9.3 981 Actual FTE1 employees at the period end 1,063 988 7.6 1,014 Variable
Slide 5: Total comprehensive income
Rathbone Brothers Plc | Interim results July 2016 Page 5 Total comprehensive income H1 2016 H1 2015 FY 2015 % change (£m) (£m) (£m) Underlying profit before tax 35.3 37.2 (5.1) 70.4 Charges in relation to client relationships and goodwill (5.8) (5.4) (11.0) Acquisition-related costs (4.4) - - Head o
Slide 6: Capital expenditure
Rathbone Brothers Plc | Interim results July 2016 Page 6 Capital expenditure 6 5 1.7 0.8 4 0.2 0.7 £ million 1.7 3 1.5 2.3 1.8 1.6 2 2.4 2.7 0.4 1 1.7 1.7 1.1 0 2012 2013 2014 2015 H1 2016 Purchased software IT & other Property¹ 41% 44% 37% 27% 24% Investment² 63% Maintenance/replacement³ 59% 56% 73
Slide 7: Summary balance sheet
Rathbone Brothers Plc | Interim results July 2016 Page 7 Summary balance sheet 30/06/16 31/12/15* 30/06/15 Assets (£m) (£m) (£m) Balances with central banks 960.1 583.2 703.3 Other cash, deposits and investments 1,014.8 887.9 897.1 Loans and advances to customers1 111.4 117.3 101.0 Prepayments, accr
Slide 8: Pension deficit
Rathbone Brothers Plc | Interim results July 2016 Page 8 Pension deficit 15.0 9.3 5.00% 5.0 1.6 4.50% Discount rate 4.00% (5.0) (2.1) (3.7) (4.5) £m (5.4) 3.50% (15.0) (10.8) (13.7) 3.00% (25.0) 2.50% (35.0) (32.0) 2.00% H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Pension
Slide 9: Understanding our capital position
Rathbone Brothers Plc | Interim results July 2016 Page 9 Understanding our capital position Total own funds – total equity less intangibles 30/06/16 31/12/15* and other capital (£m) (£m) adjustments² Assets Total own funds1 149.5 146.0 Pillar 1 own funds requirement 67.0 63.5 Pillar 1 own funds – cr
Slide 10: Funds under management
Rathbone Brothers Plc | Interim results July 2016 Page 10 Funds under management Investment Unit Trusts Total Total Management H1 2016 H1 2016 H1 2015 H1 2016 (£bn) (£bn) (£bn) (£bn) Opening funds under management 26.1 3.1 29.2 27.2 Inflows 1.3 0.6 1.9 1.8 – Organic¹ 1.1 0.6 1.7 1.5 – Purchased² 0.2
Slide 11: 2016 Management agenda
Rathbone Brothers Plc | Interim results July 2016 Page 11 2016 Management agenda Organic Strategic Investment Infrastructure/ Risk growth growth process/ Resourcing management/ Client service Regulatory –Client –Distribution (IFAs) –Analyst recruitment/ –Launch new –Senior Managers communications/ t
Slide 12: Appendix
Rathbone Brothers Plc | Interim results July 2016 Page 12 Appendix
Slide 13: Underlying profits before tax and EPS
Rathbone Brothers Plc | Interim results July 2016 Page 13 Underlying profits before tax¹ (£m) and EPS (p) 70 60 53.2 Underlying PBT (£m) / EPS (p) 51.2 50 38.6 40 44.2 35.7 34.6 37.5 30 31.9 20 24.8 10 23.1 21.7 44.8 26.1 24.4 50.5 29.3 32.3 61.6 37.2 33.2 70.4 35.3 0 2012 2013 20142 2015 2016 1st H
Slide 14: Earnings per share
Rathbone Brothers Plc | Interim results July 2016 Page 14 Earnings per share H1 2016 H1 2015 Pre tax Post tax Pre tax Post tax EPS (p)1 EPS (p)2 (£m) (£m) (£m) (£m) Underlying profit attributable to shareholders 35.3 27.0 56.5 37.2 29.7 62.4 Charges in relation to client relationships and goodwill (
Slide 15: Dividend and earnings per share
Rathbone Brothers Plc | Interim results July 2016 Page 15 Dividend and earnings per share 120 100 97.4p 80 pence 76.1p 76.0p 60 66.5p 55.0p 52.0p 47.0p 49.0p 40 35.7p 20 21.0p 0 2012 2013 2014 2015 H1 2016 Basic EPS Dividend per share
Slide 16: Revenue margin
Investment Management | Interim results July 2016 Page 16 Revenue margin Basis points (bps) H1 2016 H1 2015 % change FY 2015 Return on fees 58.0 53.4 8.6 56.0 Return on commission 14.4 20.3 (29.1) 16.8 Return on interest and other income 2.8 2.6 7.7 3.4 Total revenue margin 75.2 76.3 (1.4) 76.2 Aver
Slide 17: Analysis of operating income
Investment Management | Interim results July 2016 Page 17 Analysis of operating income Basis point return from fees Basis point return from commission 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 0 10 20 30 40 50 60 0 10 20 30 Basis point return from interest Advisory fee income (£m) 2012 2012
Slide 18: Growing quality of earnings
Investment Management | Interim results July 2016 Page 18 Growing quality of earnings H1 2016 H1 2015 6% 5% 5% 5% 18% 25% 65% 71% Net investment management fee income Net commission income Net interest income Fees from advisory services and other income
Slide 19: Annual management fees
Investment Management | Interim results July 2016 Page 19 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 mana
Slide 20: Total operating expenses
Rathbone Brothers Plc | Interim results July 2016 Page 20 Total operating expenses H1 2016 H1 2015 4% 3% 4% 4% 3%2% 9% 10% 41% 44% £97.4m 12% £85.0m 11% 2% 3% 24% 24% Staff - payroll (excluding variable) Staff - variable Staff - other Property Depreciation & amortisation Professional Settlements IT
Slide 21: Segmental results
Rathbone Brothers Plc | Interim results July 2016 Page 21 Segmental results H1 2016 Investment Management Unit Trusts Indirect expenses Total (£m) (£m) (£m) (£m) Net investment management fee income 77.3 9.8 87.1 Net commission income 19.5 - 19.5 Net interest income 5.7 - 5.7 Fees from advisory serv
Slide 22: Investment Management
Investment Management | Interim results July 2016 Page 22 Investment Management H1 2016 H1 2015 FY 2015 % change (£m) (£m) (£m) Average FTSE 100 Index1 6298 6677 (5.7) 6415 Net investment management fee income 77.3 69.1 11.9 143.8 Net commission income 19.5 26.3 (25.9) 43.1 Net interest income 5.7 5
Slide 23: Analysing the balance sheet
Rathbone Brothers Plc | Interim results July 2016 Page 23 Analysing the balance sheet 30/06/16 31/12/15* 30/06/15 30/06/16 31/12/15* 30/06/15 Assets (£’000) (£’000) (£’000) Liabilities (£’000) (£’000) (£’000) Deposits by banks 3,434 299 10,522 Cash and balances with central banks 960,115 583,156 703
Slide 24: Reconciliation of equity to total own funds
Rathbone Brothers Plc | Interim results July 2016 Page 24 Reconciliation of equity to total own funds HY 2016 FY 2015* HY 2015 (£m) (£m) % change (£m) Equity Share capital and share premium 103.9 100.1 3.8 98.6 Reserves 182.4 206.3 (11.6) 189.8 Less: – Unverified year to date earnings¹ 23.9 - (8.4)
Slide 25: Market movements and growth
Rathbone Brothers Plc | Interim results July 2016 Page 25 Market movements and growth Group funds under management 35.0 30.6 30.0 29.2 27.2 25.0 22.0 20.0 18.0 £bn 15.0 10.0 5.0 0.0 YE 2012 YE 2013 YE 2014 YE 2015 H1 2016 Funds under management FTSE 100¹ FTSE WMA Balanced¹ ¹ FTSE 100 and FTSE WMA Ba
Slide 26: Consistent growth in funds under management
Investment Management| Interim results July 2016 Page 26 Consistent growth in funds under management 4 3 2 £ billion 1 0 -1 -2 Organic growth¹ Purchased growth Outflows¹ 30 27.3 26.1 24.7 25 20.2 20 16.7 £ billion 15 10 5 0 2012 2013 2014 2015 H1 2016 ¹ Organic growth is new business from current cl
Slide 27: Investment Management client base
Investment Management | Interim results July 2016 Page 27 Investment Management client base Analysis of funds under management¹ Service level Service level 3.5% 4.2% Discretionary 9.0% Private clients Advisory ISAs 11.6% Execution-only 38.6% Trusts Charities 13.2% Pensions Other 11.8% 92.3% 15.8% Si
Slide 28: Where our clients' assets are invested
Investment Management | Interim results July 2016 Page 28 Where our clients’ assets are invested¹ H1 2014 14.8% 45.9% 27.7% 6.8% 4.8% FY 2014 14.2% 43.7% 29.8% 7.2% 5.1% Collectives Direct holdings 46.2% 53.8% H1 2015 13.5% 43.0% 29.5% 8.4% 5.6% FY 2015 13.1% 42.6% 30.3% 8.9% 5.1% H1 2016 13.7% 39.1
Slide 29: Other information
Rathbone Brothers Plc | Interim results July 2016 Page 29 Other information H1 2016 H1 2015 % change FY 2015 Investment Management Total annualised rate of net growth in funds under management 4.2% 5.1% 5.7% Revenue margin on FUM (excluding Charities team) (bps) 78.4 79.6 (1.5) 79.4 Revenue margin o
Slide 30: Shareholders at June 2016
Rathbone Brothers Plc | Interim results July 2016 Page 30 Shareholders at 30 June 2016 Rathbones staff, former staff & directors Lindsell Train Investment Mgt¹ 15.4% MFS Investment Mgt² 26.8% BlackRock Investment Mgt³ Aviva Investors Mawer Investment Mgt 13.4% Franklin Templeton Investments Aberdeen
Slide 31: Performance: Rathbone Unit Trust Management
Unit Trusts | Interim results July 2016 Page 31 Performance: Rathbone Unit Trust Management Performance¹ and Quartile Ranking at Size of fund 1 year 3 year 5 year 30 June 2016 (I-Class units and S-class shares) (£m) † FTSE 100 Index 3.8 16.85 31.73 Rathbone Income Fund 1.41 1 25.55 1 63.37 1 1,222.7
Slide 32: Performance: Rathbone Unit Trust Management
Unit Trusts | Interim results July 2016 Page 32 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 Opportunities Fu
Slide 33: Board and Executive Committee
Rathbone Brothers Plc | Interim results July 2016 Page 33 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 Dean Cha
Slide 34: Offices
Investment Management | Interim results July 2016 Page 34 Offices Office location Number of investment Funds under management professionals¹ (£bn at H1 2016)² London 125 14.9 Liverpool 26 1.8 Edinburgh 27 2.2 Winchester 18 1.5 Bristol 17 0.6 Other offices³ 54 6.9 Total 267 27.9 ¹ As at 30 June 2016
Slide 35: Reference sheet
Rathbone Brothers Plc | Interim results July 2016 Page 35 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 investment in ass
Slide 36: Important information
Rathbone Brothers Plc | Interim results July 2016 Page 36 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