Rathbones Group PLC · LSE:RAT
Rathbones — Rathbone Brothers — H1 2004 Earnings Presentation
36 slides from Rathbones's earnings presentation, Sep 9, 2004
Slide 1: Announcement of Interim Results to 30th June 2004
Rathbone Brothers Plc Announcement of Interim Results to 30th June 2004 9th September 2004
Slide 2: Introduction
Introduction 4 Mark Powell Chairman 4 Andy Pomfret Finance Director/Chief Executive elect 4 Ian Buckley Chief Executive, Trust Division 4 Sue Desborough Finance Director elect 2
Slide 3: The Executive Team
The Executive Team Mark Powell Roy Morris Andy Pomfret Sue Desborough Ian Buckley Chairman Chief Executive Chief Executive Finance Director Chief Executive, (from 1/10/04) (from 1/10/04) Trust Division Paul Chavasse Paul Egerton-Vernon Richard Lanyon James Lifford Chief Operating Chairman, Trust Div
Slide 4: Management team changes and strategy
Management team changes and strategy 4 Executive team changes: 4 Andy Pomfret, Sue Desborough, Paul Chavasse 4 Other management changes: 4 Nigel Bentley (Jersey), Ariane Slinger (Geneva), Emily Morris (Marketing) 4 Refine focus on core activities 4 Critical importance of Liverpool 4 Acquisitions and
Slide 5: Results Highlights
Results Highlights % change from H1 2004 H1 2003 Operating Income £47.3m +18.0% Operating Profit Before Goodwill £13.2m +40.4% Operating Profit After Goodwill £10.2m +54.5% Earnings Per Share (pre-goodwill) 23.03p +26.6% (post-goodwill) 15.83p +40.0% Dividend 10.5p +5.0% Funds Under Management £7.0
Slide 6: Operating Income & Costs
Operating Income & Costs % Change H1 2004 from H1 2003 Fees £29.3m +17.2% Commissions £13.0m +30.0% Interest £5.0m -2.0% Operating Income £47.3m +18.0% Costs Excluding Goodwill £34.1m +11.1% Goodwill £3.0m - Operating Costs £37.1m +11.1% 6
Slide 7: Other Issues
Other Issues 4 Updates on: 4 Pension fund deficit 4 Stock Exchange shares 4 Basel II/RBCD 4 IAS 7
Slide 8: Investment Management
Investment Management RATHBONES ished 1742
Slide 9: Rathbones and the market
Rathbones and the market 4 UK HNWI population 383,000 in 2003, up 8% on 2002 4 Projected to grow at 7% p.a. globally over next 5 years 4 HNWIs revise asset allocations, 2002-2003 (average %) 2002 2003 Alternative investments 10% 13% Real estate 25% 30% Equities 15% 17% Cash/deposits Fixed income 10%
Slide 10: Rathbones and the market
Rathbones and the market Fiduciary Accounting Services Cash-Flow & Reporting Management Tax Investment Wealth Manager Planning Planning as Chief Financial Officer Trust & Legal Estate Advice Planning Client HNWIs Seek More CFO-Like Services from their Financial Advisers Source: Capgemini/Merrill Lyn
Slide 11: Market Positioning
Market Positioning 4 High net worth individuals and trusts £100,000 - £10 million+ 4 Discretionary portfolios (including ISAs/PEPs and SIPPS) 4 Charities £500,000 - £50 million 4 Unit Trusts 4 Retail and bespoke 4 Specialist range of funds 11
Slide 12: Market Positioning
Market Positioning 4 Competitors/Peer Groups Discretionary portfolios Charity portfolios Unit trusts GAM Carr Sheppards Artemis Cazenove Cazenove Liontrust Kleinwort Benson NCL Smith & Williamson Jupiter NM Rothschild Schroders Sarasin Chiswell HSBC Newton UBS/Laing & Cruickshank 12
Slide 13: Growth in Funds Under Management
Growth in Funds Under Management 4 Organic growth continues in 2004 against flat markets 4 Rathbone Unit Trust Management’s success continues - now £683m FUM 4 Charities funds now >£500m 4 Increasing success with panels, eg Skandia, GE SIPP 4 Increased focus on marketing 13
Slide 14: Investment Process
Investment Process 4 Combination of asset allocation and stock selection 4 Teams research collectives, hedge funds and structured products 4 Six awards to date in 2004 (see appendix A-8) 4 Where our clients’ money is invested: 15% 17% Fixed interest & cash 3% FTSE 100 equities 3% Other UK equities O
Slide 15: Unit Trusts
Unit Trusts 4 35% increase in FUM over the period 4 65% of funds held externally 4 45% of sales from fund supermarkets 4 1,500 IFA relationships 4 Staffing 4 10 fund management 4 15 sales and marketing 15
Slide 16: Summary
Summary 4 Respected name with strong client retention record 4 Rathbones as a consolidator - management team with track record of integration; but not at any price 4 Greater focus on organic growth 4 Robust systems infrastructure, allowing for growth and cost management 4 Changing pensions legislati
Slide 17: Trust Division
Trust Division RATHBONES ished 1742
Slide 18: Progress
Progress 4 Improved half year figures over 2003 4 Profits (before tax and goodwill amortisation) in the Trust Division were £1.7m 4 On budget 4 New management team 4 Jersey performing well 4 Turnaround in International continues - but residual issues in Geneva 4 UK potential for improvement 18
Slide 19: Results
Results 4 Pre-goodwill profit before tax Total H1 Total H1 2002 2003 2003 2004 £m £m £m £m Jersey 3.2 1.5 2.9 1.8 International (including Geneva and BVI) (0.2) (0.7) (1.1) (0.3) UK 0.6 0.4 0.4 0.2 Total 3.6 1.2 2.2 1.7 19
Slide 20: Strategy
Strategy 4 Trust services and asset management work together but stand alone for business management, ethical and regulatory reasons 4 No more than 20% of the business 4 Income based mainly on chargeable time not asset values 4 Total chargeable time depends on underlying level of economic activity 4
Slide 21: The Business
The Business 4 Universally private client driven and predominantly UK-linked 4 UK tax compliance, tax planning, trust planning and administration, and company administration in London and Liverpool 4 Offshore trust administration and corporate services in Jersey, Geneva and the BVI 4 Family Office -
Slide 22: Summary
Summary 4 UK tax advisory services: growth opportunities 4 Jersey: 4 >2/3 of the division’s activity 4 Emphasis on succession planning and cradle to grave services for high net worth individuals and families 4 New head office building planned for 2006 4 BVI: VISTA trusts opportunity 4 Geneva: access
Slide 23: Conclusion & Current Trading
Conclusion & Current Trading 23
Slide 24: Conclusion and Current Trading
Conclusion and Current Trading 4 Growth opportunities 4 Market level 4 Investor confidence 4 Recruitment & acquisitions 24
Slide 25: Appendices
Appendices RATHBONES ished 1742
Slide 26: Analysis of Operating Income
Analysis of Operating Income for the 6 months to 30th June 2004 8% 23% Investment management Trust 69% Unit trusts A-1 26
Slide 27: Analysis of Investment Management Operating Income
Analysis of Investment Management Operating Income for the 6 months to 30th June 2004 15% Fees 45% Commission Net interest 40% A-2 27
Slide 28: Analysis of Expenditure (excluding Goodwill)
Analysis of Expenditure (excluding Goodwill) for the 6 months to 30th June 2004 6% 4% Staff - payroll (excl. profit related) 4% Staff - profit related 4% Staff Other 4% Premises 7% 52% Depreciation Professional 4% Settlements 15% IT Other A-3 28
Slide 29: Pre-Tax, Pre-Goodwill Profit (£m)
Pre-Tax, Pre-Goodwill Profit (£m) 1999 - H1 2004 30 26.5 25 23.2 20.6 19.7 20 18.4 14.2 15 12.3 13 .2 11.6 11.6 11.2 11.4 10.4 9.4 9.4 10 7.0 5 0 1999 2000 2001 2002 2003 H1 2004 1st Half 2nd Half Full Year A-4 29
Slide 30: Market Movements & Funds Under Management
Market Movements & Funds Under Management 6 months 1 Year 5 years FTSE 100 Index -0.3% +10.7% -29.4% APCIMS Balanced Index +0.5% +8.3% -17.9% Funds Under Management +2.9% +18.6% +55.6% A-5 30
Slide 31: Market Movements/Funds Under Management
Market Movements/Funds Under Management 1999 - H1 2004 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1999 2000 2001 2002 2003 H1 2004 Funds under management FTSE-100 APCIMS Balanced A-6 31
Slide 32: Growth in Funds Under Management
Growth in Funds Under Management Year to Six months 31/12/03 to 30/6/04 £bn £bn Opening FUM 5.3 6.8 Market Movement (FTSE 100) 0.7 - Inflow of New Money - Acquired 0.3 - Inflow of New Money - Organic 0.6 0.4 Outflow of Money (0.2) (0.2) Effect of Performance Relative to Market 0.1 - Closing FUM 6.8
Slide 33: Awards
Awards 2004 - Winner of:- 4 ‘Winner: UK Income’ awarded to the Rathbone Income Fund by Investment Week Fund Manager of the Year Awards 2004 Ì 4 ‘Small Fund Manager of the Year 2004’ awarded to Rathbone Unit Trust Management Ltd in the Financial Adviser Investment Awards 2004 Ì 4 ‘Gold Rating - Fund
Slide 34: Unit Trust Performance
Unit Trust Performance Rathbone Unit Trust Management Ltd S&P Fund 6m 1 yr 3 yrs 5 yrs Quartile Performance Stars Rathbone Capital Growth Fund 3 1 2 1 ** Rathbone Ethical Bond Fund 4 4 N/A N/A (launched May 2002) Rathbone Global Companies Fund 2 1 2 N/A (launched April 2001) Rathbone Income Fund 2 2
Slide 35: Unit Trust Sales
Unit Trust Sales Net of Discounts and Redemptions (£m) 160 145.5 152.1 140 120 100 80 60 45.7 36.2 40 23.7 28.4 16.2 11.9 12.1 20 0 2002 2003 H1 2004 Internal Bespoke External A-10 35
Slide 36: Consolidated Balance Sheet as at 30th June 2004
Consolidated Balance Sheet as at 30th June 2004 30 June 2004 31 Dec 2003 30 June 2004 31 Dec 2003 Assets £'000 £'000 Liabilities £'000 £'000 Cash and balances at central banks 302 3,205 Deposits by banks 4,695 5,335 Settlement balances 36,473 13,523 Settlement balances 42,528 11,376 Loans and advanc