Slide 1: 2021 Preliminary results
2021 Preliminary results Rathbones Group Plc 24 February 2022
Slide 2: 2021 - A year of strong results
Rathbones Group Plc | Preliminary results Page 1 2021- A year of strong results Our strategy 2021 activity 2021 results Enriching the client FUMA Growth and adviser proposition and experience Organic growth +24.7% y-o-y Supporting and Underlying PBT growth delivering growth +30.5% y-o-y Delivery on
Slide 3: Your team today
Rathbones Group Plc | Preliminary results Page 2 Your team today Paul Stockton Jennifer Mathias Andy Brodie Group Chief Group Chief Financial Chief Operating Executive Officer Officer
Slide 4: Financial Results
Financial Results Jennifer Mathias Group Finance Director
Slide 5: Strong results, strong momentum
Rathbones Group Plc | Preliminary results Page 4 Strong results, strong momentum Operating income (£m) Underlying PBT (£m) Statutory PBT (£m) 95.0 435.9 120.7 348.1 366.1 92.5 88.7 +19.1% +30.5% 39.7 43.8 +116.9% y-o-y y-o-y y-o-y 2019 2020 2021 2019 2020 2021 2019 2020 2021 Underlying basic EPS (pe
Slide 6: FUMA growth drives EPS growth
Rathbones Group Plc | Preliminary results Page 5 FUMA growth drives EPS growth FUMA growth y-o-y +24.7% £5.0bn £8.5bn £68.2bn FUMA £54.7bn 2020 Closing FUM Organic/Market growth Acquisitions 2021 Closing FUM Underlying 27.7% operating 25.3% margin 2020 2021 Financials Underlying 172.2p EPS 133.3p +2
Slide 7: Growth in net organic inflows
Rathbones Group Plc | Preliminary results Page 6 Growth in net organic inflows Net organic flows Improving organic inflows in IM £50.3bn Total FUM Investment Management (£bn) — Business demonstrating momentum £44.9bn 1.8% 0.1% Net — Focus on growth £43.0bn organic growth rate — IFA channel momentum
Slide 8: FUMA quality driving fee growth
Rathbones Group Plc | Preliminary results Page 7 FUMA quality driving fee growth 2021 2020 % High FUMA quality (£m) (£m) change — Investment Management fee increase Investment Management fee income 288.1 230.3 25.1 demonstrates growth in quality business mix Rathbone Funds income 63.1 45.4 39.0 — Fu
Slide 9: Resilient Investment Management margin and growing advisory fees
Rathbones Group Plc | Preliminary results Page 8 Resilient Investment Management margin and growing advisory fees Basis point return from discretionary fees Advisory fee income (£m) 58.4 59.9 Total SHL 57.9 56.5 6.1 56.2 52.9 19.4 17.5 17.0 16.2 13.0 11.4 2016 2017 2018 2019 2020 2021 2016 2017 2018
Slide 10: Improved operating margin - despite increased investment
Rathbones Group Plc | Preliminary results Page 9 Improved operating margin - despite increased investment 2021 2020 % Fixed staff costs (£m) (£m) change — Planned recruitment to support our strategic Fixed staff costs 129.8 117.5 10.5 change agenda and business capacity for growth Variable staff cos
Slide 11: Strategic spend supporting business growth
Rathbones Group Plc | Preliminary results Page 10 Strategic spend supporting business growth Staff costs (£m) Staff costs — Full year impact of 2020 hires (+79) and new hires 3.4 during 2021 (+202) to support business growth 12.7 (0.7) — Creation of dedicated transformation team 9.3 219.9 — Performa
Slide 12: Operating leverage and acquisition integration drive profits higher
Rathbones Group Plc | Preliminary results Page 11 Operating leverage and acquisition integration drive profits higher 2021 2020 % Underlying operating margin (£m) (£m) change — Delivered operating margin ahead of guidance Underlying profit before tax 120.7 92.5 30.5 despite significant investment to
Slide 13: Strong capital position
Rathbones Group Plc | Preliminary results Page 12 Strong capital position 31 December 2020 (£m) 31 December 2021 (£m) Surplus capital — Acquisition of Saunderson House adds 303.9 304.7 intangible assets and operational risk 10.7 requirement 38.5 293.2 Surplus: Surplus: 266.2 — Placing raised £50m of
Slide 14: Progressive dividend track record
Rathbones Group Plc | Preliminary results Page 13 Progressive dividend track record Generally progressive 70 72 81 66 dividend policy having 61 54 regard to: 45 47 42 39 — Current and forecast financial performance — Level of distributable reserves 24 25 25 27 — Prevailing market conditions 22 — Inv
Slide 15: Business update
Business update Paul Stockton Paul Stockton Chief Executive Officer Chief Executive
Slide 16: Rathbones gives exposure to secular growth
Rathbones Group Plc | Preliminary results Page 15 Rathbones gives exposure to secular growth Rathbones has structural advantages UK Wealth Management market estimates¹ (£trn) — A high quality brand — A range of propositions for clients and advisers — A robust investment capability with a history of
Slide 17: Our strategy is focused on clients, growth and profit
Rathbones Group Plc | Preliminary results Page 16 Our strategy is focused on clients, growth and profit Strategic pillars Enriching the client — Relevant solutions for clients and advisers and adviser proposition — Using technology to improve experience and experience — Leveraging ESG capability — C
Slide 18: We deliver client solutions across multiple channels…
Rathbones Group Plc | Preliminary results Page 17 Enriching the client and adviser We deliver client solutions across multiple channels… proposition and experience Rathbone investment process Our ambition Direct or Bespoke discretionary — Expand client and advisor networks B2B — Grow market share In
Slide 19: … to drive stronger organic growth
Rathbones Group Plc | Preliminary results Page 18 Supporting and delivering growth … to drive stronger organic growth Annual net growth % Discretionary and managed net inflows (£m) 4.1% 531 Future flow outlook driven by: 2.9% 242 — Investment in capacity 1.4% 1,292 — A leading approach to responsibl
Slide 20: …while also building a highly successful funds business
Rathbones Group Plc | Preliminary results Page 19 Supporting and delivering growth …while also building a highly successful funds business Rathbone funds net inflows (£m) Maintain positive momentum through: — A balanced fund portfolio 829 817 — A strong historical performance track record — New CIO
Slide 21: Building on Greenbank's 20+ year ESG expertise
Rathbones Group Plc | Preliminary results Page 20 Supporting and delivering growth Building on Greenbank’s 20+ year ESG expertise Specialist 2021 funds — Greenbank Multi-Asset Funds launch Active governance A dynamic — Investment process enhancement and Greenbank shareholder proposition — Firmwide t
Slide 22: We are also growing planning revenue
Rathbones Group Plc | Preliminary results Page 21 Supporting and delivering growth We are also growing planning revenue Advisory services revenue (£m) Saunderson House — FUMA of £4.9bn — 51 financial planners A best of — Strengthening investment propositions breed planning 25.5 business serving 17.0
Slide 23: Strong track record of acquisitions
Rathbones Group Plc | Preliminary results Page 22 Supporting and delivering growth Strong track record of acquisitions Speirs & Jeffrey (2018) EPS accretion target of at least 8% Saunderson House (2021) ROIC target of 13% — Integration well under way — Encouraging revenue and growth potential Other
Slide 24: A high quality, engaged workforce
Rathbones Group Plc | Preliminary results Page 23 A high quality, engaged workforce Inspiring our people — High engagement scores — Investing in our people — Career development — Training — Hybrid working — Diversity, equality and inclusion — Attracting new talent
Slide 25: Our platform for digital change is ready for the next phase
Rathbones Group Plc | Preliminary results Page 24 Operating more efficiently Our platform for digital change is ready for the next phase 2023 Delivery outcomes — Modern technology platform 2022 — Enhancing private client — Increased digital processes investment tools 2021 — Client prospecting, — Red
Slide 26: Simplified operating model will de-risk delivery
Rathbones Group Plc | Preliminary results Page 25 Operating more efficiently Simplified operating model will de-risk delivery — Stable technology infrastructure Prospecting — Hired an experienced team to deliver — Innovative and collaborative vendors — Reducing number of systems Client and — Client
Slide 27: Financial outlook
Rathbones Group Plc | Preliminary results Page 26 Financial outlook Mid-20s operating margin for 2022-23 includes Operating margin (%) — Investment expenditure of £40m over two years, in operating expenses 27-30% guidance Mid-20s — Capital expenditure remaining around £10m per annum guidance — Salar
Slide 28: Building a compelling model that drives positive client and investor outcomes
Rathbones Group Plc | Preliminary results Page 27 Building a compelling model that drives positive client and investor outcomes Our model Personal service that builds trust A blended human and digital with clients and advisers experience Our objectives Our stakeholders — Thinking, acting — Trust and
Slide 29: Q&A
Q&A
Slide 30: Appendix
Appendix
Slide 31: How Rathbones delivers wealth solutions
Rathbones Group Plc | Preliminary results Page 30 How Rathbones delivers wealth solutions A range of services that… Point-in-time Wealth planning Other advisory advice/planning …leverages capability across the firm Blended investment / advice solutions and Non- …provides optionality Discretionary Mu
Slide 32: Accessing the financial advice market
Rathbones Group Plc | Preliminary results Page 31 Accessing the financial advice market RFP – In-house financial Vision Independent Financial Distribution of investment planning Planning services to external IFAs — ‘Whole of market’ advice through — Independent IFA network — Combined RIM/RUTM sales
Slide 33: Movement in funds under management and administration
Rathbones Group Plc | Preliminary results Page 32 Movement in funds under management and administration Investment management business Funds business 2021 2020 2021 2020 (£bn) (£bn) (£bn) (£bn) Opening FUMA 44.9 43.0 Opening FUM 9.8 7.4 Inflows 4.5 3.9 Inflows 4.4 3.6 – organic¹ 4.4 3.3 Outflows (2.
Slide 34: Breakdown of net organic inflows by service level
Rathbones Group Plc | Preliminary results Page 33 Breakdown of net organic inflows by service level Service level 2019 FY 2020 FY 2021 FY Net flows (£m) Ann. net growth (%) Net flows (£m) Ann. net growth (%) Net flows (£m) Ann. net growth (%) Discretionary service 246 952 1,292 Bespoke portfolios 16
Slide 35: Breakdown of net organic inflows by channel
Rathbones Group Plc | Preliminary results Page 34 Breakdown of net organic inflows by channel Channel 2019 FY 2020 FY 2021 FY Net flows (£m) Ann. net growth (%) Net flows (£m) Ann. net growth (%) Net flows (£m) Ann. net growth (%) Discretionary service Bespoke portfolios (99) -0.4% 742 2.4% 518 1.6%
Slide 36: Investment Management client base
Rathbones Group Plc | Preliminary results Page 35 Investment Management client base Analysis of funds under management¹ Service level by number Fund type by value 2.0% 6.0% 11.0% Private clients 10.0% 34.0% ISAs Discretionary Charities Advisory 12.0% Pensions Execution-only 13.0% 92.0% 20.0% Trusts
Slide 37: Where our clients' assets are invested
Rathbones Group Plc | Preliminary results Page 36 Where our clients’ assets are invested¹ 6.5% 6.9% 6.1% 5.5% 4.4% 9.7% 10.0% 8.8% 9.4% 10.5% Direct holdings 34.3% 34.5% 36.3% 41.8% 44.6% 53% Collectives 36.4% 35.3% 35.4% 30.6% 29.4% 47% 13.1% 13.3% 13.4% 12.7% 11.1% FY 2017 FY 2018 FY 2019 FY 2020
Slide 38: Performance – single strategy funds
Rathbones Group Plc | Preliminary results Page 37 Performance – single strategy funds Performance¹ and quartile ranking at 31 December 2021 1 year 3 year 5 year 10 years Size of fund (£m)7 Rathbone Global Opportunities Fund I Acc4 20.15% 2 98.91% 1 137.58% 1 392.29% 1 4,333.87 Sector: IA Global 17.6
Slide 39: Performance – multi-asset funds
Rathbones Group Plc | Preliminary results Page 38 Performance – multi-asset funds Discrete year performance1 at 31 December 2021 (S-class shares) 1 year 3 years 5 years 10 years Size of fund (£m)5 Rathbone Multi-Asset Total Return Portfolio S Inc2 7.00% 22.72% 24.62% 61.59% 380.01 Bank of England Ba
Slide 40: Total capital expenditure
Rathbones Group Plc | Preliminary results Page 39 Total capital expenditure Capital expenditure (£m) Technology & other 11.7 1.0 — Proportion that can be capitalised is reducing as 0.9 8.8 we transition to modern, cloud based solutions 0.3 0.4 Property 9.8 — Expect to increase in 2022 as we develop
Slide 41: Underlying profit before tax and EPS
Rathbones Group Plc | Preliminary results Page 40 Underlying profit before tax¹ (£m) and EPS (p) 63.6 68.3 69.9 51.1 41.6 24.5 36.1 20.4 25.8 13.5 43.3 44.2 87.5 48.3 43.3 91.6 46.6 42.1 88.7 46.0 46.5 92.5 62.9 57.8 120.7 2017 2018 2019 2020 2021 1st half UPBT (£m) 2nd half UPBT (£m) Full year UPBT
Slide 42: Earnings per share
Rathbones Group Plc | Preliminary results Page 41 Earnings per share 2021 2020 Pre tax Post tax Pre tax Post tax EPS (p)1 EPS (p)2 (£m) (£m) (£m) (£m) Underlying profit attributable to shareholders 120.7 97.0 172.2 92.5 71.6 133.3 Charges in relation to client relationships and goodwill (15.6) (12.6
Slide 43: Segmental results
Rathbones Group Plc | Preliminary results Page 42 Segmental results y/e 31 December 2021 Investment Management (£m) Funds (£m) Indirect (£m) Total (£m) Net investment management fee income 288.1 61.3 - 349.4 Net commission income 53.6 - - 53.6 Net interest income 3.9 - - 3.9 Fees from advisory servi
Slide 44: Analysing the balance sheet
Rathbones Group Plc | Preliminary results Page 43 Analysing the balance sheet 31/12/21 31/12/20 31/12/21 31/12/20 Assets (£’000) (£’000) Liabilities (£’000) (£’000) Cash and balances with central banks 1,463,294 1,802,706 Deposits by banks 2,212 893 Settlement balances 69,750 90,373 Settlement balan
Slide 45: Capital ratios
Rathbones Group Plc | Preliminary results Page 44 Capital ratios 2021 (£m) 2020 (£m) Total risk exposure amount Total risk exposure amount 99.9 115.1 114.0 (risk-weighted assets) (risk-weighted assets) £1,425m 132.8 £1,248m £304.7m CET1 ratio2 £303.9m CET1 ratio2 Total own funds1,4 18.7% Total own f
Slide 46: Reconciliation of equity to total own funds
Rathbones Group Plc | Preliminary results Page 45 Reconciliation of equity to total own funds 2021 (£m) 2020 (£m) Equity – Share capital and share premium 294.1 218.0 – Reserves 365.8 342.6 Less: – Own shares (36.6) (46.7) – Intangible assets1 (344.8) (220.7) – Retirement benefit asset (12.3) - Tota
Slide 47: Other information – Investment Management
Rathbones Group Plc | Preliminary results Page 46 Other information – Investment Management 2021 2020 Change Investment Management Total rate of net growth in funds under management 2.1% 1.4% Revenue yield on FUM (excluding Charities and excluding SHL) (bps) 73.7 74.8 (1.1)bps Revenue yield on FUM (
Slide 48: Investment Management – number of investment managers and FUMA per office
Rathbones Group Plc | Preliminary results Page 47 Investment Management – number of investment managers and FUMA per office Investment management Number of funds under management investment and administration Office location managers¹ (£bn at 31/12/21) London 138 25.8 Glasgow 48 7.7 Liverpool 29 3.5
Slide 49: Our future responsible investment approach
Rathbones Group Plc | Preliminary results Page 48 Our future responsible investment approach Our ambition is to cater to the needs of all clients – whether their interest in ESG factors is driven simply by financial materiality or by specific sustainability preferences. High ESG integration Low ESG
Slide 50: Our four ESG pillars
Rathbones Group Plc | Preliminary results Page 49 Our four ESG pillars The way we implement responsible investment rests on four pillars: ESG integration 1 Voting with purpose 2 Where possible, we consider environmental, social and governance We actively vote across all votable holdings, unless thes
Slide 51: Shareholders at 31 December 2021
Rathbones Group Plc | Preliminary results Page 50 Shareholders at 31 December 2021 11% Lindsell Train Current Rathbones staff Heronbridge 9% Aviva Investors Blackrock 6% 48% Aberforth Baillie Gifford 5% Vanguard 5% Franklin Templeton 4% MFS 3% Montanaro 3% 2%2%2% Other
Slide 52: Investment Management – annual management fees for direct private clients
Rathbones Group Plc | Preliminary results Page 51 Investment Management – annual management fees for direct private clients¹ Our fee is completely transparent and we do not charge: Discretionary management fees — Fixed and minimum fees Applied across main funds and ISA (subject to VAT) funds (pa)² —
Slide 53: Important information
Rathbones Group Plc | Preliminary results Page 52 Important information Information valid at date of presentation. The value of investments and Tax regimes, bases and reliefs may change in the future. the income from them may go Rathbones Group Plc is independently owned, is the sole shareholder in