Tatton Asset Management PLC · LSE:TAM
Tatton Asset Management — FY2020 Earnings Presentation
36 slides from Tatton Asset Management's earnings presentation, June 2020
Slide 1: Tatton Asset Management Investor and Analyst Presentation
TATTON ASSET MANAGEMENT INVESTOR AND ANALYST PRESENTATION June 2020
Slide 2: Disclaimer
DISCLAIMER The information contained in this document (“Presentation”) has been prepared by Tatton Asset Management plc (the “Company”). The content of this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. The Slides are be
Slide 3: Agenda
AGENDA • Introduction to the team • Key highlights • Financial performance • Market overview • Investment and fund update • Summary 3
Slide 4: Introduction to the Team
INTRODUCTION TO THE TEAM O Tatton
Slide 5: Introduction to the Team
INTRODUCTION TO THE TEAM Paul Hogarth Lothar Mentel Paul Edwards CEO CIO CFO – Over 30 years’ experience at Board – Co-founder of Tatton Capital – Joined Tatton Asset Management level in the financial services sector Limited in 2012 plc as Group CFO in May 2018 – Founder of Tatton Asset – Ex CIO of
Slide 6: Divisional Structure
DIVISIONAL STRUCTURE Tatton Asset Management plc (“TAM” or “Group”) Investment Management Division IFA Support Services Division (“Tatton”) (“Paradigm”) • Tatton Investment Management offers on-platform only challenger model DFM MPS • Low charges - MiFID II alignment Paradigm Consulting Paradigm Mor
Slide 7: Key Highlights
KEY HIGHLIGHTS OY Tatton
Slide 8: Key Highlights: Financial
KEY HIGHLIGHTS FINANCIAL • Group revenue increased 22.0% to £21.369m (2019: £17.518m) • Adjusted operating profit1 up 24.2% to £9.076m (2019: £7.308m) • Adjusted operating profit1 margin 42.5% (2019: 41.7%) • Reported profit before tax increased to £10.296m (2019: £6.112m) • Adjusted fully diluted E
Slide 9: Key Highlights: Operational
KEY HIGHLIGHTS OPERATIONAL • Tatton’s assets under management (“AUM”) increased 9.6% to £6.7bn (2019: £6.1bn), current AUM recovered to £7.553bn in June 2020 • Average AUM net inflows of over £94.0m per month, current average net inflows £51.7m (Apr- May only experienced 1 negative week of flows thr
Slide 10: Financial Progress Since IPO
FINANCIAL PROGRESS SINCE IPO Adj Operating Profit1 £m Revenue £m CAGR 21.7% CAGR 26.3% £9.1m £21.4m £17.5m £7.3m £15.5m £6.2m £4.5m £11.9m Mar-17 Mar-18 Mar-19 Mar-20 Mar-17 Mar-18 Mar-19 Mar-20 Mar-18 adjusted for like for like plc costs pre-IPO Adjusted F.Dil EPS2 (p) Margin1 % +4.5% (Absolute) CA
Slide 11: Financial Performance
FINANCIAL PERFORMANCE OY Tatton
Slide 12: Profit & Loss
PROFIT & LOSS • Group revenue increased 22.0% to £21.4m • Like for like underlying revenue increased 15.3% to £20.2m • FY20 additional income and Other exceptional income relates to change in treatment of value added tax • Investment in costs in Tatton (people: Investment, Ops & Dist, Tenet Marketin
Slide 13: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS • Robust balance sheet • Debt free, net cash £12.8m • Strong financial liquidity position • In discussions to increase existing facility • Goodwill & intangible assets • £2.5m of the increase relates to the acquisition of Sinfonia including £1.2m of customer relationship int
Slide 14: Cash Flow Bridge
CASH FLOW BRIDGE • Cash generated from operations £11.2m, before exceptional • Sinfonia acquisition £2.0m cash with future items was £9.8m, 108% of adjusted operating profit contingent consideration payable in two tranches • Dividends paid include FY2019 final dividend of 5.6p plus • £1.0m purchase
Slide 15: Divisional Financial Performance
DIVISIONAL FINANCIAL PERFORMANCE Performance Commentary COVID-19 Impacts • Net inflows £1,129m - average £94m • Markets have recovered some of the lost ground per month current AUM £7.6bn • Net inflows H1 £440m (39%) v H2 • IFA Engagement impacted by lockdown £689m (61%) • Average net inflows in Apr
Slide 16: Divisional Development and Analysis
DIVISIONAL DEVELOPMENT AND ANALYSIS Revenue Split Adj Operating Profit1 Split Group Adj Op Profit1 £6.526m £7.308m £8.910m £9.076m £7.371m £6.213m £1.753m £1.818m £2.128m Mar-18 Mar-19 Mar-20 £(1.440m) £(1.881m) £(1.962m) Tatton Paradigm Central 16 1. Adjusted for exceptional items, share-based paym
Slide 17: Market Overview
MARKET OVERVIEW OY Tatton
Slide 18: IFA Activity During Lockdown
IFA ACTIVITY DURING LOCKDOWN TIML Sales Activity 1st Week Feb 20 - 1st Week 35 June 20 Areas of focus March 30 • Reassurance with firms • Market commentary and Investment team Comms 25 Areas of focus April NUMBER OF MEETINGS 20 • BDM lead generation & IFA engagement 15 • Assist IFA in writing busine
Slide 19: The IFA Market
THE IFA MARKET • Adviser platform market currently at £495.5 billion1, estimated £1 trillion 2023 Total on-platform Tatton Funds Under On-platform • Latest Forecast by Fundscape is £713.1bn DFM FUM AUM Management ("FUM") Hardman May 2020 £48.1bn1 £6.7bn £495.5bn1 • 1/3rd of the total in advisory mod
Slide 20: Tatton – Opportunity Update
TATTON – OPPORTUNITY UPDATE Total AUM £6.7bn • £495.5bn1 Assets held on platform and growing • £48.1bn1 Assets held in DFM and growing Direct AUM £2.3bn or • Tatton £6.7bn from 595 firms 35% Paradigm AUM £4.3bn • Paradigm firms = 186 or 31% firms = £4.3bn AUM or 65% or 65% • Non-Paradigm firms = 409
Slide 21: Industry Trends
INDUSTRY TRENDS Competitive challenges and trends Response / impact Tatton remains the lowest cost DFM provider, platform agnostic with a Environment becoming more strong track record of performance. Our expanding range of competitive propositions ensures we can meet the needs of IFAs and their clie
Slide 22: Paradigm: Mortgages, Compliance and Protect
PARADIGM Current • Mortgage: Up 10.9% to 1,544 (2019: 1,392) Membership Growth 2017-20 • Consulting: Increased to 394 (Mar 2019: 390, Sept 1600 800 2019: 385), 2.3% increase in 6 months 1500 • Protect: Up 23.7% to 662 (2019: 535) 700 Compliance and Protect 1400 600 Targets for FY 20/21 Mortgages 130
Slide 23: Mortgage Market: COVID-19 & Beyond
MORTGAGE MARKET: COVID-19 & BEYOND What’s happening? • Estate agents have reopened and socially-distanced viewings are now taking place • There has been a significant increase in activity on property portals such as Zoopla & Rightmove since the lockdown restrictions have been eased • Valuers are fac
Slide 24: Investment & Fund Update
INVESTMENT & FUND UPDATE OY Tatton
Slide 25: Growth in Assets Under Management
GROWTH IN ASSETS UNDER MANAGEMENT +£0.6bn over 12 months, Mar-19 to Mar-20 Tatton Assets Under Management in £ billion Assets under management 8.0 Key AUM milestones 7.0 • By June 2014: £1.0 bn 6.0 • By June 2015: £2.0 bn 5.0 • By June 2016: £3.0 bn £ billion • By May 2017: £4.0 bn 4.0 • By Sept 201
Slide 26: Tatton: What We Do
TATTON WHAT WE DO • Discretionary investment management • Segregated, fund based, non-bespoke private investor portfolios (MPS based DFM) • Bespoke investment services, as long as using scalable building blocks + platform (BPS based DFM) • Exclusively available on adviser platforms and only B2B thro
Slide 27: Tatton's COVID Client Retention Strategy
TATTON’S COVID CLIENT RETENTION STRATEGY RESPONSIVE AND RELEVANT COMMUNICATIONS • Realtime market updates • Bespoke video content for advisers • Embedding Tatton in the minds of their clients • Being visible and vocal during the period of maximum client stress • Service phone lines immediately opera
Slide 28: Post COVID-19 Related Proposition Development
TATTON POST COVID-19 RELATED PROPOSITION DEVELOPMENT Introducing global market capitalisation weighted portfolio and fund variants • Driver: Increasing interest in portfolio asset allocation regimes without UK home bias • Growing disparity of core beliefs: Western societies increasingly split whethe
Slide 29: Distribution of AUM Across Proposition Matrix
DISTRIBUTION OF AUM ACROSS PROPOSITION MATRIX Globally diversified multi-asset portfolio choices that satisfy multi-manager, index tracker, income drawdown and ethical investment choices across 6 standard UK risk profiles (3-8 out of 1-10) Defensive (3) Cautious (4) Balanced (5) Active (6) Aggressiv
Slide 30: Investment Portfolio Returns
INVESTMENT PORTFOLIO RETURNS Since launch 1 January 2013 1 April 2019 to 31 March 2020 TIML1 Portfolio Performance (per cent.) - core produce set annualised, after DFM charge and fund costs) TIML TIML TIML IA Active Tracker Hybrid Sector2 Defensive 4.3 4.6 4.4 3.5 Cautious 5.4 5.4 5.4 4.2 Balanced 6
Slide 31: Ethical Investment Portfolio Returns
ETHICAL INVESTMENT PORTFOLIO RETURNS Since launch 28 January 2018 1 April 2019 to 31 March 2020 Tatton Fund Performance (per cent.) - ethical produce set, annualised, after DFM charge and fund costs) Ethical IA Sector1 Defensive 0.2 (1.5) Cautious (0.2) (3.6) Balanced* 5.0 3.0 Active (0.9) (3.8) Agg
Slide 32: Summary
Summary Growing the IFA relationships to grow AUM • Organic: signing up more new firms • More white labelling & back book migration arrangements • Promote further strategic IFA partnerships • Continue to broaden the asset management proposition, organically and by acquisition • Disciplined M&A activ
Slide 33: Appendix
Appendix Catton
Slide 34: Platforum Report – DFM Distribution Dynamics July 2019
PLATFORUM REPORT – DFM DISTRIBUTION DYNAMICS JULY 2019 Our World • Adviser trends to outsourcing Investment strategies used by advisers • 51% of advisers outsource but only 12% of advised assets on platform • 47% run their own in-house MPS • = 32% of advised assets on platform • 21% of assets in Mul
Slide 35: Year on Year Growth of DFMs on Platform
YEAR ON YEAR GROWTH OF DFMS ON PLATFORM1 35 1. Source: UK Fund Distribution: DFM Distribution Dynamics, Platforum, July 2019 2. Range of AMC for passive to active portfolios. 3. Tatton AUM £6.7bn as at March 2020
Slide 36: Mortgage and Protection Highlights
MORTGAGE HIGHLIGHTS PROTECTION HIGHLIGHTS Growth in Lending vs Proc Fee Override • £14.7m in Annual Premiums written, 22% up £12.00bn £3.50m • Total income generated Life and General Insurance £3.00m Gross Proc Fee Override £10.00bn £658k, 11% increase £2.50m £8.00bn • Policies written increased 36%
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