Rathbones Group Plc · LSE:RAT
Rathbones — FY2023 Earnings Presentation
34 slides from Rathbones's earnings presentation, March 2024
Slide 1: 2023 Preliminary Results
RATHBONES GROUP PLC 2023 PRELIMINARY RESULTS March 2024 Rathbones Group Plc
Slide 2: Your Team Today
RATHBONES GROUP PLC | Preliminary results 2023 1 YOUR TEAM TODAY PAUL STOCKTON IAIN HOOLEY Group Chief Executive Officer Group Chief Financial Officer
Slide 3: A Transformational Year
2 A TRANSFORMATIONAL YEAR Paul Stockton Group Chief Executive RATHBONES GROUP PLC
Slide 4: A short-term challenging flows environment for the sector
RATHBONES GROUP PLC | Preliminary results 2023 3 A SHORT-TERM CHALLENGING FLOWS ENVIRONMENT FOR THE SECTOR… Backdrop Persistent inflation1 (CPI%) Rising interest rates2 Benchmark concentration3 210 Magnificent 7 73% S&P 500 (Excl. Magnificent 7) 170 S&P 500 4.47 9.1 7.4 130 24% 2.6 0.25 1.54 11% 90
Slide 5: Structural tailwinds continue to support long-term UK wealth growth
RATHBONES GROUP PLC | Preliminary results 2023 4 …BUT STRUCTURAL TAILWINDS CONTINUE TO BE SUPPORTIVE OF LONG-TERM UK WEALTH GROWTH Ageing UK population with a Total investable UK wealth Backdrop supportive need to save1 increasing2 (£bn) of growth 48% 90.3 90.5 +4.3% — Pension freedoms 47% 47% 89.8
Slide 6: Our combined service led business model is resilient
RATHBONES GROUP PLC | Preliminary results 2023 5 OUR COMBINED SERVICE LED BUSINESS MODEL IS RESILIENT Rathbones Together Client net Overall client — A broad range of promoter satisfaction propositions that offer true score score choice to clients 43% 8.5/10 (Peer mean: 34%) (Peer mean: 8.3) — Led by
Slide 7: We continue to build diverse sources of distribution
RATHBONES GROUP PLC | Preliminary results 2023 6 WE CONTINUE TO BUILD DIVERSE SOURCES OF DISTRIBUTION Gross discretionary and managed inflows1 increased 18% year on year to £5.1bn CLIENT-FACING THIRD PARTY IFAS, STRATEGIC DIRECT TEAM NETWORKS SOLICITORS, ACCOUNTANTS PARTNERSHIPS MARKETING — ‘One Rat
Slide 8: We are leveraging our brands in the market
RATHBONES GROUP PLC | Preliminary results 2023 7 WE ARE LEVERAGING OUR BRANDS IN THE MARKET Professional and Collaborative and high performing empathetic in dealing with in all our actions people We see it as our responsibility to invest for everyone’s tomorrow. That means doing the right thing for
Slide 9: Delivering the IW&I integration
RATHBONES GROUP PLC | Preliminary results 2023 8 DELIVERING THE IW&I INTEGRATION Complete Early Q4 During Q1 Executive leadership structures End 2024 2025+ 2023 2025 in place; investment manager turnover low Integration delivery team in place Phase 2: Parallel Run Phase 4: Optimise Proposition w
Slide 10: Saunderson House continues to offer upside
RATHBONES GROUP PLC | Preliminary results 2023 9 SAUNDERSON HOUSE CONTINUES TO OFFER UPSIDE Our aim at acquisition was to create a much Migration has impacted 2023 revenues, but more streamlined business future target revenue margins are circa 1% AT ACQUISITION RATHBONES MODEL 2 c.£40m In-house solu
Slide 11: A clear technology roadmap
RATHBONES GROUP PLC | Preliminary results 2023 10 A CLEAR TECHNOLOGY ROADMAP InvestCloud (Client Lifecycle) Charles River (asset — Launch date of June 2024 allows better management) alignment of applications with IW&I — Final phase completed by H1 24 £30.7m spent to — Opportunity to use Salesforce t
Slide 12: Rathbones is well positioned for growth
RATHBONES GROUP PLC | Preliminary results 2023 11 RATHBONES IS WELL POSITIONED FOR GROWTH Delivery in 2023 Enriching the client and adviser proposition and Operating more — Firmly established a scale presence through efficiently experience transformational IW&I deal — Created a unique opportunity to
Slide 13: Financial Update
12 FINANCIAL UPDATE Iain Hooley Group Chief Financial Officer RATHBONES GROUP PLC
Slide 14: Underlying profit growth enhanced by IW&I combination
RATHBONES GROUP PLC | Preliminary results 2023 13 UNDERLYING PROFIT GROWTH ENHANCED BY IW&I COMBINATION FUMA (£bn) Operating Income (£m) Underlying PBT (£m) 75% 25% 31% 105.3 571.1 127.1 87.9* 42.2* 25.4* 483.2 120.7 435.9 455.9 97.1 101.7 68.2 63.1 60.2 FY21 FY22 FY23 FY21 FY22 FY23 FY21 FY22 FY23
Slide 15: Dividend policy remains progressive despite short term investment
RATHBONES GROUP PLC | Preliminary results 2023 14 DIVIDEND POLICY REMAINS PROGRESSIVE DESPITE SHORT TERM INVESTMENT Statutory PBT (£m) Underlying Basic EPS (p) Dividends (p) (10)% 4% 4% 57.6 95.0 15.0 172.2 87.0 64.1 84.0 130.8 135.8 81.0 42.6 FY21 FY22 FY23 FY21 FY22 FY23 FY21 FY22 FY23 Rathbones I
Slide 16: IW&I combination drives FUMA increase of 75%
RATHBONES GROUP PLC | Preliminary results 2023 15 IW&I COMBINATION DRIVES FUMA INCREASE OF 75% FY23 FUMA movement 75% 105.3 — Increase in FUMA to £105.3bn driven by (0.8) 5.1 IW&I combination — On a comparable basis excluding IW&I, 105.3 FUMA 40.8 has increased by 4.7% 42.2 40.8 — Net fund inflows i
Slide 17: Discretionary and managed gross flows up 18%
RATHBONES GROUP PLC | Preliminary results 2023 16 DISCRETIONARY AND MANAGED GROSS FLOWS UP 18% 2023 FUMA (£m) Inflows Outflows Net Flows AGR Discretionary and managed gross inflows (£m) Discretionary and Managed 5,112 (4,421) 691 1.5% 18% Non-discretionary 40 (62) (22) (2.9)% 5,112 4,325 896 IW&I 79
Slide 18: IW&I outflows elevated in Q4
RATHBONES GROUP PLC | Preliminary results 2023 17 IW&I OUTFLOWS ELEVATED IN Q4 2023 FUMA (£m) Inflows Outflows Net Flows AGR Gross inflows (£m) Gross outflows (£m) 1,123 Discretionary and Managed 5,112 (4,421) 691 1.5% 796 Non-discretionary 40 (62) (22) (2.9)% 514 366 IW&I 796 (1,123) (327) (3.2)% S
Slide 19: Saunderson House - £2.4bn of FUMA migrated
RATHBONES GROUP PLC | Preliminary results 2023 18 SAUNDERSON HOUSE - £2.4BN OF FUMA MIGRATED TO RATHBONES INVESTMENT PROPOSITIONS IN 2023 2023 FUMA (£m) Inflows Outflows Net Flows AGR FY23 FUMA movement (£m) Discretionary and Managed 5,112 (4,421) 691 1.5% Non-discretionary 40 (62) (22) (2.9)% 58% I
Slide 20: Single strategy funds show resilience relative to market
RATHBONES GROUP PLC | Preliminary results 2023 19 SINGLE STRATEGY FUNDS SHOW RESILIENCE RELATIVE TO MARKET BACKDROP 2023 FUMA (£m) Inflows Outflows Net Flows AGR Gross inflows/gross outflows (£m) Discretionary and Managed 5,112 (4,421) 691 1.5% (374) INFLOWS Non-discretionary 40 (62) (22) (2.9)% (56
Slide 21: Rathbones standalone income up 6%
RATHBONES GROUP PLC | Preliminary results 2023 20 RATHBONES STANDALONE INCOME UP 6% Income (£m) 2022 2023 % — Fee and funds income reflects higher average FUMA at billing dates, benefitting from higher market indices and Rathbones IW&I* Group Rathbones migration of Saunderson House assets Fee income
Slide 22: Resilient income margins
RATHBONES GROUP PLC | Preliminary results 2023 21 RESILIENT INCOME MARGINS Investment management fee income (£m) Commission income (£m) 60bps 61bps 62bps 63bps 11.1bps 10.8bps 9.5bps 350 53.6 70 9.4 142 288 275 280 53.6 48.9 44.2 70 72 FY21 FY22 FY23 Q4 23 FY21 FY22 FY23 Rathbones IW&I Rathbones IW&
Slide 23: Underlying expenses
RATHBONES GROUP PLC | Preliminary results 2023 22 UNDERLYING EXPENSES 2022 2023 Change % Underlying expense movement (£m) Rathbones IW&I Group Rathbones 6% Fixed staff 158.5 176.7 29.4 206.1 11.5 63 Variable staff 87.1 93.2 14.3 107.5 7.0 Total staff 245.6 269.9 43.7 313.6 9.9 444 6 (5) 6 8 Other op
Slide 24: Acquisitions directly impact profits after tax and EPS
RATHBONES GROUP PLC | Preliminary results 2023 23 ACQUISITIONS DIRECTLY IMPACT PROFITS AFTER TAX AND EPS Profit after tax (£m) 2022 2023 % Underlying EPS (p) Statutory EPS (p) Underlying operating profit 97.1 127.1 31% 135.8 Amortisation (19.5) (25.2) 29% 130.8 96.8 83.6 52.6 Deal execution costs -
Slide 25: Integration costs will continue to impact results
RATHBONES GROUP PLC | Preliminary results 2023 24 INTEGRATION COSTS WILL CONTINUE TO IMPACT RESULTS Integration Costs (£m) Total Phasing of run rate synergies of at least £60m Cash costs to achieve 98.0 c90% Employee incentives 65.0 c70% Property 14.0 Total IW&I integration cost 177.0 of which will
Slide 26: Robust capital with progressive dividend policy maintained
RATHBONES GROUP PLC | Preliminary results 2023 25 ROBUST CAPITAL WITH PROGRESSIVE DIVIDEND POLICY MAINTAINED Capital surplus (£m) • Consistent common equity tier one ratio provides 134 ongoing evidence of robust and resilient capital position 110 • Increased capital surplus includes the impacts of:
Slide 27: 2024 Guidance
RATHBONES GROUP PLC | Preliminary results 2023 26 2024 GUIDANCE REVENUE Saunderson House benefits – continued synergy delivery & recovery of advice fees Market aligned salary inflation at c.4%; FSCS levy return to normal; IW&I synergy benefits; EXPENSES full year of 2023 recruitment Expect mid 20s%
Slide 28: Looking Forward
RATHBONES GROUP PLC | Preliminary results 2023 27 LOOKING FORWARD Priorities for 2024 — CLM completion and benefits — IW&I client consent and migration preparation — Combined operating models — Marketing and distribution focus — Expense management — Managing regulatory change
Slide 29: Q&A
28 Q&A RATHBONES GROUP PLC
Slide 30: Appendix
29 APPENDIX RATHBONES GROUP PLC
Slide 31: Investment management client base
RATHBONES GROUP PLC | Preliminary results 2023 30 INVESTMENT MANAGEMENT CLIENT BASE Analysis of funds under management¹ Service level by FUM Fund type by FUM 2% 10% 12% Discretionary Private clients Advisory 8% 35% ISAs Execution-only Charities 15% Pensions Trusts 88% 10% Other 20% Size of client re
Slide 32: Where our clients' assets are invested
RATHBONES GROUP PLC | Preliminary results 2023 31 WHERE OUR CLIENTS’ ASSETS ARE INVESTED¹ 6.1% 5.5% 4.4% 5.2% 3.7% 9.4% 10.5% 9.5% 8.8% 11.9% 36.3% 41.8% 44.6% 43.4% 41.5% 35.4% 30.6% 24.9% 29.4% 28.6% 18.5% 13.4% 12.7% 12.8% 11.1% FY 19 FY 20 FY 21 FY 22 FY 23 Fixed income UK equities Overseas equi
Slide 33: Analysing the balance sheet
RATHBONES GROUP PLC | Preliminary results 2023 32 ANALYSING THE BALANCE SHEET 31/12/23 31/12/22 31/12/23 31/12/22 Assets Liabilities (£m) (£m) (£m) (£m) Cash and balances with central banks 1,038.3 1,412.9 Deposits by banks 12.4 1.0 Settlement balances 165.7 65.8 Settlement balances 172.1 70.0 Loans
Slide 34: Important Information
RATHBONES GROUP PLC | Preliminary results 2023 33 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 of excha