Tatton Asset Management Plc · LSE:TAM
Tatton Asset Management — H1 FY2025 Earnings Presentation
47 slides from Tatton Asset Management's earnings presentation, November 2024
Slide 1: Tatton Asset Management Investor and Analyst Presentation
TATTON ASSET MANAGEMENT INVESTOR AND ANALYST PRESENTATION For the six months ended 30 September 2024 NOVEMBER 2024
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 Presentation
Slide 3: Agenda
AGENDA Our Team 04 Key Highlights 07 Financial Performance 11 Strategic Update 20 Investment Management Update 28 Summary 39
Slide 4: Introduction to the Team
INTRODUCTION TO THE TEAM
Slide 5: Introduction to the Team
INTRODUCTION TO THE TEAM Paul Hogarth Paul Edwards Lothar Mentel CEO CFO CIO Over 40 years’ experience at Joined Tatton Asset Co-founder of Tatton Capital Board level in the financial Management plc as Group Limited in 2012 services sector CFO in May 2018 Has held senior investment Founder of Tatton
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 DFM MPS, the fastest-growing segment of the wealth management market Paradigm Consulting Paradig
Slide 7: Key Highlights
KEY HIGHLIGHTS
Slide 8: Key Financial & Operational Highlights
KEY FINANCIAL & OPERATIONAL HIGHLIGHTS Financial Highlights Group Revenue Adjusted Adjusted Operating Adjusted Fully Interim Operating Profit2 Profit Margin2 Diluted EPS3 Dividend £21.7m £10.9m 50.3% 13.67p 9.5p up 23.7% up 22.8% 2023: 50.7% up 30.0% up 18.8% Operational Highlights AUM/I1 Tatton IFA
Slide 9: Strong Financial Performance Since IPO
STRONG FINANCIAL PERFORMANCE SINCE IPO Group Revenue (£m) 17% CAGR Adjusted Operating Profit (£m) 22% CAGR £42.6m £21.8m £36.8m £18.5m £32.3m £16.4m £29.4m £14.5m £23.4m £21.4m £11.4m £17.5m £15.5m £9.1m £11.9m £7.3m £6.2m £4.5m Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Consensu
Slide 10: Assets Under Management / Influence
ASSETS UNDER MANAGEMENT / INFLUENCE Tatton AUM/I1 in £ billions 20.0 Central Bank Pivot 17.5 Fight on inflation 15.0 Russia invades Ukraine 12.5 Global £ billion pandemic 10.0 Mar 2020 Market crash 7.5 5.0 2013 Tatton 2.5 Incorporated 0.0 10 1. “AUM/I” is Assets under management and influence includ
Slide 11: Financial Performance
FINANCIAL PERFORMANCE oi i i 7
Slide 12: Group Profit & Loss
GROUP PROFIT & LOSS Growth Sep-24 Sep-23 • Group revenue increased 23.7% to £21.7m % £000’s £000’s • Group adjusted operating profit1 increased 22.8% Revenue 23.7% 21,660 17,506 to £10.9m Adjusted operating profit1 22.8% 10,894 8,872 • Adjusted operating profit margin1 of 50.3%, prior year includes
Slide 13: Divisional Performance: Tatton
DIVISIONAL PERFORMANCE: TATTON AUM/I1 (£bn) Revenue (£m) Strong underlying growth in AUM/I1 to £19.9bn, underpinned by: +28.1% £18.5m +34.9% £19.9bn • Record organic net inflows in H1 of £1.832bn, an average of £305m per month – equates to annualised 22.1% of opening AUM - £16.551bn £14.8bn £14.5m A
Slide 14: Divisional Performance: Paradigm
DIVISIONAL PERFORMANCE: PARADIGM Mortgage Completions (£bn) Revenue (£m) o Paradigm Consulting increased its members to 437 (Mar 2024: 424) £6.9bn £3.1m £3.2m £6.6bn o Paradigm Mortgages increased the number of mortgage firms utilising its services to 1,930 (Mar 2024: 1,916) o Paradigm Mortgages com
Slide 15: Margin Trends & Evolution
MARGIN TRENDS & EVOLUTION Adj.OP1 Margin Trends (%) o Tatton anticipate to continue to grow strongly and deliver Tatton Revenue Yield good operational gearing 70.0% 23.3bps 22.8bps 22.5bps 22.1bps 21.9bps 21.0bps o Paradigm geared to the mortgage market, growth 60.0% anticipated to be single digit a
Slide 16: Overhead Analysis & Direction
OVERHEAD ANALYSIS & DIRECTION Investment in Sep-24 Change1 Change1 Inflationary Stepped costs One off growth (Annualised) £ % £ £ £ £ Employee costs (Incl bonuses) (£13.1m) (£1.5m) 12.7% (£0.6m) (£0.5m) (£0.4m) - Marketing & Distribution (£4.6m) (£0.6m) 15.0% - (£0.6m) - - Legal & Professional (£1.9
Slide 17: Group Financial Strength
GROUP FINANCIAL STRENGTH Sep-24 Mar-24 Sep-24 £000’s £000’s Regulatory capital requirement £4.6m Goodwill & intangible assets 18,604 18,834 Tangible fixed assets 700 816 Total Shareholder funds £47.4m Less: Foreseeable dividend (£5.7m) Trade & other receivables 6,400 5,402 Less: Unaudited profits (£
Slide 18: Group Cash Flow Bridge
GROUP CASH FLOW BRIDGE Interest received on FY25 Corporation TAM’s own cash on tax payments on the balance sheet account Capex, lease & other Cash generated sundry items from operations Dividends paid Mar relates to FY24 final Sep dividend of 8.0p Seeding of new 2024 Passive fund 2024 range Cash Cas
Slide 19: FY25 Financial Outlook
FY25 FINANCIAL OUTLOOK Net inflows have continued On track to deliver full strong momentum in H1, We will continue to invest year results in line with anticipated to return to in people to support the Board expectations normalised c.£200m per month growth in H2 (+£389m 1st six weeks H2) H2 FY25 Capi
Slide 20: Strategic Update
STRATEGIC UPDATE Sesser poe:
Slide 21: Largest Participant in the Fastest-Growing Segment of the Market
LARGEST PARTICIPANT IN THE FASTEST-GROWING Sep24 SEGMENT OF THE MARKET MARKET GROWTH Sep ON PLATFORM FUNDS UNDER MANAGEMENT 2024 £19.9bn 2024 14.3% 2023 £17.6bn 12.7% 2022 £13.9bn Tatton 2021 13.4% 2020 £11.3bn AUM/AUI 20248 £9.0bn 13.9% % of on- 2018 2019 £6.7bn 13.5% Size: platform DFM £6.1bn 2023
Slide 22: Roadmap to Growth – Year Plan
ROADMAP TO GROWTH – 5 YEAR PLAN Assets under management / influence • H1 FY25 (Sep24) - AUM/I1 £19.9bn +18.9% completion of the new £30bn target • Net inflows of £1.832bn, doubling the prior year’s H1 net inflows • Markets had a positive contribution to AUM growth of £0.534bn £20.6bn • Growth to be
Slide 23: Tatton AUM Growth by Firm Cohort
TATTON AUM GROWTH BY FIRM COHORT AUM growth, showing assets generated from each year’s new firms (‘cohorts’) 1038 £20.0bn 975 1000 Financial year £18.0bn 869 900 2025 £16.0bn 2024 746 800 2023 £14.0bn 668 700 2022 Number of Firms £12.0bn 595 600 2021 AUM (£bn) £10.0bn 2020 445 500 2019 £8.0bn 341 40
Slide 24: Broader Market – Netflow Analysis
BROADER MARKET – NETFLOW ANALYSIS • Tatton - Momentum maintained driven by high demand for MPS products and supported by good long-term and consistent investment performance, sector leading service delivered at the right price point for IFAs and their clients • Platforms continue to attract more ass
Slide 25: Tatton – Opportunity Update
TATTON – OPPORTUNITY UPDATE Continued progression Sep 2022 Sep 2023 Sep 2024 Number of firms 806 Number of firms 914 Number of firms 1,038 Direct firms Paradigm firms Direct firms Paradigm firms Direct firms Paradigm firms 638 / 79% 168 / 21% 752 / 82% 162 / 18% 889 / 86% 149 / 14% AUM £11.3bn AUM £
Slide 26: Evolved MPS Offering
EVOLVED MPS OFFERING CO-BRANDED WHITE-LABELLED APPOINTED INVESTMENT TATTON MPS TATTON MPS ADVISER (AIA) MPS 29 arrangements 12 arrangements 4 arrangements £1,523m AUM (Sep24) £1,335m AUM (Sep24) £518m AUM (Sep24) • Offering jointly branded client • Offering IFA firm branded • Offering a joint invest
Slide 27: Paradigm
PARADIGM • The current market is resilient, but this continues to be tested by Membership growth 2017 - 2024 economic factors, consumer confidence & affordability constraints 2000 Mortgage 1250 • H1-2024 delivered a marked increase in both properties for sale & Protection buyer activity leading to a
Slide 28: Investment Management Update
INVESTMENT MANAGEMENT UPDATE
Slide 29: Portfolio Returns 2024
PORTFOLIO RETURNS 2024 MARKET DYNAMICS TATTON POSITIONING • Q1 – demand resilience delays anticipated rate cuts – • Neutral on risk – remained fully invested China becomes notable outlier • Slow Q2 on renewed inflation concerns with bond sell- • Active bond (credit) allocation off and oil price rall
Slide 30: Solid Basis for Clients' Annual Reviews (Core MPS)
SOLID BASIS FOR CLIENTS’ ANNUAL REVIEWS (CORE MPS) Tatton Money Market Tatton Core Defensive Tatton Core Cautious Tatton Core Balanced Tatton Core Active Tatton Core Aggressive Tatton Core Global Equity UK CPI 12 month returns before platform and adviser charges; Money Market MPS in solid dark blue,
Slide 31: MPS Investment Portfolio Returns
MPS INVESTMENT PORTFOLIO RETURNS Media coverage of Tatton’s MPS performance 31
Slide 32: MPS Investment Portfolio Returns: 1 Year
MPS INVESTMENT PORTFOLIO RETURNS 1 year to 31st October 2024 Portfolio Performance (per cent.) - core product set Risk Return - 1 Year to 31st October 2024 annualised, after DFM charge and fund costs 30.0 ARC Active Tracker Hybrid Ethical Peers1 25.0 Annualised Return Defensive 11.2 11.9 11.6 12.8 8
Slide 33: MPS Investment Portfolio Returns: 3 Years
MPS INVESTMENT PORTFOLIO RETURNS 3 years to 31st October 2024 Portfolio Performance (per cent.) - core product set Risk Return - 3 Years to 31st October 2024 annualised, after DFM charge and fund costs 9.0 ARC Active Tracker Hybrid Ethical Peers1 7.0 Annualised Return Defensive -0.4 0.5 0.1 0.3 0.1
Slide 34: MPS Investment Portfolio Returns: 5 Years
MPS INVESTMENT PORTFOLIO RETURNS 5 years to 31st October 2024 Portfolio Performance (per cent.) - core product set Risk Return - 5 Years to 31st October 2024 annualised, after DFM charge and fund costs 12.0 ARC Active Tracker Hybrid Ethical 10.0 Peers1 Annualised Return Defensive 1.8 2.1 1.9 2.8 1.9
Slide 35: MPS Investment Portfolio Returns: 10 Years
MPS INVESTMENT PORTFOLIO RETURNS 10 years to 31st October 2024 Portfolio Performance (per cent.) - core product set annualised, after Risk Return - 10 Years to 31st October 2024 DFM charge and fund costs 12.0 ARC Active Tracker Hybrid 10.0 Peers1 Annualised Return Defensive 3.2 3.4 3.3 2.4 8.0 5.0 5
Slide 36: Ethical Investment Portfolio Returns
ETHICAL INVESTMENT PORTFOLIO RETURNS 5 years to 31st October 2024 Tatton Fund Performance (% - ethical product set, Risk Return - 5 Years to 31st October 2024 annualised, after DFM charge and fund costs 10.0 9.0 ARC 8.0 Ethical Peers1 Annualised Return 7.0 Defensive 2.8 1.9 6.0 5.0 Cautious 4.5 3.2
Slide 37: Distribution of AUM Across Proposition Matrix
DISTRIBUTION OF AUM ACROSS PROPOSITION MATRIX 45 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) and a UK home bias set as well as a global market capitalisation weighted set
Slide 38: 2024/25 Market Variables
2024/25 MARKET VARIABLES Employment driven inflation remains Risks: Wildcards: Fiscal stimulus – US Debt concern but focus AI boom/bust, Elevated yields moves to catalysts China rebound Middle East, Ukraine for growth US geopolitics Isolationism - medium term withdrawal - damages US economic leaders
Slide 39: Summary Investment Case
SUMMARY ✓ Leading market position – the market leader in the UK DFM MPS market with £19.9bn of AUM/I, operating in the fastest growing segment of the UK wealth market INVESTMENT CASE ✓ Large barriers to entry - breadth of investment and service offering with +11-year investment track record, and a w
Slide 40: Appendices
APPENDICES
Slide 41: Tatton Share Price
TATTON SHARE PRICE COMPARISON TO PEER GROUP Share price performance comparison v peer group 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% TAM PLC Peer Group Average1 FTSE AIM All Share 41 1. Selected peer group companies, including AJ Bell, Rathbones, Brooks Macdonald, Polar Capital, Jupiter Inve
Slide 42: Maximising Shareholder Value
MAXIMISING SHAREHOLDER VALUE Market Cap (£m) £115m £129m £106m £196m £265m £270m £344m £420m 700p 700p 568p 600p 20.0p 1 Adj Dil EPS (interim) 1 450p 450p 500p Adj Dil EPS 15.0p Share price 350p 400p 300p 231p 22.9p 10.0p 206p 190p 20.6p 18.6p 200p 156p 14.7p 13.7p 12.0p 100p 5.0p 10.0p 9.9p 10.5p 9
Slide 43: Impact of Consumer Duty
IMPACT OF CONSUMER DUTY Fair value of Helpful customer Product & services Consumer products & service fit for purpose understanding services Tatton MPS Market Impact • Tatton MPS aligned to principles of consumer duty • Sets higher and clearer standards of consumer protection across financial servic
Slide 44: 10-Year MPS Returns vs. Key Competitors
10-YEAR MPS RETURNS VS. KEY COMPETITORS (against peer platform portfolio services in same risk profile) 10 Year Annualised Returns - Risk Profile 5/Balanced 7.0% 6.1% 6.1% 6.1% 6.2% 6.0% 5.6% 5.3% 5.0% 5.1% 5.1% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% TAM AM Active Parmenion LGT Wealth Brewin Dolphin Average
Slide 45: Sizeable Opportunity for Further Growth with Non-Paradigm IFA Relationships
SIZEABLE OPPORTUNITY FOR FURTHER GROWTH WITH NON-PARADIGM IFA RELATIONSHIPS Non-Paradigm firms now represents 889 firms and 66% of AUM • Successfully increased penetration of non-Paradigm firms from £5.1m of average AUM per firm in Sep-18 to £14.0m in Sep-24 AUM (£bn) # of firms • Untapped opportuni
Slide 46: Perspective
PERSPECTIVE AUM/I - Perspective/Tatton Net Inflows Perspective AUA (£) Tatton AUM/I1 • Total net inflows for H1 FY25 of £1.832bn • Average per month = £305m £2.5bn £17.4bn • Perspective net inflows for H1 FY25 of £385m £5.5bn • Average per month = £64m £2.5bn • Net inflows (excl Perspective) for H1
Slide 47: Exceptional Asset Retention Provides Strong Visibility
EXCEPTIONAL ASSET RETENTION PROVIDES STRONG VISIBILITY September 2024 – 6-month period Consolidation True Potential • 19 IFAs Tatton AUM £18.917bn 1.0% Attrition1 c.£86m Retention 99.0% Avellemy • Ascot Lloyd Other Benchmark Consolidators 47 1. Annualised attrition of assets under management from co
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