Slide 1: 2022 Preliminary Results
RATHBONES GROUP PLC 2022 PRELIMINARY RESULTS 1 MARCH 2023 RATHBONES GROUP PLC RATHBONES GROUP PLC
Slide 2: Your Team Today
Preliminary Results 1 LONDON YOUR TEAM TODAY Paul Stockton Jennifer Mathias Tony Overy Group Chief Executive Group Chief Financial Officer Chief Executive Officer Saunderson House RATHBONES GROUP PLC
Slide 3: Business Update
Preliminary results 2 BUSINESS UPDATE Paul Stockton Group Chief Executive RATHBONES GROUP PLC
Slide 4: We Are Positioned for Long Term Structural Growth
Preliminary Results 3 WE ARE POSITIONED FOR LONG TERM STRUCTURAL GROWTH UK wealth management market size by liquid assets 1 (£bn) − Growing demand for financial planning, ESG 5,000 0-50K 50K-1M 1M-10M+ and digital propositions 4,000 − Ageing demographics 3,000 2,000 − Growing personal wealth 1,000 −
Slide 5: Responding to a Challenging Year
Preliminary Results 4 RESPONDING TO A CHALLENGING YEAR Ranked 8 th The UK market saw net outflows in retail sales 2022 Sustained net inflows (£m) in the 2022 Pridham Net retail UK fund sales (£m)¹ report for total net 531 14,000 sales in the UK 12,500 399 10,000 6,400 1,292 917 2021 2022 -3,500 -4,8
Slide 6: Building on a Strong Foundation
Preliminary Results 5 BUILDING ON A STRONG FOUNDATION A strong model − Balanced business model, which delivers resilient growth − Robust IM revenue margin of 72.4bps Supports critical investment MyRathbones − Spend of £16.3m, demonstrating good progress on our digital programme − Positive outcomes f
Slide 7: Our Model Is Well Placed
Preliminary Results 6 OUR MODEL IS WELL PLACED Choice and service to clients Growing distribution C.1,200 c.555 Absolute growth in client Number of investment and numbers in 2022 adviser professionals Bespoke Choice, reliability and (including Vision) discretionary flexibility − A proposition menu t
Slide 8: Financial Results
Preliminary Results 7 FINANCIAL RESULTS Jennifer Mathias Group Chief Financial Officer RATHBONES GROUP PLC
Slide 9: Resilient Performance in Changing Economic Conditions
Preliminary Results 8 RESILIENT PERFORMANCE IN CHANGING ECONOMIC CONDITIONS FUMA (£bn) Operating income (£m) Underlying PBT (£m) Digital programme 455.9 120.7 spend 68.2 435.9 16.3 60.2 366.1 92.5 97.1 54.7 (11.7%) +4.6% (19.6%) y-o-y y-o-y y-o-y 2020 2021 2022 2020 2021 2022 2020 2021 2022 Statutor
Slide 10: Continued Growth with Sustained Positive Net Inflows
Preliminary Results OUR PERFORMANCE CONTINUED GROWTH WITH SUSTAINED POSITIVE NET INFLOWS Discretionary and managed net inflows (£m) Single strategy net inflows/outflows (£m) 2.9% 4.1% 2.6% 20.4% 18.9% -4.5% Growth rate 1,823 531 1,316 1,194 242 398 1,200 1,292 957 952 918 2020 2021 2022 -374 Discret
Slide 11: Diversified Income Streams
Preliminary Results 10 DIVERSIFIED INCOME STREAMS Sustained quality of income 2022 2021 % − Investment Management and Funds income reflects (£m) (£m) change reduced FUMA Investment Management fee income 274.9 288.1 (5) Rathbone Funds income 63.0 63.1 (-) − Return of interest income, normalised commi
Slide 12: Investment Management Robust Margin, Growing Advisory Fees and Interest Income
Preliminary Results 11 INVESTMENT MANAGEMENT ROBUST MARGIN, GROWING ADVISORY FEES AND RETURN OF INTEREST INCOME Basis point return from discretionary fees¹ Advisory fee income (£m) 59.9 61.1 29.5 56.5 56.2 Saunderson House 52.9 6.1 17.5 19.4 19.7 16.2 17.0 2018 2019 2020 2021 2022 2018 2019 2020 202
Slide 13: Disciplined Expense Growth Supports Strategy
Preliminary Results 12 COSTS DISCIPLINED EXPENSE GROWTH SUPPORTS STRATEGY Strategic costs +£38.5m 2022 2021 Run costs % change +£5.3m (£m) (£m) 16.3 Fixed staff costs 158.5 129.8 22 Variable staff costs¹ 87.1 90.1 (3) 22.2 (6.9) (1.3) 358.8 Other operating expenses 113.2 95.3 19 13.5 Total underlyin
Slide 14: Resilient Underlying Profit Before Tax
Preliminary Results 13 RESILIENT UNDERLYING PROFIT BEFORE TAX 2022 2021 % Underlying PBT supports digital investment (£m) (£m) change − Digital transformation spend: year one of £40m target Underlying profit before tax 97.1 120.7 (20) − Underlying operating margin excluding digital spend was Charges
Slide 15: Strong Capital Position, Supports Dividend Increase
Preliminary Results 14 STRONG CAPITAL POSITION, SUPPORTS DIVIDEND INCREASE 31 December 2022 (£m) Capital position − Highly cash-generative business Total: £338.8m Surplus: − CET1 ratio of 17.9% 40.0 298.8 £110.3m Tier 2 228.5 − Inorganic opportunities Tier 1 Capital requirement Own funds Requirement
Slide 16: Financial Outlook and Guidance
Preliminary Results 15 FINANCIAL OUTLOOK AND GUIDANCE 2023 2024 and beyond Revenues Increased revenues driven by: − Higher interest rate environment − Realisation of Saunderson house synergies − FY23 net interest income of at least £35m − Continued return of net interest income − Organic growth: IM
Slide 17: Looking Forward
Preliminary results 16 LOOKING FORWARD Paul Stockton Group Chief Executive RATHBONES GROUP PLC
Slide 18: Growing and Enabling Client Facing Teams
Preliminary Results 17 GROWING AND ENABLING CLIENT FACING TEAMS Proposition Investment Marketing Distribution Technology development process Proposition Marketing Enhancing Building Investing in development investment distribution technology Brand refresh capability Key affinity groups, Business MyR
Slide 19: Integrating Technology and Personal Service
Preliminary Results 18 INTEGRATING TECHNOLOGY AND PERSONAL SERVICE Clients value Rathbones as a trusted voice with a human touch and believe that human specialists, not digital, make the best investment decisions. At the same time, being able to engage digitally is increasingly critical Reasons for
Slide 20: Digital: Operating More Efficiently
Preliminary Results 19 DIGITAL: OPERATING MORE EFFICIENTLY BEYOND Delivery outcomes: 2022 2023 2023 − Increasing technology stability − Improving data quality InvestCloud client − Investcloud Onboarding and − Enhancing private client prospecting launched Servicing investment tools − Increasing digit
Slide 21: Leveraging Financial Planning Across the Business
Preliminary Results 20 LEVERAGING FINANCIAL PLANNING ACROSS THE BUSINESS Rathbones Rathbones and Saunderson House combined Financial Planning Rathbones Combined approach Supported by Financial Planning investment solutions − Initial advice − Initial advice − Bespoke discretionary − One off, point in
Slide 22: Financial Planning: How We Will Grow
Preliminary Results 21 FINANCIAL PLANNING: HOW WE WILL GROW MIGRATION BENEFITS TO EXISTING CLIENTS ATTRACTING NEW CLIENTS SUPPORTING OUR PEOPLE − Complete transition to new − Deliver financial planning to − Broader proposition − Use our funds products and proposition existing Rathbones digital solut
Slide 23: Maintaining Momentum for Growth
Preliminary Results 22 MAINTAINING MOMENTUM FOR GROWTH Enriching the client and adviser Inspiring our people proposition and experience − Wellbeing initiatives Enriching the − Brand refresh − Attracting new and diverse talent Operating more client and adviser − Website and digital marketing efficien
Slide 24: Q&A
Preliminary results 23 Q&A RATHBONES GROUP PLC
Slide 25: Appendix
Preliminary results 24 APPENDIX RATHBONES GROUP PLC
Slide 26: Strong Track Record of Acquisitions
Preliminary Results 25 SUPPORTING AND DELIVERING GROWTH STRONG TRACK RECORD OF ACQUISITIONS Other historical transactions Saunderson House (2021) Year Target FUMA (£bn) • Integration progressing well Vision Independent Financial 19.9% holding and option • Encouraging revenue and growth potential 201
Slide 27: Accessing the Financial Advice Market
Preliminary Results 26 ACCESSING THE FINANCIAL ADVICE MARKET RFP In-house financial planning Vision Independent Financial Planning Distribution of investment services to − ‘Whole of market’ advice through in- − Independent IFA network committed external IFAs house financial planners for clients with
Slide 28: We Deliver Client Solutions Across Multiple Channels
Preliminary Results 27 WE DELIVER CLIENT SOLUTIONS ACROSS MULTIPLE CHANNELS Channels Rathbones investment process Our ambition WEALTH Direct or B2B Bespoke discretionary − Expand client and advisor networks MANAGEMENT Investment − Grow market share Management Managed fund solutions − Build specialis
Slide 29: Movement in Funds Under Management and Administration
Preliminary Results 28 MOVEMENT IN FUNDS UNDER MANAGEMENT AND ADMINISTRATION Investment management business Funds business 2022 2021 2022 2021 (£bn) (£bn) (£bn) (£bn) Opening FUMA 50.3 44.9 Opening FUM 13.0 9.8 Inflows 3.8 4.5 Inflows 3.1 4.4 – organic¹ 3.8 4.4 Outflows (3.1) (2.3) – purchased² 0.0
Slide 30: Breakdown of Net Organic Inflows by Service Level
Preliminary Results 29 BREAKDOWN OF NET ORGANIC INFLOWS BY SERVICE LEVEL Service level 2022 FY 2021 FY 2020 FY Net flows Ann. net growth Net flows Ann. net growth Net flows Ann. net growth (£m) (%) (£m) (%) (£m) (%) Discretionary service 918 1,292 952 − Bespoke portfolios 787 1.6% 1,123 2.6% 854 2.2
Slide 31: Breakdown of Net Organic Inflows by Channel
Preliminary Results 30 BREAKDOWN OF NET ORGANIC INFLOWS BY CHANNEL Channel 2022 FY 2021 FY 2020 FY Net flows Ann. net growth Net flows Ann. net growth Net flows Ann. net growth (£m) (%) (£m) (%) (£m) (%) Discretionary service − Bespoke portfolios 325 0.9% 518 1.6% 742 2.4% − Managed via in-house fun
Slide 32: Investment Management Client Base
Preliminary Results 31 INVESTMENT MANAGEMENT CLIENT BASE Analysis of funds under management¹ Service level by value Fund type by value 5% Private clients 2% 12% ISAs 10% 34% Discretionary Charities Advisory 12% Pensions Execution-only Trusts 13% 19% Other 93% Size of client relationship by value FUM
Slide 33: Where Our Clients' Assets Are Invested
Preliminary Results 32 WHERE OUR CLIENTS’ ASSETS ARE INVESTED¹ Direct holdings 56% Collectives 44% 4.4% Fixed income 6.9% 6.1% 5.5% 5.2% 10.5% UK equities 10.0% 8.8% 9.4% 11.9% Overseas equities 34.5% 36.3% 41.8% 44.6% 41.5% Alternatives² Cash 35.3% 35.4% 30.6% 28.6% 29.4% 13.3% 13.4% 12.7% 11.1% 12
Slide 34: Performance – Single Strategy Funds
Preliminary Results 33 PERFORMANCE – SINGLE STRATEGY FUNDS Size of fund Performance¹ at 31 December 2022 1 year 3 year 5 year (£m)6 Rathbone Global Opportunities Fund4 -20.57 25.27 57.16 Sector: IA Global -11.06 20.64 38.68 3,360.5 Rathbone Income Fund4 0.07 7.91 17.02 FTSE All Share 0.34 7.07 15.5
Slide 35: Performance – Multi-Asset Funds
Preliminary Results 34 PERFORMANCE – MULTI-ASSET FUNDS Size of fund Performance1 at 31 December 2022 (S-class shares) 1 year 3 years 5 years (£m)5 Rathbone Multi-Asset Total Return Portfolio2 -4.67 7.17 14.99 Bank of England Base Rate +2% 3.47 8.01 13.91 420.7 Volatility as % of FTSE Developed (£) [
Slide 36: Total Capital Expenditure
Preliminary Results 35 TOTAL CAPITAL EXPENDITURE Technology & other Capital expenditure (£m) − Proportion that can be capitalised is reducing as we transition to modern, cloud-based solutions Property − Expect to increase in 2022 as we develop hybrid capability and 8.8 0.3 relocate our premises in E
Slide 37: Underlying Profit Before Tax and EPS
Preliminary Results 36 UNDERLYING PROFIT BEFORE TAX¹ (£M) AND EPS (P) 172.2 142.5 132.8 133.3 130.8 48.3 43.3 91.6 46.6 42.1 88.7 46.0 46.5 92.5 62.9 57.8 120.7 50.0 47.1 97.1 2018 2019 2020 2021 2022 1st half UPBT (£m) 2nd half UPBT (£m) Full year UPBT (£m) Full year UEPS (p) 1. See slide 37 for a
Slide 38: Earnings Per Share
Preliminary Results 37 EARNINGS PER SHARE 2022 2021 Pre tax Post tax EPS Pre tax Post tax EPS (£m) (£m) (p)1 (£m) (£m) (p)2 Underlying profit attributable to shareholders 97.1 76.7 130.8 120.7 97.0 172.2 Charges in relation to client relationships and goodwill (19.5) (15.8) (27.0) (15.6) (12.6) (22.
Slide 39: Segmental Results
Preliminary Results 38 SEGMENTAL RESULTS Investment Management Funds Indirect Total y/e 31 December 2022 (£m) (£m) (£m) (£m) Net investment management fee income 274.9 62.1 - 337.0 Net commission income 48.9 - - 48.9 Net interest income 17.8 0.5 - 18.3 Fees from advisory services and other income 51
Slide 40: Analysing the Balance Sheet
Preliminary Results 39 ANALYSING THE BALANCE SHEET 31/12/22 31/12/21 31/12/22 31/12/21 Assets Liabilities (£’000) (£’000) (£’000) (£’000) Cash and balances with central banks 1,412,915 1,463,294 Deposits by banks 1,035 2,212 Settlement balances 65,819 69,750 Settlement balances 69,872 60,075 Loans a
Slide 41: Capital Ratios
Preliminary Results 40 CAPITAL RATIOS 2022 (£m) 2021 (£m) Total risk exposure amount Total risk exposure amount (risk-weighted assets) (risk-weighted assets) £1,667m £1,425m 110.3 133.3 CET1 ratio2 115.1 114.0 CET1 ratio2 17.9% 18.7% £338.8m £304.7m Total own funds1,4 Consolidated leverage ratio3 To
Slide 42: Reconciliation of Equity to Total Own Funds
Preliminary Results 41 RECONCILIATION OF EQUITY TO TOTAL OWN FUNDS 2022 2021 (£m) (£m) Equity − Share capital and share premium 313.1 294.1 − Reserves 374.2 365.8 Less: – Own shares (52.5) (36.6) − Intangible assets1 (326.6) (344.8) − Retirement benefit asset (9.4) (12.3) Total common equity tier 1
Slide 43: Investment Management – Number of Investment Managers and FUMA per Office
Preliminary Results 42 INVESTMENT MANAGEMENT – NUMBER OF INVESTMENT MANAGERS AND FUMA PER OFFICE Investment management funds under management Office location Number of investment managers¹ and administration (£bn at 31/12/22) London 148 23.3 Glasgow 53 6.6 Liverpool 29 3.2 Edinburgh 28 2.9 Other off
Slide 44: Shareholders at 31 December 2022
Preliminary Results 43 SHAREHOLDERS AT 31 DECEMBER 2022 11% Lindsell Train Current Rathbones staff 10% Heronbridge Aviva Investors 5% Aberforth 48% Vanguard Group 5% Franklin Templeton BlackRock 4% Janus Henderson 5% Slater Investments 4% Other 2%3% 4% RATHBONES GROUP PLC
Slide 45: Our Future Responsible Investment Approach
Preliminary Results 44 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. Low ESG integration High ESG integration RESPONSIBLE INV
Slide 46: Appendix: Responsible Business at Rathbones
Preliminary Results 45 APPENDIX: RESPONSIBLE BUSINESS AT RATHBONES Our alignment with the Sustainable Development Goals Pillar Highlights from 2022 Responsible investment − Published voting season review − Votes Against Slavery now up to 122 global investors with £9.6trn, and a very successful year.
Slide 47: Appendix: Responsible Business at Rathbones Continued
Preliminary Results 46 APPENDIX: RESPONSIBLE BUSINESS AT RATHBONES CONTINUED Our alignment with the Sustainable Development Goals Pillar Highlights from 2022 Our people − Updated our diversity, equality and inclusion plan − Increased number of mentoring pairs by 10% − Second year support of #10,000
Slide 48: Investment Management – Annual Management Fees for Direct Private Clients
Preliminary Results 47 INVESTMENT MANAGEMENT – ANNUAL MANAGEMENT FEES FOR DIRECT PRIVATE CLIENTS¹ Our fee is completely transparent Discretionary management fees (subject to Applied across main funds and ISA VAT) funds (pa)² and we do not charge: First £250,000 1.20% − Fixed and minimum fees Next £5
Slide 49: Important Information
Preliminary Results 48 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 exchange between currencies may