Rathbones Group PLC · LSE:RAT
Rathbones — Rathbone Brothers — H1 2003 Earnings Presentation
34 slides from Rathbones's earnings presentation, September 2003
Slide 1: Rathbone Brothers Plc Interim Results 30th June 2003
Rathbone Brothers Plc Interim Results 30th June 2003
Slide 2: Introduction
Introduction Speakers Mark Powell Chairman Andy Pomfret Finance Director Richard Lanyon Director - Investment Management -1-
Slide 3: The Executive Team
The Executive Team Mark Powell Roy Morris Andy Pomfret Chairman Chief Executive Finance Director Richard Lanyon James Lifford Paul Egerton-Vernon Paul Chavasse Director - Director - Director - Trust Division Director - IT & Operations Investment Management Regional Centres -2-
Slide 4: Results Highlights
Results Highlights Operating income £40.1 million - 4.8% Pre-tax profits £9.4 million - 17.5% (pre goodwill and exceptional items) Earnings per share (pre goodwill) 18.19p - 18.8% (post goodwill) 11.31p - 40.3% Interim dividend 10p Maintained Funds under management £5.9 billion + 11.3%* FTSE 100 Ind
Slide 5: Strategy
Strategy 4 To be the leading provider of discretionary investment management services to the private client in the UK and trust services internationally 4 Further acquisitions of people and businesses if demonstrably earnings enhancing in the medium term 4 Focus will remain on private clients 4 Link
Slide 6: Key Issues and Developments
Key Issues and Developments 4 Strong organic growth in funds under management 4 Good investment performance 4 Purchase of two small investment management businesses 4 Updates on: 4 Stock Exchange shares 4 Pension fund deficits 4 “Splits” 4 Basel II 4 IFRS 4 Back office productivity still improving 4
Slide 7: Quarter by Quarter Analysis Pre-Tax, Pre-Goodwill Profit
Quarter by Quarter Analysis Pre-Tax, Pre-Goodwill Profit (£m) (As per Segmental Analysis) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Investment Management Trust FTSE 100 Index (rebased) -6-
Slide 8: Investment Management
Investment Management 5. RATHBONES Established 1742
Slide 9: Strategic Approach
Strategic Approach 4 Fund manager at Rathbones is both relationship and asset manager 4 Long term relationships 4 Low fund manager and client turnover 4 Major client wins in 2003 4 Acquisition of fund managers with clients improves economies 4 Smaller clients profitable with efficient administration
Slide 10: Market Movements and Funds under Management
Market Movements and Funds under Management 5 Years 1 Year 6 Months FTSE 100 - 29.1% - 13.4% 2.3% APCIMS Balanced Index - 16.7% - 8.2% 4.0% Funds under Management 46.6% - 11.3% -9-
Slide 11: Location of Funds Under Management & Profitability
Location of Funds Under Management & Profitability Funds under Pre-Tax Management at Pre-Goodwill Profit 30th June 2003 by Quarter 2003 £bn £m Q1 Q2 Total London 3.6 2.3 3.3 5.6 Liverpool 1.0 0.8 1.2 2.0 Regional Centres 1.3 0.3 0.6 0.9 5.9 8.5 - 10 -
Slide 12: Staff Numbers
Staff Numbers Investment Professionals (including assistants) June-02 June-03 Liverpool 39 36 Regional Centres * 96 89 London 111 100 246 225 Investment Management Operations 144 134 * June 03 includes Jersey acquisition - 11 -
Slide 13: Investment Process
Investment Process 4 Investment Committee provides direction 4 Asset allocation 4 Recommended stock lists 4 Morning and weekly meetings 4 Not index trackers but 85% of assets held in 500 stocks 4 Unit Trust influence - 12 -
Slide 14: Awards
Awards STANDARD &POOR'S FU N D GROWTH GOMPANZ AWAR DS Growth Company Awards 2002 Z () () » WINNER UNITED KINGDOM AIM Fund of the Year Pennine AIM VCT - eon rate ager of the Year _ REUTERS ‘B INVESTORS Snel Private Asset Managers a AWARDS 2000 invest” 2000 UK Marketed Funds Winner TANDARD CHRONIC ORE
Slide 15: Rathbone Unit Trust Management Performance
Rathbone Unit Trust Management Performance Rathbone Unit Trust Management Ltd S&P Fund 6m 1 yr 3 yrs 5 yrs Quartile Performance Stars Rathbone Capital Growth Fund 1 1 4 1 ** Rathbone Ethical Bond Fund 4 3 N/A N/A (launched May 2002) Rathbone Global Companies Fund 2 2 N/A N/A (launched April 2001) Ra
Slide 16: Quality Controls
Quality Controls 4 Day book 4 Dealing system restrictions 4 Weekly meeting 4 Peer group reviews 4 Quarterly performance - 15 -
Slide 17: Daybook
Daybook Teamund TeamundNamFund NamFundService Service Fund FundRisk Risk Fund Fund Recommended Recommended Fund FundType Type Trans TransType Type See SeeClass Class See SeeName Name Level Level Level Level Objective Objective Stock Stock Lon-A Lon-A Corps Corpsof of Disc DiscFd Fd MEDIUM MEDIUM Bal
Slide 18: Operations Productivity
Operations Productivity Productivity - Based on number of core discretionary clients 140.0 130.0 120.0 110.0 100.0 90.0 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 - 17 -
Slide 19: Summary
Summary 4 Reputation 4 Process 4 Infrastructure 4 Environment - 18 -
Slide 20: Trust
Trust “9. RATHBONES Established 1742
Slide 21: Results
Results % Movement % of £m from 2002 Group Total Gross operating income 10.7 + 5% 22% Profit before tax and goodwill 1.6 - 19% 16% Goodwill amortisation charge 1.0 + 31% 38% Profit before tax 0.5 - 54% 7% - 20 -
Slide 22: Key Events
Key Events 4 Strategy reviewed - Geneva to grow in importance 4 Further headcount reductions in BVI, Geneva and London; annualised savings of around £1m 4 Loss of some clients to former management 4 No corporate acquisitions in the short/medium term 4 Has suffered more than expected from economic sl
Slide 23: Conclusion
Conclusion “yy. RATHBONES Established 1742
Slide 24: Current Trading
Current Trading 4 Markets getting better? 4 Average charging level last year of FTSE 100 = 4400 4 This year average (so far) = 3923 4 Further management changes in Trust Division and further savings 4 Still looking to invest for the future 4 Organic growth remains strong 4 Client retention very stro
Slide 25: Appendices
Appendices oa. RATHBONES Established 1742
Slide 26: Pre-Tax Profits
Pre-Tax Profits (before goodwill and exceptional items) (£ million) 30 25 20 15 10 5 0 1998 1999 2000 2001 2002 2003 1st Half 2nd Half Full Year - 25 -
Slide 27: Funds under Management
Funds under Management 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 30.06.98 31.12.98 30.06.99 31.12.99 30.06.00 31.12.00 30.06.01 31.12.01 30.06.02 31.12.02 30.06.03 Funds Under Management (£m) Funds Under Management (Interims) FTSE 100 Index (Rebased) - 26 -
Slide 28: Analysis of Gross Income Sources
Analysis of Gross Income Sources Unit Trusts: £6.6m Investment Management: £32.0m Trust: £10.6m - 27 -
Slide 29: Analysis of Fund Management Net Income
Analysis of Fund Management Net Income Net Interest: Investment Management Fees £5.1m (18%) : £12.8m (46%) Investment Management Commission: £10.0m (36%) - 28 -
Slide 30: Analysis of Expenditure (excluding Goodwill)
Analysis of Expenditure (excluding Goodwill) for 6 months to 30th June 2003 Staff Costs: £20.4m Other Costs: £1.7m (of which 9.4% is variable profit share) Depreciation: £1.5m Premises: £2.5m IT Costs: £1.5m Professional: £1.5m Settlements: £1.6m - 29 -
Slide 31: Quarter by Quarter Analysis Pre-Tax, Pre-Goodwill Profit
Quarter by Quarter Analysis Pre-Tax, Pre-Goodwill Profit (£m) Q1 Q2 Q3 Q4 Total Q1 Q2 Total Investment Management 4.5 5.0 1.9 3.8 15.2 3.4 5.1 8.5 Trust 1.5 0.4 1.2 0.8 3.9 0.4 1.1 1.5 Total 6.0 5.4 3.1 4.6 19.1 3.8 6.5 10.0 FTSE 100 Index 5272 4656 3722 3940 4400* 3814 4031 3923* * Average - 30 -
Slide 32: Recommended Asset Allocation
Recommended Asset Allocation Main Menu Asset Class Private Client Models Capital Growth Q2 2003 Charities Growth Income Balanced Return is based on Income Asset Mix at % Asset % Asset % Asset % Asset UK Equities 55.2 66 61 63.5 Special Situations Overseas Equities North America 9 13 5 10 USA Europe
Slide 33: Consolidated Balance Sheet as at 30th June 2003
Consolidated Balance Sheet as at 30th June 2003 30/06/03 31/12/02 30/06/03 31/12/02 £'000 / £'000 £'000 £'000 Assets Liabilities Cash and balances at central banks 6,126 19,019 Deposits by banks 6,318 62 Settlement balances 19,151 6,837 Settlement balances 14,710 5,865 Loans and advances to banks 34
Slide 34: Growth in Funds Under Management
Growth in Funds Under Management Six months Six Months Year to Six Months to 30/06/02 to 31/12/02 31/12/02 to 30/06/03 £bn £bn £bn £bn Opening FUM 5.8 5.9 5.8 5.3 Market Movement (FTSE 100) (0.7) (0.9) (1.4) 0.1 Inflow of New Money** 0.6 0.3 0.9 0.6 Outflow of Money (0.1) (0.1) (0.2) (0.1) 0.5 0.2 0