Rathbones Group PLC · LSE:RAT
Rathbones — Rathbone Brothers — H1 2005 Earnings Presentation
30 slides from Rathbones's earnings presentation, Sep 1, 2005
Slide 1: Announcement of Interim Results to 30 June 2005
Rathbone Brothers Plc www.rathbones.com Rathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005
Slide 2: The Executive Team
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 2 The Executive Team Mark Powell Andy Pomfret Chairman Chief Executive Sue Desborough Paul Chavasse Finance Director Chief Operating Officer
Slide 3: Chairman's statement on first half progress
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 3 Rathbone Brothers Plc “A more favourable environment in world stock markets has provided the backdrop for solid progress by Rathbones during the first half of 2005.” Mark Powell, Chairman
Slide 4: Results Highlights
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 4 Results Highlights H1 2005 % increase Operating income £53.9m 14.0 Operating profit (before Rensburg-related costs) £16.1m 21.1 Operating profit (after Rensburg-related costs) £14.7m 10.5 Earnings per sh
Slide 5: Operating Income
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 5 Operating Income H1 2005 (£m) % increase Investment management fees 18.8 25.3 Investment management commissions 13.4 - Bank interest and other income from investment 4.4 15.8 management activity Total in
Slide 6: Operating Expenses (excluding Rensburg-related costs)
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 6 Operating Expenses (excluding Rensburg-related costs) H1 2005 (£m) % increase Fixed staff costs 19.2 4.9 Variable (including profit-related) staff costs 5.9 18.0 Total staff costs 25.1 7.7 Other costs 12
Slide 7: Other Financial Issues
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 7 Other Financial Issues • International accounting standards • 2004 restatement issued 4 August 2005 • Conversion costs around £0.5m • Interpretations still developing • Transitional effects • Pension fun
Slide 8: Investment Management Highlights
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 8 Investment Management Highlights • Segregated funds up 7.2% to £7.4bn (APCIMS Balanced up 5.1%) • Charity funds over £600 million • Pension funds (predominantly SIPP funds) over £400 million • New head o
Slide 9: Investment Management
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 9 Investment Management Growth in segregated funds under management Six months to Year to 30/6/05 31/12/04 £bn £bn Opening funds under management 6.9 6.3 Market movement (FTSE APCIMS Balanced) 0.3 0.4 Infl
Slide 10: Operations: Scaleability
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 10 Operations: Scaleability “Rathbones’ existing operations and systems have proved efficient and robust and, the Rathbones Directors believe, have the capacity to cope with a significant increase in clien
Slide 11: Operations: Scaleability
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 11 Operations: Scaleability Common/scaleable platform • Investment in core fund management systems - Quasar 6 & Rathbone Investment Desk (RID) • Automation of basic processes - order flow, cash payments, c
Slide 12: Operations: Flexibility and Client Service
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 12 Operations: Flexibility and Client Service • Common operational platform allows flexibility in client service: − Offshore investment − US clients, EU requirements − Differing client requirements - SIPPs
Slide 13: Operational Scaleability
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 13 Operational Scaleability Change in value of client cases1: December 2001 – June 2005 Cases: a case may be % change several accounts that are effectively managed as one mandate. Commonly FTSE All Share +
Slide 14: Trust Division
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 14 Trust Division • Continuing progress on managing legacy issues • Geneva improving with recent profitable underlying trading • Continuing solid performance in Jersey • Profit of £1.5m, being 7.7% above H
Slide 15: Unit Trusts
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 15 Unit Trusts • Continued growth in funds under management to over £1 billion • Good medium to long-term performance across the range of funds • Maturing team - appointment of two investment managers to s
Slide 16: Conclusion and Current Trading
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 16 Conclusion and Current Trading “World stock markets have maintained their comparative strength since 30 June, despite the political and economic uncertainties which exist. Levels of new business enquiri
Slide 17: Appendices
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 17 Appendices
Slide 18: Rathbone Brothers Plc: Strategy
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 18 Rathbone Brothers Plc: Strategy • To be the leading, independent provider of discretionary investment management services to the private client in the UK and to provide trust services internationally •
Slide 19: Analysis of Gross Operating Income
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 19 Analysis of Gross Operating Income 6 months to 30 June 2005 12% 17% Investment management Trust Unit trusts 71%
Slide 20: Analysis of Investment Management Operating Income
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 20 Analysis of Investment Management Operating Income 6 months to 30 June 2005 12% Fees 51% Commission 37% Net interest and other income
Slide 21: Analysis of Expenditure (excluding Rensburg-related costs)
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 21 Analysis of Expenditure (excluding Rensburg-related costs) 6 months to 30 June 2005 Staff - payroll (excl. profit related) 6% 4% 4% Staff - profit related Staff other (non payroll costs) 8% Premises 3%
Slide 22: Operating Profit (£m) (before Rensburg-related costs)
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 22 Operating Profit (£m) (before Rensburg-related costs) 2000 - H1 2005 After IFRS restatement 28.5 30 26.5 25 20.6 19.7 18.4 20 16.1 15.2 £ million 1st Half 14.2 13.3 15 2nd Half 12.3 11.4 11.2 10.4 Full
Slide 23: Investment Management
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 23 Investment Management Market movements and growth in Group funds under management 1 Year 3 Years 5 Years FTSE 100 Index +14.5% +9.8% -19.1% FTSE APCIMS Balanced Index +11.3% +10.8% -12.8% Funds Under Ma
Slide 24: Investment Management (incl. unit trusts)
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 24 Investment Management (incl. unit trusts) Market movements and growth Group funds under management 9,000 Funds under management 8,000 FTSE 100 7,000 FTSE APCIMS Balanced FTSE 100 and FTSE 6,000 APCIMS B
Slide 25: Trust Division
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 25 Trust Division Operating profit (£m) H1 H2 Total 2005 1.5 2004 1.9 1.4 3.3
Slide 26: Unit Trusts: Growth of business
01 £ million /0 4 0 200 400 600 800 1000 1200 01 /1 9 /0 99 7 01 /1 9 /1 99 0 01 /1 9 /0 99 1 01 /2 0 Rathbone Brothers Plc /0 00 4 01 /2 0 /0 00 7 Interim Results to June 30, 2005 01 /2 0 /1 00 0 01 /2 0 /0 00 1 Unit Trusts 01 /2 0 Growth of business /0 01 4 01 /2 0 /0 01 7 01 /2 0 /1 01 0 Page 26
Slide 27: Unit Trusts: Internal and external FUM
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 27 Unit Trusts Internal and external FUM 1000 External FUM 900 Internal FUM 800 700 600 765 £ millions 500 606 400 226 300 200 75 83 26 255 211 218 100 160 114 146 0 2000 2001 2002 2003 2004 H1 2005 Source
Slide 28: Awards
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 28 Awards 2005 – Winner of:- • ‘Specialist Unit Trust Group of the Year 2005’ –Rathbone Unit Trust Management Ltd – What Investment?² • ‘Most Consistent Unit Trust of the Year 2005’ – Rathbone Special Situ
Slide 29: Consolidated balance sheet as at 30 June 2005
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 29 Consolidated balance sheet as at 30 June 2005 30/6/05 31/12/04 30/06/05 31/12/04 Assets Liabilities £’000 £’000 £’000 £’000 Cash and balances at central banks 306 15,840 Deposits by banks 3,718 3,243 Se
Slide 30: Notes to Consolidated Balance Sheet
Rathbone Brothers Plc www.rathbones.com Interim Results to June 30, 2005 1 September 2005 Page 30 Notes to Consolidated Balance Sheet • Equity investments at market value with uplift in ‘Other reserves’ • Pre 1 Jan 2004 goodwill value frozen but must be reviewed for impairment • Defined benefit pens