Rathbones Group PLC · LSE:RAT
Rathbones — Rathbone Brothers — Investor Day (November 2014)
37 slides from Rathbones's investor day presentation, Nov 19, 2014
Slide 1: Analyst Dinner 2014
RATHBONE BROTHERS PLC ANALYST DINNER 2014 = 19 NOVEMBER 2014 RATHBONES Established 1742
Slide 2: Setting the scene: business strategy 2014-2018
• Setting the scene: business strategy 2014-2018 – Building on a successful track record – Evolution not revolution – The growth agenda – Financial implications • Conclusion • Appendix – Q3 2014 financial overview 2
Slide 3: Building on a successful track record
Building on a successful track record Adding a package of incremental initiatives The growth agenda Financial implications 3
Slide 4: Building on a successful track record
Building on a successful track record Adding a package of incremental initiatives The growth agenda Financial implications 4
Slide 5: Five years of rapid growth with continuing growth momentum
• Five years of rapid growth with continuing growth momentum • High quality and loyal client base • Consistent operating profit margin • Respected investment managers supported by well-informed investment process • Attractive destination for acquisition of teams and good geographical spread • Modern
Slide 6: Client survey results 2012 vs 2014
2014 Has clients' best interest at heart 2012 84% Provides service that 91% Provides clear 77% meets needs information 94% 88% 85% 94% 89% Easy to do business 86% 82% Treats you as an with individual 64% 78% 86% 72% Makes you feel like a Reasonable fees and valued client charges Source: Ledbury Rese
Slide 7: FUM by source
800 FUM¹ by source 700 106 15% 600 500 248 £ million 18% 400 66% 300 200 351 100 Direct Intermediary Charity (including Greenbank) 0 30/09/2014 Charity Intermediary Direct Total Rathbone Investment Management funds under management at 30 September 2014 7
Slide 8: Threats
Threats • Low wealth generation outlook in UK • Regulatory intrusion and costs • Increased capital requirements • Client balance of power changing – ‘information era’ • Generational client trend towards ‘involved’ • Generational client trend from loyalty to value for money/performance judgement • Em
Slide 9: Industry trends
• Polarising: mass affluent versus HNW/SHNW • Vertical integration to capture assets and value chain • Centralising investment process • New delivery models: direct to client, ‘platform plus’ • New client communication channels 9
Slide 10: Opportunities
• Potential client/team/business acquisitions due to: – Fragmented industry with deteriorating economics (>180 players) – Withdrawal of big banks from advice and HNW – Changes in the mega private banks – Ownership and business models change in key competitors • Legacy technology and operations are a
Slide 11: Adding a package of incremental initiatives
Building on a successful track record Adding a package of incremental initiatives The growth agenda Financial implications 11
Slide 12: We will
We will: • Maintain ‘player-manager’ approach and a flat management structure • Respect the ‘professional autonomy with accountability’ mandate for investment managers • Promote a ‘team approach’ and wide investment process participation • Support investment managers with a skilled and robust centra
Slide 13: We will not
We will not: • Depart from the combined Investment Manager-Relationship Manager model (save in specific parts of the business) • Centralise the core investment process to the extent of prescribed model portfolios • Pursue the mass affluent or direct to client/self directed model (Rathbone Unit Trust
Slide 14: The growth agenda
Building on a successful track record Adding a package of incremental initiatives The growth agenda Financial implications 14
Slide 15: Rathbone Investment Management and Unit Trust Management structure
Rathbone Investment Management Rathbone Unit Trust Management Private Private Charities & Multi Asset Funds Office Clients Specialist Services Trust Investment Charities Management Jersey Greenbank Advisory Private Bankers Investment Managers Banking Central Investment Process Marketing & Distributi
Slide 16: Rathbone Investment Management vision and key actions
Vision To provide high quality, Key actions client-focused bespoke Drivers Net organic growth discretionary investment management service to • 5% organic growth per Selective acquisitions individuals, families and annum supported by that fit our culture their advisers business development and Vision
Slide 17: Financial planning vision and key actions
Vision To provide clients with an Key actions integrated wealth Drivers Fully embed financial management solution and planning into the assist them in developing • Wider service offering future financial plans Rathbone Investment • Recruit more advisers Management core business Additional paraplanne
Slide 18: Charities and Greenbank vision and key actions
Vision To be one of the five largest Key actions UK charity fund managers Organic growth with pre-eminent ethical Drivers investment credentials • Invest in new products Selective recruitment and services supported by Promote Greenbank enhanced marketing effort • Increase the capacity of the team by
Slide 19: International and SHNW vision and key actions
Vision Key actions To establish Rathbones as a leading name in the SHNW Drivers Organic growth segment (£10 – 100M) • Exploit an emerging gap Expand offshore by offering a full-service in the market proposition family office proposition • Opportunity to combine Develop service offering Rathbones’ ca
Slide 20: Rathbone Unit Trust Management vision and key actions
Vision To be recognised as a Our Goal pre-eminent specialist Drivers Continued performance investment house that Selective fund launches focuses on helping financial • Investment excellence advisers to deliver financial focused on active Rigorous cost control security to their clients over managemen
Slide 21: Distribution
• Maintain existing model • Maximise team skills • Drive greater networking Direct to Client • Referral and conversion activities • Drive greater brand penetration and communication activities • Greater use of firm intellectual property • Single distribution team • Infrastructure support UK Financia
Slide 22: Staff and client perspective
Attribute Staff Perspective Client Perspective • Respect for professional skills & experience • Treat each client as having unique • Investment autonomy with accountability requirements • Personal service & integrity in our DNA • Benefits of the combined RM-IM role • Easy access to a team with clien
Slide 23: New brand identity
• We need a more progressive brand to achieve our goals • A new brand identity built on solid foundations • A contemporary ‘look and feel’ to complement our heritage • We will implement our new brand identity in 2015 23
Slide 24: Financial implications
Building on a successful track record Adding a package of incremental initiatives16 The growth agenda Financial implications 24
Slide 25: Revenues, costs and profits
FUM Shareholder returns Revenues Employee Growth Costs pay and reward Profits Investment Company returns Reinvestment 25
Slide 26: 2009 vs 2014 key metrics
FUM Market Cap Profit Dividend Staff Non margin per share cost property per Capex head 2009 £13.0bn £346m 28% £0.42 £84.2k £2.3m 2014 £26.3bn¹ £912m¹ 30%² £0.50³ £112.3k4 £4.2m4 +102% +164% +7% +19% +33% +109% As at 30 September 2014 As at 30 June 2014 Based on 2013 final and 2014 interim dividend 4
Slide 27: Rathbone Investment Management basis point return
Rathbone Investment Management basis point return 90 82.9 84.6 80.5 80 5.5 5.1 78.0 4 3.2 70 23.4 22 26.1 20.5 60 50 40 Interest Commission 30 56.1 55 54.3 Fees 51.3 20 10 0 2011 2012 2013 30/09/2014¹ Annualised 27
Slide 28: Areas to invest and where the money will go
Area to invest Where the money will go Increasing Capacity Recruitment, administrative support, technology Driving growth Distribution Sales teams Marketing Brand refresh Private Office Dedicated resources Research Recruitment Enhancing investment process Investment Process Suitability assurance IT
Slide 29: Protecting our profit margin
• Protecting our profit margin • Headcount control • Cost transparency and budget ownership • Project business cases • Discipline over capital spend and ongoing maintenance costs • Regular review of expense policy and compliance • Rewarding performance • Responding to investment markets 29
Slide 30: FUM growth to 2018
45 Rathbone Unit Trust Continue Market growth 5% net annual organic Management & successful (2.5% per growth other initiatives acquisitions annum) 40 35 £ billion 30 Circa Circa 40 37 25 26.3 20 SHNW Team Rathbone Unit Trust Market Mkt adjusted 2018 Business 2018 FUM Distribution Sept 2014 FUM Core
Slide 31: Conclusion
• Building on a success story • No major change in direction – a package of incremental changes • Protecting and growing the core business • Widening and deepening the service offering • Preparing to be a bigger business! 31
Slide 32: Business Strategy 2014-2018 Q&A
BUSINESS STRATEGY 2014-2018 Q&A 32
Slide 33: Appendices
APPENDICES 33
Slide 34: Net operating income and funds under management
Net operating income Funds under management Q3 14 Q3 13 Change YTD 14 YTD 13 Change Investment management Unit trusts Investment management £m £m % £m £m % 3 months 9 months 9 months Fees 30.5 26.6 14.7 87.3 76.7 13.8 ended ended ended 30/09/14 30/09/14 30/09/14 Commissions 9.4 8.9 5.6 32.9 32.1 2.5
Slide 35: FTSE index, FUM and basis point returns
FTSE 100 index and funds under management (2013-14) 2014 Monthly Commission v last 3 years max/min¹ 25 7250 24 £5.5m 23 7000 £5.0m 22 6750 £4.5m FUM £bn 21 FTSE 20 6500 £4.0m 19 £3.5m 18 6250 17 £3.0m 6000 16 £2.5m 15 5750 £2.0m Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun
Slide 36: Where our clients' assets are invested
Gross treasury interest return and base rate Client cash balances (£m) 1.2% 1,500 1.0% 1,250 0.8% 1,000 0.6% 750 0.4% 500 0.2% 0.0% 250 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 0 Received Paid Base Rate Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Annualised historical BPR from interest Wh
Slide 37: Rathbone Brothers Plc contact details
Rathbone Brothers Plc 1 Curzon Street London W1J 5FB Telephone +44 (0)20 7399 0000 Facsimile +44 (0)20 7399 0011 www.rathbones.com Issued by Rathbone Brothers Plc (the “Company”) for use by professional investors only. This presentation has been prepared for general information on matters of interes