Rathbone Brothers Plc Preliminary Announcement of Results 31st December 2003.
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Transcript of Rathbone Brothers Plc Preliminary Announcement of Results 31st December 2003.
Rathbone Brothers PlcRathbone Brothers Plc
Preliminary Announcement ofPreliminary Announcement of
ResultsResults
31st December 200331st December 2003
Introduction
Mark PowellMark Powell
ChairmanChairman
Andy PomfretAndy Pomfret
Finance DirectorFinance Director
Richard LanyonRichard Lanyon
Director - Investment ManagementDirector - Investment Management
The Executive Team
Mark PowellMark PowellChairmanChairman
Roy MorrisRoy MorrisChief ExecutiveChief Executive
Andy PomfretAndy PomfretFinance DirectorFinance Director
Richard LanyonRichard LanyonDirector - Director - Investment ManagementInvestment Management
James LiffordJames LiffordDirector - Director - Regional OfficesRegional Offices
Paul Egerton-VernonPaul Egerton-VernonDirector - Trust DivisionDirector - Trust Division
Paul ChavassePaul ChavasseDirector - IT & OperationsDirector - IT & Operations
Ian BuckleyIan BuckleyDirector - Trust DivisionDirector - Trust Division
Results Highlights
£81.8 million
£19.7 million
Operating Income
Pre-Tax Profits(pre-goodwill and exceptional gains)
+ 2.4%
+ 7.5%
38.11p24.07p
Earnings Per Share(pre-goodwill)(post-goodwill)
+ 12.4%+ 0.7%
26pDividends Maintained
£6.8 billionFunds Under Management + 28.2%
4477FTSE 100 Index + 13.6%
4103Average FTSE 100 Index on Charging Dates - 6.5%
Strategy
To be the leading provider of discretionary investment management services to the Private Client in the UK and to provide trust services internationally
Primary focus will remain on private clients
Encourage and reward organic growth
Further acquisitions of businesses and people if demonstrably earnings enhancing in the medium-term, or add to service offered to clients
Investment Management to account for 80% of activity
Continuing development of the Investment Process
Key Issues and Developments
Growth in Funds under Management
Investment performance
Back office productivity improvement
Potential for corporate acquisitions
Trust Division:- New management structure Savings made Business rationalisation Timescale for improvement
Updates on:- Stock Exchange shares Pension fund deficit ‘Splits’ Basel II IFRS
Investment ManagementInvestment Management
Growth in Funds Under Management
Organic growth in 2003
Rathbone Unit Trust Management success
Growth of Bespoke Funds
Charities
Demonstration of Investment Process
Performance
Market Movements & Funds Under Management
-35.4%
-23.9%
35.1%
13.6%
12.1%
28.2%
11.1%
7.8%
15.1%
FTSE 100 Index
APCIMS Balanced Index
Funds under Management
5 Years5 Years 1 Year1 Year 6 months6 months
Growth in Funds Under Management
Opening FUM
Market Movement (FTSE 100)
Effect of Performance Relative to Market
Closing FUM
Inflow of New Money - Acquired
Outflow of Money
5.3
0.7
5.8
(1.4)
0.1 0.2
6.8 5.3
0.3 0.4
(0.2) (0.2)
Year to Year to 31/12/0331/12/03
£bn£bn
Year to Year to 31/12/0231/12/02
£bn£bn
Inflow of New Money - Organic 0.6 0.5
Net New Money 0.7 0.7
Unit Trust Sales (£m)Net of Discounts and Redemptions
23.716.2
28.4
45.736.2
145.5
0
20
40
60
80
100
120
140
160
2002 2003 2002 2003 2002 2003
Internal Bespoke External (including direct)
Unit Trust Performance
Source: Standard & Poor’s Micropal Bid to Bid, net reinvestment. Data to 01.03.04
The value of investments and the income from them may go down as well as up and you may not get back your originalinvestment. Past performance is not necessarily a guide to future performance.
Rathbone Income Fund
Rathbone Income and Growth Fund
Rathbone Smaller Companies Fund
Rathbone Special Situations Fund
Rathbone Capital Growth Fund 1
1
2
1
1
2
1
1
3
1
1
1
2
**
*****
*****
**
*****11
Rathbone Unit Trust Management LtdQuartile Performance
1 yr 3 yrs 5 yrs S&P FundStars
1
2
2
1
1
6m
Rathbone Technology Fund 2 4 N/A *3
Rathbone Global Companies Fund(launched April 2001)
1 N/A N/A1
Rathbone Ethical Bond Fund(launched May 2002)
4 N/A N/A3
Standard & Poor’s awarded the Rathbone Income Fund 1st place over 5 years for UK-Marketed funds in the ‘Equity UK Income’ sector.Standard & Poor’s awarded the Rathbone Income Fund 1st place over 5 years for UK-Marketed funds in the ‘Equity UK Income’ sector.
The Rathbone Special Situations Fund won Best UK General Equity Fund (Money Observer magazine) 2004 to follow up winning the The Rathbone Special Situations Fund won Best UK General Equity Fund (Money Observer magazine) 2004 to follow up winning the award in 2002 and 2003 and the fund retained its Standard & Poor’s Fund Rating of ‘A’. The fund was awarded 1st place in the Standard award in 2002 and 2003 and the fund retained its Standard & Poor’s Fund Rating of ‘A’. The fund was awarded 1st place in the Standard & Poor’s UK-Marketed ‘Equity UK’ funds sector over 5 years. & Poor’s UK-Marketed ‘Equity UK’ funds sector over 5 years.
The Rathbone Smaller Companies Fund won 1st place in the Standard & Poor’s UK-Marketed ‘UK Smaller Companies’ funds sector The Rathbone Smaller Companies Fund won 1st place in the Standard & Poor’s UK-Marketed ‘UK Smaller Companies’ funds sector over 10 years.over 10 years.
Bespoke Fund Performance
25.7%
18.0%
16.0%
10.1%
21.4%
15.8%
19.8%
15.8%
13.4%14.2%
25.4%
21.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Esk Hamilton QuercusGrowth
Quercus Mixed Longroad Sherwood (fromlaunch -20/02/03)
Fund Benchmark
Performance vs Benchmark 2003Performance vs Benchmark 2003
Investment Process
Combination of sector and stock selection
Growing ability to manage larger portfolios
Use of collectives (over £1 billion), hedge funds and private equity
Small clients less than £100,000
Investment Management - Conclusion
A consolidator - management team with track record of integration
Respected name with strong client retention
Robust systems infrastructure
Improving markets and demographics
TrustTrust
Trust Division Results
0.4UK
0.4Exceptional Gains
1.6Segmental Analysis (per accounts)
1.5Jersey
(0.7)International
1.2
0.0
0.1
1.1
1.4
(0.4)
1.0
0.4
0.5
2.7
2.9
(1.1)
2.2
0.6
0.3
3.9
3.2
(0.2)
3.6
H1H120032003£m£m
H2H220032003£m£m
TotalTotal20032003£m£m
TotalTotal20022002£m£m
Pre-GoodwillPre-Goodwill
Trust Division
Strategic Challenges
The changing client base
Offshore jurisdictions
Regulatory changes
Strategic fit with Investment Management
Implementation
New management in place
£1.2m of cost savings in International Business (ex Jersey) but £2.2m drop in income
Strengthened review processes
Conclusion & Current TradingConclusion & Current Trading
Conclusion and Current Trading
Demographic potential
Strong Investment Performance
National presence
Improved markets
AppendicesAppendices
Investment Management - Our Market
Domestic private individuals and trusts £100,000 - £10 million +£100,000 - £10 million +
International private individuals and trusts £100,000 - £10 million +£100,000 - £10 million +
UK Unit Trusts (including ‘Bespokes’)
Charities £500,000 - £50 million£500,000 - £50 million
Pension Funds - mainly in SIPP form
Competitors GAM Cazenove Kleinworts NM Rothschild HSBC
Market Movements & Funds Under Management
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
31.12.99 31.12.00 31.12.01 31.12.02 31.12.03
Funds under Management FTSE-100 APCIMS
Productivity
90
100
110
120
130
De
c-0
1
Fe
b-0
2
Ap
r-02
Ju
n-0
2
Au
g-0
2
Oc
t-02
De
c-0
2
Fe
b-0
3
Ap
r-03
Ju
n-0
3
Au
g-0
3
Oc
t-03
De
c-0
3Based on Number of Core Discretionary Clients (Rebased to 100)Based on Number of Core Discretionary Clients (Rebased to 100)
Quarter by Quarter AnalysisPre-Tax, Pre-Goodwill Profit (£m)
3.4
0.4
3.8
5.1
1.2
6.3
5.5
0.7
6.2
Investment Management
Trust
Total
Q1Q1 Q2Q2 Q3Q3
4.1
0.4
4.5
Q4Q4
FTSE 100 Index 3814 4031 4091 4477
18.1
2.7
20.8
TotalTotal
4103*
* Average
Location of Funds Under Management & Profitability
4.1
1.1
1.6
2.3
0.8
0.3
3.3
1.2
0.6
London
Liverpool
Regional Offices
Q1Q1 Q2Q2
3.4
1.2
0.9
Q3Q3
6.8
2.8
0.8
0.5
Q4Q4
11.8
4.0
2.3
TotalTotal
18.1
Funds underFunds underManagement atManagement at
31st December 200331st December 2003£bn£bn
Pre-TaxPre-TaxPre-Goodwill ProfitPre-Goodwill Profit
by Quarter 2003by Quarter 2003£m£m
Quarter by Quarter AnalysisPre-Tax, Pre-Goodwill Profit (£m) (As per segmental analysis)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 Q4 '03
Investment Management Trust FTSE 100 Index (rebased)
Pre-Tax Profits(before goodwill and exceptional items) (£ million)
11.6 11.6
23.2
14.2
12.3
26.5
11.2
9.4
20.6
11.4
7.0
18.4
9.410.4
19.7
0
5
10
15
20
25
30
1999 2000 2001 2002 2003
1st Half 2nd Half Full Year
Analysis of Expenditure (excluding Goodwill)for 12 months to 31st December 2003
£38.1m£38.1m
£4.0m£4.0m
£4.7m£4.7m
£3.1m£3.1m
£3.0m£3.0m
£2.9m£2.9m
£2.6m£2.6m
£3.6m£3.6m
Staff - Payroll
Staff - Other
Premises
Depreciation
Professional
Settlements
IT
Other
Analysis of Gross Incomefor 12 months to 31st December 2003
Investment Management
Trust
Unit Trusts
£66.0m£66.0m
£20.2m£20.2m
£5.8m£5.8m
Analysis of Investment Management Incomefor 12 months to 31st December 2003
Investment Management Fees
Investment ManagementCommission
Net Interest
£27.0m£27.0m
£20.7m£20.7m
£10.0m£10.0m
Consolidated Balance Sheetas at 31st December 2003
31/12/03£'000
31/12/02£'000
31/12/03£'000
31/12/02£'000
Assets Liabilities
Cash and balances at central banks 3,205 19,019 Deposits by banks 5,335 62
Settlement balances 13,523 6,837 Settlement balances 11,376 5,865
Loans and advances to banks 43,207 33,025 Customer accounts 366,715 408,039
Loans and advances to customers 36,353 36,828 Debt securities in issue 898 5,768
Debt securities 333,002 363,426 Other liabilities 11,190 10,899
Equity shares 35 70 Accruals and deferred income 8,560 7,671
Intangible fixed assets 57,702 56,232 Provision for liabilities and charges 5,188 3,940
Tangible fixed assets 6,226 7,454 Called up share capital 2,033 1,969
Other assets 4,245 3,651 Shares to be issued including premium - 1,927
Prepayments and accrued income 17,666 16,132 Share premium account 13,791 9,639
Other reserves 49,428 45,674
Profit and loss account 40,650 41,221
Equity shareholders' funds 105,902 100,430
Total Assets 515,164 542,674 Total Liabilities 515,164 542,674