Transcript No Slide Title

Rathbone Brothers Plc
Preliminary Announcement of
Results
31st December 2003
Introduction
Mark Powell
Chairman
Andy Pomfret
Finance Director
Richard Lanyon
Director - Investment Management
The Executive Team
Mark Powell
Chairman
Roy Morris
Chief Executive
Andy Pomfret
Finance Director
Ian Buckley
Director - Trust Division
Paul Chavasse
Director - IT & Operations
Paul Egerton-Vernon
Director - Trust Division
Richard Lanyon
Director Investment Management
James Lifford
Director Regional Offices
Results Highlights
Operating Income
£81.8 million
+ 2.4%
Pre-Tax Profits
(pre-goodwill and exceptional gains)
£19.7 million
+ 7.5%
38.11p
24.07p
+ 12.4%
+ 0.7%
26p
Maintained
£6.8 billion
+ 28.2%
FTSE 100 Index
4477
+ 13.6%
Average FTSE 100 Index on Charging Dates
4103
- 6.5%
Earnings Per Share
(pre-goodwill)
(post-goodwill)
Dividends
Funds Under Management
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 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
5 Years
1 Year
6 months
FTSE 100 Index
-35.4%
13.6%
11.1%
APCIMS Balanced Index
-23.9%
12.1%
7.8%
Funds under Management
35.1%
28.2%
15.1%
Growth in Funds Under Management
Year to
31/12/03
£bn
Year to
31/12/02
£bn
Opening FUM
5.3
5.8
Market Movement (FTSE 100)
0.7
(1.4)
Inflow of New Money - Acquired
0.3
0.4
Inflow of New Money - Organic
0.6
0.5
Outflow of Money
(0.2)
(0.2)
Effect of Performance
Relative to Market
0.1
0.2
Closing FUM
6.8
5.3
Net New Money
0.7
0.7
Unit Trust Sales (£m)
Net of Discounts and Redemptions
160
145.5
140
120
100
80
60
45.7
36.2
40
28.4
23.7
16.2
20
0
2002
Internal
2003
2002
Bespoke
2003
2002
2003
External (including direct)
Unit Trust Performance
Rathbone Unit Trust Management Ltd
Quartile Performance
6m
1 yr
3 yrs
5 yrs
S&P Fund
Stars
Rathbone Capital Growth Fund
1
1
2
1
**
Rathbone Ethical Bond Fund
3
4
N/A
N/A
1
1
N/A
N/A
Rathbone Income Fund
2
1
1
1
*****
Rathbone Income and Growth Fund
2
2
1
1
*****
Rathbone Smaller Companies Fund
1
1
3
2
**
Rathbone Special Situations Fund
1
1
1
1
*****
Rathbone Technology Fund
3
2
4
N/A
*
(launched May 2002)
Rathbone Global Companies Fund
(launched April 2001)
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 original
investment. Past performance is not necessarily a guide to future performance.
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
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.
The Rathbone Smaller Companies Fund won 1st place in the Standard & Poor’s UK-Marketed ‘UK Smaller Companies’ funds sector
over 10 years.
Bespoke Fund Performance
Performance vs Benchmark 2003
30.0%
25.7%
25.4%
25.0%
21.4%
21.8%
19.8%
18.0%
20.0%
16.0%
15.8%
15.8%
14.2%
13.4%
15.0%
10.1%
10.0%
5.0%
0.0%
Esk
Hamilton
Quercus
Growth
Fund
Quercus Mixed
Benchmark
Longroad
Sherwood (from
launch 20/02/03)
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
Trust
Trust Division Results
Pre-Goodwill
H1
2003
£m
H2
2003
£m
Total
2003
£m
Total
2002
£m
1.5
1.4
2.9
3.2
International
(0.7)
(0.4)
(1.1)
(0.2)
UK
0.4
0.0
0.4
0.6
1.2
1.0
2.2
3.6
Exceptional Gains
0.4
0.1
0.5
0.3
Segmental Analysis (per accounts)
1.6
1.1
2.7
3.9
Jersey
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 Trading
Conclusion and Current Trading
 Demographic potential
 Strong Investment Performance
 National presence
 Improved markets
Appendices
Investment Management - Our Market
 Domestic private individuals and trusts
£100,000 - £10 million +
 International private individuals and trusts
£100,000 - £10 million +
 UK Unit Trusts (including ‘Bespokes’)
 Charities
 Pension Funds - mainly in SIPP form
 Competitors
GAM
Cazenove
Kleinworts
NM Rothschild
HSBC
£500,000 - £50 million
Market Movements & Funds Under Management
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
31.12.99
31.12.00
Funds under Management
31.12.01
31.12.02
FTSE-100
31.12.03
APCIMS
Productivity
Based on Number of Core Discretionary Clients (Rebased to 100)
130
120
110
100
Dec-03
Oct-03
Aug-03
Jun-03
Apr-03
Feb-03
Dec-02
Oct-02
Aug-02
Jun-02
Apr-02
Feb-02
Dec-01
90
Quarter by Quarter Analysis
Pre-Tax, Pre-Goodwill Profit (£m)
Q1
Q2
Q3
Q4
Total
Investment Management
3.4
5.1
5.5
4.1
18.1
Trust
0.4
1.2
0.7
0.4
2.7
Total
3.8
6.3
6.2
4.5
20.8
3814
4031
4091
4477
4103*
FTSE 100 Index
* Average
Location of Funds Under Management & Profitability
Funds under
Management at
31st December 2003
£bn
Pre-Tax
Pre-Goodwill Profit
by Quarter 2003
£m
Q1
Q2
Q3
Q4
Total
London
4.1
2.3
3.3
3.4
2.8
11.8
Liverpool
1.1
0.8
1.2
1.2
0.8
4.0
Regional Offices
1.6
0.3
0.6
0.9
0.5
2.3
6.8
18.1
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
Investment Management
Q4 '02
Trust
Q1 '03
Q2 '03
Q3 '03
Q4 '03
Pre-Tax Profits
(before goodwill and exceptional items) (£ million)
30
2 6 .5
25
2 3 .2
20
2 0 .6
19 .7
18 .4
15
14 .2
10
12 .3
11.6 11.6
11.4
11.2
9 .4
9 .4
10 .4
7 .0
5
0
1999
2000
1st Half
2001
2nd Half
2002
2003
Full Year
Analysis of Expenditure (excluding Goodwill)
for 12 months to 31st December 2003
Staff - Payroll
Staff - Other
Premises
Depreciation
Professional
Settlements
IT
Other
£38.1m
£4.0m
£4.7m
£3.1m
£3.0m
£2.9m
£2.6m
£3.6m
Analysis of Gross Income
for 12 months to 31st December 2003
Investment Management £66.0m
Trust
Unit Trusts
£20.2m
£5.8m
Analysis of Investment Management Income
for 12 months to 31st December 2003
Investment Management Fees
£27.0m
Investment Management
Commission
£20.7m
Net Interest
£10.0m
Consolidated Balance Sheet
as at 31st December 2003
31/12/03 31/12/02
£'000
£'000
Assets
Cash and balances at central banks
31/12/03 31/12/02
£'000
£'000
Liabilities
3,205
19,019 Deposits by banks
5,335
62
11,376
5,865
366,715
408,039
898
5,768
11,190
10,899
70 Accruals and deferred income
8,560
7,671
56,232 Provision for liabilities and charges
5,188
3,940
Settlement balances
13,523
Loans and advances to banks
43,207
33,025 Customer accounts
Loans and advances to customers
36,353
36,828 Debt securities in issue
Debt securities
Equity shares
333,002
35
6,837 Settlement balances
363,426 Other liabilities
Intangible fixed assets
57,702
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
105,902
100,430
515,164
542,674
Equity shareholders' funds
Total Assets
515,164
542,674 Total Liabilities