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Transcript of Rathbone Brothers Plc
www.rathbones.comRathbone Brothers Plc
Rathbone Brothers Plc
Announcement of Preliminary Results to 31 December 2005
8 March 2006
www.rathbones.com8 March 2006Page 2
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Andrew Morris
Director
Sue Desborough
Finance Director
Andy Pomfret
Chief Executive
Mark Powell
Chairman
The executive team
www.rathbones.com8 March 2006Page 3
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Rathbone Brothers Plc
“2005 has proved to be a year of considerable growth in UK and overseas stock markets. This has provided the backdrop for an increase in the rates of organic growth within Rathbones and has helped us to make real progress.”Mark Powell, Chairman
www.rathbones.com8 March 2006Page 4
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Highlights• Funds under management as at 2 March 2006 are £10 billion
• Profits before tax, aborted acquisition costs and LSE-related profits increased 28.4% to £34.4 million (2004: £26.8million)
• Profits before tax increased 23.9% to £35.3 million (2004: £28.5 million)
• Unit trust profits increased 182.4% to £3.8 million (2004: £1.3 million)
• Basic earnings per share rose by 22.7% to 60.13p (2004: 48.99p)
• Recommended final dividend is 18.5p, making a total of 30.0p (2004: 27.5p) for the year – an overall increase of 9.1%
• New non-executive appointments and Paul Egerton-Vernon steps down from the Plc Board
• Court hearing in relation to the approval of the acquisition of Dexia UK private banking business
www.rathbones.com8 March 2006Page 5
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Results highlights
9.127.530.0Dividend (p)
59.50
34.4
76.5
110.9
2005 Adjusted
(£m)
45.44
26.8
67.0
93.8
2004* Adjusted
(£m)
(3.99)
(1.4)
Rensburg-related
costs (£m)
3.36
(2.3)
LSE-related profits
(£m)
30.960.13Earnings per share (p)
28.435.3Profit before tax
14.277.9Operating expenses
18.2113.2Operating income
% increase
2005 income statement
(£m)
1*Restated for IFRS
www.rathbones.com8 March 2006Page 6
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Operating income (adjusted)
93.8
3.2
20.5
6.8
63.3
2004* (£m)
21.93.9Other income
4.921.5Trust income
18.2110.9Operating income
54.410.5Unit trust income
18.575.0Investment management income
% increase 2005 (£m)
*Restated for IFRS
www.rathbones.com8 March 2006Page 7
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Operating expenses (adjusted)
71%69%Adjusted cost/income ratio
% increase2004* (£m) 2005 (£m)
4.235.436.9Fixed staff costs
43.09.313.3Variable (include profit-related) staff costs
67.0
22.3
44.7
14.276.5Operating expenses
17.926.3Other operating expenses
12.350.2Total staff costs
*Restated for IFRS
www.rathbones.com8 March 2006Page 8
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Profits by segment
26.8
3.3
1.3
22.2
2004* (£m)
-2.73.2Trust
28.134.4
+182.43.8Unit trusts
+23.427.4Investment management
% change 2005 (£m)
*Restated for IFRS
www.rathbones.com8 March 2006Page 9
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Trust
• Jersey business profits increased by 5.2%
• Three Jersey sites will combine into a single, purpose-built site on the Esplanade in St. Helier
• Geneva returned to operating profitability during 2005
• Our operations in the UK continue to perform in line with expectations
• Trust division helps to secure and retain investment management mandates and works closely with some key investment management clients
1.9
1.5
H1
3.31.42004
3.21.72005
TotalH2Operating profit (£m)
www.rathbones.com8 March 2006Page 10
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Unit trusts• Continued growth in funds under management since the year end to
over £1.3 billion as at 2 March 2006
• Rathbone Income Fund top quartile over one, two, three and five year periods
• Recent awards from Citywire, What Investment and Standard & Poor’s
• Growing level of support from over 2,000 IFAs
• New sources of business from life companies, further fund supermarket links and fund of fund managers
• Internal sales now account for only 5% of total gross sales
www.rathbones.com8 March 2006Page 11
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Unit trustsOperating Income
6.810.5Unit trust operating income
(3.4)(5.6)Rebates and trail commission
10.716.7
(0.5)(0.6)Commission payable
0.10.5Interest & other income
0.91.4Net dealing profits
8.813.7Annual management charges
0.91.1Initial charges net of discounts
2004* (£m)2005 (£m)
*Restated for IFRS
www.rathbones.com8 March 2006Page 12
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Unit trustsGrowth in funds under management
0.20.3Net new money
0.1-Effect of performance relative to market
0.81.2Closing funds under management
(0.1)(0.1)Outflow of money
0.30.4Inflow of new money
-0.1Market movement (FTSE 100)
0.50.8Opening funds under management
2004 £bn2005 £bn
www.rathbones.com8 March 2006Page 13
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment managementOperating income
9799Basis point return
12.323132597Average FTSE/APCIMS Balanced Index on charging dates
63.3
7.5
24.8
31.0
2004* (£m)
20.09.0Interest
18.575.0
6.526.4Commission
27.739.6Fees
% increase 2005 (£m)
*Restated for IFRS
www.rathbones.com8 March 2006Page 14
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment managementGrowth in segregated funds under management
6.57.6Average funds under management
0.30.4Net new money
(0.1)-Effect of performance relative to market
6.98.3Closing funds under management
(0.2)(0.5)Outflow of money
0.50.9Inflow of new money – organic
0.41.0Market movement (FTSE/APCIMS Balanced)
6.36.9Opening funds under management
2004 £bn2005 £bn
www.rathbones.com8 March 2006Page 15
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management • New investment managers joining
• The value of segregated portfolios under management rose by 20.6% to £8.3 billion (31 December 2005)
• £700 million of charity funds
• £300 million of SIPP funds
• The Rathbone SIPP
• SEC registration
• Fees and commission unbundling
• Further development of the Rathbones Investment Process
www.rathbones.com8 March 2006Page 16
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: Dexia• Dexia’s UK private banking operations
• What we are buying:
• Investment management
• Banking book
• Timetable
• Court approval
• Date of transfer
• Accommodation
• Financial impact
www.rathbones.com8 March 2006Page 17
Rathbone Brothers PlcPreliminary Results to December 31, 2005
55.9%
21.3%
8.7%
5.4%8.8%
Private client funds (exc SIPPs)
Trusts and settlements
Charities
Pensions, including SIPPs
Other funds under management
Investment management: client base (1)Funds under management by type of account
Source: Internal data.
www.rathbones.com8 March 2006Page 18
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Funds under management by type of account
88.0%
12.0%Discretionary
Non-discretionary
Investment management: client base (2)
Source: Internal data.
www.rathbones.com8 March 2006Page 19
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: client base (3)Profile of client numbers by location Profile of client FUM by location
39.9%
20.6%
11.4%
12.0%
3.1%5.0%
2.8%
5.2%
Internal data. Private clients only.
19.0%
12.6%
8.7%
3.0%5.0%
2.6%
44.3%
4.8%South EastSouth WestCentralNorth WestNorth EastScotlandWales/NIRest of World
www.rathbones.com8 March 2006Page 20
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: client base (4)Profile of client numbers by age Profile of client FUM by age
43.2%
22.2%
13.3%
10.8%
6.3%4.2%
Internal data. Private clients only.
51.9%
23.0%
12.6%
7.8%3.6%
1.1%65+55 to 6445 to 5435 to 4425 to 34Under 25
www.rathbones.com8 March 2006Page 21
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: client base (5)Profile of client numbers by gender
36.4%
52.1%
11.5% Male
Female
Joint
Internal data. Private clients only.
Breakdown by funds under management almost the same
www.rathbones.com8 March 2006Page 22
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: client baseChange in value of clients: December 2001 – December 2005
+66.5%£1million +
+45.2%£500,000 - £999,999
+35.9%£250,000 - £499,999
+16.2%£100,000 - £249,999
-18.9%<£100,000
+4.3%Total number of clients
Number of clients banded by value
+34.3%Value of total funds under management (ex-RUTM)
+11.0%FTSE APCIMS Balanced
+12.8%FTSE All Share
% change
www.rathbones.com8 March 2006Page 23
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Investment management: client base• Private client focus
• Bias towards discretionary
• Well-diversified client base
• Growth potential
www.rathbones.com8 March 2006Page 24
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Issues for 2006• Market levels and momentum
• Organic growth
• Dexia acquisition
• Pension deficit
• Pensions – A-day
• Further consolidation in sector
• LSE shares
www.rathbones.com8 March 2006Page 25
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Conclusion and current trading
“These are record results for Rathbones. We are busy and facing the future in all three of our activities with enthusiasm and confidence.”Mark Powell, Chairman
www.rathbones.com8 March 2006Page 26
Rathbone Brothers PlcPreliminary Results to December 31, 2005
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
• 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 and unit trusts to account for over 80% of activity
• To grow our unit trust business
• Continuing development of the investment process
www.rathbones.com8 March 2006Page 27
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Appendices
www.rathbones.com8 March 2006Page 28
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Analysis of investment management operating income 12 months to 31 December 2005
52.8%35.2%
12.0%Fees
Commission
Net interest and otherincome
www.rathbones.com8 March 2006Page 29
Rathbone Brothers PlcPreliminary Results to December 31, 2005
48.3%
17.4%
3.7%
11.8%
3.0%
7.8%4.6%
3.4%Staff - payroll (excl variable)
Staff - variable (incl profit-related)
Staff other (non-payroll costs)
Premises
Depreciation
Professional
Settlements
IT
Analysis of operating expenses (excl Rensburg-related)
12 months to 31 December 2005
www.rathbones.com8 March 2006Page 30
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Operating profit (£m)
14
.2
11
.2
11
.4
9.4
13
.3 16
.1
12
.3
9.4
7.0
10
.4
15
.2
19
.2
26
.5
20
.6
18
.4 19
.7
28
.5
35
.3
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005
£ m
illio
n 1st Half
2nd Half
Full Year
2000 - 2005 After IFRS restatement
www.rathbones.com8 March 2006Page 31
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Market movements and growth Group funds under management
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2000 2001 2002 2003 2004 2005
£ m
illio
ns
Funds under management
FTSE 100
FTSE APCIMS BalancedFTSE 100 and FTSE
APCIMS Balanced
rebased at 5574 as at
31 December 2000
www.rathbones.com8 March 2006Page 32
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Consolidated balance sheetas at 31 December 2005
6,0677,869Current tax liabilities59,86060,101Intangible assets
23,00327,526Accruals, deferred income, provisions381,119396,000Investment securities – held-to-maturity
286141Debt securities in issue7,2195,157Investment securities – available-for-sale
425,078493,612Due to customers41,22637,520Loans and advances to customers
197Derivative financial instruments57,881144,975Loans and advances to banks
15,23816,133Settlements balances11,19914,017Settlement balances
Total liabilities
Equity shareholders funds
Retained earnings
Share premium/other reserves
Called up share capital
Retirement benefit obligations
Deposits by banks
Liabilities
605,357
22,154
4,379
4,480
15,840
31/12/04*
£’000
696,268
130,417
57,854
70,500
2,063
18,710
1,853
31/12/05
£’000
605,357696,268Total assets
117,440
46,174
69,22325,093Prepayments, accrued income, other assets
2,0438,599Deferred tax asset
14,9834,295Property, plant and equipment
3,243511Cash and balances at central banks
31/12/04*
£’000
31/12/05
£’000Assets
*Restated for IFRS
www.rathbones.com8 March 2006Page 33
Rathbone Brothers PlcPreliminary Results to December 31, 2005
Rathbone Brothers Plc159 New Bond StreetLondonW1S 2UDTelephone +44 (0)20 7399 0000Facsimile +44 (0)20 7399 [email protected]