Results for the year ended 30 September 2019 27 November 2019 1 - PowerPoint PPT Presentation

Results for the year ended 30 September 2019 27 November 2019 1

Agenda Agenda 1 Introduction 3 2 4 - 16 Financial results 3 Strategic progress 17 - 25 Q&A 26 4 27 - 41 Appendix 5 2

2019 – a year of successful execution Discretionary net inflows 1 £1.4bn ➢ Strong organic inflows ➢ Growth in direct and indirect business Total funds £45.0bn ➢ Robust financial performance ➢ Four strategically important Adjusted PBT 2 £75.0m acquisitions ➢ Client offering expanded Adjusted diluted EPS 3 20.5p ➢ Technology infrastructure projects on track Full year dividend 16.4p 1 Including transfers, excluding acquisitions 2 See adjusted PBT to statutory PBT reconciliation on page 36 3 See note 12 of the preliminary results to 30 September 2019 3

Financial results Siobhan Boylan 4

Another year of strong funds growth… Discretionary organic net inflows 1 (£bn) Total funds (£bn) Discretionary funds (£bn) 8% 7% 4% Growth rate +5% 45.0 +7% 2.3 2.3 40.1 +7% 42.8 +11% 37.6 40.1 33.8 1.4 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 Ex-transfers 2.2 1.6 Net flows (£bn) 1.9 Growth rate (%) 7.6 4.3 5.6 1 Including transfers 5

…driving robust financial results Total costs 1 (£m) Adjusted PBT 1 (£m) Total income (£m) +3% -3% +5% +8% +11% +8% 77.5 339.1 75.0 (265.7) 329.0 (252.3) 70.0 304.5 (234.5) Adjusted margin 1 23.0% 23.6% 22.1% FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 Adjusted diluted EPS 1 (p) Statutory PBT (£m) Full year dividend (p) 16.40 16.40 15.00 -6% -9% +11% 68.5 12.00 12.00 +19% 21.7 20.5 62.6 19.6 10.75 57.6 4.40 4.40 4.25 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 1 See adjusted PBT to statutory PBT reconciliation on page 36 6

Strategy delivering balanced net flows FY FY Discretionary net new flows £bn 2018 2019 FY 2019 FY 2018 Direct Opening discretionary funds 33.8 37.6 £bn 0.2 MPS Inflows 3.2 2.8 0.5 0.6 Intermediaries Outflows (1.3) (1.2) 0.7 Net new flows 1.9 1.6 1.1 0.4 Transfers 0.4 (0.2) Net flows including transfers 2.3 1.4 ➢ Direct (+150%) and MPS (+17%) Acquired 0.0 0.3 ➢ Direct funds growth benefiting from strong integrated inflows Investment performance 1.5 0.8 (aided by 1762 from Brewin Dolphin ) and an improved client retention rate Closing discretionary funds 37.6 40.1 ➢ Over £0.3bn of discretionary net inflows in Q4, mostly attributed Execution only & BPS 4.0 4.1 to MPS and 1762 from Brewin Dolphin Advisory 1.2 0.8 ➢ Intermediaries net flows lower due to slow down in new business, mostly pension related, which began in H2 18; Total closing funds 42.8 45.0 quarterly flows have stabilised in FY19 MSCI WMA Private Investor 1,612 1,665 Series Balanced Index Majority of direct net flows into integrated service ➢ £0.6bn of integrated net flows driving 0.4 growth in direct book 0.2 0.2 ➢ IM only net outflows (£0.1bn) 0.1 ➢ £0.2bn transferred to integrated Net new flows Transfers into into integrated integrated service service from IM only service FY 2018 FY 2019 7

Diversified business mix driving increased income FY FY Change Income growth supported by demand for advice 2018 2019 (%) ➢ Direct and financial planning income growth supported by £m increasing demand for advice and an integrated offering Direct 211.6 217.5 +3 ➢ Indirect income growth supported by our IFA relationships Intermediaries 64.2 67.7 +5 continuing to deliver positive funds flows MPS 7.6 9.1 +20 Indirect 71.8 76.8 +7 Stable effective direct fee margin (bps) 1 Total discretionary 283.4 294.3 +4 70.2 69.9 ➢ Stable due to changing income 7.1 Advice 3 8.1 mix Financial planning 24.5 27.5 +12 ➢ Growth in integrated service Other income 21.1 17.3 IM 62.8 62.1 ➢ Growth in 1762 from Brewin Total income 329.0 339.1 +3 Dolphin FY 2018 FY 2019 £bn (quarter end) Intermediaries income margin (bps) 1 Average total funds 41.6 42.8 +3 ➢ Competitively priced to encourage Average discretionary funds 36.0 37.9 +5 scale – IFAs encouraged to place additional funds with Brewin Average direct funds 24.3 25.0 +3 ➢ Success of strategy has led to Average indirect funds 11.7 12.9 +10 strong net flows driving increased 71.7 70.5 income Quarterly average MSCI 1,584 1,592 +1 ➢ 39% of intermediaries funds from WMA index 2 IFAs who individually have greater FY 2018 FY 2019 than £50m of funds with Brewin 1 Income margin calculated using average funds value as at each quarter’s fee Dolphin (34% FY18) strike date 2 Average MSCI WMA Private Investor Series Balanced Index 3 Integrated recurring FP income/average direct funds 8

Financial planning - a growing advice-led proposition £4.4bn of integrated 1 funds, growth of £1.0bn YoY ➢ Income by quarter (£m) 7.8 (£0.3bn from acquisitions in the year) ➢ Q4 19 quarterly income more than doubled since Q1 15 3.5 ➢ Income growth expected to continue, supported by acquisitions ➢ 38% of FP income from pension related advice (up from 36% in FY 2018) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 ➢ 2018 2019 Change Over 50% (£0.5bn) of direct private client inflows into (%) integrated 1 offering, up from 43% (£0.3bn) in FY 2018 No. of integrated 1 FP 5,500 6,300 +15 clients 2 ➢ 22% of direct discretionary clients are now integrated 1 FP clients No. of FP only clients 2 1,200 1,600 +33 o £0.2bn net flows transferred to integrated 1 Total no. of FP service from IM only in the year 6,700 7,900 +18 clients 2 Integrated 1 funds £3.4bn £4.4bn +29 Private client £0.3bn £0.5bn +67 integrated inflows 1 Where a client receives FP and IM services directly from Brewin Dolphin 2 Receiving ongoing advice 9

Incremental investment for future growth FY FY Change Staff costs (£m) £m 2018 2019 (%) 0.2 £3.6m 3.0 Staff costs 117.1 126.7 +8 126.7 2.1 Non-staff costs 77.5 80.8 +4 1.5 Fixed operating costs 194.6 207.5 +7 Profit share 57.7 58.2 +1 2.8 Total costs 1 252.3 265.7 +5 117.1 FY 2018 Pay inflation Financial 8WP & Infrastructure Other FY 2019 planning WealthPilot investment Total staff cost / income (%) 53.1 54.5 Non-staff costs / income (%) 23.6 23.8 Non-staff costs (£m) Total costs / income (%) 76.7 78.4 £1.6m Profit share / pre profit share 42.9 44.2 profit (%) 0.3 1.3 1.2 2 Headcount ex-acquisitions 1,699 1,810 +7 0.5 80.8 Acquisitions 54 Headcount 1,699 1,864 +10 77.5 FY 2018 BAU FSCS levy 8WP & Acquistions FY 2019 WealthPilot 1 See adjusted PBT to statutory PBT reconciliation on page 36 2 FSCS levy for FY 2019 was £3.1m 10

Cash flow £m Aylwin - £2.0m Software - £10.1m Mathieson Consulting - £0.7m PPE - £5.2m Epoch - £10.0m 85.1 £13.6m of 2.0 cash from 58.4 15.3 acquisition of 2 2.4 ICIIL 11.0 8.8 12.7 2 43.4 229.2 46.0 2.3 199.4 186.2 1 FY 2018 Adjusted Pension Capex Working Interest, tax & Net share Dividends M&A costs Placing M&A FY 2019 ICIIL Post ICIIL EBITDA funding capital other purchases acquisition 1 Investec Capital & Investments (Ireland) Limited 2 €50.2m total payment, €15.7m cash 11

Strong balance sheet FY FY £m 2018 2019 Movement in intangible assets (£m) Acquisitions 28.2 Goodwill, client relationships & brand 83.2 104.5 Technology upgrades 11.3 Software 2.5 12.7 * Amortisation/other (8.0) Total intangible assets 85.7 117.2 Total 31.5 Fixed assets 8.1 10.7 Defined benefit pension 11.4 17.4 Other non-current assets 4.2 - Total other non-current assets 23.7 28.1 Net cash 186.2 229.2 Working capital (9.3) (10.2) Provisions (3.4) (4.4) Total net current assets 173.5 214.6 Proforma regulatory capital resources (£m) 1 Total non-current liabilities (9.2) (22.2) Regulatory capital resources 216.0 Net assets 273.7 337.7 Acquisition of ICIIL 2 (32.9) IFRS 16 impact (6.6) * Proforma 176.5 Regulatory capital resources 180.8 216.0 Capital adequacy 235% Capital adequacy (%) 234 291 1 Proforma impact of ICIIL (completed 31 Oct 2019) and impact of IFRS 16 (effective from October 1 2019) 2 Investec Capital & Investments (Ireland) Limited 12

Strong regulatory capital position Capital Capital resources of resources are £176.5m are 291% of FCA 235% of FCA requirements requirements ICIIL acquisition £32.9m Available Capital capital IFRS 16 impact deductions £69.1m £6.6m £121.7m Future uses: Available capital * £28.0m • Increase in intangibles as Regulatory investment * Net assets capital Final dividends Final dividends continues £337.7m resources est. £35.4m 1 est. £35.4m 1 • Available for as at 30 £216.0m September investment 2019 Capital adequacy 291% Regulatory Capital Capital capital requirement requirement resources including including £216.0m group risk group risk appetite appetite (150%) (150%) £113.1m 2 £111.5m 1 Based on issued share capital as at 22 November 2019 2 Based on capital requirement post completion of ICIIL acquisition 13