TATT TTON ON ASSET ASSET MAN MANAGEMENT GEMENT INVES INVESTOR AND R AND AN ANAL ALYST ST P PRESE RESENTATIO TION June 2020
DISCLAIMER DISCLAIMER The information contained in this document (“Presentation”) has been prepared by Tatton Asset Management plc (the “Company”) . The content of this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. The Slides are being supplied and directed only at persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC, as amended) and, additionally in the United Kingdom, to those qualified investors who (a) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (investment professionals) or (b) fall within Article 49(2)(a) to (d) of that Order (high net worth companies, unincorporated associations etc) (all such persons being "Relevant Persons"). Any person who is not a Relevant Person may not attend the presentation of the Slides and should not act or rely on this document or any of its contents. Any investment or investment activity to which the Slides relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This Presentation does not purport to contain all information that a prospective investor may require and is subject to updating, revision and amendment. No representation or warranty, express or implied, is given by the Company or any of its subsidiaries, advisers, directors, members, officers, trustees, employees or agent, as to the accuracy, fairness or completeness of the information or opinions contained in this Presentation and, save in respect of fraud or wilful default, no liability is accepted for any such information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or information expressed in the presentation. 2
AGEND GENDA • Introduction to the team • Key highlights • Financial performance • Market overview • Investment and fund update • Summary 3
INTR INTRODUCT ODUCTION ION TO O THE TEA THE TEAM 4
INTRODUC INT ODUCTI TION ON TO THE O THE TE TEAM AM Paul Hogarth Lothar Mentel Paul Edwards CEO CIO CFO – Over 30 years’ experience at Board – Co-founder of Tatton Capital – Joined Tatton Asset Management level in the financial services sector Limited in 2012 plc as Group CFO in May 2018 – Founder of Tatton Asset – Ex CIO of Octopus. Has held – Previously Group Finance Director Management Group, specifically senior investment positions with of Scapa Group plc and NCC Paradigm Consulting in 2007 and NM Rothschild, Threadneedle, Group plc subsequently of Tatton Capital Barclays Wealth, and Limited in 2012 Commerzbank AG 5
DIVISI DIVISION ONAL STR AL STRUCTURE UCTURE Tatton Asset Management plc (“TAM” or “Group”) Investment Management Division IFA Support Services Division (“Tatton”) (“Paradigm”) • Tatton Investment Management offers on-platform only challenger model DFM MPS • Paradigm Consulting Low charges - MiFID II alignment Paradigm Mortgage Services • Pure investment manager • • Mortgage aggregation Compliance services • Complementary, low cost • • Technical support Protection multi-manager fund range • • Business consultancy Other insurance aggregation • Platform wrap services 6
KEY KEY HIGHLIGHTS HIGHLIGHTS 7
KEY HIGHLI KEY HIGHLIGHTS GHTS FIN INANCIA ANCIAL • Group revenue increased 22.0% to £21.369m (2019: £17.518m) Adjusted operating profit 1 up 24.2% to £9.076m (2019: £7.308m) • Adjusted operating profit 1 margin 42.5% (2019: 41.7%) • • Reported profit before tax increased to £10.296m (2019: £6.112m) Adjusted fully diluted EPS 2 increased 19.8% to 12.00p (2019: 10.02p) • • Dividend of 6.4p increasing 14.3% (2019: 5.6p) • Strong financial position, with net cash of £12.757m 8 1. Adjusted for exceptional items, share-based payment costs and amortisation 2. Adjusted for exceptional items, share-based payment costs, amortisation and potentially dilutive shares
KEY HIGHLI KEY HIGHLIGHTS GHTS OPERATIO IONAL • Tatton’s assets under management (“AUM”) increased 9.6% to £6.7bn (2019: £6.1bn), current AUM recovered to £7.553bn in June 2020 • Average AUM net inflows of over £94.0m per month, current average net inflows £51.7m (Apr- May only experienced 1 negative week of flows throughout lockdown) • Tatton increased the number of firms utilising its DFM services by 33.7% to 595 (2019: 445) and the number of accounts increased 13.0% to 66,100 (2019: 58,500) • Tatton’s long -term business partnership with Tenet is developing well with 81 new IFA firms and initial business activity has resulted in assets under management reaching £225.9m • The Group made its first acquisition of Sinfonia on 30 September 2019 for a consideration of up to £2.7m, five risk-targeted funds that complement the current fund range proposition • Amalgamation of Consulting and Mortgages creating a simplified IFA support services business, allowing the Group to better meet the needs of IFAs through an integrated approach • Paradigm Mortgages increased gross lending facilitation via its channels by 17.5% to £9.86bn (2019: £8.39bn) and increased the number of firms by 10.9% to 1,544 (2019: 1,392) 9
FIN FINANC ANCIAL IAL PR PROGRESS OGRESS SI SINCE NCE IP IPO Adj Operating Profit 1 £m Revenue £m CAGR 26.3% CAGR 21.7% £9.1m £21.4m £7.3m £17.5m £6.2m £15.5m £4.5m £11.9m Mar-17 Mar-18 Mar-19 Mar-20 Mar-17 Mar-18 Mar-19 Mar-20 Mar-18 adjusted for like for like plc costs pre-IPO Adjusted F.Dil EPS 2 (p) Margin 1 % +4.5% (Absolute) CAGR 23.0% 12.00p 42.5% 41.7% 10.02p 40.3% 9.12p 38.0% 6.45p Mar-17 Mar-18 Mar-19 Mar-20 Mar-17 Mar-18 Mar-19 Mar-20 Mar-18 adjusted for like for like plc costs pre-IPO 10 1. Adjusted for exceptional items and share-based payment costs 2. Adjusted for exceptional items and share-based payment costs and potentially dilutive shares
FIN FINANCI ANCIAL AL PE PERFOR RFORMANC MANCE 11
PROFIT PR OFIT & L & LOSS OSS • Group revenue increased 22.0% to £21.4m • Like for like underlying revenue increased 15.3% to £20.2m • FY20 additional income and Other exceptional income relates to change in treatment of value added tax • Investment in costs in Tatton (people: Investment, Ops & Dist, Tenet Marketing) • Exceptional credit (exceptional income above plus other items) Group adjusted operating profit 1 increased +24.2%, • increasing underlying margin 2 to 44.9% • Effective tax rate 18.8% Adjusted F.Dil EPS 3 increased 19.8% to 12.0p • 12 1. Adjusted for exceptional items and IFRS2 share-based payment costs. 2. Underlying margin calculated based on Adjusted operating profit divided by Underlying revenue. 3. Adjusted for exceptional items and IFRS2 share-based payment costs and potentially dilutive shares.
BALA ALANCE NCE SHE SHEET ET HIGHLI HIGHLIGHTS GHTS • Robust balance sheet • Debt free, net cash £12.8m • Strong financial liquidity position • In discussions to increase existing facility • Goodwill & intangible assets • £2.5m of the increase relates to the acquisition of Sinfonia including £1.2m of customer relationship intangible assets to be amortised over 10 years, as well as investment in Tatton portal/systems • Tangible fixed assets • Recognition of £0.5m lease asset following adoption of IFRS 16 and investment in office fit-out • Trade & other receivables • Movement is FY20 accrued income re further tax repayment • Trade & other payables • IFRS16 lease liability, Sinfonia deferred payment & other accruals 13
CA CASH FL SH FLOW W BR BRIDGE IDGE • • Cash generated from operations £11.2m, before exceptional Sinfonia acquisition £2.0m cash with future items was £9.8m, 108% of adjusted operating profit contingent consideration payable in two tranches • • Dividends paid include FY2019 final dividend of 5.6p plus £1.0m purchase of own shares through the EBT for FY2020 interim dividend of 3.2p utilisation against any future options • Corporation tax now under “very large” company tax • Capex investment in Tatton portal / settlement instalments systems and office fit-out 14
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