TATT TTON ON ASSET ASSET MAN MANAGEMENT GEMENT Interim Results for the six months ended 30 September 2018 INVE VESTOR R AN AND D AN ANAL ALYST PRE RESENTATION
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 information contained in this document (“Presentation”) has been prepared by Tatton Asset Management PLC (the “Company”) . 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 • Divisional analysis • Strategy for growth • Summary 3
INTR INTRODU ODUCTION CTION TO O THE THE TEAM TEAM 4
INT INTRODUC ODUCTI TION ON TO THE O THE TE TEAM AM Paul Hogart rth, CEO Lotha thar r Men Mentel, tel, CIO IO Paul Edward wards, s, CFO • Over 30 years’ experience at Board • • Co-founder of Tatton Capital Limited Joined Tatton Asset Management level in the financial services sector in 2012 Plc as Group CFO in May 2018 • • • Founder of Tatton Asset Ex CIO of Octopus. Has held senior Previously Group Finance Director Management Group, specifically investment positions with NM of Scapa Group plc and NCC Paradigm Partners, in 2007 and Rothschild, Threadneedle, Barclays Group plc subsequently of Tatton Capital Wealth, and Commerzbank AG Limited in 2012 5
GR GROUP ST OUP STRUCTURE UCTURE Tatton Asset Management PLC (“TAM” or “Group”) Tatton Investment Management Paradigm Partners Paradigm Mortgage Services (“Tatton” or “TIML”) (“Paradigm” or “ PPL ”) (“PMS”) Challenger model DFM IFA support services Adviser support services • • • On-platform only discretionary Compliance services Mortgage aggregation • • portfolio management (MPS based) Technical support Protection • • • Complimentary in-house fund Business consultancy Other insurance aggregation range • Low cost 6
KEY KEY HIG HIGHLIG HLIGHTS HTS 7
KEY HIGHLI KEY HIGHLIGHTS GHTS FIN INANCIA ANCIAL & & OPE PERA RATIO TIONAL AL • TIML AUM increased 29.5% to £5.7bn (2017: £4.4bn) • Average AUM inflows of over £90m per month • Group revenue increased 15.7% to £8.45m (2017: £7.30m) • Adjusted operating profit* up 8.3% to £3.35m (2017: £3.09m) • Reported profit before tax increased to £3.08m (2017: £0.56m), after charging exceptional items and share based charges of £0.4m • Interim dividend of 2.8p (2017: 2.2p) a 27.3% increase • Adjusted F.dil EPS** increased 8.6% to 4.57p (2017: 4.21p) • Strong financial position, with net cash of £11.6m (2017: £10.5m) 8 *Operating profit before exceptional items and IFRS2 share-based costs **Adjusted for exceptional items and IFRS2 share-based costs and potentially dilutive shares
KEY HIGHLI KEY HIGHLIGHTS GHTS (F (FIN INAN ANCIAL & & OP OPERA RATIO IONAL CO CONT NTIN INUED) D) • TIML delivered strong organic growth and client portfolio returns ahead of peer group averages • TIML increased its member firms by 41.6% to 405 (2017: 286) and number of accounts by 21.5% to 53.5k (2017: 44.1k) • ACD provider changed to improve efficiency and service offering – seamless process and helping improve margin • Further investment and strengthened business development team • Pipeline of new IFA businesses continues to grow, as more IFAs that are not clients of Paradigm Partners use TIML. IFA’s that also use Paradigm Partners (or “PPL”) consulting services now account for 42% of the total number of firms and 79% of the assets under management • Paradigm Mortgages (or “PMS”), the Group’s mortgage and protection distribution business, performed strongly, with gross lending via its channels during the period of £4.0bn (2017: £3.2bn), an increase of 25.0%. PMS now has 1,290 mortgage firms using its services (2017: 1,143) 9
FIN FINANCIAL ANCIAL PERFORMAN PERFORMANCE CE 10
PR PROFIT OFIT & L & LOSS OSS Six months ended 30 • Revenue increased 15.7% September 2018 2018 2017 Growth % Currency: £'000 • Operating profit increased 8.3% 7,298 15.7% Revenue 8,445 • H1 2017 excludes £260k additional governance costs (5,095) (4,204) Admin expenses following July 2017 IPO Adjusted Operating profit* 3,350 3,094 8.3% • Share based payments include 2018 EMI and share Margin %* 39.7% 42.4% save schemes Share based payments (IFRS2) (365) (892) • Exceptional items relate to July 2017 IPO Exceptional charges – IPO costs (13) (1,632) Operating profit 2,972 570 • – Interest relates to £0.5m loan note redeemable Finance Income / (costs) 112 (14) December 2018 Profit before tax 3,084 556 • Underlying tax rate 19.7% Corporation tax (681) (426) Basic earnings per share 4.30p 0.21p • Adjusted F.dil EPS increased 8.6% Adjusted F.Dil earnings per 4.57p 4.21p 8.6% share** • Interim dividend increased 27.3% to 2.80p Dividend 2.80p 2.20p 27.3% 11 * Adjusted for exceptional items and IFRS2 share-based costs **Adjusted for exceptional items and IFRS2 share-based costs and potentially dilutive shares
DIVISION DIVISI ONAL A AL ANAL ALYSI SIS £000’s TIML PPL PMS 2018 2017 2018 2017 2018 2017 H1 H1 H1 H1 H1 H1 Revenue 4,025 2,779 3,118 3,475 1,278 1,032 Growth% +/- +44.8% -10.3% +23.8% EBIT * 2,050 1,280 1,537 1,795 718 531 Margin % 50.9% 46.1% 49.3% 51.7% 56.2% 51.5% £4.0bn £3.2bn £5.7bn AUM £4.4bn AUM gross gross +29.5% +33.3% lending lending +25.0% +33.3% KPI’s & 405 Firms & 286 Firms & 382 356 1,290 1,143 Attributes 53,500 44,100 Members Members Members Members Clients Clients +7.3% +2.6% +12.9% +12.9% Recurring = Yes Recurring = Yes Recurring = No 12 * Adjusted for exceptional items and share based charges
SHAPE SHAPE AND AND PATT TTERN ERN OF GR OF GROWTH WTH H1 v H2 revenue splits (2018/19 consensus) Revenue split % Sep-17 52.0% 50.0% 14.1% 48.0% 46.0% 44.0% 38.2% 42.0% 47.7% 40.0% 38.0% TIML PPL PMS Total H1 Sep 18 H1 Sep 17 TIML PPL PMS H1 v H2 profit splits (2018/19 consensus) Revenue split % Sep-18 60.0% 15.1% 50.0% 40.0% 30.0% 36.9% 20.0% 47.9% 10.0% 0.0% TIML PPL PMS Central* Total* H1 Sep 18 H1 Sep 17 TIML PPL PMS *2017 adjusted for IPO governance costs 13
BALA ALANCE NCE SHE SHEET ET & CASH FL & CASH FLOW BALANCE SHEET CASH FLOW 2018 2017 2018 2017 £’000 £’000 £’000 £’000 Cash from operations before 4,291 2,694 Goodwill 4,917 4,917 exceptional items Fixed assets & 310 42 Exceptional (13) (1,632) Investments Cash from operations 4,278 1,062 Trade & other 3,410 2,037 receivables Tax paid (687) - 11,622 10,520 Cash Capital investment (251) (37) (5,775) (3,704) Finance income / (Cost) 112 (14) Trade & other payables Dividends (2,460) (481) (615) (1,302) Tax Proceeds from share issue - 10,000 Net Assets 13,869 12,510 Net cash increase 992 10,530 14
TATT TTON UNIVERSE ON UNIVERSE Total number of IFA 13,250 Total FUM £520 billion firms Tatton number of user 341 Tatton FUM £5 billion firms Each IFA firm has an average £40m under control on platform 15 * Platforum – UK Adviser Platform Guide
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