EFTA01116071.pdf

RHJ INTERNATIONAL ------- Corporate Presentation For the year ended 31 December 2013 RHJ INTERNATIONAL EFTA01116071  Disclaimer This presentation contains certain forward-looking statements concerning RHJ International's ("the Company") operations, economic performance and financial condition. Such forward-looking statements are based on management's current expectations, estimates and projections and are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company has no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. RHJ INTERNATIONAL EFTA01116072  Contents BHF transaction 2013 Key Highlights Holding Company Costs Legacy Portfolio Financial Services BHF BANK overview RHJ INTERNATIONAL 2 EFTA01116073  BHF transaction RHJ INTERNATIONAL 3 EFTA01116074  Strategic Rationale: A highly complementary combination to drive profitable growth in core markets Acquisition of BI-IF with high quality, complementary • Quality franchise with substantial scale across European core markets franchise in Private Scale in Private Wealth, a strong Asset Banking • Strengthens unique value proposition to our sophisticated client base Management and a promising value proposition in Financial Complementary ■ Differentiated product range from highly regarded portfolio management Markets and Corporates skills in Asset teams with strong investment performance track record Management ■ Well positioned in corporate, pensions, SWFI and sub advisory segments A major step forward in RI-IJI's growth strategy to become a leading German ■ A solid, clear and simple business model connecting international capital with private and corporate Corporate the successful German 'Mittelstand" banking group Banking Access ■ "Mittelstand" one of the key drivers of the German (export-) economy • BHF and KB have compatible cultures focusing on client service excellence Strong cultural fit • Client-centric approach to preserve and grow the wealth of our clients with best-in-class solutions • Critical mass to expand core businesses and grow client base profitably Mid and back office synergies • Leveraging scale from outsourcing the back-office and support functions in Wealth Management 1. Sovereign Wealth Fund (KBI only) Source: RHJUKleinwon Benson/BHF management RHJ INTERNATIONAL 4 EFTA01116075  KBG's key performance indicators YE 2013 (excluding potential revenue and cost synergies) • Kleinwort Benson 81-11:4' BANK •10einwort Benson Operating Entities nn us• 777777 Group The combination of the Private two banks gives the Banking and Kleinwort Benson Asset €12.5bn €38.5bn1 Group critical mass in Management capital, assets under AuMs management and revenues Lending volumes €0.5bn €2.9bn3 Figures are year ended 31 December 2013 for Kleinwort Benson and NAV2 €280m €494m 0 BHF-BANK (except (IFRS) preliminary NAV as at 28 Feb 2014) Tier 1 ratio (Basel III) 19.8% 0 15.0W C;) 714 0 1,072 0 €111.1m €199.1m8 1. Assets under Management in BHF ixiude institutional client deposits within the Corporates business (€2.7bn) 2. IFRS net asset value comprises 100% of BHF's preliminary net asset value of E494m and 100% of KBG's preliminary net asset value pre-capital .crease of E280 million 3. Incl. E0.5bn for Private Banking and E2Abn for Corporates 4. Preliminary RHJ INTERNATIONAL valuation. subject to cbsing purchase price adjustments S. Figures for Kleinwort Benson Group relate to the Wealth Management operations only 6. Combined figures for Tier I capital. 5 RWAs and Tier 1 ratio represent a simple pro forma aggregation and are not intended to reflect a true consolidated figure 7. Pro-forma Basel Ill 8. Excl. E20.8m income in segment Other/ Consolidation Note: fx rater to E is 1.178 for for year to 31. Dec 2013 and 1.19947 for BtS as at 31. Dec 2013 EFTA01116076  Private Banking: High quality Wealth Mgmt franchise Creating significant scale in our core Private Banking business PWM AuM at 31.12.2013 (€bn) Comments 26.3 • Pro forma AuM of combined entity 3.5 times higher at €26bn overall • Pro forma revenues up 125% to €147.9m per end of 2013 • BHF one of the largest independent private banking franchise in Germany and ... 19.2 • ... ranked No. 1 Private Bank for 8 times in succession (Elite Report 2014) • Strong brands in our core European markets • Private banking and wealth management has been our 7.1 heritage for more than 200 years • Strengthens a unique value proposition to our sophisticated client base of (U)HNWIs KB BHF Pro forma combined • Use of cross selling potential with other business Reve- divisions and/or client segments nues 65.81 82.1 147.9 • Strong cultural fit with deep talent pool of highly dedicated (€m) and motivated employees 1. KB Wealth Management operations include family office (E1.4m), fiduciary (E19.8m) and other (€0.2m) Source: RH,WKleinwort BensoNBHF management RHJ INTERNATIONAL Note: fx rate £ to E is 1.178 for for year to 31. Dec 2013 and 1.19947 for BIS as at 31. Dec 2013 6 EFTA01116077  Asset Management: Complementary capabilities, channels and focus Asset Mgmt. per 31.12.2013 (€bn) Comments 22.0 • Pro forma AuM up -300% to €22bn and pro forma revenues up -200% to €47.4m per end of 2013 • Stable experienced teams with separate and distinctive investment processes • KBI focusing on global equity strategies and FT 16.6 specialising in European equity, multi asset and fixed income — potential cross-selling opportunities • KBI has made successful inroads with global consul- 5.4 tancy firms and both businesses have products with top ratings from Lipper/Morningstar/ FWW FundStars • Existing distribution for both firms can be leveraged further — KBI's channel focus in US, Asia and UK and KBI FT Group Pro forma FT's strength in continental Europe combined • Ongoing opportunity for both firms to collaborate with Reve- wealth management in BHF/KB nues 15.6 31.8 47.4 (€m) • Both companies will operate separately with no cost synergies, but potential upside on revenues Source: RHJWIeinwort BensoniBHF management Note: to rate to E is 1.178 for MI for year to 3t. Dec 2913 and 1.19947 for B/S as at 3t. Dec 2913 RHJ INTERNATIONAL 7 EFTA01116078  Financial Markets and Corporates: Significant potential to leverage offering for sophisticated KB clients Fin. Markets & Corporates income' (€m) Comments Corporates (C) • BHF income down 6% to €85m per end of 2013 due to ■KB Treasury IN Financial Markets (FM) excl. Treasury lower size of bond portfolio in 2013 in Financial Markets, Treasury and reduced loan portfolio for Corporates (due to overlap in client and credit basis with parent, negative impact of 90.7 loan loss provisions and higher allocation of IT/ service centre costs). Hence result before tax down 25% to €17.3m in 2013 • Strong track record in commodity finance for commodity producers • Financial Markets offers expertise in German equity markets, interest rate related investments and currency related investments • Strong position in customer advisory (sales and execution and financial markets research) • Long-standing customer relationships through 2012 2013 personalized advice • Due to complementary nature of business attractive proposition for sophisticated KB clients 1. Includes treasury income and result from treasury Source: RHJM3HF management RHJ INTERNATIONAL Note: lx rate £ to E is 1.178 for I= for year to 31. Dec 2013 and 1.19947 for B/S as at 31. Dec 2013 8 EFTA01116079  Leveraging scale from outsourcing the back-office and support functions in Wealth Management Cost reductions achieved Comments • Management and key staff with extensive integration experience KBB/KBCIL (£m)1 102 • Successful acquisition integration track record: KB Close integration • Both entities with proven track record in reducing costs: KBB/KBCIL, BHF Germany and Switzerland • Vigilant approach with experienced team to 2010 2011 2012 2013 ensure successful integration • Further details to be provided at the Earnings Call on 15 May 2014 290 267 228 Additional scale benefits of €20+m in Wealth Management targeted for combined entity 2010 2011 2012 2013 1. Excluding growth initiatives (2010: £0.5m, 2011: £2.8m, 2012: £3.3m, 2013: £8Am) Source: RHJUKleinwort Benson/BHF management RHJ INTERNATIONAL EFTA01116080  Strong balance sheet of both KB and BHF Loan to deposit ratio (%) Tier 1 ratio' (%) 120 35 I 101 30 - 100 I I I I 25 - 80 70 71 73 73 73 74 I I I 64 20 60 I I I I 44 153 153 156 I 15 - I I I I I I I I 42 40 - , 10 - 281 19 20 , 24 20 - 5 - 12 I . t . . . . r 0 e a co cco . € 0 itc? Edmond de Rothschi E ea 8 2 2 2 2= s z'° E l= (0 lac o X (C 0 cT- o 2 at C le% Im l w g 4 a W 2. 2 5 m 0 o z 0 m KB is one of the best capitalised private banks Low loan to deposit ratio creates capacity for with a Tier 1 ratio well in excess of both internal profitable growth and regulatory targets Source: Company information RI-If INTERNATIONAL Note: All figures as of December 31, 2013, unless otherwise stated 1. Figures as reported under Basel III fully-loaded: 2. As of June 30.2013; 3. As of December 31. 2012: 4. As of March 3 t • 2013: 10 5. As of October 31. 2013: 6. Based on pro-forma Basal III EFTA01116081  'Transaction structure of BHF acquisition' RHJ International Co-Investors Total purchase price 65.8% 34.2% for 100% BHF: €340m (RHJi effective interest in BHF of 68.9%) KB Group Ltd (Preliminary NAV: Purchase D price:: E30.6m €730m2) Purchase price: €309.4m • Kleinwort Benson Bank Ltd BHF-BANK AG • Kleinwort Benson Channel Islands Holdings Ltd (Preliminary NAV: €494m) • Kleinwort Benson Investors Dublin Ltd (Preliminary NAV: E280m) 1. Based on preliminary valuations of KBG and BHF, subject to post•closing adjustments 2. NAV comprises 100% of existing KBG NAV (E280m) and 91% of RI-lj INTERNATIONAL BHF NAV (€494m) Source: RHAGeinwort Benson management 11 EFTA01116082  BHF acquisition — an attractively priced transaction' Breakdown of transaction valuation parameters Comments ■ Acquisition of BHF (100%) for €340M (in € millions) BHF KBG Total represents an attractive multiple of 0.69x to €494M net asset value ("NAV") NAV2 494 280 774 ■ And is 0.74x its tangible net asset value ("TNAV") of €459M Intangibles 35 39 74 ■ Pro forma purchase price of the BHF reduced to €340M from -€354M in Oct TNAV3 459 241 700 2013 due to non-operating adjustments to BHF's NAV Purchase price (PP) 340 194 534 ■ RHJI's 100% stake in KBG was valued at €194M and is in line with the equivalent multiple of 0.69x NAV that PP/NAV 0.69 0.69 0.69 was used to value BHF PP/TNAV 0.74 0.80 0.76 1. Based on preliminary valuations of KBG and BHF, subject to postolosing adjustments 2. Net asset value, based on a 100% of BHF 3. Tangible net asset RHJ INTERNATIONAL value Source: RHJUKleinworl Benson 12 EFTA01116083  91% of BHF-BANK acquired through Kleinwort Benson Group (KBG)1 Breakdown of KBG valuation and ownership Uses (valuation in €m) BHF-BANK Kleinwort Transaction KB BHF Group KB / BHF Group Benson costs (incl. trans. costs) 91% stake €309.4m €194.3m €503.7m €10.0m €513.7m Transaction Total KBG Investor Investment (pre transaction costs) costs investment ownershi 1 RHJ €331.3m investment (oA.v Kleinwort Benson €6.6m €337.9m 65.78% International valued at €194.3m and €137.0m in cash) Windmere and €513.7m €13.3m cash investment into KBG €0.3m €13.6m 2.65% Collins Trust 3 Fosun €96.6m cash investment into KBG €1.9m €98.5m 19.18% AQTON SE, €62.4m cash investment into KBG €1.2m €63.7m 12.40% Total €503.7m €10.0m €513.7m 100.0% .— 1. Based on preliminary valuations of KBG and BHF, subject to post.closing adjustments 2. AQTON SE 100% owned by Mr Ouandt RHJ INTERNATIONAL Source: RHJI/Kleinwort Benson 13 EFTA01116084  Recap: RHJI strategy to build European Financial Services proposition Focus on PWM, • Become a leading wealth management and corporate banking platform in Europe AM and Corp • Target sophisticated private and corporate clients and family offices Banking • Experienced Asset Mgmt. with complementary capabilities, channels and focus Leverage • International platform to leverage each others products, distribution and expertise international platform • Strong franchise based on ties to wealth creators in respective domestic markets Client • Client-centric service excellence with talented and motivated employees centricity • Experienced and committed management team • A solid, clear and simple business model connecting international capital with our A focused targeted (U)HNWI client segments business model • Solid platform built around strong, well established brands with a clear heritage Source: RHJINeinwor1 Benson/BHF management RIM INTERNATIONAL 14 EFTA01116085  Conclusion: a very strong proposition Management and organisation focused on executing the • Acquisition in line with Corporate Strategy to become a strong integration Strategic fit Anglo-German private and corporate banking group aligned with quality asset management capabilities Vigilant approach with experienced team to ensure successful integration Client fit • Client-centric approach to preserve and grow the wealth of our clients with best-in-class solutions • BHF and KB have compatible cultures focusing on stability and Cultural fit continuity for clients and employees • Business models similar along key dimensions with opportunity Business fit to drive scale benefits in Wealth Management of €20m÷ Financial fit • Strong balance sheet proactively managed with low-risk business profile, providing additional capacity for growth Source: RHAMeinwort Benson/BHF management RIM INTERNATIONAL 15 EFTA01116086  I Results for the year to 31 December 2013 RHJ INTERNATIONAL 16 EFTA01116087  Results summary - Segment overview in 2013 RHJI Segments for the year to 31 December 2013 (€m) (In EUR Consolidated loss across the Group reduced by Financial Holding 21% to €66.4 million (2012: €84.4 million). Sub-Total Reclassifications2 Total Services, Segment, Net interest income 15.7 15.7 0.2 15.9 Losses related to non-core and discontinued operations reduced from €41.0 million to Net fee and commission income 95.8 95.8 95.8 €26.3 million. Other operating income 0.9 1.9 2.8 2.8 Core operating segment loss across the Operating income 112.4 1.9 114.3 0.2 114.5 Financial Services and Holding segments 8% lower at €40.1 million (2012: €43.4 million). Operating expenses (123.8) (30.6) (154.4) (2.3) (156.7) Core operating segment result (11.4) (28.7) (40.1) (2.1) (42.2) 14% growth in AuM to £5.9 billion (€7.1 billion). Within our Wealth Management operations. Other non-recurring items3 (2.3) (2.3) 2.3 Segment loss of £11.7 million (€13.8 million). Operating profit (loss) before tax (13.7) (28.7) (42.4) 0.2 (42.2) Balance sheet strong with a tier 1 capital ratio of Net loss on disposal of available for sale assets (3.0) 19.8%. Net finance income (6.0) • 49% growth in AuM at Kleinwort Benson Share of profit (loss) of equity accounted investees 0.5 Investors to €5.4 billion. Segment profit of Profit (loss) before income tax (50.7) €2.5 million over eight times higher than 2012. Income tax benefit (expense) (0.3) (Loss) from discontinued operations (15.4) Holding Company costs across RHJI and Profit (loss) for the period (66.4) Kleinwort Benson Holdings reduced by 40% to €30.6 million (2012: €51.0 million). I. Kleinwort Benson Holdings has been removed from the Financial Services segment and is now reflected the Holding Segment. Nor year figures have been restated RHJ INTERNATIONAL 2. 3. Includes reclassifications of exceptional and other non•recurrirg items Non-recurring items prilcipally relate to restructuring provisions connected with the outsourcing of Back Office functions in the Wealth Management business 17 EFTA01116088  RHJ International - Key Highlights • 40% reduction in total Holding Company costs to €30.6 million (2012: €51.0 million) • Transformation costs (deal-related and restructuring) down 81% to €3.1 million — 2014 will be higher due to BHF Holding costs at completion 1 Company • Cash fixed holding costs' reduced by 17% to €15.9 million Costs We remain focused on the simplification of the corporate structure to achieve the targeted run rate of cash fixed holding costs excluding London lease costs • 39% stake in Shaklee sold via a share buyback transaction for gross consideration of €39.8 million Legacy • 21.8% stake in SigmaXYZ sold for total proceeds of €17.0 million. Portfolio • Merchant banking business conducted by Ripplewood successfully spun-off. RHJI retains 19% stake in KBA. Final capped payment of $5 million (€3.6 million) with a firm commitment not to fund future expenses. Kleinwort Benson Wealth Management • 14% increase in AuM to £5.9 billion (€7.1 billion) — over half of growth due to positive net inflows. • 19% growth in loan portfolio to £446 million — low loan to deposit ratio provides capacity for future profitable growth • Balance sheet remains strong — tier 1 ratio of 19.8% amongst highest across European peer set 3 • Segment loss of £11.7 million (€13.8 million) reflects impact of challenging economic environment on operating Financial income and £6.4 million investment in growth initiatives. Underlying expenses reduced by 3%. Services Kleinwort Benson Investors ("KBI") • 49% growth in AuM to €5.4billion — 76% of growth due to strong net inflows of €1.4 billion • Marked shift in geographic distribution of client base — North American and European client each now account for 31% of AuM • Segment profit of €2.5 million over eight times higher than 2012 — Reflects highly scalable business model, with operating margin strengthened from 3% to 16% RHJ INTERNATIONAL I. Excluding London lease costs 18 EFTA01116089  Holding Company Costs O 40% reduction in Holding Company costs Breakdown of Holding Company costs in 2012 and 2013 51.0 Total holding company costs reduced by 40% to €30.6 million (2012: €51.0 million) CO* Restructuring and deal-related expenses 81% lower at €3.1 million) — 2014 deal-related expenses will be higher 30.6 30.6 due to BHF acquisition completion costs. 0.6 2.5 Fixed cash fixed holding costs excluding London lease 6.4 costs reduced by 17% to €15.9 million — Includes 42.9 remuneration costs which were 23% lower at €6.9 million principally due to headcount reduction. 9.1 6.9 Variable compensation also 36% lower at €5.2 million - €19.2m - I lower individual awards reflect commitment to reduce costs €15.9m 4 and Company's financial performance. 10.1 9.0 Delays in BHF transaction have had a knock-on effect on the corporate and legal simplification process. FY2012 FY2013 Short-term priority is to integrate BHF and drive -1Restructuring expenses Fixed remuneration efficiencies Deal-related costs Other recurring cash fixed holding costs London lease costs Kleinwort Benson Holdings Variable compensation RHJI Depreciation / amortisation RHJ INTERNATIONAL I. Excluding London lease costs 19 EFTA01116090  RHJ International — Key Highlights 40% reduction in total Holding Company costs to €30.6 million (2012: €51.0 million) • Transformation costs (deal-related and restructuring) down 81% to €3.1 million — 2014 will be higher due to BHF Holding costs at completion Company Costs • Cash fixed holding costs' reduced by 17% to €15.9 million We remain focused on the simplification of the corporate structure to achieve the targeted run rate of cash fixed holding costs excluding London lease costs • 39% stake in Shaklee sold via a share buyback transaction for gross consideration of €39.8 million Legacy • 21.8% stake in SigmaXYZ sold for total proceeds of €17.0 million. Portfolio • Merchant banking business conducted by Ripplewood successfully spun-off. RHJI retains 19% stake in KBA. Final capped payment of $5 million (€3.6 million) with a firm commitment not to fund future expenses. Kleinwort Benson Wealth Management • 14% increase in AuM to £5.9 billion (€7.1 billion) — over half of growth due to positive net inflows. • 19% growth in loan portfolio to £446 million — low loan to deposit ratio provides capacity for future profitable growth • Balance sheet remains strong — tier 1 ratio of 19.8% amongst highest across European peer set • Segment loss of £11.7 million (€13.8 million) reflects impact of challenging economic environment on operating Financial income and £6.4 million investment in growth initiatives. Underlying expenses reduced by 3%. Services Kleinwort Benson Investors ("KBI") • 49% growth in AuM to €5.4billion — 76% of growth due to strong net inflows of €1.4 billion • Marked shift in geographic distribution of client base — North American and European client each now account for 31% of AuM • Segment profit of €2.5 million over eight times higher than 2012 — Reflects highly scalable business model, with operating margin strengthened from 3% to 16% RHJ INTERNATIONAL I. Excluding London lease costs 20 EFTA01116091  Legacy portfolio 0 Spin-off of Ripplewood merchant banking business • Merchant banking activities conducted by Ripplewood spun-off into a separate legal entity in December 2013 • RHJI holds a 19% minority stake in the new entity - This will continue to operate under the name "Kleinwort Benson Advisors, LLC." ("KBA") • RHJI retains access to future investment products and services through its 19% equity stake in KBA, • RHJI has made a capped and final cash payment of US$5.0 million (€3.6 million) as consideration for its 19% equity stake and as a contribution to the costs of winding down Ripplewood Holdings LLC. Spin-off transaction • Wind down process includes realisation of the Ripplewood Fund's remaining portfolio assets — this process is virtually complete following realisation of interest in GoGo Inc, one of the fund's last remaining investments • Merchant banking business reclassified as discontinued - €13.8 million loss in