Perpetual Limited · ASX:PPT
Perpetual — H1 2019 Earnings Presentation
27 slides from Perpetual's earnings presentation, Feb 21, 2019
Slide 1: Perpetual Limited 1H19 Results
21 February 2019 For personal use only PERPETUAL LIMITED 1H19 RESULTS Six months to 31 December 2018 Rob Adams Chief Executive Officer & Managing Director Chris Green Chief Financial Officer ABN 86 000 431 827
Slide 2: CEO Initial Observations
CEO INITIAL OBSERVATIONS For personal use only Client relationships 5 months ▪ ▪ 130+ years earning trust of our clients Fiduciary responsibility in our DNA Joined 24 September ▪ Long-term relationships spanning multi-generations ▪ Strong client advocacy in all divisions MET WITH: Clients People & C
Slide 3: Challenging Macro Operating Environment
CHALLENGING MACRO OPERATING ENVIRONMENT NEAR-TERM INCREASE IN COMPLEXITY For personal use only MACRO INDICATORS ▪ Geopolitical uncertainty ▪ Low interest rate environment ▪ Subdued credit growth SECTOR CHANGE ▪ Increased market volatility ▪ Ageing population ▪ Sector dislocation, structural change C
Slide 4: Royal Commission Themes
ROYAL COMMISSION THEMES ESTABLISHED AND WELL POSITIONED BUSINESS MODEL For personal use only Follow the Act in client’s best Increased Culture, law and meet client interest and manage regulator and governance expectations conflicts compliance activity and remuneration ▪ Mature Risk Management ▪ Esta
Slide 5: 1H19 Results
For personal use only 1H19 RESULTS $252.3m $167.0m $60.2m $1.25 Revenue Expenses NPAT Dividend 5% on 1H18 1% on 1H18 12% on 1H18 7 % on 1H18 PERPETUAL PERPETUAL PERPETUAL INVESTMENTS PRIVATE CORPORATE TRUST FUM $27.7b FUA $13.7b FUA $717b Highly regarded investments business Clear HNW segmen
Slide 6: Financials
For personal use only FINANCIALS CHRIS GREEN CHIEF FINANCIAL OFFICER
Slide 7: Financial Performance – Group
FINANCIAL PERFORMANCE – GROUP For personal use only 1H19 2H18 1H18 1H19 1H19 For the period $m $m $m v 2H18 v 1H18 Operating revenue1 252.3 266.9 266.8 (5%) (5%) Total expenses (167.0) (172.2) (165.3) 3% (1%) Underlying profit after tax (UPAT) 60.2 67.4 71.5 (11%) (16%) Significant items - 4.7 (3.5)
Slide 8: Net Profit Impacted by Weaker Equity Markets and Lower FUM
NET PROFIT IMPACTED BY : WEAKER EQUITY MARKETS AND LOWER FUM, OFFSET BY INCREASED DISTRIBUTIONS AND LOWER TAX For personal use only Movement in NPAT ($m) 68.1 3.5 60.2 3.4 (7.8) 3.4 0.3 (10.1) 1H18 NPAT Revenue1 Asset at Group interest and Expenses3 Tax 1H18 Significant 1H19 NPAT FVTPL2 distribution
Slide 9: Investments – Key Drivers
PERPETUAL INVESTMENTS – KEY DRIVERS DECLINING MARKET AND INCREASING VOLATILITY For personal use only All Ordinaries Index Valuations remain elevated 6500 20 6250 15 6000 Average 1H19 v 2H18: 0.1% 10 5750 Average 1H19 v 1H18: 3.5% 5 5500 2008 2010 2012 2014 2016 2018 Jul-17 Nov-17 Mar-18 Jul-18 Nov-1
Slide 10: Investments – Long-Term Performance Remains Strong
PERPETUAL INVESTMENTS LONG-TERM PERFORMANCE REMAINS STRONG For personal use only Quartile Rankings1 % of funds quartile ranking periods ending December 2018 over 6 months – 10 years 6 mths 1 Yr 3 Yrs 5 Yrs 7 Yrs 10 Yrs Perpetual W Australian 1 3 4 4 4 2 6 mths 60% 40% Perpetual W Concentrated Equity
Slide 11: Investments – Lower Revenue Due to Net Outflows and Performance Fees
PERPETUAL INVESTMENTS LOWER REVENUE DUE TO NET OUTFLOWS AND PERFORMANCE FEES For personal use only Revenue $m 1H19 2H18 1H18 1H19 v 1H19 v For the period 5.3 3.9 $m $m $m 2H18 1H18 1.4 Revenue 105.8 114.6 117.6 (8%) (10%) 112.3 110.7 104.4 Operating expenses (54.3) (55.6) (54.9) 2% 1% 1H18 2H18 1H19
Slide 12: Private – Client Growth Continues Despite Industry Headwinds
PERPETUAL PRIVATE CLIENT GROWTH CONTINUES DESPITE INDUSTRY HEADWINDS For personal use only New client growth Continued growth in 11th consecutive half of across HNW and new Fordham clients positive flows Fordham continues Net New Clients – HNW ex Fordham New Clients - Fordham Net Flows - FUA $b 120
Slide 13: Private – Steady in a Challenging Environment
PERPETUAL PRIVATE STEADY IN A CHALLENGING ENVIRONMENT For personal use only 1% growth in FUA in line with 1H18 Margins in-line PP Funds Under despite market volatility with 2H18 Management vs 1H18 Funds Under Advice $b Funds Under Management $b Market Related Revenue Margin bps 6.4 6.1 6.1 0.6 0.5 0
Slide 14: Private – Consistent Results, Well Positioned for Future Growth
PERPETUAL PRIVATE CONSISTENT RESULTS, WELL POSITIONED FOR FUTURE GROWTH For personal use only 1H19 2H18 1H18 1H19 v 1H19 v Revenue $m For the period $m $m $m 2H18 1H18 Market related revenue 60.5 59.5 61.0 2% (1%) 92.8 93.7 92.6 Non-market related revenue 32.1 34.2 31.8 (6%) 1% 31.8 34.2 32.1 Total
Slide 15: Corporate Trust – Debt Market Services
PERPETUAL CORPORATE TRUST – DEBT MARKET SERVICES (DMS) EXTENSIONS OFFSETTING LOWER MARKET SECURITISATION ISSUANCES For personal use only DMS FUA $b Market Securitisation Issuance $b DMS Revenue Composition $m 41 29.6 27.9 28.9 448 450 461 34 10 18 15 15 27 10.4 43 8 10.1 10.9 45 42 113 123 120 16 8
Slide 16: Corporate Trust – Managed Fund Services
PERPETUAL CORPORATE TRUST – MANAGED FUND SERVICES (MFS) CONTINUED DIVERSIFICATION SUPPORTING GROWTH For personal use only Australian Cross-Border Flows1 $b MFS FUA $b MFS – Revenue Contribution 24.1 24.7 21.7 3.4 3.9 3.1 4.2 4.3 3.8 6.2 6.1 243 256 5.5 32 34 214 22 9.3 10.3 10.4 1H18 2H18 1H19 1H18
Slide 17: Corporate Trust – Strong Diversified Business
PERPETUAL CORPORATE TRUST STRONG DIVERSIFIED BUSINESS WITH CLEAR STRATEGY For personal use only 1H19 2H18 1H18 1H19 v 1H19 v Revenue $m For the period $m $m $m 2H18 1H18 53.7 53.6 49.6 Debt Market Services revenue 28.9 29.6 27.9 (2%) 4% 21.7 24.1 24.7 Managed Fund Services revenue 24.7 24.1 21.7 3%
Slide 18: Balance Sheet – Strength Provides Opportunities
BALANCE SHEET STRENGTH PROVIDES OPPORTUNITIES For personal use only For the period ended 1H19 2H18 1H18 1H19 v 1H19 v Regulatory Capital2 2H18 1H18 Cash 279.8 320.2 270.1 (13%) 4% Liquid investments (FVTPL) 63.4 75.0 83.7 (15%) (24%) 155.6 155.5 155.2 Goodwill & other intangibles 346.9 327.7 327.8 6
Slide 19: Financial Indicators
FINANCIAL INDICATORS For personal use only EPS1 cps DPS cps NTA per share ROE2 % 145.5 154.1 135 140 22.1 125 21.2 128.6 6.69 6.68 18.2 6.43 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 $1.25 97% 29 March FULLY FRANKED DIVIDEND PAYOUT RATIO3 DIVIDEND PAYABLE 1. Fully diluted 2. ROE is
Slide 20: Strategic Priorities
For personal use only STRATEGIC PRIORITIES ROB ADAMS CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR
Slide 21: Positioning for Next Phase of Growth
POSITIONING FOR NEXT PHASE OF GROWTH For personal use only Leadership Brand and Sustained and capability reputation quality growth ▪ Stable and experienced ▪ Deepen our strong existing ▪ Pursue complementary growth leadership team client relationships opportunities in a disciplined manner ▪ Employer
Slide 22: Investments – New Direction Combining Boutique Culture with Institutional Infrastructure
PERPETUAL INVESTMENTS NEW DIRECTION THAT COMBINES BOUTIQUE CULTURE WITH INSTITUTIONAL GRADE INFRASTRUCTURE For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Active value investing philosophy ▪ Diversification to accelerate growth and approach ▪ Expand beyond a “value” investment style onl
Slide 23: Private – Proven Business Model Well Positioned for Future Growth
PERPETUAL PRIVATE PROVEN BUSINESS MODEL WELL POSITIONED FOR FUTURE GROWTH For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Targeted segment approach ▪ Pursue all relevant growth options arising from focused on: industry dislocation − Established wealthy ▪ Greater profile to highlight Per
Slide 24: Corporate Trust – Leveraging Proven Business Model to Drive New Revenue Streams
PERPETUAL CORPORATE TRUST LEVERAGING STRENGTHS OF PROVEN BUSINESS MODEL TO DRIVE NEW REVENUE STREAMS For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Targeted segment approach ▪ Drive growth in analytics focused on: ▪ Accelerate “Regtech” service offerings into new − Residential Real Est
Slide 25: Clients, People & Capabilities, Brand
For personal use only Clients Foster our long-term relationships Always act in the best interest of our clients Build on our strong client advocacy People & Capabilities Committed to our diversified business model Invest in new capabilities Brand Leverage the strength of our brand across all three b
Slide 26: Contacts
CONTACTS For personal use only Rob Adams Level 18 Angel Place, 123 Pitt Street Chief Executive Officer & Managing Director SYDNEY NSW 2000 Australia [email protected] +612 9229 9700 Chris Green Chief Financial Officer [email protected] +612 9229 9861 Andrew Ehlich General Manager
Slide 27: Disclaimer
DISCLAIMER For personal use only Important information The information in this presentation is general background information about the Perpetual Group and its activities current as at 21 February 2019. It is in summary form and is not necessarily complete. It should be read together with the compan