Perpetual Limited · ASX:PPT
Perpetual — H1 2011 Earnings Presentation
26 slides from Perpetual's earnings presentation, Feb 23, 2011
Slide 1: 1H11 Results for six months ended 31 December 2010
For personal use only 1H11 Results for six months ended 31 December 2010 Presented by: David Deverall Roger Burrows 23 February 2011 ABN 86 000 431 827
Slide 2: Disclaimer: Important information
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 23 February 2011. It is in summary form and is not necessarily complete. It should be read together with the compan
Slide 3: Agenda
Agenda For personal use only Group highlights David Deverall Managing Director until 23/2/11 Financials Roger Burrows Chief Financial Officer Remarks Chris Ryan CEO & Managing Director from 23/2/11 2
Slide 4: 1H11 Overview
1H11 Overview For personal use only 1H11 Underlying Profit After Tax $41.0m up 13% (1H10:$36.4m) driven by: − Benefits of rebound in equity and credit markets during the period − Private Wealth acquisitions − Improved performance from Mortgage Services − Reduction in equity remuneration expense
Slide 5: Average equity markets flat over 1H11
Average equity markets flat over 1H11 For personal use only Spot close All Ords FY10 Avg All Ords 1st Half Avg All Ords 2nd Half Avg All Ords 5,000 FY10 1H11 4,750 2H10 Avg All Ords 1H11 Avg All Ords FY10 Avg All Ords All Ords 4,500 1H10 Avg All Ords 4,250 4,000 09 0 10 9 0 0 9 0 9 10 10 0 10 0 9 9
Slide 6: Industry inflows yet to recover
For personal use only 5 $b M (15.0) (10.0) (5.0) 0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 ar J u 06 n Se 06 p D 06 ec M 06 ar J u 07 Source: Plan for Life September 2010 n Se 07 p D 07 ec M 07 ar Industry inflows yet to recover J u 08 n Se 08 p D 08 ec M 08 ar J u 09 Total market flows n Se 09 p D 09 ec
Slide 7: Securitisation issuance continues its slow and modest recovery
Securitisation issuance continues its slow and modest recovery For personal use only RMBS issuance v average revaluation margin - 2 Year Senior RMBS Non AOFM AOFM Margin above BBSW 60 250 basis points over BBSW 50 200 40 150 30 $b 100 20 10 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20
Slide 8: Our brand health amongst advisors remains ahead of market
Our brand health amongst advisors remains ahead of market For personal use only Brand health indicator Perpetual Competitor A Competitor B Competitor C Competitor D Competitor E Competitor F Competitor G Competitor H Competitor I 0 5 10 15 20 25 30 35 Net positive word association (%) Source: Wealth
Slide 9: Momentum in underlying profit
Momentum in underlying profit For personal use only 1H10 2H10 1H11 1H11 v For the 6 month period $m $m $m 1H10 Underlying profit after tax (UPAT) 36.4 36.4 41.0 13% Significant items 12.8 4.9 (6.0) Net profit after tax (NPAT) 49.2 41.3 35.0 (29%) Diluted EPS on UPAT (cps) 85.1 84.1 93.9 10% Annualis
Slide 10: Perpetual Investments – healthy revenue margin and good cost discipline
Perpetual Investments – healthy revenue margin and good cost discipline For personal use only 1H10 2H10 1H11 1H11 v For the 6 month period $m $m $m 1H10 Revenue 111.5 116.2 112.8 1% Key themes: Operating expenses (56.2) (61.7) (60.7) (8%) 1H11 revenue benefited EBITDA 55.3 54.5 52.1 (6%) from rebo
Slide 11: Perpetual Investments − outperformance maintained
Perpetual Investments − outperformance maintained For personal use only Excess investment performance p.a. – gross as at end December 2010 Period Industrial Australian Small Concentrated International Diversified Share Share Companies Equity Share Income Fund Fund Fund Fund Fund Fund 1 year +0.94% +
Slide 12: FUM benefits from improved equity markets – offsetting outflows
FUM benefits from improved equity markets – offsetting outflows from lower margin products For personal use only 1H10 2H10 Net flows Other (1) 1H11 At end of $b $b $b $b $b Institutional 8.7 8.1 (0.5) 0.7 8.3 Intermediary 14.2 12.9 (0.6) 0.8 13.1 Retail 6.4 5.9 (0.2) 0.4 6.1 All channels 29.3 26.9 (
Slide 13: Private Wealth profit up
Private Wealth profit up For personal use only 1H10 2H10 1H11 1H11 v For the 6 month period $m $m $m 1H10 Total revenues 41.8 59.0 56.9 36% Key themes: Operating expenses (28.8) (41.7) (41.7) (45%) Acquisitions drive increase in revenue in 1H11 versus 1H10 EBITDA 13.0 17.3 15.2 17% 1H11 profit b
Slide 14: Private Wealth acquisitions are performing and diversifying our revenues
Private Wealth acquisitions are performing and diversifying our revenues For personal use only Key themes: For the 6 month period 1H10 1H11 1H11 v Non-market revenue $m $m 1H10 driven by acquisitions that provide tax and Market related revenue 33.5 39.4 18% accounting services Non-market related r
Slide 15: Integration on track
Integration on track For personal use only Grosvenor Fordham Date acquired September 2009 January 2010 Synergies: ─ 1H11 annualised run rate to date $0.5m $1.3m Client retention rate 98% 99% Premises January 2011 May 2010 Expected combined FY11 EBITDA $8 to 9 million before integration costs 14
Slide 16: Private Wealth FUA increases in response to improved equity markets
Private Wealth FUA increases in response to improved equity markets For personal use only 1H10 2H10 Net flows Other (1) 1H11 At end of $b $b $b $b $b Financial advisory: Superannuation 2.9 3.3 (0.1) 0.3 3.5 Non-superannuation 2.3 2.2 - 0.1 2.3 5.2 5.5 (0.1) 0.4 5.8 Fiduciary services: Philanth
Slide 17: Corporate Trust – FUA run-off rate slows and PLMS performance improving
Corporate Trust – FUA run-off rate slows and PLMS financial performance improving For personal use only Key themes: Trust & Fund Services: For the 6 month 1H10 2H10 1H11 1H11 v period $m $m $m 1H10 ─ Decline in revenue reducing in response to improving FUA run- Total revenues 41.6 45.9 52.3 26% of
Slide 18: Mortgage Services revenue benefits from run rate growth
Mortgage Services revenue benefits from run rate growth of business secured in FY10 For personal use only 1H10 1H11 1H11 v For the 6 month period $m $m 1H10 Trust & Fund Services 27.9 26.9 (4%) Mortgage Services 13.7 25.4 85% Total revenues 41.6 52.3 26% Funds under Administration Mortgage Matters 2
Slide 19: Financials
Financials For personal use only Roger Burrows Chief Financial Officer 18
Slide 20: Improved underlying performance
Improved underlying performance For personal use only 1H10 2H10 1H11 1H11 v Key themes: For the 6 month period $m $m $m 1H10 1H11 v 1H10 opex up due Revenue 200.1 226.2 227.1 13% to Private Wealth Operating expenses (124.6) (149.7) (150.6) (21%) acquisitions & business investment and growth in EBI
Slide 21: Significant items impacts NPAT
Significant items impacts NPAT For personal use only Key themes: 1H10 2H10 1H11 1H11 v For the 6 month period $m $m $m 1H10 Lower tax rate in 1H11 due to prior over provision. UPBT 54.0 53.7 59.1 9% Excluding over provision Tax expense (17.6) (17.3) (18.1) (3%) rate was around 32% UPAT 36.4 36.4 4
Slide 22: Non-cash goodwill impairment charge of $10.6m after tax
Non-cash goodwill impairment charge of $10.6m after tax For personal use only smartsuper, acquired in September 2008, is a SMSF administration provider based in Sydney smartsuper revenue represents <1% of Group revenues Regular review of assets ascertained that the business is unlikely to achi
Slide 23: Financial strength continued to improve
Financial strength continued to improve For personal use only Key themes: 1H10 2H10 1H11 $m $m $m NTA per share up 15% due to increase in Total equity and Total equity 348 361 372 reduction in Deferred tax assets Less: Intangibles(1) (184) (190) (171) Interest coverage remains very strong at 48x
Slide 24: Risk capital requirements reflect growth in business
Risk capital requirements reflect growth in business For personal use only At end of 1H10 2H10 1H11 $m $m $m Liquid assets 203 212 204 Risk based capital 177 141 148 Coverage ratio 1.15x 1.50x 1.38x Liquid assets = cash + 50% of liquid investments 23
Slide 25: FY11 interim dividend fully franked, 92% payout ratio
FY11 interim dividend 95 cps fully franked equivalent to 92% payout ratio on 1H11 NPAT excluding goodwill impairment For personal use only Key Themes: 1H11 EPS based on UPAT up 10% Source of EPS and 12% over 1H10 and 2H10 $1.20 respectively $1.00 1H11 NPAT reduced by $10.6m non- Diluted EPS $0.8
Slide 26: Summary
Summary For personal use only 1H11 UPAT up 13% on 1H10 and 2H10 1H11 NPAT adversely impacted by non-cash impairment charge Improving market conditions but investors and advisors remain cautious Increased financial strength Fully franked dividend of 95 cents given steady underlying performa