Perpetual Limited · ASX:PPT
Perpetual — H1 2005 Earnings Presentation
38 slides from Perpetual's earnings presentation, Feb 23, 2005
Slide 1: 2005 Half Year Results
2005 Half Year Results Analyst Briefing 23 February 2005 Perpewesp ae ——lUCE
Slide 2: Agenda
Agenda half highlights — David Deverall Financial results — John Nesbitt Corporate strategy update — David Deverall Outlook — David Deverall Perpetual Pp
Slide 3: An excellent first half result
An excellent first half result Dec 2004 Dec 2003 % Change Operating profit after tax’) $41.4m 31% Profit after tax $42.4m 58% Interim dividend pe share 70¢ 86% EPS@)3) 109.2 ¢ 29% (1) Operating profit after tax excludes realised gains on investments and one-off costs of major strategic initiatives (
Slide 4: Track record of continued profit growth
Track record of continued profit growth Operating Profit after Tax $M 60-7 Dec Dec Dec Dec Dec 00 o1 02 03 04 cents 150- 100-7 50 EPS 140.6 Dec Dec Dec Dec Dec 00 01 02 03 04
Slide 5: 19% Increase in revenues driven by strong growth in asset volumes
19% Increase in revenues driven by strong growth in asset volumes Funds Under Funds Under Advice & Funds Under Management Administration Administration Perpetual Investments Perpetual Private Clients Corporate Trust $B $B 305 150- 254 424.1 207 100+ 154 104 504 Ss o- 0 oJ Dec Jun Dec Jun Dec Dec Jun
Slide 6: All operating divisions performing well
All operating divisions performing well « Wealth Management — up very strongly « Continued outstanding investment performance * Good fund inflows and revenue growth # Continued cost management « Added capabilities to deliver growth * Corporate Trust — up strongly * Securitisation volumes and revenue
Slide 7: 26% growth in EBITDA
26% growth in EBITDA EBITDA EBITDA % Dec 2004 Dec 2003 Change Wealth Management $56.8m 32% Corporate Trust $12.9m 17% Group unallocated ($2.8m) - TOTAL* $66.9m 26% * Excludes gains on sale of investments and one-off costs of major strategic initiatives
Slide 8: Excellent growth for Wealth Management
Excellent growth for Wealth Management = Expansion of EBITDA margin through revenue growth and cost control * Continued excellent investment performance = Funds under management up 20% since 30 June 2004 Opened global equities business in Ireland Launched credit and property products * Quantitative
Slide 9: Wealth Management EBITDA up 32%
Wealth Management EBITDA up 32% Dec 2004 Dec 2003 % Change Revenues Perpetual Investments $84.8m 23% Private Clients $32.7m 9% Total Revenues $117.5m 19% Expenses $60.7m 7% EBITDA* $56.8m 32% EBITDA* margin 48% * Excludes one-off costs of major strategic initiatives
Slide 10: Continued outstanding performance in Australian Equities
Continued outstanding performance in Australian Equities Excess over benchmark (pre-fees) (3 Year Rolling Excess Performance} Variance to benchmark 10.0% 8.0 Australian Share Fund Performance 6.05 4.04 ist Quartile 2.04 Performers- . Mercers Universe 0 0 T T T T T T T T T T T T T T T T T T T T T T 1
Slide 11: Performance well recognised by the market during this half
Performance well recognised by the market during this half « Fund Manager of the Year 2004 # Best Rated Australian Equities Fund = Best Growth Fund « Golden Bull Award for Fund Manager of the Year 2004 « Australian Equity Fund Manager of the Year 2004 « Best rated Australian Equities Fund = Best rat
Slide 12: Funds under management up 20% in the first half
Funds under management up 20% in the first half FUM ($B) 307 257 20-4 19.4 17.6 17.4 15-5 10-4 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Dec 04
Slide 13: First half net inflows of $1.4B
First half net inflows of $1.4B 30 June 2004 Net inflows Other* 31 Dec 2004 FUM ($B) ($B) (3B) FUM ($B) Retail $0.7 $7.3 Masterfund $1.4 $13.8 Institutional $0.8 $4.9 All Channels $2.9 $26.0 Australian Equity $2.6 $17.8 Other $0.3 $8.2 All Asset Classes $2.9 $26.0 * Includes re-investments, distribu
Slide 14: Global equities business fully operational
Global equities business fully operational « PIIML (PI Investment Management Ltd.) established and operating in Dublin * Recently authorised by the lrish Financial Services Regulatory Authority to commence operations « Team of 7 very well regarded asset managers = Highly experienced London-based ins
Slide 15: All advice and administration businesses experienced good growth
All advice and administration businesses experienced good growth Funds under advice, administration, and trust ($B) Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 * Private Clients and Wilson Dilworth merged in 2005
Slide 16: Implemented first phase of advice strategy
Implemented first phase of advice strategy « Integrated Wilson Dilworth into our Private Clients business to provide a wider range of products and more consistent level of service « Discontinued use of the Wilson Dilworth brand * Relocated Wilson Dilworth operations into a single Melbourne premises
Slide 17: Steady growth in Corporate Trust
Steady growth in Corporate Trust « Growth driven by strong securitisation volumes « Securitisation revenues up 17% on prior corresponding half year « Continued strong issuances of residential mortgage backed securities « Continuing to win new securitisation clients * Vision is to be the end-to-end p
Slide 18: Corporate Trust EBITDA up 17%
Corporate Trust EBITDA up 17% Dec 2004 Dec 2003 % Change Revenue $24.1m 17% Expenses $11.2m 16% EBITDA $12.9m 17% EBITDA Margins 54%
Slide 19: ASX Perpetual joint venture up
ASX Perpetual joint venture up * Retained and acquired key clients this period (able to replace revenues from loss of 2" largest client in prior corresponding period) « Re-appointed by Telstra — largest share registry in Australia « New business from Coles Myer, Babcock & Brown and Mellon Human « Es
Slide 20: ASX Perpetual EBITDA up 4% and net profit to Perpetual up 20%
profit to Perpetual up 20% ASX Perpetual EBITDA up 4% and net Dec 2004 Dec 2003 % Change Revenue $28.3m 1% Expenses $19.9m (1)% EBITDA $8.4m 4% Net profit after tax $1.0m 20%
Slide 21: Agenda
Agenda First half highlights — David Deverall ancial results — John Nesbitt Corporate strategy update — David Deverall Outlook — David Deverall Perpetual Pp
Slide 22: Overview
Overview Building off a solid base Moving decisively to implement strategy Continuing to create a more variable cost base Pleasing result in a period of significant activity Perpetual Pp
Slide 23: An excellent operational result
An excellent operational result Dec 2004 Dec 2003 % Change Revenue $146.4m 19% EBITDA® $66.9m 26% Operating profit before tax® $58.8m 32% Operating profit after tax $41.4m 31% Profit after tax $42.4m 58% Operating EPS@*) 109.2¢ 29% EPS®) 111.8¢ 55% (1) Revenues adjusted to reflect reclassification s
Slide 24: Operating profit after tax of $54.3m
Operating profit after tax of $54.3m $100M- 804 24.2 ieee “4.0 Pe 6. 7.7 60 54.3 407 207 0 . 7 — Operating Profit on sale Provisions for One-off expense Net profit profit after tax of investrnents/ the move to a for establishing after tax businesses single Sydney global equities {after tax) premises
Slide 25: Margins improving whilst enhancing capabilities
Margins improving whilst en capabilities hancing Dec 2004 Dec 2003 % Change Total revenue® $ 146.4m 19% Staff related expenses Admin & general expenses $50.4m 15% $29.1m 10% Total operating expenses(?) EBITDA $79.5m 13% EBITDA / revenue margin (1) Revenues adjusted to reflect reclassification stated
Slide 26: First half saw an increase in variable costs and an investment in growth...
First half saw an increase in variable costs and an investment in growth... # Staff incentive costs higher in line with increased profits # Increased professional fees for outsourced operations (FUM based fees) « Credit investing capability a Strategy and project management # Risk management =» Prod
Slide 27: ...whilst maintaining profitability
...whilst maintaining profitability EBITDA to revenue margin (%) 70-5 60-7 50-4 40- Dec 02 Jun 03 Dec 03 Jun 04 Dec 04
Slide 28: A strong, clean balance sheet
A strong, clean balance sheet Dec 2004 Net assets Investments at cost Investments at market value Cash holdings Jun 2004 % Change $315.4m (12%) $60.1m 1% $109.5m 6% $163.4m (20%) Liquid assets Key Financial Ratios Gross debt to book equity Interest coverage (EBITDA) $272.9m 14%
Slide 29: Normal dividend of cents per share as per our new dividend policy
Normal dividend of 130 cents per share as per our new dividend policy Ordinary dividend per share (cents) 150-7 100- 507 0. i ; Dec 02 Jun 03 Dec 04 Special Dividend 50 (cents per share) Perpetual P * Includes special dividends of 50 cents paid in June 2004 and 200 cents paid in September 2004
Slide 30: Agenda
Agenda First half highlights — David Deverall Financial results — John Nesbitt Corporate strategy update — David Deverall Outlook — David Deverall Perpetual Pp
Slide 31: Implementing our strategy
Implementing our strategy pro ee I A A IL Develop new 9 wth ill. Fully engage our people to deliver our strategy
Slide 32: Four sources of competitive advantage that underpin our strategy
Four sources of competitive advantage that underpin our strategy 1. The management of funds management teams, philosophies, and processes Relationship management with financial planning community A trusted brand A long history as a leading provider of fiduciary services to individuals and corporates
Slide 33: Implementation: Developing a more balanced portfolio and new growth engines
Implementation: Developing a more balanced portfolio and new growth engines « Expanded our asset management footprint « Global equities « Credit * Opened global equities business in Ireland # Initial flows into credit income and credit enhanced cash products * Launched property income and capital pr
Slide 34: Expanding our asset management footprint
Expanding our asset management footprint | Mortgages | Mezz Debt Domestic infra- structure - Hedge | Domestic Hybrids ) Currency! TAA Emerging Markets Broad Vanilla Bonds Skills we currently possess
Slide 35: Implementation: Fully engage our people
Implementation: Fully engage our people *« Completed implementation of new remuneration system « Moving to a single premises in January 2006 - Angel Place « Well progressed in selling 39 Hunter Street and pleased with the level of interest from potential buyers « Leadership team in place Perpetual P
Slide 36: Agenda
Agenda First half highlights — David Deverall Financial results — John Nesbitt Corporate strategy update — David Deverall ook — David Deverall Perpetual Pp
Slide 37: A good platform for growth
A good platform for growth « Favourable operating environment * Strong retirement savings trend # Healthy growth in Corporate Trust industry « Strong second half starting position for funds under management and funds under advice « Added growth capabilities in the first half “ae We expect to record
Slide 38: 2005 Half Year Results
2005 Half Year Results Analyst Briefing 23 February 2005 Perpewesp ae ——lUCE