Perpetual Limited · ASX:PPT
Perpetual — FY2014 Earnings Presentation
35 slides from Perpetual's earnings presentation, Aug 28, 2014
Slide 1: 2014 Full Year Results for the 12 months to 30 June 2014
Perpetual Limited For personal use only 2014 Full Year Results for the 12 months to 30 June 2014 Geoff Lloyd CEO & Managing Director Gillian Larkins Chief Financial Officer 28 August 2014 ABN 86 000 431 827
Slide 2: Transformation 2015: Strong results, delivering returns
TRANSFORMATION 2015 Strong results, delivering returns For personal use only Strong results across all businesses Simplify and refocus phases of Transformation 2015 (T15) strategy completed Delivering growth organically and with The Trust Company (TrustCo) acquisition Upgraded forecast integration s
Slide 3: Perpetual's Vision
PERPETUAL’S VISION For personal use only AUSTRALIA’S LARGEST INDEPENDENT WEALTH MANAGER OF CHOICE ONE PERPETUAL PERSONAL ADVISORY TO SPECIALISED ASSET CORPORATE TARGETED HIGH NET MANAGEMENT FIDUCIARY SERVICES WORTH SEGMENTS FOUNDATIONS • Heritage of 128 years • Multi-generational clients • Perpetual
Slide 4: 2014 Full Year Results - Highlights
2014 FULL YEAR RESULTS - HIGHLIGHTS Strong results driven by markets, flows and The Trust Company For personal use only Revenue, $m NPAT, $m UPAT EPS, cps DPS, cps +19% +35% +29% +34% 440.6 81.6 175.0 237.8 369.7 61.0 185.0 130.0 2013 2014 2013 2014 2013 2014 2013 2014 FUM / FUA^, $b Net inflows PI,
Slide 5: All businesses delivering growth
2014 FULL YEAR RESULTS All 3 businesses delivering growth For personal use only Perpetual Investments Perpetual Private Perpetual Corporate Trust PBT, $m PBT, $m PBT, $m +30% +135% +40% 113.6 21.6 25.7 87.2 18.3 9.2 2013 2014 2013 2014 2013 2014 Positive net flows Delivery strategy on growth S
Slide 6: Perpetual Investments: Strong investment performance
PERPETUAL INVESTMENTS Strong investment performance For personal use only QUARTILE RANKINGS^ FUM^ WEIGHTED % OF FUNDS RANKED periods ending June 2014 1 – 10 YEARS 1Yr 3Yrs 5Yrs 7Yrs 10Yrs Perpetual W Australian 2 1 1 1 1 1 yr 100% Perpetual W Concentrated Equity 2 1 1 1 1 Perpetual W Ethical SRI 2 1
Slide 7: Perpetual Investments: Return to positive net inflows
PERPETUAL INVESTMENTS Return to positive net inflows For personal use only Investment Fund ratings Aligned Distributor Increase APLs Increase models performance sales team connections and multis On On On INCREASING target target target INFLOWS INVESTOR CONFIDENCE Net inflow in equities of $539m Retu
Slide 8: Perpetual Private: Journey towards sustainable growth
PERPETUAL PRIVATE Journey towards sustainable growth For personal use only VISION: AUSTRALIA’S LEADING INDEPENDENT HNW BUSINESS Right Heritage Strategic Scale Distribution Tech uplift service business segment focus benefits excellence model Strong brand One New market Lean cost-to- • TrustCo
Slide 9: Perpetual Private: TrustCo accelerates strategy
PERPETUAL PRIVATE TrustCo accelerates strategy towards sustainable growth For personal use only FUA, $b Delivering on strategy focused on high net worth segments – PBT+135% +40% 12.6 9.0 Benefiting from investment in building a scalable business 2013 2014 Delivering targeted savings, accelerated syn
Slide 10: Perpetual Corporate Trust: Diversified business with a leading market position
PERPETUAL CORPORATE TRUST Diversified business with a leading market position For personal use only FUA, $b TrustCo acquisition has diversified and 484.0 strengthened business 177.1 309.2 49.8 Market leader in Trust Services and Fund 259.4 306.9 Services FY13 FY14 Disciplined exit of 5 non-core busi
Slide 11: T15 Strategy - Scorecard
T15 STRATEGY – SCORECARD Delivered “simplify” and “refocus” phases For personal use only 1H13 2H13 FY14 Reduced central cost Improved PP adviser Reduced property Simplified structure productivity footprint (stage 2) New leadership team Reduced property Simplified investment footprint (
Slide 12: Transformation 2015: Strong results, strategy delivering returns
TRANSFORMATION 2015 Strong results, strategy delivering returns For personal use only UPAT, $m NPAT, $m UPAT EPS, cps DPS, cps +59% +206% +52% +94% 104.1 81.6 237.8 175.0 75.9 61.0 185.0 130.0 65.4 156.8 90.0 26.7 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 12
Slide 13: Financials
FINANCIALS For personal use only Gillian Larkins Chief Financial Officer
Slide 14: Introduction: Accounting notes
INTRODUCTION For personal use only Accounting notes important for the interpretation of this result TrustCo now fully consolidated into Perpetual’s results Purchase Price Allocation window – changes in the provisional balances booked including goodwill and income classification from divested operati
Slide 15: Financial Performance - Group
FINANCIAL PERFORMANCE – GROUP Strong results, disciplined execution of strategy For personal use only FY14 2H14 1H14 FY13 FY14 v KEY THEMES: For the period ended $m $m $m $m FY13 • Operating revenue ex Operating revenue 440.6 238.5 202.1 369.7 19% TrustCo +9% on FY13 Total expenses (293.8) (158.8) (
Slide 16: Financial Performance: Improvement across all businesses
FINANCIAL PERFORMANCE Improvement across all businesses For personal use only Perpetual Perpetual Perpetual Investments^ Private^ Corporate Trust^ Group^ 29.8 12.6 484.0 UPAT diluted EPS, cps Closing FUM 25.3 or FUA, $b 9.0 237.8 309.2 185.0 29% 33% FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 0.2 47.5 *
Slide 17: TrustCo contributes to scale and increased tangible returns
FINANCIAL PERFORMANCE TrustCo contributes to scale and increased tangible returns For personal use only TrustCo acquisition total consideration of $278m Cash 278 78 20 TrustCo consideration, $m 64 194 278 59 GT assets held for sale 59 − Following divestments net consideration of $194m Identified E
Slide 18: Acquisition and integration costs
FINANCIAL PERFORMANCE Acquisition and integration costs For personal use only FY14 2H14 1H14 FY13 FY14 v After tax costs, $m $m $m $m $m FY13 14.3 0.8 UPBT 146.8 79.7 67.1 107.4 37% 1.9 10.0 Tax expense (42.7) (23.3) (19.4) (31.5) 36% 0.1 0.0 3.1 UPAT 104.1 56.4 47.7 75.9 37% 6.0 Transformation cost
Slide 19: Financial Performance - Expenses: Cost discipline
FINANCIAL PERFORMANCE – EXPENSES Cost discipline For personal use only Group expenses FY12 – FY14 3.0 293.8 1 285.3 -7.0% 31.4 12.0 +1.2% 265.4 262.3 273.3 18.2 15.1 FY12 FY13 T15 FY14 BAU FY14 TrustCo TrustCo FY14 Expenses Expenses Incremental Increase Expenses ex (7 months) Synergies Expenses Savi
Slide 20: Financial Performance - Expenses
FINANCIAL PERFORMANCE – EXPENSES For personal use only Total T15 annualised savings of $50m pre-tax achieved $15.1m booked in FY14 $10.2m remaining in FY15 FY14 business as usual costs increase of $18.2m Full year impact of outsourced provider fees $8.3m per previous 18.2 guidance 0.9 1.7 Amortisa
Slide 21: Financial Performance: Themes FY15 and beyond
FINANCIAL PERFORMANCE Themes: FY15 and beyond For personal use only 1 Full year impact of TrustCo acquisition 2 Indicative pre-tax impact of TrustCo synergies and integration costs^, $m Pre-tax synergies 1H14A 2H14A 1H15G 2H15G 1H16G 2H16G Indicative P&L impact - 3 5 6 8-9 9-10 Annualised period end
Slide 22: Perpetual Investments: Results highlight operating leverage to equity markets
PERPETUAL INVESTMENTS Results highlight operating leverage to equity markets For personal use only FY14 2H14 1H14 FY13 FY14 v KEY THEMES: $m $m $m $m FY13 Revenue 222.5 113.0 109.5 195.9 14% • FY14 revenues up in line with growth in Operating expenses (97.3) (49.2) (48.1) (97.7) - Average FUM EBITDA
Slide 23: Perpetual Private: Scale drives improved margins
PERPETUAL PRIVATE Scale drives improved margins For personal use only FY14 2H14 1H14 FY13 FY14 v $m $m $m $m FY13 KEY THEMES: Market related revenue 95.6 54.1 41.5 71.2 34% • Perpetual Private business model Non-market related revenue 48.2 27.2 21.0 44.5 8% affirmed Total revenues 143.8 81.3 62.5 11
Slide 24: Perpetual Corporate Trust: Scale player in Trust and Fund services
PERPETUAL CORPORATE TRUST Scale player in Trust and Fund services For personal use only FY14 2H14 1H14 FY13 FY14 v KEY THEMES: $m $m $m $m FY13 Trust services revenue 41.1 21.4 19.7 38.1 8% • Balanced business with two market leading Fund services revenue 26.3 18.8 7.5 11.1 137% offerings Total fidu
Slide 25: Balance sheet remains strong with low gearing
FINANCIAL PERFORMANCE Balance sheet remains strong with low gearing For personal use only At the end of period FY14 FY13 KEY THEMES: Cash & Liquid investments ($m) 327.9 252.5 • Strong balance sheet • Cash reflects net Corporate debt ($m) (87.0) (45.0) proceeds received from Net cash ($m) 240.9 207.
Slide 26: Full year dividend up 35% and fully franked
FINANCIAL PERFORMANCE Full year dividend up 35% and fully franked For personal use only KEY THEMES: FY14 2H14 1H14 FY13 • Continued commitment to return capital efficiently to Fully franked dividends (cps) 175.0 95.0 80.0 130.0 shareholders • Dividend policy is to Dividend payout ratio (%) 99.8 91.6
Slide 27: Growth
GROWTH For personal use only Geoff Lloyd CEO & Managing Director
Slide 28: T15 Strategy - Grow: Delivered first two phases
T15 STRATEGY – GROW Delivered first two phases and third phase on track For personal use only • Clarity and focus • Skilled and client • Portfolio momentum • Market share gain • Innovation • Strategic alignment focused team • Distribution excellence • More productive • Leaner team • Partners • A
Slide 29: T15 Strategy - Grow: Strong momentum with growth initiatives
T15 STRATEGY – GROW Strong momentum with growth initiatives For personal use only Growth in FUM/FUA: PI +32%, PP +58%, PCT +41%^ Strong earnings growth: UPAT EPS +52%^^ Existing Maintained strong client advocacy Growth in revenue of Pure Equity Alpha Fund • Portfolio momentum Super Wrap an
Slide 30: The Trust Company Scorecard: Synergy benefits upgraded
T15 STRATEGY – THE TRUST COMPANY SCORECARD Synergy benefits upgraded to $18-$20m For personal use only OUTCOMES FY14 PROTECT 1H15 1H15 ALIGN 2H15 ONE COMPANY 2H15 Single Executive Team On Track: Reduce central cost On Track: Reduce property footprint New organisation structure in (HR, Finance, M
Slide 31: Launch of new Perpetual Global Share Fund
T15 STRATEGY – GROW Launch of new Perpetual Global Share Fund For personal use only Opportunity Rationale Growth in superannuation market, $tr 8.4 Strong demand for independent domestic manager 1.9 Strong growth in allocation to global equities Leverages our successful equities 2014 2040 proje
Slide 32: Global equities - people, performance and product
T15 STRATEGY – GROW Global equities – people, performance and product For personal use only People ANTHONY ABOUD Performance Equities Analyst MARYANNE DREWE As at 30 June 2014 1 year 2 years 3 years Equities Analyst pa pa PAUL SKAMVOUGERAS ALEX HURRELL Perpetual Global Seed Fund 35.3% 37.7% 22.9% De
Slide 33: Summary
SUMMARY For personal use only Strong balance sheet Scale benefits to come in Perpetual Private and Perpetual Corporate Trust Upgraded forecast integration synergies Positive net inflows - Reinvigorated distribution in Perpetual Investments to capture opportunities Strong client advocacy which will l
Slide 34: Contacts
CONTACTS For personal use only Chief Executive Officer & Managing Director Geoff Lloyd [email protected] T: +612 9229 9078 Chief Financial Officer Gillian Larkins [email protected] T: +612 9229 3547 General Manager Investor Relations & Corporate Finance Neil Wesley neil.wes
Slide 35: Disclaimer: Important information
DISCLAIMER Important information For personal use only The information in this presentation is general background information about the Perpetual Group and its activities current as at 28 August 2014. It is in summary form and is not necessarily complete. It should be read together with the company’