Perpetual Limited · ASX:PPT
Perpetual — FY2009 Earnings Presentation
42 slides from Perpetual's earnings presentation, Aug 19, 2009
Slide 1: 2009 Full Year Results Announcement
For personal use only 2009 Full Year Results Announcement Presentation to investors and analysts 19 August 2009 ABN 86 000 431 827
Slide 2: Agenda
Agenda For personal use only Group highlights – David Deverall – Financial results – Roger Burrows – Strategy – David Deverall – Summary – David Deverall 1
Slide 3: Overview
Overview For personal use only Tough year Result in line with guidance and market consensus Underlying profit of $65.7 million after tax We positively influenced what we could control – Costs, capital, business mix – Customer service, investment performance, brand health Well positioned fo
Slide 4: Responded to market challenges
Responded to market challenges For personal use only Cut underlying cash operating expenses by $40 million or 15% – capped board and executive remuneration Reduced costs – reduced headcount – significant reduction in short-term incentives 9 Revised dividend policy – transition to between 80-100%
Slide 5: Enhanced our competitive position
Enhanced our competitive position For personal use only Increased customer engagement at time of uncertainty Enhanced front and back office despite cost reductions 9 Focused – myClient investment to improve customer service customer – significant improvement in 2009 year end process service – pr
Slide 6: Massive fall in equity market
Massive fall in equity market For personal use only ASX All Ordinaries Index (2004-2009) Market peak Nov 2007 6854 7,500 7,000 Lehman’s collapse Sep 2008 6,500 4957 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 Market trough Mar 2009 2,000 3111 5 4 6 7 8 9 9 4 5 6 7 8 l-0 -0 -0 -0 -0 -0 -0 -0 -0 -
Slide 7: Worst year on record for attractiveness of equities
Worst year on record for attractiveness of equities For personal use only % 80 Historical annual difference: Australian shares and Government bonds (%) 60 40 20 0 -20 -40 -60 2008 -80 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 Source: UBS 6
Slide 8: Funds management industry in outflow
For personal use only 7 -15 5 15 25 35 -5 $B M Net flows ar 0 Ju 4 n 0 Se 4 p 0 D 4 Source: Plan for Life, June 2009 ec -0 4 M ar -0 5 Ju n- 0 Se 5 p- 0 D 5 ec -0 5 M ar -0 Ju 6 n- 0 Se 6 p- 0 D 6 ec -0 6 M ar -0 Ju 7 n- 0 33 Se 7 p- 0 D 7 ec -0 Funds management industry in outflow 7 M Total market
Slide 9: Securitisation market effectively closed
Securitisation market effectively closed For personal use only $B 16 Australian RMBS issuance 14 12 10 8 6 4 2 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2006 2007 2008 2009 Source: Perpetual and Standard & Poor’s 8
Slide 10: Profit result in line with market guidance
Profit result in line with market guidance For personal use only 2009 2008 Change For year ended 30 June $M $M % Underlying profit before tax 98.2 193.6 (49) Underlying profit after tax 65.7 133.5 (51) Gain / (loss) on sale of investments (6.1) 21.1 ~ EMCF losses (13.8) (25.8) ~ Restructuring (8.1)
Slide 11: Our operating businesses
Our operating businesses For personal use only Perpetual Perpetual Perpetual Investments Private Corporate Wealth Trust Private Trust & Fund Clients Services Superannuation Australian Global Income & Multi-sector & Investment Equities Equities Solutions Mortgage Direct Services 10
Slide 12: Perpetual Investments underlying profit before tax down on lower revenue
Perpetual Investments underlying profit before tax down on lower revenue For personal use only 2009 2008 Change $M $M % Total revenues 203.0 294.5 (31) Profit before tax 59.0 147.0 (60) 11
Slide 13: FUM down 14% at June 2009; average FUM down 28%
FUM down 14% at 30 June 2009; average FUM down 28% For personal use only 2008 Net flows Other (1) 2009 Year ended 30 June $B $B $B $B Retail 7.2 (0.6) (0.8) 5.8 Intermediary (masterfund and wrap) 14.8 (1.1) (1.8) 11.9 Institutional 8.3 1.0 (0.8) 8.5 All channels 30.3 (0.7) (3.4) 26.2 Australian equi
Slide 14: FUM up 7% since December 2008; funds in positive flows
FUM up 7% since 31 December 2008; funds in positive flows For personal use only 31 Dec 2008 Net flows Other (1) 30 June 2009 $B $B $B $B Retail 5.7 (0.2) 0.3 5.8 Intermediary (masterfund and wrap) 11.4 (0.2) 0.7 11.9 Institutional 7.5 0.5 0.5 8.5 All channels 24.6 0.1 1.5 26.2 Australian equities 14
Slide 15: Excellent short & long-term performance relative to benchmark
Excellent short & long-term performance relative to benchmark For personal use only Excess investment performance – gross as at 30 June 2009 Australian Equities Global Equities Industrial Australian Small Concentrated International Annualised Share Fund Share Fund Companies Fund Equity Fund Share Fu
Slide 16: Perpetual Investments business update
Perpetual Investments business update Fund Manager of the Year – 2009 AFR Smart Investor Blue Ribbon Awards For personal use only Increased market share – net institutional inflows Australian – maintained pricing Equities – retained rating Stable and committed team Consistent, healthy inflows
Slide 17: Perpetual Private Wealth underlying profit before tax down
Perpetual Private Wealth underlying profit before tax down on lower revenues For personal use only 2009 2008 Change $M $M % Total revenues 85.7 104.9 (18) Profit before tax 29.1 46.4 (37) 16
Slide 18: Perpetual Private Clients' FUA down 12%
Perpetual Private Clients’ FUA down 12% For personal use only Acquired Year ended 30 June 2008 Net flows FUA (1) Other (2) 2009 $B $B $B $B $B Financial Advisory – Superannuation 2.7 (0.1) 0.2 (0.4) 2.4 – Non-superannuation 2.0 (0.1) - (0.1) 1.8 4.7 (0.2) 0.2 (0.5) 4.2 Fiduciary Services – Philanthr
Slide 19: Private Wealth business update
Private Wealth business update For personal use only Introduced myClient Improved – market-leading client management system adviser – further enhancements in 2010 productivity tools Acquired Financial Pursuit Pursued – $170 million in FUA inorganic growth Market consolidation presenting opport
Slide 20: Corporate Trust underlying profit up 22% driven by cost efficiencies
Corporate Trust underlying profit up 22% driven by cost efficiencies For personal use only 2009 2008 Change $M $M % Total revenues 80.3 84.2 (5) Profit before tax 36.1 29.5 22 19
Slide 21: Perpetual Corporate Trust FUA boosted by repo issuances
Perpetual Corporate Trust FUA boosted by repo issuances For personal use only $B Securitisation FUA as at 30 June 250 241.4 222.9 210.1 17% CMBS & ABS (1) 200 RMBS (non-bank) 178.6 23% 21% RMBS (repo) (2) 26% RMBS (bank) 150 22% 32% 34% 36% 100 32% 13% 50 45% 42% 32% 25% 0 2006 2007 2008 2009 (1) Co
Slide 22: Mortgage Services volumes shifting to banking clients
Mortgage Services volumes shifting to banking clients For personal use only PLMS volumes as at 30 June Volumes ‘000 100 95 96 Non-bank 80 22% Bank 41% 57% 60 40 40 60% 59% 20 43% 40% 0 2007 2008 2009 21
Slide 23: Corporate Trust business update
Corporate Trust business update For personal use only New sources of business – new private and Government deals Trust & Fund – active intervention in series of high profile scheme collapses on behalf Services of unit holders – strong reputation has created demand from banks and insolvency experts
Slide 24: Agenda
Agenda For personal use only – Group highlights – David Deverall Financial results – Roger Burrows – Strategy – David Deverall – Summary – David Deverall 23
Slide 25: Result in line with guidance
Result in line with guidance For personal use only 2009 2008 Change For 12 months to 30 June $M $M % Total revenue 375.1 495.7 (24) Operating expenses (239.4) (268.6) 11 EBITDA (1) 135.7 227.1 (40) Amortisation and depreciation (13.2) (9.8) 35 Equity remuneration amortisation (21.8) (20.4) 7 Interes
Slide 26: Business diversity underpins result
Business diversity underpins result For personal use only Contribution to underlying profit before tax 2009 2008 PW CT PW CT 20.8% 13.2% 23.4% 29.1% PI PI 47.5% 66.0% PI = Perpetual Investments PW = Private Wealth CT = Corporate Trust 25
Slide 27: Expense reductions on track
Expense reductions on track For personal use only $M Key commentary 320 5 (40) 4 $40 million or 15% reduction in 302 cash expenses 300 – approximately 30% variable expenses Cost savings offset by: 280 6 277 – investment in systems – acquisitions – operational errors 260 269 Savings mainly flow
Slide 28: Significant items
Significant items For personal use only 2009 2008 Change For the 12 months to 30 June $M $M % Underlying profit after tax 65.7 133.5 (51) Gain/(loss) on sale of investments (6.1) 21.1 ~ Restructuring (8.1) - ~ EMCF losses (13.8) (25.8) ~ Net profit after tax 37.7 128.8 (71) 27
Slide 29: EMCF: portfolio de-risked: expect to recover losses as securities mature
EMCF: portfolio de-risked: expect to recover losses as securities mature For personal use only 2009 2008 Key commentary For 12 months to 30 June $M $M Changed EMCF valuation Realised losses (4.0) (5.7) methodology to de-risk volatility from the total return swap Hedging gains/(losses) 4.0 (3.3) –
Slide 30: Strengthened/more flexible balance sheet absorbed full impact of downturn
Strengthened/more flexible balance sheet absorbed full impact of downturn For personal use only 30 Jun 2009 31 Dec 2008 30 Jun 2008 $M $M $M Cash holdings 146.1 107.7 183.1 Investments at market value 36.7 60.5 77.0 Liquid assets 182.8 168.2 260.1 Net assets 290.0 261.0 314.4 Key financial ratios Li
Slide 31: Level of capital required decreasing as balance sheet is de-risked
Level of capital required decreasing as balance sheet is de-risked For personal use only $M 200 Other capital commitments Key commentary Risk capital Strengthened and flexible balance sheet 150 Risk capital calculated on Basel II basis – over 2 x regulatory capital requirements 100 Total capit
Slide 32: Transitioning to dividend payout ratio of 80-100% of NPAT
Transitioning to dividend payout ratio of 80-100% of NPAT For personal use only Dividend payout ratio Dividend % NPAT Key commentary 150 Final dividend 60 cps 141 cps 140 Represents 108% payout ratio – continued transition to revised 130 policy announced in February 40 cps 2009 120 Previous po
Slide 33: Agenda
Agenda For personal use only – Group highlights – David Deverall – Financial results – Roger Burrows Strategy – David Deverall – Summary – David Deverall 32
Slide 34: Our vision
Our vision For personal use only To be the leading provider of wealth management services to financially successful investors and their advisers and the leading corporate trustee Supplier of choice Product to financially Leading adviser to Leading corporate manufacturing successful high net worth tr
Slide 35: We will broaden access to our products and services
We will broaden access to our products and services For personal use only Perpetual’s offering Intermediaries Clients Asset management/ managed funds Administration services Mass Market Providers of Basic Advice investors DIY Super services Mass Affluent Investors Fiduciary services Full Service Pro
Slide 36: Agenda
Agenda For personal use only – Group highlights – David Deverall – Financial results – Roger Burrows – Strategy – David Deverall Summary – David Deverall 35
Slide 37: Adviser sentiment turning
Adviser sentiment turning For personal use only Adviser sentiment “In your role as a financial planner, are times good or bad for you right now?” % 60 50 40 30 20 10 0 Very bad Bad Average Good Very good Apr-08 Dec-08 Jul-09 Source: Wealth Insights Adviser Sentiment Survey 36
Slide 38: Advisers predict the potential 'dash from cash'
Advisers predict the potential ‘dash from cash’ For personal use only Net increase in advisers’ forecast changes to asset classes June 2009 % 60 58% 50 40 31% 30 20 10 0 -10 -20 -30 -32% -40 Australian equities International equities Cash Source: Wealth Insights Adviser Market Trends 37
Slide 39: Our brand positions us well
Our brand positions us well For personal use only Fund manager brand equity June 2009 (as judged by advisers) Perpetual 72% Competitor 1 66% Competitor 2 64% Competitor 3 50% Competitor 4 47% Competitor 5 44% Competitor 6 36% Competitor 7 33% Competitor 8 31% Competitor 9 26% Source: Wealth Insights
Slide 40: Summary
Summary For personal use only Tough year Result in line with guidance and market consensus Underlying profit of $65.7 million after tax We positively influenced what we could control – Costs, capital, business mix – Customer service, investment performance, brand health Well positioned for
Slide 41: 2009 Full Year Results Announcement August 2009
For personal use only 2009 Full Year Results Announcement 19 August 2009
Slide 42: Disclaimer
Disclaimer For personal use only Important information While this information has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information c