Perpetual Limited · ASX:PPT
Perpetual — H1 2006 Earnings Presentation
40 slides from Perpetual's earnings presentation, Feb 22, 2006
Slide 1: 2006 Half Year Results
2006 Half Year Results Analyst and Investor Briefing 22 February 2006 rerpewesp
Slide 2: Agenda
Agenda Group highlights —- David Deverall Financial results — John Nesbitt Outlook — David Deverall PerpevalpP
Slide 3: Agenda
Agenda [_choup highlights — David Deverall Financial results — John Nesbitt Outlook — David Deverall PerpevalpP
Slide 4: A solid first half result
A solid first half result Dec 2005 Dec 2004 Change $m $m % Operating profit after tax 56.6 12 Net profit after tax 65.0 13 EPS@) interim dividend per share ®) Basic EPS calculated under AIFRS using operating profit after tax ©) Operating profit after tax excludes significant items and global equitie
Slide 5: Track record of continued profit growth
Track record of continued profit growth Operating Profit after Tax up 12% EPS* up 11% $M cents 80 200- 63.5 60- 407 207 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec o1 02 03 04 05 OL 02 03 04 05 * Basic EPS calculated under AIFRS using operating profit after tax Perpetual All comparative periods have bee
Slide 6: Strong asset volume growth
Strong asset volume growth 30.3 Dec Jun Dec 03 04 O04 OS O5 Perpetual investments $B 104 Dec Jun Dec Jun Dec 03 #04 #04 O05 05 Perpetual Private Clients L000 $B 200-4 150-4 100-5 5074 Dec 03 04 O04 05 O5 Dec Jun Dec Jun Corporate Trust Pepe
Slide 7: 18% growth in EBITDA
18% growth in EBITDA“) EBITDA EBITDA Dec 2005 Dec 2004 Change $m $m % Wealth Management 77.9 14 Corporate Trust 15.4 7 Group unallocated (5.8) - Total EBITDA 87.2 18 EBITDA margin 50% - “ Excludes significant items, global equities initial operating losses and amortisation of equity B erpetual remun
Slide 8: Wealth Management EBITDA up 14%
Wealth Management EBITDA up 14% Total Revenues Expenses aE EBITDA Tee eran 2 es EBITDA margin Dec 2004 Change $m % 139.7 10 61.8 4 779 14 56% - Perpet INVESTMENTS. P.
Slide 9: Solid growth in Wealth Management revenue
Solid growth in Wealth Management 6 months to Revenue Dec 05 Dec04 Change _ Strong: $m $m % increase: in thre Perpetual Investments 113.3 103.9 9 Metisse Perpetual Private Clients 40.2 35.8 12 153.5 139.7 10 roxpetualy
Slide 10: Performance well recognised by the market during this half
Performance well recognised by the market during this half « Reader's Choice Award for Best Fund Manager (inaugural award) « Australian Share Fund of the Year (3rd consecutive year) Personal Investor Magazine Awards 2005 « Balanced Superannuation Fund of the Year (2nd consecutive year) Money. Magazi
Slide 11: First half net inflows of $1.0 billion
First half net inflows of $1.0 billion 30 June 31 Dec 2005 Net inflows Other 2005 FUM ($B) ($B) ($B) FUM ($B) Retail 0.3 8.2 Masterfund 1.4 14.7 Institutional 7.4 All Channels 2.6 30.3 Australian Equity 2.2 21.0 Cash & Fixed Interest 0.1 6.4 Global Equity 0.1 2.0 Other 0.2 0.9 All Asset Classes 2.6
Slide 12: Notes on significant flows
Notes on significant flows Aursttalicn m Strategic asset allocation models equities . . . . institutional working against investment in flows Australian equities = Over $900 million into Credit funds in the first half of the year = New exact cash fund Strong flows. into new. credit funds
Slide 13: Global equities — building momentum
Global equities — building momentum a investment style out of favour in recent market conditions and initial returns tracking below benchmark Stable FUM balance: of a Prior experience of net outflows ceased and modest $2 billion flow generated to date = Operating loss of $5.3 million recorded in the
Slide 14: Slide 14
Slide 15: Perpetual Private Clients performing well
Perpetual Private Clients performing well m= Strong volume growth m Price increases m= Substantial increase in profitability
Slide 16: Solid growth in Wealth Management revenue
Solid growth in Wealth Management 6 months to Revenue Dec 05 Dec 04 Change Strong $m $m % increase in volumes Perpetual investments 113.3 103.9 9 me igey we Perpetual Private Clients 40.2 39.8 12 163.5 139.7 410 u Fundamentals in place uw Results beginning to emerge from recent initiatives Outlook m
Slide 17: Corporate Trust EBITDA up 7%
Corporate Trust EBITDA up 7% Total Revenue Expenses EBITDA EBITDA margin 6 months to Dec 2005 Dec 2004 Change $m $m % 28.1 2 13.0 (4) 16.4 7 54% - oop comet
Slide 18: Steady growth in Corporate Trust revenue
Steady growth in Corporate Trust 6 months to Revenue Dec 05 Dec 04 Change $m $m % Securitisation 19.6 17.7 14 FUA Other Corporate Trust 9.4 10.4 (13) Volumes up 28.7 28.4 2 6% 2 Securitisation FUA increased by 6% to $152.8 billion at December 2005 a Large client internalised outsourced responsible e
Slide 19: Our corporate strategy: Progress over the last months
I: Our corporate strategy: Progress over the last 6 months IL Develop new growth engines lll. Fully engage our people to deliver our Perpetual strategy S
Slide 20: Expanding our asset management footprint
Expanding our asset management footprint Domestic Stock Hedge Private Picking Mortgage Lending LPT Stock Picking infrastructure Investing Quantitative Investing Credit Investing Global Stock Emerging Picking Markets Fl Hedge Global Thematic / Funds Broad Direct Property Investing Duration Vanilla Ma
Slide 21: Pleasing results from entry into Credit Funds
Pleasing results from entry into Credit | Funds have outperformed benchmark every month to date resulting in strong FUM growth FUM ($B) 2.07 $1.78 « Initial focus on credit is enhanced product # New higher margin products 1.04 ~ Exact Market Cash Fund - Diversified Income Fund 0.57 * $2.5 billion to
Slide 22: Implementation of initiatives continues
Implementation of initiatives continues « Acquired remaining 50% of Perpetual James Fielding (PJF) in November 2005 « Direct property funds management capability established ~ Potential seeding requirements = Establishment of structured products business ~ Gearing, capital protection ~ Use of balanc
Slide 23: Name change and Board renewal
Name change and Board renewal « Change of name to Perpetual Limited in early January « Board renewal program completed: ~ Robert Savage (Chairman) ~ David Deverall (Managing Director) ~ Meredith Brooks - Paul McClintock ~ Sandra McPhee — Elizabeth Proust ~ Peter Scott ~ Philip Twyman Pepe
Slide 24: Agenda
Agenda Group highlights —- David Deverall [Fanci results — John Nesbitt Outlook — David Deverall PerpevalpP
Slide 25: Overview
Overview « Building off a solid base ~ Fundamentals favourable in the period ~ Continued focus on expenses and investment in skill base « Moving decisively to implement strategy « Disposing non-core assets « Expenses for administration process review identified as non- recurring « Initial operating
Slide 26: A solid result
A solid result Dec 2004 = Change $m % Operating revenue 174.0 9 Operating expenses 86.8 - EBITDA 87.2 18 Operating profit after tax 56.6 12 Net profit after tax 65.0 13 Operating EPS“ 150.2¢ 11 EPS 172.2¢ 13 EBITDA / revenue margin 50% - “)} Basic EPS calculated under AIFRS using operating profit af
Slide 27: Operating profit after tax for months to December 2005
Operating profit after tax for 6 months to December 2005 $M 1005 17.8 807 -0.4 Sa 73.5 “3.3 “24 63.5 607 404 207 0) Operating Profit on Sale of Initial Admin process Net profit profit after tax saleofAPRL = investments operating review costs after tax and warranty losses of claim* global equities Pe
Slide 28: Modest increase in expense base
Modest increase in expense base Dec 2005 Dec 2004 Change $m $m % Employee related expenses 54.7 5 Occupancy expenses 2.6 4 G&A expenses 29.5 (9) Operating “cash” expenses 86.8 - Equity Remuneration amortisation 3.7 108 Interest and depreciation 5.4 (15) | Total Expenses 9.9 4. PerpevalpP
Slide 29: Continued focus on expenses
Continued focus on expenses » Employee incentive costs higher in line with increased profits Increased : » Performance based equity amortisation expenses up PIOpOLlOn GI substantially variable costs . » Increased professional fees for outsourced operations (FUM based fees) Investmentin s Structured
Slide 30: Margins expanded while investment in the business continues
Margins expanded while investment in the business continues EBITDA to revenue margin (%) 6075 504 48 50 50 407 30- EBIIDA Margin 20- 10-7 0 Dec 03* Jun 04* Dec 04* Jun 05* Dec 05 * Comparative periods adjusted for AIFRS PerpevalpP
Slide 31: Operating profit after tax: result explained
Operating profit after tax for 6 months to December 2005: PIIML result explained Significant Structured $m Operating APRL Sale Items! Products Statutory Revenue 189.6 - - 1.2 195.0 Expenses (87.1) < (3.0) (1,2) (99.0) EBITDA 102.5 - (3.0) - 96.0 Equity remuneration amortisation (7.7) - - - (9.4) Dep
Slide 32: Administration process review
Administration process review End to end review of administration and fund accounting processes including unit pricing policies and procedures Costs incurred to date include professional fees associated with initial review and refinement of policies and procedures ($3.0m before tax, $2.1m after tax)
Slide 33: A strong balance sheet
A strong balance sheet Change a Net assets 17 Investments at market value 22 Cash holdings (3) Liquid assets 7 Structured investments - Key Financial Ratios Gross debt to book equity Interest coverage (EBITDA) times Franking credits (4\% Pepe
Slide 34: Monthly review of capital requirements
6 monthly review of capital requirements PerpevalpP
Slide 35: 25% increase in interim dividend
Sa 25% increase in interim dividend to 162 cents per share Ordinary dividend per share (cents) 2005 15074 130 130 100-4 80 70 - CS CC 0 Dec 03 Jun 04 Dec 04 Jun 05 Special Dividend 250 - 100 - {cents per share} * 90% of underlying cash earnings paid out to shareholders, excludes equity remuneration
Slide 36: AGAAP/AIFRS OPAT overview
AGAAP/AIFRS OPAT overview 31 December 2004 AIFRS 56.6 31 December 2005 AIFRS 31 December 2004 AGAAP 63.5 54.3 31 December 2005 AIFRS 63.5 Pepe
Slide 37: AIFRS impacts on 2005 OPAT
AIFRS impacts on 2005 OPAT Dec 2004 $m Reported operating profit under AGAAP 54.3 AIFRS adjustments - Amortisation of goodwill no longer provided 1.7 ~ Additional amortisation of deferred staff incentives (options and shares) (0.4) - Taxation effect of adjustments above 0.1 ~ Equity accounting for A
Slide 38: Agenda
Agenda Group highlights —- David Deverall Financial results — John Nesbitt [ohitiook —~ David Deverall Pepe
Slide 39: A good platform for growth
A good platform for growth = Core business fundamentals favourable # Added growth capabilities in the first half * Strong second half starting position for funds under management and funds under advice and administration # Healthy pipeline Pepe
Slide 40: 2006 Half Year Results
2006 Half Year Results Analyst and Investor Briefing 22 February 2006 rerpewesp