Magellan Financial Group Ltd · ASX:MFG
Magellan Financial — FY2023 Earnings Presentation
29 slides from Magellan Financial's earnings presentation, Aug 18, 2023
Slide 1: Magellan Financial Group Ltd Full Year Results
Magellan Financial Group Ltd Full Year Results Investor Presentation For the year ended 30 June 2023 Andrew Formica | Non-Executive Chairman David George| CEO & Managing Director Kirsten Morton| CFO & Chief Operating Officer
Slide 2: Agenda
Agenda 1. Governance Update Andrew Formica 3 2. FY23 Overview David George 4 3. Group Financial Results Kirsten Morton 13 4. Strategy Progress Update David George 19 Magellan| 2
Slide 3: Governance Update
Governance Update Previously announced appointments of David Dixon (former CIO, Equities at First Sentier Investors) and Andrew Formica (previously CEO of Jupiter Asset Management) as Non-Executive Directors to the Board in December 2022 and July 2023 respectively Changes announced yesterday to the
Slide 4: FY23 Overview
FY23 Overview David George, CEO & Managing Director Magellan| 4
Slide 5: FY23 Overview
FY23 Overview Following a reset in FY23, Magellan is now at next stage of its evolution. Solid progress made on FY23 priorities and executing our 5 year strategy Early signs of improvement in investment performance Disciplined approach to cost management ― FY23 Funds Management business operating ex
Slide 6: Market Conditions
Market Conditions Central bank monetary tightening cycles have extended in the face of stubborn inflation trends Effects of higher rates have been uneven, with: ― Predictable impacts coming to pass for companies and sectors most sensitive to higher interest rates; ― Resilience in consumer and servic
Slide 7: Funds Under Management
Funds Under Management As at 30 June 2023 ($ billion) Investment Strategy 30 June 2022 1H23 Net Flows1 2H23 Net Flows Performance1 Distributions 30 June 2023 Global Equities 33.3 (13.3) (4.8) 4.4 (0.5) 19.1 Infrastructure 20.1 (1.5) (0.9) (1.3) (0.2) 16.1 Equities Australian Equities 7.9 (0.1) (4.5)
Slide 8: Fund Performance to June 2023 – Primary Strategies
Fund Performance to 30 June 2023 – Primary Strategies Since All three primary strategies have outperformed their 6 months 1 year 3 Years 5 Years Inception (% ) (%) (% p.a.) (% p.a.) (% p.a.)1 benchmarks since inception Magellan Global Fund 18.13% 20.64% 5.62% 9.07% 10.78% 1. GLOBAL EQUITIES STRATEGY
Slide 9: Fund Performance to June 2023 – New Products & Relaunches
Fund Performance to 30 June 2023 – New Products & Relaunches Since Newly launched / re-launched products in FY23: 6 months 1 year 3 Years 5 Years (%) (%) (% p.a.) (% p.a.) Inception Building on proven track record of delivering innovative (% p.a.)1 products that meet client demand Magellan Core Seri
Slide 10: Financial Performance Overview
Financial Performance Overview Group: Funds Management Business: Group: Adjusted Revenue & Other Income1 Operating Expenses Adjusted Net Profit After Tax2 $647.3m (41%) $401.0m $263.4m (4%) $379.4m $125.8m $121.3m FY24 $152.5m Guidance (57%) $170.6m 2H23 $95m - $174.3m $383.8m $100m $76.0m 2H23 $248
Slide 11: Financial Strength
Financial Strength $853.7 million $945.3 million No debt Net Tangible Assets (NTA) Cash, financial assets & Total liabilities of $236.5 million, ($4.71 per share) investments in associates $159.9 million of which relates to the Group’s commitments potentially to fund the MGF Options discount 116.7 c
Slide 12: ESG Highlights
ESG Highlights Environmental Social Governance Commitments prepared for the Net Refreshed Magellan values launched Significant progress made on Board Zero Asset Manager initiative renewal process Female representation in senior Adopted a new Risk Management management team1 of 44% and at Appointment
Slide 13: Group Financial Results
Group Financial Results Kirsten Morton, CFO and Chief Operating Officer Magellan| 13
Slide 14: Reported Earnings
Reported Earnings $ million 30 Jun 2023 30 Jun 2022 % change Management and services fees Performance fees 330.2 11.5 592.6 11.5 (44%) 0% • Management and services fees decreased by 44%, Other revenue and income 37.6 43.1 (13%) reflecting the 48% reduction in average FUM Adjusted revenue and other i
Slide 15: Funds Management Segment
Funds Management Segment $ million 30 Jun 2023 30 Jun 2022 % change Revenue • Funds Management segment represents the core Management fees 327.6 588.6 (44%) business that drives profits and dividends Performance fees 11.5 11.5 0% Services fees 2.6 4.0 (36%) • Increase in average base management fee
Slide 16: Expenses – Funds Management Business
Expenses – Funds Management Business Cost to income ratio (excluding performance fees) of 36.4% during the period FY23 Funds Management business operating expenses of $121.3 million below guidance range of $125- $130 million — Included $15.4 million expense for staff cash retention payments and cost
Slide 17: Fund Investments
Fund Investments Magellan has set a pre-tax hurdle of 10% p.a. (over the business cycle) for the Fund Investments portfolio FUND INVESTMENTS PORTFOLIO INVESTMENT RETURNS Investment ($ million) 30 June 2023 30 June 2022 Time Period (to 30 June 2023) Return Cash 0.4 0.3 1 Year 19.8% Investments in: Ma
Slide 18: Associate Investments
Associate Investments As at 30 June 2023, Magellan held two investments in associates: • 36% economic interest (5% voting interest) in Barrenjoey Capital Partners Group Holdings Pty Ltd • 16% interest in FinClear Holdings Limited1 FY23 associate investments delivered post-tax loss of $11.5 million:
Slide 19: Strategy Progress Update
Strategy Progress Update David George, CEO & Managing Director Magellan| 19
Slide 20: Strategy Progress Update – Magellan in Five Years
Strategy Progress Update – Magellan in Five Years Fund manager of scale Diversified product mix Attractively positioned in growing segments with growing client demand Partner of choice within the Australian wealth industry Strengthened global institutional relationships Attractive returns for shareh
Slide 21: Strategy Progress Update – Our Plan to Get There
Strategy Progress Update – Our Plan to Get There Stabilise & improve core Funds Management performance Strong balance sheet $945.3 million1 in cash, Platform financial assets & investments in associates Disciplined capital and cost management Extensive operational infrastructure to facilitate Launch
Slide 22: Strategy Progress Update – Platform
Strategy Progress Update – Platform ✓Simplified Magellan – focus on funds management ✓Realigned organisational structure to support long term strategy ✓Funds Management operating expenses of $121.3 million below FY23 guidance range of $125- $130 million PLATFORM ✓Capital management initiatives deliv
Slide 23: Strategy Progress Update – Product
Strategy Progress Update - Product ✓Implemented changes to investment team organisational structure aimed at improving performance, with initiatives showing early signs of performance improvement ✓Continue to embed ESG knowledge across all client solutions ✓Added dedicated ESG capabilities to the te
Slide 24: Strategy Progress Update – People
Strategy Progress Update – People ✓Investment team changes including greater focus on improving and clarifying development opportunities, and deliberate succession planning ✓Staff retention program announced in March 2022 accelerated – cash payments brought forward by one year from Sep 2024 and Sep
Slide 25: FY24 Priorities
FY24 Priorities • Implement program to deliver year-on-year improvement in cost and operational efficiency across the business Platform • FY24 Funds Management business operating expense guidance range of $95-$100 million • Focus on capital efficiency • Deliver investment performance over sustained
Slide 26: Summary
Summary First year of our five-year strategy – we have delivered on our FY23 priorities: ✓ Significant work completed to rationalise and stabilise the business ✓ Early signs of improvement in investment performance ✓ Successfully launched two investment strategies and relaunched Magellan Core Series
Slide 27: Q&A
MAGELLAN FINANCIAL GROUP Q&A
Slide 28: Important Information
Important Information This presentation has been prepared by Magellan Financial Group Limited ACN 108 437 592 (‘Magellan’). This presentation contains summary information about Magellan and its related bodies corporate and is current as at 18 August 2023. While the information in this presentation h
Slide 29: www.magellangroup.com.au
www.magellangroup.com.au Phone: +61 2 9235 4888
Magellan Financial Group — FY2023 Earnings Presentation on 6ix