Perpetual Limited · ASX:PPT
Perpetual — FY2011 Earnings Presentation
27 slides from Perpetual's earnings presentation, Aug 26, 2011
Slide 1: FY11 Results for 12 months ended 30 June 2011
For personal use only FY11 Results for 12 months ended 30 June 2011 Chris Ryan Managing Director & CEO Roger Burrows Chief Financial Officer 26 August 2011 ABN 86 000 431 827
Slide 2: Disclaimer
Disclaimer For personal use only Important information The information in this presentation is general background information about the Perpetual group and its activities current as at 26 August 2011. It is in summary form and is not necessarily complete. It should be read together with the company’
Slide 3: Agenda
Agenda For personal use only Group highlights Chris Ryan Financials Roger Burrows Progress report and next steps Chris Ryan 2
Slide 4: FY11 Overview
FY11 Overview For personal use only FY11 UPAT & NPAT in line with guidance – FY11 UPAT $72.9m/165.5 cps FY10: $72.8m/169.3 cps – FY11 NPAT $62.0m/140.8 cps FY10: $90.5m/210.5 cps Investment market linked revenues reflect subdued market conditions during FY11 Continued investment in Private Wea
Slide 5: Subdued contribution from equity markets with FY11 average All Ords +2.7%
Subdued contribution from equity markets with FY11 average All Ords +2.7% versus +14.1% in FY10 For personal use only All Ords 5,100 4,900 4,700 4,500 All Ords 4,300 4,100 3,900 Spot close (@ end of each day) All Ords 1st Half Avg All Ords 2nd Half Avg All Ords FY Avg All Ords 3,700 Nov 09 Nov 10 Ju
Slide 6: Industry inflows fall away in FY11
For personal use only 5 $b (20.0) (10.0) 0 10.0 20.0 30.0 40.0 Jun 07 Sep 07 Dec 07 Source: Plan for Life March 2011 Mar 08 Jun 08 Sep 08 Industry inflows fall away in FY11 Dec 08 Mar 09 Jun 09 Sep 09 Total Market Net Flows Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11
Slide 7: Our brand equity among advisers remains in number one place
Our brand equity among advisers remains in number one place For personal use only Fund manager brand equity June 2011 (as judged by advisers) Perpetual 73% Competitor 1 72% Competitor 2 70% Competitor 4 46% Competitor 3 50% Competitor 5 46% Competitor 6 44% Competitor 7 37% Competitor 8 36% Competit
Slide 8: FY11 saw largest volume of RMBS issued since GFC
FY11 saw largest volume of RMBS issued since GFC For personal use only RMBS issuance v average revaluation margin – 2 year Senior RMBS Non AOFM AOFM Spread Margin Average Revaluation M argin bps 60 250 50 200 - 2 Y ear S enior 40 150 $b 30 100 20 10 50 0 0 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY
Slide 9: Corporate Trust margin reduced as back book margin higher than new business
Corporate Trust margin reduced as margin on back book higher than new business driven by change in business mix For personal use only A$ Billions Australian RMBS Outstanding by Currency 180 AUD EUR GBP NZD USD JPY 160 140 120 100 80 60 40 20 0 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02
Slide 10: Perpetual Investments delivers improved financial performance in challenging environment
Perpetual Investments delivers improved financial performance in challenging environment For personal use only FY10 FY11 FY11 v Key themes: $m $m FY10 Continued to deliver award winning active Revenue 227.7 225.0 (1%) returns for our clients Operating expenses (128.0) (131.0) 2% Improved revenue
Slide 11: FY11 average FUM margin up 2 bps as lower margin cash FUM declined
FY11 average FUM margin +2 bps to 78 bps as FUM from lower margin products such as cash declined For personal use only 30.0 90bps 80bps 25.0 70bps 20.0 Average Revenue Margin % 60bps Avg FUM $bn 15.0 50bps 40bps 10.0 30bps 5.0 20bps - 1H09 2H09 1H10 2H10 1H11 2H11 10bps -5.0 0bps Australian Equities
Slide 12: Perpetual Investments' strong record of outperformance continued
In FY11 Perpetual Investments’ strong record of outperformance continued For personal use only Excess/(under) performance p.a. – gross as at end June 2011 Period Industrial Australian Smaller Concentrated International Diversified Share Ethical Global Share Share Companies Equity Share Income Plus S
Slide 13: Perpetual Investments' FUM up 1% in FY11
Perpetual Investments’ FUM up 1% in FY11 – Equities FUM up 4% offset by Cash & Fixed Interest down 10% For personal use only FY10 Net flows Other (1) FY11 $b $b $b $b Institutional 8.1 (0.1) 0.7 8.7 Intermediary (master fund and wrap) 12.9 (1.2) 0.9 12.6 Retail 5.9 (0.5) 0.5 5.9 All channels 26.9 (1
Slide 14: FUM as at end of July 2011
FUM as at end of July 2011 For personal use only End of July FUM was $25.4b versus $27.2b at end of June 2011. This decline is mainly attributable as follows: – c$700m due to the decline in equity markets – c$500m due to outflows in the cash asset class from the institutional segment, and – c$400m
Slide 15: Perpetual Private Wealth continuing to invest in people, capability and technology
Perpetual Private Wealth continuing to invest in people, capability and technology For personal use only FY10 FY11 FY11 v Key themes: $m $m FY10 Average FUA +7% Market related revenue 73.5 79.1 8% Fordham & Grosvenor Non-market related revenue 27.3 37.1 36% acquisitions now BAU Increase in non
Slide 16: Perpetual Private Wealth FUA benefited from improved investment market conditions
Perpetual Private Wealth FUA benefited from improved investment market conditions – average FUA per client c$1.3m For personal use only FY10 Net flows Other (1) FY11 $b $b $b $b Financial advisory: Superannuation 3.3 (0.1) 0.3 3.5 Non-superannuation 2.2 - - 2.2 5.5 (0.1) 0.3 5.7 Fiduciary servic
Slide 17: Corporate Trust FY11 profit broadly unchanged
Corporate Trust FY11 profit broadly unchanged For personal use only FY10 FY11 FY11 v $m $m FY10 Key themes: FY11 RMBS issuance Trust and Fund Services 55.6 54.5 (2%) up but new business Mortgage Services 31.9 42.7 34% written on finer margins than back Total revenues 87.5 97.2 11% book due to clie
Slide 18: Financials
Financials For personal use only Roger Burrows Chief Financial Officer 17
Slide 19: FY11 profit before tax broadly unchanged from prior year
FY11 profit before tax broadly unchanged from prior year For personal use only FY10 FY11 FY11 v Key themes: $m $m FY10 Full year’s contribution from Operating revenue 426.3 448.7 5% Fordham & Grosvenor Operating expenses (274.3) (305.5) (11%) – acquired in FY10 Continued investment EBITDA (1) 15
Slide 20: NPAT reflects a number of significant items
NPAT reflects a number of significant items For personal use only Key themes: FY10 FY11 FY11 v Lower tax rate in FY11 $m $m FY10 as over provided in UPBT 107.7 105.4 (2%) prior years Tax expense (34.9) (32.5) 7% Majority of EMCF unrealised losses now UPAT 72.8 72.9 0% recovered. From FY12 will b
Slide 21: Financial strength provides flexibility – continued to de-risk balance sheet
Financial strength provides flexibility – continued to de-risk balance sheet For personal use only FY10 FY11 Key themes: $m $m Interest coverage impacted by acceleration of interest discount Total equity 361.0 376.1 unwind for Private Wealth earn-out Less: Intangibles (1) (189.5) (175.2) payments
Slide 22: Conservative methodology used to calculate risk based capital
Conservative methodology used to calculate risk based capital Improved coverage ratio reflects decrease in risk and improved liquidity For personal use only As at end of 2H10 1H11 2H11 $m $m $m Liquid assets 212 204 242 Risk based capital 141 148 133 Coverage ratio 1.50x 1.38x 1.82x Liquid assets =
Slide 23: FY11 final dividend fully franked
FY11 final dividend of 90 cents per share fully franked FY11 dividend payout ratio 96% of NPAT after adjusting for one-offs For personal use only Key themes: Applying dividend policy of 80- 100% of annual statutory NPAT 1H10 2H10 1H11 2H11 FY10 FY11 would result in FY11 dividends in range of 113-1
Slide 24: Off-market buy-back announced
Off-market buy-back announced For personal use only As outlined in May, Perpetual will actively manage its capital In FY11 reduced seed funding by $7m Continued to reduce exposure to capital guaranteed products such as EMCF Strong financial position supports FY11 final dividend that was over
Slide 25: Progress report and next steps
Progress report and next steps For personal use only 24
Slide 26: Update on May objectives
Update on May objectives For personal use only Portfolio review – Closed Dublin office and entered into strategic outsourcing with Wellington Management Company, LLP to manage global equities – variabilising cost – will deliver annual savings of $7m after tax (based on current level of FUM) – Sold
Slide 27: Next steps
Next steps For personal use only Complete portfolio review and remove remaining distractions Focus on opportunities by refining growth plans Ensuring the best talent is focused on the best opportunities Complete process to select external provider of platform administration services for Priv