Magellan Financial Group Ltd · ASX:MFG
Magellan Financial — FY2019 Earnings Presentation
39 slides from Magellan Financial's earnings presentation, Aug 13, 2019
Slide 1: Magellan Financial Group Limited Full Year Results
Magellan Financial Group Limited Full Year Results For the year ended 30 June 2019 For personal use only
Slide 2: Financial Year Highlights
Introduction Financial Year Highlights1 For personal use only • Net profit after tax up 78% to $376.9 million • Adjusted net profit after tax grew by 35% to $364.2 million • Strong growth: – Average funds under management up 28% to $75.8 billion – Management and services fees revenue up 22% to $472.
Slide 3: FY19 Financial Results
For personal use only FY19 Financial Results Kirsten Morton, Chief Financial Officer Magellan| 3
Slide 4: Magellan Financial Group Full Year Results
Magellan Financial Group Full Year Results $ million 30 June 2019 30 June 2018 % change Management and services fees 472.5 385.8 22% For personal use only Performance fees 83.6 39.8 110% Other revenue 21.1 27.1 (22%) Adjusted revenue 577.3 452.6 28% Adjusted expenses (104.0) (101.0) 3% Adjusted net
Slide 5: Funds Management Business
Funds Management Business For personal use only $ million 30 June 2019 30 June 2018 % change Revenue Management fees 467.8 381.1 23% Performance fees 83.6 39.8 110% Services fees 4.7 4.7 0% Other income 5.2 3.2 65% 561.3 428.7 31% Expenses Employee expense 62.8 51.9 21% Marketing expense 3.4 11.1 (7
Slide 6: Tax and Dividends
Tax and Dividends For personal use only • Effective tax rate for the 12 months to 30 June 2019 is 23.6% (Offshore Banking Unit) • Dividends: – 6 month dividend of 111.4 cents per share (75% franked) comprising: o Final Dividend of 78.0 cents per share o Performance Fee Dividend of 33.4 cents per sha
Slide 7: Business Overview
For personal use only Business Overview Brett Cairns, Chief Executive Officer Magellan| 7
Slide 8: Funds Under Management Summary
Funds Under Management Summary For personal use only 30 June 2019 30 June 2018 30 June 2017 Closing FUM ($ billion) % % % Retail 23.2 27% 19.2 28% 15.2 30% Institutional 63.5 73% 50.3 72% 35.4 70% Total FUM 86.7 100% 69.5 100% 50.6 100% Average FUM ($ billion) Retail 20.4 17.3 13.6 Institutional 55.
Slide 9: Investment Performance
Investment Performance For the periods to 30 June 2019 For personal use only Since 1 Year 3 Years 5 Years Inception (%) (% p.a.) (% p.a.) (% p.a.)1 Magellan Global Fund 20.2 17.5 16.0 12.3 MSCI World NTR Index ($A) 12.0 14.0 13.1 6.4 Magellan Infrastructure Fund 16.5 10.6 12.4 9.1 Global Listed Infr
Slide 10: FY19 FUM Flows
FY19 FUM Flows Retail Net Inflows1 For personal use only Institutional Net Inflows 4,500 4,500 $ Millions $ Millions 4,000 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Total net inflows for the 12 months e
Slide 11: Listed Unitholder Growth
Listed Unitholder Growth For personal use only 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Number of registered unitholders across Magellan Global Equities Fund (ASX:
Slide 12: Institutional Client Diversity
Institutional Client Diversity For personal use only 10% % of Total Management & Services 8% 6% Fees 1 4% 2% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Top 30 Institutional Clients Cumulative Total Management and Services Fees Top Institutional Clients 5 10 2
Slide 13: Expenses
Expenses For personal use only • View costs associated with strategic initiatives as outside day-to-day operating expenses – Excluded from Funds Management business – Excluded from dividend payout • Employee expenses account for ~60% of operating expenses – Expect modest headcount increases from org
Slide 14: Growth Areas
Growth Areas For personal use only • Sustainable: approaching 3 year track records, meaningfully above benchmark, ~US$20bn theoretical capacity • Infrastructure: solid interest, great long-term track record, unique definition, remaining capacity of ~US$6bn • Self-directed retail: continued emphasis,
Slide 15: Magellan's Partnership Approach
For personal use only Magellan’s Partnership Approach Hamish Douglass, Chairman Magellan| 15
Slide 16: Partnering with our investors
Partnering with our investors For personal use only • A partnership with our clients is important to building long term enduring value: – Providing benefits to investors increases engagement, promotes loyalty and likely to attract more investors over time – The investments made by Magellan generate
Slide 17: The Partnership in Action – Investor Benefits
The Partnership in Action – Investor Benefits For personal use only MGG IPO MGG DRP MGG UPP MHCT IPO (ASX: MHH) FUM raised $1.57 billion $17.5 million $277 million TBC Ability to subscribe Investor Ability to reinvest Loyalty Units of 7.5% for up to $15,000 of Partnership Loyalty Units of 6.25% dist
Slide 18: The Partnership in Action – Enhancing Shareholder Value
The Partnership in Action – Enhancing Shareholder Value For personal use only 5.0x Post-tax earnings multiple on post-tax 4.0x partnership investments 3.9x 3.7x MGG IPO MGG DRP MGG UPP MHH IPO Priority Offer 1 Each dollar spent on partnership investment has resulted in materially more than $2 of sha
Slide 19: Magellan High Conviction Trust
Magellan High Conviction Trust • Undertaking an IPO for an ASX-listed investment trust of the Magellan High Conviction strategy For personal use only Priority Offer • Open to eligible MFG shareholders and investors in Magellan Global Trust and Magellan High Conviction Fund • Eligible investors can s
Slide 20: Institutional Share Placement
For personal use only Institutional Share Placement Hamish Douglass, Chairman Magellan| 20
Slide 21: Institutional Share Placement
Institutional Share Placement For personal use only • Undertaking a fully underwritten institutional placement to raise $275 million • Funds raised will be used to: – Fund costs associated with the Magellan High Conviction Trust IPO – $50 million to support new retirement product – Seed new investme
Slide 22: Institutional Share Placement Overview
Institutional Share Placement Overview For personal use only • Fully underwritten institutional placement to raise $275 million (“Placement”) Size and • 4.98 million shares will be issued (“New Shares”) structure • Represents ~2.7% of expanded issued capital • Offer Price of $55.20 per New Share rep
Slide 23: Drivers of Shareholder Value
For personal use only Drivers of Shareholder Value Magellan| 23
Slide 24: A model for long term Total Shareholder Return (TSR)
A model for long term Total Shareholder Return (TSR) For personal use only 4-5% pa 11-14% pa FUM Flows/ additional opportunities 7-9% pa Existing business - Dividend yield Existing business Long term TSR investment growth TSR through cycle Double digit TSR from existing business Magellan| 24
Slide 25: Important Information
Important Information This presentation has been prepared by Magellan Financial Group Limited ACN 108 437 592 (“Magellan”). For personal use only This presentation contains summary information about Magellan and is current as at 13 August 2019. While the information in this presentation has been pre
Slide 26: Important Information
Important Information Macquarie Capital (Australia) Limited (the ‘Sole Lead Manager’) has acted as lead manager of the Offer. Neither the Sole Lead Manager, nor any of its affiliates or related bodies corporate (as that term is For personal use only defined in the Corporations Act 2001 (Cth) (“Corpo
Slide 27: Risks
Risks Attracting and retaining employees For personal use only Magellan relies on its ability to attract, train and retain highly skilled employees, portfolio managers and investment professionals, to generate future earnings and returns. If it is unable to attract and retain such employees, this ma
Slide 28: Risks
Risks Economic conditions For personal use only The operating and financial performance of Magellan is influenced by a variety of general economic and business conditions including the level of inflation, interest rates and exchange rates and government fiscal, monetary and regulatory policies. A pr
Slide 29: Risks
Risks Investment Performance Risk For personal use only The performance of Magellan and its subsidiaries in providing its investment management services is dependent on its expertise, the level of research it undertakes and ultimately the outcomes of its investment decisions. Magellan's assessment o
Slide 30: Risks
Risks Reduced ability to retain and attract investors For personal use only With the exception of Magellan’s ASX-listed closed end investment trusts, Magellan’s funds and institutional mandates provide investors with the ability to redeem their investment. Redemptions reduce Magellan's funds under m
Slide 31: Risks
Risks Service Provider Risk For personal use only Magellan relies on a number of service providers to provide operational and administrative functions for its funds and institutional mandates. Failure of a key service provider to deliver services to Magellan in accordance with its contractual obliga
Slide 32: International Offer Restrictions
International Offer Restrictions For personal use only This document does not constitute an offer of new ordinary shares ("New Shares") of Magellan in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offe
Slide 33: International Offer Restrictions
International Offer Restrictions For personal use only The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New Shares purchased pursuant to this document (other than (a) a "Canadian financial
Slide 34: International Offer Restrictions
International Offer Restrictions For personal use only European Union − Germany and the Netherlands This document has not been, and will not be, registered with or approved by any national securities regulator in the European Union. Accordingly, this document may not be made available, nor may the N
Slide 35: International Offer Restrictions
International Offer Restrictions For personal use only Japan The New Shares have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the "FIEL") pursuant to an exemption from the registration requir
Slide 36: International Offer Restrictions
International Offer Restrictions For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other docum
Slide 37: International Offer Restrictions
International Offer Restrictions For personal use only United Arab Emirates Neither this document nor the New Shares have been approved, disapproved or passed on in any way by the Emirates Securities and Commodities Authority ("ESCA") or any other governmental authority in the United Arab Emirates.
Slide 38: International Offer Restrictions
International Offer Restrictions For personal use only United States The New Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state or other jurisdiction of the United States. Accordingly, th
Slide 39: Contact details
For personal use only www.magellangroup.com.au Phone: +61 2 9235 4888
Magellan Financial Group — FY2019 Earnings Presentation on 6ix