Perpetual Limited · ASX:PPT
Perpetual — FY2023 Earnings Presentation
39 slides from Perpetual's earnings presentation, Aug 23, 2023
Slide 1: Perpetual FY23 Financial Results
Perpetual Limited ABN 86 000 431 827 Angel Place, Level 18, 123 Pitt Street Sydney NSW 2000 24 August 2023 Australia Phone +61 9229 9000 ASX Limited www.perpetual.com.au ASX Market Announcements Office Exchange Centre 20 Bridge Street Sydney NSW 2000 Perpetual FY23 Financial Results The following an
Slide 2: Perpetual Limited FY23 Results Presentation
Perpetual Limited (ASX:PPT) FY23 Results Presentation For the year ending 30 June 2023 Thursday 24 August 2023 Presented by: Rob Adams, CEO & Managing Director Chris Green, Chief Financial Officer
Slide 3: Disclaimer
Disclaimer Important information The Product Disclosure Statement (PDS) for the Perpetual Asset Management Australia funds are issued by Perpetual Investment Management Limited ABN 18 This presentation is in summary form and is not necessarily complete. It should be 000 866 535 AFSL 234426. The appl
Slide 4: FY23 Highlights
FY23 Highlights Rob Adams CEO and Managing Director half year ending 31 December 2021
Slide 5: Delivering growth, scale and diversification benefits
Delivering growth, scale and diversification benefits Key themes • Solid execution of strategy with acquisitions on track and delivering benefits • Integration of Pendal Group on schedule with synergies realised to-date on track • Earnings impacted by net outflows in Asset Management • Continued org
Slide 6: Asset Management
Asset Management AUM and revenue influenced by markets, outperformance and net flows; improvement in net flows our prime focus • UPBT up 29% on FY22, revenue up 55%; due to the inclusion of Pendal • Strong investment performance across portfolio positions us well for • Total AUM of $212.1 billion, s
Slide 7: Annual performance
Outperforming benchmarks across diverse portfolio expected to drive growth in AUM over time Proportion of strategies outperforming benchmark1,2 Value style strategies Growth style strategies Value style strategies ESG strategies Value style strategies 97% 97% 87% 86% 90% 91% 89% 73% 73% 59% 64% 53%
Slide 8: Corporate Trust
Corporate Trust A quality business that delivers consistent growth, underpinned by long-term client relationships • UPBT up 12% on FY22, revenue up 12% with FUA up 6% • Consistent delivery of EBITDA margin, client retention and earnings growth • Investment in Perpetual Digital delivering new client
Slide 9: Wealth Management
Wealth Management Strong growth in non-market linked revenues driven by Fordham and Priority Life • UPBT of $47 million, up 6% on FY22; total revenues up 3% to $217.4 million • Non-market revenue growth offset by weaker market related revenue, impacted by repricing and lower average equity markets •
Slide 10: Pendal update
Pendal update Integration tracking to plan; focus on synergy realisation and improving net flows • Client consent at completion – 98%1; and no key portfolio Synergies on track to meet targets (run-rate synergies) manager losses since completion • Net flows below expectation, driven primarily by two
Slide 11: Track record of delivering acquisition benefits over time
Track record of delivering acquisition benefits over time • Very limited sales and marketing capability • 100% institutional client base • Primarily operating in one state • SME market focused At • Distribution largely driven by the high net worth advice team and client referrals • US focused distri
Slide 12: Execution of strategy announced in February 2019
Execution of strategy announced in February 2019 Expanding our diversified business across clients, regions and channels Asset Management Wealth Management Corporate Trust Diversify to accelerate growth Target segments in a disciplined Accelerate digital service manner offerings Acquired Trillium,
Slide 13: Our refreshed strategy
Our refreshed strategy Simplifying and driving sustainable growth Our purpose: To create enduring prosperity Our values: Excellence, Integrity, Partnership Clients: Enduring relationships and People: Inclusive, empowered and accountable Shareholders: Delivering sustainable Community: Support strong
Slide 14: Simplified, focused global Asset Management team
Simplified, focused global Asset Management team Focused on successful execution of asset management strategy • Streamlined, global leadership team focused on asset management • Global functions prioritise regions/channels of focus • Adapt to suit each boutique’s needs Maximising the opportunity to
Slide 15: FY24 priorities
FY24 priorities Focus on delivering returns on investments made across our quality portfolio of businesses Asset Management Wealth Management Corporate Trust • Deliver year 1 synergies from Pendal • Leverage the specialised segment • Innovate collaboratively with clients acquisition model that provi
Slide 16: FY23 Group Financials
FY23 Group Financials Chris Green Chief Financial Officer year ending 31 December 2021
Slide 17: FY23 financial results
FY23 financial results Revenue and UPAT up; NPAT impacted by transaction and integration costs FY23 FY22 FY23 v FY22 For the period $m $m (%) Summary points: Operating revenue 1,013.8 767.7 32% • Revenue driven by inclusion of Pendal Group from January 2023, market linked revenues impacted by Total
Slide 18: Diversified sources of revenue provide support through market cycles
Diversified sources of revenue provide support through market cycles Asset Management Wealth Management Corporate Trust Closing AUM ($b)1 135% Closing FUA ($b) 6% Closing FUA ($b) 6% AUM/FUA/FUA $b vs FY22 vs FY22 vs FY22 1,092.3 1,162.5 18.5 922.8 682.2 691.1 582.9 212.1 17.4 DMS2 17.0 98.3 9
Slide 19: FY23 UPAT analysis
FY23 UPAT analysis 760.9 163.2 148.2 298.3 275.3 FY22 Asset Management Wealth Management Corporate Trust Group Support Services YoY Tax Movement FY23 UPAT UPBT UPBT UPBT UPBT UPAT Additional Positive net inflows with Continued profit growth Higher revenue earnings from the strong performance across
Slide 20: Expense analysis
Expense analysis Increase mainly due to investment in growth engines % Controllable cost growth 4% +4% 8% +32% 40% change2 794.6 760.9 794.6 298.3 613.4 566.5 589.3 275.3 566.5 (16.6) Variable 24.1 181.2 remuneration External factors Pendal Group acquisition FY22 Group wide Performance Technology An
Slide 21: Cashflow analysis
Cashflow analysis Cashflow movements reflect the completion and integration of Pendal Free Cash Flow Key movements $85.8m1 • Cash consideration of Pendal acquisition funded by additional debt • Inclusion of Pendal balance sheet reflected in cash position • Utilised excess seed capital to repay debt
Slide 22: Balance sheet
Balance sheet Debt reduction a priority; reaffirm 3 year target of ~1.2x gross debt/EBITDA1 30 June 31 Dec 30 June FY23 v For the period 2023 2022 2022 FY22 $m $m $m (%) Key movements vs FY22 Cash 263.2 133.6 175.4 50% • Significant movements across the balance sheet reflect incorporation of Pendal
Slide 23: Dividends
Dividends Dividend payout ratio within stated target payout range • Final dividend of 65 cps declared, 40% franked, representing a 76% of 2H23 UPAT payout ratio • Total dividends for the year were $1.551, representing a payout ratio of 78% within the Board’s stated target range to payout between 60%
Slide 24: Summary & Outlook
Summary & Outlook Rob Adams CEO and Managing Director half year ending 31 December 2021
Slide 25: FY24 outlook and priorities
FY24 outlook and priorities Focus on delivering return on investments made across our quality portfolio of businesses • Execute on our refreshed strategy • Operating environment for Asset Management expected to continue to be challenging with investor caution towards equities, asset allocation shift
Slide 26: Contacts
Contacts Emma Rumble Susie Reinhardt General Manager, Corporate Affairs Head of Investor Relations & Investor Relations emma.rumble@perpetual.com.au susie.reinhardt@perpetual.com.au +612 9229 3998 +612 9125 7047 Connect with us at: About Perpetual perpetual.com.au pendal.com.au Head Office johcm.com
Slide 27: Appendix: Detailed divisional result commentary
Appendix Detailed divisional result commentary
Slide 28: Asset Management
Asset Management FY231 FY22 FY23 v FY22 For the period $m $m (%) Revenue 600.4 387.8 55% Operating expenses 437.7 271.2 61% EBITDA 162.8 116.5 40% Depreciation & amortisation 13.2 7.8 69% Equity remuneration 15.5 5.2 198% Interest expense 1.4 0.7 92% Underlying profit before tax 132.7 102.8 29% PBT
Slide 29: Corporate Trust
Corporate Trust FY23 FY22 For the period FY23 v FY22 (%) $m $m Debt Market Services revenue 77.2 68.7 12% Managed Funds Services revenue 77.4 70.3 10% Perpetual Digital revenue 23.4 19.5 20% Total revenues 178.0 158.5 12% Operating expenses (85.1) (75.4) (13%) EBITDA 92.9 83.1 12% Depreciation & amo
Slide 30: Wealth Management
Wealth Management FY23 FY22 For the period FY23 v FY22 (%) $m $m Market related revenue 145.1 153.0 (5%) Non-market related revenue 72.3 58.3 24% Total revenues 217.4 211.2 3% Operating expenses (155.4) (151.5) (3%) EBITDA 62.0 59.7 4% Depreciation & amortisation (9.1) (9.3) 2% Equity remuneration (
Slide 31: Appendix: UPAT to NPAT reconciliation
Appendix UPAT to NPAT reconciliation
Slide 32: UPAT to NPAT reconciliation
UPAT to NPAT reconciliation $104.2m of significant items mainly attributable to acquisitions (80.0) FY23 Transaction and Integration costs: Non-cash Net unrealised FY23 UPAT amortisation losses on NPAT Trillium Barrow Pendal Other Hanley of acquired financial assets intangibles 31
Slide 33: Appendix: Pro-forma UPBT – Asset Management
Appendix Pro-forma UPBT – Asset Management
Slide 34: Asset Management pro-forma historical results
Asset Management Pro-forma historical results For the period FY23 FY22 2H23 1H23 2H22 1H22 $M $M $M $M $M $M Total revenue 871.7 1,063.8 434.5 437.2 501.6 562.2 Operating expenses (617.4) (632.9) (316.3) (301.1) (320.3) (312.6) EBITDA 254.3 430.9 118.2 136.1 181.3 249.6 Depreciation and amortisation
Slide 35: Appendix: Assets under Management, Funds under Advice and Administration
Appendix Assets under Management, Funds under Advice and Funds under Administration
Slide 36: Asset Management: AUM and flows
Asset Management: AUM and flows AUM by asset class ($b) 30 June 2022 Pendal AUM Foreign 30 June 2023 For the period (at 11 January Flows1 Other2 Exchange ($b) 2023) Impacts3 ($b) Equities Australia 11.2 17.4 (1.6) 2.0 0.0 28.9 Global/International4 15.6 47.2 (0.8) 4.7 3.2 69.8 UK 0.0 8.7 (0.3) (0.4)
Slide 37: Asset Management: AUM by asset class and base management fee margins
Asset Management: AUM by asset class and base management fee margins AUM (A$b) Asset Class (30 June 2023) Base management fee (bps) – margin map as at 30 June 2023 Australian equities 28.9 Australian equities UK equities Global/International1 equities 69.8 Global/International equities European equi
Slide 38: Wealth Management FUA and AUM
Wealth Management FUA and AUM FUA by client segment and AUM FUA ($b) (Inclusive of AUM) AUM ($b) FY23 v FY22 FY23 v FY22 FY23 FY22 FY23 FY22 (%) (%) Community and Social Investments (CSI) 6.1 5.2 17% Select Portfolios 2.8 2.8 - High Net Worth 11.6 11.4 2% Implemented Portfolios 4.2 3.7 14% Other 0.8
Slide 39: Corporate Trust
Corporate Trust FUA by segment ($b) For the period FY23 FY22 FY23 v FY22 (%) Public Market Securitisation RMBS - bank (ADI) 52.4 57.4 (9%) RMBS - non bank 79.3 78.4 1% ABS and CMBS 60.7 52.3 16% Balance Sheet Securitisation RMBS - repos 393.3 398.9 (1%) Covered bonds 89.2 76.3 17% Debt Market Servic