Perpetual Limited · ASX:PPT

Perpetual — FY2010 Earnings Presentation

33 slides from Perpetual's earnings presentation, Aug 24, 2010

  1. Slide 1: FY10 Results for 12 months ended 30 June 2010

    For personal use only FY10 Results for 12 months ended 30 June 2010 David Deverall Chief Executive Officer Roger Burrows Chief Financial Officer 24 August 2010 ABN 86 000 431 827

  2. Slide 2: Disclaimer

    Disclaimer For personal use only Important information While this information has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information c

  3. Slide 3: Agenda

    Agenda For personal use only ƒ Group highlights – David Deverall ƒ Financials – Roger Burrows ƒ Strategy update and summary – David Deverall 2

  4. Slide 4: FY10 Overview

    FY10 Overview For personal use only ƒ Solid increase in full year profit – Underlying Profit After Tax $72.8m (FY09: $65.7m) +11% yoy – Net Profit After Tax $90.5m (FY09: $37.7m) +140% yoy ƒ Improved market conditions – Rising markets and cost initiatives deliver increased operating leverage in Perp

  5. Slide 5: Equity markets rebound in FY10 – demonstrating our operating leverage to rising markets

    Equity markets rebound in FY10 – demonstrating our operating leverage to rising markets For personal use only Spot close All Ords Avg All Ords 5,250 FY09 FY10 5,000 4,750 FY10 Avg All Ords 4,500 4,250 4,000 FY09 Avg All Ords 3,750 3,500 3,250 9 0 9 0 08 8 09 9 8 9 9 0 8 9 9 9 0 0 9 0 08 08 09 9 -0 -

  6. Slide 6: Industry back in inflow in FY10, but not yet back to historic levels

    Industry back in inflow in FY10, but not yet back to historic levels For personal use only Total market quarterly net flows since June 2006 40.0 30.0 20.0 10.0 $b 0 (10.0) (20.0) Se 6 Se 7 Se 8 Se 9 Ju 7 Ju 8 Ju 9 10 D 6 M 6 D 7 M 7 D 8 M 8 D 9 M 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 n n n n ar ar ar ar e

  7. Slide 7: Group average FUM up 7% in FY10; revenue margins have expanded

    Group average FUM up 7% in FY10; revenue margins have expanded For personal use only 35.0 0.80 bps 0.70 bps 30.0 0.60 bps 25.0 Revenue Margin (bps) 0.50 bps Avg FUM $bn 20.0 0.40 bps 15.0 0.30 bps 10.0 0.20 bps 5.0 0.10 bps - - 1H09 2H09 1H10 2H10 Australian Equities Global Equities Quantitative Inv

  8. Slide 8: Securitisation issuance showing signs of improvement as spreads contract

    Securitisation issuance showing signs of improvement as spreads contract and end investors return to market For personal use only RMBS issuance (quarterly) 30 250 Average Revaluation Margin bps - 2 Year Senior Non AOFM AOFM Spread Margin 200 20 150 $b 100 10 50 0 0 2000 2001 2002 2003 2004 2005 2006

  9. Slide 9: Earnings momentum returned in FY10

    Earnings momentum returned in FY10 For personal use only FY09 FY10 FY10 v $m $m FY09 UPAT 65.7 72.8 11% Significant items (28.0) 17.7 NPAT 37.7 90.5 140% Diluted EPS on NPAT (cps) 89.4 210.5 135% Dividend per Ordinary Share (cps) 100.0 210.0 110% Annualised ROE on NPAT (%) 12.5 27.9 8

  10. Slide 10: Perpetual Investments represents around 50% of the business unit profit pool mix

    Perpetual Investments represents around 50% of the business unit profit pool mix For personal use only FY2009 Profit before tax FY2010 Profit before tax 29% 24% 48% 52% 24% 23% Perpetual Investments Perpetual Investments Private Wealth Private Wealth Corporate Trust Corporate Trust 9

  11. Slide 11: Perpetual Investments demonstrated clear operating leverage

    Perpetual Investments demonstrated clear operating leverage For personal use only FY09 FY10 FY10 v Key themes: $m $m FY09 ƒ Operating leverage to rising markets Revenue 203.0 216.9 7% ƒ Good cost Operating expenses (118.1) (114.5) 3% management EBITDA(1) 84.9 102.4 21% ƒ Active equities Depreciation

  12. Slide 12: Perpetual Investments’ strong record of outperformance

    Perpetual Investments’ strong record of outperformance For personal use only Excess performance(1) above benchmark Annualised Industrial Australian Small Concentrated International returns Share Share Companies Equity Share Fund Fund Fund Fund Fund 1 year +0.07% +5.90% +14.64% +2.80% -0.36% 3 years

  13. Slide 13: Perpetual Investments’ FUM up, driven by positive markets

    Perpetual Investments’ FUM up, driven by positive markets For personal use only FY09 Net flows Market (1) FY10 $b $b $b $b Institutional 8.5 (1.2) 0.8 8.1 Intermediary (master fund and wrap) 11.9 (0.3) 1.3 12.9 Retail (including Direct) 5.8 (0.4) 0.5 5.9 All channels 26.2 (1.9) 2.6 26.9 Australian e

  14. Slide 14: Revenue margin growth driven by inflow into active equities

    Revenue margin growth driven by inflow into active equities For personal use only 30 0.6 1.0 29 2.6 1.4 28 0.1 26.9 27 $b 26.2 26 25 24 FY09 Market Net inflow Net outflow Net outflow Net outflow FY10 into from from Cash from Other Active Quantitative & Fixed Equities Equities Interest 13

  15. Slide 15: Substantial turnaround in net flows in active equities

    Substantial turnaround in net flows in active equities For personal use only Equity net fund flows FY09 FY10 FY10 v $b $b FY09 Active strategies (0.6) 0.6 1.2 Quantitative strategies (0.1) (1.0) (0.9) Total (0.7) (0.4) 0.3 14

  16. Slide 16: Perpetual Private Wealth profit driven by operating leverage

    Perpetual Private Wealth profit driven by operating leverage For personal use only FY09 FY10 FY10 v Key themes: $m $m FY09 ƒ Operating leverage to rising markets in Revenue 85.7 111.6 30% underlying business Operating expenses (52.2) (73.9) (42%) ƒ Two acquisitions EBITDA(1) 33.5 37.7 13% during FY1

  17. Slide 17: Perpetual Private Wealth FUA up 22%, driven by acquisitions

    Perpetual Private Wealth FUA up 22%, driven by acquisitions For personal use only FY09 Net flows Acquired (1) Market (2) FY10 $b $b $b $b $b Financial advisory: ƒ Superannuation 2.4 - 0.7 0.2 3.3 ƒ Non-superannuation 1.8 - 0.2 0.2 2.2 4.2 - 0.9 0.4 5.5 Fiduciary services: ƒ Philanthropic 1.0 - - 0.1

  18. Slide 18: Corporate Trust expanded into new business initiatives

    Corporate Trust expanded into new business initiatives For personal use only FY09 FY10 FY10 v Trust & Fund Services $m $m FY09 ƒ Subdued RMBS market conditions led to lower Revenue 80.3 87.5 9% FUA Operating expenses (40.7) (51.9) (28%) ƒ Maintained market share EBITDA(1) 39.6 35.6 (10%) Depreciatio

  19. Slide 19: Mortgage Services driving revenue growth in Corporate Trust

    Mortgage Services driving revenue growth in Corporate Trust For personal use only FY09 FY10 FY10 v $m $m FY09 Trust & Fund Services 58.4 55.6 (5%) Mortgage Services 21.9 31.9 46% Total revenues 80.3 87.5 9% Securitisation Mortgage Services (FUA $b) (nos. of matters ‘000s) 241.4 210.5 199 96 FY09 FY1

  20. Slide 20: Financials

    Financials For personal use only Roger Burrows Chief Financial Officer 19

  21. Slide 21: Improved financial performance

    Improved financial performance For personal use only FY09 FY10 FY10 v $m $m FY09 Operating revenue 375.1 426.3 14% Operating expenses (239.4) (274.3) (15%) EBITDA(1) 135.7 152.0 12% Depreciation & amortisation (13.2) (14.7) (11%) Equity remuneration (21.8) (26.8) (23%) EBIT 100.7 110.5 10% Interest

  22. Slide 22: Significant items impacted by recovery of EMCF prior period losses

    Significant items impacted by recovery of EMCF prior period losses For personal use only FY09 FY10 FY10 v $m $m FY09 Profit before tax 98.2 107.7 10% Tax expense (32.5) (34.9) (7%) UPAT 65.7 72.8 11% EMCF gains/losses (13.8) 20.3 - Gain/(loss) on sale/impairment of investments (6.1) (2.6) 57% Restru

  23. Slide 23: Group expenses increased as a result of acquisitions and organic investment

    Group expenses increased as a result of acquisitions and organic investment For personal use only ƒ Expense discipline 330 maintained savings 320 9.8 1.3 318.6 ƒ Have reinvested in 310 11.1 business 300 19.5 ƒ M&A execution and organic business 290 $m development add to 280 276.9 FY09 expenses base

  24. Slide 24: Growth initiatives responsible for increased expenses in 2H10 v 1H10

    Growth initiatives responsible for increased expenses in 2H10 v 1H10 For personal use only ƒ Grosvenor acquired in 175 2.7 172.5 September 2009 and 2.9 170 6.6 Fordham in January 165 2010 14.2 160 ƒ Mortgage Services 155 volumes up 45% in $m 2H10 v 1H10 150 146.1 145 140 135 130 1H10 Private Mortgag

  25. Slide 25: Financial strength continued to improve in FY10

    Financial strength continued to improve in FY10 For personal use only Total equity Net tangible assets FY09 FY10 ($m) ($m) $m $m Total equity 290.0 361.0 290 361 149 172 Less: Intangibles 140.9 189.5 FY09 2H09 FY101H10 FY09 FY10 1H09 Net tangible assets 149.1 171.5 Interest coverage Gearing (times)

  26. Slide 26: Continuing to de-risk balance sheet to counterparty credit risk

    Continuing to de-risk balance sheet to counterparty credit risk For personal use only EMCF PPI $b $m 1.5 1.3 1.2 0.4 0.5 0.5 1.1 0.8 0.7 320 199 189 2H09 1H10 2H10 2H09 1H10 2H10 EMCF1 EMCF2 Redeployed risk capital to invest in our operating businesses 25

  27. Slide 27: Risk capital requirements reflect changing business needs

    Risk capital requirements reflect changing business needs For personal use only As at end of 2H09 1H10 2H10 $m $m $m Liquid assets 165 203 212 Risk based capital 151 177 141 Coverage ratio 1.09x 1.15x 1.50x Liquid assets = cash + 50% of liquid investments 26

  28. Slide 28: UPAT underpins the FY10 dividend

    UPAT underpins the FY10 dividend For personal use only 300 210 100% Dividend cents per share 200 payout 41 80% range 100 100 169 0 FY09 dividend FY10 dividend UPAT Significant items 27

  29. Slide 29: Strategy update and summary

    Strategy update and summary For personal use only 28

  30. Slide 30: Implementation of strategy − examples

    Implementation of strategy − examples For personal use only Supplier of choice to Product and Leading adviser financially Leading service to high net worth successful corporate trustee excellence investors investors and their advisers ƒ Pure Value Fund ƒ #1 brand position with ƒ Integration of recen

  31. Slide 31: Summary and outlook

    Summary and outlook For personal use only ƒ Solid increase in full year profit ƒ Improved market conditions ƒ Increased financial strength ƒ FY10 full year fully franked dividends of 210 cents ƒ Markets are inherently uncertain and regulatory environment has created additional challenges. However, w

  32. Slide 32: Appendix

    For personal use only 31 Appendix

  33. Slide 33: DRP details

    DRP details For personal use only 2H09 1H10 2H10 Fully franked dividend $0.60 $1.05 $1.05 DRP participation rate 13% 13% TBA Ex-dividend date 1 September Record date/DRP election by 5.00 pm AEDT 7 September DRP pricing period starts 8 September DRP pricing period ends 21 September Payment date 28 Se

Perpetual — FY2010 Earnings Presentation on 6ix