Magellan Financial Group Ltd · ASX:MFG
Magellan Financial — H1 FY2023 Earnings Presentation
25 slides from Magellan Financial's earnings presentation, Feb 16, 2023
Slide 1: Interim Results Investor Presentation
Magellan Financial Group Limited Interim Results Investor Presentation For personal use only Half year ended 31 December 2022 David George| CEO & Chief Investment Officer Kirsten Morton| CFO & Chief Operating Officer
Slide 2: Agenda
Agenda For personal use only 1. 1H23 Overview David George 3 2. Group Financial Results Kirsten Morton 9 3. Strategy Progress Update David George 15 Magellan| 2
Slide 3: 1H23 Overview - Summary
1H23 Overview - Summary For personal use only Magellan at next phase of its evolution following accelerated change in 2022 Strategy announced in October 2022 to facilitate transition to a more diversified business delivering sustainable growth Good progress in executing our five-year strategy and bu
Slide 4: Market conditions
Market conditions For personal use only Significant shift in economic environment and market conditions over past 12 months Re-emergence of inflation, from many sources Central banks globally raising interest rates to manage inflation and slow demand Cyclical headwinds for allocations to equities De
Slide 5: Performance to December 2022
Performance to 31 December 2022 For personal use only Since ALL 3 FUNDS HAVE OUTPERFORMED THEIR BENCHMARKS SINCE INCEPTION 1 Year 3 Years 5 Years Inception (%) (% p.a.) (% p.a.) GLOBAL EQUITIES STRATEGY (% p.a.)1 — Deliberate changes made to address performance including: Magellan Global Fund (15.7)
Slide 6: Financial performance
Financial performance For personal use only Average FUM for 1H23: $53.8 billion (down 52%) FUM as at 31 January 2023 $46.2 billion (vs $45.3bn as at 31 December 2022) 1H23 Management fee revenue down 49%, broadly in line with average FUM 1H23 Group Adjusted net profit after tax (NPAT) of $98.3 milli
Slide 7: Financial strength
Financial strength For personal use only $837.3 million $882.4 million No debt Net Tangible Assets Cash, financial assets & Total liabilities of $195.7 ($4.61 per share) investments in associates million, predominantly relating to the Group’s commitments to fund the MGF Options discount 46.9 cps Int
Slide 8: Magellan's strong foundations
Magellan’s strong foundations For personal use only Research Intensive fundamental FUM $46.2bn1 company analysis, industry Engine Investment research, and macro insights Global Infrastructure Airlie Capability Rigorous portfolio construction Investment and risk discipline by Expertise experienced le
Slide 9: Group Financial Results
For personal use only Group Financial Results Kirsten Morton CFO and Chief Operating Officer Magellan| 9
Slide 10: Reported earnings
Reported earnings $ million 31 Dec 2022 31 Dec 2021 % change • Management and services fees decreased 181.1 352.3 For personal use only Management and services fees (49%) Performance fees 0.1 11.5 (99%) by 49%, reflecting the 52% reduction in Other revenue and income 27.6 20.0 38% average FUM Adjust
Slide 11: Funds Management segment
Funds Management segment $ million 31 Dec 2022 31 Dec 2021 % change For personal use only Revenue • Funds Management segment represents the core business that drives Management fees 179.1 350.3 (49%) profits and dividends Performance fees 0.1 11.5 (99%) Services fees 2.0 2.0 (2%) • Profit before tax
Slide 12: Expenses
Expenses For personal use only Cost to income ratio (excluding performance fees) of 34.2% during the period Funds Management business operating expenses in the range of $125-$130 million remain appropriate for the 2023 financial year • Includes $15.2 million expense for staff cash retention payments
Slide 13: Fund Investments
Fund Investments For personal use only Magellan has set a pre-tax hurdle of 10% p.a. (over the business cycle) for the Fund Investments portfolio FUND INVESTMENTS PORTFOLIO INVESTMENT RETURNS Investment ($ million) 31 December 2022 30 June 2022 Time Period Return Cash 0.3 0.3 1 Year to 31 December 2
Slide 14: Associate investments
Associate investments For personal use only As at 31 December 2022, Magellan held two investments in associates: • 36% economic interest (5% voting interest) in Barrenjoey Capital Partners • 16% interest in FinClear Holdings Limited1 1H23 associate investments delivered post-tax loss of $8.1 million
Slide 15: Strategy Progress Update
For personal use only Strategy Progress Update David George, CEO & Chief Investment Officer Magellan| 15
Slide 16: Strategy progress update – Magellan in five years
Strategy progress update – Magellan in five years For personal use only Fund manager of scale with >$100bn in funds under management Diversified product mix Attractively positioned in growing segments with growing client demand Partner of choice within the Australian wealth industry Strengthened glo
Slide 17: Strategy progress update – Our plan to get there
Strategy progress update – Our plan to get there For personal use only Stabilise & improve core Funds Management performance Strong balance sheet $882.4 million1 in cash, financial assets and investments in associates Launch new products Add new and complementary capabilities through inorganic Opera
Slide 18: Strategy progress update – Platform
Strategy progress update – Platform For personal use only PRIORITIES WHAT WE DELIVERED IN 1H23 • Deepen specialist product ✓Simplified Magellan distribution capability to support a ✓Realigned organisational structure to diverse range of client demanded support long term strategy products PLATFORM ✓F
Slide 19: Strategy progress update - Product
Strategy progress update - Product For personal use only PRIORITIES WHAT WE DELIVERED IN 1H23 • Improve ✓ Steps to improve performance: performance ✓ Organisational realignment – consolidated portfolio management group • Embed existing ESG ✓ Enhanced analyst engagement with portfolio managers capabi
Slide 20: Strategy progress update – People
Strategy progress update – People For personal use only PRIORITIES WHAT WE DELIVERED IN 1H23 • Implement new ✓ Investment team changes including greater focus on improving and clarifying development Accountability & Alignment opportunities model ✓ Work commenced to refresh and reaffirm culture • Rev
Slide 21: Outlook
Outlook For personal use only Challenging market conditions and volatility expected to continue Higher interest rate environment and inflationary pressures will create challenges for many companies, resulting in dispersed performance and earnings outcomes These market and economic conditions provide
Slide 22: Conclusion
Conclusion For personal use only Significant work completed to rationalise the business Improving performance still a key priority Substantial progress on near term organic product development Inorganic growth expected to form part of the longer term growth strategy Strong foundations and balance sh
Slide 23: Q&A
For personal use only Q&A Magellan| 23
Slide 24: 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 16 February 2023. While the information in this presentation
Slide 25: For personal use only
For personal use only www.magellangroup.com.au Phone: +61 2 9235 4888
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