Slide 1: Full Year Results Presentation
TREASURY GROUP LIMITED FULL YEAR RESULTS PRESENTATION 26 AUGUST 2015 TREASURY GROUP LIMITED // NORTHERN LIGHTS CAPITAL GROUP
Slide 2: Agenda
Agenda 1. Overview 2. Treasury Group FY15 Results 3. Aurora Trust FY15 Results 4. Strategy 5. Outlook 6. Appendix TREASURY GROUP LIMITED // NORTHERN LIGHTS CAPITAL GROUP // 2
Slide 3: 1. Overview
1. Overview Momentum from key boutiques driving improved outcomes Financial » Underlying NPAT of $18.7m – up 32.9% on FY14 » Statutory NPAT of $138.7m includes significant abnormals (mark to market revaluation of TRG portfolio at merger completion) » Final dividend increased to 28.0cps Operational »
Slide 4: 1. Overview – Operational Summary
1. Overview – Operational Summary Post-merger » Portfolio of 19 boutiques across the group with improved diversification by strategy, clients and geography » Strengthened access to investment and distribution capabilities » Opportunity for merger-related synergies in 2016 Aurora now highly different
Slide 5: 1. Overview – Team Post-Merger
1. Overview – Team Post-Merger Experience and background of team » Have founded, invested in, and built leading investment firms globally including, Russell, Hastings, Crescent Capital, Parametric and Envestnet » Have invested in over 25 boutiques during past 15 years that now manage in excess of US
Slide 6: 2. TRG Results
2. TRG Results Treasury Group underlying current year vs prior year results TRG TRG » TRG Statutory NPAT for FY15 $138.7m Underlying Underlying Variance P&L Highlights (A$m) FY15 FY14 % » Actual FY15 figures include 7 months results post merger & 5 months TRG Revenue 6.7 2.3 191.3% stand-alone. Pcp
Slide 7: 2. TRG Results – Significant non-recurring items in FY15
2. TRG Results Significant non-recurring items in FY15 » Gain on sale is mark to market Treasury Group P&L (A$m) FY15 FY14 adjustment of all assets and liabilities at the time of transfer Profit After Tax 138.7 13.1 to Aurora trust Gain on sale net of transaction costs and » Total transactions costs
Slide 8: 2. TRG Results – Dividend increased
2. TRG Results Dividend increased 60 » Final dividend 28 cps, fully 52 franked 50 50 » Payout ratio of 71% against underlying NPAT 40 40 34 34 cps (A$) 30 20 10 0 2011 2012 2013 2014 2015 Interim Final TREASURY GROUP LIMITED // NORTHERN LIGHTS CAPITAL GROUP // 8
Slide 9: 3. Aurora Trust Results – Balance sheet
3. Aurora Trust Results Balance sheet » TRG owned 64% of Aurora trust as at Balance Sheet – Aurora Trust (A$m) 30 June 2015 30 June 2015 Current Assets 70.6 » Carrying values marked to market as at Non-Current Assets merger completion – will be subject to impairment testing in future Investments in
Slide 10: 3. Aurora Trust Results – Details of Non-Current Liabilities
3. Aurora Trust Results Details of Non-Current Liabilities Amount Name Maturity Notes (Face Value) Redeemable Preference Units US$15m May ’16 Unit holder debt Redeemable Preference Units US$42m Nov ’16 Unit holder debt, contingent on value of certain NL boutiques achieving profit targets by 2021. Co
Slide 11: 3. Aurora Trust Results – Illustrative aggregation of portfolio P&L
3. Aurora Trust Results Illustrative aggregation of portfolio P&L as if all boutiques were 100% owned Pro-forma » Total FUM of $49.0bn at 30 June 2015, Aggregate P&L for Boutiques (A$m) FY15 excluding WHV & Trilogy FUM was Year end FUM ($bn)* 34.8 $34.8bn Average Net Margin (%)* 47 bpts » Aggregated
Slide 12: 3. Aurora Trust Results – Contribution by boutique
3. Aurora Trust Results Contribution by boutique – pro forma for 12 months A$49.0bn » Well diversified portfolio of Products 100% and strategies 90% » Broad client diversification 80% » Broad geographic diversification 70% » Approximately 45% of portfolio earnings from boutiques denominated 60% Othe
Slide 13: 4. Strategy – Capital Deployment
4. Strategy – Capital Deployment » Assuming consummation of RARE transaction, we will have • $126m of cash • $60m of external debt • $20m of RPU’s payable this fiscal year » Key corporate strategies will include • Reduce overall amount and cost of debt • Find strategic opportunities to add optionali
Slide 14: 4. Strategy – Investment/Divestment Philosophy
4. Strategy – Investment/Divestment Philosophy » Generally ultra-long-term holders of assets (“permanent”) » Seek to make two types of investments: • Core holdings in larger strategic partnerships • Smaller capital commitments to highly scalable opportunities » Will from time-to-time divest: • If we
Slide 15: 4. Strategy – Targeted Opportunities
4. Strategy – Targeted Opportunities SUNRISE SUNSET • International /global/emerging markets • Domestic equities, particularly equities large cap • Liquid alternatives • Defined benefit plans • Private Capital (equity, debt, real estate) • Real assets • Traditional hedge fund of funds • Liability Dr
Slide 16: 4. Strategy – Deal Pipeline Post-Merger
4. Strategy – Deal Pipeline Post-Merger » Sourced more than 110 opportunities, of which approximately: • 45 moved through to intensive due diligence; • 25 added to current prospect list; • 6 offered term sheets » Robust existing deal pipeline with opportunities across a wide-range of geographic regi
Slide 17: 4. Strategy – Partnership Proposition
4. Strategy – Partnership Proposition » Enduring partnerships with asset managers to enhance growth and enterprise value • Creating flexible partnership structures establishing alignment with boutiques • Long-term partners with permanent capital • Actively growing boutiques through various global di
Slide 18: Strategy: Growing Boutiques
Strategy: Growing Boutiques Strong track record of building asset management businesses through FUM growth ASSET GROWTH* » Partnership established in 2008, zero FUM at inception » 2010 closed on Fund I of US$127 million » 2012 closed on Fund II of US$303 million » 2013 closed on Fund III of US$303 m
Slide 19: Strategy: Growing Boutiques
Strategy: Growing Boutiques Accelerating momentum in newer boutiques » Partnership established in 2014, FUM of approximately US$3 million » Secured anchor investor (SEI) in 2014 and initiated global distribution effort » 30 June 2015 FUM of US$159 million with active and robust pipeline » Partnershi
Slide 20: 4. Strategy – Key Geographies
4. Strategy – Key Geographies Geography Key focus » TRG has current and growing momentum in the largest market in the world (US$34T) United States » Significant growth opportunities with Aether, Seizert, Blackcrane, EAM, and Canada and RARE » Highly competitive, but significant demand for boutiques
Slide 21: 5. Outlook
5. Outlook Conditional sale of RARE in July, post year-end » Sale of RARE Infrastructure delivering greater than 33x cash on cash return over 9 years of ownership » Completion expected end of November » Provides capital to repay external debt, fund TRG/NL’s investment pipeline and provide flexibilit
Slide 22: 5. Outlook
5. Outlook TRG/NL is well positioned » Merger with Northern Lights completed and has created a diversified fund portfolio » TRG now has exposure to 11 boutiques that it did not have last year » Continuing strong business momentum from many areas in the portfolio » Significantly improved access to gl
Slide 23: 6. Appendix – Simplified Group Structure
6. Appendix Simplified Group Structure TRG NLCP BNP Class A Units Class B Units Class B&C Units 64.0%1 27.2%1 8.8% Aurora Trust 100.0% Midco External Debt Facility Various % Australian Various % Boutiques2 US Boutiques2 1 Ownership percentage based on current expectation following completion of Auro
Slide 24: Disclaimer
Disclaimer The information in this presentation is general background information about Treasury Group Limited and is current only at the date of this presentation. In particular, this presentation: » is not an offer or recommendation to purchase or subscribe for securities in Treasury Group Limited