Slide 1: Treasury Group Limited Full Year Results - 30 June 2011
Wednesday, 24 August 2011 TREASURY GROUP LIMITED FULL YEAR RESULTS - 30 JUNE 2011 Overview Treasury Group (ASX:TRG) today announced a consolidated profit after tax of $10.01 million for the year ended 30 June 2011, down by 14% from $11.67 million reported the previous year. Normalised net profit aft
Slide 2: Funds Under Management
Funds Under Management Total Funds Under Management (FUM) at 30 June 2011 amounted to $16.76 billion, an increase of $2.05 billion on the previous year or 13.94%. The attribution of FUM across the Group boutiques is shown below: Composition of FUM by Boutique as at 30 June 2011 Aubrey, AR Capital &
Slide 3: Composition of FUM by Investor Type and Product
The margin (revenue relative to FUM) from institutional clients is lower than for retail. As such, the increasing proportion of institutional FUM over time is an adverse trend putting pressure on margins. The graph below illustrates the relative rate of growth between retail and institutional client
Slide 4: FUM by Investor Location and Market Conditions
Another feature of Treasury Group’s FUM over the last few years has been the increased volume sourced from International investors. This is an area that we see as strategically important and requiring sustained focus to mitigate potential business risks from increased consolidation among large super
Slide 5: For further information
For further information Mr Andrew McGill Mr Joseph Ferragina Chief Executive Officer Chief Financial Officer +61 2 8243 0400 +61 2 8243 0400 Page 5 of 12
Slide 6: Detailed Financial Analysis: Normalised Earnings
Detailed Financial Analysis Normalised Earnings The results for the year ended 30 June 2011 need to be understood relative to those of 30 June 2010. The Company’s results in 2010 were positively impacted by a number of one off items that were not repeated in 2011. The table below shows the relative
Slide 7: Dividend and Detailed Disclosure of Business Profit and Loss
Dividend On 24 August, 2011, the Treasury Group board declared a 20 cents per share (cps) fully franked dividend. The final dividend will be paid on 28 September, 2011. The record date is 7 September 2011. Detailed Disclosure of Business Profit and Loss a. Aggregated Profit and Loss of our Boutique
Slide 8: Treasury Group Income Statement
b. Treasury Group Income Statement The table below summarises the statutory income statement for Treasury Group. 12 months to 30 June $000s 2011 2010 % Change 2 Revenue 4,493 5,602 (19.8) Gains/(losses) on Investments 62 337 (81.6) 1 Employee Expenses (5,741) (5,334) 7.6 2 Fund Management and Admin
Slide 9: Funds Under Management (FUM)
Funds Under Management (FUM) The proportion of Group FUM within International Equities and Alternatives increased during the year while the proportion in Domestic Equities decreased. Asset Class 2011 % 2010 % Australian 8,180,996,267 48.81 8,239,293,864 56.02 Equities International 4,269,658,640 25.
Slide 10: Review of Operations
Review of Operations Treasury Group Investment Services (TIS) - (100% owned at 30 June 2011) TIS provides Group boutiques with a comprehensive range of business support services including risk management and compliance, human resources management, full corporate accounting services, investment admin
Slide 11: Review of Operations: GVI and TAAM
Global Value Investors (GVI) - (47.56% owned at 30 June 2011) GVI appointed Grant Cullens as Joint Managing Director and Chief Investment Officer in December 2010. Grant has introduced a new level of discipline and focus since his commencement and we are confident that with the backing of the team t
Slide 12: Review of Operations: AR Capital and Celeste
AR Capital Management - (30% owned at 30 June 2011) AR Capital is a Melbourne based boutique which invests in Australian equities with an absolute return focus. During the year, AR Capital delivered positive returns for investors in difficult market conditions however growth in FUM has been below ex
Slide 13: Results Presentation June 2011
Results Presentation 30 June 2011
Slide 14: Agenda
Agenda 1. Summary 2. FUM & Performance 3. Financial Results 4. Strategy Review 5. Outlook & Summary 2
Slide 15: 1. Summary
1. Summary • Total Funds Under Management (FUM) at 30 June 2011 - $16.7 billion, up $2.1 billion on the previous year (or 13.9%) • Normalised NPAT down 4.5% year on year • Full year dividend of 34 cents, fully franked (9.5% yield) • The Company’s balance sheet is ungeared and maintains a healthy pos
Slide 16: Strong growth in FUM and revenue at boutiques
1. Summary – Strong growth in FUM and revenue at boutiques % $ • Solid growth in FUM relative to the Change Year end FUM ($bn) 16.7 +14.0 market Average FUM ($bn) 15.8 +12.9 Aggregate Boutique Mgmt Fees ($m) 74.9 +11.2 • TRG Normalised NPAT marginally down due to adverse change in Reported NPAT ($m)
Slide 17: Influences of key profit drivers were mostly negative during 2011
1. Summary – Influences of key profit drivers were mostly negative during 2011 Drivers of Treasury Group NPAT 2011 Impact • Net new funds flow was strong during the year Primary • Institutional flows strong, particularly FUM at RARE • Retail investor confidence remains Investor/Product mix weak.
Slide 18: Superior long term performance, particularly from larger boutiques
2. FUM & Performance - superior long term performance, particularly from Treasury Group’s larger boutiques Performance Relative to Benchmark – in AUD, Net of Fees – June 2011 1 Year 3 Year 5 Year Since Excess Excess Excess Inception Date Sample Ratings Inception Returns Returns Returns AR Capital -0
Slide 19: Australian funds management industry experienced outflows during FY11
2. FUM and Performance – the Australian funds management industry experienced outflows during FY11 Australian Managed Funds Industry – Quarterly Funds Flows 12 Industry 10 Australian Equity 8 6 4 2 $bn - -2 -4 -6 -8 -10 Mar-03 Jun-03 Mar-04 Jun-08 Jun-04 Mar-05 Mar-09 Jun-05 Mar-06 Jun-09 Mar-10 Jun
Slide 20: New funds inflow achieved in spite of difficult market conditions
2. FUM & Performance - new funds inflow achieved in spite of difficult market conditions $16.7bn FUM as at 30 June 2011 • TRG continues to diversify assets across managers 4% Investors Mutual 16% 17% Orion • Net fund inflows of $787m over the year Global Value Investors TAAM • Flow primarily to inst
Slide 21: Composition of Group FUM has changed over time
2. FUM & Performance – the composition of Group FUM has changed over time and has brought pressure on margins Composition of FUM vs Average Margin 18 80 16 70 Trilogy 14 60 AR Capital 12 50 Aubrey 10 Celeste Avg Margin FUM 40 (bps) $bn 8 TAAM 30 Global Value Investors 6 RARE Infrastructure 20 4 Orio
Slide 22: Diversification away from Australian Equities continues
2. FUM and Performance – Diversification away from Australian Equities continues. Concentration to Institutional Investors is increasing FUM by Asset Class 2011 2010 2009 2008 2007 Australian Equities 49% 56% 64% 74% 86% International Equities 25% 26% 27% 20% 12% Alternatives 26% 18% 9% 6% 2% TOTAL
Slide 23: Group Earnings are significantly leveraged to Equities market levels
2. FUM & Performance – Group Earnings are significantly leveraged to Equities market levels 5,500 All Ordinaries vs Year Average 5,000 4,500 Avg FY11 Avg FY10 4,000 Avg FY09 3,500 3,000 Based on FY11 outcomes, 1% increase in All Ord Shares will increase Treasury Group earnings by approx. $260K assum
Slide 24: Aggregate financial performance of all boutiques
3. Financial Results – Looking at the aggregate financial performance of all boutiques, FUM inflows and costs control delivered higher NPAT Aggregate P&L of Boutiques ($m) 2011 2010 % Change Average FUM ($bn) 15.8 14.0 +12.9 • Average FUM higher due primarily to net flows at RARE Base Management Fee
Slide 25: Net Profit was lower due primarily to lower revenue
3. Financial Results – Net Profit was lower due primarily to lower revenue at Treasury Group Treasury Group P&L ($m) 2011 2010 % Change Revenue 4.493 5.602 -19.8 • 2011 revenues lower due to Expenses 8.680 8.492 +2.2 lower interest income and reduction in mgmt fees due to Equity Share of Associates
Slide 26: Contribution to NPAT by Business Segment
3. Financial Results – Alternatives delivered increased earnings during the year whilst all other business segments were lower Contribution to FY11 NPAT 14.0 by Business Segment 12.0 11.676 3.409 10.005 10.0 (1.641) 8.0 (2.912) (0.527) $m 6.0 4.0 2.0 0.0 FY10 Australian International Alternative Ove
Slide 27: Increased payout ratio delivers a strong dividend yield
3. Financial Results – An increased payout ratio this year delivers a strong dividend yield • Final fully franked dividend of 20 cps 70 Dividend History 60 • Full year dividends of 34 cps fully franked 50 40 • Dividend yield of 9.5% fully franked cps 30 (based on 22/8/11 share price) 20 • 2011 Payou
Slide 28: Strategy: partnering with outstanding investment professionals
4. Strategy – partnering with outstanding investment professionals to deliver superior investment performance to clients • Multi-boutique model is the core • Superior alignment of investment team incentives to client outcomes • Equity ownership delivers greater team stability • Treasury Group value
Slide 29: Strategy: address opportunities
4. Strategy – address opportunities • Expand and diversify portfolio of boutiques • Invest in Distribution and Marketing capability • Increase Capacity to deliver seed funding to boutiques • Pursue efficiency and returns from Support Services • Proactive management of investment in boutiques through
Slide 30: Outlook: difficult market and economic conditions likely in short term
5. Outlook & Summary – difficult market and economic conditions likely in short term • Investor confidence fragile and likely to remain so in short term • Institutional investors have moved to allocate continuously to growth assets through the year • Retail investors remain very cautious globally –
Slide 31: Outlook & Summary
5. Outlook & Summary • Increased FUM, more diversified, underlying boutique profitability increasing • 34 cps full year dividend, high dividend yield • Investor confidence remains fragile, equity market conditions volatile • Significant opportunities available, internal and external - strong balance