Pacific Current Group Ltd · ASX:PAC
Pacific Current — Investor Presentation (September 2017)
35 slides from Pacific Current's investor presentation, Sep 11, 2017
Slide 1: Investor Presentation
Investor Presentation Presenters Paul Greenwood, President, North America and Global CIO Joseph Ferragina, Chief Financial Officer and COO Tony Robinson, Executive Director A S X : PA C 11 S e p t e m b e r 2 0 1 7
Slide 2: Disclaimer
Disclaimer The information in this presentation is general information about Pacific Current Group 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 Pacific Current Group Limited, nor
Slide 3: Agenda
Agenda 1. Overview 2. Portfolio Update 3. Financials 4. Business Drivers 5. Q & A 6. Appendices
Slide 4: Overview
1 OVERVIEW
Slide 5: Overview – A Year of Progress
Overview – A Year of Progress ❯ Financial Strength – Improved revenues and earnings and much stronger balance sheet ❯ Portfolio Performance – Strong organic growth and rising markets driving large increases in FUM ❯ Simplification Completed – Modified legal structure improves shareholder alignment a
Slide 6: Overview – A Year of Progress
Overview – A Year of Progress ❯ Financial Strength Underlying net profit after tax of A$16.6m compared to A$11.6m in FY16 Statutory profit of A$10.6m compared to a loss of A$48.2m in FY16 Largest cost reductions came from reduced interest expense A$2.6m and decreases in personnel costs by A$5.
Slide 7: Overview – A Year of Progress
Overview – A Year of Progress ❯ Simplification All shareholders now own the same equity security Improved financial transparency because PAC now owns 100% of Aurora Trust Reduction in X-RPU liability from a contingent US$42m to a certain US$21m Simplified structure should contribute to lower
Slide 8: Overview – A Year of Progress
Overview – A Year of Progress ❯ Investment Opportunities Divested Raven and Aubrey Quiet year on the investment front, while balance sheet was strengthened. We expect to be more active in FY18 Secular headwinds persist in certain market segments, most notably US active equity Focus is on inc
Slide 9: FY17 Financial Results Summary
FY17 Financial Results Summary » Total FUM of boutiques reaches A$62bn » Core boutiques: A$45.3bn FUM A$62bn* » Growth boutiques: A$14.2bn » Other boutiques: A$2.5bn NPAT » Underlying Net Profit After Tax of A$16.6m, A$16.6m** 43.1% up 43.1% from A$11.6m in FY16 A$10.6m statutory NPBT » Underlying N
Slide 10: Overview of PAC
Overview of PAC The simplification and restructure resulted in PAC owning 100% of the Aurora Trust Aurora Trust Core Boutiques Growth Boutiques Other Boutiques Real assets fund of funds International equity China ETF index provider Customised tax managed International small cap Australian small cap
Slide 11: Boutique Results – Core Boutiques
Boutique Results Core Boutiques Key Metrics Real assets fund of funds FY2016 FY2017 FUM as at 30 June A$41.1b A$45.3b Customised tax managed equity Revenue for the full year A$137.6m A$154.6m Australian equities Earnings to the Group* A$30.3m A$33.7m Global listed infrastructure » FY2016 has been ad
Slide 12: Boutique Results – Growth Boutiques
Boutique Results Growth Boutiques Key Metrics FY2016 FY2017 International equity FUM as at 30 June A$6.7b A$14.2b International small cap Revenue for the full year A$22.1m A$22.1m Global and emerging Earnings to the Group* A$0.7m A$0.3m equities » FY2016 includes Raven, which was sold in October 201
Slide 13: Boutique Results – Other Boutiques
Boutique Results Other Boutiques Key Metrics China ETF index provider FY2016 FY2017 FUM as at 30 June A$2.6b A$2.5b Australian small cap Australian REIT Revenue for the full year A$11.8m A$16.8m & unlisted property Japan small cap & EM equities Earnings to the Group* A$0.1m A$1.3m Private equity and
Slide 14: Portfolio Update
2 PORTFOLIO UPDATE
Slide 15: Portfolio Company Update
Portfolio Company Update Significant FUM growth across Core and Growth boutiques** Seizert produced strongest investment performance in FY17, with most portfolio companies outperforming over the last 3 to 5 years FUM 25 30-Jun-16 vs 30-Jun-17 Billions (in managers' home currency) 20 +24% 15 30-J
Slide 16: Summary of Boutique Economics
Summary of Boutique Economics Core Boutiques Growth Boutiques Other Boutiques Traditional Economics Economics to PAC are broadly correlated with their equity ownership in the funds Non-traditional Economics Economics to PAC are leveraged to revenue and FUM growth of the funds ❯ PAC earnings from Cor
Slide 17: Core Boutiques
Core Boutiques Boutique: Equity ownership: 100% 45.4% PM / CIO: Sean Goodrich and Troy Schell Anton Tagliaferro and Hugh Giddy Economics: 100% of excess management fee* Equity share FUM as at June 17: US$1.2bn A$9.1bn » Closed new funds totaling approx. US$300m in » Steadily growing FUM, increasing
Slide 18: Core Boutiques
Core Boutiques Boutique: Equity ownership: 23.4% 100% 10% Gerald Seizert, David Collon and Richard Elmslie and PM / CIO: Patrick Geddes Edward Eberle Nick Langley Preferred profit share, reduced to Economics: Equity share Revenue share pro rata after certain milestones FUM as at June 17: US$19.3bn U
Slide 19: Growth Boutiques
Growth Boutiques Boutique: Equity ownership: 25% 16% Travis Prentice and PM / CIO: Dan Kim Josh Moss Economics: Equity share Equity and revenue share FUM as at June 17: US$721m US$505m » Significant inflows, with FUM increasing 178% » Solid growth over last 18 months. Interest in Fund flows: since J
Slide 20: Growth Boutiques
Growth Boutiques Boutique: Equity ownership: 5% 17.6% PM / CIO: Rajiv Jain Michael Lukin and Shaw Ng Economics: Revenue share Equity share FUM as at June 17: US$6.0bn A$4.8bn » Growing exceptionally rapidly since launch in June » Ongoing diversification of client base and Fund flows: of 2016 product
Slide 21: Other Boutiques
Other Boutiques » Provides investors with direct exposure to Chinese markets primarily through a series of China indexes » Revenue generated through a licensing agreement » Equity ownership: 31%, Jun-17 FUM: US$263m » Australian small cap fund providing above benchmark returns over the medium to lon
Slide 22: Financials
3 FINANCIALS
Slide 23: Underlying Financial results of PAC
Underlying Financial results of PAC Pro forma PAC P&L on a ‘look through’ basis as if the Aurora Trust was 100% owned by PAC PAC ❯ The corresponding table shows pro forma PAC P&L for P&L Highlights (A$m) Pro forma FY17 FY17 which has been adjusted to gross up significant revenue and expense items of
Slide 24: Decrease in pro forma underlying expenses
Decrease in pro forma underlying expenses Significant reduction in corporate costs and interest expense has improved operating leverage Corporate cost reductions A$29.8m ~38% decrease in underlying expenses vs FY16 on pro ❯ Reduced employee related expenses a forma basis significant driver of the re
Slide 25: Business Drivers
4 BUSINESS DRIVERS
Slide 26: Business Drivers
Business Drivers As part of an effort to help investors better understand the important factors and forces that influence our business, we have offered a presentation that discusses some of the major “Business Drivers” impacting PAC. ASX: PAC // 26
Slide 27: Business Drivers
Business Drivers Driver Comments Market Returns • Equity market returns will typically be the largest short term driver of changes in our revenues • Our business benefits from the generally upward (albeit volatile) trajectory of equity markets • Greater exposure to “contractual” revenues (private ca
Slide 28: Business Drivers – Continued
Business Drivers – Continued Driver Comments Organizational • The smaller companies in which we often invest have inherent advantages over larger firms (less bureaucratic, more nimble, better economic alignment) • With smaller firms, interpersonal dynamics, company culture, and operational capabilit
Slide 29: Business Drivers – Continued
Business Drivers – Continued Driver Comments Minority Orientation • Being primarily a minority investor is a strong competitive advantage for PAC, and results in many more opportunities • Minority investing limits our ability to initiate change, though our experience suggests that, on balance, this
Slide 30: Q&A
5 Q&A
Slide 31: Appendices
6 APPENDICES
Slide 32: PAC – Statutory P&L
PAC – Statutory P&L PAC PAC ❯ Statutory PAC profit and loss primarily Statutory Statutory P&L Highlights (A$m) reflects share of profit and loss from Aurora FY16 FY17 % Change Trust, the business operations of the Group Revenue 5.6 16.1 - for the nine months at 65.15% and post Net gains on investmen
Slide 33: PAC – Underlying P&L
PAC – Underlying P&L Underlying P&L (A$m) FY16 FY17 ❯ All non-recurring items are PAC’s share Statutory Net Profit / (Loss) After Tax (48.2) 10.6 of expense/gain from Aurora Trust ❯ Impairment of investments mainly Impairment of AFS investments, associates and goodwill 77.5 8.1 Gain on disposal of j
Slide 34: PAC – Balance Sheet
PAC – Balance Sheet Balance Sheet – PAC (A$m) FY17 ❯ PAC owned 65% of Aurora Trust prior to simplification of the structure in March 2017, post March 2017 PAC Current Assets 49.8 owned 100% of the Trust for the remaining three months Non-Current Assets ❯ Reflects consolidation of Aether Investment P
Slide 35: Details of Non-Current Liabilities
Details of Non-Current Liabilities Amount Name Maturity Notes (Face Value) Class X Redeemable US$21.0m 31 March 2018 Fixed liability Preference Units* 50% Nov ‘18 Vendor finance related to Seizert acquisition. Compound Promissory Notes* US$17.5m Interest accrued at LIBOR rate + 5% on total liability
Pacific Current Group — Investor Presentation (September 2017) on 6ix