Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (August 2018)
41 slides from Pinnacle Investment Management's investor presentation, Aug 28, 2018
Slide 1: FY2018 financial results (ASX cover letter)
28 August 2018 By Electronic Lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited (ASX: PNI) FY2018 financial results Pinnacle Investment Management Group Limited (Pinnacle) is pleased to advise shareh
Slide 2: Composition of Group Results
Pinnacle’s Managing Director, Ian Macoun commented: “Pinnacle’s focus remained on continuing to support each of our Affiliates and assisting them to grow their business and profitability, as well as expanding our distribution and infrastructure capabilities to support future growth. We continue to d
Slide 3: Pinnacle Affiliates – FUM Growth and Revenue Growth
Pinnacle Affiliates – FUM Growth1 40 38.0 35 5-yr CAGR: +28.4% 7.9 10-yr CAGR: +27.0% 30 26.5 25 5.1 19.8 20 16.1 2.6 15 1.8 30.1 12.3 10.3 10.9 10.0 1.2 10 0.9 21.4 7.9 17.2 14.3 4.4 5 3.5 10.3 10.0 10.0 11.1 1.7 7.9 3.5 4.4 1.7 0 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-1
Slide 4: Dividend and Appointment of Non-Executive Director
Dividend The Board reminds its shareholders that it resolved to pay a fully franked final dividend of 7.0 cents per share to shareholders recorded on the register on 21 September 2018 and payable on 5 October 2018. The Dividend Reinvestment Plan (DRP) is applicable to this dividend. Please contact o
Slide 5: Annual Results Discussion for the year ended 30 June 2018
Pinnacle Investment Management Group Limited (PNI) Annual Results Discussion for the year ended 30 June 2018 28 August 2018
Slide 6: Agenda
Agenda • FY18 Financial Highlights • FY18 Business Highlights • FY18 Results Discussion • Business Focus • Distribution Update • Pinnacle Outlook • Group Overview 1
Slide 7: Pinnacle Full Year Results
Pinnacle Full Year Results FY2018 FY2017 YoY change Pinnacle Affiliates (100% aggregate basis) FUM ($billion) 38.0 26.5 43.4% Revenue ($million) 168.4 128.3 31.3% Net profit before tax 88.9 62.7 41.8% Tax expense (27.3) (19.1) 42.9% Net profit after tax 61.6 43.6 41.3% FY2018 FY2017 YoY change Pinna
Slide 8: 2018 Financial Highlights
2018 Financial Highlights ▪ NPAT from continuing operations attributable to shareholders of $23.1 million, up 92.5% from $12.0 million in the prior year ▪ Earnings per share from continuing operations of 14.3 cents, up 76.5% from 8.1 cents in the prior year ▪ NPAT attributable to shareholders of $23
Slide 9: 2018 Business Highlights
2018 Business Highlights ▪ Record FUM, FUM inflows and Affiliate Revenues ▪ FUM $38.0 billion* at 30 June 2018 - up $5.7 billion (17.6%) from 31 December 2017; - up $11.5 billion (43.4%) from 30 June 2017 - up $14.7 billion (62.9%) from 31 December 2016; and - up $18.2 billion (92.5%) from 30 June 2
Slide 10: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 2016 Morningstar Fund Manager of the Year Awards: ▪ Hyperion – Australian Fund Manager of the Year ▪ Hyperion – Domestic Equities Category Winner, Australia ▪ Hyperion – Domestic Equities Small Caps Category Winner, Australia 2017 Lonsec/Mone
Slide 11: FY18 funds under management
FY18 funds under management Gross FUM growth ($bn)(1) 40 38.0 5-yr CAGR: +28.4% ▪ Current FUM of $38.0bn as at 30 June 2018 35 10-yr CAGR: +27.0% 7.9 ▪ FUM has grown at a CAGR of 27.0% p.a. over the last ten years ▪ Increase in FUM of $11.5bn in the year to 30 June 2018, driven 30 by net inflows of
Slide 12: FY18 revenues
FY18 revenues Aggregate affiliate revenues ($m)(1) 180 168.4 Affiliate performance fees - 100% 160 Affiliate revenues - 100% (excl. performance fees) 17.2 - Group NPAT from continuing operations of $23.1m, compared to $12m in FY17, an increase of 92.5% 140 - Revenue from affiliates of $168.4m, compa
Slide 13: Funds under management by Affiliate
Funds under management by Affiliate Gross FUM by affiliate ($m) Pinnacle Hyperion Plato Solaris Resolution Palisade Antipodes Spheria Two Trees Firetrail Date (total) Capital 30 Jun 18 38,032 6,507 4,918 8,319 8,038 1,847 7,554 702 71 74 31 Dec 17 32,338 6,056 4,644 6,618 6,552 1,585 6,261 596 26 -
Slide 14: Demonstrated growth track record
Demonstrated growth track record Gross FUM ($bn)(1) Affiliate revenues ($m)(2) 168.4 FY15-FY18 CAGR: +33% 38.0 FY15-FY18 CAGR: +33% 128.3 26.5 92.8 19.8 72.0 16.0 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Pinnacle share of affiliates’ NPAT ($m)(3) Pinnacle NPAT from continued operations ($m)(4) 24.9 2
Slide 15: Pinnacle Affiliates financial highlights
Pinnacle Affiliates financial highlights FY2018 FY2017 YoY change Strong FUM and revenue growth in Pinnacle Affiliates (100% aggregate basis) FUM ($billion) 38.0 26.5 43.4% Pinnacle Affiliates: Revenue ($million) 168.4 128.3 31.3% Net profit before tax 88.9 62.7 41.8% Tax expense (27.3) (19.1) 42.9%
Slide 16: Group financial summary
Group financial summary ▪ Strong growth in Pinnacle earnings FY2018 FY2017 YoY change Pinnacle Revenue 16.5 10.9 51.4% ▪ Significant growth in ‘Pinnacle Expenses (18.3) (16.4) 11.6% Share of Pinnacle Affiliates net profit after tax Net profit before tax (NPBT) from continuing operations 24.9 23.1 17
Slide 17: PNI balance sheet
PNI balance sheet FY2018 FY2017 YoY change ▪ Cash and Principal Investments of $31.4 million Current Assets Cas h and cas h equivalents 9.3 10.9 (14.7%) ▪ Includes $21.1 million in strategies managed by Pinnacle Financial as s ets 22.1 31.6 (30.1% ) Affiliates Total cash and financial assets 31.4 42
Slide 18: Significant components of FY 2018 results
Significant components of FY 2018 results ▪ Significant growth in ‘Pinnacle Parent’ revenues and costs ▪ Strong growth in distribution revenue from Affiliates, including ‘opening new channels’ ▪ Continuing ‘P&L investment’ in ‘Horizon 2’ activities (for example, Offshore distribution) ▪ Net loss on
Slide 19: A strong and flexible balance sheet
A strong and flexible balance sheet ▪ $31.4m* of cash and principal investments ▪ Includes $21.1m* invested in strategies managed by Pinnacle Affiliates ▪ Excludes nearly $12m of cash applied for Affiliate equity recycling loans and Affiliate equity purchased ▪ Excludes post balance date impact of f
Slide 20: Focus on managing the business to maximise profits and Company value
Focus on managing the business to maximise profits and Company value over the medium term ▪ We continue to build Pinnacle by taking a measured approach to growth - Support growth of our current affiliates with increased investment in distribution channels (e.g. international and listed markets) - In
Slide 21: Focus on managing the business to maximise profits and Company value
Focus on managing the business to maximise profits and Company value over the medium term • How does ‘Horizon 2’ add value in the Medium Term? o Investment in growth initiatives that don’t require additional capital to be raised - ETF initiative commenced o Reasonable limits to be set given short-te
Slide 22: Recap on Horizon Criteria – What could we acquire?
Recap on Horizon 3 Criteria – What could we acquire? Criteria • Must not place the Company at risk • Only consider if low risk and high return on capital • Exercise great care and careful due diligence • Must be synergistic with existing core • Few will meet this test Status • Metrics Credit and Ome
Slide 23: Strong growth track record
Strong growth track record Affiliate gross FUM evolution 30 Jun 13: $10.8bn 30 Jun 18: $38.0bn Spheria Firetrail Two Trees 1.8% 0.2% 0.2% ▪ Addition of a number of new affiliates including Palisade 6.7% Hyperion Antipodes, Spheria, Two Trees and Firetrail Antipodes 17.1% 19.9% Hyperion ▪ A number of
Slide 24: Talent Driven Business Model
Talent Driven Business Model • Proven track record of identifying and supporting world class investment teams and anticipating market demand Talented Investors • All established affiliates have delivered strong long term outperformance • CAGR 27.0% over the last ten years, supported by both organic
Slide 25: Distribution Environment
Distribution Environment •Industry consolidation, internalisation, margin pressure and higher ODD hurdles, however … •Demand for high quality boutique active managers remains strong, Institutional particularly where capacity is scarce •Globalise investment solutions, distribution force and infrastru
Slide 26: Evolution of Pinnacle’s Distribution capability
Evolution of Pinnacle’s Distribution capability • Adapt o Grow ahead of our boutiques o Listen to clients and move quickly to meet their evolving needs o Do not become the market – be ahead of it • Resource o Growing adviser engagement – 15+ in retail o Direct (non advised & off platform) investment
Slide 27: Evolution of Pinnacle’s Distribution capability
Evolution of Pinnacle’s Distribution capability • Traditional `intermediated retail’ distribution expertise expanded over time to include `direct and exchange traded’ o Intermediated (Financial Advisers) ▪ Private managed funds – Platform & Direct ▪ Exchange traded funds o Direct ▪ Private managed f
Slide 28: Board succession
Board succession • Lorraine Berends appointed to the PNI Board, with effect from 1st September 2018 • Long-serving Director Steve Wilson to retire from the Board at the upcoming AGM • Takes the number of female directors to two, in line with our stated target • Increases the number of independent, N
Slide 29: Progress to date – Platform and Reputation
Progress to date – Platform and Reputation • A platform for GROWTH o Continuing investment excellence o Widespread industry recognition and support o ‘Article of faith’ reputation • Increasing diversification • Proven ability to build high quality investment managers, and facilitate substantial succ
Slide 30: Pinnacle outlook
Pinnacle outlook ▪ Strong momentum going into FY19 - Acquisition of MCP equity interest, expected to grow strongly - Acquisition of Omega equity interest, ETF initiative being pursued - Further affiliates in the pipeline, expect activity 1H FY2019 - Further LIC / LITs planned ▪ Existing Affiliates c
Slide 31: Australia’s leading “multi-affiliate” investment management firm
Australia’s leading “multi-affiliate” investment management firm Structure promotes independence, accountability, focus and longevity • Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests • Equity ownership enhances alignment with shareholders Seed FUM and working c
Slide 32: Pinnacle Group Overview
Pinnacle Group Overview The diagram above shows the Pinnacle Affiliates and Pinnacle’s effective ownership stake and economic rights in each as at the date of this presentation. In respect of Firetrail Investments, Omega Global Investors and Spheria, the percentage represents Pinnacle’s total shareh
Slide 33: Overview of Pinnacle Affiliates
Overview of Pinnacle Affiliates ▪ Antipodes Partners – a pragmatic value manager of global equities (long only and long-short) - Funds under management have grown to in excess of $7.5bn in under 3 years ▪ Firetrail Investments – high conviction investment manager of Australian and Global equities -
Slide 34: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) ▪ Plato Investment Management – a specialist manager of Australian and Global equities following a quantitative style - Funds under management increased to over $4.9bn ▪ Resolution Capital – a specialist manager of Australian and Global listed real estate
Slide 35: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates 100% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out performed their benchmarks over the 5 years to 31 July 2018 5Y 10Y Inception Inception date Hyperion Asset Management - Gross
Slide 36: Affiliates’ investment performance – July 2018
Affiliates’ investment performance – 31 July 2018 1Y 3Y 5Y 10Y Inception Inception date Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 16.39% 10.09% 12.07% 11.99% 12.54% 1/10/2002 Outperformance 1.69% 2.00% 2.92% 5.06% 3.17% Hyperion Small Growth Companies Fu
Slide 37: Affiliates’ investment performance – July 2018
Affiliates’ investment performance – 31 July 2018 1Y 3Y 5Y 10Y Inception Inception date Palisade Investment Partners - Gross Performance Palisade Diversified Infrastructure Fund 14.59% 14.04% 13.43% 10.82% 1/08/2008 Palisade Australian Social Infrastucture Fund 14.51% 14.38% 15.14% 16.42% 31/05/2011
Slide 38: Pinnacle Affiliates – FY18 review
Pinnacle Affiliates – FY18 review » Funds under management grew to $7.5 billion from $3.8 billion at 30 June 2018 » Out-performance across all strategies since inception in 2015 » Addition of the Global fund across most retail platforms » Long-term performance remains excellent – Hyperion’s Australi
Slide 39: Pinnacle Affiliates – FY18 review
Pinnacle Affiliates – FY18 review » Funds under management increased to over $4.9 billion (2017: 4.0 billion) » All of Plato’s domestic strategies have outperformed their benchmarks over five years and since inception, while income strategies have delivered on their strong income targets » Global Fu
Slide 40: Pinnacle Affiliates – FY18 performance
Pinnacle Affiliates – FY18 performance » Microcap and Small Caps strategies continued to outperform their benchmarks since inception » Funds under management $702 million at 30 June 2018 up from $211 million at 30 June 2017 » Additions of Olivier Coulon (Senior Analyst) & Al Doeke (Dealer) to take t
Slide 41: Disclaimer
Disclaimer • This presentation has been prepared by Pinnacle Investment Management Group Limited (PNI). The information in this presentation is current as at 28 August 2018. • This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with respect
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