Perpetual Limited · ASX:PPT
Perpetual — FY2019 Earnings Presentation
32 slides from Perpetual's earnings presentation, Aug 22, 2019
Slide 1: Perpetual Limited FY19 Results
For personal use only PERPETUAL LIMITED FY19 RESULTS 12 months to 30 June 2019 Rob Adams Chief Executive Officer and Managing Director Chris Green Chief Financial Officer ABN 86 000 431 827
Slide 2: Rob Adams, Chief Executive Officer and Managing Director
For personal use only FY19 RESULTS ROB ADAMS CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR 2
Slide 3: FY19 Results
For personal use only FY19 RESULTS $514.1m $351.9m $115.9m $2.50 Revenue Expenses NPAT Full-year DPS 4% on FY18 4% on FY18 17% on FY18 9% on FY18 PERPETUAL PERPETUAL PERPETUAL INVESTMENTS PRIVATE CORPORATE TRUST FUM $27.1b FUA $14.8b FUA $764.5b Highly regarded investments business Clear HNW
Slide 4: FY19 in Review: Action Taken to Position the Business for Growth
FY19 IN REVIEW ACTION TAKEN TO POSITION THE BUSINESS FOR GROWTH For personal use only Defined strategic objectives to accelerate growth and deliver long-term value for our stakeholders Leadership Designed new operating model to reposition and and capability facilitate growth Key executive appointmen
Slide 5: Investing in Our Diversified Business to Accelerate Growth
FY19 IN REVIEW INVESTING IN OUR DIVERSIFIED BUSINESS TO ACCELERATE GROWTH For personal use only Perpetual Investments Perpetual Perpetual ▪ Raised over $540m of new capital via listed vehicles2 Corporate Investments Trust ▪ 4 Multi Asset funds upgraded to “Highly recommended” by Lonsec 3 ▪ Increased
Slide 6: Investments: Elevated Markets Offset by Institutional Outflows
PERPETUAL INVESTMENTS ELEVATED MARKETS OFFSET BY INSTITUTIONAL OUTFLOWS For personal use only 7000 All Ordinaries Index 6800 6600 6400 Markets continue to favour 6200 growth over value. 6000 Markets fell late in 1H19 5800 and rebounded strongly 5600 Average FY19 v FY18: +3% in 2H19. 5400 Average FY1
Slide 7: Investments: Challenging Market Conditions for Value Managers
PERPETUAL INVESTMENTS CHALLENGING MARKET CONDITIONS FOR VALUE MANAGERS For personal use only 300 ASX 200 Value Growth 250 Growth stocks have Performance 200 outperformed value stocks for 150 a sustained period of time1 100 50 2012 2013 2014 2015 2016 2017 2018 2019 Tech Pre-GFC Exceeding 20% 24x Bub
Slide 8: Investments: Long-Term Performance Remains Strong
PERPETUAL INVESTMENTS LONG-TERM PERFORMANCE REMAINS STRONG For personal use only Quartile rankings1 % of funds quartile ranking Period ending 30 June 2019 1 yr 3 yrs 5 yrs 7 yrs 10 yrs Perpetual W Australian 4 4 4 4 2 Perpetual W Concentrated Equity 4 3 4 3 2 1 Yr 50% 50% Australian Equities Perpetu
Slide 9: High Performing Credit and Fixed Income Manager
PERPETUAL INVESTMENTS HIGH PERFORMING CREDIT AND FIXED INCOME MANAGER For personal use only Experienced and stable team Perpetual Credit Income Trust ▪ Managing over $7b in FUM ▪ Newly listed ASX vehicle (ASX:PCI) ▪ Senior management team investing together ▪ $440m of FUM for over 15 years ▪ Provide
Slide 10: Private: Consistent Growth in FUA and FUM
PERPETUAL PRIVATE CONSISTENT GROWTH IN FUA AND FUM For personal use only Six consecutive years Continued growth in Steady market related of positive flows Opportunity Funds margins Funds under advice $b Funds under management $b Market related revenue margin bps 14.8 6.7 6.4 0.2 0.6 5.7 0.6 14.1 0.5
Slide 11: Private: Client Growth Continues Despite Volatile Markets
PERPETUAL PRIVATE CLIENT GROWTH CONTINUES DESPITE VOLATILE MARKETS For personal use only New client growth Client segmentation Continued growth in across HNW and strategy proven by high new Fordham clients Medical continues client balances Net new clients - HNW ex Fordham New clients - Fordham Avera
Slide 12: Corporate Trust: Strong Growth from Diversified Business
PERPETUAL CORPORATE TRUST STRONG GROWTH DELIVERED FROM DIVERSIFIED BUSINESS For personal use only MFS FUA $b MFS – revenue contribution $m 269.7 51.3 242.9 45.8 203.8 30.6 7.4 24.3 40.6 14.7 29.2 5.8 23.8 4.6 9.5 16.0 58.1 8.0 57.3 6.6 45.1 12.5 10.4 11.7 137.5 151.7 128.0 20.2 21.9 19.0 FY17 FY18 F
Slide 13: Corporate Trust: Debt Market Services Extensions Offsetting Slower Market Growth
PERPETUAL CORPORATE TRUST DEBT MARKET SERVICES EXTENSIONS OFFSETTING SLOWER MARKET GROWTH For personal use only DMS FUA2 $b Public securitisation issuance $b DMS revenue composition $m 494.9 454.2 450.3 75.2 14.5 57.5 61.6 18.0 15.4 62.1 52.1 43.3 17.4 45.1 42.7 57.7 115.5 18.5 21.8 97.2 18.3 16.0 1
Slide 14: Delivering RegTech Solutions Utilising Our Unique Data Set
PERPETUAL CORPORATE TRUST DELIVERING REGTECH SOLUTIONS UTILISING OUR UNIQUE DATA SET For personal use only DATA AND ANALYTICS SOLUTIONS (DAS) Australian (Securitisation) Perpetual Perpetual Data Warehouse Roundtables Business Intelligence Regulatory and investor reporting Benchmarking and insights R
Slide 15: Financials: Chris Green, Chief Financial Officer
For personal use only FINANCIALS CHRIS GREEN CHIEF FINANCIAL OFFICER 15
Slide 16: Financial Performance: Group
FINANCIAL PERFORMANCE GROUP For personal use only Movement in NPAT ($m) FY19 2H19 1H19 FY18 FY19 For the period $m $m $m $m v FY18 Operating revenue1 514.1 261.8 252.3 533.7 (4%) Total expenses2 (351.9) (184.9) (167.0) (337.4) (4%) Underlying profit after tax FY18 Rev Exp Tax Sig FY19 115.9 55.7 60.
Slide 17: Revenue and Expense Analysis
REVENUE AND EXPENSE ANALYSIS For personal use only Movement in Revenue1 ($m) Key revenue movements Higher PCT revenue reflecting growth in both MFS and DMS, as well as growth in data services revenue following RFi acquisition PP revenues flat impacted by industry dislocation post Royal Commission Lo
Slide 18: Expense Deep Dive
EXPENSE DEEP DIVE LOWER STAFF COSTS OFFSET BY INVESTMENT ACROSS THE BUSINESS For personal use only Expense analysis ($m) 351.9 4.1 5.2 5.2 337.4 7.8 (7.8) FY18 Staff costs Technology Organic growth Inorganic growth Other FY19 Expenses Expenses initiatives initiatives Key Lower variable Uplift across
Slide 19: Investments: Lower Revenue Due to Net Outflows and Performance Fees
PERPETUAL INVESTMENTS LOWER REVENUE DUE TO NET OUTFLOWS AND PERFORMANCE FEES For personal use only Revenue $m FY19 2H19 1H19 FY18 FY19 v For the period 9.2 $m $m $m $m FY18 3.5 Revenue 205.0 99.2 105.8 232.3 (12%) 223.1 201.5 Operating expenses (115.1) (60.8) (54.3) (110.5) (4%) FY18 FY19 EBITDA1 89
Slide 20: Private: Consistent Results Despite Industry Headwinds
PERPETUAL PRIVATE CONSISTENT RESULTS DESPITE INDUSTRY HEADWINDS For personal use only Revenue $m FY19 2H19 1H19 FY18 FY19 v For the period 186.4 186.1 $m $m $m $m FY18 Market related revenue 120.4 59.9 60.5 120.5 - 65.9 65.7 Non-market related revenue 65.7 33.5 32.1 65.9 - Total revenues 186.1 93.4
Slide 21: Corporate Trust: Continued Investment in Growth Initiatives
PERPETUAL CORPORATE TRUST CONTINUED INVESTMENT IN GROWTH INITIATIVES DELIVERING RESULTS For personal use only Revenue $m FY19 2H19 1H19 FY18 FY19 v 112.9 For the period $m $m $m $m FY18 103.3 Debt Market Services revenue 61.6 32.7 28.9 57.5 7% 51.3 45.8 Managed Fund Services revenue 51.3 26.6 24.7 4
Slide 22: Balance Sheet: Strength Provides Opportunities
BALANCE SHEET STRENGTH PROVIDES OPPORTUNITIES For personal use only Regulatory capital2 FY19 v 2H19 v For the period ended FY19 2H19 1H19 FY18 FY18 1H19 Cash 299.6 299.6 279.8 320.2 (6%) 7.1% Liquid investments (FVTPL) 69.7 69.7 63.4 75.0 (7%) (10%) 155.5 156.7 Goodwill & other intangibles 345.8 345
Slide 23: Financial Indicators
FINANCIAL INDICATORS For personal use only EPS1 cps DPS cps NTA per share ROE2 % 6.68 293.2 296.8 265 275 22.1 21.6 250 6.47 6.40 246.3 17.5 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 $1.25 100% 30 September FULLY FRANKED FINAL DIVIDEND PAYOUT RATIO3 DIVIDEND PAYABLE 1. Fully dilute
Slide 24: Strategic Priorities
For personal use only STRATEGIC PRIORITIES ROB ADAMS CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR 24
Slide 25: Perpetual's Growth Strategy
STRATEGIC PRIORITIES PERPETUAL’S GROWTH STRATEGY For personal use only Deepen our client relationships and improve our clients’ experience Create the right environment for our people to thrive Promote a culture of innovation and empowerment to be nimble and increase productivity Be recognised as a l
Slide 26: Investments: Increased Focus and Investment in Capabilities and Distribution
PERPETUAL INVESTMENTS INCREASED FOCUS AND INVESTMENT IN CAPABILITIES AND DISTRIBUTION For personal use only Expansion of investment capabilities Industry leading distribution ▪ Add new investment capabilities ▪ Leverage our brand strength and existing distribution footprint ▪ Dedicated focus on inor
Slide 27: Private: Pursuit of Quality Opportunities During Period of Industry Change
PERPETUAL PRIVATE PURSUIT OF QUALITY OPPORTUNITIES DURING PERIOD OF INDUSTRY CHANGE For personal use only Seismic shifts in adviser landscape Our response ▪ Significant regulatory change ▪ Launched industry leading professional services model ▪ Large organisations are exiting aligned adviser model ▪
Slide 28: Corporate Trust: Leverage Strong Market Position
PERPETUAL CORPORATE TRUST LEVERAGE STRONG MARKET POSITION For personal use only Deliver innovative products and client insights through unique data set and RegTech solutions ▪ Unmatched client relationships across the banking and financial services sector ▪ Improving client experience via targeted d
Slide 29: Target Operating Model: Business Realignment to Reduce Costs
TARGET OPERATING MODEL BUSINESS REALIGNMENT TO REDUCE COSTS AND TAKE ADVANTAGE OF MARKET OPPORTUNITIES For personal use only Improve client experience to accelerate growth Improved accountability framework, with streamlined Expected to deliver decision making $18-23m in cost savings on an annualised
Slide 30: Perpetual's Growth Strategy
STRATEGIC PRIORITIES PERPETUAL’S GROWTH STRATEGY For personal use only Deepen our client relationships and improve our clients’ experience Create the right environment for our people to thrive Promote a culture of innovation and empowerment to be nimble and increase productivity Be recognised as a l
Slide 31: Contacts
CONTACTS For personal use only Rob Adams Chief Executive Officer & Managing Director rob.adams@perpetual.com.au +612 9229 9700 Chris Green Chief Financial Officer chris.green@perpetual.com.au +612 9229 9861 Andrew Ehlich General Manager, Investor Relations & Corporate Finance andrew.ehlich@perpetual
Slide 32: Disclaimer
DISCLAIMER For personal use only Important information The information in this presentation is general background information about the Perpetual Group and its activities current as at 22 August 2019. It is in summary form and is not necessarily complete. It should be read together with the company’