Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Shareholder Meeting (November 2022)
82 slides from Pinnacle Investment Management's shareholder meeting presentation, Nov 14, 2022
Slide 1: Welcome to the 2022 Annual General Meeting
For personal use only PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) Welcome to the 2022 Annual General Meeting The meeting will commence at 9:00am (Sydney time) 14 th November 2022
Slide 2: Important notice
Pinnacle Investment Management Group Limited (PNI) 2 This presentation has been prepared by Pinnacle Investment Management Group Limited ABN 22 100 325 184 (PNI). The information in this presentation is current as at 14 November 2022. For personal use only PNI has prepared this presentation based on
Slide 3: Agenda
For personal use only Agenda 3 Formal Business 4 Managing Director’s Address 15 FY22 Themes 17 FY22 Financial Results 19 Update – Q1 FY23 24 Growth Agenda 30 Corporate Sustainability 38 Q1 FY23 Update – Institutional & International 44 Q1 FY23 Update – Retail 46 Additional Information 55 Q&A 56
Slide 4: Formal Business
For personal use only Formal Business
Slide 5: Formal business
For personal use only Formal business 5 • Item 1 – Tabling of FY22 financial statements • Item 2 – Adoption of Remuneration Report • Item 3 – Re-election of Directors
Slide 6: How to ask a question
For personal use only How to ask a question (for shareholders joining online) 6 • To ask a written question, select the Q & A icon. • Select the topic your question relates to from the drop-down list. • Type your question in the text box and press the send button. • To ask a verbal question, follow
Slide 7: How to vote
For personal use only How to vote (for shareholders joining online) 7 • When the poll is open, select the vote icon at the top of the screen. • To vote, select either For, Against or Abstain. • You will see a vote confirmation. • To change or cancel your vote, click on "click here to change your vot
Slide 8: Item 1 – Tabling of FY22 financial statements
For personal use only Item 1 – Tabling of FY22 financial statements 8
Slide 9: Item 2 – Adoption of Remuneration Report
For personal use only Item 2 – Adoption of Remuneration Report 9 • To consider and, if thought fit, pass the following as an ordinary resolution: “To adopt the Remuneration Report for the financial year ended 30 June 2022.”
Slide 10: Item 2 – Adoption of Remuneration Report: proxy results
Item 2 – Adoption of Remuneration Report 10 RESOLUTION 2 For personal use only Resolution by proxy Adoption of Remuneration Report % of eligible proxies in favour 99.35% Total number votes cast 101,838,372 For 101,170,546 Against 551,263 Open usable 116,563 Excluded votes 25,514,874 Abstain 588,157
Slide 11: Item 3(a) - Re-election of Deborah Beale
For personal use only Item 3(a) - Re-election of Deborah Beale 11 • To consider and, if thought fit, pass the following as an ordinary resolution: “That Deborah Beale who retires from the office of Director by rotation and, being eligible, offers herself for re-election, is re-elected as a Director.
Slide 12: Item 3(a) - Re-election of Deborah Beale: proxy results
Item 3(a) - Re-election of Deborah Beale 12 RESOLUTION 3(a) For personal use only Resolution by proxy Re-election of Deborah Beale % of eligible proxies in favour 99.67% Total number votes cast 127,394,916 For 126,972,664 Against 307,289 Open usable 114,963 Excluded votes Nil Abstain 546,487
Slide 13: Item 3(b) - Re-election of Andrew Chambers
For personal use only Item 3(b) - Re-election of Andrew Chambers 13 • To consider and, if thought fit, pass the following as an ordinary resolution: “That Andrew Chambers, who retires from the office of Director by rotation and, being eligible, offers himself for re-election, is re-elected as a Dire
Slide 14: Item 3(b) - Re-election of Andrew Chambers: proxy results
Item 3(b) - Re-election of Andrew Chambers 14 RESOLUTION 3(b) For personal use only Resolution by proxy Re-election of Andrew Chambers % of eligible proxies in favour 99.51% Total number votes cast 127,395,116 For 126,764,737 Against 515,416 Open usable 114,963 Excluded votes Nil Abstain 546,287
Slide 15: Managing Director's Address
For personal use only Managing Director’s Address Ian Macoun
Slide 16: Managing Director's Address
Managing Director’s Address 16 • FY22 Themes For personal use only • FY22 Results • Financial Results • Funds Under Management • Latest Update – Q1 FY23 • FUM & Flows • Performance • Growth Agenda • Three Horizons of Growth • Future Growth Drivers • Horizon 2 Update • Horizon 3 Update • Corporate Su
Slide 17: FY22 Themes
For personal use only FY22 Themes 17 • Continued profit growth on record FY21 • Diversification delivering resilience • Ongoing investment for future growth
Slide 18: FY22 – Continued profit growth; diversification delivering resilience
FY22 – Continued profit growth on record FY21; Diversification delivering resilience; ongoing investment for future growth 18 1. NPAT, EPS and dividends up 14%, 8% and 22% respectively Continuing increase in base fees despite lower headline net inflows For personal use only 2. • Industry-wide pressu
Slide 19: FY22 financial highlights
FY22 financial highlights 19 Continuing revenue and earnings growth despite market dislocation; Pinnacle is not immune to market factors, but diversified platform provides resilience and growth throughout the cycle Affiliate FUM / Revenue (100%) NPAT / EPS DPS For personal use only Aggregate Affilia
Slide 20: Continued track record of earnings growth
Continued track record of earnings growth 20 The strength of our platform and award-winning brands generates material earnings growth for our shareholders For personal use only NPAT growth: 2016 - 2022 Diluted EPS growth: 2016 - 2022 CAGR (five years): 44.8% CAGR (five years): 39.0% Fully franked di
Slide 21: Continued track record of earnings growth
Continued track record of earnings growth 21 • Since listing as a ‘pure play’ funds management business in 2016, Pinnacle has delivered profit growth each year For personal use only • Pinnacle Affiliate revenues are linked, in part, to movements in equity markets • Pinnacle has pursued a deliberate
Slide 22: Funds under management
Funds under management 22 Gross FUM ($bn) 1 For personal use only • FUM has grown at a CAGR of 23.7% p.a. over the last ten years (22.0% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Equities markets were down in FY22: • S&P/AS
Slide 23: Performance fees
Performance fees 23 Now 22 strategies (18 in FY21) with the potential to deliver performance fees – driving uncorrelated opportunities, resulting in a diverse base of growth For personal use only Closing FUM & number of strategies subject to performance fees • The volume of FUM with performance fee
Slide 24: Latest Update – FUM and flows
For personal use only Latest Update – FUM and flows 24 • Total Affiliate FUM (at 100%) at 30 September 2022 of $80.5 billion – down $3.2 billion or 4% from $83.7 billion at 30 June 2022 • Total net outflows for the three months to 30 September 2022 of $1.2 billion: • $0.2 billion retail net inflows
Slide 25: Latest Update – FUM and flows
Latest Update – FUM and flows 25 • Whilst headline flows have been negative, there have been modest positive net inflows from both retail and offshore For personal use only channels, with negligible impact on overall management fee revenues in aggregate • Lower market levels have impacted management
Slide 26: Continuing strong investment performance of Affiliates to 30 September 2022
26 5 Y ( p .a .) 1 0 Y ( p .a .) I n c e p ti o n ( p .a .) I n c e p ti o n d a te Pinna cle Inv est m ent Ma na gem ent Hype r i o n As s e t M an ag e m e n t - G r o s s P e r f o r m an c e Continuing strong Hyperion Australian Growth Companies Fund 9.96% 12.01% 11.54% 1/10/2002 Outperformance
Slide 27: Affiliates' investment performance 30 September 2022
27 I ncep ti on I ncep ti on 1Y 3Y ( p .a .) 5Y ( p .a .) 10Y ( p .a .) ( p .a .) d a te Pinnacle Investment Management Hype r i o n Asse t M an age m e n t - G r o ss Pe r fo r m an c e Hyperion Australian Growth Companies Fund -31.07% 5.86% 9.96% 12.01% 11.54% 1/10/2002 Outperformance -23.07% 3.14
Slide 28: Affiliates' investment performance September 2022
28 Affiliates’ investment For personal use only performance 30 September 2022 The investment returns for each fund or strategy shown are for information purposes only. Unless otherwise stated, the investment returns have been calculated for the relevant period in AUD (with distributions reinvested)
Slide 29: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 29 2022 Lonsec and SuperRatings Fund of the Year Awards 2022 2021 Money Management Fund Manager of the Year: • Hyperion – Fund Manager Of The Year Winner For personal use only • Longwave – Emerging Manager of the Year – Winner • Hyperion – Au
Slide 30: Growth Agenda
For personal use only Growth Agenda
Slide 31: Three Horizons of growth
Three Horizons of growth 31 Prepared for, and seeking, further expansion opportunities – committed to taking advantage of the significant offshore opportunity to evolve into a global multi-affiliate by ‘exporting our model’ For personal use only • Continue to build Pinnacle by taking a measured appr
Slide 32: Future growth drivers
Future growth drivers 32 An excellent platform in place to move ahead with sustained growth For personal use only Distribution Platform Robust, Flexible, Start-Up Affiliate Existing Affiliate Acquisitive Expansion Operating Platform Enablement Expansion Growth • Investment in (and • Stable / robust,
Slide 33: Horizon 2 – Update
Horizon 2 – Update 33 Pinnacle and Affiliates continue to actively pursue growth initiatives, recognizing that these will moderate profits in the short term but provide extremely lucrative growth opportunities over the medium term For personal use only Examples of previous Horizon 2 initiatives, wit
Slide 34: Horizon 2 – Update
Horizon 2 – Update 34 Examples of previous Horizon 2 initiatives, within Affiliates, include: • Hyperion Global, Palisade Renewables, Plato Australian Income, Resolution Capital Global REITS, Solaris Long/Short For personal use only Current initiatives, within Affiliates, include: Affiliate Initiati
Slide 35: Horizon 2 – Update
Horizon 2 – Update 35 • The aggregate annual net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, is approximately $12m For personal use only (Pinnacle share, after tax) • Each initiative is only entered into after careful consideration of the longer-term benefits and with reas
Slide 36: Horizon 2 – International
Horizon 2 – International 36 Incubations remain a highly attractive investment proposition for Pinnacle. We are looking to incubate more outside of Australia and leverage off the operational infrastructure we have developed in the UK/Europe and in Canada For personal use only Aikya (London) • Commen
Slide 37: Horizon 3
Horizon 3 37 • We have explored many Horizon 3 opportunities with the following characteristics: For personal use only • Strategically attractive and diversifying relative to current Affiliate composition • Internationally-based, plus select opportunities in Australia • High demand asset classes inc
Slide 38: Corporate Responsibility
For personal use only Corporate Responsibility
Slide 39: FY22 Highlights
FY22 Highlights 39 ESG Working Group ESG Charter For personal use only We established a cross-affiliate ESG Working Group to share We developed the Pinnacle Group ESG Charter to reflect knowledge and promote industry best practice ESG Pinnacle and Affiliates’ shared commitment to ensuring that stand
Slide 40: Our contribution to the United Nation's 2030 Agenda
Our contribution to the United Nation’s 2030 Agenda 40 The United Nations Sustainable Development Goals (SDGs) aim to address the biggest problems human beings face on this planet. We recognise the need for strategies that foster economic development, reduce gender inequalities and transition toward
Slide 41: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation 41 • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly reflected in For personal use only Pinnacle’s commitment – together with Affiliates – to the Pinnacle Charitable Foundation • The Foundation’s focus is on gro
Slide 42: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation 42 • Total donations by the Foundation in FY2022 were over $900,000 (an increase of almost 70% from 2021), primarily For personal use only directed towards 14 not for profit partners. Support was also provided for initiatives aligned with employee volunteering and fund
Slide 43: Pinnacle Charitable Foundation
43 Pinnacle Charitable Foundation • A total of 14 not for profit partners - operating across six core focus areas - are delivering long term impact through sustainable change, including 5 new partnerships initiated in FY22: For personal use only MENTAL WELLBEING Together with illness prevention and
Slide 44: Q1 FY23 Update – Institutional & International
For personal use only Q1 FY23 Update – Institutional & International
Slide 45: Latest Update and Outlook – Institutional & International
Latest Update and Outlook – Institutional & International 45 • Global uncertainty around inflation, rates, earnings and liquidity driving defensive institutional investor behaviour For personal use only • Institutional flows and search activity in public markets asset classes mixed • Asset owners in
Slide 46: Q1 FY23 Update – Retail
For personal use only Q1 FY23 Update – Retail
Slide 47: Retail update
Retail update 47 Maintained positive retail flows in Q1 FY23 despite economic uncertainty, challenging market conditions and poor investor confidence. For personal use only • Weak retail market conditions have stalled retail net inflows with $0.2bn net inflows in Q1 FY23. As a result of AMP’s super
Slide 48: Retail update
Retail update 48 Ever-changing client preferences and advice landscape requires a nimble, efficient and adaptive distribution platform to deliver success For personal use only • The retail distribution team continues to maintain high activity and engagement with clients and prospects. The team is we
Slide 49: Retail update
Retail update 49 Affiliate reach continues to be enhanced by leading multi-affiliate sales and marketing platform For personal use only • Multi-affiliate network effect enables unique cross-selling opportunities and powerful organic Affiliate growth • Realisation of cost efficiencies in Affiliate ma
Slide 50: Research ratings and consultants' support drive future flows
Research ratings and consultants’ support are key factors that drive future flows 1 50 Lonsec Research Morningstar For personal use only • Antipodes Global Fund – Long - Recommended • Antipodes Global Fund – Long – Bronze • Firetrail Absolute Return Fund - Highly Recommended • Antipodes Global Share
Slide 51: Client engagement has never been stronger
Client engagement has never been stronger 51 YoY engagement growth across marketing platforms: For personal use only Email Clicks LinkedIn Followers Event Attendance Rate Website Visits 75% 25% 10% 10% • More clients consumed Pinnacle & Affiliate content year on year: • Mix of content delivery is br
Slide 52: Retail - listed solutions update
Retail - listed solutions update 52 • $3.8bn1 of exchange listed FUM in nine listed vehicles spanning most asset classes across > 85 000 underlying investors • Committed to listed fund market with expanded product offering and distribution resources For personal use only • ~60 Active ETFs in Austral
Slide 53: Managing Director's Address – Conclusion
For personal use only Managing Director’s Address – Conclusion 53 • Platform and distinctive business model remain intact • Ambitions, strategies and growth plans not diminished
Slide 54: Pinnacle differentiation
Pinnacle differentiation 54 Australia’s leading ‘multi-affiliate’ investment firm For personal use only 1. Distinguished from competitors 2. High quality, experienced, 3. All the advantages, benefits and by comprising the highest dedicated, passionate superior conditions of a quality investment mana
Slide 55: For personal use only
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Slide 56: Q&A
For personal use only Additional information
Slide 57: FY22 In Review
For personal use only FY22 In Review
Slide 58: FY22 financial results
FY22 financial results 58 FY22 ($M) FY21 ($M) % Ch an ge • NPAT attributable to shareholders of $76.4m (+14% on FY21) For personal use only PINNACLE Reven u e 1 46.0 32.5 42% • Performance fees earned by Pinnacle Affiliates, post-tax, Exp en ses 2,3 (43.5) (31.9) 36% contributed $16.6m of Pinnacle’s
Slide 59: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 59 Continuing improvement in average base rate fees and client diversity, ‘Horizon 2’ investment in growth initiatives moderates profits in the short term, but will drive strategic growth through the cycle Revenue (Pinnacle and Affiliates) 1 For persona
Slide 60: Balance sheet
For personal use only Balance sheet 60 • Cash and PI of $178.2m 30 Jun 2022 ($M) 30 Jun 2021 ($M) Cha ng e • Includes $134.2m invested in strategies managed by CURRENT ASSETS Pinnacle Affiliates Ca sh a nd ca sh eq uiva l ents 38.3 96.1 (60% ) • Excludes $25.1m of cash applied for Affiliate equity r
Slide 61: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 61 Track record of investing to deliver medium-term growth Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests. For personal use only Equity ownership enhances alignment with shareholders. Seed FUM and Middle office and
Slide 62: FY22 funds under management
For personal use only FY22 funds under management 62
Slide 63: Diversification → increased resilience
Diversification → increased resilience 63 A broadly diversified platform in place to move ahead with sustained growth For personal use only FY22 FUM by Asset Class (%) 30 Jun 22 FY22 FUM by Affiliate (%) 11 30 Jun 16 1.0 Resolution Capital 8 1.7 1.6 0.4 7 41 3.8 Hyperion 4 24 Plato 7.7 2 67 Metrics
Slide 64: Investment performance
Investment performance 64 Our industry leading portfolio of high performing Affiliates continues to outperform benchmarks and provides an engine for continued FUM growth and performance fee generation For personal use only Affiliate fund outperformance over benchmarks (alpha) – over 5-year period, p
Slide 65: Major industry awards
For personal use only Major industry awards 6565 2022 Financial 2022 Financial Standard 2021 SuperRatings and 2021 Zenith Fund Newswire/SQM Research Investment Leadership Lonsec Fund of the Year Awards: Fund Manager Awards: Awards 2022: Awards: • Spheria – Australian Equities – • Plato - Australian
Slide 66: FY22 Institutional and International Review
FY22 Institutional and International Review 66 • FY22 was characterized by improved institutional margins • Outflows were skewed towards lower margin domestic business and inflows into higher margin asset classes from local For personal use only and international investors, such that the contained a
Slide 67: FY22 Review - retail
FY22 Review - retail 67 Record 1H retail net inflows achieved on the back of a high-performance operating model. Much lower, albeit still positive, 2H net inflows recorded amid volatile investing conditions and weak investor For personal use only confidence • Strong retail net inflows of $3.6bn achi
Slide 68: Growth in retail FUM
Growth in retail FUM 68 Retail FUM evolution For personal use only 7.7x Total FUM 30 June 13: $10.9bn Total FUM 30 June 2022: $83.7bn Retail: $0.9bn Retail: $21.1bn 23.4x 8% Retail 25% Retail 92% institutional 75% Institutional • Pinnacle has invested significantly in retail distribution and has gen
Slide 69: Top contributions from multiple Affiliates and Strategies
Top 5 contributions from multiple Affiliates and Strategies 69 $5Bn For personal use only $4Bn $3Bn $2Bn $1Bn $0Bn FY2020 FY2021 FY2022 Source: Salesforce, Pinnacle Retail
Slide 70: CYTD - Volatile markets, weak confidence & narrower range of winners
CYTD - Volatile markets, weak confidence & narrower range of winners! 70 Total Funds Under Mangement - Retail Funds CYTD For personal use only $2,000Bn $1,800Bn $1,600Bn $1,400Bn $1,200Bn $1,000Bn $800Bn $600Bn $400Bn $200Bn Annualised Estimated Net Flows - Retail Funds $69.8Bn $43.3Bn $30.3Bn $13.0
Slide 71: Sales activity has remained high
For personal use only Sales activity has remained high – this should drive flows over time 71 Source: Salesforce, Pinnacle Retail
Slide 72: Large and diversified footprint across the intermediated channel
For personal use only Large and diversified footprint across the intermediated (wealth management) channel 72 82% of net flows sourced outside Top 20 clients 18% of net flows $562 m sourced from Top 20 Wealth Net flows from Mgt Clients Top 20 clients $3.1bn Net flows across retail funds in FY22 Sour
Slide 73: Retail platform continuing to enable high performance business development
73 Retail platform continuing to enable high performance business development management 21,300+ 1,050+ 150+ 1,000+ Researchers Brokers For personal use only Advisers Consultants Source: Pinnacle, Salesforce & Pardot
Slide 74: Affiliate commitment to ESG
Affiliate commitment to ESG 74 All Pinnacle Affiliates embed ESG into their investment decision making process: For personal use only Incorporate ESG into Affiliate Signatory to PRI Have an ESG policy Investment process Aikya Yes Yes Yes Antipodes Yes Yes Yes Coolabah Yes Yes Yes Firetrail Yes Yes Y
Slide 75: Summary
Summary 75 Pinnacle’s diverse Affiliate portfolio and extensive distribution channels provide stability whilst fostering growth opportunities For personal use only Fundamentals in place • Highly regarded Affiliates with strong local and international investment consultant and research house ratings
Slide 76: Affiliate Summaries
For personal use only Affiliate Summaries
Slide 77: Pinnacle Affiliates
Pinnacle Affiliates 77 Global Emerging Markets Equities For personal use only • High quality • Absolute return • Concentrated portfolio • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, UK Global and Emerging Markets Value Equities (Long Only and Long-Short)
Slide 78: Pinnacle Affiliates
Pinnacle Affiliates 78 Australian, Global, Small Cap & Long-Short Equities For personal use only • Deep fundamental research approach consistently applied for 15+ years • Experts in high conviction investing • No enduring style bias. Building concentrated portfolios of our best growth and value idea
Slide 79: Pinnacle Affiliates
Pinnacle Affiliates 79 Global and Canadian Small Cap Equities For personal use only • Active and Engaged owners of world class smaller companies • Quality/Growth at a Reasonable Price (Q-GARP) • Seek to identify and evaluate businesses that can compound intrinsic value at high rates over the long te
Slide 80: Pinnacle Affiliates
Pinnacle Affiliates 80 Private Infrastructure, Impact & Real Assets • Mid-Market focus results in better acquisition multiples and portfolio yield • Actively involved in operational management and governance of assets; unlocks embedded value For personal use only • Owns airports, seaports, portside
Slide 81: Pinnacle Affiliates
Pinnacle Affiliates 81 Australian and New Zealand Private Agriculture, Food & Water For personal use only • Real asset backed investments across the food and agriculture sector • Participation throughout the value chain investing in assets that are critical to the production of essential goods; wate
Slide 82: Disclaimer
Disclaimer 82 Lonsec Research For personal use only The Lonsec Ratings presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to "General Advice" (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of
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