Perpetual Limited · ASX:PPT
Perpetual — H1 FY2014 Earnings Presentation
35 slides from Perpetual's earnings presentation, Feb 27, 2014
Slide 1: ASX cover letter: updated Slide 17
Perpetual Limited ABN 86 000 431 827 Level 12 Angel Place For personal use only 123 Pitt Street Sydney GPO Box 4172 Sydney NSW 2001 27 February 2014 Australia DX 365 Sydney Telephone 02 9229 9000 The Companies Office Facsimile 02 8256 1461 Australian Securities Exchange Sydney Exchange Centre 20 Bri
Slide 2: 1H14 Results
1H14 RESULTS For personal use only 31 DECEMBER 2013 Geoff Lloyd CEO & Managing Director Gillian Larkins Chief Financial Officer 27 February 2014 ABN 86 000 431 827
Slide 3: Disclaimer
DISCLAIMER Important information For personal use only The information in this presentation is general background information about the Perpetual Group and its activities current as at 27 February 2014. It is in summary form and is not necessarily complete. It should be read together with the compan
Slide 4: 1H14 Overview
1H14 OVERVIEW For personal use only Strong financial result Superior investment performance in Perpetual Investments and Perpetual Private Reinvigorated distribution model delivering net inflows Transformation 2015 strategy has reduced the cost base with new business model focused on growth Transfor
Slide 5: Strong Result
STRONG RESULT For personal use only • 1H14 result strong improvement on same period last year FINANCIAL RESULTS • 1H14 UPAT up 37% to $48.1m • 1H14 NPAT up 22% to $33.3m DIVIDEND • 1H14 interim dividend of 80 cps fully franked v 50 cps in 1H13 & 80 cps in 2H13 Simplify • $19.6m in 1H14 Transformatio
Slide 6: Transformation 2015
TRANSFORMATION 2015 For personal use only • Portfolio momentum • Market share gain • Clarity and focus • Innovation • Skilled team • Acquisitions and partnering • Comprehensive approach • Activity drives results • Strategic alignment • Business accountability • Leaner Executive Leadership Team • Ali
Slide 7: Transformation 2015 on Track to Deliver
TRANSFORMATION 2015 ON TRACK TO DELIVER For personal use only OUTCOMES 1H13 2H13 FY14 Reduce central cost Improve adviser productivity in Reduce property footprint (stage (HR, Finance, Risk, Marketing) Perpetual Private 2) Simplify structure, fewer Reduce property footprint Simplify inve
Slide 8: Transformation 2015 Growth Delivered So Far
TRANSFORMATION 2015 GROWTH DELIVERED SO FAR For personal use only Perpetual Private Corporate Trust FUAdvice ($b) FUAdministration ($b) $15 $650 +49% * $550 +51%^ +63% * $450 +59%^ $10 $350 $250 $5 $150 2H12 1H13 2H13 1H14 2H12 1H13 2H13 1H14 PPT TRUST AUS TRUST NZ PPT TRUST AUS TRUST NZ Perpetual I
Slide 9: 1H14 UPAT Up 37% on 1H13
1H14 UPAT UP 37% ON 1H13 For personal use only Spot close (@ end of each day) All Ords 1st Half Average All Ords KEY THEMES 2nd Half Average All Ords Full Year Average All Ords 5,800 • T15 increases 5,600 operating leverage 5,400 through 5,200 1H14 • New business +5% model All Ords 5,000 2H13 1H14 v
Slide 10: Investors Return to the Market
INVESTORS RETURN TO THE MARKET For personal use only NET FLOWS (EX. CASH), VIX VOLATILITY AND INVESTOR SENTIMENT KEY THEMES 25,000 50 • Key drivers remain volatility, confidence and 20,000 40 net flows 15,000 30 • Industry flows continue to improve 10,000 20 • Volatility declines $MILLIONS 5,000 10
Slide 11: Securitisation - Issuance Remains Strong
SECURITISATION- ISSUANCE REMAINS STRONG For personal use only SECURITISATION ISSUANCE KEY THEMES 70 250 • Corporate Trust 60 maintains market leading position REVALUATION MARGIN (bps) 200 50 • CY13 public issuance ISSUANCE ($)B 150 mix continues to 40 improve 30 100 • CY13 RMBS issuance +90% on CY12
Slide 12: Perpetual Investments: Unrivalled Investment Performance Continues
PERPETUAL INVESTMENTS: UNRIVALLED INVESTMENT PERFORMANCE CONTINUES For personal use only QUARTILE RANKINGS ^ FOR % OF FUM ^^ RANKED PERIODS ENDING DECEMBER 2013 1ST AND 2ND QUARTILE 1-10 YEARS 1Yr 3Yrs 5Yrs 7Yrs 10Yrs 2% Perpetual W Australian 1 1 1 1 1 1 yr 98% Perpetual W Concentrated Equity 1 1 1
Slide 13: Perpetual Investments: Net Flows Gaining Momentum
PERPETUAL INVESTMENTS: NET FLOWS GAINING MOMENTUM For personal use only Intermediary and institutional channels return to net inflow in 1H14 1H14 net inflows $0.6b v $1.2b net outflows in 1H13 Improving distribution – since announcing Transformation 2015: • 13 additions onto discretionary plat
Slide 14: Two Successive Quarters of Net FUM Inflow
1H14: TWO SUCCESSIVE QUARTERS OF NET FUM INFLOW For personal use only APPLICATIONS, REDEMPTIONS & RETURN OF CAPITAL KEY THEMES 2.0 • Significant improvement Inflows 1.5 in net flows 1.3 1.1 1.1 1.0 0.8 0.8 0.8 0.8 0.8 0.9 • Q2 FY14 recorded 0.6 0.6 largest gross inflow in 0.8 0.6 the last 3 years 0.
Slide 15: Perpetual Private: Journey Towards Sustainable Growth
PERPETUAL PRIVATE: JOURNEY TOWARDS SUSTAINABLE GROWTH For personal use only VISION: AUSTRALIA’S LEADING INDEPENDENT HNW BUSINESS STRATEGIC RIGHT ACHIEVE HERITAGE TECHNOLOGY DISTRIBUTION SEGMENT SERVICE SCALE BUSINESS UPLIFT EXCELLENCE FOCUS MODEL BENEFITS • Strong brand • One • Introduced • Lean • A
Slide 16: Perpetual Private: Improved Sales and Service Model Delivering Results
PERPETUAL PRIVATE: IMPROVED SALES AND SERVICE MODEL DELIVERING RESULTS For personal use only Acquisition of The Trust Company adds $4.9b of FUA: • $2.8b in Australia • $2.1b in New Zealand 1H14 net flows up slightly on 2H13 Net new clients increased Increase in number of both alliance partne
Slide 17: Corporate Trust: Refocused on Growing Core Business
CORPORATE TRUST: REFOCUSED ON GROWING CORE BUSINESS For personal use only Acquisition of The Trust Company adds a highly complementary offering in Fund Services and an established presence in Singapore Evolving mix between securitisation and fund services revenues $34.8b growth in securitisati
Slide 18: Accelerating Growth Through Acquisitions
TRANSFORMATION 2015 ACCELERATING GROWTH THROUGH ACQUISITIONS For personal use only • Completed acquisition of ASX listed The Trust Company on 18 December 2013 • Shared fiduciary and service heritage • The Trust Company is highly complementary to all three Perpetual businesses • Accelerates growth th
Slide 19: The Trust Company Integration Scorecard
THE TRUST COMPANY INTEGRATION SCORECARD For personal use only OUTCOMES FY14 PROTECT 1H15 1H15 ALIGN 2H15 2H15 ONE COMPANY Single Executive Team Reduce central cost Reduce property footprint New organisation structure in place (HR, Finance, Marketing) Consolidate and reduce corporate All
Slide 20: Financials
FINANCIALS For personal use only GILLIAN LARKINS CHIEF FINANCIAL OFFICER
Slide 21: Financial Performance: Improvement in Key Business Metrics
FINANCIAL PERFORMANCE IMPROVEMENT IN KEY BUSINESS METRICS For personal use only Perpetual Perpetual Perpetual Group+ Investments^ Private^ Corporate Trust^ Closing FUM 33% or FUA ($b) 29.1 9.7 294.2 27% 8.8 U 31% 9.0 259.4 P 24.3 25.3 248.5 A 86.1 99.0 115.7 T 1H13 2H13 1H14 Diluted EPS on UPAT (cps
Slide 22: Strength in UPAT Allows Investment in Growth Initiative
FINANCIAL PERFORMANCE STRENGTH IN UPAT ALLOWS INVESTMENT IN GROWTH INITIATIVE For personal use only 1H13 2H13 1H142 1H14 v 1H14 v KEY THEMES: For the period ended $m $m $m 1H13 2H13 • Operating revenue ex TrustCo +10% on Operating revenue 179.4 190.3 204.9 14% 8% 1H13, +4% on 2H13 Total expenses (13
Slide 23: Group Expense Profile
GROUP EXPENSE PROFILE For personal use only Transformation 2015 identified $50m reduction from FY12 normalised cost base CHANGE IN GROUP EXPENSES 1H12-1H14 GROUP EXPENSES PROFILE 1H12-1H14 Normalised Expenses $m DECREASE 1H12 INCREASE 140 $143m $143.0m* Norm- alised 138 8.5% Fixed -18.8 Remuneration
Slide 24: Expenses for the Half Down 1% Excluding The Trust Company
FINANCIAL PERFORMANCE EXPENSES FOR THE HALF DOWN 1% EXCLUDING THE TRUST COMPANY For personal use only GROUP EXPENSES^ FOR CONTINUING OPERATIONS BEFORE TAX KEY THEMES: $m • T15 1H14 P&L 140 BAU +3.8% Transformation savings of $19.6m v - 4.4% 138 $13.6m in 2H13 136 2.9 3.8 • 1H14 BAU ex TrustCo 134 0.
Slide 25: Transformation 2015 Progressing to Plan
FINANCIAL PERFORMANCE TRANSFORMATION 2015 PROGRESSING TO PLAN For personal use only PRE-TAX P&L IMPACT KEY THEMES: P&L savings before tax Investment spend before tax 30 • Annualised pre-tax cost savings program Savings/ (investment) before tax 20 of $50m by end of 10 FY14 remains on track 0 • Foreca
Slide 26: Significant Items Reflect The Trust Company Acquisition and Integration Costs
FINANCIAL PERFORMANCE SIGNIFICANT ITEMS REFLECT THE TRUST COMPANY ACQUISITION AND INTEGRATION COSTS For personal use only 1H13 2H13 1H14 1H14 v 1H14 KEY THEMES: $m $m $m 1H13 v 2H13 UPBT 49.0 58.4 67.6 38% 16% • T15 restructuring costs Tax expense (13.9) (17.6) (19.5) (40%) (11%) of $6.9m after tax
Slide 27: Perpetual Investments: Results Highlight Operating Leverage
PERPETUAL INVESTMENTS^ RESULTS HIGHLIGHT OPERATING LEVERAGE TO EQUITY MARKETS For personal use only 1H13 2H13 1H14 1H14 v 1H14 v KEY THEMES: $m $m $m 1H13 2H13 • 1H14 revenues up in Revenue 93.6 102.3 109.5 17% 7% line with growth in average FUM Operating expenses (48.4) (49.3) (48.2) - 2% • Strong
Slide 28: Perpetual Private: Market Linked Revenues Benefit
PERPETUAL PRIVATE^ MARKET LINKED REVENUES BENEFIT FROM IMPROVED EQUITY MARKETS For personal use only 1H13 2H13 1H14 1H14 v 1H14 v KEY THEMES: $m $m $m 1H13 2H13 • Revenue leverage to Market related revenue 34.5 36.7 39.4 14% 7% equity markets Non-market related revenue 22.0 22.5 20.7 (6%) (8%) • Non
Slide 29: Corporate Trust: Focus on Core Fiduciary
CORPORATE TRUST^ FOCUS ON CORE FIDUCIARY For personal use only 1H13 2H13 1H14 1H14 v 1H14 v KEY THEMES: For the six month period $m $m $m 1H13 2H13 Trust revenue 19.7 20.0 20.5 4% 3% • Renewed focus on Fund services revenue 4.9 4.6 4.4 (10%) (4%) core fiduciary activities delivers improved Total fid
Slide 30: Financial Performance: The Trust Company
FINANCIAL PERFORMANCE THE TRUST COMPANY For personal use only 1H13 2H13 1H14 KEY THEMES: $m $m $m • TrustCo acquired Revenue n/a n/a 7.5 December 2013 Total expenses n/a n/a (6.4) • 1H14 results include Profit before tax (PBT) n/a n/a 1.1 1 month profit contribution from As at end of 1H14 FUM FUAdvi
Slide 31: Group Balance Sheet Remains Strong
FINANCIAL PERFORMANCE GROUP BALANCE SHEET REMAINS STRONG For personal use only 1H13 2H13 1H14 KEY THEMES: At the end of period Cash & Liquid investments ($m) 218.8 252.5 248.5 • Liquidity remains Corporate debt ($m) (45.0) (45.0) (97.0) strong Net cash ($m) 173.8 207.5 151.5 • TrustCo acquisition fu
Slide 32: 1H14 Interim Dividend of 80 Cents Per Share Fully Franked
FINANCIAL PERFORMANCE 1H14 INTERIM DIVIDEND OF 80 CENTS PER SHARE FULLY FRANKED For personal use only 1H13 2H13 1H14 KEY THEMES: Fully franked dividends (cps) 50.0 80.0 80.0 • Excluding impact of TrustCo dividend payout ratio is 87% Dividend payout ratio (%) 77 100 112 • DRP will be operational for
Slide 33: 1H14 Overview
1H14 OVERVIEW For personal use only Strong financial result Superior investment performance in Perpetual Investments and Perpetual Private Reinvigorated distribution model delivering net inflows Transformation 2015 strategy has reduced the cost base with new business model focused on growth Transfor
Slide 34: Appendix
For personal use only APPENDIX
Slide 35: Our Vision
OUR VISION For personal use only AUSTRALIA’S LARGEST INDEPENDENT WEALTH MANAGER OF CHOICE ONE PERPETUAL PERSONAL ADVISORY TO SPECIALISED ASSET CORPORATE TARGETED HIGH NET MANAGEMENT FIDUCIARY SERVICES WORTH SEGMENTS FOUNDATIONS • Heritage of 128 years • Multi-generational clients • Perpetual brand •