Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Shareholder Meeting (February 2016)
66 slides from Pinnacle Investment Management's shareholder meeting presentation, Feb 11, 2016
Slide 1: Annual General Meeting
Slide 1 – Cover Page Wilson HTM Investment Group Ltd (ASX: WIG) Annual General Meeting Wednesday 26th November 2014 Scheduled start time: 3 pm Slide 2 - Agenda Good afternoon ladies and gentlemen, fellow shareholders, staff and visitors. My name is Steven Skala and I am the Chairman of Wilson HTM In
Slide 2: Apologies and proxies
I am also advised that there are no apologies recorded prior to the commencement of this meeting. Are there any apologies that shareholders wish to have recorded in the Minutes of the Meeting? [Yes/No], thank you. In addition to those present here today, valid proxies have been received from 161 Sha
Slide 3: Introduction of Board members
Before running through the Agenda of today’s meeting, I would like to take the opportunity of introducing my fellow Board members: Mr Alan Watson, lead independent director Mr Chum Darvall Mr Steven Wilson Ms Erica Lane (by telephone in Melbourne) and Mr Sandy Grant our Managing Director. In attenda
Slide 4: Meeting structure and speakers
This AGM is being held in Sydney as part of a broader commitment to hold AGMs in Brisbane every second year and in Sydney or Melbourne in the intervening year, so that over time this meeting is more conveniently accessible to a larger number of shareholders to attend in person. Today, I will cover t
Slide 5: Proxy votes on Remuneration Report
Approximately 77% of the eligible proxies received to date have voted in favour of the resolution supporting the Remuneration Report. Unless a number of those present in the room vote against the Resolution, we will have a majority of greater than 75% in favour of its adoption. The Board acknowledge
Slide 6: Chairman's Address
Slide 3 - Chairman’s Address Moving now to my Chairman’s address. I would like to report on the following • WIG Financials • WIG’s Transformational year • Pinnacle growth continues • Wilson HTM Securities • Board update • Shareholder returns Slide 4 – WIG Financials The 2014 financial year was a yea
Slide 7: WIG Financials
comment more on this and the way forward later in the presentation. In the Wilson HTM business segment there was a substantial turnaround to profits. In particular the Securities business recovered from a $7 million loss before tax in the 2013 financial year to a profit before tax of $1.2 million in
Slide 8: Return to dividends and WIG's transformational year
The improved balance sheet and Group profits have allowed a return to dividends with a fully franked dividend of 2.75 cents per share was declared in respect of the 2014 financial year and was paid to shareholders on 18 September 2014. It is the Board’s intention that through a stronger balance shee
Slide 9: Investment thesis for shareholders
This is worth repeating: our key investment thesis for shareholders is that operators of financial services businesses are best motivated to achieve better results for their clients if they have owner-like responsibilities and derive owner-like returns from the business. This translates into a strat
Slide 10: Wilson HTM Securities, Priority Funds and Next Financial
In Wilson HTM Securities we are advancing well towards the creation of an independently managed and controlled business. The Board considers Securities has a strong future as a leading emerging company house with established wealth management expertise and plans to grow. Priority Funds have the char
Slide 11: WIG businesses
Upon the creation of an independent Securities business, WIG will be a backer of leading financial and investment service businesses through Pinnacle or directly, and will allocate its capital in accordance with the core strategy. We propose that WIG will become a reliable source of dividends to sha
Slide 12: Key criteria in backing businesses
Slide 7 – Key criteria in backing businesses In deliberating on whether to back a business, among other things, the Board considers the following: • The commitment and calibre of its key staff • Whether the business is or has the realistic capacity, plan and commitment to become a market leader with
Slide 13: Pinnacle Continues to Grow
Slide 8 – Pinnacle Continues to Grow I would like to take this opportunity to highlight the strong growth and performance of Pinnacle. It began in 1996 with the creation of Hyperion Asset Management. The business has grown from funds under management of $1 billion in 2006, with the establishment of
Slide 14: New boutique and industry growth outlook
As part of Pinnacle’s strategy of growing funds under management Pinnacle will be adding one new boutique in international equities in December 2014, taking its group of boutiques to seven. The Board remains confident in Pinnacle’s capacity to continue its success. Industry projections for growth in
Slide 15: Wilson HTM Securities
Slide 9 – Wilson HTM Securities In relation to Wilson HTM Securities, I would like particularly to congratulate our management team for an $8.2 million turnaround to a $1.2 million profit before tax in the 2014 financial year. The turnaround in profits was through increased revenues and reduction in
Slide 16: Board post AGM
Slide 10 – Board post AGM I have spoken about WIGs transformation to a house of financial and investment services businesses. As WIG changes, it is important that the nature and skills of its Board match that transformation and development. With this in mind, Alan Watson has been appointed lead inde
Slide 17: Chairman to stand aside
Around this time, I propose to stand aside as Chairman of the Company. We will, of course undertake a sensible process in the appointment of a new Chairman and shareholders will be advised in a timely manner in accordance with the ASX Listing rules. 17/36
Slide 18: Outlook for the financial year
Moving to the Outlook for the financial year At this stage it is too early to predict the outcome for the year ended 30 June 2015. Funds under management in Pinnacle continue to grow across the Pinnacle boutiques providing a growing annuity type income stream. The proposed Securities restructure wil
Slide 19: Shareholder returns
Slide 11 – Shareholder returns As a Board our task is to deliver for shareholders. The best measure of this is profits in the businesses, growth strategies and ultimately total shareholder returns. We therefore show the results if you had invested in WIG over the period July 2013 to October 2014 ver
Slide 20: Managing Director's Address
Slide 12 – Managing Director’s Address Thank you Chairman. Good afternoon shareholders, staff and visitors. In my address today, I will speak to you on four main areas: • Business Segmentation • Financial Performance of the Group for financial year 2014 • WIG 4 months to October 2014 • Alpha Generat
Slide 21: Wilson HTM Investment Group Segments
Within the Wilson HTM segment, is the Securities business, comprising its Capital Markets and Wealth Management businesses, Priority Funds, the Group’s Principal Investments and Next Financial Limited. Next Financial now has only $3 million of instalment product maturing by June 2015. 21/36
Slide 22: Group 2014 Financials versus 2013 Financials
Slide 14 – Group 2014 Financials versus 2013 Financials Turning to Financial Performance The Group reported a consolidated net profit after tax attributable to shareholders of $4.8 million in the 2014 financial year. The result was a significant turnaround from the $1.6 million loss attributable to
Slide 23: Group 2014 Financials versus 2013 Financials
before tax. To highlight, this was a $6.4 million turnaround from the $4.4 million loss in the 2013 financial year. The turnaround was achieved through increased revenues from stronger corporate deal flow, market share gain in broking and a reduction in the fixed cost base across the Securities busi
Slide 24: Group 2014 Financials
Slide 15 – Group 2014 Financials If you refer to the slide on the screen you will see that the first half 2014 profit was notably supported by $1.3 million in Principal Investment gains. The Securities business returned to profitability with consistent profits across both halves driven by a 13% incr
Slide 25: Fixed Costs
Slide 16 – Fixed Costs As we reported last year cost reduction has been a major focus of the business over the past few years. In the 2014 financial year we further reduced fixed costs by 18.9% following a 11.4% reduction in the 2013 financial year. The reduction in fixed costs was through the reloc
Slide 26: Balance Sheet
Slide 17 – Balance Sheet Moving to our Balance Sheet. Our Group’s net tangible assets increased by 13% to $54 million from $48 million. Liquidity grew through the year with cash and principal investments increasing by almost $17 million to $26 million at June 2014. The increase in cash was the resul
Slide 27: Boutique dividends and Next Financial balances
comprised of $8.4 million in equity accounted profits offset by $7.9 million in dividends received from the Boutiques. The commentary shown on the slide highlights the Next Financial client product related assets and liabilities. As we have stated before, the business is in run down as can be seen i
Slide 28: WIG 4 months to Oct 14
Slide 18 – WIG 4 months to Oct 14 Financially the year has started soundly, especially given the recent volatility of markets that affect both our Securities and Funds Management businesses. I can say that the Group is profitable year to date with an unaudited $1.2 million profit before tax. The yea
Slide 29: Alpha Generation
In addition profitability will be subject to the costs and the accounting effects associated with the creation of an independent Securities business. Slide 19 - Alpha Generation – Research, Corporate July 2002- October 2014 An emphasis will be placed on focussing on our strengths and what we do best
Slide 30: Finally
Finally We maintain strong relations with a leading global investment bank in Deutsche Bank, who provide quality research and corporate deal flow for our clients, and we thank them for their support. Our people remain dedicated to the direction and future of the business. I would like to thank them
Slide 31: Pinnacle Managing Director's Address
Slide 21 Pinnacle Managing Director’s Address Thank you Sandy. Pinnacle boutiques’ total Funds under Management at the end of the 2014 financial year (at $12.3 Billion) were about 13% higher than they were at the beginning of the year ($10.9 Billion at 30 June 2013). By 31st October 2014, these had
Slide 32: Pinnacle statutory financial results
Slide 24 Pinnacle statutory financial results – FY14 and FY13 Pinnacle’s share of boutiques’ net after tax profit increased by 35% from $6.2 million in the year ended 30 June 2013 to $8.4 million in the year ended 30 June 2014. Pinnacle’s overall Group net profit after tax increased by 51% from $4.3
Slide 33: Pinnacle Boutiques
Slide 25 Pinnacle Boutiques Wilson HTM Investment Group has a 79.3% interest in Pinnacle Investment Management, which in turn has an interest in six boutiques – • Hyperion Asset Management (49.9% owned by Pinnacle) – a specialist manager of Australian equities following a growth style; • Palisade In
Slide 34: Sigma and seventh boutique
• Sigma Funds Management (25.0% owned by Pinnacle) – a value style Australian equities manager. We at Pinnacle are pleased that there will be a seventh boutique – initially to be called Pinnacle International Equities Limited – when on 1st December 2014 we acquire 100% of the Perennial International
Slide 35: Investment Performance
diversification of our business offerings, reduces the risk of the performance of the business. Slide 26 Investment Performance Investment performance is at the heart of the Pinnacle boutiques’ funds management offerings and strong performance against market benchmarks and strong ratings by asset co
Slide 36: Pinnacle Strategy FY15
Slide 29 Investment Performance of Perennial International Equities Slide 30 - Pinnacle Strategy FY15 The 2014 financial year was another year in which we did not add new boutiques, although – as I indicated earlier, we are now about to add our seventh boutique, in an asset class which is new to Pin
Slide 37: Wilson HTM Investment Group Ltd 2014 Annual General Meeting
Wilson HTM Investment Group Ltd 2014 Annual General Meeting 3:00pm 26 November 2014 Sydney
Slide 38: Agenda
Agenda • Chairman’s Address – Steven Skala AO • Managing Director Address – Sandy Grant • Pinnacle Managing Director Address – Ian Macoun • Q&A • Ordinary Business 2
Slide 39: Chairman's Address
Chairman’s Address • WIG Financials • WIG’s Transformational Year • Pinnacle Growth Continues • Wilson HTM Securities • Board Update • Shareholder Returns 3
Slide 40: WIG Financials
WIG Financials FY2014 FY2013 Profit/(loss) after tax attributable to shareholders $4.8m ($1.6m) Fully Franked Dividend 2.75 cents - Net Tangible Assets $54.4m $48.0m Share price (WIG) $0.61 $0.19 Cash and Principal Investments $26.3m $16.7m Pinnacle Debt to WIG* $14.0m $16.6m Corporate debt $nil $ni
Slide 41: WIG's Transformational Year
WIG’s Transformational Year • Transformation to a growing house of financial and investment service businesses • Strategic supporter of excellent people in the investment industry • Fundamental belief in the power of ownership to drive alignment, accountability and commitment • Overarching ambition
Slide 42: WIG's businesses
WIG’s businesses Following the proposed creation of a independent Securities business and the run off of Next Financial there will be 9 businesses across Pinnacle and WIG Note: FUM balances are as at 31 October 2014 *Pinnacle shareholding on completion at 1 December 2014 WIG Pinnacle 79.3% Securitie
Slide 43: WIG's key criteria in backing businesses
WIG’s key criteria in backing businesses • Commitment and calibre of key staff • Market leadership within each speciality • Overall competitive landscape within each speciality area • Prospective return on equity • Demonstrated “value add” to clients is meaningful and competitive • Capital and oppor
Slide 44: Pinnacle Continues to Grow
Pinnacle Continues to Grow • Significantly improved profits in FY2014 up 97% • Addition of a new boutique in December 2014 specialising in international equities • FUM up 11% to $13.7 billion from $12.3 billion at 30 June 2014 • Projections for superannuation and funds management remain strong 8
Slide 45: Wilson HTM Securities
Wilson HTM Securities • $8.2 million turnaround to profit before tax of $1.2 million • Strong ECM activity and higher broking revenues • Business stabilised and a base from which to grow • Good progress for the creation of a independently managed and controlled Securities business 9
Slide 46: Board post AGM
Board post AGM Remuneration Proposed Pinnacle & WHTM Investment Priority Funds Audit & Risk Nominations Securities new Next Financial Management Investment Board Committee Committee entity Limited Limited Committee Steven Skala AO Chum Darvall AM Alan Watson Steven Wilson AM Sandy Grant - Managing D
Slide 47: Shareholder returns
Shareholder returns Value of $1 - 30/06/2013 to 31/10/2014 — WIG ——S&P/ASX300 Diversified Financials Accum All Ordinaries Accumulation ee Ee 1 Le 0.5 0 . : : ; ' : ; ; ; . ; : ; ~) ‘~) ~) ~) ~) ir] ~) & & & & * & & & & & SPSS Pm OD MC aIIIN (San CaaIIIEN (nnIIIN (aa (MIEN CAIN ( SOIEEN COMIN ( IEIN
Slide 48: Managing Director's Address
Managing Director’s Address • Business Segmentation • Financial Performance FY2014 – FY2014 Profit and Loss – Fixed Costs – FY2014 Balance Sheet • WIG - 4 months to October 2014 • Alpha Generation 12
Slide 49: WIG Business Segments
WIG Business Segments LI Wilson HTM WHIM Securities HYPERICON welll aly il! PALiSADE SOLARIS Bee kencemany
Slide 50: Group FY2014 Financials versus FY2013
Group FY2014 Financials versus FY2013 • Group NPAT $4.8 million attributable to WIG shareholders from NLAT of $1.6 million • Basic earnings per share 4.7 cents from a loss per share of 1.6 cents • Fully franked dividend per share of 2.75 cents from nil cents • NTA of $54.4 million or $0.53 per share
Slide 51: Group FY2014 Financials
Group FY2014 Financials Composition of Group Results ($million) 1H2014 2H2014 FY2014 Pinnacle ^ 2.6 3.3 5.9 Securities 0.6 0.6 1.2 Principal Investments 1.3 (0.1) 1.2 Priority Funds (0.3) (0.2) (0.5) Next Financial (0.2) 0.3 0.1 Wilson HTM (pre consolidation of Wilson HTM Priority Core Fund) 1.4 0.6
Slide 52: WIG Financials – Fixed cost control
WIG Financials – Fixed cost control 16
Slide 53: Group Balance Sheet
Group Balance Sheet As at: 30 June 2014 30 June 2013 $million $million Assets Cash and cash equivalents 20.6 7.9 Value of Principal Investments. Financial Assets at fair value through profit or loss 5.7 9.2 Financial Assets at fair value through profit or loss* - 11.9 Trade and other receivables 5.6
Slide 54: WIG – Unaudited 4 months to Oct14
WIG – Unaudited 4 months to Oct14 4 months ended 4 months ended Composition of Group results ($million) 31Oct14 31Oct13 Pinnacle* 2.1 1.4 Securities 0.4 (0.2) Priority Funds (0.1) (0.1) Principal Investments (0.2) 1.3 Next Financial (0.3) (0.2) Wilson HTM (0.2) 0.7 Group Overhead (unallocated) (0.7)
Slide 55: Alpha Generation
Alpha Generation Research & Corporate Index vs Benchmarks from 1 July 2002 to 31 October 2014 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Research Index Corporate Index Small Ordinaries Accumulation Index All Ordinaries Accumulation Index 19
Slide 56: Alpha Generation
Alpha Generation Research Index & Corporate Index vs Benchmarks from 1 July 2013 to 31 October 2014 1.50 1.40 1.30 > 1.20 1.10 1.00 & me & & & Ca & & Sy Sy Sy Ry oy oY SY SY SSW —=g” ay aS wr Sash rr gh oS Shh —— Corporate Index Research Index == S&P/ASX All Ordinaries Accumulation Index S&P/ASX Sma
Slide 57: Pinnacle Managing Director's Address
Pinnacle Managing Director’s Address • Aggregate FUM of boutiques now $13.7 billion • Diversification of managers and strategies provides growth opportunities and seeks to mitigate risk • Performance of boutiques remains strong, underpinning growth expectations • Above market benchmarks • Strong con
Slide 58: Pinnacle – Financial Drivers
Pinnacle – Financial Drivers Funds Under Management ($billion) 16.0 FUM ($billions) 14.0 12.0 10.0 8.0 13.7 6.0 12.3 10.3 10.9 10.0 4.0 7.9 2.0 3.5 4.4 1.7 0.0 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Oct 14 22 Note: Funds Under Management are shown as the aggregation of 100% of Pinna
Slide 59: Pinnacle – Gross Boutique Revenues
Pinnacle – Gross Boutique Revenues 70.0 60.0 50.0 Revenue ($millions) 40.0 30.0 59.8 55.7 47.3 20.0 37.9 38.6 28.0 10.0 14.4 16.0 8.1 0.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Oct-14 23 Note: Revenue is shown as the aggregation of 100% of Pinnacle boutiques. Revenue excludes revenue derived by Pin
Slide 60: Pinnacle – Statutory Financials
Pinnacle – Statutory Financials FY2014 FY2013 Pinnacle Boutiques (100% aggregate basis) FUM ($billion) 12.3 10.9 ($million) Revenue 55.7 47.3 Net profit before tax 26.2 18.3 Tax expense (8.2) (5.9) Net profit after tax 18.0 12.4 Pinnacle's share of Pinnacle Boutiques NPAT statutory result 8.4 6.2 Pi
Slide 61: Pinnacle Boutiques
Pinnacle Boutiques • Hyperion Asset Management (49.9% owned by Pinnacle) – a specialist manager of Australian equities following a growth style; • Palisade Investment Partners (35.7% owned by Pinnacle) – a specialist manager of unlisted infrastructure assets with both pooled funds and separately man
Slide 62: Investment Performance - Boutiques
Investment Performance - Boutiques Performance as at 31 October 2014 Since 3 years inception 1 year (p.a.) (p.a.) Inception date Hyperion Australian Growth Companies Fund 9.1% 19.9% 13.1% 1 Oct 2002 Returns in excess of benchmark 3.0% 6.6% 3.3% Hyperion Small Growth Companies Fund 8.6% 26.2% 18.7% 1
Slide 63: Investment Performance - Boutiques
Investment Performance - Boutiques Performance as at 31 October 2014 Since 3 years inception 1 year (p.a.) (p.a.) Inception date Resolution Capital Core Plus Property Securities Fund 17.3% 21.0% 6.7% 30 Sep 2008 Returns in excess of benchmark 0.8% 1.0% 3.1% Resolution Capital Global Property Securit
Slide 64: Investment Performance - Boutiques
Investment Performance - Boutiques 28
Slide 65: Pinnacle – Perennial International Equities
Pinnacle – Perennial International Equities Since 3 years inception 1 year (p.a.) (p.a.) Inception date International Equities - International 22.9% 23.9% 2.7% 31 Aug 2007 Returns in excess of benchmark 5.4% 1.8% 0.4% International Equities - Global High Alpha 21.2% 22.1% 4.8% 28 Feb 2006 Returns in
Slide 66: Pinnacle - Strategy for FY15
Pinnacle - Strategy for FY15 • Continue to provide high quality distribution, Responsible Entity and infrastructure services • Maintain its affiliated fund managers’ high standards • Remain focused on investing to enable continued strong performance and FUM growth • Grow proportion of retail FUM • D
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