Pacific Current Group Ltd · ASX:PAC
Pacific Current — Treasury Group — H1 FY2009 Earnings Presentation
35 slides from Pacific Current's earnings presentation, Feb 25, 2009
Slide 1: Financial Results and Business Update
Treasury Group Limited Financial Results and Business Update Half Year ended 31 December 2008 1
Slide 2: December 2008 Half Year Results Overview
Wednesday, 25 February 2009 TREASURY GROUP LIMITED DECEMBER 2008 HALF YEAR RESULTS Overview Treasury Group (ASX:TRG) today announced a consolidated net profit after tax (and after market to market losses) of $3.195 million for the half year ended 31 December, 2008. This was down 70% on the previous
Slide 3: Summary of Profit and Loss
A summary of the Profit and Loss is as follows (see accounting policy change note below): 6 months to 31 December $M 2008 2007 % Change Total revenue 2.95 3.07 (3.91) Net profit after tax 3.20 10.68 (70.04) NORMALISED NET PROFIT 5.48 10.07 (45.58) Basic earnings per share 13.84 cents 46.96 cents (70
Slide 4: Comments on Current Market Conditions
31 December 31 December 2008 2007 $ $ Revenues 23,902,402 32,690,891 Other income (4,746,567) 1,756,422 Expenses (13,588,312) (12,671,052) Share in net profits of equity accounted investments 2,229,412 3,074,800 PROFIT FROM CONTINUING OPERATIONS BEFORE 7,796,935 24,851,061 INCOME TAX Income tax expe
Slide 5: Revenue and Normalised Earnings
6 months to 31 December $M 2008 2007 % Change Revenue 2.95 3.07 (3.91) Other Income (1.23) 1.14 (159.33) Employee Expenses (2.89) (2.33) (24.03) Other Expenses (2.00) (1.97) (1.52) Equity share of associates profit 5.43 10.99 (50.59) Profit before tax 2.26 10.90 (79.27) Tax expense 0.94 (0.22) 527.2
Slide 6: Drivers of Change in Income and Expenses
A fall in other income arising from marked to market losses on investments held in funds seeded by TIS and TRG; Increased salaries and employee benefits, payroll tax impacted mainly by the appointment of a new Managing Director, relocation of the finance team from Melbourne to Sydney, and increa
Slide 7: Investors Mutual Limited (IML)
Investors Mutual Limited (IML) - (50.10% owned at 31 December 2008) Whilst IML suffered net outflows for the six months ended 31 December, IML has stayed true to its value investment philosophy which has resulted in very strong performance against benchmark for the period. IML is focusing on support
Slide 8: Strategy Ahead
Strategy Ahead Strategically, we remain committed to the support and development of boutique fund managers. Specifically this means providing reliable and well run back office services plus marketing assistance where required. Cost control remains a high focus within the Group. Growth in funds under
Slide 9: Boutique asset management
Boutique asset management. It is our belief that superior long term investment returns are best achieved by well run boutique asset managers. Our mission is to support high quality investment professionals to achieve their full potential within a boutique funds management environment. 2
Slide 10: The support role of Treasury Group
The support role of Treasury Group SERVICE PROVIDER • Risk management • Compliance & Governance • Human Resources BOUTIQUE • Operations FUND MANAGERS • Administration • Accounting • Marketing • Joint purchasing (eg: custody, IT) RESPONSIBLE ENTITY EUROPEAN FUNDS 3
Slide 11: Financial Results for half year to December 2008
Financial Results for half year to December 31 2008 4
Slide 12: Financial results
Financial results 6 months to 31 December 2008 2007 % Change Total revenue ($Mil) 2.95 3.07 (3.91) Net profit after tax ($Mil) 3.20 10.68 (70.04) Basic earnings per share (cents) 13.84 cents 46.96 cents (70.53) Dividend per share (fully franked) 10.00 cents 30.00 cents (66.66) Normalised Earnings Th
Slide 13: Comment on the half year results
Comment on the half year results • Results were effected by the continued deterioration in global financial markets – Funds under management declined but outperformed index – Some retail outflow during the half – Institutional flows positive where made, particularly at TAAM and RARE. New client inte
Slide 14: The credit bubble bursts in 2008
The credit bubble bursts in 2008 7500 ASX All Ordinaries Index: 7000 1-Nov-07 6500 6000 5500 12-May-06 30-Jun-08 5000 4500 4000 6-May-05 3500 31-Dec-08 1-Mar-04 25-Feb-09 3000 2500 7
Slide 15: Change in accounting policy
Change in accounting policy • TRG has always been a partner as opposed to a parent with its boutiques • Following a review by TRG and its auditors of shareholder agreements and introduction of staff equity plans, it has been determined to change accounting policies – In accordance with accounting st
Slide 16: Equity held by Treasury Group
Equity held by Treasury Group 50% (47.5% from January 09) 58% (Long term position will be 50%) 40% 42% 40% 35%* (+ an option to go to 40%) 0% (Revenue share via Orion) 100% 9 * TRG has a convertible note in Cannae Capital Partners that once exercised will equal 35%.
Slide 17: Key charts
FUNDS UNDER MANAGEMENT ($ BILLIONS) Key charts 16 All boutiques associated w ith Treasury Group As at 31 December 15.17 14 • Funds under management 12 Half 11.29 10.3 9.73 • Dividend payments 10 7.8 year 8 result • Normalised net profit after tax 6 4.18 4 1.62 2 0 2002 2003 2004 2005 2006 2007 2008
Slide 18: Strategic outlook for Treasury
Strategic outlook for Treasury 11
Slide 19: Appointment of New Managing Director
Appointment of New Managing Director • Appointment of Mark Burgess in December 2008 – TRG looking to deepen experience in both domestic and offshore markets – David Cooper to move to Executive Director – focused on assessing new boutique opportunities, boutique acquisition and development; board mem
Slide 20: Treasury offers strong franchise
Treasury offers strong franchise • Strong boutique range – All boutiques are in a competitive position • Our experience and success now differentiates the Treasury offering – We offer a unique independent partnership for new boutiques • No exotic / leveraged investment companies – Avoided fashionabl
Slide 21: Diversification of funds under management
Diversification of funds under management Cannae Trilogy RARE Investors Mutual Treasury Asia Asset Management Global Value Investors Orion 14
Slide 22: Client location
Client location 2 2 2 2 2 22 2 2 2 2 2 2 2 2 2 15
Slide 23: Outlook for the asset management industry
Outlook for the asset management industry • Clients globally remain distressed over investment returns – Are looking to diversified returns in quality assets such as RARE Infrastructure – Will focus on future secular growth – such as TAAM in Asia – In Australia focused on quality groups committed to
Slide 24: Targets for Treasury Group
Targets for Treasury Group • Utilise Treasury’s strong brand and position – During difficult period, new boutiques looking for Treasury’s brand and position. – Client relationships remain strong – Strong balance sheet supports future growth opportunities • Remain focused on expanding boutiques – Com
Slide 25: Boutique Overview
aig-t-hieimva Group Ltd Boutique Overview 18
Slide 26: Products
Products Manufacturing Distribution Product Aus Retail Institutional Offshore clients Australian equities – value 95% 5% Global equities – value 93% 7% Asia pacific equities 10% 90% 9 Australian equities – growth 10% 90% 9 Global listed infrastructure 15% 85% 9 Australian equities – value 0% 100% 19
Slide 27: Expanding range of products
Expanding range of products Manufacturing Products Pooled products New products planned for 2009? 8 1 Yes 1 Yes 3 3 Yes 2 3 20 Total: 21 Forecast total: 24
Slide 28: IML
• IML has stayed true to its value investment strategy which has resulted in very strong performance against benchmark. • Focused on supporting valued clients during a difficult period for retail client base. • Expanding offering into institutional market with tax effective and other offerings. • Un
Slide 29: Orion
• Orion continued to enhance its reputation during this difficult investment environment. • Business continues to enjoy solid institutional support. • Orion’s distribution alliance with Trilogy Global Advisors, a New York based asset management business remains an attractive option for clients. • Or
Slide 30: GVI
• GVI deepened the investment team with addition of Stephen Arnold – experienced global investor returning from offshore. • Investment returns against benchmark remain outstanding and in line with investment style. • GVI has been highly successful in gaining access to major retail platforms. • While
Slide 31: TAAM
• Investment performance has been good during difficult market conditions. • Seeing ongoing increasing interest from offshore clients with positive flow during the half. • Solid investment ratings from global institutional consultants. • TAAM is gaining representation on a number of leading retail p
Slide 32: RARE Infrastructure
• RARE Infrastructure product remains a unique asset class which is gaining attention globally. • Government policy focus on infrastructure supports this diversifying asset class. • RARE has had a successful six months culminating in winning mandates from two large institutional clients in December.
Slide 33: Cannae
• Cannae’s investment performance remains positive against benchmark. • Outstanding team culture and investment focus. • Seeing growing interest from institutional consultants. • Cannae offers a strong investment product backed by a financially strong investment partner. • TRG remains fully committe
Slide 34: Results summary to December 2008
Results summary to 31 December 2008 1. Normalised earnings of $5.48m down 46% over the previous corresponding period. 2. Interim dividend of 10 cents per share declared and payable 27th March 2009. Key themes: • Diversification of the business coming through and continuing into 2009. • All boutiques
Slide 35: Disclaimer
Disclaimer: The information in this presentation is general background information about Treasury Group Limited and is current only at the date of this presentation. In particular, this presentation: • is not an offer or recommendation to purchase or subscribe for securities in Treasury Group Limite