Slide 1: Pacific Current Group Half Year Results ASX Announcement
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only ASX ANNOUNCEMENT 29 February 2016 PACIFIC CURRENT GROUP HALF YEAR RESULTS Period ending 31 December 2015 HIGHLIGHTS PAC Underlying NPAT of $5.7m for 1H16
Slide 2: Operational Results
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only Over 1H16 Management remained focused on the merger of Treasury Group and Northern Lights Capital Group operations to build synergies across the organisation.
Slide 3: Financial Results for the Trust
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only Despite market volatility and general market weakness globally in 1H16, “Growth boutiques” for the fund exceeded broader market performance, with a mixed port
Slide 4: Dividend and Summary of Profit and Loss
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only DIVIDEND The Board has declared a fully franked interim dividend of 20 cents per share, representing approximately 95% payout ratio of underlying NPAT. This i
Slide 5: Outlook and Conference Call
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only recovery is still slow and dependent on monetary stimulus, volatility creates opportunity for Pacific Current to further capitalise on. “As we have previously
Slide 6: Contact and About Pacific Current Group
33° 52’ 4.675” S 151° 12’ 36.431” E Level 14, 39 Martin Place, Sydney NSW 2000 T: +61 2 8243 0400 // F: +61 2 8243 0410 For personal use only CONTACT For Investor Enquiries: Tim Carver MD & CEO (+1) (206) 965 8879 For Media Inquiries in the US: Chris Sullivan MacMillan Communications +1 212 473 4442
Slide 7: Half Year Results
For personal use only 29 February 2016 HALF YEAR RESULTS Presenters A S X : PA C Tim Carver, CEO & Managing Director Joseph Ferragina, COO & Finance Director Paul Greenwood, CIO & Executive Director
Slide 8: Disclaimer
Disclaimer The information in this presentation is general information about Pacific Current Group and is For personal use only 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 Pacific Curr
Slide 9: Agenda
Agenda For personal use only 1. Overview 2. Portfolio Performance 3. FUM Analysis 4. PAC 1H16 Statutory & Underlying Profits 5. Trust P&L and Balance Sheet 6. Strategy 7. Outlook Q &A ASX: PAC // 3
Slide 10: Overview
For personal use only 1 OVERVIEW ASX: PAC // 4
Slide 11: Overview
Overview A successful year of strategic repositioning for sustained growth For personal use only ❯ Successful first half repositioning of the portfolio and delivering on synergies ❯ Pro forma earnings at Trust proximate pre-RARE sale, taking into account debt pay down and Aperio (which does not appe
Slide 12: Understanding Our Financial Results
Understanding Our Financial Results ❯ Pacific Current (PAC) is a publicly-traded corporation that owns 65% of the Aurora For personal use only Trust (“Trust” or “Aurora”), which was established as a result of the merger between Treasury Group and Northern Lights Capital Partners in November 2014 ❯ T
Slide 13: Financial Results Summary
Financial Results Summary For the First Half of FY 2016 For personal use only 1H16 1H15 % change PAC Statutory (loss)/profit ($10.0m) $136.9m1 n/a Underlying profit $5.7m $7.1m (19.8%) Interim dividend 20.0cps 24.0cps (16.7%) Trust2 Statutory loss ($20.5m) Underlying profit $3.5m One-off expenses $3
Slide 14: Operational Results
Operational Results For personal use only ❯ Aggregate FUM of $30.9bn 31 December 2015 – down $3.8bn or 11.0% primarily due to RARE, Seizert and Tamro (in the case of Tamro, the business is being wound down). Pro forma FUM including Aperio of $49.2bn ❯ Very strong business momentum from “Growth bouti
Slide 15: Transformational Strategy Results
Transformational Strategy Results Delivery on prior commitments, achieved through: For personal use only 1 Completion of sale of 75% › Completed on 21 October 2015 for A$112m upfront consideration, ownership of RARE to representing 33x cash return Legg Mason 2 Significant leverage › Repaid A$62m deb
Slide 16: Strategy Scorecard
Strategy Scorecard Company achievements in 1H16 For personal use only CONSOLIDATION ACCELERATION TRANSFORMATION Preserving the Core Stimulating Progress Creative Partnerships Unified management Continued strong Repositioning of team growth from “Core and portfolio Growth boutiques” Synergies
Slide 17: Industry Trends: Threats and Opportunities
Industry Trends: Threats and Opportunities For personal use only INDUSTRY TREND PAC STRATEGY >25% of earnings from portfolio are Increased market volatility derived from contractual revenues Continued decline in active Investment in Aperio, pipeline focus on management and home country global an
Slide 18: Portfolio Update
For personal use only 2 PORTFOLIO UPDATE ASX: PAC // 12
Slide 19: Core Boutiques
Core Boutiques For personal use only Core Boutiques^ FUM as at 31 Dec 2015 A$21.3b* Revenue (6-months) A$53.4m Contribution to Aurora A$11.9m Trust earnings (6-months) Share of earnings to A$7.8m Pacific Current (6-months) * FUM of private equity funds is based on capital commitments to each fund an
Slide 20: Core Boutiques
Core Boutiques ASSET GROWTH* For personal use only » Partnership established in 2008, zero FUM at inception 1,098* 898 898 » 2010 closed on Fund I of US$127 million » 2012 closed on Fund II of US$303 million 430 430 » 2013 closed on Fund III and related fund of US$179 million » *31 December 2015 FUM
Slide 21: Growth Boutiques
Growth Boutiques For personal use only Growth Boutiques FUM as at 31 Dec 2015 A$6.4b* Revenue (6-months) A$10.5m Contribution to Aurora A$0.02m Trust earnings (6-months) Share of earnings to A$0.01m Pacific Current (6-months) * FUM of private equity funds is based on capital commitments to each fund
Slide 22: Growth Boutiques
Growth Boutiques For personal use only » Partnership established in 2014, FUM of approximately US$3 million 256.0 » Secured anchor investor (SEI) in 2014 and initiated global distribution 159.3 134.7 effort » 31 December 2015 FUM of US$256 million with active and robust pipeline 30-Jun-14 30-Jun-15
Slide 23: Other Boutiques
Other Boutiques For personal use only Other Boutiques* FUM as at 31 Dec 2015 A$3.2b Revenue (6-months) A$8.2m Contribution to Aurora A$0.3m Trust earnings (6-months) Share of earnings to A$0.2m Pacific Current (6-months) *All figures exclude relevant financial data for Orion Asset Management and WHV
Slide 24: FUM Analysis
For personal use only 3 FUM ANALYSIS ASX: PAC // 18
Slide 25: Translating the Aurora Trust Portfolio
Translating the Aurora Trust Portfolio For personal use only Total Contribution to Total FUM Total Revenue Earnings Core Boutiques $21.26b $53.37m $11.95m Growth Boutiques $6.40b $10.48m $0.02m Other Boutiques $3.21b $8.22m $0.27m TOTAL: $30.87b $72.07m $12.24m Total Portfolio FUM: $30.87b Total Por
Slide 26: Earnings Breakdown
Earnings Breakdown Benefits of a diversified portfolio across geographies and core / growth boutiques For personal use only Aurora's Statutory Aurora's Underlying Earnings from Associates Earnings from Associates Aurora Earnings (A$) by by Primary Currency of by Primary Currency of Associates' Inves
Slide 27: FUM Exposure to Market Beta
FUM Exposure to Market “BETA” For personal use only ❯ Total FUM in Investment Strategies with “Market-Exposed” Revenue: $23.9b FUM (77.5%) ❯ Total FUM in Investment Strategies with “Contractual” Revenue: $7.0b FUM (22.5%) ❯ Market-Driven Revenues at Associate Level $57.4m | % of total: 79.7% ❯ Contr
Slide 28: PAC 1H16 Statutory & Underlying Profits
For personal use only 4 PAC 1H16 STATUTORY & UNDERLYING PROFITS ASX: PAC // 22
Slide 29: Review of 1H16 Results
Review of 1H16 Results PAC Statutory P&L for six months to 31 Dec 2015 For personal use only PAC ❯ Statutory PAC Profit and loss primarily reflects Statutory P&L Highlights (A$m) share of profit and loss from Aurora Trust, the 1H16 business operations of the Group Revenue 2.7 ❯ Revenue from distribu
Slide 30: Significant Non-recurring Items
Significant Non-recurring Items Underlying net positive result after taking out one-off significant items For personal use only ❯ All non-recurring items are PAC share of PAC P&L (A$m) 1H16 expense/gain from Aurora trust PAC Statutory (Loss) After Tax (10.0) ❯ Gain on sale of investment reflects pro
Slide 31: Financial Strength and Dividends
Financial Strength and Dividends Sustained dividend growth over five years For personal use only Dividends: 60 ❯ Final dividend of 20cps fully franked 52 50 ❯ Payout ratio of 95% aggregated underlying NPAT 50 Balance Sheet: 40 40 ❯ Strong balance sheet with healthy cash position 34 34 ❯ Net cash imp
Slide 32: Trust P&L and Balance Sheet
For personal use only 5 TRUST P&L AND BALANCE SHEET ASX: PAC // 26
Slide 33: Aurora Trust – P&L
Aurora Trust – P&L Aurora Trust: analysis of current year statutory results For personal use only ❯ Revenue includes service fee revenue P&L Highlights (A$m) Aurora 1H16 ❯ Prior year comparisons omitted due to merger Revenue 2.2 distortions Gain on sale of investments 10.2 ❯ Gain on sale of investme
Slide 34: Aurora Trust – Underlying P&L
Aurora Trust – Underlying P&L Significant non-recurring items For personal use only Aurora P&L (A$m) 1H16 ❯ Gain on sale for 1H16 reflects profit on sale of RARE Aurora (Loss) After Tax (20.5) ❯ Transaction costs incurred at RARE corporate level Less: as well as incurred by Aurora has been separated
Slide 35: Aurora Trust – Balance Sheet
Aurora Trust – Balance Sheet Strength provides opportunities For personal use only Balance Sheet – Aurora Trust ❯ $125m of surplus cash available at 31 December 1H16 (A$m) 2015, providing balance sheet flexibility Current Assets 157.0 ❯ Subsequent to 31 December, repayment of Medley of Non-Current A
Slide 36: Details of Non-Current Liabilities
Details of Non-Current Liabilities For personal use only Amount Name Maturity Notes (Face Value) Redeemable Preference Units US$15m May ’16 Unit holder debt Redeemable Preference Units US$42m Nov ’16 Unit holder debt, contingent on value of certain NL boutiques achieving profit targets by 2021. Cond
Slide 37: Financial Results of Boutiques
Financial Results of Boutiques Illustrative aggregation of portfolio P&L if all boutiques were 100% owned For personal use only Pro- ❯ 1H15 is shown as pro-forma full 6 months to Dec Aggregate P&L for Boutiques (A$m)* forma 2014 while the merger was completed in November 1H16 1H15 2014 Year end FUM
Slide 38: Strategy
For personal use only 6 STRATEGY ASX: PAC // 32
Slide 39: Strategy
Strategy Management are confident PAC’s strategy, scale and diversity will support growth into the For personal use only future and generate good, long-term shareholder returns CONSOLIDATION ACCELERATION TRANSFORMATION Preserving the Core Stimulating Progress Creative Partnerships Continue to simp
Slide 40: Investment/Divestment Philosophy
Investment/Divestment Philosophy ❯ Generally ultra-long-term holders of assets (“permanent”) For personal use only ❯ Seek to make two types of investments: • Core holdings in larger strategic partnerships • Smaller capital commitments to highly scalable opportunities ❯ Will from time-to-time divest:
Slide 41: Targeted Opportunities
Targeted Opportunities For personal use only SUNRISE SUNSET • International /global/emerging markets • Domestic equities, particularly equities large cap • Liquid alternatives • Defined benefit plans • Private Capital (equity, debt, real estate) • Real assets • Traditional hedge fund of funds • Liab
Slide 42: Deal Pipeline
Deal Pipeline ❯ For CY2015, the Investment team sourced more than 160 opportunities in 16 countries, For personal use only of which approximately: • 58 moved through to intensive due diligence; • 30 added to current prospect list; • 7 offered term sheets Asset Class of Investment Opportunities 40% 3
Slide 43: Partnership Proposition
Partnership Proposition ❯ Enduring partnerships with asset managers to enhance growth and enterprise value For personal use only • Creating flexible partnership structures establishing alignment with boutiques • Long-term partners with permanent capital • Actively growing boutiques through various g
Slide 44: Outlook
For personal use only 7 OUTLOOK ASX: PAC // 38
Slide 45: Outlook
Outlook The business has started FY16 in a position of strength For personal use only ❯ Early 2H16 successes: • Completion of Aperio investment • SCI partners with Santander UK for hedge fund accelerator strategy • Repayment of third party debt of US$45.2m • Official launch of new brand platform, en
Slide 46: Summary
Summary A global leading, diversified and scalable business with growth momentum For personal use only ❯ Have delivered on plan to repay debt, redeploy RARE proceeds, and find synergies ❯ Well diversified for volatile markets ❯ Poised for success with a proven leadership team focused on growing Paci
Slide 47: Q&A
For personal use only Q&A ASX: PAC // 41