Qualitas Limited · ASX:QAL
Qualitas — H1 2023 Earnings Presentation
31 slides from Qualitas's earnings presentation, Feb 22, 2023
Slide 1: Qualitas 1H23 Results
Qualitas 1H23 Results (ASX:QAL) 22 February 2023
Slide 2: Acknowledgement of Country
Acknowledgement of Country Qualitas acknowledges the Traditional Custodians of country throughout Australia and their ongoing connection to land, sea, and community. We pay our respect to their Elders past and present.
Slide 3: Agenda and presenters
Agenda and presenters 1 1H23 Highlights and Market Outlook ANDREW SCHWARTZ Group Managing Director and Co-Founder 2 Funds Management 3 1H23 Financial Results KATHLEEN YEUNG Global Head of Corporate Development 4 FY23 Outlook A Supplementary Information PHILIP DOWMAN Chief Financial Officer Important
Slide 4: 1H23 Highlights and Market Outlook
| 1H23 Highlights and Market Outlook
Slide 5: 1H23 – Strong growth in new FUM raised with record deployment of $1.76 billion
1H23 – Strong growth in new FUM raised with record deployment of $1.76 billion 1H23 GROUP HIGHLIGHTS $1.5bn $1.76bn 45.6% $71m $80m Net new capital 1H23 Deployment Group EBITDA margin2 Avg. gross investment size Pool of embedded commitment since June +68% vs. 1H22 +6% vs. 1H22 excl. excl. ‘AURA by A
Slide 6: +66% Group EBITDA (excl. performance fees) on 1H22
+66% Group EBITDA (excl. performance fees) on 1H22 1H23 GROUP HIGHLIGHTS $5.8bn $16.0m $20.7m $14.6m $122m FUM1,2 Group EBITDA3 Funds management fee4 Pro forma NPBT3 Net cash5 +36% vs. 1H22 +66% vs. 1H22 excl. +21% vs. 1H22 +77% vs. 1H22 excl. $159m cash on balance performance fee +$1.6m upside assu
Slide 7: Execution of strategic priorities
Execution of strategic priorities Step change in FUM enables accelerated deployment in both investor and balance sheet capital under favourable market conditions DEPLOYMENT FUM GROWTH MOMENTUM STRATEGIC DEPLOYMENT BACKED BY MARKET AND DIVERSIFICATION OF OF BALANCE SHEET CAPITAL TAILWINDS INVESTOR BA
Slide 8: Macroeconomic landscape
Macroeconomic landscape Key investment strategies supported by mega trends and long-term tailwinds INTEREST RATES TO CONTINUE TO RISE IN 20231 WIDENING SPREAD FOR PRIVATE CREDIT AS LIQUIDITY Lag effect in commercial real estate - requires specialised skillset and WITHDRAWS experience investing throu
Slide 9: QAL key investment thematics
QAL key investment thematics Qualitas funds management platform is well-positioned in the current economic cycle Long-term growth underpinned by regulatory changes1 combined with benefits from rising interest rates and PRIVATE CREDIT widening risk margins. Opportunity to maximise our ESG impact via
Slide 10: Funds Management
Funds Management
Slide 11: Strong growth in FUM and deployment
Strong growth in FUM and deployment Credit strategy represents 75% of incremental FUM and full deployment in 1H23 provides solid foundation for growth and underpins scalability of funds management platform FUM ($M) – STRONG GROWTH REFLECTING INVESTOR DEPLOYMENT ($M) – EXCEPTIONAL GROWTH DRIVEN BY AL
Slide 12: Significant growth in capital raised for private credit
Significant growth in capital raised for private credit Private credit strategy continues to drive FUM growth and scalability of the platform INVESTOR COMPOSITION AS OF 31 DECEMBER 2022 COMMENTS • FUM from institutional investors Institutional capital composition increased from 69% in 1H22 to 76% 1H
Slide 13: Progress on ESG initiatives
Progress on ESG initiatives Focus on selected initiatives to drive long-term value ACHIEVED FOCUS AREAS FOR FY23+ ENVIRONMENTAL Carbon neutral Partner value alignment Carbon neutrality at Ongoing refinement of the Qualitas proprietary ESG sponsor assessment tool corporate level, confirmed via Furthe
Slide 14: 1H23 Financial Results
pe, 1H23 Financial Results ee QUALITAS
Slide 15: Group earnings
Group earnings Strong growth in funds management fees and operating margins excluding performance fees with increasing utilisation of balance sheet capital % • Increase in funds management fees is driven by strong P&L BREAKDOWN ($THOUSANDS) 1H22 1H23 (YOY) growth in FUM and deployment. Full benefit
Slide 16: Operating performance
Operating performance Consistently strong performance of underlying earnings excluding performance fees underpinned by FUM growth, deployment of balance sheet capital and platform scalability GROUP REVENUE1 – TRACK RECORD OF UNDERLYING PERFORMANCE METRICS – IMPROVING OPERATIONAL LEVERAGE EARNINGS GR
Slide 17: Co-investment and warehousing fees
Co-investment and warehousing fees Increasing deployment of balance sheet capital in warehousing as investment pipeline expands OTHER INCOME ($THOUSANDS) 1H23 • Earnings from BTR Equity JV is recognised in Other Income. Income from investments 1,2631 • $328m deployed for underwriting eight transacti
Slide 18: Balance sheet
Balance sheet Strong balance sheet well positioned to capitalise on expanding investment pipeline to maximise deployment while maintaining flexibility to co-invest and drive FUM growth QUALITAS GROUP BALANCE SHEET FY22 1H23 ($THOUSANDS) • Strong deployment of balance sheet capital Assets • Total $10
Slide 19: Outlook
QUALITAS
Slide 20: No change to outlook and guidance
No change to outlook and guidance FY23 Outlook No change in FY23 guidance Outlook statements and guidance have been made Estimated range based on no material adverse change in the current market conditions. $30m - $33m NPBT1 • Interim dividend of 2cps declared • FY23 dividend per share (DPS) in line
Slide 21: Thank you
Thank you MELBOURNE OFFICE SYDNEY OFFICE BRISBANE OFFICE Level 38, 120 Collins Street Governor Macquarie Tower Level 14, 167 Eagle Street Melbourne VIC 3000 Level 27, 1 Farrer Place, Brisbane QLD 4000 Sydney NSW 2000 QAL INVESTOR ENQUIRES P +61 3 9612 3939 E investor.relations@qualitas.com.au qualit
Slide 22: Disclaimer
Disclaimer This presentation has been prepared by and its sole responsibility of Qualitas Limited (ACN 655 057 588). To the maximum extent permitted by law, the information contained in this presentation is given without any liability whatsoever to Qualitas Limited, any of its related entities, or Q
Slide 23: Appendix – Segment information
Appendix 1 Segment information
Slide 24: Diversified product and investment profile as at December 2022
Diversified product and investment profile as at 31 December 2022 FUNDS UNDER MANAGEMENT1 FUNDS UNDER MANAGEMENT RISK ALLOCATION2 (BY COMMITTED FUM) (BY INVESTED FUM) 9% 29% Senior debt Private credit 17% • $5.8bn of funds under Mezzanine • 69% in senior credit Private equity management across 16 wi
Slide 25: Appendix 2 – Metrics
‘45. Hi I NY} III) Hi | | WM | | il Dees metrics QUALITAS
Slide 26: FUM overview
FUM overview FUND NAME STRATEGY INVESTMENT TYPE FUM STRUCTURE EXPIRY1 QRI (ASX listed) Senior debt / mezzanine $601m ASX listed Perpetual QSDF Senior debt – diverse $675m Open ended Perpetual Income Senior Debt SMA Senior debt – diverse $203m Open ended Perpetual Credit Funds Arch Finance Senior deb
Slide 27: Base management fee benchmark
Base management fee benchmark FUM Benchmark Funds as at Dec-22 Invested FUM Other $1,234m QSDF SD SMA QBIF Op Fund I credit BTR Other Acquisition price QFIF $1,101m Equity Equity1 Total facility limit / Allocated QCDF $1,962m QDCI Op Fund III FUM I & II (excl. QCDF I) Net asset value QRI $601m Arch
Slide 28: Credit funds – Fee Earning FUM as at December 2022
Credit funds – Fee Earning FUM as at 31 December 2022 COMMITTED FEE EARNING FUM NOT YET FUND NAME FUM FUM EARNINGS FEES FUND FEE STRUCTURE BASE FEE BENCHMARK QRI (ASX listed) $601m $601m - base fee, PF, transaction fee % on net asset value QSDF $675m $673m $3m Senior Debt SMA $203m $157m $46m base f
Slide 29: Equity funds – Fee Earning FUM as at December 2022
Equity funds – Fee Earning FUM as at 31 December 2022 COMMITTED FEE EARNING FUM NOT YET FUND NAME FUM FUM EARNINGS FEES FUND FEE STRUCTURE BASE FEE BENCHMARK Opportunity I $85m $62m $23m % of invested FUM % of committed FUM (invested Opportunity II $286m $286m - base fee, PF FUM post-investment peri
Slide 30: Closing period FUM
Closing period FUM $m FY19 FY20 FY21 FY22 1H23 Committed FUM Funds management 1,810 2,290 2,503 3,7941 5,3641 Arch Finance 448 480 480 465 400 Total committed FUM 2,258 2,770 2,983 4,259 5,764 Invested FUM Funds management 1,086 1,444 1,660 2,458 3,107 BTR2 - - - 46 77 Arch Finance 399 440 423 380 3
Slide 31: Fund key and glossary
Fund key and glossary LISTED ENTITY GLOSSARY ASX: QAL Qualitas Group CAGR Compound annual growth rate CRE Commercial real estate LISTED FUND EBITDA Earnings before interest tax depreciation & amortisation ASX: QRI Qualitas Real Estate Income Fund ESG Environmental, social, and governance Fee earning