Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — H1 2019 Earnings Presentation
40 slides from Pinnacle Investment Management's earnings presentation, Feb 22, 2019
Slide 1: 2019 Interim Results
22 February 2019 By Electronic Lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited (ASX: PNI) 2019 Interim Results Pinnacle Investment Management Group Limited (Pinnacle) is pleased to advise sharehol
Slide 2: Funds under management (FUM)
2 2 1 $48.7bn at 31 January 2019 2 Includes net impact of realized and unrealized losses on principal investments. Nil revenues from upfront fees on LIC/LIT IPOs in 1HFY19; these were $928k in 1HFY18. Funds under management (FUM) The FUM of Pinnacle’s eleven operating Affiliates as at 31 December 20
Slide 3: Retail FUM
1,2 Retail FUM Retail FUM stood at $9.4 billion3 at 31 December 2018, compared with $7.9 billion at 30 June 2018. This $1.5 billion growth was attributable to $1.4 billion net inflows, $0.7 billion ‘acquired’ FUM (ASX:MXT), with reductions due to market movements/investment performance of $0.6 billi
Slide 4: Dividend
Dividend The Board has resolved to pay a fully franked interim dividend of 6.1 cents per share to shareholders recorded on the register on 8 March 2019 and payable on 22 March 2019. The Dividend Reinvestment Plan (DRP) is applicable to this dividend. Please contact our share registry, Computershare
Slide 5: Please contact Ian Macoun
Please contact Ian Macoun on +61 2 8970 7700 if you require any further information. Yours faithfully Calvin Kwok General Counsel and Company Secretary Forward-looking statements This announcement includes certain forward-looking statements that are based on information and assumptions known to date
Slide 6: Interim Results
Interim Results For the period ended 31 December 2018 22 February 2019
Slide 7: Agenda
Agenda • First half FY19 Financial Highlights • First half FY19 Business Highlights • First half FY19 Results Discussion • Additional material: • Group Overview and Business Focus • Horizon 2 Initiatives • Distribution Update • Summary and plans for the remainder of FY19 1
Slide 8: First half FY19 financial highlights
First half FY19 financial highlights Announced 22nd February 2019 • Pinnacle’s share of Affiliates’ NPAT $14.3 million, up 44% from $9.9 million in PCP • Pinnacle funds under management (FUM) of $48.7bn at 31 January 2019 • Fully franked interim dividend of 6.1 cents per share payable on 22 March 20
Slide 9: First half FY19 business highlights
First half FY19 business highlights • FUM at 31 December 2018 $46.7 billion1, 3 • up $8.7 billion or 23% from $38.0 billion at 30 June 2018 • up $14.4 billion or 45% from $32.3 billion at 31 December 2017 • Retail FUM now $9.4 billion 2, up 19% from $7.9 billion at 30 June 2018 • Net inflows for the
Slide 10: Understanding 1HFY19 financial outcome
Understanding 1HFY19 financial outcome • Pinnacle remains well positioned to deliver superior business and financial performance in the medium term: • Proven deep expertise and diversity of our 12 Affiliates – 94% of Pinnacle Affiliated Investment Manager strategies and products (with a track record
Slide 11: Financial summary
Financial summary • ‘P&L’ investment in support of Horizon 1H2019 1H2018 YoY change 2 growth – adding resources to cater Pinnacle for growth (including ahead of Revenue 7.5 6.0 25.0% E xpens es (11.7) 2 (7.8) 2 50.0% forthcoming growth) S hare of Pinnacle Affiliates net profit after tax 14.3 1 9.9 4
Slide 12: Highlights of interim results - Affiliates
Highlights of interim results - Affiliates 1H2019 1H2018 YoY change • Continuing FUM and revenue Pinnacle Affiliates (100% aggregate basis) FUM ($billion) 46.7 1 32.3 44.6% growth Revenue ($million) 103.1 70.5 46.2% Net profit before tax 52.3 36.1 45.0% • Total Affiliates’ Revenues of Tax expens e (
Slide 13: Significant components of 1HFY19 financial result
Significant components of 1HFY19 financial result • Continuing growth in ‘Pinnacle Parent’ revenues and costs o Significant ‘P&L’ investment in 1HFY19 in support of Horizon 2 initiatives (including Offshore distribution, ETF, Direct to retail consumers, new Affiliates) o Net loss on principal invest
Slide 14: A strong and flexible balance sheet
A strong and flexible balance sheet At 31 December 2018: • $47.6m of cash and principal investments • Includes $37.1m invested in strategies managed by Pinnacle Affiliates • Excludes nearly $7m of cash applied for Affiliate equity recycling loans, working capital loans (Two Trees) and Affiliate equi
Slide 15: Funds Under Management – 31 December 2018
Funds Under Management – 31 December 2018 1includes $6.8 billion ‘acquired’ in July 2018. 2$48.7bn at 31 January 2019 9
Slide 16: Funds Under Management – December 2018
Funds Under Management – 31 December 2018 Date Pinnacle Hyperion Plato Solaris RCL Palisade Antipodes Spheria Two Trees Firetrail Metrics Omega Longwave (total) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)* ($m)* ($m) ($m) 3 31 Dec 18 46,741 5,599 4,680 7,606 7,779 2,010 8,149 640 214 3,603 2,7
Slide 17: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 2016 Morningstar Fund Manager of the Year Awards: Hyperion – Australian Fund Manager of the Year Hyperion – Domestic Equities Category Winner, Australia Hyperion – Domestic Equities Small Caps Category Winner, Australia 2017 Lonsec/Mone
Slide 18: Additional Information
Additional Information The following slides provide additional information: • 13 – Building a strong, diversified platform • 14-16 – Overview of Pinnacle Affiliates • 17-19 – Continuing strong investment performance of Affiliates (to 31 January 2019) • 20-26 – Focus on managing the business so as to
Slide 19: Building a strong, diversified platform
Building a strong, diversified platform Continuing to invest in a diversified platform to strengthen future growth • Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests • Equity ownership enhances alignment with shareholders Seed FUM and working capital RE, complian
Slide 20: Overview of Pinnacle Affiliates
Overview of Pinnacle Affiliates • Antipodes Partners – a pragmatic value manager of global equities (long only and long-short) o Funds under management have grown to in excess of $8.1 billion in approximately 3.5 years • Firetrail Investments – high conviction investment manager of Australian and Gl
Slide 21: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) • Metrics is a Sydney-based alternative asset manager specializing in private debt, fixed income and capital markets o Pinnacle acquired a 35% interest in July 2018 • Omega Global Investors – Offers smart beta, factor investing and client solutions (includ
Slide 22: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) • Resolution Capital – a high conviction manager of Australian and Global listed real estate securities o Funds under management $7.8 billion at 31 December 2018 o Launched Collective Investment Trust (CIT) for US institutional investors – secured seed cli
Slide 23: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates 94% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out performed their benchmarks over the 5 years to 31 January 2019 5Y 10Y Inception Inception date Pinnacle Investment Management
Slide 24: Affiliates’ investment performance to 31 January 2019
Affiliates’ investment performance to 31 January 2019 1Y 3Y 5Y 10Y Inc eption Inc eption date Pinnacle Inves tment Manag ement - Gro s s P erfo rmance unles s o therwis e s tated Hyperion Asset Management Hyperion Aus tralian Growth Companies Fund 6.30% 8.26% 9.75% 13.97% 11.97% 1/10/2002 Outperform
Slide 25: Affiliates’ investment performance to 31 January 2019
Affiliates’ investment performance to 31 January 2019 1Y 3Y 5Y 10Y Inception Inception date Pinnacle Investment Management - Gross Performance unless otherwise stated Spheria Asset Management Microcap Fund -13.10% 10.19% 16/05/2016 Outperformance -10.04% 4.02% Smaller Companies Fund -5.30% 9.70% 11/
Slide 26: Focus on managing the business so as to maximise profits
Focus on managing the business so as to maximise profits and Company value over the medium term • We continue to build Pinnacle by taking a medium term approach o Make decisions and release information when it is reliable and representative of ‘real’ or genuine trends o Selection process, quality co
Slide 27: Focus on managing the business so as to maximise profits
Focus on managing the business so as to maximise profits and Company value over the medium term • How does ‘Horizon 2’ add value in the Medium Term? o Investment in growth initiatives that don’t require additional capital to be raised o Reasonable limits to be set given short-term ‘drag’ on Pinnacle
Slide 28: Focus on managing the business so as to maximise profits
Focus on managing the business so as to maximise profits and Company value over the medium term • We have deliberately increased resources and costs in ‘Pinnacle parent’ to ensure excellent ongoing service to existing Affiliates, support of new strategies and of new Affiliates • Every ‘Horizon 2’ in
Slide 29: Building a more resilient platform to support Horizon 1 and 2 initiatives
Building a more resilient platform to support Horizon 1 and 2 initiatives Risk and Compliance expansion in response to market expectations and Horizon 1 and 2 growth • Appointment of a Chief Risk and Compliance Officer • Team expansion from three to six members • Appointment of independent non-execu
Slide 30: Building a more resilient platform to support Horizon 1 and 2 initiatives
Building a more resilient platform to support Horizon 1 and 2 initiatives Three Senior Executives included in additional resourcing • Chris Meyer – Director, Listed Products • Former CEO RMI Investment Managers (South Africa) • Former CEO RMB Morgan Stanley (South Africa) • 20+ years industry experi
Slide 31: Horizon 2 examples undertaken
Focus on managing the business so as to maximise profits and Company value over the medium term Horizon 2 examples undertaken: • Hyperion Global and Plato Global Income Funds launched (Lonsec rating upgrades February 2019) • Longwave Capital incubation o Seeded Longwave Australian Small Companies Fu
Slide 32: Evolution of Pinnacle’s Distribution capability
Focus on managing the business so as to maximise profits and Company value over the medium term • Progressive expansion of domestic and offshore distribution platform o Completed build out of ‘capital markets’ team focused on exchange-traded offerings o Closed End (LICs, LITs) - APL, PL8, SEC, MXT o
Slide 33: Horizon 2 Progress
Horizon 2 Progress Initiative Status Approximate Launched to $m market 31 Dec 18 Direct to Retail Developing $480 2017 Capital Markets (LIC, LIT, ETF) Developing $1,722 2017 Plato Global Early Stage $55 2017 Two Trees Developing $215 2018 Hyperion Global Developing $470 2018 Spheria Opportunities De
Slide 34: Recap on Horizon 3 Criteria – What could we acquire?
Recap on Horizon 3 Criteria – What could we acquire? Criteria • Must not place the Company at risk • Only consider if low risk and high return on capital • Exercise great care and careful due diligence • Must be synergistic with existing core • Few will meet this test Status • Metrics and Omega inve
Slide 35: Evolution of Pinnacle’s Distribution capability
Evolution of Pinnacle’s Distribution capability • Adapt o Grow ahead of our boutiques o Listen to clients and move quickly to meet their evolving needs o Do not become the market – be ahead of it • Resource o Growing adviser engagement – 15+ in retail o Direct (non advised & off platform) investment
Slide 36: Evolution of Pinnacle’s Distribution capability
Evolution of Pinnacle’s Distribution capability • Traditional ‘intermediated retail’ distribution expertise expanded over time to include ‘direct and exchange traded’ o Intermediated (Financial Advisers) Private managed funds – Platform & Direct Exchange traded funds o Direct Private managed f
Slide 37: Progress to date – Platform and Reputation
Progress to date – Platform and Reputation • A platform for growth o Continuing investment excellence o Widespread industry recognition and support o ‘Article of faith’ reputation • Increasing diversification • Proven ability to build high quality investment managers, and facilitate substantial succ
Slide 38: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation • Pinnacle has a strong belief in corporate Australia’s responsibility to give back to the communities which sustain and inspire businesses both large and small • In partnership with Affiliates, Pinnacle primarily supports the community through the Pinnacle Charitable
Slide 39: Summary and plans for the remainder of FY19
Summary and plans for the remainder of FY19 • Maintain current momentum and investment to deliver medium term growth • Maintain culture – attract exceptional individuals to our business and retain them • Horizon 2 initiatives under way • Continue to deliver growth within existing affiliates • Contin
Slide 40: Disclaimers
Disclaimers • This presentation has been prepared by Pinnacle Investment Management Group Limited (PNI). The information in this presentation is current as at 22 February 2019. • This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with respe
Pinnacle Investment Management Group — H1 2019 Earnings Presentation on 6ix