Perpetual Limited · ASX:PPT
Perpetual — H1 2023 Earnings Presentation
45 slides from Perpetual's earnings presentation, Feb 23, 2023
Slide 1: Perpetual Limited 1H23 Results Presentation
Perpetual Limited (ASX:PPT) 1H23 Results Presentation For the half year ending 31 December 2022 Thursday 23 February 2023 Presented by: Rob Adams, CEO & Managing Director Chris Green, Chief Financial Officer
Slide 2: Disclaimer
Disclaimer Important information The applicable PDS or offer document for a strategy offered by either Trillium Asset Management or Barrow Hanley Global Investors, should be considered This presentation is in summary form and is not necessarily complete. It should before deciding whether to acquire
Slide 3: 1H23 Highlights
1H23 Highlights Rob Adams CEO and Managing Director
Slide 4: Solid business performance despite market conditions
Solid business performance despite market conditions Continued execution of strategy with transformational acquisition of Pendal Group now complete Solid underlying performance across all divisions despite market conditions with non-market linked revenues in PCT and PP providing capacity to continue
Slide 5: 1H23 results at a glance
1H23 results at a glance Earnings resilience through volatile market environment, while continuing to invest for growth Key themes • Unique combination of businesses 1H23 1H22 providing a level of earnings resilience, Change $m $m with PCT and PP demonstrating strength in non-equity market linked re
Slide 6: Business highlights
Business highlights Building strong foundations for future growth 89% No.1 16% 19 ~A$202b ~A$1b ~A$1.3b of strategies1 Awarded Lonsec3 Growth in consecutive half Total AUM5 in net inflows in in net inflows into outperformed and Zenith4 Fund PCT’s revenue years of net including Perpetual Trillium in
Slide 7: Net flow momentum building in Global Equity strategies
Net flow momentum building in Global Equity strategies Net flows and pipeline developing across channels and regions Asset management (PAMA and PAMI) Barrow Hanley (PAMI) 1H23 net Trillium (PAMI) net flows,1,2 by Barrow Hanley Global Share 1H23 net flows1,2,3 by asset class, A$b flows1,2 by asset cl
Slide 8: Strong performance across asset sectors
Strong performance across asset sectors Outperformance profile augurs well for future flows Proportion of strategies outperforming benchmark1 as at 31 December 20222 Perpetual Asset Management Australia2 Perpetual Asset Management International2,3 100% 100% 100% 92% 92% 90% 89% 86% 77% 80% 75% 67% 3
Slide 9: PCT and PP underpin strength through market cycles
PCT and PP underpin strength through market cycles Providing earnings stability and growth Perpetual Corporate Trust (PCT) Perpetual Private (PP) Revenue by business unit1 ($m) Net inflows – Half years1 ($b) 16% 88.7 82.0 8% 76.6 11.3 0.5 0.5 9.6 9.9 0.4 0.4 39.0 36.8 33.5 0.2 33.1 35.6 38.3 1H22 2H
Slide 10: 1H23 Financials
1H23 Financials Chris Green Chief Financial Officer
Slide 11: 1H23 financial results overview
1H23 financial results overview 1H23 2H22 1H22 1H23 v 1H23 v For the period $m $m $m 2H22 1H22 Key highlights Operating revenue 388.3 382.8 384.9 1% 1% • Revenue growth of $3.4m or 1%, compared to 1H22, was primarily driven by stronger Total expenses (298.3) (291.2) (275.3) (2%) (8%) performance in
Slide 12: Solid performance despite equity market conditions
Solid performance despite equity market conditions Unique portfolio of businesses providing earnings resilience Perpetual Asset Management Perpetual Private Perpetual Corporate Trust 9% 6% 15% Closing AUM ($b)1 FUA ($b) FUA ($b) 1143.8 AUM/FUA/FUA $b vs 1H22 vs 1H22 1092.3 vs 1H22 990.4 102.8
Slide 13: 1H23 UPAT analysis
1H23 UPAT analysis Lower UPAT from equity market-linked businesses partially offset by continued growth in PCT 1H22 PAMI PAMA PP PCT Group Support HoH Tax 1H23 UPAT UPBT UPBT UPBT UPBT Services UPBT movement UPAT1 Lower average Lower average Lower average Continued profit Higher revenue from Reduced
Slide 14: Expense analysis
Expense analysis Supporting ongoing investment in growth engines % Controllable cost growth 4% 4% 8% change 6.4 298.3 298.3 286.9 275.3 275.3 (18.4) (15.7) Variable Long-term growth remuneration investment 1H22 Group wide Performance Technology Increased FY22 Global Interest Other Total 1H23 Interes
Slide 15: Cashflow analysis
Cashflow analysis Free cash flow impacted by reduced earnings and tax payments Key points: Free Cash Flow ($19.4m)1 Reduction in free cashflow driven by: • Overpayment of tax expenses in 1H23 which will be recovered in 2H23 • Lower average markets impacting headline revenue in the asset management b
Slide 16: Balance sheet
Balance sheet Gearing ratio of ~25%, below target upper limit of 30% 1H23 v 1H23 v 1H23 2H22 1H22 2H22 1H22 For the period Key movements vs 2H22 $m $m $m (%) (%) • In 1H23, cash and cash equivalents Cash 133.6 175.4 130.9 (24%) 2% decreased by $41.8 million to $133.6 million as at 31 December 2022.
Slide 17: Debt position post Pendal acquisition
Debt position post Pendal acquisition Targeting a leverage ratio of ~1.2x gross debt/ EBITDA3 by 2026 Implementation • Post the acquisition of Pendal, Perpetual had drawn debt of ~1.6x Gross debt / EBITDA (LTM to 31 $769 million1, with undrawn facilities of $75 million January 2023)3 (~0.9x Net debt
Slide 18: Dividends
Dividends Total 1H23 dividend of 90 cents per share reflects both a 1Q23 and 2Q23 interim dividend • 1Q23 fully franked ordinary dividend of 35 cents1 per share (cps) for the period 1 July to 30 September 2022 o Paid on 8 February 2023 (record date of 10 January 2023) to Perpetual shareholders1 (57
Slide 19: Acquisition of Pendal Group
Acquisition of Pendal Group Rob Adams Chief Executive Officer
Slide 20: Pendal acquisition transforms our asset management business
Pendal acquisition transforms our asset management business Perpetual Group total AUM A$202 billion1 Stronger global distribution, improved ESG presence and scale benefits Across all major markets globally Multi-boutique Diverse portfolio Americas UK and Europe Asia Australia Equities Multi-asset Fi
Slide 21: Over $200 billion in AUM invested across diverse capabilities
Over $200 billion1 in AUM invested across diverse capabilities Significant and diversified exposure to higher margin strategies AUM (A$b) Asset Class (31 December 2022) • Well-balanced AUM across all sectors Australian equities 28.7 Global/International3 equities 64.3 • Diverse regional and global e
Slide 22: Global multi-boutique approach leveraging institutional grade infrastructure
Global multi-boutique approach leveraging institutional grade infrastructure Combining the advantages of a true boutique model with the benefits of scale • Fully committed to brands and investment autonomy to support independent cultures and drive A differentiating model future growth • Boutiques mo
Slide 23: A significantly enlarged distribution team
A significantly enlarged distribution team Expands our distribution capability across all key markets and channels Americas UK and Europe, and Asia Australia 17% 21% 35% AUM AUM 49% AUM $116.4b 51% $24.2b $61.4b 83% 44% Intermediary & Intermediary Institutional Intermediary Institutional Institution
Slide 24: Synergies and integration update
Synergies and integration update Successful completion; integration team in place, focused on first 100 days Synergies & Integration Costs Integration • Reconfirm targeted pre-tax expense synergies • Executive team already in place of $60 million • Positive client engagement • Targeting delivery of
Slide 25: Summary & Outlook
Summary & Outlook Focused on delivering targeted benefits from significant investment across all divisions Pendal Asset management Wealth management Corporate trust Fully focused on Leverage strong investment Growth across segments Continue to leverage integration, achieving performance and enhanced
Slide 26: Q&A
Q&A Rob Adams Chris Green CEO and Managing Director Chief Financial Officer Update image
Slide 27: Contacts
Contacts Emma Rumble Susie Reinhardt General Manager, Corporate Affairs Head of Investor Relations & Investor Relations emma.rumble@perpetual.com.au susie.reinhardt@perpetual.com.au +612 9229 3998 +612 9125 7047 Connect with us at: About Perpetual perpetual.com.au pendal.com.au Head Office johcm.com
Slide 28: Thank you
Thank you Trust is earned.
Slide 29: Appendix A: Detailed divisional result commentary
Appendix A Detailed divisional result commentary
Slide 30: Perpetual Asset Management International
Perpetual Asset Management International 1H23 v 1H23 v 1H23 2H22 1H22 Key highlights For the period 2H22 1H22 $m $m $m (%) (%) Barrow Hanley AUM was A$62.7billion at 31 December 2022. Through the period Barrow Hanley delivered: Revenue 105.8 109.0 109.8 (3%) (4%) Strong investment performance ac
Slide 31: Perpetual Asset Management Australia
Perpetual Asset Management Australia 1H23 v 1H23 v 1H23 2H22 1H22 For the period 2H22 1H22 Key highlights $m $m $m (%) (%) Exceptional Australian equities investment performance1 with 92% of Revenue 76.2 84.2 84.8 (9%) (10%) strategies outperforming their benchmark over 3 years Received several
Slide 32: Perpetual Corporate Trust
Perpetual Corporate Trust 1H23 v 1H23 v 1H23 2H22 1H22 For the period 2H22 1H22 $m $m $m Key highlights (%) (%) PCT named Trustee of the Year by Kanga in 1H23 for the 7th consecutive Debt Markets Services revenue 38.3 35.6 33.1 8% 16% year Managed Funds Services revenue 39.0 36.8 33.5 6% 16% FUA
Slide 33: Perpetual Private
Perpetual Private 1H23 2H22 1H22 1H23 v 1H23 v For the period $m $m $m 2H22 (%) 1H22 (%) Key highlights Market related revenue 73.8 75.1 77.9 (2%) (5%) Achieved net flows of $0.2 billion for 1H23 mainly from not-for-profit, native title and philanthropy contributing to the 19th consecutive half No
Slide 34: Appendix B: Assets under Management, Funds under Advice and Administration
Appendix B Assets under Management, Funds under Advice and Funds under Administration
Slide 35: Perpetual Asset Management: AUM and flows
Perpetual Asset Management: AUM and flows Combined PAMA and PAMI (A$b) Foreign For the period 1H22 Flows1 Other1,2 Exchange 1H23 Impacts3 Australian equities 13.6 (1.1) (0.5) - 12.1 Global equities 17.0 3.6 (1.5) 1.2 20.4 US equities 50.4 (7.6) (2.5) 3.5 43.8 Total equities 81.1 (5.1) (4.5) 4.7 76.3
Slide 36: Perpetual Private FUA and AUM
Perpetual Private FUA and AUM FUA by client segment and AUM FUA ($b) (Inclusive of AUM) AUM ($b) 1H23 v 1H22 1H23 v 1H22 1H23 2H22 1H22 1H23 2H22 1H22 (%) (%) Community and Social Investments 5.5 5.2 5.5 - Select Portfolios 2.7 2.8 3.1 (13%) High Net Worth 11.6 11.4 13.0 (11%) Implemented Portfolios
Slide 37: Perpetual Corporate Trust FUA by segment
Perpetual Corporate Trust FUA by segment ($b) For the period 1H23 1H22 1H23 v 1H22 (%) $b $b Public Market Securitisation RMBS - bank (ADI) 54.3 57.7 (6%) RMBS - non bank 83.0 70.1 18% CMBS and ABS 61.7 45.5 35% Balance Sheet Securitisation RMBS - repos 393.1 366.1 7% Covered bonds 83.4 73.2 14% Deb
Slide 38: Appendix C: UPAT to NPAT reconciliation
Appendix C UPAT to NPAT reconciliation
Slide 39: UPAT to NPAT reconciliation
UPAT to NPAT reconciliation $40.3m of significant items mainly attributable to acquisitions (34.6) 1H23 Transaction and Integration costs: Non-cash Net unrealised Accrued 1H23 UPAT amortisation gain on incentive NPAT Trillium Barrow Pendal Other Hanley of acquired financial assets compensation intan
Slide 40: Appendix D: Perpetual Asset Management performance charts
Appendix D Perpetual Asset Management performance charts
Slide 41: PAMA investment performance
Excess returns above benchmark Below benchmark returns PAMA investment performance Majority of funds outperforming over 3 years to 31 December 2022 Annualised net performance (%)1 Excess returns above benchmark (%)1 31 December 2022 Period ending 31 December 2022 Source: Perpetual, State Street and
Slide 42: PAMI (Barrow Hanley) investment performance
Excess returns above benchmark Below benchmark returns PAMI (Barrow Hanley) investment performance All equities funds outperforming over 3 years to 31 December 2022 Annualised net performance (%)1 Excess returns above benchmark (%)1 31 December 2022 Period ending 31 December 2022 Strategy Benchmark
Slide 43: PAMI (Trillium) investment performance
PAMI (Trillium) investment performance Recent performance impacted by sector positions Annualised net performance (%)1 Excess returns above benchmark (%)1 31 December 2022 Period ending 31 December 2022 Strategy Benchmark 3 mth 1 yr 3 yr 5 yr 7 yr 10 yrs 3 mth 1 yr 3 yr 5 yr 7 yr 10 yr ESG Global Eq
Slide 44: Appendix E: Combined group AUM – explanatory notes
Appendix E Combined group AUM – explanatory notes
Slide 45: Explanatory notes for the combined group AUM by asset class
Explanatory notes for the combined group AUM by asset class - Asia Equities: previously disclosed by Pendal, is now included in “Global / International Equities” - Property: previously disclosed by Pendal, has been split into “Global / International Equities” or “Australian Equities” Equities - Barr