Magellan Financial Group Ltd · ASX:MFG
Magellan Financial — FY2021 Earnings Presentation
31 slides from Magellan Financial's earnings presentation, Aug 17, 2021
Slide 1: Magellan Financial Group Limited Full Year Results
Magellan Financial Group Limited Full Year Results For the year ended 30 June 2021
Slide 2: Introduction
Introduction Financial Year Highlights1 • Average funds under management up 9% to $103.7 billion • Management and services fees revenue up 7% to $635.4 million • Profit before tax and performance fees of the Funds Management business up 10% to $526.6 million • Statutory net profit after tax down 33%
Slide 3: FY21 Financial Results
FY21 Financial Results Kirsten Morton, Chief Financial Officer Magellan| 3
Slide 4: Magellan Financial Group Full Year Results
Magellan Financial Group Full Year Results $ million 30 June 2021 30 June 2020 % change Management and services fees 635.4 591.6 7% Performance fees 30.1 81.0 (63%) Other revenue and income 33.6 20.3 65% Adjusted revenue and other income 699.1 692.9 1% Adjusted expenses 111.3 119.8 (7%) Adjusted net
Slide 5: Tax and Dividends
Tax and Dividends • Effective tax rate for the 12 months to 30 June 2021 is 21.4% (Offshore Banking Unit) • Dividends: – 6 month dividend of 114.1 cents per share (75% franked at tax rate of 30%) comprising: o Final Dividend of 102.6 cents per share (91.6 cents per share for six months to 30 June 20
Slide 6: Expenses
Expenses • Costs associated with strategic initiatives considered as outside day-to-day operating expenses – Excluded from Funds Management business – Excluded from dividend payout • Cost to income ratio (excluding performance fees) of 16.9% during the period – Key driver of profit is not expense mo
Slide 7: Business Overview
Business Overview 1. Funds Management Business 2. Business Resilience and Diversification Update Brett Cairns, Chief Executive Officer Magellan| 7
Slide 8: Funds Management Business
Funds Management Business $ million 30 June 2021 30 June 2020 % change Revenue Management fees 631.4 587.2 8% Performance fees 30.1 81.0 (63%) Services fees 4.0 4.4 (8%) Interest and other revenue (1.9) 2.2 (185%) 663.6 674.8 (2%) Expenses Employee expense 70.4 73.8 (5%) Other expense 36.5 43.0 (15%
Slide 9: Investment Performance
Investment Performance For the periods to 30 June 2021 Since 1 Year 3 Years 5 Years Inception (%) (% p.a.) (% p.a.) (% p.a.)1 Magellan Global Fund 10.8 13.2 14.4 11.9 MSCI World NTR Index ($A) 27.5 14.4 14.6 7.7 Magellan Infrastructure Fund 7.9 4.6 5.9 7.6 Global Listed Infrastructure Benchmark ($A)
Slide 10: FY21 Net Flows
FY21 Net Flows Institutional Net Inflows Retail Net Inflows1 3,000 $2,843m 3,500 $ Millions $ Millions $2,591m 3,000 $2,887m 2,500 2,500 2,000 $1,918m 2,000 1,500 1,500 1,000 1,000 500 500 0 0 FY20 FY21 FY20 FY21 Total net inflows for the 12 months ended 30 June 2021: $4.5 billion 1 Includes proceed
Slide 11: Funds Under Management
Funds Under Management As at 30 June 2021 ($ billion) Strategy 30 June 2020 Net Inflows Investment Performance 30 June 20211 Global Equities $74.3 $2.8 $9.3 $85.4 Global Listed Infrastructure $15.9 $1.6 $1.5 $19.0 Australian Equities $7.0 $0.1 $2.4 $9.5 $97.2 $4.5 $13.2 $113.9 1 Reflects $1.0 billio
Slide 12: Business Overview
Business Overview 1. Funds Management Business 2. Business Resilience and Diversification Update Brett Cairns, Chief Executive Officer Magellan| 12
Slide 13: Restructure of Global Equities Retail Funds
Restructure of Global Equities Retail Funds • Restructure of three Global Equities retail funds into a single trust (Magellan Global Fund) completed in December 2020 • Magellan Global Fund now has two unit classes: – Closed Class Units quoted on ASX under the ASX Listing Rules (ASX: MGF) – Open Clas
Slide 14: Restructure Partnership Benefits
Restructure Partnership Benefits • Magellan was pleased to raise $780 million as part of the Magellan Global Fund Partnership Offer completed in March 2021 • Investors who participated in the Partnership Offer received valuable partnership benefits: – Additional Closed Class Units worth 7.5% of subs
Slide 15: Recent Fund Initiatives
Recent Fund Initiatives • MFG Core International Fund (CXA: MCSG / APIR: MGE3851AU) • MFG Core ESG Fund (CXA: MCSE / APIR: MGE8722AU) MFG Core Series • MFG Core Infrastructure Fund (CXA: MCSI / APIR: MGE9182AU) now available to retail investors through the Chi-X securities exchange or direct applica
Slide 16: Magellan FuturePay
Magellan FuturePay • The goal: To develop a single product that captures important portfolio and structural risk management techniques and balances the competing objectives of investing for income and growth effectively and efficiently • Magellan solution: FuturePay is an actively managed fund that
Slide 17: Principal Investments update
Principal Investments update Principal Investments has now been split into two business segments: – Fund Investments: investments in our funds that provide alignment with our clients and allow for seeding of new strategies – Magellan Capital Partners: strategic investments outside Magellan’s funds m
Slide 18: Fund Investments
Fund Investments The Board has set a pre-tax hurdle of 10% p.a. (over business cycle) for the Fund Investments portfolio Fund Investment portfolio: Investment Returns: Investment ($ million) 30 June 2021 30 June 2020 Time Period Return Internal investments Cash 0.5 1.4 1 Year to 30 June 2021 12.9% I
Slide 19: Magellan Capital Partners
Magellan Capital Partners Investments Criteria High quality management teams 1 • No operational involvement by Magellan, oversight typically via non-executive director representation • No distraction from our Funds Management business 2 High quality companies with meaningful scale in their sector 3
Slide 20: Magellan investment business update: Barrenjoey
Magellan • $156 million investment for 40% non-dilutive economic stake (5% voting) investment • Strong start as a new firm, with ~250 high quality team employed • Established many of the key systems and processes required • Corporate Finance and Cash Equities have commenced client servicing activiti
Slide 21: Magellan investment business update: FinClear
• $20 million investment for ~15% (fully diluted) shareholding Magellan • Relationship to explore initiatives to improve access and reduce friction for investment investors • Continued to grow the business, bringing on-board a number of established clients such as Praemium, Superhero and Stake • In
Slide 22: Magellan investment business update: Guzman y Gomez
Magellan • $103 million investment for 12% (fully diluted) shareholding investment • GYG had a strong year, exceeding its budgeted earnings by almost 50%, despite difficult trading conditions • COVID-19 conditions have broadly benefited the business, particularly in its Business update convenience f
Slide 23: Global Equity Strategy
Global Equity Strategy Hamish Douglass, Chairman & CIO Magellan| 23
Slide 24: Global Equity Strategy Objectives
Global Equity Strategy Objectives Minimise the risk of permanent capital loss (Downside protection) Achieve attractive risk adjusted returns over the medium to long-term (Retail: 9% p.a. net of fees long term target) (Institutional: 10% p.a. long term target) Magellan| 24
Slide 25: Downside Protection
Downside Protection Global equity composite, periods ended 30 June 2021 Upside Capture Downside Capture Quarterly Excess Returns 1.2 # of Largest Largest 1 Average markets Underperformance Outperformance All Markets 56 1.0% -10.5% 15.0% 0.8 Down Markets 15 4.2% -2.8% 15.0% 0.6 Index Return < -5% 10
Slide 26: Consistent Outperformance > 9% per annum
Consistent Outperformance > 9% per annum Retail strategy – Magellan Global Fund $60,000 Growth of $10,000 Since Inception# 9% Absolute Return Target $48,343 Magellan Global Fund 11.9% p.a. MSCI World Net Total Return Index $40,000 $33,421 9.0% p.a. $28,165 7.7% p.a. $20,000 $0 Retail strategy outper
Slide 27: Consistent Outperformance – Global Equity Strategy
Consistent Outperformance – Global Equity Strategy After max Institutional Before Fees1 After retail fees 3 Year Rolling Returns since inception* Fees (@ 0.80% p.a.) – USD AUD3 USD2 Monthly Observations 133 133 133 Total Returns [Return v Objective] Observations > 10% p.a. (9% p.a. for retail) | Fre
Slide 28: Q&A
Q&A Hamish Douglass, Chairman & CIO Brett Cairns, Chief Executive Officer Kirsten Morton, Chief Financial Officer Magellan| 28
Slide 29: Important Information
Important Information This presentation has been prepared by Magellan Financial Group Limited ACN 108 437 592 (‘Magellan’). This presentation contains summary information about Magellan and its related bodies corporate and is current as at 17 August 2021. While the information in this presentation h
Slide 30: GIPS Composite Report as at 30 June 2021
GIPS Composite Report as at 30 June 2021 Global Equity Benchmark: MSCI World Net Total Return Index Report Currency: USD Measurement Period: 01/07/2007 to 30/06/2021 Rolling 3 Year Standard Deviation Returns (%) Internal Composite Total (% p.a.) Number of Year Dispersion Assets Firm Assets Composite
Slide 31: www.magellangroup.com.au Phone: +61 2 9235 4888
www.magellangroup.com.au Phone: +61 2 9235 4888
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