Pinnacle Investment Management Group Limited · ASX:PNI

Pinnacle Investment Management — Wilsons Advisory Rapid Insights Conference 2017

77 slides from Pinnacle Investment Management's conference presentation, Jun 1, 2017

1. Slide 1: ASX cover letter: Presentation

   Level 35 60 Margaret Street Sydney, NSW 2000 For personal use only www.pinnacleinvestment.com.au 1 June 2017 By Electronic Lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited – Presentation Pinnacle I

2. Slide 2: Wilsons Advisory – Rapid Insights Conference

   For personal use only Pinnacle Investment Management Group Limited (PNI) Wilsons Advisory – Rapid Insights Conference 1 June 2017

3. Slide 3: Latest update – April 2017

   Latest update – 28 April 2017 For personal use only  FUM $25B at 31 March 2017, up $1.7B (7.3%) in 3 months, up $5.2B in 9 months  Net inflows $3.7B in 9 months, including $1.4B retail.  Second $300M+ LIC raised. (Plato Income)  FY17 guidance increased (to $11m NPAT from continuing ops.)  Proce

4. Slide 4: Affiliates’ investment performance to 30/04/2017

   Affiliates’ investment performance to 30/04/2017 1Y 3Y 5Y 10Y Inception Inception date For personal use only Pinnacle Investment Management Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 8.52% 9.44% 15.76% 7.86% 12.65% 1/10/2002 Outperformance -8.98% 2.18% 5.

5. Slide 5: Affiliates’ investment performance to 30/04/2017

   Affiliates’ investment performance to 30/04/2017 1Y 3Y 5Y 10Y Inception Inception date For personal use only Pinnacle Investment Management Resolution Capital - Gross Performance Resolution Capital Core Plus Property Securities Fund 12.35% 18.10% 18.08% 9.49% 30/09/2008 Outperformance 6.25% 2.50% 1.

6. Slide 6: Pinnacle affiliates continue to win major industry awards

   Pinnacle affiliates continue to win major industry awards For personal use only  Lonsec Money Management Fund Manager of the Year 2017: • Antipodes Partners – Equities (Long Short) Category Winner • Antipodes Partners – Global Equities (Broad Cap) Category Winner • Antipodes Partners – Emerging Man

7. Slide 7: Interim Results for the period ended 31 December 2016

   For personal use only Interim Results for the period ended 31 December 2016 24 February 2017

8. Slide 8: 1H2017 Financial Highlights

   1H2017 Financial Highlights For personal use only  FUM $25B at 31 March 2017, up $1.76 (7.3%) in 3 months, up $5.2B in 9 months  Net inflows $3.7B in 9 months, including $1.4B retail.  Second $300m + LIC raised. (Plato Income)  FY17 guidance increased (to $11m NPAT from continuing ops.)  Procee

9. Slide 9: Financial Summary

   Financial Summary For personal use only  Strong growth in underlying Pinnacle earnings – 1H2016 numbers included a large Hyperion performance fee  Affiliate base management fees have increased by 31% on the PCP  50% increase in net profit after tax from continuing operations  Minority interests

10. Slide 10: Highlights of interim results

    Highlights of interim results For personal use only 1H2017 1H2016 Pinnacle Affiliates (100% aggregate basis)  Strong FUM and revenue growth FUM ($billion) 23.3 18.9  Total Affiliates’ Revenues of $52.3m, Revenue ($million) 52.3 48.0 including $2.4m (or 5%) in performance Net profit before tax 24.3

11. Slide 11: Balance Sheet

    Balance Sheet For personal use only As At 31-Dec-16 30-Jun-16  Cash and Principal Investments of $14.7m, before $m $m proceeds from $30m (pre expenses) placement in Assets January 2017 Cash and cash equivalents 6.6 13.5  The change in NTA is attributable to statutory Financial assets 8.1 10.9 Trad

12. Slide 12: Pinnacle overview

    Pinnacle overview For personal use only  Pinnacle is an investment management firm providing affiliated investment managers with the infrastructure, resources and distribution required to generate superior performance  Founded in 2006, Pinnacle currently holds an equity interest in each of seven s

13. Slide 13: Australia’s leading investment house of affiliated investment managers

    Australia’s leading investment “house of affiliated investment managers” For personal use only Structure promotes independence, accountability, focus and longevity • Executives of both Pinnacle and affiliated managers have significant equity interests • Equity ownership enhances alignment with share

14. Slide 14: Overview of Affiliates

    Overview of Affiliates For personal use only  FUM (as at 31 December 2016): $5.7 billion  Pinnacle Group equity interest: 49.9%  Leading specialist manager of Australian equities following a quality style  Global Equities Fund launched in May 2014 and is expected to drive future FUM growth  Hyp

15. Slide 15: Overview of Affiliates

    Overview of Affiliates For personal use only • FUM (as at 31 December 2016): $3.5 billion • Pinnacle Group equity interest: 47.9% • Manager of Australian equities & global equities following a systematic style • Specialises in retirement income for pension phase investors and SMSFs • Its beta one an

16. Slide 16: Overview of Affiliates

    Overview of Affiliates For personal use only • FUM (as at 31 December 2016): $5.3 billion • Pinnacle Group equity interest: 40.0% • Specialist manager of Australian and global listed real estate securities portfolios • Awarded Zenith’s Global REIT Fund Manager of the Year in 2016 for the third conse

17. Slide 17: Overview of Affiliates

    Overview of Affiliates For personal use only • FUM (as at 31 December 2016): $0.2 billion • Pinnacle Group equity interest: 40.0% • Fundamental-based manager with a bottom-up approach focusing on small and microcap companies • Commenced operations in April 2016 • Appointed as manager of Priority Gro

18. Slide 18: Pinnacle: Funds under management

    Pinnacle: Funds under management For personal use only Aggregate funds under management ($bn)(1)  FUM of $23.3 billion at 31 December 2016*  FUM has grown at a CAGR of 32.5% p.a. over the 24.0 23.3 last ten years 22.0  Increase in FUM of $3.58 billion in the six months to 19.8 20.0 31 December 20

19. Slide 19: Revenues

    Revenues For personal use only Aggregate affiliate revenues ($m)(1) 100.0 90.0 Performance fees  Group NPAT from continuing operations of $3.0 Revenues, excluding million, compared to $2.0 million in 1HY16 performance fees 80.0  EPS from continuing operations of 2.1 cents 70.0 per share, compared

20. Slide 20: Affiliates’ investment performance to 31/01/2017

    Affiliates’ investment performance to 31/01/2017 For personal use only 1Y 3Y 5Y 10Y Inception Inception date Pinnacle Investment Management Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 3.92% 9.27% 15.58% 7.63% 12.12% 1/10/2002 Outperformance -13.40% 1.90% 5

21. Slide 21: Affiliates’ investment performance to 31/01/2017

    Affiliates’ investment performance to 31/01/2017 For personal use only 1Y 3Y 5Y 10Y Inception Inception date Pinnacle Investment Management Resolution Capital - Gross Performance Resolution Capital Core Plus Property Securities Fund 9.82% 17.38% 17.44% 8.49% 30/09/2008 Alpha 2.99% 1.48% 1.31% 2.75%

22. Slide 22: Pinnacle: FY2017 outlook

    Pinnacle: FY2017 outlook For personal use only  Pinnacle expects to report the following for the full year ended 30 June 2017: FY16 FY17 Change NPAT (continuing ops) $8.4m ≥ $10m ≥+19% Group NPAT $7.2m ≥ $11m ≥+53% EPS (continuing ops) 5.2c ≥ 6.6c ≥+27% Group EPS 4.1c ≥ 7.2c ≥+76% Note: FY16 NPAT n

23. Slide 23: Corporate Priorities Going Forward

    Corporate Priorities Going Forward For personal use only  Protect the Core: • Continue to provide high quality distribution, Responsible Entity and infrastructure services. • Support affiliated fund managers’ high standards. • Remain focused on investing to enable continued strong performance and F

24. Slide 24: Growth Horizons Framework

    Growth Horizons Framework For personal use only Horizon 3 • Must not place the company at risk Horizon 2 • Only consider if low risk and high return • New affiliated on invested capital boutiques and Horizon 1 ‘non-capital’ parent • Exercise great care growth initiatives and careful due • Sustain or

25. Slide 25: Important notice and disclaimer

    Important notice and disclaimer For personal use only This presentation is issued by Pinnacle Investment Management Group Limited (ACN 100 325 184) (“Company” or “Pinnacle”). Summary information This presentation contains summary information about Pinnacle and its subsidiaries and their activities w

26. Slide 26: Important notice and disclaimer (cont.)

    Important notice and disclaimer (cont.) For personal use only Past performance Past performance and any pro-forma financial information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of Pinnacle’s views on its future fin

27. Slide 27: Annual General Meeting of Shareholders 14 November 2016

    For personal use only Pinnacle Investment Management Group Limited Annual General Meeting of Shareholders 14 November 2016

28. Slide 28: Agenda

    Agenda For personal use only  Chairman’s Address – Alan Watson  Ordinary Business  Managing Director’s Address – Ian Macoun  Q&A 27

29. Slide 29: Chairman’s Address

    Chairman’s Address For personal use only  PNI Financials  Corporate re-organisation completed  New Board in place  Pinnacle continues to grow  Careful management of discontinued operations  Shareholder returns 28

30. Slide 30: FY16 Financial Statements - Highlights

    FY16 Financial Statements - Highlights For personal use only  Group NPAT of $4.5 million, delivering earnings of 4.1 cents per share  Group NPAT from continuing operations of $5.8 million, up 49% from $3.9 million (before DTA de- recognition) in prior year  Earnings per share from continuing oper

31. Slide 31: Corporate reorganisation completed

    Corporate reorganisation completed For personal use only  Transaction review - Transaction closed on 25 August 2016 - Issue of ~37m shares to acquire the remaining 25% of Pinnacle - Ian Macoun announced as Managing Director on 17 August 2016 following Alexander Grant’s resignation - Deborah Beale,

32. Slide 32: New corporate structure – 100% ownership via PNI

    New corporate structure – 100% ownership via PNI For personal use only 31

33. Slide 33: Board and Committee Structure

    Board and Committee Structure For personal use only Board Member Classification Equity Committees Ownership Audit, Remuneration Compliance and and Risk Nominations Alan Watson (Chair) Independent, Yes  (Chair) Non-executive Ian Macoun (MD) Executive Yes Deborah Beale Independent, Yes   Non-execut

34. Slide 34: Pinnacle continues to grow (1)

    Pinnacle continues to grow (1) For personal use only  Pinnacle NPAT of $10.6 million in FY16, up 43% from $7.4 million  Pinnacle’s share of NPAT of $15.9 million from Pinnacle Affiliates in FY16, up 34% from $11.9 million  FUM of $21.5 billion as at 31 October 2016  Antipodes LIC listed on ASX i

35. Slide 35: Pinnacle continues to grow (2)

    Pinnacle continues to grow (2) For personal use only  Outlook for superannuation and managed funds remains strong: • 4th largest domestic system • $2 trillion under management • Estimated $8 trillion by 2035*  Prospects for investment markets less certain • Political uncertainty – Brexit, Post US

36. Slide 36: Management of discontinued operations

    Management of discontinued operations For personal use only  Wilson’s Advisory • Transitional services arrangements with Securities now completed • Commercial relationship remains strong – co-manager to Antipodes LIC • Super profit and DTA deferred consideration arrangements remain in place • Costs

37. Slide 37: Total shareholder returns – 1 year

    Total shareholder returns – 1 year, value of $1 For personal use only 130.26% total return 36

38. Slide 38: Total shareholder returns – 5 years

    Total shareholder returns – 3 years, value of $1 For personal use only 64.72% p.a. total return 37

39. Slide 39: Total shareholder returns – 10 years

    Total shareholder returns – 5 years, value of $1 For personal use only 36.49% p.a. total return 38

40. Slide 40: Ordinary Business

    Ordinary Business For personal use only  Item 1 – tabling of FY16 Financial Statements  Item 2 – adoption of Remuneration Report  Item 3 – re-election of directors  Item 4 – approve employee option share plan 39

41. Slide 41: Item 1 – Tabling of FY16 Financial Statements

    Item 1 For personal use only • Formal tabling of FY16 Financial Statements 40

42. Slide 42: Item 2 – Non-binding approval of Remuneration Report

    Item 2 – Non-binding approval of Remuneration Report For personal use only Resolution 2 Resolution by proxy Adoption of Remuneration Report % of eligible proxies 99.42% Total number votes cast 114,439,230 For 48,959,563 Against 204,999 Open usable 0 Excluded votes 64,856,402 Abstain 255,000 41

43. Slide 43: Item 3a – Re-election of Ms Deborah Beale

    Item 3a – Re-election of Ms Deborah Beale For personal use only Resolution 3(a) Resolution by proxy Re-election of Ms Deborah Beale % of eligible proxies 99.89% Total number votes cast 114,439,230 For 114,235,665 Against 38,299 Open usable 81,633 Excluded votes 0 Abstain 2,000 42

44. Slide 44: Item 3b – Re-election of Mr Gerard Bradley

    Item 3b – Re-election of Mr Gerard Bradley For personal use only Resolution 3(b) Resolution by proxy Re-election of Mr Gerard Bradley % of eligible proxies 99.89% Total number votes cast 114,439,230 For 114,238,165 Against 30,799 Open usable 81,633 Excluded votes 0 Abstain 7,000 43

45. Slide 45: Item 3c – Re-election of Mr Andrew Chambers

    Item 3c – Re-election of Mr Andrew Chambers For personal use only Resolution 3(c) Re-election of Mr Andrew Resolution by proxy Chambers % of eligible proxies 99.89% Total number votes cast 114,439,230 For 114,241,165 Against 32,799 Open usable 81,633 Excluded votes 0 Abstain 2,000 44

46. Slide 46: Item 3d – Re-election of Mr Adrian Whittingham

    Item 3d – Re-election of Mr Adrian Whittingham For personal use only Resolution 3(d) Re-election of Mr Adrian Resolution by proxy Whittingham % of eligible proxies 99.89% Total number votes cast 114,439,230 For 114,243,165 Against 30,799 Open usable 81,633 Excluded votes 0 Abstain 2,000 45

47. Slide 47: Item 3d – Re-election of Mr Alan Watson

    Item 3d – Re-election of Mr Alan Watson For personal use only Resolution 3(e) Resolution by proxy Re-election of Mr Alan Watson % of eligible proxies 99.91% Total number votes cast 114,439,230 For 114,259,084 Against 9,880 Open usable 81,633 Excluded votes 0 Abstain 7,000 46

48. Slide 48: Item 4 – Approval of employee option share plan

    Item 4 – approval of employee option share plan For personal use only Resolution 4 Approval of employee option share Resolution by proxy plan % of eligible proxies 98.42% Total number votes cast 114,439,230 For 50,635,926 Against 732,164 Open usable 81,633 Excluded votes 55,093,524 Abstain 7,814,350

49. Slide 49: Managing Director’s Address

    Managing Director’s Address For personal use only  FY16 financial performance and financial statements  Pinnacle and affiliated investment managers – Pinnacle model, philosophy and investment styles of affiliates and update on affiliates’ performance  Aggregate FUM and revenue update  Future gro

50. Slide 50: Financial summary – FY16

    Financial summary – FY16 For personal use only (A$m) Year ending 30 Jun 2016 30 Jun 2015  Strong growth in Pinnacle earnings Pinnacle (100%) 10.6 7.4(1) Principal Investments 0.7 0.1  Increase in group overhead Priority Funds 0.5 (0.3) Next Financial (0.6) (0.7) includes one off costs Wilson Group

51. Slide 51: Pinnacle financial highlights – FY16

    Pinnacle financial highlights – FY16 For personal use only (A$m) Year ending 30 Jun 2016 30 Jun 2015 Variance  Strong FUM and revenue growth for FUM ($bn; end of year) 19.8 16.1 23.0% affiliated investment managers Total Affiliated Investment 92.8 72.0 28.9% Managers revenues  Total Affiliated Inv

52. Slide 52: Pinnacle’s share of affiliates’ financials – FY16

    Pinnacle’s share of affiliates’ financials – FY16 For personal use only FY2016 FY2015 Pinnacle Affiliates (100% aggregate basis) FUM ($billion) 19.8 16.1 Revenue ($million) 92.8 72.0 Net profit before tax 51.5 38.9 Tax expense (14.9) (11.4) Net profit after tax 36.7 27.5 Share of Pinnacle Affiliates

53. Slide 53: Balance sheet – June 2016

    Balance sheet – 30 June 2016 For personal use only A$m – 30 June 2016 Current assets  Cash and Principal Investments of $24.5m Cash and equivalents 13.6  Excludes post balance date impacts Financial assets 10.9 including: Total cash and financial assets 24.5 Other current assets 8.3  special divi

54. Slide 54: Progress to Date – FY17

    Progress to Date – FY17 For personal use only  FUM net inflows strong – $1.7 billion for FY17 to 31 Oct  Retail net inflows of $819 million for FY17 to 31 Oct (including $313 million for Antipodes LIC received in Oct 2016)  Shareholder discussions – benefits of multi affiliate model well understo

55. Slide 55: Australia’s leading investment house of affiliated investment managers

    Australia’s leading investment “house of affiliated investment managers” (IM) For personal use only Structure promotes independence, accountability, focus and longevity • Executives of both Pinnacle and affiliated IM have significant equity interests • Equity ownership enhances alignment with shareh

56. Slide 56: Overview of Affiliated IM

    Overview of Affiliated IM For personal use only » Hyperion Asset Management (49% owned by Pinnacle) – a specialist manager of Australian equities following a growth style. » Palisade Investment Partners (35% owned by Pinnacle) – a specialist manager of unlisted infrastructure assets with both pooled

57. Slide 57: Pinnacle and affiliates continue to win major industry awards

    Pinnacle and affiliates continue to win major industry awards For personal use only  Zenith – Professional Planner Fund Manager of the Year Awards, September 2016: • Pinnacle – Fund Distributor of the Year • Resolution Capital – Global REIT Fund Manager of the Year • Antipodes – International Equit

58. Slide 58: Hyperion Asset Management

    Hyperion Asset Management For personal use only  Hyperion’s long term track record remains outstanding.  Hyperion Australian Growth Companies Fund produced absolute performance of 24.2% after fees (10.7% above the S&P ASX 300 Accumulation Index) over 12 months to 30 September 2016  Hyperion Small

59. Slide 59: Palisade Investment Partners

    Palisade Investment Partners For personal use only  Specialist manager of unlisted infrastructure assets : • Palisade’s Diversified Infrastructure Fund - diversified portfolio of assets • Palisade’s Australian Social Infrastructure Fund - assets with Government availability-based revenue streams •

60. Slide 60: Plato Investment Management

    Plato Investment Management For personal use only  FUM has risen to $3.2 billion (end Oct 2016, including FUA $3.5 billion).  Beta one strategies continue to outperform over the past three years, with the income strategies delivering on their income targets.  Plato Australian Shares Income Fund h

61. Slide 61: Solaris Investment Management

    Solaris Investment Management For personal use only  FUM has risen to $4.7 billion as at 31 October 2016  Solaris’ clients benefited from solid investment out-performance in the year to 30 September, with the Core strategy outperforming the S&P/ASX200 by 1.5%. Solaris’ core strategy has outperform

62. Slide 62: Resolution Capital

    Resolution Capital For personal use only  Funds under management grew to $4.6 billion to 31 Oct 2016, up strongly over the past year.  Zenith – Professional Planner Global REIT Fund Manager of the Year Award in September 2016 (third consecutive year).  Long term out-performance remains pleasing.

63. Slide 63: Antipodes Investment Partners

    Antipodes Investment Partners For personal use only  Pragmatic value manager of global and Asian equities (long only and long-short) founded in 2015 by Jacob Mitchell, formerly Deputy Chief Investment Officer of Platinum Asset Management, together with a number of former colleagues and like-minded

64. Slide 64: Spheria Asset Management

    Spheria Asset Management For personal use only  Commenced operations in April 2016.  Launched Spheria Micro Cap Fund in May 2016  Appointed as investment manager to Priority Growth Fund (now Spheria Australian Smaller Companies Fund) Priority Core Fund (now Spheria Australian Mid Cap Fund) in Jul

65. Slide 65: Consistent growth in FUM

    Consistent growth in FUM For personal use only Pinnacle funds under management ($bn) Includes Antipodes LIC 64

66. Slide 66: Consistent growth in affiliated IM revenues

    Consistent growth in affiliated IM revenues For personal use only Total Affiliated IM revenues ($m at 100%) – 12 month periods and FY17 YTD Revenues only. No performance fees included *2015 -includes performance fees of $11.1m - 15.5% *** No performance fees included for 4 months to Oct 2016 – see f

67. Slide 67: Affiliates’ performance fee revenue and prospects for 1H2017 and FY17

    Affiliates’ performance fee revenue to October 2016 and prospects for 1H2017 and FY17 For personal use only  Performance fees for affiliates are typically earned half yearly or annually, 31 December or 30 June  Only included in PNI’s financial statements once ‘definitely earned’ – on ‘beyond any d

68. Slide 68: Affiliated IM investment performance (to 30 Sep 2016)

    For personal use only Affiliated IM investment performance (to 30 Sep 2016) 1Y 3Y 5Y 10Y Inception Inception date Pinnacle Investment Management - Gross Performance Hyperion Asset Management Hyperion Australian Growth Companies Fund 25.35% 12.53% 19.02% 10.03% 13.18% 1/10/2002 Alpha 11.85% 6.50% 8.0

69. Slide 69: Affiliated IM investment performance (to 30 Sep 2016)

    For personal use only Affiliated IM investment performance (to 30 Sep 2016) 1Y 3Y 5Y 10Y Inception Inception Date Pinnacle Investment Management - Gross Performance Resolution Capital Resolution Capital Core Plus Property Securities Fund 21.31% 18.12% 20.31% 9.25% 30/09/2008 Alpha 0.43% 0.46% 0.76%

70. Slide 70: Strong Medium/Long Term Investment Performance of Affiliates

    Strong Medium/Long Term Investment Performance of Affiliates – 5 year period to 30 Sep 2016 For personal use only  Reporting on consistency of investment performance for the first time – will report this measure routinely in the future  100% of Pinnacle Affiliated Investment Manager strategies and

71. Slide 71: Outlook – remainder of FY2017

    Outlook – remainder of FY2017 For personal use only • FUM and revenue continue to grow – both retail and institutional • We are expanding our distribution team to cope with ongoing growth including new strategies and markets • Legacy cost impact substantially diminished on FY16 and cost savings have

72. Slide 72: Broad Strategy Principles

    Broad Strategy Principles For personal use only Keep existing Protect the businesses Core strong and growing Be open to Recognise possibilities without feeling the 3 pressure to Growth undertake Horizons Horizon 2 and 3 initiatives Convey Deliver on consistent and reasonable reasonable growth growth

73. Slide 73: Growth Horizons Framework

    Growth Horizons Framework For personal use only Horizon 3 • Must not place the company at risk Horizon 2 • Only consider if low risk and high return • New affiliated on invested capital boutiques and Horizon 1 ‘non-capital’ parent • Exercise great care growth initiatives and careful due • Sustain or

74. Slide 74: Priorities for FY17

    Priorities for FY17 For personal use only  Continue to provide high quality distribution, Responsible Entity and infrastructure services  Support the affiliated investment managers in their maintenance of high standards  Investment managers to remain focused on investing to enable continued stron

75. Slide 75: Q&A

    WN Pinnacle INVESTMENT MANAGEMENT = Q&A 74

76. Slide 76: Pinnacle Group - Contacts

    Pinnacle Group - Contacts For personal use only  Ian Macoun, Managing Director ian.macoun@pinnacleinvestment.com.au  Eleanor Padman, Company Secretary eleanor.padman@pinnacleinvestment.com.au 75

77. Slide 77: Disclaimer

    Disclaimer For personal use only • This presentation has been prepared by Pinnacle Investment Management Group Limited (PNI). The information in this presentation is current as at 14 November 2016. • This presentation is not an offer or invitation for subscription or purchase of securities or a reco

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