Perpetual Limited · ASX:PPT
Perpetual — H1 2010 Earnings Presentation
36 slides from Perpetual's earnings presentation, Feb 25, 2010
Slide 1: 1H10 Results for six months ended 31 December 2009
For personal use only 1H10 Results for six months ended 31 December 2009 David Deverall Chief Executive Officer Roger Burrows Chief Financial Officer 25 February 2010 ABN 86 000 431 827
Slide 2: Agenda
Agenda For personal use only Group highlights – David Deverall Financials – Roger Burrows Strategy – David Deverall Summary – David Deverall 1
Slide 3: Overview
Overview For personal use only Financial performance above market consensus – Underlying Profit After Tax $36.4m (1H09: $41.6m) – Net Profit After Tax $49.2m (1H09: $14.2m) Improving market conditions – Rising markets and cost initiatives deliver increased operating leverage – Investor confidenc
Slide 4: Equity markets continue to rebound in 1H10
Equity markets continue to rebound in 1H10 – demonstrating our operating leverage to rising markets For personal use only ASX All Ordinaries Index (2004-2009) 7,500 Market peak Nov 2007 7,000 6854 6,500 Lehman’s collapse Sep 2008 6,000 4957 5,500 5,000 4,500 4,000 3,500 3,000 2,500 Market trough Mar
Slide 5: Industry back in inflows but not yet back to historic levels
Industry back in inflows but not yet back to historic levels For personal use only Net flows Total market quarterly flows since December 2005 $b 40 33.1 30 20 10 1.5 3.1 (5.1) (10) (13.6) (20) Se 6 07 Se 8 09 5 6 06 6 7 D 7 M 7 8 D 8 M 8 9 09 -0 -0 -0 -0 0 -0 -0 0 -0 -0 0 0 p- p- p- p- n- n- n- n- e
Slide 6: Securitisation issuance is still very quiet
Securitisation issuance is still very quiet For personal use only RMBS issuance (quarterly) $b 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Non AOFM AOFM Source: RBA, Australian Office of Financial Management (AOFM), S&P and Perpetual 5
Slide 7: Earnings momentum returns – result above market consensus
Earnings momentum returns – result above market consensus For personal use only 1H10 v 1H10 v Six months ended 1H09 2H09 1H10 1H09 2H09 $m $m $m % change % change Underlying profit after tax (UPAT) 41.6 24.1 36.4 (13) 51 Significant Items (27.4) (0.6) 12.8 ~ ~ Net profit after tax (NPAT) 14.2 23.5 4
Slide 8: Key drivers returning to strength
Key drivers returning to strength For personal use only Perpetual Perpetual Perpetual Group Investments Private Wealth Corporate Trust 31% FUM ($b) FUA ($b) FUA ($b) 29.3 222.9 241.4 17% 24.6 26.2 8.1 222.4 10% 6.5 6.8 33.8 55.5 115.0 1H09 2H09 1H10 1H09 2H09 1H10 1H09 2H09 1H10 1H09 2H09 1H10 Dilut
Slide 9: Perpetual Investments demonstrates clear operational leverage in rising markets
Perpetual Investments demonstrates clear operational leverage in rising markets For personal use only 1H10 v 1H10 v Key themes: 1H09 2H09 Smart Investor Fund Six months ended 1H09 2H09 1H10 % % Manager of the Year $m $m $m change change 2009 Total revenue 105.4 97.6 105.9 0 9 Good cost Operating
Slide 10: FUM up 12% since June 2009
FUM up 12% since June 2009; investors moving from security of cash assets into other strategies For personal use only At end of 2H09 Net flows Other (1) 1H10 $b $b $b $b Retail 5.8 (0.3) 0.9 6.4 Intermediary (master fund and wrap) 11.9 0.1 2.2 14.2 Institutional 8.5 (0.9) 1.1 8.7 All channels 26.2 (
Slide 11: Perpetual Investments: healthy short & long-term performance relative to benchmark
Perpetual Investments: healthy short & long-term performance relative to benchmark For personal use only Excess investment performance p.a. – gross as at end Dec 2009 Australian Equities Global Equities Annualised Small Industrial Australian Concentrated International returns Companies Share Fund Sh
Slide 12: Perpetual Private Wealth executing our growth strategy
Perpetual Private Wealth executing our growth strategy For personal use only 1H10 v 1H10 v Key themes: 1H09 2H09 Executing on growth Six months ended 1H09 2H09 1H10 % % strategy $m $m $m change change Acquired Grosvenor Total revenue 45.0 40.7 47.4 5 16 Financial Services Operating expenses (25.
Slide 13: Perpetual Private Clients' FUA up 19%
Perpetual Private Clients’ FUA up 19%, showing benefits of acquisitions and improved market conditions For personal use only Acquired At end of 2H09 Net flows FUA (1) Other (2) 1H10 $b $b $b $b $b Financial Advisory – Superannuation 2.4 - 0.2 0.3 2.9 – Non-superannuation 1.8 - 0.2 0.3 2.3 4.2 - 0.4
Slide 14: Recent Private Wealth acquisitions
Recent Private Wealth acquisitions For personal use only Grosvenor Fordham Date of acquisition September 2009 January 2010 Acquired interest 100% 100% Market segment Sydney based advisory firm Melbourne based advisory specialising in the medical, firm specialising in private dental and legal profess
Slide 15: Acquisition criteria
Acquisition criteria For personal use only HNW focused, quality adviser businesses – A clearly defined client value proposition – No turnarounds – Proven track record Attracted to our breadth of services Management committed to business – Cultural fit – personal values – Not a quick exit strat
Slide 16: Corporate Trust investing in new business initiatives
Corporate Trust investing in new business initiatives For personal use only 1H10 v 1H10 v Trust & Fund Services 1H09 2H09 Subdued market Six months ended 1H09 2H09 1H10 % % conditions $m $m $m change change Maintained market Total revenue 41.0 39.3 41.6 1 6 share Operating expenses (19.3) (21.4)
Slide 17: Mortgage Services driving revenue growth
Mortgage Services driving revenue growth For personal use only 1H09 2H09 1H10 Six months ended $m $m $m Trust & Fund Services 29.9 28.5 27.9 Mortgage Services 11.1 10.8 13.7 Total revenues 41.0 39.3 41.6 Securitisation Mortgage Services (FUA $b) (nos. of matters ‘000s) 241.4 222.9 222.4 81 45 51 1H0
Slide 18: Financials
For personal use only 17 Financials
Slide 19: Solid result
Solid result For personal use only Six months ended 1H09 2H09 1H10 1H10 v 1H09 1H10 v 2H09 $m $m $m % change % change Operating revenue 194.6 180.5 200.1 3 11 Operating expenses (113.6) (125.8) (124.6) (10) 1 EBITDA (1) 81.0 54.7 75.5 (7) 38 Depreciation & amortisation (6.1) (7.1) (7.0) (15) 1 Equit
Slide 20: Financial strength continues to improve
Financial strength continues to improve For personal use only 1H09 2H09 1H10 Shareholders’ Funds Net Tangible Assets ($m) ($m) Shareholder funds $261.0m $290.0m $347.5m Less: Intangibles (1) $131.7m $143.0m $155.7m 261 290 348 129 147 192 Net Tangible Assets (NTA) $129.3m $147.0m $191.8m 1H09 1H09 2
Slide 21: Continuing to de-risk balance sheet to counterparty credit risk
Continuing to de-risk balance sheet to counterparty credit risk For personal use only EMCF PPI $b $m 2.1 0.3 1.5 341 1.3 320 0.4 0.5 199 1.8 1.1 0.8 1H09 2H09 1H10 1H09 2H09 1H10 EMCF 1 EMCF 2 Redeployed risk capital to invest in our operating businesses 20
Slide 22: Risk capital requirements reflect changing business needs
Risk capital requirements reflect changing business needs For personal use only 2H09 1H10 $m $m Liquid Assets * 165 203 Risk based capital requirements 151 177 Coverage ratio 1.09X 1.14X * Cash and cash equivalents + 50% of Liquid Investments 21
Slide 23: Dividend now aligned to NPAT
Dividend now aligned to NPAT For personal use only DPS (cents Dividend payout per share) 120 140 ratio (%) 105.0 120 100 100 Dividend 80 payout policy 80 60.0 60 60 40.0 40 40 20 20 0 0 1H09 2H09 1H10 Dividend per ordinary share Proportion of NPAT paid/payable as dividend All dividends fully franked
Slide 24: DRP details
DRP details For personal use only 1H09 2H09 1H10 Fully franked dividend $0.40 $0.60 $1.05 DRP participation rate n/a 13% TBA Ex-dividend date 4 March Record date/DRP election by 5.00 pm AEDT 11 March DRP pricing period starts 12 March DRP pricing period ends 25 March Payment date 1 April Allocation
Slide 25: Cost initiatives deliver improved operating leverage
Cost initiatives deliver improved operating leverage For personal use only $m Expense discipline delivers 1.3 (7.3) 1.4 recurring savings 7.4 Have reinvested in business 124.6 M&A execution and organic business development add 8.2 to 1H09 expenses base Variable expenses are primarily remuner
Slide 26: Strategy
For personal use only 25 Strategy
Slide 27: Our vision
Our vision For personal use only To be the leading provider of wealth management services to financially successful investors and their advisers and the leading corporate trustee Supplier of choice Product and to financially Leading adviser to Leading corporate service successful high net worth trus
Slide 28: In wealth management, affluent clients have an affinity with our brand
In wealth management, affluent clients have an affinity with our brand and value proposition For personal use only Mass affluent and Mass market high net worth individuals Affordable advice providers and High touch strategic advisers industry funds Perpetual • Asset management scale and excellence i
Slide 29: Our brand health amongst advisors remains ahead of market
Our brand health amongst advisors remains ahead of market For personal use only Perpetual Competitor A Competitor B Competitor C Competitor D Competitor E Competitor F Competitor G Competitor H Competitor I 0 10 20 30 40 50 Source: Wealth Insights – Dec 09 28
Slide 30: Quality products and services are the foundation
Quality products and services are the foundation For personal use only g p Supplier of choice to Product and Leading adviser financially Leading service to high net worth successful corporate trustee excellence investors investors and their advisers 1 2 Incubation strategies Offering existing delive
Slide 31: Distributed to the financially successful via their financial advisers
Distributed to the financially successful via their financial advisers For personal use only g p Supplier of choice to Product and Leading adviser financially Leading service to high net worth successful corporate trustee excellence investors investors and their advisers 1 2 3 Achieve market positio
Slide 32: Growing our independent, specialist advice business
Growing our independent, specialist advice business For personal use only g p Supplier of choice to Product and Leading adviser financially Leading service to high net worth successful corporate trustee excellence investors investors and their advisers 1 2 3 Inorganic growth -- Organic growth in Inv
Slide 33: Delivering high quality corporate trustee and outsourced services
Delivering high quality corporate trustee and outsourced services For personal use only g p Supplier of choice to Product and Leading adviser financially Leading service to high net worth successful corporate trustee excellence investors investors and their advisers 1 2 3 Retain leadership in trust
Slide 34: Summary
For personal use only 33 Summary
Slide 35: Summary
Summary For personal use only Financial performance above market consensus – Underlying Profit After Tax $36.4m (1H09: $41.6m) – Net Profit After Tax $49.2m (1H09: $14.2m) Improving market conditions – Rising markets and cost initiatives deliver increased operating leverage – Investor confidence
Slide 36: Disclaimer
Disclaimer For personal use only Important information While this information has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information c