Perpetual Limited · ASX:PPT
Perpetual — H1 2005 Earnings Presentation
38 slides from Perpetual's earnings presentation, Feb 23, 2005
Slide 1: 2005 Half Year Results
2005 Half Year Results Analyst Briefing 23 February 2005
Slide 2: Agenda
Agenda First half highlights – David Deverall Financial results – John Nesbitt Corporate strategy update – David Deverall Outlook – David Deverall 1
Slide 3: An excellent first half result
An excellent first half result Dec 2004 Dec 2003 % Change Operating profit $54.3m $41.4m 31% after tax(1) Profit after tax $66.8m $42.4m 58% Interim dividend per 130¢ 70¢ 86% share EPS(2)(3) 140.6 ¢ 109.2 ¢ 29% (1) Operating profit after tax excludes realised gains on investments and one-off costs o
Slide 4: Track record of continued profit growth
Track record of continued profit growth Operating Profit after Tax EPS $M c ents 60 150 54.3 140 .6 109.2 41.4 40 100 88.5 33.4 25.9 68.7 51.9 20 19.2 50 0 0 Dec Dec Dec Dec Dec De c Dec De c Dec De c 00 01 02 03 04 00 01 02 03 04 3
Slide 5: 19% increase in revenues driven by strong growth in asset volumes
19% Increase in revenues driven by strong growth in asset volumes Funds Under Funds Under Advice & Funds Under Management Administration Administration Perpetual Investments Perpetual Private Clients Corporate Trust $B $B $B 30 8 150 7.3 26.0 6.6 12 4 .1 25 6.3 5.9 6.0 1 12 .4 21.7 6 20 19.4 100 9 7
Slide 6: All operating divisions performing well
All operating divisions performing well S Wealth Management – up very strongly S Continued outstanding investment performance S Good fund inflows and revenue growth S Continued cost management S Added capabilities to deliver growth S Corporate Trust – up strongly S Securitisation volumes and revenue
Slide 7: 26% growth in EBITDA
26% growth in EBITDA EBITDA EBITDA % Dec 2004 Dec 2003 Change Wealth Management $74.7m $56.8m 32% Corporate Trust $15.1m $12.9m 17% Group unallocated ($5.7m) ($2.8m) - TOTAL* $84.1m $66.9m 26% * Excludes gains on sale of investments and one-off costs of major strategic initiatives 6
Slide 8: Excellent growth for Wealth Management
Excellent growth for Wealth Management S Expansion of EBITDA margin through revenue growth and cost control S Continued excellent investment performance S Funds under management up 20% since 30 June 2004 S Opened global equities business in Ireland S Launched credit and property products S Quantitat
Slide 9: Wealth Management EBITDA up 32%
Wealth Management EBITDA up 32% Dec 2004 Dec 2003 % Change Revenues Perpetual Investments $103.9m $84.8m 23% Private Clients $35.8m $32.7m 9% Total Revenues $139.7m $117.5m 19% Expenses $65.0m $60.7m 7% EBITDA* $74.7m $56.8m 32% EBITDA* margin 53% 48% * Excludes one-off costs of major strategic init
Slide 10: Continued outstanding performance in Australian Equities
Continued outstanding performance in Australian Equities Excess over benchmark (pre-fees) (3 Year Rolling Excess Performance) Variance to benchmark 10.0% 8.0 Australian Share Fund Performance 6.0 4.0 1st Quartile Performers- 2.0 Mercers Universe 0.0 Jan Apr Jul Oct Jan Apr Jul Oct Dec 03 03 03 03 04
Slide 11: Performance well recognised by the market during this half
Performance well recognised by the market during this half Personal Investor S Fund Manager of the Year 2004 Magazine Awards Money Magazine ‘Best of S Best Rated Australian Equities Fund the Best 2004’ Awards S Best Growth Fund S Golden Bull Award for Fund Manager of the Year Australian Fund Manager
Slide 12: Funds under management up 20% in the first half
Funds under management up 20% in the first half FUM ($B) 30 26.0 26.0 25 Diversified & Property Institutional 21.7 Mortages, Fixed 20 19.4 Interest, Cash International 17.6 17.4 Equity Retail 15 10 Australian Equites Masterfund 5 0 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Dec 04 11
Slide 13: First half net inflows of $1.4B
First half net inflows of $1.4B 30 June 2004 Net inflows Other* 31 Dec 2004 FUM ($B) ($B) ($B) FUM ($B) Retail $6.6 - $0.7 $7.3 Masterfund $11.7 $0.7 $1.4 $13.8 Institutional $3.4 $0.7 $0.8 $4.9 All Channels $21.7 $1.4 $2.9 $26.0 Australian Equity $13.9 $1.3 $2.6 $17.8 Other $7.8 $0.1 $0.3 $8.2 All
Slide 14: Global equities business fully operational
Global equities business fully operational S PIIML (PI Investment Management Ltd.) established and operating in Dublin S Recently authorised by the Irish Financial Services Regulatory Authority to commence operations S Team of 7 very well regarded asset managers S Highly experienced London-based ins
Slide 15: All advice and administration businesses experienced good growth
All advice and administration businesses experienced good growth Funds under advice, administration, and trust ($B) 8 7.3 6.6 6.3 DIY/IDPS 5.9 6.0 DIY/IDPS /Other 6 /Other Fiduciary Trusts Services 4 & Estates Wilson Dilworth 2 Private Clients* Private Clients* 0 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 *
Slide 16: Implemented first phase of advice strategy
Implemented first phase of advice strategy S Integrated Wilson Dilworth into our Private Clients business to provide a wider range of products and more consistent level of service S Discontinued use of the Wilson Dilworth brand S Relocated Wilson Dilworth operations into a single Melbourne premises
Slide 17: Steady growth in Corporate Trust
Steady growth in Corporate Trust S Growth driven by strong securitisation volumes S Securitisation revenues up 17% on prior corresponding half year S Continued strong issuances of residential mortgage backed securities S Continuing to win new securitisation clients S Vision is to be the end-to-end p
Slide 18: Corporate Trust EBITDA up 17%
Corporate Trust EBITDA up 17% Dec 2004 Dec 2003 % Change Revenue $28.1m $24.1m 17% Expenses $13.0m $11.2m 16% EBITDA $15.1m $12.9m 17% EBITDA Margins 54% 54% 17
Slide 19: ASX Perpetual joint venture up
ASX Perpetual joint venture up S Retained and acquired key clients this period (able to replace revenues from loss of 2nd largest client in prior corresponding period) S Re-appointed by Telstra – largest share registry in Australia S New business from Coles Myer, Babcock & Brown and Mellon Human S E
Slide 20: ASX Perpetual EBITDA up 4% and net profit to Perpetual up 20%
ASX Perpetual EBITDA up 4% and net profit to Perpetual up 20% Dec 2004 Dec 2003 % Change Revenue $28.5m $28.3m 1% Expenses $19.8m $19.9m (1)% EBITDA $8.7m $8.4m 4% Net profit after tax $1.2m $1.0m 20% 19
Slide 21: Agenda
Agenda First half highlights – David Deverall Financial results – John Nesbitt Corporate strategy update – David Deverall Outlook – David Deverall 20
Slide 22: Overview
Overview S Building off a solid base S Moving decisively to implement strategy S Continuing to create a more variable cost base S Pleasing result in a period of significant activity 21
Slide 23: An excellent operational result
An excellent operational result Dec 2004 Dec 2003 % Change Revenue(1) $174.0m $146.4m 19% EBITDA(2) $84.1m $66.9m 26% Operating profit before tax(2) $77.4m $58.8m 32% Operating profit after tax(2) $54.3m $41.4m 31% Profit after tax $66.8m $42.4m 58% Operating EPS(2,3) 140.6¢ 109.2¢ 29% EPS(3) 172.9¢
Slide 24: Operating profit after tax of $54.3m
Operating profit after tax of $54.3m $100M 80 24.2 Sale of shares (11.4) -4.0 66.8 Sale of -7.7 60 54.3 Symetry (12.8) 40 20 0 Operating Profit on sale Provisions for One-off expense Net profit profit after tax of investments/ the move to a for establishing after tax businesses single Sydney global
Slide 25: Margins improving whilst enhancing capabilities
Margins improving whilst enhancing capabilities Dec 2004 Dec 2003 % Change Total revenue(1) $174.0m $146.4m 19% Staff related expenses $58.0m $50.4m 15% Admin & general expenses $31.9m $29.1m 10% Total operating expenses(2) $89.9m $79.5m 13% EBITDA $84.1m $66.9m 26% EBITDA / revenue margin 48% 46% (
Slide 26: First half saw an increase in variable costs and an investment in growth
First half saw an increase in variable costs and an investment in growth… S Staff incentive costs higher in line with Increased increased profits variable costs S Increased professional fees for outsourced operations (FUM based fees) S Credit investing capability S Strategy and project management In
Slide 27: …whilst maintaining profitability
…whilst maintaining profitability EBITDA to revenue margin (%) 70 60 50 48.1 48.3 45.7 41.2 40.3 40 30 EB ITDA to revenue 20 margin 10 0 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 26
Slide 28: A strong, clean balance sheet
A strong, clean balance sheet Dec 2004 Jun 2004 % Change Net assets $277.9m $315.4m (12%) Investments at cost $60.5m $60.1m 1% Investments at market value $116.3m $109.5m 6% Cash holdings $130.4m $163.4m (20%) Liquid assets $246.7m $272.9m (10%) Key Financial Ratios Gross debt to book equity 16% 14%
Slide 29: Normal dividend of 130 cents per share as per our new dividend policy
Normal dividend of 130 cents per share as per our new dividend policy Ordinary dividend per share (cents) 150 130 100 80 70 70 Ordinary 60 Dividend 50 0 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Special Dividend 50 250* (cents per share) * Includes special dividends of 50 cents paid in June 2004 and 200 ce
Slide 30: Agenda
Agenda First half highlights – David Deverall Financial results – John Nesbitt Corporate strategy update – David Deverall Outlook – David Deverall 29
Slide 31: Implementing our strategy
Implementing our strategy Focus on our 4 sources of I. Develop a more II. Develop new growth competitive balanced portfolio engines advantage III. Fully engage our people to deliver our strategy 30
Slide 32: Four sources of competitive advantage that underpin our strategy
Four sources of competitive advantage that underpin our strategy 1. The management of funds management teams, philosophies, and processes 2. Relationship management with financial planning community 3. A trusted brand 4. A long history as a leading provider of fiduciary services to individuals and c
Slide 33: Implementation: Developing a more balanced portfolio and new growth engines
Implementation: Developing a more balanced portfolio and new growth engines S Expanded our asset management footprint S Global equities S Credit S Opened global equities business in Ireland S Initial flows into credit income and credit enhanced cash products S Launched property income and capital pr
Slide 34: Expanding our asset management footprint
Expanding our asset management footprint Skill set High Low breadth breadth Domestic Stock Broad Styles Small Caps Hedge Private Picking Funds Equity Mortgage Mortgages Mezz Debt Lending LPT Stock Global Domestic Picking Infrastructure Infra- Investing structure Quantitative Global Domestic Hedge Cu
Slide 35: Implementation: Fully engage our people
Implementation: Fully engage our people S Completed implementation of new remuneration system S Moving to a single premises in January 2006 - Angel Place S Well progressed in selling 39 Hunter Street and pleased with the level of interest from potential buyers S Leadership team in place 34
Slide 36: Agenda
Agenda First half highlights – David Deverall Financial results – John Nesbitt Corporate strategy update – David Deverall Outlook – David Deverall 35
Slide 37: A good platform for growth
A good platform for growth S Favourable operating environment S Strong retirement savings trend S Healthy growth in Corporate Trust industry S Strong second half starting position for funds under management and funds under advice S Added growth capabilities in the first half We expect to record an i
Slide 38: 2005 Half Year Results
2005 Half Year Results Analyst Briefing 23 February 2005