Perpetual Limited · ASX:PPT
Perpetual — Macquarie Australia Conference 2019
32 slides from Perpetual's conference presentation, May 1, 2019
Slide 1: Macquarie Australia Conference Presentation (ASX Announcement)
Perpetual Limited ABN 86 000 431 827 Angel Place, Level 18, 123 Pitt Street ASX Announcement Sydney NSW 2000, For personal use only Australia 1 May 2019 Phone +61 9229 9000 www.perpetual.com.au Macquarie Australia Conference Presentation Please find attached a copy of the investor presentation to be
Slide 2: Perpetual Limited Macquarie Australia Conference
For personal use only PERPETUAL LIMITED MACQUARIE AUSTRALIA CONFERENCE 1 May 2019 Rob Adams Chief Executive Officer & Managing Director ABN 86 000 431 827
Slide 3: Put not your trust in money, put your money in trust
“Put not your trust in money, put your money in trust.” Oliver Wei ndell Holmes, as quot. in Perpetual Trustees’ first annual report, 1886.
Slide 4: Trust is earned
For personal use only Trust is earned. Earn trust. Every action. Every day.
Slide 5: A Trusted Brand in Core Markets
PERPETUAL OVERVIEW A TRUSTED BRAND IN CORE MARKETS For personal use only Perpetual Investments ▪ $27.3b2 FUM ▪ Investment capabilities across Australian equities, Global equities, Multi-asset, Credit and fixed income 24% ▪ 2 listed investment vehicles3 1H191 Perpetual Private Operating profit 51% ▪
Slide 6: Diversified Sources of Revenue Across Three Divisions
PERPETUALS REVENUE SOURCES DIVERSIFIED SOURCES OF REVENUE ACROSS THREE DIVISIONS For personal use only Fiduciary & Advisory Market revenues (66%) Revenues (34%) 10% 11% Key Drivers 1H191 42% Key Drivers • New clients Operating • PI Funds Under Revenue • Market securitisation Contribution Management
Slide 7: Mature and Embedded Governance Framework
MATURE AND EMBEDDED GOVERNANCE FRAMEWORK LONG STANDING COMMITMENT TO CORPORATE RESPONSIBILITY For personal use only SOCIAL Governance People Community Environment Supported by Perpetual’s values of Excellence, Integrity and Partnership 6
Slide 8: Investments: New Direction Combining Boutique Culture with Institutional Infrastructure
PERPETUAL INVESTMENTS NEW DIRECTION COMBINING BOUTIQUE CULTURE WITH INSTITUTIONAL GRADE INFRASTRUCTURE For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Active value investing philosophy ▪ Diversification to accelerate growth and approach ▪ Expand beyond a “value” investment style only ap
Slide 9: Target Operating Model – Best of Both Worlds
PERPETUAL INVESTMENTS TARGET OPERATING MODEL – “BEST OF BOTH WORLDS” For personal use only ‘TRADITIONAL’ INSTITUTIONS ‘PURE’ BOUTIQUES Boutique culture in institutional framework • 100% owned subsidiary of large Open to other investment style beyond • 100% employee-owned; often as financial services
Slide 10: Aligning Our Distribution to Future Client Needs
PERPETUAL INVESTMENTS ALIGNING OUR DISTRIBUTION TO FUTURE CLIENT NEEDS For personal use only INDUSTRY ESG FACTORS TECHNOLOGY & INCREASED CONSOLIDATION INNOVATION TRANSPARENCY • Continued growth and consolidation of • Manager selection processes increasingly industry funds sophisticated (institutiona
Slide 11: Credit Income Trust
PERPETUAL CREDIT INCOME TRUST DESIGNED TO BE A NEW WAY TO ACHIEVE SUSTAINABLE, REGULAR INCOME For personal use only Managed by Perpetual Investments Target total return of RBA Cash Rate plus 3.25%1 p.a. one of Australia’s most experienced fund managers (after fees) through the economic cycle Highly
Slide 12: Private: Proven Business Model Well Positioned for Future Growth
PERPETUAL PRIVATE PROVEN BUSINESS MODEL WELL POSITIONED FOR FUTURE GROWTH For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Targeted segment approach ▪ Pursue all relevant growth options arising from focused on: industry dislocation − Established wealthy ▪ Greater profile to highlight Per
Slide 13: Disciplined Segmentation Strategy
PERPETUAL PRIVATE DISCIPLINED SEGMENTATION STRATEGY For personal use only BUSINESS OWNERS ESTABLISHED WEALTHY PROFESSIONALS Protecting & growing wealth Leading Referral Source High Accumulation Potential across generations ▪ 75 new Fordham clients1 ▪ 40 net new clients1 ▪ 6 courses held nationally1
Slide 14: Corporate Trust: Leveraging Strengths to Drive New Revenue Streams
PERPETUAL CORPORATE TRUST LEVERAGING STRENGTHS OF PROVEN BUSINESS MODEL TO DRIVE NEW REVENUE STREAMS For personal use only OUR STRENGTHS WHAT WILL BE DIFFERENT ▪ Targeted segment approach ▪ Drive growth in analytics focused on: ▪ Accelerate “Regtech” service offerings into new − Residential Real Est
Slide 15: Leading Fiduciary to Debt Capital Markets and Managed Funds Industry
PERPETUAL CORPORATE TRUST THE LEADING FIDUCIARY TO THE DEBT CAPITAL MARKETS AND THE MANAGED FUNDS INDUSTRY For personal use only DEBT MARKET MANAGED SERVICES FUNDS SERVICES CORE Fiduciary Management Regulated Managed BUSINESS Services Services Fiduciary Services Investment Trust Services OUR Trustee
Slide 16: Trusted Partner to Clients & the Industry
TRUSTED PARTNER TO CLIENTS & THE INDUSTRY THE CORPORATE TRUSTEE FOR SECURISATION SINCE INCEPTION For personal use only RBA committed RBA (CLF) Credit card master liquidity facility reporting trusts (CLF) (repo) Covered The ASF bonds The Royal formed The GFC Commission Regulatory Reporting suite1 198
Slide 17: Corporate Trust – Investing for the Future
PERPETUAL CORPORATE TRUST – INVESTING FOR THE FUTURE TO SUPPORT CLIENT GROWTH & DATA INSIGHTS For personal use only Perpetual issuer and investor Roundtables Undertaking a core Treasury application replacement analytics and project for key applications insights Extending our client usedCore applicat
Slide 18: Clients, People & Capabilities, Brand
For personal use only Clients Foster our long-term relationships Always act in the best interest of our clients Build on our strong client advocacy People & Capabilities Committed to our diversified business model Invest in new capabilities Brand Leverage the strength of our brand across all three b
Slide 19: Appendix – Evolution of Perpetual's Business Model
APPENDIX – EVOLUTION OF For personal use only PERPETUAL’S BUSINESS MODEL
Slide 20: Our Business Model Has Evolved Over 130+ Years
OUR BUSINESS MODEL HAS EVOLVED OVER THE PAST 130+YEARS TRUSTED THROUGH GENERATIONS For personal use only 1880’s 1930’s 1930’s19 1960’s 1990’s 2000 2010 60’s 2010 2002 PP acquired Fordham 1994 Launched Ethical SRI 2012 1886 Perpetual restructured Launched Pure Equity Alpha Fund Perpetual is from stat
Slide 21: Business Segments
PERPETUAL A For personal use only Perpetual Perpetual Perpetual Business segments Investments Private Corporate Trust Investment Products across Wealth Management Trustee & Fiduciary services Products & Services a range of Asset Classes Services including: including: • Australian Equities • Financia
Slide 22: Appendix – 1H19 Financials
APPENDIX – 1H19 For personal use only FINANCIALS 21
Slide 23: 1H19 Financial Performance – Group
1H19 FINANCIAL PERFORMANCE – GROUP For personal use only 1H19 2H18 1H18 1H19 1H19 For the period $m $m $m v 2H18 v 1H18 Operating revenue1 252.3 266.9 266.8 (5%) (5%) Total expenses (167.0) (172.2) (165.3) 3% (1%) Underlying profit after tax (UPAT) 60.2 67.4 71.5 (11%) (16%) Significant items - 4.7
Slide 24: Net Profit Impacted by Weaker Equity Markets and Lower FUM
NET PROFIT IMPACTED BY : WEAKER EQUITY MARKETS AND LOWER FUM, OFFSET BY INCREASED DISTRIBUTIONS AND LOWER TAX For personal use only Movement in NPAT ($m) 68.1 3.5 60.2 3.4 (7.8) 3.4 0.3 (10.1) 1H18 NPAT Revenue1 Asset at Group interest and Expenses3 Tax 1H18 Significant 1H19 NPAT FVTPL2 distribution
Slide 25: Balance Sheet
BALANCE SHEET STRENGTH PROVIDES OPPORTUNITIES For personal use only For the period ended 1H19 2H18 1H18 1H19 v 1H19 v Regulatory Capital2 2H18 1H18 Cash 279.8 320.2 270.1 (13%) 4% Liquid investments (FVTPL) 63.4 75.0 83.7 (15%) (24%) 155.6 155.5 155.2 Goodwill & other intangibles 346.9 327.7 327.8 6
Slide 26: Financial Indicators
FINANCIAL INDICATORS For personal use only EPS1 cps DPS cps NTA per share ROE2 % 145.5 154.1 135 140 22.1 125 21.2 128.6 6.69 6.68 18.2 6.43 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 $1.25 97% 6.45% FULLY FRANKED INTERIM PAYOUT RATIO3 DIVIDEND YIELD4 DIVIDEND 1. Fully diluted 2. RO
Slide 27: Investments: Lower Revenue Due to Net Outflows and Performance Fees
PERPETUAL INVESTMENTS LOWER REVENUE DUE TO NET OUTFLOWS AND PERFORMANCE FEES For personal use only Revenue $m 1H19 2H18 1H18 1H19 v 1H19 v For the period 5.3 3.9 $m $m $m 2H18 1H18 1.4 Revenue 105.8 114.6 117.6 (8%) (10%) 112.3 110.7 104.4 Operating expenses (54.3) (55.6) (54.9) 2% 1% 1H18 2H18 1H19
Slide 28: Private: Consistent Results
PERPETUAL PRIVATE CONSISTENT RESULTS, WELL POSITIONED FOR FUTURE GROWTH For personal use only 1H19 2H18 1H18 1H19 v 1H19 v Revenue $m For the period $m $m $m 2H18 1H18 Market related revenue 60.5 59.5 61.0 2% (1%) 92.8 93.7 92.6 Non-market related revenue 32.1 34.2 31.8 (6%) 1% 31.8 34.2 32.1 Total
Slide 29: Corporate Trust: Strong Diversified Business
PERPETUAL CORPORATE TRUST STRONG DIVERSIFIED BUSINESS WITH CLEAR STRATEGY For personal use only 1H19 2H18 1H18 1H19 v 1H19 v Revenue $m For the period $m $m $m 2H18 1H18 53.7 53.6 49.6 Debt Market Services revenue 28.9 29.6 27.9 (2%) 4% 21.7 24.1 24.7 Managed Fund Services revenue 24.7 24.1 21.7 3%
Slide 30: Analysts Covering Perpetual
ANALYSTS COVERING PERPETUAL Broker Analyst Phone Contact For personal use only Bank of America Merrill Matt Dunger +612 9226 5329 matthew.dunger@baml.com Lynch Bell Potter Lafitani Sotiriou +613 9235 1668 lsotitiou@bellpotter.com.au Citi Nigel Pittaway +612 8225 4860 nigel.pittaway@citi.com CLSA Ed
Slide 31: Contacts
CONTACTS For personal use only Rob Adams Level 18 Angel Place, 123 Pitt Street Chief Executive Officer & Managing Director SYDNEY NSW 2000 Australia rob.adams@perpetual.com.au +612 9229 9700 Chris Green Chief Financial Officer chris.green@perpetual.com.au +612 9229 9861 Andrew Ehlich General Manager
Slide 32: Disclaimer
DISCLAIMER Important information The information in this presentation is general background information about the Perpetual Group and its activities current as at 1 May 2019. For personal use only It is in summary form and is not necessarily complete. It should be read together with the company’s co