Slide 1: Investor Presentation
Investor Presentation Presenters Paul Greenwood, President North America and Global CIO Joseph Ferragina, Chief Financial Officer and COO Australia Tony Robinson, Executive Director A S X : PA C March 2017
Slide 2: Disclaimer
Disclaimer The information in this presentation is general information about Pacific Current Group and is current only at the date of this presentation. In particular, this presentation: ❯ is not an offer or recommendation to purchase or subscribe for securities in Pacific Current Group Limited, nor
Slide 3: Agenda
Agenda 1. Overview 2. Portfolio Performance 3. Financials 4. Summary 5. Q & A 6. Appendix ASX: PAC // 3
Slide 4: Overview
1 OVERVIEW ASX: PAC // 4
Slide 5: Business update
Business update ❯ All resolutions successfully passed at the EGM on 15 March 2017, enabling a simplification of the business structure for Pacific Current Group (“PAC”) • Conversion ratio of Class B units to PAC shares is accretive for existing PAC shareholders • Expenses at the corporate level redu
Slide 6: Progress on Strategic Plan
Progress on Strategic Plan Simplify » EGM held on 15 March 2017 to finalise restructure and simplification 1 business and structure » Sold Raven and Aubrey. Further sales of smaller portfolio companies may occur in the near term » Acquired Aperio, a firm with an excellent track record of FUM 2 D
Slide 7: Overview of PAC
Overview of PAC The simplification and restructure will result in PAC owning 100% of the Aurora Trust Aurora Trust Core Boutiques Growth Boutiques Other Boutiques Real assets fund of funds International equity China ETF index provider Customised tax managed International small cap Australian small c
Slide 8: PAC 1H17 Financial Results Summary
PAC 1H17 Financial Results Summary FUM » Total FUM of boutiques reaches A$51.7bn » Core boutiques: A$42.8bn A$51.7bn* » Growth boutiques: A$6.7bn » Other boutiques: A$2.2bn NPBT A$7.4m** 118% » Underlying Net Profit Before Tax of A$7.4m, up 117.6% from A$3.4m in 1H16 A$3.8m statutory NPAT A$5.8m** 2
Slide 9: Portfolio Performance
2 PORTFOLIO PERFORMANCE ASX: PAC // 9
Slide 10: Summary of Boutique Economics
Summary of Boutique Economics Core Boutiques Growth Boutiques Other Boutiques Traditional Economics Economics to PAC are broadly correlated with their equity ownership in the funds Non-traditional Economics Economics to PAC are leveraged to revenue and FUM growth of the funds ❯ PAC earnings from Cor
Slide 11: Core Boutiques
Core Boutiques Boutique: Equity ownership: 100% 40% PM / CIO: Sean Goodrich and Troy Schell Anton Tagliaferro and Hugh Giddy Economics: 100% of excess management fee* Equity share FUM as at Feb 17: US$1.2bn A$8.3bn » Closed new funds totaling approx. US$300m in » Steadily growing FUM, increasing mor
Slide 12: Core Boutiques
Core Boutiques Boutique: Equity ownership: 23.4% 100% 10% Gerald Seizert, David Collon and Richard Elmslie and PM / CIO: Patrick Geddes Edward Eberle Nick Langley Preferred profit share, reduced to Economics: Equity share Revenue share pro rata after certain milestones FUM as at Feb 17: US$16.89bn U
Slide 13: Growth Boutiques
Growth Boutiques Boutique: Equity ownership: 25% 16% Travis Prentice and PM / CIO: David Kim Josh Moss Economics: Equity share Equity and revenue share FUM as at Feb 17: US$542.0m US$433.5m » Significant inflows, with FUM increasing 33% » Solid growth over last 18 months. Interest in Fund flows: sin
Slide 14: Growth Boutiques
Growth Boutiques Boutique: Equity ownership: 5% 18% PM / CIO: Rajiv Jain Michael Lukin and Shaw Ng Economics: Revenue share Equity share FUM as at Feb 17: US$1.5bn A$4.6bn* » Currently in hyper growth phase, doubling FUM Fund flows: » n/a since Dec-16 » Invested at firm inception in June of 2016, ze
Slide 15: Other Boutiques
Other Boutiques » Provides investors with direct exposure to Chinese markets primarily through a series of China indexes » Revenue generated through a licensing agreement » Equity ownership: 76%, Feb-2017 FUM: US$202m » Australian small cap fund providing above benchmark returns over the medium to l
Slide 16: Impressive track record of outperformance from key boutiques
Impressive track record of outperformance from key boutiques Blackcrane Performance 1Y (%) 3Y (%) 5Y (%) Inception (%) Benchmark Blackcrane Overseas Alpha -3.14 0.89 n/a 9.24 MSCI EAFE-ND Performance against Benchmark -4.14 2.49 n/a 6.51 Source: PAC boutiques and eVestment As of December 31, 2016. A
Slide 17: Impressive track record of outperformance from key boutiques
Impressive track record of outperformance from key boutiques Distributions / Paid-In Total Value / Paid-in Internal Rate of Aether Performance Vintage Year Capital (net) Capital (net) Return (net)* ARA I 2009 0.51x 1.04x 1.4% ARA II 2012 0.04x 1.09x 3.8% ARA III 2013 0.02x 1.12x 10.0% ARA III Surplu
Slide 18: Impressive track record of outperformance from key boutiques
Impressive track record of outperformance from key boutiques EAM Performance 1Y (%) 3Y (%) 5Y (%) Inception (%) Benchmark EAM Emerging Markets Small Cap -2.66 -1.88 n/a 8.25 MSCI EM Small Cap-ND Performance against Benchmark -4.94 -0.61 n/a 7.85 EAM International Micro Cap 2.41 n/a n/a 7.33 Russell
Slide 19: Impressive track record of outperformance from key boutiques
Impressive track record of outperformance from key boutiques Seizert Performance 1Y (%) 3Y (%) 5Y (%) Inception (%) Benchmark Seizert Concentrated Equity 16.58 6.51 15.25 10.12 Russell 1000 Performance against Benchmark 4.53 -2.08 0.56 1.45 Seizert Core Equity 20.04 9.97 15.78 7.28 S&P 500 Performan
Slide 20: Financials
3 FINANCIALS ASX: PAC // 20
Slide 21: Pro forma financial results of PAC
Pro forma financial results of PAC Pro forma PAC P&L on a ‘look through’ basis as if the Aurora Trust was 100% owned by PAC ❯ The corresponding table shows pro forma PAC PAC PAC P&L for 1H17 and 1H16 which has P&L Highlights (A$m) Pro forma 1H16* Pro forma 1H17 been adjusted to gross up significant
Slide 22: Decrease in underlying expenses
Decrease in underlying expenses Significant reduction in corporate costs and interest expense will improve earnings leverage Corporate cost reductions A$14.0m ~38% decrease ❯ Reduced employee related expenses a Other expenses in underlying expenses vs significant driver of the reduced costs in $1.5
Slide 23: Capital Structure
Capital Structure Interim dividend deferred whilst balance sheet in process of being strengthened Simplification: ❯ The restructure and simplification transactions were approved at a meeting of PAC shareholders on 15 March 2017 and will result in the following: • 13.7 million shares to be issued to
Slide 24: Summary
4 SUMMARY ASX: PAC // 24
Slide 25: Summary
Summary Transparent structure and positive outlook ahead 1 Continue to reduce debt and strengthen balance sheet After completion of restructure our focus will be on growth and 2 diversification Expect meaningful acceleration in FUM from Growth boutiques in 3 CY17 We expect to realise additional cost
Slide 26: Q&A
5 Q&A ASX: PAC // 26
Slide 27: Appendix 1: Key Portfolio Manager / CIO Biographies
APPENDIX 1: KEY PORTFOLIO MANAGER / CHIEF INVESTMENT OFFICER BIOGRAPHIES ASX: PAC // 27
Slide 28: Key Portfolio Manager / CIO Biographies
Key Portfolio Manager / CIO Biographies » Sean and Troy are the co-founders of Aether Investment Sean Goodrich Partners and are jointly responsible for sourcing, evaluating and monitoring investments » Sean was previously Director of Alternative Investments at Jeffrey Slocum & Associates Inc. and le
Slide 29: Key Portfolio Manager / CIO Biographies
Key Portfolio Manager / CIO Biographies » Travis and Josh co-founded EAM Investors in 2007 Travis Prentice » Travis serves as Chief Executive Officer and Chief Investment Officer of EAM Investors and acts as lead Portfolio Manager for the firm’s micro cap and ultra micro cap investment strategies Jo
Slide 30: Key Portfolio Manager / CIO Biographies
Key Portfolio Manager / CIO Biographies » Richard and Nick serve as Co-Chief Executive Officer and Richard Elmslie Co-Chief Investment Officer of Rare » Richard previously spent 19 years in the global infrastructure sector, including five years as Head of Power and Joint Head of Infrastructure at UB
Slide 31: Appendix 2: PAC Interim Results
APPENDIX 2: PAC INTERIM RESULTS ASX: PAC // 31
Slide 32: PAC – Statutory P&L
PAC – Statutory P&L PAC Statutory P&L for six months to 31 December 2016 PAC PAC ❯ Statutory PAC profit and loss primarily Statutory Statutory reflects share of profit and loss from Aurora P&L Highlights (A$m) 1H16 1H17 % Change Trust, the business operations of the Group Revenue 2.7 1.8 (33.3%) Emp
Slide 33: PAC – Underlying P&L
PAC – Underlying P&L Significant non-recurring items such as impairment charges, non-labour costs incurred as a result of restructure PAC underlying P&L (A$m) 1H16 1H17 ❯ All non-recurring items are PAC’s share PAC Statutory Net Profit / (Loss) After Tax (10.0) 2.2 of expense/gain from Aurora Trust
Slide 34: Reconciliation of significant items on a pro forma basis
Reconciliation of significant items on a pro forma basis Reconciliation of pro forma P&L on a ‘look through’ basis and significant non-recurring items as if the Aurora Trust was owned 100% by PAC ❯ The corresponding table shows the reconciliation of PAC pro forma net profit / Pro forma PAC P&L (A$m)
Slide 35: Reconciliation of PAC pro forma net profit to Statutory accounts
Reconciliation of PAC pro forma net profit to Statutory accounts Reconciliation on a ‘look through’ basis as if the Aurora Trust was owned 100% by PAC (A$m) 1H16* 1H17 Aurora Trust (Management) Profit / (Loss) Before Tax (19.0) 5.6 PAC Statutory Profit / (Loss) Before Tax (12.4) 3.8 Excluding Aurora
Slide 36: Appendix 3: Aurora Trust Interim Results
APPENDIX 3: AURORA TRUST INTERIM RESULTS ASX: PAC // 36
Slide 37: Aurora Trust (Management) P&L
Aurora Trust (Management) P&L % ❯ Revenue includes service fee revenue P&L Highlights (A$m) 1H16 1H17 change ❯ Share of earnings from boutiques include Revenue 2.2 3.1 40.9% Aether and Seizert Gain on sale of investments 10.2 1.1 (89.2%) Gain on revaluation of X-RPU - 15.3 n/a ❯ Employee expenses ex
Slide 38: Aurora Trust – Underlying P&L
Aurora Trust – Underlying P&L Significant non-recurring items Aurora P&L (A$m) 1H16 1H17 ❯ The Aurora Trust’s underlying profit after tax has been calculated as Aurora Trust Aurora Net Profit / (Loss) After Tax (20.5) 5.5 (Management) profit / (loss) after tax after Gain on revaluation of X-RPU - (1
Slide 39: Aurora Trust – Balance Sheet
Aurora Trust – Balance Sheet Immediate focus on balance sheet Balance Sheet – Aurora Trust (A$m) 1H17 Current Assets 32.8 ❯ PAC owned 65% of Aurora Trust as at 31 December 2016 Non-Current Assets ❯ Reflects consolidation of Aether Investment Partners, Available-for-sale investments 28.6 Seizert Capi