Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Shareholder Meeting (October 2018)
59 slides from Pinnacle Investment Management's shareholder meeting presentation, Oct 18, 2018
Slide 1: 2018 Annual General Meeting
For personal use only Pinnacle Investment Management Group Limited (PNI) 2018 Annual General Meeting 18 October 2018
Slide 2: 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 18 October 2018. • This presentation is not an offer or invitation for subscription or purchase of securities or a recom
Slide 3: Agenda
Agenda For personal use only • Chairman’s address – Alan Watson • Ordinary business • Managing Director’s Address – Ian Macoun • The Changing Landscape for Investment Management Distribution – Andrew Chambers • Q&A • Results of meeting 2
Slide 4: Chairman's Address
For personal use only Chairman’s Address Alan Watson, Chairman 3
Slide 5: Chairman's Address
Chairman’s Address For personal use only ▪ Building a strong diversified platform ▪ Investing to underpin future growth ▪ Adding quality affiliates ▪ Building balance sheet strength for future opportunities ▪ FY18 highlights 4
Slide 6: Building a strong diversified platform
Building a strong diversified platform Continuing to investing in a diversified platform to strengthen future growth For personal use only • Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests • Equity ownership enhances alignment with shareholders Seed FUM and work
Slide 7: Investing to underpin future growth
Investing to underpin future growth For personal use only ▪ Investment in distribution platform − Grow ahead of our Affiliates − Listen to clients and move quickly to meet their evolving needs − Do not become the market – be ahead of it ▪ Investment in new affiliates adds diversification − Global eq
Slide 8: Adding quality affiliates
Adding quality affiliates For personal use only A specialist debt fund manager, offering investors actively managed access to attractive risk-adjusted returns in private debt markets Smart beta, factor investing and client solutions (including ESG) capabilities High conviction investment manager of
Slide 9: Building balance sheet strength for future opportunities
Building balance sheet strength for future opportunities For personal use only ▪ $31.4m* of cash and principal investments ▪ Includes $21.1m* invested in strategies managed by Pinnacle Affiliates ▪ Excludes nearly $12m of cash applied for Affiliate equity recycling loans and Affiliate equity purchas
Slide 10: 2018 Financial Highlights
2018 Financial Highlights For personal use only • NPAT from continuing operations attributable to shareholders of $23.1 million, up 92.5% from $12.0 million in the prior year • Earnings per share from continuing operations of 14.3 cents, up 76.5% from 8.1 cents in the prior year • NPAT attributable
Slide 11: Ordinary business
Ordinary business For personal use only • Item 1 – Tabling of FY18 financial statements • Item 2 – Adoption of Remuneration Report • Item 3 – Re-election of directors • Item 4 – Omnibus Incentive Plan • Item 5 – Issue of securities to directors (or their associates) under the Omnibus Incentive Plan
Slide 12: Tabling of FY18 financial statements
Item 1 – Tabling of FY18 financial statements For personal use only • Tabling of FY18 financial statements 11
Slide 13: Adoption of Remuneration Report
Item 2 – Adoption of Remuneration Report For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “To adopt the Remuneration Report for the financial year ended 30 June 2018.” 12
Slide 14: Adoption of Remuneration Report - proxy results
Item 2 – Adoption of Remuneration Report For personal use only Resolution 2 Resolution by proxy Adoption of Remuneration Report % of eligible proxies in favour 92.66% Total number votes cast 37,857,730 For 35,166,325 Against 2,691,405 Open usable 0 Excluded votes 41.823.563 Abstain 4,295 13
Slide 15: Board succession
Board succession For personal use only • Lorraine Berends appointed to the PNI Board, with effect from 1st September 2018 • Long-serving Director Steve Wilson to retire from the Board at end of this meeting • Takes the number of female directors to two, in line with our stated target • Increases the
Slide 16: Board and Committee Structure
Board and Committee Structure For personal use only Board Member Classification Equity Committees ownership Audit, compliance and risk Remunerations and management nominations Alan Watson (Chair) Independent, non-executive Yes Chair Ian Macoun (Managing Executive Yes Director) Deborah Beale Independ
Slide 17: Re-election of Ms Lorraine Berends
Item 3(a) – Re-election of Ms Lorraine Berends For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That Lorraine Berends, who retires from the office of Director, and being eligible, offers herself for re-election, is re-elected as a Director.”
Slide 18: Re-election of Ms Lorraine Berends - proxy results
Item 3(a) – Re-election of Ms Lorraine Berends For personal use only Resolution 3(a) Resolution by proxy Re-election of Lorraine Berends % of eligible proxies in favour 99.81% Total number votes cast 76,777,348 For 76,627,802 Against 55,583 Open usable 93,963 Excluded votes 0 Abstain 2,047 17
Slide 19: Re-election of Mr Gerard Bradley
Item 3(b) – Re-election of Mr Gerard Bradley For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That Gerard Bradley, who retires from the office of Director by rotation and, being eligible, offers himself for re-election, is re-elected as a Dir
Slide 20: Re-election of Mr Gerard Bradley - proxy results
Item 3(b) – Re-election of Mr Gerard Bradley For personal use only Resolution 3(b) Resolution by proxy Re-election of Gerard Bradley % of eligible proxies in favour 99.54% Total number votes cast 79,777,348 For 79,411,799 Against 271,586 Open usable 93,963 Excluded votes 0 Abstain 2,047 19
Slide 21: Re-election of Mr Andrew Chambers
Item 3(c) – Re-election of Mr Andrew Chambers For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That Andrew Chambers, who retires from the office of Director by rotation and, being eligible, offers himself for re-election, is re-elected as a D
Slide 22: Re-election of Mr Andrew Chambers - proxy results
Item 3(c) – Re-election of Mr Andrew Chambers For personal use only Resolution 3(c) Resolution by proxy Re-election of Andrew Chambers % of eligible proxies in favour 96.32% Total number votes cast 79,777,348 For 76,841,715 Against 2,841,826 Open usable 93,807 Excluded votes 0 Abstain 2,047 21
Slide 23: Omnibus Incentive Plan
Omnibus Incentive Plan For personal use only • Our people have elected to work within our business model and culture which is fundamental to our recent growth. To sustain an environment that promotes the continuation of the success of the business, and attract and retain a consistently high quality
Slide 24: Adoption of Employee Omnibus Incentive Plan
Item 4 – Adoption of Employee Omnibus Incentive Plan For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That for the purposes of Listing Rule 7.2 exception 9(b), Chapter 2D.2 of the Corporations Act and for all other purposes, approval is given
Slide 25: Adoption of Employee Omnibus Incentive Plan - proxy results
Item 4 – Adoption of Employee Omnibus Incentive Plan For personal use only Resolution 4 Resolution by proxy Adoption of Employee Omnibus Incentive Plan % of eligible proxies in favour 99.71% Total number votes cast 59,100,207 For 58,931,748 Against 74,496 Open usable 93,963 Excluded votes 21,150,537
Slide 26: 5(a) Issue of securities - Alan Watson
Item 5(a) – Issue of securities under the Omnibus Incentive Plan – Alan Watson For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purposes, a
Slide 27: 5(a) Issue of securities - Alan Watson - proxy results
Item 5(a) – Issue of securities under the Omnibus Incentive Plan – Alan Watson For personal use only Resolution 5(a) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Alan Watson % of eligible proxies in favour 95.97% Total number votes cast 59,104,649 For 56,721,644 Against
Slide 28: 5(b) Issue of securities - Deborah Beale
Item 5(b) – Issue of securities under the Omnibus Incentive Plan – Deborah Beale For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purposes,
Slide 29: 5(b) Issue of securities - Deborah Beale - proxy results
Item 5(b) – Issue of securities under the Omnibus Incentive Plan – Deborah Beale For personal use only Resolution 5(b) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Deborah Beale % of eligible proxies in favour 95.89% Total number votes cast 59,104,649 For 56,676,801 Aga
Slide 30: 5(c) Issue of securities - Lorraine Berends
Item 5(c) – Issue of securities under the Omnibus Incentive Plan – Lorraine Berends For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purpos
Slide 31: 5(c) Issue of securities - Lorraine Berends - proxy results
Item 5(c) – Issue of securities under the Omnibus Incentive Plan – Lorraine Berends For personal use only Resolution 5(c) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Lorraine Berends % of eligible proxies in favour 95.89% Total number votes cast 59,104,649 For 56,674,6
Slide 32: 5(d) Issue of securities - Gerard Bradley
Item 5(d) – Issue of securities under the Omnibus Incentive Plan – Gerard Bradley For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purposes
Slide 33: 5(d) Issue of securities - Gerard Bradley - proxy results
Item 5(d) – Issue of securities under the Omnibus Incentive Plan – Gerard Bradley For personal use only Resolution 5(d) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Gerard Bradley % of eligible proxies in favour 95.89% Total number votes cast 59,104,649 For 56,676,444 A
Slide 34: 5(e) Issue of securities - Ian Macoun
Item 5(e) – Issue of securities under the Omnibus Incentive Plan – Ian Macoun For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purposes, ap
Slide 35: 5(e) Issue of securities - Ian Macoun - proxy results
Item 5(e) – Issue of securities under the Omnibus Incentive Plan – Ian Macoun For personal use only Resolution 5(e) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Ian Macoun % of eligible proxies in favour 89.92% Total number votes cast 58,710,579 For 52,792,779 Against 5
Slide 36: 5(f) Issue of securities - Andrew Chambers
Item 5(f) – Issue of securities under the Omnibus Incentive Plan – Andrew Chambers For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolutions 3(c) and 4, for the purposes of Listing Rule 10.14 and for all oth
Slide 37: 5(f) Issue of securities - Andrew Chambers - proxy results
Item 5(f) – Issue of securities under the Omnibus Incentive Plan – Andrew Chambers For personal use only Resolution 5(f) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Andrew Chambers % of eligible proxies in favour 89.90% Total number votes cast 58,709,776 For 52,783,079
Slide 38: 5(g) Issue of securities - Adrian Whittingham
Item 5(g) – Issue of securities under the Omnibus Incentive Plan – Adrian Whittingham For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, subject to the passing of resolution 4, for the purposes of Listing Rule 10.14 and for all other purp
Slide 39: 5(g) Issue of securities - Adrian Whittingham - proxy results
Item 5(g) – Issue of securities under the Omnibus Incentive Plan – Adrian Whittingham For personal use only Resolution 5(g) Resolution by proxy Issue of securities under the Omnibus Incentive Plan – Adrian Whittingham % of eligible proxies in favour 89.92% Total number votes cast 58,709,776 For 52,7
Slide 40: Ratification of issue of securities
Item 6 – Ratification of issue of securities For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of: (a) 10,909,091 fully paid ordinary shares a
Slide 41: Ratification of issue of securities - proxy results
Item 6 – Ratification of issue of securities For personal use only Resolution 6 Resolution by proxy Ratification of issue of securities % of eligible proxies in favour 94.67% Total number votes cast 72,880,558 For 68,996,600 Against 3,768,927 Open usable 115,031 Excluded votes 301,859 Abstain 6,898,
Slide 42: Managing Director's Address
For personal use only Managing Director’s Address Ian Macoun, Managing Director 41
Slide 43: Managing Director's Address
Managing Director’s Address For personal use only ▪ Group financial summary ▪ Enhancing the platform – strength, stability and reputation − Diversified platform − Enhanced opportunities for growth ▪ Pinnacle affiliates continue to win major industry awards ▪ Continuing strong investment performance
Slide 44: Group financial summary
Group financial summary For personal use only ▪ Strong growth in Pinnacle earnings FY2018 FY2017 YoY change Pinnacle Revenue 16.5 10.9 51.4% ▪ Significant growth in ‘Pinnacle Expenses (18.3) (16.4) 11.6% Share of Pinnacle Affiliates net profit after tax Net profit before tax (NPBT) from continuing o
Slide 45: Significant components of FY 2018 results
Significant components of FY 2018 results For personal use only ▪ Significant growth in ‘Pinnacle Parent’ revenues and costs ▪ Strong growth in distribution revenue from Affiliates, including ‘opening new channels’ ▪ Continuing ‘P&L investment’ in ‘Horizon 2’ activities (for example, Offshore distri
Slide 46: PNI balance sheet
PNI balance sheet For personal use only FY2018 FY2017 YoY change ▪ Cash and Principal Investments of $31.4 million Current Assets Cas h and cas h equivalents 9.3 10.9 (14.7%) ▪ Includes $21.1 million in strategies managed by Pinnacle Financial as s ets 22.1 31.6 (30.1% ) Affiliates Total cash and fi
Slide 47: Enhancing the platform - strength, stability and reputation
Enhancing the platform– strength, stability and reputation For personal use only • Stable & diversified platform o Continuing investment excellence o Widespread industry recognition and support o ‘Article of faith’ reputation • Further investment in distribution capability o Direct to retail o Inter
Slide 48: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards For personal use only 2016 Morningstar Fund Manager of the Year Awards: ▪ Hyperion – Australian Fund Manager of the Year ▪ Hyperion – Domestic Equities Category Winner, Australia ▪ Hyperion – Domestic Equities Small Caps Category Winner, Aust
Slide 49: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates For personal use only 93% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out performed their benchmarks over the 5 years to 30 September 2018 5Y 10Y Inception Inception date Hyperio
Slide 50: Affiliates' investment performance - September 2018
Affiliates’ investment performance – 30 September 2018 1Y 3Y 5Y 10Y Inception Inception date For personal use only Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 24.48% 14.50% 11.27% 12.24% 12.70% 1/10/2002 Outperformance 10.45% 2.34% 3.08% 4.59% 3.42% Hyperi
Slide 51: Affiliates' investment performance - September 2018
Affiliates’ investment performance – 30 September 2018 1Y 3Y 5Y 10Y Inception Inception date For personal use only Spheria Asset Management - Gross Performance Microcap Fund 10.12% 19.12% 16/05/2016 Outperformance -10.19% 5.88% Smaller Companies Fund 18.01% 15.21% 11/07/2016 Outperformance -2.31% 3.
Slide 52: FY18 funds under management
FY18 funds under management For personal use only Gross FUM growth ($bn)(1) 40 38.0* 5-yr CAGR: +28.4% ▪ FUM of $38.0bn* as at 30 June 2018 (increased to $47.8bn* at 35 10-yr CAGR: +27.0% 30 September 2018 including Metrics Credit ($2.7bn) and 7.9 Omega ($4.1bn)) 30 ▪ FUM has grown at a CAGR of 27.0
Slide 53: FY18 revenues
FY18 revenues For personal use only Aggregate affiliate revenues ($m)(1) 180 168.4 Affiliate performance fees - 100% 160 Affiliate revenues - 100% (excl. performance fees) 17.2 - Group NPAT from continuing operations of $23.1m, compared to $12m in FY17, an increase of 92.5% 140 - Revenue from affili
Slide 54: Pinnacle Foundation
Pinnacle Foundation For personal use only • Pinnacle has a strong belief in corporate Australia’s responsibility to give back to the communities which sustain and inspire businesses both large and small • In partnership with Affiliates, Pinnacle primarily supports the community through the Pinnacle
Slide 55: Recap on Horizon Criteria - What could we acquire?
Recap on Horizon 3 Criteria – What could we acquire? For personal use only Criteria • Must not place the Company at risk • Only consider if low risk and high return on capital • Exercise great care and careful due diligence • Must be synergistic with existing core • Few will meet this test Status •
Slide 56: The Changing Landscape for Investment Management Distribution
For personal use only The Changing Landscape for Investment Management Distribution Andrew Chambers Executive Director 55
Slide 57: Australian Institutional Landscape
Australian Institutional Landscape For personal use only Large market underwritten by structural market growth 100+ Australian institutional funds with Super is the largest channel by AUM Institutional market $1.4+ trillion AUM >$1 billion ($2.7 trillion, $100+ billion net inflows) 20 years of Struc
Slide 58: Australian Retail Landscape
Australian Retail Landscape For personal use only Reversal of a 20 year super-cycle of consolidation `Big 6’ consolidated Progressive reduction in pricing FOFA, Royal Commission now Retail $1.3 trillion Manufacturing, Administration power and market access triggering `fragmentation’ & Distribution `
Slide 59: International Landscape
International Landscape For personal use only International Market Opportunity North America Europe Asia/Middle East ~US$38 trillion market ~US$22 trillion market ~US$16 trillion market Potential to Improve Business Yield & Lower Risk Profile Extremely diverse universe of Potentially stronger operat
Pinnacle Investment Management Group — Shareholder Meeting (October 2018) on 6ix