Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Shareholder Meeting (November 2017)
46 slides from Pinnacle Investment Management's shareholder meeting presentation, Nov 23, 2017
Slide 1: 2017 Annual General Meeting
For personal use only Pinnacle Investment Management Group Limited (PNI) 2017 Annual General Meeting 23 November 2017
Slide 2: Agenda
Agenda For personal use only • Chairman’s Address – Alan Watson • Ordinary Business • Managing Director’s Address – Ian Macoun • Changing landscape of Retail Distribution – Adrian Whittingham • Q&A • Results of meeting 1
Slide 3: Chairman's Address
For personal use only Chairman’s Address Alan Watson, Chairman
Slide 4: Chairman's Address
Chairman’s Address For personal use only • Ongoing strong growth in the markets in which we operate • Background on PNI – beneficiary of market growth • Overview of Pinnacle Affiliates • FY17 Highlights 3
Slide 5: Ongoing strong growth in the markets in which we operate
Ongoing strong growth in the markets in which we operate For personal use only • The institutional market and the intermediated retail market o Strong tailwinds for many years ahead • SGC compulsory superannuation drives projected high growth rates • $2.3 trillion1 of superannuation assets will more
Slide 6: PNI – beneficiary of market growth
PNI – beneficiary of market growth For personal use only 1. Owner of minority equity shareholdings in high quality owner driven Funds Management firms 2. How does PNI make money? • Equity o Share of profits (driven by base fees and performance fees) o Dividends received from affiliates • Provision o
Slide 7: Australia's leading 'multi-affiliate' investment management firm
Australia’s leading ‘multi-affiliate’ investment management firm For personal use only 49.9% 46.6% 42.0% 39.5% 40.0% 23.5% 40.0% 44.0% Global & Australian Global & Australian Unlisted Australian Global long/short Systematic Global REITs Small/Microcaps Growth equities Quant equities infrastructure C
Slide 8: Pinnacle business philosophy and approach
Pinnacle business philosophy and approach For personal use only The formula for investment success involves experienced, dedicated, passionate money-makers, free from distractions, spending most of their time on investing Equity ownership for key investment professionals attracts a higher calibre in
Slide 9: Pinnacle differentiation
Pinnacle differentiation For personal use only Australia’s leading “multi-affiliate” investment firm Distinguished from competitors by comprising the highest quality investment management firms High quality, experienced, dedicated, passionate investment professionals – strongly focused on performanc
Slide 10: Historical milestones
Historical milestones For personal use only 2006 2007 2008 2009 2010 2011 • Pinnacle • Investment into • Andrew Chambers • Andrew Findlay Investment Resolution Capital and Adrian joins Pinnacle as Management Whittingham join distribution director • Palisade Investment formally Pinnacle as Partners c
Slide 11: Overview of Pinnacle Affiliates
Overview of Pinnacle Affiliates For personal use only • Antipodes Partners – a pragmatic value manager of global equities (long only and long-short) o Funds under management have grown to in excess of $5.5 billion in approximately 2 years • Hyperion Asset Management – a specialist manager of Austral
Slide 12: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) For personal use only • Resolution Capital – a specialist manager of Australian and Global listed real estate securities portfolios. o Funds under management grew to more than $6.0 billion. • Solaris Investment Management – a specialist manager of Australi
Slide 13: FY17 Financial Highlights
FY17 Financial Highlights For personal use only • NPAT from continuing operations attributable to shareholders of $12.0 million, up 108% from $5.8 million in the prior year • Earnings per share from continuing operations of 8.1 cents, up 56% from 5.2 cents in the prior year • NPAT attributable to sh
Slide 14: Ordinary business
Ordinary business For personal use only • Item 1 – Tabling of FY17 financial statements • Item 2 – Adoption of Remuneration Report • Item 3 – Re-election of directors • Item 4 – Ratification of issue of securities under a placement 13
Slide 15: Item – Tabling of FY17 financial statements
Item 1 – Tabling of FY17 financial statements For personal use only • Tabling of FY17 financial statements 14
Slide 16: Item – 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 2017.” 15
Slide 17: Item – Adoption of Remuneration Report
Item 2 – Adoption of Remuneration Report For personal use only Resolution 2 Resolution by proxy Adoption of Remuneration Report % of eligible proxies in favour 99.61% Total number votes cast 27,716,868 For 27,608,845 Against 51,810 Open usable 56,213 Excluded votes 58,828,000 Abstain 5,582,092 16
Slide 18: Board and Committee Structure
Board and Committee Structure For personal use only Board Member Classification Equity Committees ownership Audit, compliance Remunerations and and risk nominations management Alan Watson (Chair) Independent, non-executive Yes Chair Ian Macoun Executive Yes (Managing Director) Deborah Beale Independ
Slide 19: Item 3(a) – Re-election of Mr Alan Watson
Item 3(a) – Re-election of Mr Alan Watson For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That Alan Watson, who retires from the office of Director by rotation and, being eligible, offers himself for re-election, is re-elected as a Director.
Slide 20: Item 3(a) – Re-election of Mr Alan Watson
Item 3(a) – Re-election of Mr Alan Watson For personal use only Resolution 3(a) Resolution by proxy Re-election of Alan Watson % of eligible proxies in favour 99.45% Total number votes cast 92,122,955 For 91,616,865 Against 449,877 Open usable 56,213 Excluded votes 0 Abstain 4,005 19
Slide 21: Item 3(b) – Re-election of Mr Steve Wilson AM
Item 3(b) – Re-election of Mr Steve Wilson AM For personal use only • To consider and, if thought fit, to pass the following as an ordinary resolution: “That Steve Wilson AM, 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: Item 3(b) – Re-election of Mr Steve Wilson AM
Item 3(b) – Re-election of Mr Steve Wilson AM For personal use only Resolution 3(b) Resolution by proxy Re-election of Steve Wilson AM % of eligible proxies in favour 99.36% Total number votes cast 92,123,920 For 91,536,105 Against 531,602 Open usable 56,213 Excluded votes 0 Abstain 3,040 21
Slide 23: Item – Ratification of issue of securities
Item 4 – 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 12,500,000 fully paid ordinary shares at an
Slide 24: Item – Ratification of issue of securities
Item 4 – Ratification of issue of securities For personal use only Resolution 4 Resolution by proxy Ratification of issue of securities under a placement % of eligible proxies in favour 99.89% Total number votes cast 89,329,472 For 89,231,779 Against 42,302 Open usable 55,391 Excluded votes 623,406
Slide 25: Managing Director's Address
For personal use only Managing Director’s Address Ian Macoun, Managing Director
Slide 26: Managing Director's Address
Managing Director’s Address For personal use only • Group Financial Summary FY17 and Balance Sheet • FUM and Net FUM Inflows • Pinnacle Affiliates continue to win major industry Awards • Continuing strong investment performance of Affiliates • Progress to Date – Platform and Reputation • Focus on ma
Slide 27: Group financial summary
Group financial summary For personal use only FY2017 FY2016 • Strong growth in Pinnacle Pinnacle earnings Revenue 10.9 8.4 Expenses (16.4) (15.8) Share of Pinnacle Affiliates net profit after tax 17.6 15.9 • Reduction in net loss of “parent” Net profit before tax (NPBT) from continuing operations 12
Slide 28: PNI balance sheet
PNI balance sheet For personal use only (A$m) 2017 2016 • Cash and Principal Investments of $42.5 million Current assets Cash and equivalents 10.9 13.6 • Includes $29.8 million in strategies managed Financial assets 31.6 10.9 by Pinnacle Affiliates Total cash and financial assets 42.5 24.5 Other cur
Slide 29: FUM and Net FUM Inflows
FUM and Net FUM Inflows For personal use only • FUM at 31 October 2017 $28.6 billion (up $2.1 billion or 7.8% on $26.5 billion at 30 June 2017; and up $8.8 billion or 44% on $19.8 billion at 30 June 2016). • These numbers exclude Metrics Credit FUM of in excess of $2.5 billion, and exclude the Metri
Slide 30: Funds Under Management – October 2017
Funds Under Management – 31 October 2017 For personal use only 29
Slide 31: Pinnacle Affiliates continue to win major industry Awards
Pinnacle Affiliates continue to win major industry Awards For personal use only Morningstar Fund Manager of the Year Awards, 2016: • Hyperion – Australian Fund Manager of the Year • Hyperion – Domestic Equities Category Winner, Australia • Hyperion – Domestic Equities Small Caps Category Winner, Aus
Slide 32: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates 100% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out For personal use only performed their benchmarks over the 5 years to 31 October 2017 5Y 10Y Inception Inception Date Pinnacle
Slide 33: Affiliates' investment performance to October 2017
Affiliates’ investment performance to 31 October 2017 For personal use only 1Y 3Y 5Y Inception Inception Date Pinnacle Investment Management Hyperion Asset Management – Gross Performance Hyperion Australian Growth Companies Fund 10.89% 9.31% 14.72% 12.35% 01/10/2002 Outperformance -5.03% 2.28% 4.54%
Slide 34: Affiliates' investment performance to October 2017
Affiliates’ investment performance to 31 October 2017 For personal use only 1Y 3Y 5Y Inception Inception Date Pinnacle Investment Management Resolution Capital – Gross Performance Resolution Capital Core Plus Property Securities Fund 11.28% 13.02% 14.15% 8.74% 30/09/2008 Outperformance 2.68% 2.09% 1
Slide 35: Progress to date – Platform and Reputation
Progress to date – Platform and Reputation For personal use only • A platform for GROWTH o Continuing investment excellence o Widespread industry recognition and support o ‘Article of faith’ reputation • Increasing diversification • Proven ability to build high quality investment managers, and facil
Slide 36: Focus on managing the business to maximise profits and value
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • We have built Pinnacle to date by taking a medium term approach o Make decisions and release information when it is reliable and representative of ‘real’ or genuine trends o Select
Slide 37: How 'Horizon 2' adds value in the medium term
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • How does ‘Horizon 2’ add value in the Medium Term? o Investment in growth initiatives that don’t require additional capital to be raised o Reasonable limits to be set given short-t
Slide 38: Horizon 2 examples undertaken in last 12 months
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only Horizon 2 examples undertaken in last 12 months: • Seeded Two Trees Global Macro Fund on 1 November 2017 with $5m o Promising discussions with early-stage investors • Established Dub
Slide 39: Ongoing expansion of domestic distribution platform
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • Ongoing expansion of domestic distribution platform o Adding ‘capital markets’ expertise to accelerate launch of listed offerings (e.g. LICs, LITs, EQMFs) o Continued expansion of
Slide 40: 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 41: Summary and plans for the remainder of FY18
Summary and plans for the remainder of FY18 For personal use only • Maintain current momentum and investment to deliver medium term growth • Maintain culture – attract exceptional individuals to our business • Continue to deliver growth within existing affiliates • Continue to assess high quality ne
Slide 42: Changing landscape of retail distribution
For personal use only Changing landscape of retail distribution Adrian Whittingham, Director (Distribution)
Slide 43: New landscape
New landscape For personal use only • Fragmentation at an even more rapid rate • Rapid growth of non-aligned advice firms o Cost effective outsourcing o Perceived conflicts removed • Independent platforms o Continued rise of Netwealth and Hub24 • Technology o Managed accounts • Listed Investments (l
Slide 44: Listed investments
Listed investments For personal use only • Structural change o Business models evolving to use listed strategies o Seeking greater efficiencies o Manager absorbing the costs • Scale / growth o 104 strategies in total with 13 listed in 2017 (Nov 2017) o 6 raised in excess of $100m (Plato and Metrics
Slide 45: Adviser / Client engagement
Adviser / Client engagement For personal use only • Transparency o Implementing an online portal for adviser / client access • Accessibility o Boardroom lunches on average 2x per month o National roadshows o Webinars held monthly • Servicing o Strict turn around times on queries o Implemented by Int
Slide 46: Evolution of Pinnacle's Distribution capability
Evolution of Pinnacle’s Distribution capability For personal use only • Adapt o Grow ahead of our boutiques o Listen to clients and move quickly to meet their evolving needs o Do not become the market – be ahead of it • Resource o Growing adviser engagement – 15+ in retail o Direct (non advised & of
Pinnacle Investment Management Group — Shareholder Meeting (November 2017) on 6ix