Perpetual Limited

Good day and thank you for standing by. Welcome to the perpetual half-year results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 101 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 101 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susie Reinhart, Head of Investor Relations. Please go ahead.

Good morning, everyone, and good afternoon or evening to those joining us from other parts of the world. Welcome to Perpetual's Half Year 2023 Results Briefing. I'm Susie Reinhart, Perpetual's Head of Investor Relations. Before we begin today, we would like to acknowledge the traditional owners and custodians of the land on which we present from today. Here in Sydney, the Gadigal people of the Eora Nation and recognise their continuing connection to land, waters and community. We pay our respects to Australia's First Peoples and to their elders past and present. We would also like to extend our respect and welcome to any Aboriginal or Torres Strait Islander people who are listening in today and also acknowledge the traditional custodians of the various lands on which you all join from today. Presenting here with us is Rob Adams, Perpetual's Chief Executive Officer and Managing Director, as well as Chris Green, Perpetual's Chief Financial Officer. There will be an opportunity to ask questions at the end of today's presentation. Before I hand over to Rob, we would like to draw your attention to the disclaimer on page two of the presentation. Rob, over to you.

Thanks, Susie, and good morning, everyone. Thanks for joining us for today's first half 23 results briefing. A key theme for the first half of the 2022-23 financial year was the continued execution of our strategy to better position each of our businesses to manage effectively in their respective environments and to drive future growth. While our headline earnings numbers were impacted by the volatility seen in global investment markets during the half, which I'll comment on shortly, you'll see that despite these conditions, we have delivered a solid result and we have positive momentum. Our unique combination of businesses continues to set us apart from our peers, with non-market-linked revenues in our corporate trust business in particular, and within perpetual private as well, providing us with the capacity to continue to invest for growth through the market cycles. In our asset management businesses, PAMA and PAMI as we refer to them, revenue was, of course, impacted by the volatility in global investment markets during the period and net outflows. In addition, cautious investment sentiment towards equities. Importantly, our investment teams are delivering outstanding relative investment performance, with nearly 90% of our funds outperforming their benchmark over the all-important three-year timeframe. Following the first half, the acquisition of the Pendle Group completed on the 23rd of January, 2023. Whilst we're only one month in, the integration of our asset management businesses has commenced and the new executive team is fully focused on driving the benefits of what we expect to deliver, that we expect to deliver from this transformational acquisition. And that includes our enhanced global distribution reach, our materially strengthened ESG positioning and expected expense synergy realisation. Today, we will confirm our previously stated synergy target of a $60 million reduction in run rate expenses on a pre-tax basis to be realised over the next two years. Turning now to the high-level results for the first half of 2023... Perpetual delivered total revenue of $388.3 million, up 1% on the first half of 2022. Underlying profit after tax was $67 million, delivered within previous earnings guidance of $65 to $70 million, down on the prior corresponding period. And net profit after tax was $26.8 million, down 55% on the prior period. prior corresponding period, I should say. Our return on equity decreased to 14.8%, which was a 25 basis point drop from the prior year. As I mentioned in my opening comments, we believe this is a solid result in what has been a difficult operating environment and one that demonstrates the strength in our combination of businesses. Importantly, we've continued to invest for growth in the long term, and we've done so with discipline, and we've done it across all divisions, particularly to support growth in corporate trust, growth in perpetual private, and the continued build-out of our global distribution team. Expense growth was 4% on the prior corresponding period, excluding the impact of foreign exchange rates and interest rates. Our board has declared a dividend for the second quarter of 55 cents per share. When added to the first quarter dividend of 35 cents per share, the total dividend for the first half was therefore 90 cents per share. Turning to some of our operational highlights for the half. The first half of this financial year saw further important developments as we executed our strategy to build stronger foundations for future growth. Across our asset management businesses, we are delivering very strong investment outcomes for our clients. As mentioned, 89% of all strategies outperformed their benchmark over the three-year timeframe. Reflecting this strong performance, Perpetual Asset Management Australia was awarded both the Lonsec and Zenith Fund Manager of the Year awards for 2022. In Perpetual Corporate Trust, which, as you know, provides essential infrastructure for the financial services industry, we continue to deliver strong growth, with PCT's revenues growing 16% compared to the prior corresponding period. An outstanding result for PCT. In perpetual private, we saw yet another half year of positive net inflows. Now the 19th consecutive half of positive flows for perpetual private. This consistency over the last nine and a half years, despite the market environment during the half, is reflective of perpetual private's market position as one of Australia's most trusted financial advice businesses. In Perpetual Asset Management International, Trillium continues to go from strength to strength, with over a billion dollars, in Australian dollar terms that is, a billion dollars of net inflows for the half, while Barra Hanley reported a strong $1.3 billion in net inflows across their various global equity strategies for the half. So as you can see across the firm, we are delivering some really positive outcomes and that momentum is pleasingly continuing into the second half of this financial year, which I'll comment on shortly. Drilling down into some of the inflows in our asset management businesses. Given the strong performance profile, our pipeline is building across regions and channels, with growth in particular coming through our various global equity strategies. The chart on the left-hand side, the first of the four charts on this page, shows first half net flows for the combined asset management business by asset class. As you can see, net flows into global equity strategies managed by both Barra Hanley and Trillium are strong and growing. U.S. equities continues to be a challenging asset class, not just for our business but across the sector, impacted by the current risk-off environment and asset allocation shifts. In Australian equities, we're seeing a continued improvement of the net flow position, particularly through the intermediary channel, once again driven by our Aussie equities team's exceptional investment performance. The second chart on this slide shows Barra Hanley's net flows by asset sector. And I wanted to really evidence here the tale of two stories, if you like. The positive net flows that are coming through Barrow's various global equity and global emerging market equity capabilities, but of course the challenges that remain in US equities. When we acquired Barrow Hanley back in November of 2020, we stated that our aim was for Barrow's total net flows, total net flows, to turn positive in the third year following the acquisition. Since then, of course, we've seen the impact of COVID globally. We've had very volatile investment markets and a rising interest rate environment. And as I've mentioned, there's still work to do in relation to improving the net flow position in the US equity sector. Whilst these challenges exist, we still retain that original objective. And with our growing pipeline, we remain optimistic that it can still be achieved. What provides us with this optimism is the very strong investment performance Barrow Hanley teams are delivering and our investment in distribution and product development, including opening up new channels for Barrow. Of course, there are, as always, a myriad of factors that can impact this objective, including market volatility, further interest rate movements and investor sentiment. The third chart, in Trillium, we continue to see strong interest in our ESG, in Trillium's ESG capabilities, despite near-term performance challenges impacted through the ongoing strength of the energy and defence sectors, which their funds have little or no exposure to. And we expect the hype, but regardless of that, we expect the interest in Trillium's global capabilities to continue. Within our Australian asset management business, an area of continued improvement has been our net flows via the intermediary channel across sectors. In this fourth chart, I've highlighted the growing momentum of net flows from the intermediary channel into the Barra Hanley Australian Domiciled Global Share Fund, which is now amongst the top five global equity funds on a net flow basis over the last 12 months. Recent upgrades in ratings from both Zenith and Morningstar to their highest categories have contributed to seeing Barrow Hanley replace incumbent global equity managers in a number of model portfolios just recently, coming from leading dealer groups and asset consultants. With a broad presence across major platforms and approved product lists now, and given Barrow's exceptional investment performance, we expect this trend to continue. Our confidence in the intermediary channel in Australia extends into other important asset classes, most notably Australian equities and multi-asset. Once again, due to the very strong relative investment performance our teams are generating for our clients. Here you can see on the next slide the proportion of our investment strategies across asset classes outperforming their benchmarks as at 31 December. This strong performance profile, particularly over the all-important three-year timeframe, leads us to be confident that our net flow trends will continue to improve across investment capabilities, across regions and across channels. Okay, next slide. As you know, Perpetual has what we refer to as being a truly unique combination of businesses. This is indeed one of our greatest strengths, particularly during periods of investment market volatility. As a diversified financial services firm, we have exposure to both equity and general market-linked revenues and non-market-linked revenues. Our non-market-linked revenues come to the fore when investment markets are volatile. PCT, as mentioned, continues to be a standout performer for Perpetual, while helping to provide the stability of earnings through market cycles. PCT has again seen growth across all segments, with total revenue increasing 8% when compared with the second half of 2022, and rising 16% when compared with the prior corresponding period. For Perpetual Digital, we are encouraged by the growth in new clients, which will take some time to onboard, but we expect to benefit from that growth over the next 12 months. Our debt market services business has benefited from continued growth in the non-bank segment, while our managed fund services business has delivered growth across all its underlying segments. I've mentioned perpetual privates, consistent net flows outcome, once again growing despite the market conditions we've seen in the last half. PP also saw during the period a strong rebound in non-market linked revenues, with Fordham in particular having a positive half following the return to in-person client engagements in a post-COVID world. I'll now stop there and hand over to Chris to go through the financials in more detail, and I'll be back with you shortly to talk about Pendle and our outlook.