Financial results ( for Pendal Group )

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    Financial results
    Cash NPAT for the first half of the 2019 financial year was $84.5 million, down 26 per cent versus
    pcp as a result of a significant decrease in performance fees and lower base management fee
    revenue.
    Base management fee revenue during the period was down four per cent to $237.6 million, as a
    result of a one per cent decline in average FUM and a contraction in base management fee margin,
    which was down 2 bps to 49 bps. The margin reduction resulted from a change in asset mix as
    investors moved out of equities and into more defensive and lower-margin cash and fixed income
    products. Performance fees were $4.4 million for the half, 91 per cent lower than pcp.
    Average FUM was down one per cent to $97.4 billion, with the average levels of the MSCI AC
    World Index in local currency terms and the S&P/ASX 300 Index declining 2.7 per cent and 1.2 per
    cent respectively compared to pcp.
    Cash operating expenses of $140.0 million were down 13 per cent, largely led by lower variable
    staff costs given lower fee revenue. The operating profit margin for the half was 42 per cent which
    compares to 45 per cent versus pcp.
    The first half result was supported by stronger foreign currencies which saw the average levels of
    the US Dollar (+ nine per cent), Japanese Yen (+ eight per cent), British Pound (+ four per cent),
    and the Euro (+ three per cent) all higher when compared to average levels in the first half of the
    2018 financial year.
    Funds under management
    Pendal Group FUM saw strong net inflows in the Australian business during the half, while ongoing
    Brexit uncertainty impacted flows in the UK/European OEICs.
    Closing FUM as at 31 March 2019 was $100.9 billion, representing a one per cent decrease on
    $101.6 billion as at 30 September 2018, which was affected by significant negative market
    movements in the December quarter.
    The period saw net outflows of $1.7 billion in the OEICs, predominantly led by net outflows in
    European equities of $1.2 billion. Economic momentum in Europe has been slow and coupled with
    Brexit uncertainty has led to reduced appetite for risk from investors. Strong net flows were
    recorded into cash (+$0.9 billion), fixed income (+$0.8 billion) and Australian equities (+$0.2
    billion), while Asian equities experienced net outflows of $0.5 billion.
    As announced on 12 April 2019, the Westpac Group advised its intention to redeem an additional
    $1.5 billion of FUM from the Westpac legacy book as part of its consolidation of superannuation
    offerings. The redemption has subsequently taken place.
    Investment performance
    The period under review saw significant market volatility particularly in the December quarter,
    where US rate policy, tightening financial conditions and a deepening concern regarding economic
    growth placed significant pressure on equity markets. However, we have seen a market recovery
    during the March quarter as expectations grew that the US Fed would not be raising rates, and
    some progress was made on the trade front between the US and China.
    3
    Over the medium to long term our investment performance remains solid with 69 per cent of FUM
    outperforming over 3 years and 89 per cent of FUM outperforming over 5 years. Investment
    strategies performing well over the past year with excess returns above benchmark includes the
    JOHCM Global Opportunities Fund (+6.8%), JOHCM Global Emerging Markets Opportunities Fund
    (+6.3%), JOHCM US Small Mid-Cap Equity Fund (+5.3%), JOHCM UK Opportunities Fund
    (+4.7%), JOHCM International Select Fund (+4.4%), Pendal Micro-Cap Opportunities Fund
    (+3.7%), Pendal Monthly Income Plus Fund (+3.4%), JOHCM Global Smaller Companies Fund
    (+3.4%), and the Pendal Property Securities Fund (+2.9%). A number of our investment strategies
    investing in UK, Europe, Japan, and Asia ex-Japan have underperformed where macro-economic
    factors, along with Brexit concerns, have driven market sentiment.
    Capital management
    Pendal Group’s balance sheet remains strong with no debt and good cash flows in the business.
    The Board has declared an interim dividend of 20.0 cents per share for the 2019 financial year,
    which will be 10 per cent franked and paid on 26 June 2019 to ordinary shareholders at record
    date, 24 May 2019. The dividend represents a 1H19 payout ratio of 75 per cent. The Board has a
    policy of paying out 80-90 per cent of its full year Cash NPAT.
    The Dividend Reinvestment Plan remains deactivated for the FY19 interim dividend.
    Strategy and outlook
    In commenting on Pendal Group’s outlook and strategy, Mr Gonzalez said,
    “The first half of 2019 was a challenging period for markets and investors. The market returns in the
    December quarter were the worst on record since the September 2011 quarter, and despite a
    rebound in market returns in the March quarter, the volatility over the half has led to a significant
    increase in risk aversion from clients. Any resolution to the US/China trade talks and clarity over
    Brexit should see investor confidence improve.
    “Despite the more difficult trading conditions, our strong balance sheet with no debt and good cash
    flow means the company is in a firm position to take advantage of opportunities to expand our
    capabilities and global presence, in line with our focused strategy around growth and
    diversification. We remain focused on expanding our investment and distribution capabilities,
    maintaining a disciplined approach to managing capacity and providing ongoing support to our
    investment talent through our investment-led culture and business model.”

    courtesy of Bell Direct

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    ( DYOR )

    i hold PDL ( 'free-carried' )

    i bought as BTT in 2011 @ $2.30

    so am unlikely to top up in any dip

  2. 82.0k
    Posts

    Pendal Group Half Year 2022 Financial Results
    • Delivering solid financial results with robust growth achieved in key metrics
    • Underlying EPS up 34% vs pcp
    • Underlying profit after tax (UPAT) up 59% vs pcp; statutory NPAT up 8% vs pcp
    • Interim dividend of 21.0 cps, up 24% vs pcp
    • Positive shift in revenue mix supporting stable base management fee margins of 48bps
    • Prudent cost management contributing to improved operating margin of 42% (up 5% on pcp)
    • TSW integration progressing well
    • Progressing strategic initiatives across global distribution, product, infrastructure and talent.
    Sydney, Australia 10 May 2022 - Pendal Group Limited (“Pendal” or “the Group”) (ASX: PDL), a
    leading independent global investment manager, today announced its half-year financial results,
    which delivered solid growth in underlying earnings per share, revenue and underlying profit for the six
    months ending 31 March 2022. The results were supported by a full six-month contribution from USbased investment manager Thompson, Siegel & Walmsley (“TSW”) acquired by Pendal in the second
    half of the 2021 financial year.
    Results overview
    1H21 1H22 1H22 v 1H21
    Fee revenue $277.0m $362.6m 31%
    Operating expenses $174.4m $209.6m 20%
    Operating margin 37% 42% +5%
    UPAT $82.6m $131.4m 59%
    Statutory NPAT $89.9m $96.7m 8%
    Underlying EPS 25.5 cps 34.3 cps 34%
    Dividend 17.0 cps 21.0 cps 24%
    Average FUM $97.1b $133.3b 37%
    Robust growth achieved in key metrics
    The Group’s underlying earnings per share for the period increased 34% to 34.3 cents per share (cps)
    from 25.5 cps in the prior corresponding period (pcp).
    Underlying profit after tax (UPAT) increased 59% to $131.4 million, while statutory NPAT was $96.7
    million up 8% from $89.9 million in pcp.
    Revenue for the half year increased 31% to $362.6 million. Base management fees were $317.7
    million, up 35% on 1H21, as average FUM increased by 37% to $133.3 billion, reflecting the
    acquisition of TSW and supported by higher global equity markets. Average base management fee
    margins were 48 basis points, in line with the 2021 financial year. Performance fees realised during
    the period were $44.5 million, an uplift of 8% on pcp.
    Excluding TSW, Pendal’s base management fees margins were slightly higher at 51 basis points
    compared to 49 basis points in pcp, reflecting the positive shift in Pendal’s revenue mix during the
    period.
    2
    Operating expenses increased by 20% to $209.6 million which includes the full contribution of TSW in
    the period. Excluding TSW, operating expenses were approximately 4% higher as a more prudent
    approach was taken to cost management to reflect trading conditions. The Group’s operating margin
    increased to 42%, up five percentage points on pcp.
    Pendal Group CEO, Nick Good, said: “Pendal Group has delivered a solid first-half result in a tough
    environment for asset managers. We delivered healthy growth in revenue, underlying EPS, UPAT and
    the interim dividend.
    “While continuing to invest in our business, we have taken a more disciplined approach during the
    period, in response to the current market environment and tempered investor confidence.
    “Pendal acquired TSW in 2021, materially enhancing and diversifying our US product range. We have
    seen TSW’s value strategies outperform in the past quarter, and despite cautious US investor
    sentiment, TSW’s international strategies have seen inflows.
    “The integration of TSW is tracking well. The teams are working well together under single US
    leadership, while maintaining investment independence, which is core across Pendal Group.
    Execution of a coordinated sales strategy has begun, with cross-selling opportunities emerging,
    reflecting the complementary nature of our expanded set of investment capabilities,” he said.
    Progressing strategic initiatives
    “Our targeted set of strategic initiatives are designed to enhance our existing global distribution
    footprint and extend product diversification in growth areas, such as impact and thematic investing.
    Furthermore, we continue to invest in our global infrastructure to leverage Pendal’s expanded scale,
    drive efficiencies and deliver a world-class operating platform for fund managers and clients,” Mr
    Good said.
    Key developments during the period included:
    Distribution
    • Gained EU MiFID license approval and established office in Paris
    • Strengthened US, UK & European marketing and distribution teams
    ESG / RI
    • Launched Regnan Sustainable Water & Waste fund in UK & Europe with early client support
    • Attracted positive flows in to the Regnan Global Equity Impact Solutions strategy in all regions

    People & platform
    • Commenced transition of Australian business to new global custodian, Northern Trust
    • Deepened senior executive expertise adding leaders in HR, Operations and Investments.
    Capital management
    Pendal is a highly cash generative business with a strong balance sheet that provides significant
    flexibility to pursue both growth and capital management initiatives for the benefits of shareholders.
    Recognising that Pendal’s share price was undervalued by the market, the Board undertook a capital
    management review at the beginning of 2022. As announced on 12 April 2022, it determined an
    $100 million on-market buy-back was the most efficient way to deliver an earnings per share accretive
    return of capital to shareholders. A combination of surplus cash and other financial assets will be used
    to fund the buy-back.
    Pendal’s Board also remains committed to a dividend policy that sees shareholders rewarded via
    regular dividends and has declared an interim dividend for the 2022 financial year of 21 cps, up 24%
    3
    from 17 cps on pcp. The dividend is to be paid to shareholders at record date 20 May 2022 and
    remains within the Group’s annual payout ratio of 80 to 95% of UPAT.
    Outlook
    “We remain focused on implementing our multi-year growth strategy, and believe it is prudent to
    continue to adopt a nimble approach in managing costs against the ongoing backdrop of geopolitical
    uncertainties and economic pressures,” said Mr Good.
    “While I am pleased with the progress made over the past six months, there is still more to do. Our
    priorities are to fully leverage our global distribution footprint, deliver long-term investment
    performance across a diversified, forward looking product set and to provide a platform that enables
    our teams to deliver exceptional client outcomes.
    “Pendal is home to some of the most respected investment talent in the world. We have a dynamic
    and respectful culture that recognises and values our employees’ individuality, many skill sets and
    rewards them for their success. We remain fully committed to providing an environment where they
    can flourish while ensuring we deliver investment excellence to our clients and strive to maximise
    value for our shareholders,” he said.
    Investor presentation webcast
    Pendal’s Chief Executive Officer, Nick Good, and Chief Financial Officer, Cameron Williamson, will
    provide an investor update at 10:00am (AEST time) on 10 May 2022. The presentation can be
    streamed live via webcast at https://webcast.openbriefing.com/8656/

    courtesy of Bell Direct

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    ( DYOR )

    i hold PDL ( 'free-carried' )

    i bought as BTT in 2011 @ $2.30

    so am unlikely to top up in any dip

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