Hi All For the first part they ran through the presentation...

Hi All

For the first part they ran through the presentation pack, below will only put in points not in there. The second part was the Q&A. They also said the call was being recorded, but not sure if it will be available publicly.

Here are my notes from today’s Conference Call:
Presentation Pack Review

• Chairman opening points:
  • Getting on top of costs
  • There has been an uptick in revenue for the current period similar to last period
  • Believes this is the turn of the corner
• COO opening points:
  
  • Previous six months highlights how things are improving moving forward
  • Some nice green shoots coming through
  • GQG are well beyond $1 Billion now
  • Will divest other funds when viable to do so
  • Seizert Capital has dramatically recovered with its five funds performing in top 1-2 quartiles
  • Significant expense reductions achieved with other expenses they can target
• CFO opening points:
  
  • Tax expense of $1.6 Million will reverse in the full year reporting period increasing NPAT
  • Reduction of debt contributed significantly to lowering Interest Expense
  • In the Aurora Trust underlying Profit increased from $3 Million to $10 Million
• COO further points:
  
  • Operational side portfolios are performing relatively well
  • Aether’s revenue increased due to raising
  • Aether revenue is fixed and longer term focus over 10 years
  • Aperio growth back to pre-Q4 levels and FUM is up in two months to $US17 Billion ($A22.17 Billion @AUD/USD 0.7668), from Dec 16 quarter of $US15.5 Billion ($A21.56 Billion @AUD/USD 0.7228)
  • GQG is in hyper-growth mode. NZ article recently quoted CEO as saying GQG will be at $US3 Billion by end of March quarter (COO was slightly cautious and said it may get close to this figure)
  • Aggregate FUM increased by 6.6% over the last 6 months and this year will be slightly higher
  • Growth bucket funds will be materially higher
• CFO points:
  
  • Variability of asset values due to method required dependent upon growth. Previously FUM has been decreasing and now that they have turned the corner becoming growth funds, there is an alternative DCF model to use. Some are still shrinking, therefore write off required.
  • The write down in Nereus was largely due to opportunities not proceeding as quickly as expected
• Tony Robinson reviewed the restructure and simplification (nothing more to add other than what was in presentation)
• Chairman wrap up:
  
  • Growth in boutiques exceptional
  • There are wins that aren’t funded yet (not 100% sure what was meant by this)
  • Scope to increase FUM in US market is significant.

Questions and Answers session

• Q: Elaborate on GQG growth prospects, what does 2018 look like? Outline economics of fund. A: GQG will be up close to $US3 Billion March quarter end, ultimately they will be in excess of this by year end. The economics of GQG is different to other funds despite low ownership. The revenue is generated through a clip of the Funds where PAC generates sales from Institutions to GQG FUM (competing with Goldman Sachs) and ownership of the fund contributes too, but in a minor way. The agreement is designed so that clip from revenue PAC generates decreases over time the bigger the fund is which would increase ownership revenue. COO added the income derived from GQG would be similar to Aperio today if GQG reach $US10 Billion FUM.
• Q: Where would you look to invest in future Fund businesses? A: Private Capital Strategies like Aether. These organisations have a resilient Income Stream over a long period of time.
• Q: What guidance do you see on Corporate Costs? A: Previous year has seen a 30% reduction in costs, targeting $15 Million on a gross basis. COO noted that costs may go up from this due to commission payments. Ultimately these are good costs to have because they are paid out when revenue is generated. Back of envelope projection is that we will see good growth in revenue.
• Q: What is your guidance on dividends and elaborate on dividend not being paid this half. A: $10 Million in franking credits currently available, this will be $26 Million at 30/06/2017. (Chairman adds) we were reluctant to not pay a dividend. Cash will be released over the next few months to contribute to full year end dividend. Final Dividend will have a level of make up in it and will be fully franked. Payout policy hasn’t changed and chairman was reluctant to not pay dividend based on experience with AIX, it took 3 years to recover price from not paying a dividend at that company.
• Q: Is PAC likely to receive RARE earn out payments? A: CFO said highly unlikely to receive earn out payments (isn’t impossible). Figures to achieve would be 5% annual growth by March 2019 (I thought it was 11% growth to be achieved). Chairman added, RARE have launched an ETF and Retail Market FUM in the US. Legg Mason has had issues in setting up since the sale and it was finally established in the last quarter.
• COO advised rate of redemptions at Seizert has reduced significantly.
  

Best of Luck
Lost