Prescient Limited. JSE and ABSA Private Bank Showcase Presentation 22 July Presented by: Herman Steyn (CEO)

Transcription

1 Prescient Limited JSE and ABSA Private Bank Showcase Presentation 22 July 2015 Presented by: Herman Steyn (CEO) July 2015

2 CONTENTS Business environment About Prescient Operational overview The year ahead Questions Appendices 2

3 Business Environment 3

4 BUSINESS ENVIRONMENT Hidden opportunities in the challenges Worsening employment situation Poor service delivery Education crisis Weakening credit rating Increased regulatory burden Regulatory changes Retail distribution review Retirement reform BEE Cyber security World grappling with QE Increased tension around ISIS 4

5 About Prescient 5

6 WHO IS PRESCIENT Well-established, entrepreneurial 1998 Founders still involved in the business Staff are significant shareholders Alignment of interests Diversified Financial Services and Information Management Company Operate globally (SA, Africa, China, Australia, Ireland, Middle East, Jersey, London) Asset management (Retail and Institutional) Information management services Fund services and White labelling Stock broking Wealth management Innovative Offerings - Only Operate in areas where we know we can add value to clients Differentiated approach - Asset management (philosophy) Differentiated products - Energy Fund, Hedge fund administration, Information management services, Growth markets Africa and China 6

7 GROUP ORGANOGRAM Prescient Investment Management Stricklands Tetra Cape FINANCIAL SERVICES Prescient Securities Prescient Wealth Management Prescient Fund Services Prescient Fund Services (Ireland) Prescient Life Prescient Management Company Prescient Property Investment Management INFORMATION MANAGEMENT SERVICES PBT Infosight PBT Technology Services (Cape Town) PBT Technology Services PBT Australia Bi-Blue Consulting Technique Business Intelligence Software (TBIS) EMHPrescient Investment Management Cyberpro Consulting Greenfields Institute of Business Stadia Capital 7

8 Operational Overview 8

9 HIGHLIGHTS AS A 31 MARCH Current AUM in investment management R65.5 billion (FY14: R59.1 billion) Current third party AUA in Fund Services business South Africa R48.6 billion (FY14: R31.1 billion) Ireland 1.1 billion (FY14: 1.2 billion) Revenue increased to R835.8 million (+26%) Headline earnings per share of 7.54 cents (+15.4%) Total dividend declared for the year of 5.75 cents per share (+12.7%), interim dividend of 3.0 cents per share Prescient Holdings and subsidiaries Level II contributor in terms of the DTI code 9

10 PRESCIENT INVESTMENT MANAGEMENT 16 Year track record Markets include South Africa, Africa, China, Assets under management Global Markets 66 Investment philosophy - a differentiating 64 factor Assets under management of R65.5 billion 62 (FY14: R59.1 billion). Geographical split of AUM Millions Africa 61.6 China Developed Markets Namibia South Africa Total AUM Rand Billions AUM Average fee rate has increased from 0.23% to 0.27% 10

11 PRESCIENT INVESTMENT MANAGEMENT Assets under management mandate ranking Challenges Retail market penetration Dispel the myth of active management vs. Prescient Investment Management Opportunities and Strategies for Growth Improved performance underpin for earnings and distribution First to market in China - significant earnings contributor in FY15, performance is actively being monitored(chinese markets) Renewable Energy Fund Africa Fund AUM billions % Cash % Income % Bonds % Equity % Balanced % Positive Return % TAA % Global % Property % Total % Market catalysts : Retirement Reform and RDR Improve distribution across institutional and retail markets (staffing) 11

12 CORE SOLUTION RANGE Expected Capital Volatility Expected Real Returns Money Market Income Provider Yield Quant Plus Bond Quant Plus Global Income Feeder Global Income Fund ($) Positive Return China Conservative Feeder China Conservative Fund ($, ) Global Positive Return Feeder Global Positive Return (Euro) Fund ($, ) Absolute Balanced Balanced Equity Global Defender Balanced Fund Strategy Feeder Equity Quant Equity Income Global Growth Fund ($) Equity Global Growth Feeder Africa Equity China Balanced Feeder China Balanced Fund ($, ) Targets a high income yield with stable capital values. Targets sustainable real returns over time, while actively managing downside risk (in foreign currency for feeder funds). Targets real returns through income and capital gains with capital losses possible over the shorter term. Targets real returns similar to the average balanced fund with no explicit risk target. Targets returns above general equity markets by investing in shares that offer value relative to its price CORE SATELLITE GLOBAL FEEDER FUNDS GLOBAL FUNDS 12

13 PERFORMANCE Period Performance as at 31 March Months 12 Months Benchmark Fund BM Alpha Fund BM Alpha Balanced Funds Global Absolute Balanced 6.60% 2.00% 4.60% 16.70% 8.40% 8.30% CPI + 5% Income Funds Income Provider 2.60% 1.40% 1.20% 10.30% 5.90% 4.40% STeFI Call 110% Equity Funds Equity Fund (Was EAQ) 9.00% 6.90% 2.10% 19.80% 17.70% 2.10% SWIX Equity Income 7.20% 2.70% 4.50% 20.90% 11.70% 9.20% FTSE/JSE Divi + Positive Return Funds Positive Return 2.90% 1.80% 1.10% 8.00% 7.40% 0.60% CPI + 4% 13

14 PRESCIENT OFFSHORE RANGE Expected Capital Volatility Expected Real Returns Global Income China Conservative Global Positive Return (Euro) Global Growth Africa Equity China Balanced Asset Class Interest Bearing Multi Asset Equity Benchmark 90 day US TB China CPI + 2% EU Harmonised CPI + 1% MSCI World Index Nedbank 100 ex- SA China CPI + 3% Fund Type UCITS Registered Office 33 Sir John Rogerson s Quay Pricing Daily Dublin 2, Ireland Investment Manager Prescient Investment Management Client Services 49 Upper Mount Street Custodian BNY Mellon Trust Company Dublin 2, Ireland Administrator Stadia Fund Management Ltd Tel : Auditors KPMG [email protected] 14

15 PERFORMANCE OFFSHORE FUNDS Period Performance as at 31 March Months 12 Months Benchmark Fund BM Alpha Fund BM Alpha International Funds Global Income US$ 0.00% 0.00% 0.00% 1.50% 0.00% 1.50% USTB Global PR (Euro) 4.10% 0.50% 3.60% 8.10% 0.60% 7.50% EURO Inflation Global Growth US$ 0.30% 2.50% -2.10% -0.70% 5.20% -5.90% MSCI/Inflation Africa Funds Africa (Rand) -2.10% -1.30% -0.80% 7.20% 10.40% -3.20% MSCI Africa/Nedbank 100 Chinese Funds China Balanced 27.00% -1.10% 28.10% 95.40% 2.70% 92.70% Chinese Inflation +3% China Conservative 0.90% 0.20% 0.80% US Libor 15

16 PRESCIENT FUND SERVICES (SA & IRELAND) Specialist outsourced administration and platform services to fund management market South African assets under administration Significant growth in 3 rd party AUA: South Africa R48.6 billion (FY14: R31.1 billion) Ireland billion (FY14: 1.2 billion) Total local AUA - R138.6 billion Third party segregated White label life portfolios Challenges and Opportunities Investment in systems Changing technology Expand on offering Hedge fund administration capability (significant growth area) SA Hedge Fund Survey June 2014 (source: Novare) Hedge Fund assets surpass R50 billion, an increase of more than R10 billion from the previous year. Inflows into the hedge fund industry for the 12 months ending June 2014 exceeded R9.5 billion of which R654 million was allocated to new funds launched during new funds were launched for the year ending June 2014 Rand Billions White label unit trusts Well positioned for growth in changing regulatory environment (outsourced models likely to gain momentum) Significant pipeline of clients local and Ireland

17 PRESCIENT LIFE LIMITED Institutional: Offers a range of life-pooled portfolios managed by internal and third party managers with full administration services (AUM: R9.40 billion) Policyholder Policyholder Assets Assets Retail: Offers retirement annuities, preservation funds, umbrella funds, living annuities, endowment policies and tax-free savings accounts (AUM: R420 million) Net Flows: R2.27 billion Asset managers Third Party (AUM: R6.89 billion) Prescient Investment Management (AUM: R2.93 billion) Competitive advantages: Systems and reporting, strong regulatory knowledge and insights Focus Policyholder Assets (Rand Billion) Seamless Transition into annuity products in retirement 2.00 Catalyst for growth: regulatory requirements Retail distribution

18 PRESCIENT SECURITIES Focus on institutional market Research and trade offering covers equity, derivatives and fixed income Differentiated by covering niche sectors/areas Consistent performance in FM rankings and Spire awards (refer to Appendix) Challenges and opportunities: Respond to downward pressure on brokerage rates by strengthening research/trade offering across asset classes (a number of appointments made recently) PRESCIENT WEALTH MANAGEMENT An independent private client wealth and portfolio management business Market responding well to Multi - asset portfolio offering Advisory business gaining momentum Challenges and opportunities: Strengthening team and developing distribution channels and partnerships 18

19 INFORMATION MANAGEMENT SERVICES The PBT Group is a consulting company, specialising in data management, to SA, MEA and Australian clients These professional services are conducted in, amongst others, the Financial Services, Retail and Mobile Telecommunication sectors Successful track record in Africa and Middle East, operating since 2003 Well established in Australia, operating since 2005 Challenges and Opportunities Sizable debtors book but well managed Remunerated in foreign currency but salaries in ZAR Continued growing contribution to Prescient Group revenue and earnings 50% of earnings generated offshore to diversify earnings base Continued service delivery to clients in buoyant trading environment 19

20 The Year Ahead 20

21 THE YEAR AHEAD Focus on investment performance Positioned for growth Strong balance sheet Technology platform Appropriate solutions Maintain competitive positioning Specific focus areas: Retail Multi asset class performance Prescient Wealth Renewable energy Africa Maintain our entrepreneurial culture Diversification within companies 21

22 THE YEAR AHEAD Challenges Regulatory burden Pressure to reduce costs of investment management services Dollar denominated costs for systems Conversion time for Prescient Wealth Pressure on revenue for Prescient Securities Funding growth? Earnings growth drivers Improved performance Growth of AUM / AUA Improved margins due to increase in retail flows High demand for information management services Growth of Prescient Fund Services (Ireland) 22

23 Q&A 23

24 Thank You Regulatory Information This presentation contains certain forward-looking statements. These forward-looking statements are based on current information and expectations, and involve a number or risks and uncertainties. Although Prescient believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to changes in economic and market conditions, changes in regulatory environment, fluctuations in security prices and exchange rates, and business and operational risk management. Prescient is under no obligation to update these statements once it has been posted or released. The information contained herein is provided for general information purposes only. This information does not constitute a solicitation, recommendation, guidance or proposal, and the service provided is not intended nor does it constitute financial, tax, legal, investment or other advice. Whilst reasonable steps are taken to ensure the accuracy and integrity of information contained herein, Prescient accepts no liability or responsibility whatsoever if any information is, for whatever reason, incorrect. Prescient further accepts no responsibility for any loss or damage that may arise from reliance on information contained herein. Unit trusts should be considered a medium- to long-term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past performance is not necessarily an indication of future performance. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax, where applicable. Where foreign securities are included in a fund it may be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Prescient Management Company (RF) (Pty) Ltd is a Collective Investment Schemes Manager approved by the Financial Services Board in terms of the Collective Investment Schemes Control Act. Unit Trusts are traded at ruling prices set on every trading day. Unit trusts are allowed to engage in script lending and borrowing. Prescient is a full member of the Association for Savings & Investment SA (ASISA). Business address: Prescient House, Westlake Business Park, Otto Close, Westlake, Cape Town, 7945 Tel: Fax:

25 Appendices 25

26 INDUSTRY RECOGNITION 2015 BATSETA Imbasa Yegolide Awards Bond Manager of the Year Responsible Investment Consultant / Service Provider of the Year Nominated in Absolute Return Manager of the Year category Nominated in Responsible Investment Manager of the Year category 2015 Raging Bull Awards 27Four stable Prescient Fund of Funds Best SA Multi-Asset Low Equity Fund 27Four Balanced Prescient Fund of Funds Best SA Multi-Asset Medium Equity Fund 2014 Morningstar Nominated in Diversified Bond category Nominated in Global Bond category Prescient Fund Services uses Eagle Investment Systems as its primary administration system. The business unit received an award from Eagle for innovative use of its software. 26

27 INDUSTRY RECOGNITION The 2015 Financial Mail Rating the Analysts (equities and derivatives) Awards : #1 Innovative Research #1 Electronic & Electrical Equipment #2 Derivatives Research #2 Derivatives Dealing #3 Financial and Industrial Small & Medium Market Cap Companies #3 Hotels, Travel & Leisure #3 Risk Management #4 Resources Small & Medium Market Cap Companies #6 Computer Services The 2014 Spire Awards: #1 Best Agency Broker House (Roll-up award) #1 Best Agency Broker Bonds #1 Best Agency Broker Listed Interest Rare Derivatives #2 Best Agency Broker Listed FX Derivatives #2 Best Research Team Quantitative Research 27

28 INDUSTRY RECOGNITION In 2014, EMHPrescient Investment Management was awarded Best Investment Management Company in Namibia as announced by leading financial magazine, World Finance. Prescient Wealth Management was shortlisted in the Africa Investor Advisor of the Year category for the Africa investor (Ai) Infrastructure Investment Awards In 2014, Prescient was recognised as being one of the top 100 most Gender Empowered Companies in South Africa. Top Women in Business and Government Media research revealed Prescient as an organisation encompassing gender empowerment at the very core of our business practices. 28

29 REVENUE Information Management Services Financial Services Rand Millions

30 PROFIT BEFORE TAX Information Management Services Financial Services Rand Millions ,015 30

31 ANALYSIS OF SHAREHOLDERS 21% 2% 17% External BEE shareholding 7% BEE staff and management 2% Other staff and management Non-executive directors and other related parties Other Treasury shares 52% As at 31 March