MAGELLAN FINANCIAL GROUP LIMITED — AGM Information 2012

Oct 25, 2012

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26 October 2012

ASX Market Announcements Australian Securities Exchange Limited Level 4, Exchange Centre 20 Bridge Street, Sydney NSW 2000

Dear Sir/Madam,

Magellan Financial Group Limited (ASX: MFG) 2012 Annual General Meeting Chairman’s Address & CEO’s Presentation

Magellan Financial Group Limited (‘ MFG ’) hereby submits copies of:

• the Address by MFG’s Chairman, Mr Chris Mackay; and

• the Presentation by MFG’s CEO, Mr Hamish Douglass,

which will be delivered at this morning’s Annual General Meeting of MFG.

Yours faithfully,

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Leo Quintana Legal Counsel & Company Secretary

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Chairman’s Address Annual General Meeting

Friday, 26 October 2012

Magellan recorded a full year net profit after tax of $13.7 million for the year ended 30 June 2012 ($5.8 million for 2011). Revenues almost doubled during the year.

Magellan is in a strong financial position with an extremely strong balance sheet. As at 30 June 2012:

• the Group had investment assets (including the cash and fixed and variable rate debt investments) of approximately $139.3 million and shareholders’ funds of $147.2 million; and

• the Group’s NTA per share (diluted assuming conversion of the Class B shares) was approximately $0.91 ($0.78 for 2011).

Magellan has paid a final fully franked dividend of 3.0 cents per ordinary share and an interim fully franked dividend of 1.5 cents per share, which total $6.9 million in respect of the 2012 financial year. The Board reviews Magellan’s capital requirements and dividend policy as the core business develops.

Hamish is leading the team to make excellent progress with our funds management business which he will detail in his presentation shortly. Relationships are increasingly being built internationally, as well as domestically.

The Magellan Global Fund, has continued its excellent investment and valuation disciplines. The outperformance in these difficult markets is more than 50 percentage points above the average market benchmarks for the 5 years to 30 June 2012 and is achieving this with lower volatility.

Magellan’s infrastructure team again also had strong investment performance in 2011/12 and domestic and international client relationships are strong and growing.

I would like to thank the Directors. The Board continues to operate well together and each Board member is valuable. Shareholders are well served by the calibre and commitment of the Board.

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The closing comments from last year’s AGM continue to apply: “Hamish and I believe that the Magellan team is skilled and professional, and continues to improve. The research team lead by Gerald Stack is detail oriented, persistent and clearly understands the nexus between Quality, Value and investment performance over time. Our business support and control teams led by Nerida Campbell are very professional and rigorous, whilst Frank Casarotti and our Distribution Team are proving themselves in these difficult markets. They are developing and maintaining strong relationships with key decision makers such as financial planners and their clients, built on trust and transparency.

We have a lot of work to do; it’s early days, but we hope to provide very solid investment returns for a growing number of satisfied investors in Magellan’s funds over the years to come”.

I’ll now hand over to Hamish for his address after which we will take further questions and open up the discussion.

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Magellan Financial Group Limited

Annual General Meeting

Hamish Douglass Chief Executive Officer Friday, 26 October 2012

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Important Information

This presentation has been prepared by Magellan Financial Group Limited (‘MFG’).

While the information in this presentation has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation.

This presentation and comments made by Directors may contain forward looking statements. These forward-looking statements have been made based upon MFG’s expectations and beliefs concerning future developments and their potential effect upon MFG (and its controlled entities) and are subject to risks and uncertainty which are, in many instances, beyond MFG’s control. No assurance is given that future developments will be in accordance with MFG’s expectations. Actual results could differ materially from those expected by MFG.

The information contained in this presentation and provided at this Annual General Meeting is not intended to be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs.

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Magellan Financial Group Limited Overview

• Sydney based investment boutique established in 2006, specialising in the management of global equity and infrastructure strategies.

• $4.8 billion in funds under management as at 23 October 2012.

• 19 Investment Professionals and 50 Total Staff as at 23 October 2012.

• Strong Balance Sheet with Investment Assets of $139.3 million and Net Assets of $147.2 million as at 30 June 2012

• Net profit after tax of $13.7 million for the year ending 30 June 2012.

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Results Summary

$ million	30 June 2011	30 June 2012	% **Change **
Revenue	18.3	35.8	96%
Total operating expenses	10.2	16.7	64%
Net profit after tax	5.8	13.7	136%

Key Statistics

	30 June 2011	30 June 2012	% **Change **
Earnings per share1	3.7c	8.5c	130%
Dividend per share	1.5c	4.5c	200%
NTA per share2	$0.78	$0.91	17%
Cost/Income	56%	47%	-16%

1 Fully diluted.

2 Diluted assuming conversion of the Class B shares.

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MFG Capital Structure

30 June 2012	$ million
Ordinary Shares	152.558
2016 Options1	7.882
Class B Shares2	9.154
Total potential issued capital	169.594

• 1 MFG 2016 options have an exercise price of $3.00 and expire on 30 June 2016.

2 Class B shares are held by H.M. Douglass and will convert to ordinary shares on the first business day after 21 November 2016 . The number of ordinary shares is equal to 0.06 times the number of ordinary shares on issue on 21 November 2016, subject to a cap of 10.2 million ordinary shares.

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Funds Management Business

	$ million		30 June 2011		30 June 2012		**% change **
	Revenue
	Management fees		13.6		31.0		128%
	Consultingfees*		1.3		1.2		-4%
	Interest/other income		0.3		0.4		29%
			15.2		32.7		115%
	Expenses
	Employee expense		7.0		11.4		63%
	Other expense		2.8		5.0		75%
			9.8		16.4		67%
	Profit before tax		5.4		16.3		202%
	Key Statistics
			30 June 2011		30 June 2012		**% change **
	Net Assets ($ million)		6.1		12.8		110%
	Cost/Income		64.6%		50.1%		-22%
	Avg. Numberof Employees		28		38		36%
	Employee expense/total expense		71.0%		69.5%		-2%

*The arrangement under which consulting fees are received expires on 30 June 2013

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Employee Summary

	30 June 2010	30 June 2011	30 June 2012	23 Oct 2012
Investment
- Professional	10	12	14	19
- Administration	1	1	2	2
	11	13	16	21
Distribution
- Professional	5	10	12	12
- Administration	1	1	1	1
	6	11	13	13
Business Support
- Professional	6	6	13	13
- Administration	1	1	2	3
	7	7	15	16
Total	24	31	44	50
Average	24	28	38

We intend to modestly increase headcount in the 2012/13 financial year.

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Funds Under Management Summary

	30 June 2010	30 June 2011	30 June 2012	23 Oct 2012
$ million
Retail	610.7	1,081.9	1,749.6	2,320.5
Institutional
-Active	197.6	178.3	786.9	994.6
-Enhanced beta	338.7	1,496.1	1,469.2	1,467.1
	536.3	1,674.4	2,256.1	2,461.7
Total FUM	1,147.0	2,756.3	4,005.7	4,782.2
%
Retail	53%	39%	44%	49%
Institutional
-Active	17%	6%	20%	21%
-Enhanced beta	30%	55%	36%	31%
	47%	61%	56%	51%
Total FUM	100%	100%	100%	100%
Average Base Management fee (bps)*	95	61	71	79 est
Percentage of FUM subject to performance fees	63%	39%	53%	59%

Contingent Assets and Liabilities

The Group has a contingent asset of a non-crystallised performance fee at year end, which has not been recognised in the financial statements in accordance with AASB 137 – Provisions, Contingent Liabilities and Contingent Assets. Recognition of the fee is dependent upon the underlying values of the (US dollar denominated) portfolio at 31 December 2012. As at 30 September 2012, the performance fee payable to the Group from this mandate was approximately $5.3 million [23 October: $5.3 million].

• Average Base Management fees for the financial years ending 30 June 2010, 30 June 2011 and 30 June 2012 is calculated Base Management fees divided by Average FUM. For the period 23 Oct 2012, this is estimated by calculating Base Management fee prorated over 12 months, divided by Average FUM for the Sept 2012 quarter.

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Retail Business

• As at 23 October 2012 Total Retail FUM $2.3 billion.

• Total Net Retail Inflows for the 12 months to 30 June was $672.8 million.

• –

• Magellan Global Fund Key representation

• Platforms: BT Wrap, Macquarie Wrap, Colonial First State First Choice, Colonial First State First Wrap, MLC Wrap, Navigator, Asgard, NetWealth, AXA North, AXA Summit, Goldman Sachs, JB Were and IOOF, amongst others.

• Retail Research Ratings:

  • Morningstar – 5 stars quantitative (Silver qualitative)

  • Lonsec – Recommended

  • Zenith – Highly Recommended

  • Van Eyk – A

• Number of dealer groups using MGF: 110 approx

• Number of advisers attending the August 2012 Roadshows: 1200 approx. (700 approx. in 2011)

• Retail distribution offices in Sydney, Melbourne, Brisbane and Auckland.

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Retail Business (continued)

Investment Performance as at 30 September 2012

	1 Year	3 Years p.a.	5 Years p.a.	5 Years cumul.
Magellan Global Fund	21.9%	11.1%	5.6%	34.0%
MSCI World NTR Index($A)	13.6%	1.7%	-5.3%	-22.4%
Excess	8.3%	9.4%	10.9%	56.4%
Magellan Infrastructure Fund	17.8%	15.1%	3.0%	11.1%
UBS Dev Infra & Utilities NTR Index Hedged($A)	13.1%	7.6%	0.0%	-4.6%
Excess	4.7%	7.5%	3.0%	15.7%

*Calculations are based on exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). Annualised 5 Year performance is denoted with “p.a.”, cumulative 5 year performance is denoted with “cumul.”

Source: MSCI, UBS, Magellan Asset Management

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Retail Business (continued)

Peer Comparison as at 30 September 2012

	1 Year	3 Years p.a.	5 Years p.a.
MSCI World Net TR ($A)	13.6%	1.8%	-5.3%
Platinum International Brands	9.7%	10.1%	6.2%
Magellan Global	21.9%	11.1%	5.6%
IFP Global Franchise Fund	15.2%	10.7%	3.4%
Platinum International	3.3%	-2.8%	0.1%
Walter Scott Global Equity	10.6%	2.5%	-1.1%
MFS Global Equity Trust	17.8%	4.2%	-1.5%
Fidelity Global Equities	15.4%	4.2%	-3.0%
Zurich Investments Global Thematic	9.9%	0.5%	-3.5%
T. Rowe Price Global Equity	14.2%	0.6%	-7.4%
DWS Global Equity Thematic	10.9%	-1.0%	-7.4%
AXA W Global Equity Growth	12.8%	-0.5%	-11.1%
AXA Wholesale Global Equity Value	6.9%	-5.1%	-13.8%

Source: MSCI, Morningstar

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Retail Business (continued)

Magellan Global Fund – Monthly Net Inflows and FUM

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140 2,000
130
Average monthly net inflows for last 12 months is $74.6m 1,800
120 Average monthly net inflows for last 3 months is $115.5m
110 1,600
100
1,400
90
1,200
80
70 1,000
60
800
50
600
40
30
400
20
200
10
- -
30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-12
Magellan Global Fund Flows - LHS Magellan Global Fund FUM - RHS
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• FUM & Flows includes Colonial First State Magellan Global Option from April 2011

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Institutional Business

• As at 23 October total institutional FUM $ 2.5 billion.

• Institutional gross inflows of $417.6 million and net inflows of $170.4 million for the 12 months to 30 June 2012.

• Australian business is strong with a growing number of Institutional clients and FUM of $1.8 billion as at 23 October 2012.

• Agreement with Frontier Partners to distribute capabilities in the US and Canada has resulted in two new global equity mandates (A$300 million) and built strong relationships with many Asset Consultants and Potential Clients in this region.

• Inroads in UK:

• launched a Core Infrastructure product for UK clients in June 2012 with significant client interest to date

• Intention to launch a UCITS fund for the Global Equities Strategy

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Investment Assets

Summary of Magellan’s investment assets at 30 June 2012

Investment	$ million
Cash	1.1
Fixed Term Deposits	30.6
MFF Shares	42.2
Magellan Unlisted Funds	52.6
Listed shares	9.1
Other	3.7
Total	139.3

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Magellan Financial Group Limited 2012 Annual General Meeting

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