MAGELLAN FINANCIAL GROUP LIMITED — Annual Report 2012

Aug 27, 2012

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Magellan Financial Group Limited Investor Briefing

Hamish Douglass Chief Executive Officer

Tuesday, 28 August 2012

Magellan Financial Group Limited Overview

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

• As at 30 June 2012:

• $4.0 billion in funds under management.

• 14 Investment Professionals and 44 Total Staff.

• Strong Balance Sheet with Investment Assets of $139.3 million and Net Assets of $147.2 million.

• Net profit after tax of $13.7 million.

Results Summary

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

MFG Capital Structure

30 June 2012	(m)
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.

Funds Management Business

$’000	30 June 2011	30 June 2012	% change
Revenue
Management fees	13,631	31,042	128%
Consultingfees*	1,266	1,218	-4%
Interest/other income	311	400	29%
	15,208	32,660	115%
Expenses
Employee expense	6,972	11,378	63%
Other expense	2,845	4,983	75%
	9,817	16,361	67%
Profit before tax	5,391	16,299	202%

Key Statistics

	30 June 2011	30 June 2012	% change
Net Assets ($’000)	6,094	12,803	110%
Cost/Income	64.6%	50.1%	-22%
Avg. Numberof Employees	28	38	36%

Employee Summary

	30 June 2010	30 June 2011	**30 June 2012 **	17 August 2012
Investment
- Professional	10	12	14	17
- Administration	1	1	2	2
	11	13	16	19
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	48

Funds Under Management Summary

	30 June 2010	30 June 2011	30 June 2012	17 August 2012
$ million
Retail	610.7	1,081.9	1,749.6	1,922.5
Institutional
- Active	197.6	178.3	786.9	841.9
- Enhanced beta	338.7	1,496.1	1,469.2	1,371.7
	536.3	1,674.4	2,256.1	2,213.6
Total FUM	1,147.0	2,756.3	4,005.7	4,136.1
%
Retail	53%	39%	44%	46%
Institutional
- Active	17%	6%	20%	20%
- Enhanced beta	30%	55%	36%	34%
	47%	61%	56%	54%
Total FUM	100%	100%	100%	100%
Average Base Management	95	61	71	71 est.

Retail Business

• As at 30 June 2012 Total Retail FUM $1.7 billion.

• Total Net Retail Inflows for the 12 months to 30 June 2012 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 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

• Number of advisers attending the August 2012 Roadshows: 1200 approx.

Retail Business (continued)

Investment Performance as at 30 June 2012

	1 Year	3 Years p.a.	5 Years p.a.	5 Years cumul.
Magellan Global Fund	18.2%	11.4%	4.1%	22.4%
MSCI World NTR Index($A)	-0.8%	2.5%	-6.6%	-28.8%
Excess	19.0%	8.9%	10.7%	51.2%
Magellan Infrastructure Fund	7.6%	18.0%	2.0%	10.4%
UBS Dev Infra & Utilities NTR Index Hedged($A)	5.0%	10.3%	-0.3%	-1.5%
Excess	2.6%	7.7%	2.3%	11.9%

*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.”

Retail Business (continued)

Peer Comparison as at 30 June 2012

	1 Year	3 Years p.a.	5 Years p.a.
MSCI World NTR Index($A)	-0.8%	2.5%	-6.6%
Magellan Global	18.2%	11.4%	4.1%
Platinum International Brands	-5.3%	11.5%	4.1%
IFP Global Franchise Fund	11.3%	10.9%	1.2%
Platinum International	-6.4%	-1.0%	-0.8%
Walter Scott Global Equity	4.0%	2.6%	-1.8%
MFS Global Equity Trust	0.9%	5.0%	-3.1%
Zurich Investments Global Thematic	-0.9%	-0.4%	-3.8%
Fidelity Global Equities	0.3%	4.6%	-4.0%
GMO Global Equity	-1.7%	2.1%	-7.3%
T. Rowe Price Global Equity	-4.4%	0.3%	-8.3%
DWS Global Equity Thematic	-9.2%	-0.1%	-9.2%
AXA Wholesale Global Equity Growth	-3.8%	0.5%	-11.8%

Retail Business (continued)

Magellan Global Fund – Monthly Net Inflows and FUM

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Institutional Business

• As at 30 June 2012 total institutional FUM $ 2.3 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 23 Institutional clients and FUM of $1.9 billion.

• 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

Fee Summary

	Base Fee pa	Performance Fee
Magellan Global Fund	1.35%	Yes
Magellan Infrastructure Fund	1.06%	Yes
Magellan Core Infrastructure Fund	0.60%	No
Frontegra MFG Global Equity Fund1	0.80%	No
Frontegra MFG Infrastructure Fund1	0.70%	No
Magellan Flagship Fund	1.25%	Yes
Global Equities institutional fee scale1
First $US 100m	0.70%
Next $US 100m	0.50%
Next $US 200m	0.40%

Investment Assets

Summary of Magellan’s investment assets at 30 June 2012

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

Executive Director Remuneration

	Hamish Douglass CEO and Managing Director
Salary	$400,000
Investment Restriction Payment (15 July 2017)	$500,000
Bonus
- Maximum1	200% of salary
- Key Criteria	MFG Group Performance (50% weighting)
	Global Equity Performance (40% weighting)
	Other criteria (10% weighting)

1 If EPS is less than 10 cents the maximum amount of the bonus would be 125% of salary.

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 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 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.