Perpetual : 1H20 Results Briefing

20 February 2020

ASX Limited

ASX Market Announcements Office

Exchange Centre

20 Bridge Street

Sydney NSW 2000

Perpetual Half Year Financial Results

The following announcements to the market are provided:

Appendix 4D

1H20 ASX Announcement

• 1H20 Results Briefing
  Half Yearly Report and Accounts
  Operating and Financial Review - 31 December 2019

Yours faithfully,

Chris Green

Company Secretary

(Authorising Officer)

Perpetual Limited

ABN 86 000 431 827

Angel Place,

Level 18, 123 Pitt Street

Sydney NSW 2000

Australia

Phone [phone] www.perpetual.com.au

Page 1

PERPETUAL LIMITED

1H20 RESULTS

6 months to 31 December 2019

Rob Adams

Chief Executive Officer

and Managing Director

Chris Green

Chief Financial Officer

ABN 86 000 431 827

1H20 RESULTS

ROB ADAMS

CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR

2

1H20 RESULTS

$253.5m

Revenue1

 $1.2m on 1H19

$173.8m

Expenses1

 4% on 1H19

$51.6m	$1.05
NPAT		Interim DPS
 14% on 1H19		 16% on 1H19

	PERPETUAL		PERPETUAL		PERPETUAL
	INVESTMENTS		PRIVATE		CORPORATE TRUST
	FUM $26.3b		FUA $15.2b		FUA $772.5b
Highly regarded investments business	Clear HNW segmentation strategy	Leader in securitisation and
adding world-class investment	and new professional services	managed fund services, investing
capabilities to drive sustained growth		model, capitalising		in data analytics solutions
				on industry disruption

1. Revenue is presented net of distributions and expenses of the EMCF structured products. For statutory purposes revenue, distributions and expenses are adjusted to reflect the gross revenue and	3
expenses of these products. A reconciliation is included in Appendix B of the operating and financial review for the 6 months ended 31 December 2019

OUR STRATEGY

	OUR PURPOSE		OUR VISION		OUR VALUES
	Enduring Prosperity		Most trusted in Financial Services		Excellence, Integrity, Partnership
	CLIENTS		PEOPLE		SHAREHOLDERS
	Trusted brand and enduring		Attract, develop and inspire		Delivering sustainable quality growth
	relationships		the best people

STRATEGIC IMPERATIVES

Exceptional products	Empowering our people to	New capabilities
Outstanding service	deliver high performance	Global footprint

• Exceed client needs with products and services
• Improve client connectivity and delivery through innovative digital solutions
• Set industry leading standards in all that we do

• Agile, efficient and scalable operating platform to manage growth
• A strong culture where people are positively challenged and empowered within our stated risk appetite
• Contemporary technology platform

• Buy or build global investment distribution capabilities
• Improve and diversify our growth potential both organically and via an active M&A agenda across our businesses
• Deliver contemporary solutions to our clients

Brand	Leadership	Innovation

4

PERPETUAL

SOLID PROGRESS IN STRATEGY EXECUTION

Exceptional products	Empowering our	New capabilities
Outstanding service	people to deliver high	Global footprint
	performance

• Capitalising on industry disruption with 16 new advisers1, and an active growing pipeline
• Perpetual Corporate Trust awarded
  "Trustee of the Year" 2 for the fourth consecutive year and delivered 23% growth in profit before tax3
• Perpetual Income Opportunities Fund awarded Best Multi Strategy Fund (for the second year running)4
• Diversified Real Return Fund - winner 2019 Multi-AssetReal Return5

• Key senior appointments completed to support growth agenda
• Perpetual Client Solutions established to support and leverage expertise across the business
• Process & automation review designed to unlock further efficiencies in Client Solutions and across the business
• Infrastructure transformation program underway to build contemporary platform positioned for growth across the business

• Priority Life acquisition completed, extending deep client segment expertise
• Investing in world-class investment capabilities with Trillium Asset Management acquisition providing exposure to fast growing ESG segment6
• Establishing US distribution team to accelerate growth in key markets
• Active M&A pipeline across all three lines of business

Delivering on strategic imperatives across the business

1. Since 1H19 2. KangaNews Awards 2019 3. For the six months ended 31 December 2019 4. Awarded by Hedge Funds Rock Australian Alternative Investments Awards in 2019 5. The Zenith
Fund awards were issued 11 October 2019 by Zenith Investment partners (ABN 27 130 132 672 AFSL 226872) and are determined using proprietary methodologies. Further information about this	5
award can be found on slide 32 6.The Cerulli Report - US Environment, Social and Governance investing 2019: Meeting evolving Investor Expectations

PERPETUAL INVESTMENTS

ELEVATED MARKETS OFFSET BY OUTFLOWS

7200		All Ordinaries Index
7000
6800
6600
6400
6200			Average 1H20 v 2H19: +8%
6000			Average 1H20 v 1H19: +11%
5800
5600
5400
5200
Jul-18	Nov-18	Mar-19	Jul-19	Nov-19
	Average 1H19: 6103	Average 2H19: 6196	Average 1H20: 6780

					FUM by channel $b								FUM by asset class $b
27.7	27.2	26.3		27.7	27.2	26.3
			0.4
													0.9
					0.8									0.9
								0.8							0.9
8.4								7.1
	7.0		7.0			7.5		8.7
												1.3
																1.3
																			1.3
14.1		14.5		13.8		18.4		17.5
															15.4
4.8		4.9		4.7
														1H19	2H19	1H20
		1H19	2H19		1H20
		Retail		Intermediary		Institutional		Listed Vehicles			Australian Equities				Global Equities

Credit & Fixed Income Other

Markets rebounded

positively with

double digit growth over the 12 months

$1.3bn net flows into

cash and fixed income in Q2, marking first quarter of positive flows in 10 quarters

6

PERPETUAL INVESTMENTS

CHALLENGING MARKET CONDITIONS FOR VALUE MANAGERS

	20%	2000	2007	Exceeding
		Tech bubble	Pre GFC	Tech bubble
		21.3x	bubble	levels
	15%		17.9x	24.4x
OutperformanceISF	10%
5%			Average
			P/E: 16.3x
	0%

-5%

-10%

96	97	98	99	00	01	02	03	04	05	06	07	08	09	10	11	12	13	14	15	16	17	18	19
				Industrial Share Fund Outperformance						Industrials Ex Financials P/E			Average P/E

26x

24x

22x

20x

18x

16x

14x

12x

10x

Price: Earnings Ratio

Valuations now exceed previous market peaks

Our funds have historically outperformed when valuations normalise

Greatest valuation gap in 100 years

Source: FactSet and Perpetual. ISF returns shown are 1-year gross excess returns over the fund benchmark up to the end of December 2019	7

PERPETUAL INVESTMENTS

LONG-TERM PERFORMANCE REMAINS STRONG

Quartile rankings1	% of funds quartile ranking
Period ending 31 December 2019

Australian Equities
Global	Equities
Multi	Asset
Credit and	Fixed Income

Perpetual W Australian

Perpetual W Concentrated Equity

Perpetual W Ethical SRI

Perpetual W Geared Australian

Perpetual W Industrial

Perpetual W SHARE-PLUSLong-Short2

Perpetual W Smaller Companies

Perpetual Pure Equity Alpha3

Perpetual Pure Microcap4

Perpetual Global Share Fund - Class A

Perpetual Global Share Fund - Hedged

Perpetual W Balanced Growth

Perpetual W Conservative Growth

Perpetual W Diversified Growth

Perpetual Diversified Real Return

Perpetual W Diversified Income5

Perpetual Active Fixed Interest6

Perpetual Pure Credit Alpha

Perpetual Wholesale Dynamic Fixed Income5 Perpetual High Grade Treasury - R unit

6 mos	1 yr	3 yrs	5 yrs	7 yrs	10 yrs
						6 mos
3	4	4	4	4	3
3	4	4	4	4	2
4	4	4	4	3	1
1	1	1	2	1	1	1 yr
4	4	4	4	4	2
2	4	3	4	2	1
3	4	4	3	3	2
4	4	3	4
1	1	2	1			3 yrs
4	3	2	2
4	3	3
						5 yrs
4	4	4	4	4	3
4	4	3	3	2	2
4	4	4	4	4	2
4	4	2	2	3		7 yrs
1	3	3	2	2	2
1	1	1	1	1	1
1	3	1	1	1		10 yrs
2	3	2	2	2
1	1	1	1	1

40%60%

20%80%

40%60%

47%53%

50%50%

83%17%

1st & 2nd Quartile

1.	Perpetual funds included in the Mercer wholesale survey (Sub universe, post fee) quartile ranking
2.	From March 2018 the Share Plus Fund is no longer included in Mercer survey. Quartiles have been estimated against the Wholesale - Equity - Australia All Cap Universe
3.	Mercer institutional survey - Australian Shares Absolute Return (net) universe which is not an official Mercer Universe
4.	From September 2019 Pure Microcap is no longer included in Mercer survey. Quartiles have been estimated based on net returns for the Wholesale - Equity - Australian Small Caps Universe	8
5.	Diversified Income and Dynamic Fixed Income quartiles are estimated based on returns against the Wholesale Fixed Income - Global - Income Universe
6.	Mercer institutional survey - Australia Fixed Income (before fees) is not an official Mercer Universe

TRILLIUM STANDS TO BENEFIT FROM TWO MEGATRENDS: INTERGENERATIONAL WEALTH TRANSFER AND INCREASING ESG INVESTMENT DEMAND

Millennials have a higher propensity to invest in ESG strategies than

Baby Boomers1

2019 saw a significant increase in European Sustainable fund flows3

Demand for ESG Investments %

70%

25%

17%

US$30t is expected to

transfer from Baby42%

Boomers to Millennials over the next few decades

41%

Sustainable Fund Flows (Euro billion)

140

120

100

80

60

40

20

6%

Baby Boomers (age, 55-73)		Millennials (age, 23-38)
		High demand %		Moderate demand %		Low demand %

European

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

-20

Active Funds Passive Funds

ESG investment generates superior financial performance2

An analysis which aggregated results of over 2,200 studies into the impact of ESG on financial performance concluded that:

• in 63% of cases positive correlation was proven
• in only 8% of cases negative correlation was proven
• the remaining 29% were not statistically significant

"US ESG-focused product assets grew 75% from 2013 to 2Q 2019" Cerulli Associates1

"ESG and ethical FUM is the fastest growing Australian asset sector" Rainmaker Sept 20194

"ESG integration is one of the fastest growing ESG segment and globally added $7t of AUM between 2016 and 2018" Global Sustainable Investment Alliance

1. Cerulli Associates US ESG investing 2019 and Accenture The 'Greater" Wealth transfer

2.	Journal of Sustainable Finance and Investment. ESG and Financial Performance. Aggregate evidence from more than 2000 empirical studies	9
3.	Morningstar, Morgan Stanley Research
4.	Rainmaker roundup Vol 23. September 2019

ACQUISITION OF TRILLIUM ASSET MANAGEMENT INTEGRATED ESG INVESTING SINCE 1982

Mission

"We will provide for the financial needs of our clients whilst leveraging their capital for positive social and environmental impact"

Joan Bavaria Founder of Trillium 1982

Reputation

• Trillium recognised as "2019 B Corporation1 best for the

world overall honouree"

• 20 years of fossil fuel free investing
• Trillium's all cap core strategy honoured as 2019 impact SMA of the year (Investment Advisor Magazine)2
• Trillium helped found leading bodies:
• • USSIF (US Sustainable Investment Forum)
  • Open MIC (Open Media and Information Companies initiative)
• Trillium also founded Ceres in 1989 - having incubated the environmental organisation in their offices for its first 4 years

Positive Net Flows

300		Trillium net flows US $m
250
200
150
100
50
0
2016	2017	2018	2019

Growth Opportunities

• Commenced buildout of US distribution capability with the hiring of Chuck Thompson3 as head of distribution and corporate strategy - Americas
• EU sustainable action plan looks to reorient capital flows towards sustainable investment further supporting ESG in Europe
• Leverage Perpetual's brand and Australian distribution capabilities

1. B Corporation certification is a private certification issued to for-profit companies by B Lab. Certified B Corporations are businesses that meet the highest standards of verified social and

	environmental performance, public transparency, and legal accountability to balance profit and purpose	10
2.	Envestnet PMC and Investment Advisor Magazine Top Asset Managers of 2019
3.	Start date not before 2 March 2020

ACQUISITION OF TRILLIUM ASSET MANAGEMENT

KEY TRANSACTION FEATURES

• Perpetual is acquiring 100% of Trillium's equity
• Completion is expected on or around 30 June 2020
• Upfront consideration of US$36m to be paid on completion from existing cash resources
• Deferred consideration structured as an earn-out:

1. Majority of potential payments linked to revenue growth over 4 years; and

• 1. Maximum potential earn-out of US$20m requires revenues to more than double by 30 June 2024
• Key investment professionals and business managers retained with long term incentives
• Incremental EBITDA generated from growth of Trillium is expected to fund the buildout of the US distribution team

11

PERPETUAL DISTRIBUTION

INVESTING IN AND BUILDING A WORLD CLASS DISTRIBUTION MODEL

Adam Quaife, General Manager - Global Head of Distribution

• 22 years industry experience in asset management distribution
• Last 18 years at Franklin Templeton Investments in senior distribution roles, including:
• • Head of Institutional Sales, Australia
  • Head of Central & Eastern Europe and the Middle East
  • Co-CEO& Regional Head of South East Asia Franklin Templeton Investments (Singapore)

Chuck Thompson, Head of Distribution & Corporate Strategy - Americas1

• 26 years of industry experience in asset management distribution
• 15 years at Henderson as Head of North America
• • Built Henderson's business from inception to US $20 billion
  • Managed a team of 50 across all distribution and marketing functions
  • Significant M&A experience in asset management

Core US team expected to be in place by end of FY20

Initial focus on Australia, US and Europe

1. Start date not before 2 March 2020	12

PERPETUAL PRIVATE

SUCCESS IN CLIENT SEGMENTATION AT CORE OF CONTINUED GROWTH

	13 consecutive halves					Continued growth in				Steady market related
					Select & implemented
	of positive FUA flows								margins
					funds
	Funds under advice $b		Funds under management $b	Market related revenue margin bps
									6.7	6.8
						6.2	0.6	0.6
						0.6
																86	83	84
			15.2
		14.8						2.9	3.0
					2.6
13.7
						2.9	3.1	3.2
	1H19	2H19	1H20			1H19		2H19		1H20	1H19	2H19	1H20
		Funds under advice						Select		Implemented		Opportunities

13

PERPETUAL PRIVATE

REFERRAL CHANNELS CONTINUE TO DELIVER NEW CLIENTS

New client growth across HNW and medical continues

Net new clients - HNW ex Fordham1

	59
40	54

28

19				14
1H19		2H19	1H20
		Medical		HNW

Continued growth in		Client segmentation
	strategy proven by
Fordham
	high client balances
New clients - Fordham	Average FUA per new HNW client $m

111	4.2	4.6

3.8

75

56

1H19

2H19

1H20

1H19

2H19

1H20

Avg New Bal HNW ($m)

1. Net new clients excludes clients acquired as part of Priority Life, which represent a new referral channel for Perpetual Private's service offering

14

of $2m+

PERPETUAL PRIVATE

CAPITALISING ON INDUSTRY DISLOCATION BY ATTRACTING CULTURALLY ALIGNED HIGH QUALITY TALENT

TRANSITION ADVISERS

ONBOARD CLIENTS

ACCELERATE GROWTH

FY20

FY21

FY22

Industry context

30% of the advice industry either switched licensees or left entirely during 20191

Lowest number of advisers since December 2015

16 new advisers joining Perpetual3

Pipeline of additional advisers continues to grow

Servicing true HNW segment average FUA per client and managing average client books

Largest decline seen in the institutionally	of $80 million
owned segment, with 9.4%1 decrease in the	Growth in FUA and market revenue expected to
number of advisers servicing this segment	accelerate from FY21

Continued growth in adviser numbers despite industry contraction

1. Advisor Musical Chairs Report for Q4 2019
2. As reported on the Australian Securities and Investment Commissions AFSL register for the quarter ended 30 September 2019. Institutionally owned segment and aligned licensees

(Major banks, AMP, IOOF)

15

3. Eight of the 16 advisers have joined since 1H19, with the remaining eight to commence in 2H20

PERPETUAL PRIVATE

PRIORITY LIFE ACQUISITION UPDATE

1H20

Business overview

Priority Life is one of Australia's leading risk advisory firms, with a particular

strength in servicing medical professionals Australia-wide since 1992

Provides expert advice on Life and

Disability insurance

Services over 2,500 clients including 700 high net worth, and 60% in the medical segment

Consideration paid via cash and share issuance with deferred earn-out over 5 years

Accelerate growth through referrals

Cross referrals have commenced:

• Wealth advisory into Priority Life clients; and
• Risk services to existing Perpetual Private clients

Expected to be EPS accretive in FY21

Acquisition aligned to strategy to build capability and referral channels for targeted segments

16

PCT - MANAGED FUND SERVICES

DEMAND FROM DOMESTIC & GLOBAL INVESTORS SUPPORTING GROWTH

					MFS1 FUA $b					MFS revenue contribution $m
255.8		269.7		274.1			24.7	26.6		27.6
											32.7									4.0
						30.6								3.8
	28.7			4.0
		29.2		30.7
24.6					5.1		5.0
										4.3
					58.1		63.5
57.5								7.0
														6.1	6.3
145.1		151.7		147.1			10.4	11.2	11.6
	1H19		2H19		1H20	1H19	2H19	1H20
			Custody				Wholesale Trustee			Custody			Wholesale Trustee
			Responsible entity		Singapore							Responsible entity		Singapore

SIGNIFICANT TRANSACTIONS 1H20

	$2.72b FUM	$925m FUM
Responsible Entity Services	Wholesale Trustee Custodian	Responsible Entity Services
Australian Equities Strategy	Purpose built student accommodation	Listed Global Credit Strategy
1. Managed Fund Services (MFS)

17

PCT - DEBT MARKET SERVICES

GROWTH IN NON BANK LENDING AND DATA & ANALYTICS SOLUTIONS

				DMS FUA1	$b								DMS Public securitisation issuance	DMS revenue composition $m
					494.9			498.4						$b	35.3				32.7	33.2
461.2										28.9
		14.5					15.5						29.3	8.9
			14.8			26.7				13.6		14.3
				115.5			121.4
129.2					8.0				11.2
	43.3			43.0		8.0
43.1																			18.3
																				13.7
																14.0
274.0		321.7			318.5							17.7	19.1		18.9
																4.7	7.6	8.1
			1H19			2H19				1H20				1H19		2H19		1H20	1H19	2H19	1H20
		Balance sheet		ABS & CMBS		RMBS		Other				RMBS Bank		RMBS Non bank		ABS & CMBS			Securitisation			DAS and other 2

SIGNIFICANT TRANSACTIONS 1H20

$1.25b		Medallion Trust Series 2019-1
	$1.5b
Residential Mortgages	Digital Consumer Neo Bank	Residential Mortgages
DMS - Trustee, Security Trustee, Custodian	New Mandate	DMS - Trustee, Security Trustee
DAS - Investor Reporting		DAS - Regulator and Investor Reporting
MFS - Custody

1.	Debt Market Services (DMS)	18
2.	Data & Analytics Solutions (DAS) and other services includes RBA, Investor and Intermediary reporting, Document Custody, Standby Servicing, Trust Management, Accounting and Agency

PCT - DATA AND ANALYTICS SOLUTIONS

BUILDING MOMENTUM WITH NEW CLIENTS AND PRODUCT EXPANSION

DATA AND ANALYTICS SOLUTIONS (DAS)

Australian (Securitisation) Data Warehouse

Regulatory and investor reporting

• $330bn of loan level mortgage data collected over 20 years
• Facilitating investor reporting, intermediary reporting and global regulatory reporting for domestic and global banking and financial services institutions

Perpetual

Roundtables

Benchmarking and insights

• Delivering benchmarking and insights to Roundtables participants on over $2.4 trillion of balance sheet data
• Extending our client reach with attendees representing all major banks and non-bank financial institutions in Australia and New Zealand

SIGNIFICANT TRANSACTIONS 1H20

Perpetual

Business Intelligence

Data analytics digital platform

• Extending the plug-and-play data management and advanced analytics platform with the launch of the Securitisation and Treasury modules
• Developed to support clients' digital transformation strategies to automate and digitise legacy technology systems and processes

RBA Regulatory and Investor Reporting

+

Perpetual Roundtables

ADW - Global investor reporting and supporting

regulatory reporting data standards

1. ESMA - European Securities and Markets Authority

European regulatory reporting and Investor Reporting

+

Perpetual Roundtables

ADW - European investor reporting and supporting regulatory reporting for credit cards to support ESMA1 data standards

Perpetual Business Intelligence "PBi" digital

platform

PBi - Portfolio Intelligence supporting in-depth customer due diligence & market intelligence

19

PERPETUAL CORPORATE TRUST

PRODUCT INNOVATION AND M&A DRIVING GROWTH

PCT Revenue1 $m

13%2

	Acquisition		Data Services	Digital
	Trust Co		Acquisition Rfi	Digital platform
		"Fintech/Regtech
	acquired		product launch	Analytics	launched
		Strategy"
	Dec 13
2013	2014	2015	2016	2017	2018	2019
	New products		New products	New products	New products	New products
	Investment Mgt		Regulator	Perpetual Business	Roundtables	PBi - IFRS 9 Intelligence
	Accounting		Reporting (RBA)	Intelligence Platform	Benchmarking	PBi - Securitisation
	New APAC			PBi - Market	PBi - Credit	Intelligence
			Intelligence	Intelligence
	Footprint			PBi -Treasury Intelligence
	Singapore					Regulator Reporting Europe
						(ESMA)

1.	Revenue excludes discontinued operations. The Business sold the Loan Servicing Business in 2013, and RSE (formerly part of The Trust Company (Superannuation) Limited) in 2014	20
2.	Compound annual growth rate from FY13 - FY19

FINANCIALS

CHRIS GREEN

CHIEF FINANCIAL OFFICER

21

FINANCIAL PERFORMANCE GROUP

For the period	1H20	2H19	1H19	1H20	1H20
$m	$m	$m	v 2H19	v 1H19
Operating revenue1	253.5	261.8	252.3	(3%)	-
Total expenses1	(173.8)	(184.9)	(167.0)	6%	(4%)
Underlying profit after tax	56.2	55.7	60.2	1%	(7%)
(UPAT)
Significant items2	(4.6)	-	-	NM	NM
Net profit after tax (NPAT)3	51.6	55.7	60.2	(7%)	(14%)
Diluted EPS on UPAT (cps)	119.0	118.1	128.2	1%	(7%)
Diluted EPS on NPAT (cps)	109.2	118.1	128.2	(8%)	(15%)
Dividends (cps)	105	125	125	(16%)	(16%)
Return on equity on NPAT (%)	15.6%	16.8%	18.2%	(120bps)	(260bps)

Key themes

• Revenue impacted by PI net outflows and lower performance fees; partially offset by double digit growth in PCT
• Expense growth within guidance, inclusive of investments in inorganic and organic initiatives
• Operating Model implementation costs reported as a significant item
• Effective tax rate of 29.4% consistent with 1H19

1. Revenue is presented net of distributions and expenses of the EMCF structured products. For statutory purposes Revenue, distributions and expenses are adjusted to reflect the gross revenue and expenses of these products. A reconciliation is included in Appendix B of the operating and financial review for the 6 months ended 31 December 2019
2. Significant items includes the operating model implementation costs and are shown net of tax

3. Attributable to equity holders of Perpetual Limited

22

REVENUE AND

EXPENSE ANALYSIS

Movement in Revenue1 ($m)

1H19	PCT	PP	PI	Other	Interest	1H20
Revenue				income	income	Revenue

Movement in Expenses ($m)

1H19	Staff	G&A	Premises	D&A Equity	1H20
Expenses	costs			Rem	Expenses

1. Revenue includes net income from structured products
2. The movement in G&A expenses includes financing costs

Key revenue movements

• Higher PCT revenue reflecting growth in both MFS and DMS, as well as growth in data services revenue and full year Roundtables revenue
• Higher PP revenues due to higher market related revenue partially offset by lower non-market revenues
• Lower PI revenue impacted by PI net flows and lower performance fees
• Higher other income due to lower unrealised loss on assets at FVTPL compared to 1H19, partially offset by lower distributions this half
• Lower interest income received from unit trust investments and bank deposits

Key expense movements

• Lower staff costs due to lower FTE and lower variable remuneration across the group
• G&A includes inorganic and organic cost growth initiatives, as well as adviser growth strategy, higher interest, partially offset by lower listed strategy costs this half
• Lower occupancy costs offset by depreciation and amortisation (D&A) uplift due to new leasing standard and full year of Roundtables acquisition late in 1H19
• Equity remuneration higher in 1H20 due to reversals from forfeited options reported in 1H19

23

OPERATING MODEL REVIEW UPDATE

REPOSITIONING THE BUSINESS AND INVESTING IN GROWTH

	Client centric	Decision making and	Centres of excellence	Digital Transformation
	model	accountability
▪	Expected to deliver $18-$23m in annualised pre-tax cost	▪ Phase 2 of the operating model review underway looking at
	savings from FY211		process automation across Perpetual Client Solutions (PCS)
▪	$4.6m2 reported as significant item (post-tax)	and the business
▪	Phase 1 of operating model review and reshaping the	▪ 2H20 implementation spend expected between $5m-$8m
(post-tax)
	workforce design largely completed
▪	Adviser growth strategy and Priority Life acquisition costs	▪ Savings generated to be reinvested in new roles to support
growth initiatives
	included with 4% cost growth this half

▪ Full benefits expected to be realised from FY21

1. Excludes implementation spend and investment in strategic initiatives on a pre-tax basis, which equates to $13-$16m in annualised costs savings on a post-tax basis.
2. Significant items includes the operating model implementation costs and are shown net of tax

24

PERPETUAL INVESTMENTS

LOWER REVENUE DUE TO NET OUTFLOWS AND PERFORMANCE FEES

For the period	1H20	2H19	1H19	1H20 v	1H20 v
$m	$m	$m	2H19	1H19
Revenue	94.5	99.2	105.8	(5%)	(11%)
Operating expenses1	(52.2)	(60.8)	(54.3)	14%	4%
EBITDA2	42.3	38.4	51.5	10%	(18%)
Depreciation & amortisation1	(1.4)	(1.2)	(1.4)	(12%)	-
Equity remuneration	(3.6)	(3.7)	(3.6)	3%	-
Interest expense1	(0.1)	-	-	NM	NM
Profit before tax	37.2	33.5	46.5	11%	(20%)
PBT Margin on revenue (%)	39	34	44	5 pts	(5 pts)
Closing FUM ($b)	26.3	27.2	27.7	(3%)	(5%)
Average FUM ($b)	26.3	27.9	29.7	(5%)	(11%)
Net flows ($b)	(1.5)	(3.0)	(1.3)	50%	(15%)
Average FUM revenue margin	72	71	71	1bp	1bp
(bps)

Revenue $m

			1.4
							2.1
										0.5
	104.4			97.2		93.9
			1H19	2H19		1H20
	◼ Performance fees			◼ Management fees
			Average revenue margin bps
													1
			1						1
												71
	70					70
		1H19	2H19		1H20
	◼ Performance fees			◼ Base fee margin

Cost to income ratio %

56%	66%	61%
1H19	2H19	1H20

1.	Effective 1 July 2019, the Group adopted AASB 16, Leases. On adoption, the Group elected the modified retrospective approach, with the effect of the initial application recognised in	25
	retained earnings at 1 July 2019. Comparatives have not been restated
2.	EBITDA represents earnings before interest, taxation, depreciation, amortisation of intangible assets, equity remuneration expense, and significant items

PERPETUAL PRIVATE

INVESTING IN FUTURE GROWTH

For the period	1H20	2H19	1H19	1H20 v	1H20 v
$m	$m	$m	2H19	1H19
Market related revenue	62.8	59.9	60.5	5%	4%
Non-market related revenue	30.7	33.5	32.1	(8%)	(4%)
Total revenues	93.5	93.4	92.6	-	1%
Operating expenses1	(67.1)	(68.3)	(63.6)	2%	(5%)
EBITDA2	26.4	25.1	29.0	5%	(9%)
Depreciation & amortisation1	(7.1)	(4.9)	(4.8)	(45%)	(48%)
Equity remuneration	(1.4)	(1.7)	(1.5)	15%	7%
Interest expense1	(0.5)	-	-	NM	NM
Profit before tax	17.4	18.5	22.6	(6%)	(23%)
PBT Margin on revenue (%)	20%	20%	24%	-	(4 pts)
Closing FUA ($b)	15.2	14.8	13.7	3%	11%
Average FUA ($b)	14.9	14.4	14.1	4%	6%
Net flows ($b)	0.1	0.1	0.1	-	-
Market related revenue	84	83	86	1bp	(2 bps)
margin (bps)

Revenue $m

32.1

33.5

30.7

60.559.962.8

1H19	2H19	1H20
◼ Non-market related revenue	◼ Market related revenue

Cost to income ratio %

80%81%

76%

1H192H191H20

1.	Effective 1 July 2019, the Group adopted AASB 16, Leases. On adoption, the Group elected the modified retrospective approach, with the effect of the initial application recognised in	26
	retained earnings at 1 July 2019. Comparatives have not been restated
2.	EBITDA represents earnings before interest, taxation, depreciation, amortisation of intangible assets, equity remuneration expense, and significant items

PERPETUAL CORPORATE TRUST

DELIVERED 23% RECORD GROWTH IN PROFIT BEFORE TAX

For the period	1H20	2H19	1H19	1H20 v	1H20 v
$m	$m	$m	2H19	1H19
Debt Market Services revenue	33.2	32.7	28.9	2%	15%
Managed Fund Services revenue	27.6	26.6	24.7	4%	12%
Total revenues	60.8	59.3	53.6	3%	13%
Operating expenses1	(27.1)	(29.6)	(27.0)	8%	-
EBITDA2	33.7	29.7	26.6	14%	27%
Depreciation & amortisation1	(5.5)	(3.9)	(3.6)	(42%)	(55%)
Equity remuneration	(0.4)	(0.5)	(0.6)	8%	23%
Interest expense1	(0.3)	(0.1)	(0.1)	NM	NM
Profit before tax	27.5	25.2	22.4	9%	23%
PBT Margin on revenue (%)	45	43	42	2pts	3pts
Closing FUA ($b) -	498.4	494.9	461.2	1%	8%
Debt Market Services
Closing FUA ($b) -	274.1	269.7	255.8	2%	7%
Managed Funds Services

Revenue $m

	59.3	60.8
53.6
24.7	26.6	27.6
28.9	32.7	33.2
1H19	2H19	1H20

Debt Market Services Managed Fund Services

Cost to income ratio %

58%57%

55%

1H192H191H20

1.	Effective 1 July 2019, the Group adopted AASB 16, Leases. On adoption, the Group elected the modified retrospective approach, with the effect of the initial application recognised in	27
	retained earnings at 1 July 2019. Comparatives have not been restated
2.	EBITDA represents earnings before interest, taxation, depreciation, amortisation of intangible assets, equity remuneration expense, and significant items

BALANCE SHEET

STRONG FOUNDATIONS FOR FUTURE GROWTH

For the period ended	1H20	2H19	1H19	1H20 v	1H20 v
$m	$m	$m	2H19	1H19
Cash	261.7	299.6	279.8	(13%)	(6%)
Liquid investments (FVTPL)	79.1	69.7	63.4	6%	16%
Goodwill & other intangibles	373.4	345.8	346.9	8%	8%
Other1	251.4	185.1	237.7	36%	6%
Total assets2	965.6	900.1	927.8	7%	4%
Corporate debt	87.0	87.0	87.0	-	-
Other liabilities	214.7	150.9	180.1	42%	19%
Total liabilities2	301.7	237.9	267.1	27%	13%
Net assets	663.9	662.2	660.7	-	-
Net Tangible Assets	$5.97	$6.47	$6.43	(16%)	(18%)
(NTA) per share1

Regulatory capital3

155.2156.7157.9

1H19

2H19

1H20

Gearing ratio4

11.6

11.6

11.6

1H192H191H20

1. Effective 1 July 2019, the Group adopted AASB 16, Leases. As a result, the Group as a lessee, has recognised a right of use assets representing its right to use the underlying assets and lease liabilities representing its obligations to make lease payments. On adoption, the Group elected the modified retrospective approach, with the effect of the initial application recognised in retained earnings at 1 July 2019. Comparatives have not been restated

2. Excludes the assets and liabilities for the Perpetual Exact Market Cash Fund (EMCF) structured products28

3. Operational risk including regulatory capital requirements. 4. Corporate debt /(Corporate debt + Equity)

FINANCIAL INDICATORS

EPS1 cps		DPS cps		NTA per share		ROE2 %

128.2	118.1	119.0	125	125	6.43	6.47	5.97
				105			18.2	16.8	15.6

1H19 2H19 1H201H19 2H19 1H201H19 2H19 1H201H19 2H19 1H20

$1.05		95%	27 March 2020
FULLY FRANKED INTERIM DIVIDEND	PAYOUT RATIO3		DIVIDEND PAYABLE

1. Fully diluted on an underlying basis.
2. ROE is calculated using NPAT attributable to equity holders of Perpetual Limited for the period divided by average equity attributable to equity holders of Perpetual Limited

3. Dividends paid/payable as a proportion of annual NPAT on ordinary fully paid shares at the end of the reporting period

29

Clients first

Exceptional products. Outstanding service

Future fit

Empowering our people to deliver high performance

New horizons

New capabilities. Global footprint

CONTACTS

Rob Adams

Chief Executive Officer & Managing Director

[e-mail] [phone]

Chris Green

Chief Financial Officer

[e-mail] [phone]

Catherine Buckmaster

Senior Manager, Investor Relations

[e-mail] [phone]

Level 18 Angel Place, 123 Pitt Street

SYDNEY NSW 2000 Australia

About Perpetual

Perpetual is an ASX-listed, diversified financial services company which has been serving Australians since

1886. Across our three businesses: Perpetual Investments, Perpetual Private and Perpetual Corporate Trust, we

protect and grow our clients' wealth, knowing that by doing

so we can make a difference in their lives.

We have been earning the trust of our clients for more than 130 years and pride ourselves on our long-standing client relationships - Trust is earned, every day. For further information, go to www.perpetual.com.au

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DISCLAIMER Important information

The information in this presentation is general background information about Perpetual Limited and its subsidiaries (Perpetual Group) and their activities and is current as at 20 February 2020. It is in

summary form and is not necessarily complete. It should be read together with the company's consolidated financial statements lodged with the ASX on 20 February 2020 which have been reviewed by

the Group's external auditor. The information in this presentation is general information only and is not intended to be relied upon as advice to investors or potential investors and does not take into account your objectives, financial situation or needs. Investors should consult with their own legal, tax, business and/or financial advisers in connection with any investment decision.

The information in this presentation is believed to be accurate at the time of compilation and is provided in good faith. It may contain information contributed by third parties. The Perpetual Group does not warrant the accuracy or completeness of any information contributed by a third party. Any views expressed in this presentation are opinions of the author at the time of presenting and do not constitute a recommendation to act. No person, including the Perpetual Group, has any responsibility to update any of the information provided in this presentation.

No representation or warranty is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation (any of which may change without notice). To the maximum extent permitted by law, the Perpetual Group, its directors, officers, employees, agents and contractors and any other person disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may be suffered through use or reliance on anything contained in or omitted from this presentation. Past performance is not indicative of future performance.

This presentation contains forward looking statements. These forward looking statements should not be relied upon as a representation or warranty, express or implied, as to future matters. Prospective financial information has been based on current expectations about future events and is, however, subject to risks, uncertainties, contingencies and assumptions that could cause actual results to differ materially from the expectations described in such prospective financial information. The Perpetual Group undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this review, subject to disclosure obligations under the applicable law or any relevant listing rules of the ASX.

Underlying profit after tax (UPAT) attributable to equity holders of Perpetual Limited reflects an assessment of the result for the ongoing business of the Group as determined by the Board and management. UPAT has been calculated with regard to ASIC's Regulatory Guide 230 - Disclosing non-IFRS financial information. UPAT attributable to equity holders of Perpetual Limited has not been

reviewed or audited by the Group's external auditors, however the adjustments to NPAT attributable to equity holders of Perpetual Limited have been extracted from the books and records that have been audited.

Nothing in this presentation should be construed as an offer to sell or solicitation of an offer to buy or sell securities of Perpetual Limited or units in any fund referred to in this presentation in any jurisdiction. The Product Disclosure Statement (PDS) for these funds are issued by Perpetual Investment Management Limited. The applicable PDS should be considered before deciding whether to acquire or hold units in a fund and can be obtained by calling 1800 022 033 or visiting our website www.perpetual.com.au.

All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated. All references to NPAT, UPAT etc. are in relation to Perpetual Limited ordinary shareholders. Certain figures may be subject to rounding differences. 1H20 refers to the financial reporting period for the six months ended 31 December 2019. 2H19 refers to the financial reporting period for the six months ended 30 June 2019 with similar abbreviations for previous and subsequent periods. 1H19 refers to the financial reporting period for the six months ended 31 December 2018 with similar abbreviations for previous and subsequent periods.

The Zenith Fund Awards were issued 11 October 2019 by Zenith Investment Partners (ABN 27 130 132 672, AFSL 226872) and are determined using proprietary methodologies. The Fund Awards are solely statements of opinion and do not represent recommendations to purchase, hold or sell any securities or make any other investment decisions. To the extent that the Fund Awards constitutes advice, it is General Advice for Wholesale clients only without taking into consideration the objectives, financial situation or needs of any specific person. Investors should seek their own independent financial advice before making any investment decision and should consider the appropriateness of any advice. Investors should obtain a copy of and consider any relevant PDS or offer document before making any investment decisions. Past performance is not an indication of future performance. Fund Awards are current for 12 months from the date awarded and are subject to change at any time. Fund Awards for previous years are referenced for historical purposes only.

32