PINNACLE FY25 RESULT--TOP 10 Holding-- Advancing on all fronts!

 PINNACLE FY25 RESULT—TOP 10 holding

FY25 NPAT was 30% above my numbers, but since I normalise PF and PF had a big year adjusting for that the result was 10% above, still strong. EPS +37% yoy. Note opening FUM is 24% above the average from FY25, positioning PNI for good growth into FY26. 

FUM grew from $110B to $179B, growth comprised of $28B acquired, MTM and performance 18B and net flows $23B or 21% in net flows, above my numbers good result. The surprise did not come in retail or international flows which were expected to be good and will likely continue to be strong but in the rest which is domestic insto Australia. That segment dominated by the very competitive public, Insto equities saw large growth started to see the movement in other asset classes and private markets. that could produce another growth leg for PNI. Private markets are now 16% of total FUM and growing strongly. 

PNI claim that they aim to be “more relevant to more clients, in more countries, more often” and the strategy is aligning with that desire. The business continues to evolve with consciously increasing exposure to higher margin and higher growth areas while wanting more FUM exposed to PF’s. 

International saw outstanding growth and the company brought in new managers with big expectations for global equity manager Life Cycle who increased FUM $16B as the firm reestablished itself under PNI colours.

There have been significant expansions of capabilities in Coolabah (FI) and Metrics  (asset based lending) with Metrics developing and expanding origination capabilities and is expected to grow into the huge private credits and other ABL markets. An internal origination capability is expected to give Metrics an competitive edge, allows control of pipeline versus buying through brokers. 

The PNI story is coming together better than expected with the firm expanding into growth areas, focus on PF and fees, while strategies that aren’t working as well become insignificant to the total story. 

The accounting is complex due to FV accounting, that PNI hold equity (40% average) int eh operating businesses, while the actual 100% owned is largely marketing. Although the accounting is complex the business fundamentals are not, add FUM at good rates and keep you costs under control. 

Investing in market sensitive companies can be volatile. My strategy is to pick the winners, that will grow significantly over time and wait for market dislocations to add. That occurred in April when the position was added to. If the SP becomes too frothy I will let some go. No hurry to buy or sell. Basically the same game plan for HUB and MQG. I monitor total market sensitive exposure in the portfolio.

The main risks are a long bear market where FUM growth becomes much more difficult or if one of the major affiliates gets into trouble due to performance or a manner of other things. PNI continues to diversify this risk over time. 

 

 

 

Result summary

Ian Macoun   Founder, MD & Executive Director

Besides the key outcomes and results for FY '25 and the key themes for the year, we'll outline the strong growth outlook. So, we'll be looking forward as well. In a nutshell, we have achieved excellent results in terms of profit growth, funds inflows and growth in funds under management as well as strong investment performance.

More importantly, though, we've made tremendous progress in demonstrating the power of our platform to sustain high rates of growth and in demonstrating the success and attractiveness of our business model in a growing range of asset classes, subclasses and geographies around the world.

In the 2025 financial year, we again delivered the highest net profit after tax earnings per share and dividends per share of any year in Pinnacle's journey to date. Net profit after tax was $134.4 million, up 49% on FY '24. Earnings per share of $0.624 were up 37% on $0.455 in FY '24, and dividends totaling $0.60 per share were up 43% on $0.42 in FY '24.

Funds under management at 30th of June 2025 was $179.4 billion, up $69.3 billion or 63% over the 12-month period from the beginning of the year, of which $23.1 billion was from net inflows, $18.2 billion from market and investment performance and $28 billion was acquired. Excluding acquired FUM, FUM was up $41.3 billion or 37.5% on FY '24.

Our earnings per share, excluding performance fees and excluding net return on principal investments, what some people might think of as our core earnings was up 33% on FY '24. We elaborate on what we mean by our platform growing, becoming more and more valuable and boosting the rate of earnings growth later in the presentation.

Point three, we have delivered a strong performance fee outcome from a range of Affiliates, but with Hyperion, the standout, recognizing that the majority of this came in the first half and that performance fees are variable over 6-month time periods, though less so over annual periods.

Long-term Affiliate performance continues to be robust, and many key strategies are entering FY '26 at close to or at or above their high watermarks. Pinnacle's share of performance fees after tax, that is the impact on Pinnacle's NPAT of Affiliate performance fees was $46.6 million this year compared with $31.2 million in FY '24. This was from 12 Affiliates, though the majority was still from Hyperion this year.

Point 4, record net inflows. Our overall net inflow number of $23.1 billion for the year was a record. And it is pleasing that the majority of this came from new Affiliates, Life Cycle with $14.9 billion in just under a full year since the partners commenced and Pacific Asset Management with $2.5 billion in just 8 months since we bought into them.

Pleasingly, the vast majority of these Life Cycle inflows were from investors who had not been Royal London clients previously. 

Point five, we are entering FY '26 with all Affiliates at run rate profitability. And point 6, we have an increasingly diverse pipeline of opportunities, offering multiple sources of contributions to earnings growth as we head into FY '26.

A record 83% by FUM of strategies with the ability to produce substantial performance fees were at or within 2% of their high watermarks at 30th of June. Slides 5, 6 and 7 elaborate these themes.

I've made the point of our record inflows and the continued outperformance of public market strategies provides the opportunity for market share gains in public market equity flows.

I think we can agree that Life Cycle has shown the benefits of Horizon 2, which will come through in FY '26. Finally, point 6, we have an increasingly diverse platform, offering multiple earnings drivers. We are opening FY '26 with FUM of $179.4 billion, 24% higher than average FUM in FY '25. 

Aggregate domestic retail FUM was $39.7 billion at 30th of June '25, up $10.9 billion or 38% from $28.8 billion at 30th of June '24. The aggregate Affiliate FUM capable of earning performance fees was $50.4 billion at 30th of June '25, up $11.8 billion or 31% on $38.6 billion at 30th of June '24.

Total net inflows for the year were $23.1 billion, comprising $6.9 billion of net domestic retail inflows, $4.8 billion of net inflows from international clients and $11.4 billion of net inflows from Australian institutional clients. The increase in FUM attributable to market and investment performance combined was $18.2 billion, including $4 billion from domestic retail.

Aggregate Affiliate revenue at 100% was up $261.6 million or 39% to $925 million, of which base fee revenues were up $217.8 million or 39% to $771.4 million. And performance fees up 40% from $109.8 million to $153.6 million at 100%, of which Pinnacle's share after tax was up from $31.2 million to $46.6 million.

Higher fee and diversifying international and retail FUM in aggregate have grown from 29% to 51% of total FUM over the past 5 years. And this represents, I think, about 2/3 of base Affiliate revenues. Slide 13 shows some detail on our performance fee record and opportunity. As mentioned, we are growing the size and diversity of our performance fee potential and look forward to further large performance fee outcomes over future years.

Horizon 1 is the main game. It is continuing to pursue net inflows into existing strategies of existing Affiliates. We remain very confident of our ability to continue to do that. We conservatively estimate the remaining capacity of the Affiliates' existing strategies at $500 billion. They will sustain our growth as we evolve and adapt and as the world changes. And we'll ensure we don't go off strategy or outside our core competencies or seek to grow in a way that is haphazard or illogical. We have a core ideology, which is clear and fundamental to everything we do.

Q&A

Metrics Navalo

But it is true that we can provide more information. We've said that Navalo is the sort of name that's being given to the whole of that, call it, noncore activity base will be profitable next year, which it was not in FY '25. So, in terms of the staging, Nick, we provided some disclosure in that slide about the specific one-off item around performance fees in '25. That obviously won't recur, so that's a positive. There are some one-off costs associated with the acquisitions as well. They won't recur. And then we've talked about the consolidation of those various platforms into a single platform, and there'll be synergies released as a result of that. And we expect that to happen progressively throughout FY '26.

The key earnings driver, though, will be the advent of asset-backed lending funds, which will sit behind that origination capability and take that capability into Metrics client channels. And we think that, that will happen within this calendar year, and then the earnings will flow from that thereafter. We've made a statement that we expect this part of the business to contribute positively to earnings in future periods. The exact timing is uncertain, but hopefully, that gives you a bit of color.

getting the origination in place, that was important and a major, major development, but that's just the beginning. We now need to do the work of raising funds based on those origination capabilities. And of course, that is the agenda. That's what it's all about. raising funds based on growing origination capability.

The other task for metrics this year it will happen progressively is to put those various businesses together to extract synergies. That means operating synergies, that means lower cost of funding, et cetera. That will all happen progressively. So that will not happen from the first day of FY '26, that will happen progressively through. And some of those benefits will really start later in FY '26 and be fully apparent in FY '27. But FY '26 will definitely be significantly improved profit-wise on FY '25, which was a sort of an acquisition year.

The overall comment I would make though is that metrics have been on a mission to grow big quickly, and they added a lot of resource ahead of, …And the only other thing I'd add is that there will also be some synergies released as a result of putting those origination platforms together. So, they've completed the acquisition of BC and Taurus in early July. That work is underway, and we think that will be realized progressively over this year and next.

in terms of total addressable market, I mean, the asset-based finance market or the asset-based lending market itself, we're talking over USD 9 trillion. And we're only at the start early pioneering stages of that. So, [CALPUS], all the U.S. state pension plans starting to put $1 billion plus mandates with various managers at the front end of that trend. And the fact that Metrics has actually built and control its own origination platform is the majority of participants work with originators, but don't actually own them.

And you're really controlling your own deal flow and your credit quality and your deployment when you do that. And so, we think that's a real competitive edge as we go into this, what's going to be a huge market and allocation market for institutional investors and private wealth.

I think the other interesting thing is where they can sell those strategies. So, they've obviously started in institutional in Australia, then by going into the retail market through listed funds, unlisted funds, they've only really scratched the surface internationally, there's a huge demand for that capability out.

And equally importantly, it doesn't cannibalize the existing business because these have very low correlations, the asset-based lending with their traditional corporate and institutional lending strategies. As a function of these things effectively are collateral-based self-amortizing loans, very short tenure in nature, very low correlation. So, it can be sold in addition to rather than instead of the existing offering.

Life Cycle

we're not going to disclose fee rates on the business. I think it's fair to say that you would expect the sort of large early FUM into a new Affiliate is probably at lower rates than the average will settle at after a while. But, and there's a lot of in-store, Aussie domestic in-store in those numbers. Over time, of course, the average fee rates of Life Cycle will be as good as any of the global equities managers, reflecting their quality and the demand for them and the fact that we will absolutely be selling them into the Aussie retail and wholesale market and the U.K. and Europe retail and wholesale market and so on and overseas, which are at higher fees. But at the very beginning, it's dominated by Aussie in-store, which tends to be somewhat lower fees than the others. But Dan, did you want to say something about it?

more of the front-ended mandate wins have been domestic in Australia. As a function of the fact, we weren't able really to market to Northern Hemisphere investors until the restraints were off, obviously, after January. , not just in the global equity strategy, but also in the U.S. equity strategy, which we intend to launch later in this calendar year.