Ladies and gentlemen, thank you for standing by, and welcome to the Pinnacle Investment Management Group Limited Full Year FY twenty twenty one Financial Results Teleconference. At this time, all participants are just in a listen only mode. Following the presentation, there will be some time for a question and answer session today. And just please be advised that today's call is being recorded. But without further ado, I'll hand the conference over to our first speaker for today, Mr.
Ian MacHown. Thank you, and please go ahead, Ian.
Thanks, Myles, and welcome to everyone who's joined us on the call this morning. Thank you for your time. We appreciate your interest in P and I. So as you've heard, this call is to discuss our results for the 2021 financial year. We posted with the ASX last night our formal results announcement, our annual report, audited financial statement, Appendage four d and importantly, our investor presentation.
So we'll be speaking to the presentation this morning or rather to a few parts of it. So the colleagues with me on the call are Alan Watson, our Chairman Andrew Chambers, Executive Director with particular responsibility for Institutional and International Distribution Random Jiaju, who leads our retail distribution function, Dan Longan, our CFO, who besides finance and accounting, Dan's responsible for IT, middle office, back office, offshore vehicles and operations and a range of other major infrastructure functions. You'll hear later that we've done a lot of work enhancing our capabilities in preparation for further major expansion. So I'll simply call out our main themes and highlights of our results, briefly elaborate a few aspects that we feel are particularly important for analysts and for shareholders. The presentation is far too detailed for it to fully cover in the core of this duration.
We make it this extensive to enable people to review as much detail as they wish in their own time. And we'll, of course, go into more detail in one on one meetings with larger shareholders. The presentation is arranged in self contained topic sections and is easy to navigate. You'll leave plenty of time for questions. You're welcome to direct to any of the Pinnacle representatives on the call any questions that you have.
As you can see on agenda slide three, there are sections where the relevant executive will be Andrew or Ramsden or Dan rather than me. So slide two is a disclaimer that is important and would ask you to read this at your leisure. Slide three is an agenda. Slide four is titled 2021 financial year themes. So this sets out our opinion of the major themes for the year.
Now we recognize and strongly believe that it's for our guests on this call and also shareholders to form their own opinions on our performance and on the outcomes that we're delivering. And we always value feedback from you, by the way, but, nevertheless, people do ask us for our view, our opinion on how things are traveling. We're happy to do this to the best of our ability and in good faith. Now you'll see that our view of the scenes this year is very upbeat and confident. We are indeed very proud of what has been achieved by our company this year.
But we'll strive to always be objective and fully realistic and to seek to place our results in context. This year's themes are quite different from our opinion of the themes when we released our twenty twenty full year results. At that time, we said we felt we had delivered a solid financial outcome in the prevailing circumstances, although below expectations at the start of the year. Our profit was higher than in the previous year, but not by as much as we would have expected in the absence of the COVID crisis. So I'd like to make one particular point about the context of our very strong results for this year.
Now we are reporting extremely strong growth in profits, buoyant share markets, record funds under management inflows and our strongest ever increasing funds under management. So we'll be saying that our status as a high growth company remains intact. Indeed, it has been further enhanced this year. And we fully recovered from the virus and market challenges of FY 'twenty. But we want to make it clear that in our excitement and confidence about the future for our company, we humbly, acutely are aware of how fortunate we are.
This virus has not been fair. Some have prospered while so many have endured enormous difficulty. We are very respectful of this fact. Our company's mission is enabling better lives through investment excellence. We know that money itself cannot cure the ills of the world, but it can be an enabler of better lives.
And we must all do whatever we can to help in times of adversity. And, of course, none of us knows what lies ahead with certainty. So with that caveat and context, our themes for this year are as set out in Slide four, a strong financial outcome and the resumption of strong growth in profitability, in funds under management and in net inflows. We've enjoyed continuing benefits from the growing diversity of our asset classes and the investment strategies of our affiliates, of the types and domicile of our clients and of our performance fee exposures. And happily, we are entering the new financial year very confidently anticipating further growth.
Now funds under management at the start of the financial year are more than 20% ahead of the average funds under management throughout the financial year that these results relate to. We do recognize the possibility of further external adversity, but we have weathered adversity major adversity in 2020 and proved ourselves to be resilient. We are well prepared for and actively seeking further meaningful expansion opportunities, both organic and inorganic, in Australia and offshore. Slide five sets out the financial highlights of the 2021 financial year. Net profit after tax of $67,000,000 up 108% from the 2020 financial year.
Basic earnings per share
of $0.382
up 103% diluted earnings per share, $0.03 $6.05, up 104% Our share of the net profit after tax from Pinnacle affiliates was $66,400,000 up 75% from FY 'twenty. This included our share of performance fees earned by Pinnacle affiliates after tax of $19,500,000 in FY 'twenty one compared with $6,600,000 in FY 2020. We had cash and principal investments. So principal investments are basically investments in affiliate funds of $155,000,000 at the June 30. Our CBA facility was increased in order to provide dry powder for potential business investments.
Additional funds are deployed, meanwhile, in liquid strategies managed by our affiliates. And we paid a CHF3 final dividend of CHF0.17 per share and we've declared that dividend. That's up 100%. We'll double the FY 'twenty final dividend, and it takes total dividends for the financial year to $0.02 $87 up 86% on the financial year. Now there's one important footnote here, footnote one.
So adjusting for the net return on principal investments, our impact is up 98 on the year. Now that's the comparison that we focus on in assessing how much of our profit or how much our profit has grown from one year to the next. Now for those who are interested, Footnote two adjusts also for our share of performance fees. I should emphasize that we don't make that adjustment ourselves. We regard performance fees as an important component of our profit.
So look, in simple terms, our profits and EPS were approximately double the previous year. Slide six shows a bit more detail on the financials. Slide seven shows the rates of growth in our net profit after tax, earnings per share and dividends over the five years since we rolled up, so since we became a pure play with the pinnacle. 63% per annum impact growth 47% per annum EPS growth and 54% per annum dividend growth. So our growth has been consistently strong except for FY 'twenty, which was the year of the COVID stock market slump, when we only grew earnings by about 5% or 6%.
But as Slide eight shows, we have really caught up on the slower FY 'twenty growth and restored our high growth record. So on average, over the two year period to the June 30, which encompasses the entire crisis period to date, NPAT grew just about 60% per annum over the two year period on average. Diluted EPS, 56.7 per annum on average over the two year period and sum growth was 32% per annum over the two year period. Slide nine shows our funds under management highlights. The aggregate affiliates fund was $89,400,000,000 at the June 30.
Now we pointed out in footnote two that PLATO won an exceptionally large low fee mandate in April. It's $3,900,000,000 So we're effectively inviting you to exclude that. If you're using our thumb numbers, for example, to estimate the run rate revenue growth starting in FY '22, you're using for that purpose, maybe you exclude that. Or if you're looking for a kind of normalized rate of fund growth and inflows for FY 'twenty one, you might exclude that $3,900,000,000 So this $89,400,000,000 was up 18,900,000,000 or 27% over the six months from December or $15,000,000,000 or 21% excluding that low fee mandate. Our sum was up $30,700,000,000 or 52% over the twelve months or $26,800,000,000 or 46% excluding the plateau mandate.
Now aggregate retail fund, this is really important, retail fund, is now $20,300,000,000 So we're delighted to have hit $20,000,000,000 in retail. That was up 22% from $16,700,000,000 a year ago sorry, six months ago in December, dollars 16,700,000,000.0, up 22% and up 55% from June a year ago. So the $30,700,000,000 increase comprised increases due to net inflows of the $16,700,000,000 or $12,800,000,000 without the plateau, which is still a record by a long margin. And $4,500,000,000 of that was retail, also a record for retail by a large margin. We also got $14,000,000,000 increase due to market movements and investment performance.
We make the point we have an increasingly diverse client base. That's important. And our closing sum of $89,400,000,000 is 28% higher than the average sum through the FY 'twenty one year or 23% higher excluding the PLATO mandate. So this gives us a strong starting base for revenue and profit growth in FY 'twenty two over the FY 'twenty one level. Or if you prefer, it gives us a healthy buffer against any stock market or economic growth adversity that might come our way.
Slide 10 shows the size of our inflows during the period. We had record inflows, as I mentioned. Total net inflows, 16,700,000,000.0 or in footnote 1, 12,800,000,000.0, excluding the PLATO mandate, 12,800,000,000.0 for the year, dollars 7,300,000,000.0 in the second half excluding the PLATO mandate. Again, still record inflows by a large margin. And retail at $4,500,000,000 was $1,900,000,000 in the first half and $2,600,000,000 in the second half.
Hyperion, Cooler Bar, Recap, Metrix, FireTrail and Solaris, all growing strongly in retail. Our institutional net inflows for the year were $12,200,000,000 $8,300,000,000 excluding the PLATO one off, 3,600,000,000.0 in the first half and $8,600,000,000 in the second half or $4,300,000,000 including that one off. So recognizing that institutional flows can be large and uncertain, we are delighted by the results for the year and the momentum with which we enter FY 'twenty two, both within Australia and offshore. I'm sure you can ask Andrew Chambers about the in store pipeline and Ramson about retail. Slide 11 sets out some affiliate business highlights.
Slide 12, some further detail on the financials Slides thirteen and fourteen provide some detail on our performance fee growth, and there's further detail on performance fees later in the presentation as well. Slide 15 outlines significant components of the pinnacle parent component of the financial results Slide 16, balance sheet details Slide 18 records our history of fund growth over the years Slide 19 is one that many shareholders look for. It shows the funds under management by affiliate. So the first row across the top shows the June 30 sum for all of our affiliates. It is very pleasing to see ResCap at $16,300,000,000 Hyperion at almost 12,000,000,000 Solaris and Plato both above $10,000,000,000 and strong growth in other affiliates, especially Koolabah and Metrix.
Slides twenty, twenty one and twenty two show the overall continuing strong investment performance of our affiliates. 80% of strategies with a track record exceeding five years have outperformed their benchmarks over the five years to June 30. That's the classic measure used for medium term performance, five years. You also see the long term since inception numbers in the right hand column. Now I'd like to spend just a few minutes on Slide 26, and then we'll go to questions.
So Slide 26 is headed growth and resilience. You'll notice our focus on growth throughout the presentation. We spoke quite a lot about resilience during 2021 and 2020, and we're delighted that our business has proved resilient to the sharp, albeit fairly short lived so far as it turned out, FY 'twenty market downturn. We retain our vigilance and preparedness to face any adversity that might come, but we're also now very focused on growth ahead. We've shown in Slide seven that we managed EPS growth of 47% per annum over the five years since we rolled up.
And over the past two years, EPS grew by 57% per annum. We are very focused on continuing to be a high growth company. A strategy in this regard is to be careful, that is not to seek to grow by taking excessive risk and to have multiple sources of growth. So that both increases the likelihood of strong growth irrespective of challenges in any particular market or affiliate. It also increases the size or quantum of our growth.
So you'll hear us talking more a lot more about offshore markets, offshore Horizon two and three opportunities, retail expansion, further affiliates and so on. So without spending even more time, I apologize for going on, Let's go to questions, please, Miles.
Certainly. So ladies and gentlemen on the phones, again, if you'd like to ask a question, it's just by pressing star one on your telephone keypad and then just waiting for your name to be announced. But we do have a couple of questions in queue, though. I'll first go to Scott Murdock from Morgan.
Well done. Great result this year. Just start on the offshore strategy. Clearly, that's a focus you've signaled offshore for a while now. But maybe can you just give us a bit of a picture of the five year expectation?
Obviously, distribution, a massive part of the Australian business. Are you sort of thinking that you could replicate your distribution capabilities that you have here in offshore jurisdiction? Yes. Thanks, Scott. I'll start off answering that, but then I might ask Andrew Chambers, who's responsible for our offshore distribution, to make a comment.
So you're right that we've been signaling this for some time. I'm also delighted that Adrian Whittingham, who built our retail capability and then handed over so successfully to Random, is back full time, charged with the responsibility for building and growing our offshore Pinnacle International. So that is a significant initiative that we're taking. We started with distribution offshore, and we're having a lot of success there. So that's going great.
But we are signaling that we are very interested in doing the pinnacle model offshore. I can't give you a five year forecast, of course. We're telling you that we have ambition offshore. We probably would have done more by now if it wasn't for our inability to travel over there. But we think the critical model has a lot of good prospects for offshore.
We're not going to be silly. We're not going to take big risks, but we think there's good opportunities offshore. Chamber, would you like to say something about distribution offshore?
Yes. So I'll just highlight that we've been quite modest to date in our investment offshore relative to the payoff. So if you think about our offshore business today, it represents about 10% of our total AUM as a firm. In the last twelve months, we've sourced $3,000,000,000 of our total net inflows from international investors, which we saw from 26 countries outside of Australia, 40% from The United States across Antipodes, ResCap and Ripery 28% of that was from The United Kingdom across IKEA, Antigoneys and ResCap and 32% from the rest of the world across effectively six affiliated firms. So very good momentum internationally, and we expect that to continue looking into the future.
In fact, the yearly signs in this new financial year are pretty positive across a number of affiliates unrelated to those which raised capital last year. The consultant ratings are very much in place with the global consultants for a lot of our global equity, global real estate securities, global emerging market equity managers, which gives us confidence about our capacity to continue to compound that momentum we've built today. We intend to continue investing in offshore distribution in terms of adding more people on the ground, both in The United Kingdom and in The Americas, representing our efforts in The Americas from Canada through to South America and also out of London for the Europe, Middle East and Africa region. And of course, we look after Japan from Australia with our Japanese sales team here.
Okay. That's great detail. And probably steps into a question on flows. You've sort of called out there in the presentation that the in store pipeline remains strong still. Obviously, a lot came through in this half and in this year.
Just interested in sort of the quantum and the quality of the in store pipeline as it stands now compared to say six to twelve months ago. That's also one for Andrew.
Yes. So I would say that the pipeline is as strong as what it's been before. The thing that I can't ever anticipate in advance is the timing of when things will actually crystallize, which is always the great challenge in the institutional market. But the size and quantum is the same as what it's been and are expected to actually increase as we continue to add more distribution professionals to the team. So but if you think about the context for where the assets were raised in the last twelve months and where I think it will be raised in the next twelve months, If you at the last twelve months, dollars 10,000,000,000 of that money was sourced from public markets in public market asset classes, 2,200,000,000.0 in private markets, 7,400,000,000.0 was sourced in domestic facing asset classes and $4,800,000,000 in global asset classes.
I think if we look forward into the next twelve months, most of the growth will move from I think we'll retain our growth in credit based strategies, given where base rates are around the world, but across Koolabah and Metrix. But I think the leadership on the equity side will move from Australian equities and global real estate securities to equities and global real estate securities to global equities and global emerging markets, recognizing the fact that both Resolution Capital and a number of Australian equity managers are up against capacity limits and maybe going through periods of recycling into retail.
Okay. Again, thanks. Great detail. And just another last one on retail flows while I'm here. I mean, obviously, retail flows can be influenced sort of by, I guess, sentiment in the market, and that's been pretty positive.
I guess if you attempt to strip that out, which is probably impossible, what you sort of expect in terms of is there anything under the bomber there that can sustain this elevated retail flows that we're seeing in the last six months? So we'll throw this to random, but I would just make the comment. So Scott, we haven't been reliant on positive sentiment in the retail market for our flows. We've had some periods of pretty significant negative sentiment when the market tanked and so on. We're taking market share.
So we're growing in retail irrespective of the sentiment of retail investors, albeit that is becoming quite strong and positive again. But we don't need total system to be growing for us to keep getting retail inflows. Our retail inflows across quite a large number of affiliates. That's another reason that gives us such confidence. But we've also built strong momentum in a number of our affiliates in retail.
But, Branson, would you like to comment further?
Just a quick comment. The biggest driver of success in retail is momentum in terms of flows. So once you actually get on to APLs, approved product lists, or once you get into many managed portfolios, model portfolio programs, the tap turns on and so the momentum becomes a key driver of future success. And to Ian's point, we do have a good support base across many strategies in retail. So unless there's some massive market dislocations from here on in, which even in those cases we do take market share, there is some confidence in our retail future pipeline.
Okay. Thanks, Ram. Just one last one and then I'll hand it over to someone else. Just on Horizon three, obviously acquisitions, you've got the capital base there. Just interested that capital position, would you prefer to lead that as is until you are sort of able to look at something offshore?
Or is Australia still on the horizon in terms of Horizon three opportunities? So it's always difficult for us to comment too specifically about Horizon three, Scott. We've said we're having lots of discussions and we have ambition to do some Horizon three and there are opportunities in Australia as well as offshore. So it's very difficult to be too specific. We took on this extra CBA money to have dry powder.
We love having dry powder because it creates optionality and puts you in a stronger position in negotiating any potential acquisitions. But so we want to tell the market that we're actively looking. We don't want to promise something. I don't want people asking me every day, where's your acquisition? So we're trying to strike that balance and just signal that we have the wherewithal now with over $100,000,000 of capacity there.
We had said to the Commonwealth Bank, if we deploy that with acquisitions, we would seek to top it up probably with equity. But it all depends on the circumstances.
But your next one, I'll hand to Nicholas McCarrigal from Barron Joey. So please ask your question,
My question will probably extend on Scott's a little bit. But I know that in the past, you've been hampered in terms of executing on acquisitions in global markets. Can you talk about potentially the capacity of the team to be comfortable with due diligence in a post COVID world and if that's going to impede progress or do you feel like you sold for that in a way? Yes. So that's a crucial point.
I would say we have been impeded. So you can do a lot. And we've been working on laying the groundwork for offshore really for a number of years. Our chairman has a lot of offshore experience, and we've been sort of laying the groundwork. So I would probably say we would have done more offshore by now.
You can't say for certain. But, you know, the inability to travel because the way we operate, when we partner with people, we seek to get to know them very well before we partner because we put so much store on the are these people the real deal? What's their character? So it's you can do a lot with video conference, and we have had many, many, many dozens of video conferences with people offshore who we're contemplating partnering with, either Horizon two or Horizon three. But, you know, it's difficult to make a big move without meeting people.
So we have been held back. Who knows what lies ahead with the vaccine? But we're getting ready for post COVID. Yeah. I mean, the commentary in the presentation talks to Horizon two and Horizon three opportunities.
Can you help us understand what the shape of those that are most prospective may look like? And I think there's a comment about additional investment maybe through the OpEx line into more horizon two opportunities and maybe there's some of that option where some of those options are for you at the moment. Yeah. So it's easier to do Horizon two than Horizon three remotely. So Adrian's done a lot of terrific work.
So we could do some of what you see what we've always done in Australia, building a new affiliate or a new capability from scratch, working with talented, experienced people. So you could see us I don't wanna go forecasting things. You could see us doing Horizon two offshore before we're able to travel. You can get pretty comfortable on those things, and it's not very risky. We're not outlining a lot of money.
Harder to do Horizon three. But, yes, we are looking in Australia and overseas at both Horizon two and three. In terms of I think, turning to the Pinnacle parent level, was some really good success based revenues and some, I guess, retail revenue sharing in the Pinnacle parent. How should we think about the way that evolves into next year? You obviously made a small profit at the parent level.
How how does that evolve over time? So that revenue is it's a bit of a mixture. As you mentioned, some of it is success based. So we got something of a boost this year by, for example, very strong inflows in the res cap. But quite a lot of it is like trailing.
Quite a lot of it is a percentage of revenue, especially retail revenue or so many basis points. So that will be ongoing. So certainly, our revenue in Pinnacle Parent has grown to a higher level, which is sustainable, at least in part. But we don't target to make a profit or a certain loss in Pinnacle Parent. We've always been happy to invest off our p and l in Horizon two.
And, you know, we could do some more of that. So can't give you a lot of visibility on it. It won't move enormously, a little bit above or potentially somewhat below zero, you know, breakeven. Sure. And in terms of the I think looking through some of the operating leverage, there were some really strong margin improvements for some of the managers and probably less so for others.
But potentially, that's driven around investment in future capability. Can you talk through maybe the top three investments that have been made in the affiliates to power new strategies that have yet to sort of see material distribution success? Yeah. So clearly, there is major operating leverage in our affiliates. That's the nature of the beast.
You have to put the resources in place ahead of growth. And then once once the fund grows and grows strongly, the operating leverage kicks in very strongly. So our affiliates are a mixture of maturing ones where that operating leverage is really, really coming home to roost and investment in new strategies. So even in some of our more mature affiliates, we are investing in new strategies, which means adding some people to the new strategies. I can't think of a single one of our affiliates that isn't building new strategies.
And, of course, that retards the profitability of the affiliate and makes it makes it, makes less operating leverage than that otherwise would bring. But you look at Hyperion, for example, they invested in global and people. And now as the global fund comes in, you'll see the operating leverage just keep growing there. All the suspects, Nick, you can see which ones are having operating leverage kick the bigger growth managers well, you can see it in the thumb table, who's growing the most, ResCap, Hyperion, etcetera. And newer affiliates haven't yet kicked in, but they will over time.
You'll see, you know, a long way than Asia starting to kick in. I expect Verizon to them this year. So does that more or less answer it to all you? Yeah. That's definitely useful.
I mean, it's interesting to see that the strategy is being invested in that haven't seen flows. For instance, REZ Cap has built out a real asset strategy that most of the flows have been to the global rate fund, which is long standing. So there's upside there, which is which is good to know. Maybe if we had time, we could go through sorry.
I was
just saying, if we had time, we could go through all of them. They're all added extra strategy. Yes. Five trial. We can do that we can do that tomorrow in our in our session.
Yep. Great. This is maybe a question for Andrew, and then I'll give someone else a chance just around metrics and cool ability to distribute their fixed income, fixed interest type products into low rate jurisdictions and how how you know, what what the sort of what the impedance is there? I know that certain Australian managers have had good success distributing to Japan, for instance. But what are some of the cracks in the dam, what do we need to see for that to start to be material?
Yes. So you're absolutely spot on, Nick, in terms of the low rate settings around the world. And that's really providing a large conundrum for most asset owners. Traditional fixed income strategies, long duration fixed income strategies in particular are particularly challenged. So all attention and focus is turning to building defense by unconventional means.
And that's where areas like private credit strategies or more absolute returns like public markets credit strategies such as Koolaba come into the picture. In terms of offshore interest, we're seeing quite a bit out of Japan for both Metrix and Koolaba, given the growth settings over there. And also given the trade relationship between Japan and Australia, there's a lot of comfort around Australia as a destination point for both managing money, but also the financial settings here. And then we're also seeing interest from other parts of the world, such as the major insurers in parts of Continental Europe, given that they're trying to solve equally for liability matching purposes, but also the endowment foundation market in The United States and big Canadian funds as well, which see outsized risk adjusted returns being earned in areas like private credit in Australia relative to the rest of
the world. These are on
a risk adjusted basis, What you can earn in real estate direct lending, for example, or LBO sponsored debt direct lending also relative to what you might earn inside The United Kingdom and The U. S. Is very attractive. So it becomes much more opportunistic in nature and more targeted at particular market segments, which are often there for liability matching purposes or just simply yield enhancement as well. So it's quite targeted in terms of the approach.
Okay.
We've got another question in queue. I'll next throw to Sean Lue from Morningstar. So please ask your question, Sean.
Hi. Good morning, everyone. Clearly, fast growth everywhere and excellent job. Now I just want to point to a similar firm called, I think, Stay Current. As of one point, they had about 18 boutiques in the state.
Similarly, similar to Pinnacle grew very aggressively, but eventually, you know, the powerful came from making the wrong investments, many write downs, excessive impairment. So I guess, for for Pinnacle, do you mind giving more detail on what mistakes from your peers are you trying to avoid? Plus how even grow more sustainably, I guess, in a risk adjusted manner, especially as you look to do overseas?
Yeah. Thanks, Sean. That's exactly the right question to be asking. I try hard not to compare us with others too much. We say constantly amongst our sort of leadership team and within Pinnacle that it's all in the execution.
We must never be complacent. We must always look after our existing affiliates and protect the golden goose. So, as we grow, we will always be careful, and we will always respect, what we already have. So we've said, you know, we won't take excessive risk to grow. I mean, as you can see, we're we're a high growth company.
Right? Just Horizon one on its own doing nothing else. We're a high growth company. So we don't have to do the Horizon two and Horizon three. We want to do them because our platform is strong, lends itself to this kind of growth, and we believe we can grow in a fairly low risk manner.
So I can't say a lot more to you except that we are very aware of this and we're not going to go taking silly risks. We've got something that is too valuable to go placing at risk.
Thanks again. I guess my follow-up question to that is, I guess, what are you trying to do differently to your competitors like Ciganting? I mean, clearly, historically, you guys have grown some faster than them, but, you know, your like Fidante, for example, they have recently gained some momentum, you know, winning the 2020 distributor award and recently took on Platinum Asia's XPN in the new EM boutique. So I was just curious, you know, what what what what's the secret sauce to staying ahead both domestically and and and and overseas?
Yeah. So we have enormous respect for Fidante. We think they're one of the two best multi affiliate managers, safe in Australia, and they've certainly grown extremely well with Adaiya more recently and so on. So what I would say, we don't need for Fidante to do poorly for us to do well. There's a huge market out there and we can all do well.
What we do, we just stay focused on excellence. We stay focused on all of our affiliates being excellent and us doing a great job for them in distribution with the quality of our infrastructure, etcetera. So, you know, there will always be good competitors out there. And I say to our people constantly, don't go focusing too much on the competitors. If we do a poor job, there will always be competitors to take the business instead of us.
But if we keep doing an excellent job, we will win more than our fair share of the business.
Ian, it's probably worth highlighting, if I can make a comment just very quickly. If you think about the context of Fodanto and what they've achieved with Ardea and the billions of dollars of growth they've had in the last twelve months, at that same time, credit based strategies both across Metrix and Koolabah constitute over onethree around about onethree of our total net inflows for the financial year. So we've succeeded concurrently with them. So it hasn't had to be a binary outcome.
Yes. All right. I guess my final question is just in regards to the dividend. The payout ratio is up 79%, slightly lower than historically. I'm just curious, is this a one off thing or will this be somewhat more sustained levels moving forward?
Yes. So we still think it's a higher ratio, Sean. Yes. You know, we are it's no secret we're sort of accumulating a bit of capital. We like to have this strong balance sheet.
We think it gives us optionality and negotiating strength. But I would argue it's still a high payout ratio and we have stayed faithful to our discipline of paying out quite a high portion of our profits. And then if we want capital, we'll go to the market and ask for it. So I guess I'd probably disagree a little bit with with your statement that it's it's low. It's it's quite high.
Thanks a lot, Ian. Thanks, everyone.
Okay. And we have just one more question for now from John Hind from Wilson. So I'll throw to you, John.
Thanks for your presentation and congratulations on such a strong result.
Thanks, John.
Perhaps if we could
just touch on the affiliates. I noticed there was some consolidation amongst one or two of them that were noted the presentation. Can you perhaps explain some of the drivers there? And if we can expect, I guess, where you start to look at benchmarks for further consolidation amongst some of the affiliates.
Yeah. So I think we've we've sort of explained that Omega and Plato were talking for quite a while about the prospects of them getting together. They are very complementary. They both do great quant research and can benefit from each other's, if you call it, IP. So it did make quite a lot of sense.
As it turns out, there was an extremely low fee, quite large mandate that has been lost in August, which it's kind of good that they are getting together given that, although it wasn't the majority of their revenue. But look, we have very big ambition for quant within the Pinnacle Group. We think it will be a major area of active funds management going forward as we start to talk more about AI and so on. So we're delighted with PLATO getting through $10,000,000,000 It's a great success. And we think we'll be doing more in quant generally.
So, you could think of Two Trees also being systematic or quantitative. You know? So I'm not gonna go, foreshadowing anything, but it was really it wasn't driven by a desire for us to consolidate affiliates. It was more than my there was a lot of sense, a lot of logic to only that and PLATO getting together. So what I would foreshadow more than anything is major growth of quant funds management within our group.
Now that's likely to be within PLATO, although not necessarily.
Great. That's some good color. I guess, Lisa, my next question around that took on a larger mandate that is obviously lower fees. How do you think about the quantitative strategies and then the quant affiliates and their fee profile going forward? Will it essentially lead to an adjustment on an average level at some point across the funnel or the affiliates?
Or do you think the growth that you're seeing in the active managers like Hyperion provide an offset?
Yes. So overall, our average fee rates have been sort of modestly floating up. I think FY 'twenty one is about the same as FY 'twenty. So we don't target a particular fee level, John. What we do is for every piece of business, we negotiate with prospective clients and we get the best fee we can for that strategy.
And they vary enormously. Some of our strategies have very high base fees and performance fees. Others have modest fees, but they're still good business. So who knows how it all works out on average? We've been our fees have been somewhat going up because of retail.
We've been growing retail a lot. Now in f y twenty one, as it turns out, we grew retail a lot, but we grew instead of by even more. So that affects your averages.
And
offshore money tends to pay higher fees than domestic, all else being equal. So that's all helpful. But in terms of this the quant businesses, they have a very big range. So Play Doh has some high fees business. So it does very well, for example, out of its equity income, especially in retail.
So they have some quite high fee business. Then they also have some areas where, you know, that might be very large, some at low fees, but it's still very good business because it doesn't take up much capacity in those, you know, low tracking areas. So they'll do that business if it makes sense. But Plato also will have some quite high fees pieces of business being added going forward. So it's quite a mixture.
Yeah. Okay. And I think that I briefly touched on earlier, obviously, there's lot of leverage displayed this year with revenue up 45% and EBITDA up 90%. Are you able to perhaps, in your eyes, break out the most important buckets there and how we think about, I guess, those that specific leverage going forward? What can it look like in three or five years' time?
Yeah. So so thanks. So there's no question that there's a range of our affiliates there that are fully resourced for what they are planning to do now, including new strategies. And so as their thumb just keeps coming in, they keep, if you like, harvesting the capacity of their capabilities, that operating leverage is very strong. So if we had time, I can read out what, you know, eight strategies, major strategies that we're winning substantial sum in.
So that operating leverage is there. That will be ongoing. It's a it's a permanent feature of our kind of business. But sort of offsetting that is the investment that affiliates are making, adding people, and adding cost ahead of additional strategies. So they somewhat offsetting.
But really in terms of magnitude, the investments they're making tend to be pretty modest compared with the revenue they're now earning.
Yes. Okay. And last one for me, just more of a housekeeping. Incentives were up reasonably year on year. I mean, I'm assuming that's driven by some mandate wins.
How should we think about that next year if you're successful in growing FUM as you were this year?
So we paid out what we think of as sort of full incentives this year. A great many of our people got the maximum that they could be eligible for. And you'd expect that, I'd hope, given the success across the board in our company. So, yeah, that amount that we've paid out this year, that's kind of very full. I hope that we can do the same next year, and I'll be delighted to be paying out those levels of incentives because it'll mean we've had great success in distribution and, across the range of our functions in our company.
But last year was very restrained. Last year was the COVID year. Our profit grew, but not by as much as you would have expected. It was a very restrained year. That's why it's increased so much this year.
But I'm delighted that we've paid out as much as we did this year. It was well deserved, and I think shareholders got very good value for it. Going forward, I'd be delighted if it's a similar kind of amount to this year and even floating up a bit as the number of people slowly increase. You're welcome.
And with that, there's no further questions at this time. So I might just hand the conference back to you for now, Andrew, maybe for any I'm sorry, for any concluding remarks.
Look, thanks, Myles. And thanks to everybody who took the time to come on to the call. I think we've made the major points that we wanted to make. We're delighted with the year we've had. We're looking forward to further growth and working hard on growing in a range of ways, but in a low risk way.
I guess, look, the only other point that I would make is a lot of terrific work has been undertaken within the company over the last couple of years to grow our people. Obviously, this sort of success doesn't come about by accident. You've got a lot of people working very hard to bring about this kind of success, and I'm so grateful to our people for the work they've done. If you look at Alan Watson's letter at the front of our annual report, Deb Beal's letter introducing our remuneration report. We are calling out the quality of our people and how resilient they've been and the absolute brilliant job they've done in very difficult circumstances.
So I've worked hard on building succession in the company, and a whole range of younger people have grown. They've continued to grow. And the quality of our infrastructure capabilities under Dan, the quality of our distribution under Ramsden and Andrew, we've done a lot of work to be ready for high quality and further growth. So we feel very good about the shape that the company is in. So thanks to shareholders for supporting us and for your interest in the company.
Ladies and gentlemen, that does conclude today's conference call. Once again, thank you all for participating today. You may now all disconnect. Thank you.