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1 Magellan Financial Group Limited Investor Briefing Hamish Douglass Chief Executive Officer 29 th AUGUST 2013

2 Magellan Financial Group Limited Overview Sydney based investment boutique established in 2006, specialising in the management of global equity and infrastructure strategies. As at 30 June 2013: $14.7 billion in funds under management. 22 investment professionals and 58 total staff. Strong balance sheet with net assets of $153.0 million. Net profit after tax of $66.6 million. Underlying profit after tax $48.5 million 1. Underlying EPS of 29.2 cents per share 1,2. Dividend policy 75%-80% of underlying profit of funds management segment, subject to franking credits Theoretical capacity of our global equities and infrastructure strategies US$50 billion 1 Excludes gain on the in-specie distribution 2 Fully diluted. 2

3 Results Summary 30 June June 2012 % Change Revenue $120.9m $35.8m 238% Expenses $25.9m $16.7m 55% Profit after tax $66.6m $13.7m 386% Underlying Profit After Tax 4 $48.5m $13.7m 254% Key Statistics 30 June June 2012 % Change Earnings per share (EPS) c 8.5c 371% Underlying EPS c 8.5c 244% Dividend per share c 4.5c 378% NTA per share 3 $1.02 $ % 1 Fully diluted. 2 During the 2013 year an in-specie distribution representing 9.16 cents per share was made. 3 Diluted assuming conversion of the Class B shares (& 2016 MFG options.) 4 Excludes gain on the in-specie distribution 3

4 MFG Capital Structure 30 June 2013 million Ordinary Shares Options Class B Shares 2, Total potential issued capital MFG 2016 options have an exercise price of $ and expire on 30 June Class B shares are held by H.M. Douglass and will convert to ordinary shares on the first business day after 21 November The number of ordinary shares is equal to times the number of ordinary shares on issue on 21 November 2016, subject to a cap of million ordinary shares. 3 Based on the ordinary shares on issue and assuming all options are fully exercised as at 30 June

5 Funds Management Business $ million 30 June June 2012 % change Revenue Management fees % Performance fees % Consulting fees % Interest/other income (25)% % Expenses Employee expense % US Marketing/consulting fees Other expense % % Profit before tax % Key Statistics 30 June June 2012 % change Avg. Number of Employees % Employee expense/total expense 69.1% 69.5% Cost/Income 29.3% 50.1% Cost/Income (excl performance fees) 43.8% 69.3% 1 The arrangement under which consulting fees are received expired on 30 June Pursuant to the agreement, Frontier Partners is entitled to receive 25% of net management fees from Frontegra MFG Funds and 20% of net management fees from institutional mandates with clients in North America. 5

6 Funds Management Business at 30 June 2013 Geographical Management & Performance Fee Revenue Breakdown Expense Breakdown North America 9% UK 6% Other Expense 25% Australia 85% US marketing/ consulting fee expense 6% Employee expense 69% 6

7 Employee Summary 31 July June June June 2011 Investment - Professional Administration Distribution Professional Administration Business Support Professional Administration Total Average

8 Employee and Expense Outlook We expect that the number of employees will increase modestly (currently 61) in 2013/14 We expect total employee expenses will increase by approximately 40% in 2013/14 US marketing costs to increase with North American funds under management and net management fees 8

9 Funds Under Management Summary 31 July June June June 2011 $ million Retail 4,962 4,542 1,750 1,082 Institutional - Australia/NZ 2,589 2,424 1,924 1,674 - North America 3,085 2, Rest of World 5,346 4, ,020 10,153 2,256 1,674 Total FUM 15,982 14,695 4,006 2,756 % Retail 31% 31% 44% 39% Institutional - Australia/NZ 16% 16% 48% 61% - North America 20% 20% 7% - - Rest of World 33% 33% 1% - 69% 69% 56% 61% Total FUM 100% 100% 100% 100% Breakdown of Funds Under Management ($ million) -Global Equities 13,094 12,088 2,357 1,046 -Infrastructure Equities 2,888 2,607 1,649 1,710 9

10 Retail Business As at 30 June 2013 Retail FUM $4.5 billion. Total Net Retail Inflows for the 12 months to 30 June 2013 were $1.8 billion. Magellan Global Fund Key representation Platforms: BT Wrap, Macquarie Wrap, Colonial First State First Choice, Colonial First State First Wrap, MLC Wrap, Navigator, Asgard, NetWealth, AMP North, AMP Summit, IOOF and Perpetual Wealth Focus amongst others. Number of dealer groups using MGF: 560 Number of advisers attending the August 2013 Roadshows: 1,760 approx. (1,200 approx in 2012, 700 approx in 2011) 10

11 Retail Investment Performance at 30 June Year 3 Years p.a. 5 Years p.a. 5 Years cumul. Magellan Global Fund 39.7% 19.2% 15.6% 106.5% MSCI World NTR Index ($A) 32.8% 10.7% 3.7% 19.8% Excess 6.9% 8.5% 11.9% 86.7% Magellan Infrastructure Fund 17.7% 19.2% 9.3% 56.0% UBS Dev Infra & Utilities NTR Index Hedged ($A) 14.4% 12.0% 2.5% 13.1% Excess 3.3% 7.2% 6.8% 42.9% *Calculations are based on exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees (if applicable). Annualised 5 Year performance is denoted with p.a., cumulative 5 year performance is denoted with cumul. Source: MSCI, Magellan Asset Management 11

12 Global Equity Peer Comparison at 30 June Year 3 Years (% p.a.) 5 Years (% p.a.) Magellan Global 39.7% 19.2% 15.6% Platinum International Brands 33.1% 11.8% 15.4% IFP Global Franchise Fund 30.6% 16.4% 12.7% Platinum International 37.3% 6.0% 9.5% MFS Global Equity Trust 39.6% 13.6% 7.6% Walter Scott Global Equity 28.2% 9.6% 6.2% Fidelity Global Equities 31.5% 11.2% 4.2% MSCI WORLD NET TR ($A) 32.8% 10.7% 3.7% Zurich Investments Global Thematic 27.2% 7.5% 3.2% Ironbark GTP Global Equity Thematic 29.6% 6.0% 1.3% T. Rowe Price Global Equity 29.6% 7.6% -0.3% AMP Capital Wholesale Global Equity Growth 25.3% 6.5% -3.2% Source: MSCI, Morningstar 12

13 Retail Net Inflows Global Equity Magellan Global Fund Monthly Net Inflows and FUM $M 250 4,500 $M 4, , ,000 2, ,000 1, , Magellan Global Fund & CFS Flows - LHS Magellan Global Fund & CFS FUM - RHS FUM & Flows includes Colonial First State Magellan Global Option from April

14 Magellan High Conviction Fund Unconstrained, highly concentrated, high quality global equity strategy Leverages Magellan s deep global equities/macroeconomic research and risk management Focused on best investment ideas (8 to 12 stocks) Portfolio managed by Hamish Douglass Fees Base Management fee 1.5% pa Performance fee 10% of returns above 10% pa Capacity US$3 billion Offered to higher net worth clients in Australia and New Zealand Currently working on platform representation 14

15 Institutional Business As at 30 June 2013 total institutional FUM $10.2 billion Number of institutional clients 38 Global equities $7.8 billion Infrastructure $2.4 billion Net inflows of $6.2 billion for the last 12 months. Australia/New Zealand: 25 Institutional clients FUM $2.4 billion at 30 June North America: Nine new global equity mandates and one infrastructure mandate. We are sub-advisor to two institutional mutual funds in the United States for US based investors that do not qualify for the separate account minimum. FUM $2.9 billion at 30 June

16 Institutional Business (continued) UK: February 2013 St. James s Place initial funding of approximately $3 billion ($3.7 billion at 30 June 2013). May a UK insurance company (in partnership with FTSE and Magellan) launched our Core Infrastructure strategy. FUM as at 30 June 2013 is $986 million. August UCITS. The Central Bank of Ireland authorised MFG Investment Fund plc for Magellan to act as promoter and investment manager. MFG Global Fund will be launched shortly and we anticipate solid client interest. 16

17 Fee Summary Base Fee pa Performance Fee Magellan Global Fund 1.35% Yes Magellan Global Fund (Hedged) 1.35% Yes Magellan Infrastructure Fund 1.06% Yes Magellan Infrastructure Fund (Unhedged) 1.06% Yes Magellan Core Infrastructure Fund 0.60% No Magellan High Conviction Fund 1.50% Yes Frontegra MFG Global Equity Fund % No Frontegra MFG Infrastructure Fund % No MFG Global Fund (UCITS) 0.80% No Global Equities institutional fee scale 1 First $US 100m 0.70% Next $US 100m 0.50% Next $US 200m 0.40% 1 Pursuant to the agreement, Frontier Partners is entitled to receive 25% of net management fees from Frontegra MFG Funds and 20% of net management fees from institutional mandates with clients in North America. 17

18 Principal Investments at 30 June 2013 Investment $ million Cash Fixed Term Deposits 9.7 Magellan Unlisted Funds 73.1 Listed shares 21.6 Listed subordinated bank notes 4.3 Other 2.8 Total Deferred tax liability (7.9) Net principal investments Net principal investments per share (cents) Settlements payable at 30 June 2013 of $8.8 million has been deducted from cash. 18

19 Offshore Banking Unit On 31 July 2013, Magellan Asset Management Limited was declared an Offshore Banking Unit (OBU). Under the current legislation, assessable offshore banking (OB) income, net of costs, will be subject to a concessional tax rate of 10%. Revenues earned from non-resident clients invested in the Magellan s global equities strategy meet the current definition of assessable OB income. As at 31 July 2013, offshore institutional global equity AUM is 45% of total AUM. 19

20 CEO Remuneration (from 1 July 2013) Hamish Douglass CEO and Managing Director Fixed Compensation Investment Restriction Payment (15 July 2017) $1,250,000 $500,000 Short Term Incentive - Incentive Up to 1 times fixed compensation - Key Criteria (Global Equity Strategy) Ranking in Peer Group (33.3%) Absolute Investment Performance (33.3%) Relative Investment Performance (33.3%) 20

21 Board update Chris Mackay to step down as Executive Chairman effective 30 September 2013 Chris Mackay to become Special Adviser to MFG Chris to become Managing Director of Magellan Flagship Fund Limited (MFF) Dr Brett Cairns to become Non-Executive Chairman effective 30 September 2013 Arrangements with MFF post 30 September Magellan Asset Management Limited (MAM) ceases to be investment manager but will continue to provide research and administration services. MAM s management fees to be reduced by an amount equivalent to Chris Mackay s executive remuneration. 21

22 Important Information This presentation has been prepared by Magellan Financial Group Limited ( MFG ). While the information in this presentation has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation. This presentation may contain forward looking statements. These forward-looking statements have been made based upon MFG s expectations and beliefs concerning future developments and their potential effect upon MFG (and its controlled entities) and are subject to risks and uncertainty which are, in many instances, beyond MFG s control. No assurance is given that future developments will be in accordance with MFG s expectations. Actual results could differ materially from those expected by MFG. This presentation does not constitute an offer to sell or a solicitation of an offer to purchase any security or financial product or service. Any such offer or solicitation shall be made only pursuant to a Product Disclosure Statement, Information Memorandum, Prospectus or other offer document relating to a financial product or service. Past performance is not necessarily indicative of future results and no person guarantees the performance of any financial product or service or the amount or timing of any return from it. There can be no assurance that the financial product or service will achieve any targeted returns, that asset allocations will be met or that the financial product or service will be able to implement its investment strategy and investment approach or achieve its investment objective. The information contained in this presentation is not intended to be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. 22