Navigator Global Investments : AGM - Chairman and CEO Address

For personal use only

Chairman & CEO Address

10.00am (AEDT) 28 January 2022 Virtual AGM at: https://agmlive.link/NGI21

Authorised by: Michael Shepherd, Chairman

Mr Michael Shepherd

Chairman's Address

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personalThe 2021 financial year was one of significant change and evolution for the Navigator Global Investments Limited Group, most notably seeing the settlement of a major acquisition transaction which has firmly cemented us on our

path to both grow and diversify our business.

The COVID-19pandemic has become the new normal. It has presented enormous challenges for our staff and we would like to acknowledge their efforts in continuing to effectively work under what can be trying conditions. We are very fortunate that we are able to accommodate our staff working from their homes, giving them the best opportunities to protect themselves and their families from contracting the coronavirus. The emergence of the

ForOmicron variant shows us just how important that flexibility continues to be.

While the world continues to adapt to the ever changing challenges of the pandemic, we continue to look forward to the day that we can welcome all our staff back to our offices, and re-establish face-to-facerelationships between ourselves, our clients and our shareholders.

Navigator Global Investments Limited | 2021 Annual General Meeting

Chairman's Address by Michael Shepherd

The numbers in this presentation have been presented in US dollars (USD), unless otherwise indicated.

• A diversified and scaled portfolio of cash flow generating assets

This milestone means the Group is now positioned with:

2021 in review

Major achievement in 2021 was completion of the USD 235 million acquisition of the NGI Strategic Portfolio



7.0 bn - NGI Strategic Portfolio (ownership adjusted basis)



13.9 bn - Lighthouse

(▲18% from June 2020)

Group AUM

as at 30 June 2021

USD 20.9bn

Navigator Global Investments Limited | 2021 Annual General Meeting

1.1 2021 in review

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• A clean balance sheet
• Deep investment and operating expertise
• A strategic partnership with Dyal Capital Partners, a leading investor in alternative investment managers

use	USD 31.6m Adjusted EBITDA	USD 9.5 cps Total dividends for FY21
A good recovery to be above top end of the	80% of Adjusted EBTIDA paid out as
EBITDA guidance range announced in
dividends
February 2021
	Paid on the equivalent of 270.2m shares, as
		Convertible Notes participate in ordinary
		dividends on an as -converted basis

No change to guidance of 2022 financial year full year

Adjusted EBITDA ofUS$40-42m

personal	1	Adjusted to exclude the impact of the new AASB 16 Leasesaccounting standard. Adjusted FY20 EBITDA includes an additional $2.2m of cash lease payments which are no longer	5
	included in occupancy expense. Adjusted FY21 estimates $3.0m for these cash lease payments

1.1.1 NGI Strategic Portfolio acquisition

No doubt the biggest achievement by size for the Navigator Group this year was the successful closing of the acquisition of the NGI Strategic Portfolio from Dyal Capital Partners in February 2021.

The transaction involved the acquisition of a portfolio of minority interest stakes in six high quality, established alternative asset managers. As at 30 June 2021, this portfolio added US$235 million in assets to our balance sheet.

The acquisition of the Portfolio is an important step for the NGI Group in delivering on a sound growth and diversification strategy, and it creates a platform for Navigator to seek and implement other acquisition opportunities.

ForThe transaction is a milestone for the Navigator Group, and means that we are now in an excellent position to deliver further growth and diversification with:

• a diversified and scaled portfolio of cash flow generating assets
• a clean balance sheet
• deep investment and operating expertise; and
• a strategic partnership with Dyal Capital Partners, a leading investor in alternative investment managers

Navigator Global Investments Limited | 2021 Annual General Meeting

The acquisition was structured to have two distinct stages:

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• The first stage was for Navigator to acquire approximately 70% of the combined portfolio in exchange for the issue of 40.5 million Ordinary Shares and 10 year Convertible Notes which convert to an additional 67.6 million Ordinary Shares
• This entitles Navigator to a preferred share of the earnings for the first 5 years (which is set at $17 million in the first year and indexed at 3% annually) and then 20% of any earnings in excess of the minimum deferred amount.
• Stage 2 occurs at the end of 5 years, when NGI will make an additional cash payment to acquire the remaining interest in the combined portfolio, at 4.5 times the average of the earnings in excess of the minimum deferred amount over the 5 year period.

We are very pleased with the performance of the Portfolio since its acquisition in February. The benefits of usediversification in investment strategy across the Portfolio has meant that overall we have seen a healthy growth in

assets from a combination of both net inflows and investment performance.

Whilst this does not materially impact Navigator's 2022 earnings given the nature of the preferential distribution structure, it does provide good evidence of the overall strength of the Portfolio and gives us confidence that it will deliver excellent returns to Navigator shareholders over the long-term.

1.1.2 Group AUM

personalThe Group's AUM was US$20.9 billion as at 30 June 2021. The significant growth on the prior year was a result of both the NGI Strategic Portfolio transaction, which added US$7.0 billion on an ownership-adjusted basis, and

excellent performance from our operating subsidiary, Lighthouse Investment Partners, to end the 2021 financial year with US$13.9 billion in assets.

Sean will discuss Group AUM in further detail in his address.

1.1.3 Financial results

Navigator delivered Adjusted EBITDA of US$31.6 million for the 2021 financial year, up 2.5% on the prior year.

Adjusted EBITDA represents EBITDA adjusted to take into account non-cash and non-recurring items, as well as to add-back cash rent payments which are no longer recognised in operating expenses under the AASB 16 Leases accounting standard. We consider that this represents the best measure of the Group's performance given its current structure.

We consider this a strong result, coming in slightly above the earnings guidance provided by the Company in February 2021. It also only reflects US$3.7 million of distribution income for the NGI Strategic Portfolio in the 2021 financial year, due to some of the complicated accounting requirements around the transaction. With the

Forfull benefit of the minimum preferred distribution to be reflected in the 2022 financial year, we remain comfortable with our existing 2022 earnings guidance of adjusted EBITDA of US$40-42 million.

•

Retirement of Andy Esteban at this AGM af ter more than 13 y ears on the NGI Board Appointment of new director, Suv an de Soy sa, on 22 September 2021

•

Resignation of Randall Yanker on 7 April 2021 to take up an executiv e position with the NGI Group

•

Board composition

Continuing progress on renewing board composition

Navigator Global Investments Limited | 2021 Annual General Meeting

1.1.4 Dividend

The Directors determined an unfranked dividend of 6.0 cents per share which was paid on 10 September 2021. Added to the interim dividend of 3.5 cents per share, this brings the total for the year to 9.5 US cents per share.

The 2021 financial year combined interim and final dividends equates to a payout ratio of 80% of Adjusted onlyEBITDA.

Whilst it is always a matter of on-going consideration by the Board to ensure the dividend policy reflects the evolving needs of the Group, Navigator's dividend policy remains a payout of 70-80% of Adjusted EBITDA.

1.2 Board composition

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• Korn Ferry appointed to identif y an additional Australian f emale director, and we expect an appointment tofbeinalised shortly

• Dy al Capital Partners hav e not recommended any one f or appointment to the Board, despite their entitlement to do so under the terms of the NGI Strategic Portf olio acquisition

Board composition after this AGM

personal		Independent	Years on the Board
Michael Shepherd (Chair)			12.1 years
Nicola Grenham			1.3 years
Suvan de Soysa			0.3 years
Andy Bluhm			9.3 years
Sean McGould- Executive Director and CEO			14.1 years
		Proportion of independent directors	3 out of 5:	60%
		Average tenure			7.4 years
		Average tenure excluding the CEO			5.8 years

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The numbers in this presentation have been presented in US dollars (USD), unless otherwise indicated.

ForCorporate Governance is always a priority of the Navigator Board, and we see it being especially important at times like these, where global conditions require the Group to be responsive to changes in its operating environment.

Board composition is of key importance, and the last 12 months has seen a number of steps forward in terms of renewing the membership of our Board.

During the 2021 financial year, Randall Yanker stepped down from his Board position in order to take an executive position to support the growth of the NGI Strategic business through the identification and evaluation of potential transactions. We sincerely thank Randall for his time of service whilst a Board member, and look forward to his on-going contribution to the success of the Navigator Group.