This year marks five years since our transformative acquisition of J O Hambro Capital Management (JOHCM). Over this period, BT Investment Management (BTIM) has increased Cash NPAT five‑fold and more than doubled Cash EPS, dividends and funds under management (FUM).
Total shareholder return, which measures both dividend and share price growth, has increased annually by 42 percent on average over this period. This compares with the annual on average increase of 11 percent in returns delivered by the S&P/ASX 200 Accumulation Index over the same period.
It is pleasing that this strategic acquisition, aimed at diversifying our business in order to deliver reduced risk and resilience, has delivered these strategic objectives for our shareholders.
In the 2016 Financial Year, BTIM again delivered a record result despite a backdrop of heightened uncertainty in the markets and regions in which we operate. Particularly pleasing was the strong net fund flows of $4.4 billion into our Australian and offshore businesses, across a broad range of our investment products. This contributed to the growth in FUM, which increased by seven percent during the 12 months and, as at 30 September 2016, was a record $84.0 billion.
Our key measure of financial performance, Cash Net Profit After Tax (NPAT), increased 18 percent to $156.0 million, compared with $132.5 million last year. Cash Earnings Per Share (EPS) increased 15 percent to 50.8 cents per share. Total dividends for the year increased by 14 percent, to 42 cents per share, and represents an 83 percent payout ratio, in accordance with our policy to pay between 80‑90 percent of Cash NPAT.
We are in a strong capital position having fully repaid the debt of $83 million that the business took on in 2011 to part fund the purchase of the JOHCM business. This positions the business to weather uncertainty and take advantage of future opportunities.
The Dividend Reinvestment Plan (DRP) remained open during the year and while we have no immediate need for additional capital, we continue to keep the DRP active to benefit those shareholders who want to reinvest in the business without incurring transaction costs.
As a global asset manager, we operate in markets we cannot control and expect volatility and a level of uncertainty. However, we continue to build resilience in the business by diversifying across geographies, clients and products. These varied revenue sources reduce our reliance on earnings from any one region, client or product. We also take a long term view as we review and assess the strategy each year, ensuring it remains appropriate to market cycles and events. The strategic objectives for the year are detailed in this report on pages 8 and 9.
Supporting our continued growth and success is our investment talent. Talent management is fundamental to our business and supports our strong culture of performance excellence.
A tangible example of this has been the establishment of a Global Executive Committee, led by the Group’s Chief Executive Officer, Emilio Gonzalez, to provide leadership and management bandwidth across the Group. This recognises the global nature of the business and will actively support the execution of our strategic objectives.
You will have observed that the UK referendum to exit the European Union negatively impacted equity and currency markets and investor confidence. However, over the last few months we have seen markets regain lost ground and in the UK and Europe we are seeing investor confidence return. We continue to provide our UK and European clients with investment expertise and products and are confident that we are in a position to respond to any changes that may be required.
The benefits of building a resilient business are clearly evident in our ability to manage our exposure to such market volatility.
BTIM’s strong growth and successful execution of its strategy requires a Board and executive management with the skills and experience matched to the size and objectives of the business.
In March this year, Brad Cooper retired from the Board. Brad had been a Director since 2010 and served on the Board during the purchase and integration of JOHCM, delivering enhanced diversity and resilience for the Group. I am very grateful to Brad for his outstanding contribution over the past six years and wish him every success for the future.
I am delighted to welcome Les Vance to the Board, who comes from the Westpac Group, our largest shareholder and replaces Brad Cooper. Les was appointed in March this year and will be up for election at the Annual General Meeting in December. Les has broad financial industry experience and has already made a significant contribution to the Board and the Remuneration and Nomination Committee.
Last year we sought and received your approval to increase the aggregate remuneration paid to Non‑executive Directors each year. This provides for the addition of new Directors and allows existing Directors to participate as members on the Group’s subsidiary Boards. Consequently, we have expanded Board membership with an additional Non‑executive Director.
I am pleased that Kathryn Matthews has been appointed to the Board, as an Independent Non‑executive Director, with effect from 1 December 2016. Kathryn has the relevant background and understanding of the global asset management industry, both as an Executive and a Non‑executive Director. Kathryn brings a new international perspective to the Board, and her experience and global industry knowledge will be a valuable addition to the Board’s existing mix of skills and experience. From her London base, Kathryn will also serve as a Director on our JOHCM subsidiary Board, and as a member of the Board’s Remuneration & Nominations Committee.
In this coming year I will work with my fellow Directors to review and enhance our involvement in BTIM’s subsidiary Boards as well as Board Committees, ensuring the best fit of skills and experience is available for our international Boards, where the majority of BTIM’s diversification and profit is generated.
The result achieved this year is testament to the successful execution of our strategy, the enhanced scale and diversity of our business and our ongoing investment in talent. However, we are mindful of the global uncertainly that continues to affect markets in which we operate.
I would like to acknowledge and thank the management team and all our people for their significant individual contributions and the team effort required to deliver another record result for BTIM shareholders. I would also like to thank my Board colleagues for their continued support and for willingly taking on the additional work and time associated with our transformation into a truly global asset manager.
In the year ahead we will aim to continue our strategy of diversification, identifying new investment talent and opportunities, expanding our investment capabilities and strengthening our distribution. Building out our global business remains a priority for the future, generating further value for all our stakeholders and increasing rewards for our shareholders.