Perpetual Ltd (ASX: PPT)
Perpetual Ltd (ASX: PPT) delivered a strong financial performance in FY24, with revenue up 32% and Underlying Profit After Tax (UPAT) increasing by 26% year-over-year. Corporate Trust and Wealth Management were significant contributors, reporting Underlying Profit Before Tax (UPBT) growth of 4% to A$85 million and 15% to A$54 million, respectively. Funds Under Administration rose to A$1.2 trillion (+4%), while Wealth Management’s Funds Under Advice increased to A$19.8 billion (+7%). Asset Management saw standout performance, with UPBT surging 51% to A$200.4 million, driven by the full-year integration of the Pendal Group and improved revenue margins in equity strategies. Total Assets Under Management (AUM) grew to A$215 billion (+A$2.9 billion YoY), although the division faced net outflows of A$18.4 billion due to underperformance in key J O Hambro strategies and client reallocations at TSW.
The company has made notable progress on its strategic initiatives, including completing its A$80 million synergy target from the Pendal acquisition seven months ahead of schedule. Perpetual is actively simplifying its operations to focus on becoming a pure-play asset manager, with plans to reduce costs by A$25–A$35 million by FY26. Leadership changes, including the appointment of a new CEO, are expected to further enhance the performance of the Asset Management business. Despite challenges with net outflows, diversification across geography, channel, and investment styles continues to provide a strong foundation for medium- to long-term growth. Recent quarterly updates reflected slightly positive net flows, signaling potential stabilization. The financial results were impacted by a goodwill impairment charge of A$547 million, driven by moderated forward flow expectations in Asset Management. While this non-cash item affected statutory earnings, it did not impact cash reserves. Statutory results also included costs associated with the Pendal integration and other strategic initiatives. The company declared a final dividend of A$0.53 per share (50% franked), bringing total FY24 dividends to A$1.18 per share, representing a payout ratio of 65% of UPAT. The balance sheet remains robust, with an 8% reduction in borrowings to A$679 million and a manageable gearing ratio of 28.2%.
As part of its strategic review, Perpetual announced the divestment of its Corporate Trust and Wealth Management divisions through a transaction with KKR. The Perpetual brand will transition to the divested businesses, although the Australian Equities segment retains temporary usage rights. Looking ahead, Perpetual remains focused on managing structural challenges such as the rise of passive fund allocation, regulatory pressures, and the impact of AI on the asset management sector. However, the company’s diversified platform, disciplined cost management, and strategic realignment position it well for sustainable growth. Investors are encouraged to monitor the execution of cost reduction targets, stabilization of flows, and the strategic review’s impact on shareholder value.
Source: Company’s Report
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