• Perpetual Limited announced its first half 2025 results, reporting a 2% increase in underlying profit after tax (UPAT) to A$100.5 million.
• Operating revenue increased by 4% to A$686.2 million, reflecting growth across Asset Management, Corporate Trust, and Wealth Management.
• Statutory net profit after tax (NPAT) decreased to A$12.0 million due to significant items, including an impairment of A$25.5 million in Asset Management and costs related to the KKR scheme.
• Corporate Trust's Funds Under Administration (FUA) reached A$1.25 trillion, up 4% from 1H24.
• Wealth Management's FUA was A$20.6 billion, an 8% increase compared to 1H24.
• An interim dividend of A$0.61 per share, unfranked, was declared, representing a 70% payout ratio of UPAT.
• The company is progressing with the separation and proposed sale of Wealth Management following the termination of the Scheme of Arrangement with KKR.
• Perpetual is targeting annualised cost reductions of A$70 million to A$80 million before tax by FY27 through its uplifted simplification program.
• Gross debt is expected to reduce to approximately A$750 A$770 million by 30 June 2025.
• FY25 total expense growth is guided at approximately 4%, driven by Corporate Trust and Wealth Management.

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there's growth in revenue and some business segments, the significant drop in NPAT and the KKR deal termination introduce uncertainty. The cost-cutting measures and debt reduction plans are viewed favorably, but the outflows in Asset Management temper the overall outlook.

• Underlying profit after tax (UPAT) increased by 2% to A$100.5 million.
• Operating revenue grew by 4% to A$686.2 million.
• Corporate Trust FUA increased by 4% to A$1.25 trillion.
• Wealth Management FUA increased by 8% to A$20.6 billion.
• An interim dividend of A$0.61 per share was declared.
• The simplification program aims to deliver A$70 million A$80 million in annualised cost reductions by FY27.
• Gross debt is expected to reduce to approximately A$750 A$770 million by 30 June 2025.
• A$10 million in annualised cost reductions in 1H25 were delivered by the simplification program.
• 65% of strategies outperformed benchmark over the three-year period to 31 December 2024.

• Revenue and underlying profit growth were achieved across all three business segments.
• Corporate Trust and Wealth Management showed strong growth in FUA.
• The company is actively pursuing cost reductions through its simplification program.
• A clear pathway to reduce debt over the short to medium term is in place.
• The interim dividend payout ratio is in line with the company's dividend policy.
• Wealth Management benefitted from growth in both non-market revenues as interest rate levels remained at elevated levels as well as increasing revenues linked to the improvement across equity markets.
• Corporate Trust business has continued to deliver consistent revenue growth in the first half.

• Statutory NPAT decreased significantly due to significant items and an impairment in Asset Management.
• Asset Management experienced net outflows, particularly in the J O Hambro boutique.
• The impairment charge of A$25.5 million was recognised against the carrying value of goodwill for J O Hambro.
• The Scheme of Arrangement with KKR was terminated, leading to potential legal disputes over break fees.
• J O Hambro boutique recorded net outflows of A$3.6 billion.

• The potential legal dispute with KKR over break fees could result in financial and reputational costs.
• Continued net outflows in Asset Management could further impact future earnings.
• The successful execution of the simplification program is crucial to achieving the targeted cost reductions.
• Market fluctuations and foreign exchange rate volatility could impact AUM and revenue.
• Failure to successfully execute the business separation, the revised Simplification Program and the refreshed operating model for Asset Management could impact shareholder value.

Perpetual anticipates future organic growth across several segments and expects total expense growth for FY25 to be approximately 4%, driven by Corporate Trust and Wealth Management.

• 'Despite some challenges, our three high-quality businesses have delivered solid growth during the half with opportunity for future organic growth across a number of segments,' said Mr Reilly.
• 'My conviction in the quality, performance and growth opportunities across all of our businesses has only increased since I joined Perpetual,' said Mr Reilly.
• Mr Reilly stated confidence in the strategic direction and believes that focused execution of the business separation, the revised Simplification Program and the refreshed operating model for Asset Management will deliver value for shareholders.

The announcement reflects a challenging environment for asset managers, with market volatility and net outflows impacting profitability, while also highlighting the resilience of trust and wealth management businesses. Perpetual's focus on cost reduction and strategic realignment mirrors broader industry trends aimed at improving efficiency and shareholder value.

• Perpetual's performance can be compared to other diversified financial services firms such as AMP Limited and Insignia Financial, which also operate across asset management, wealth management, and corporate trust sectors.
• The 4% revenue growth is within the range of industry peers, but the decline in NPAT due to significant items is a concern.
• The FUA growth in Corporate Trust and Wealth Management is competitive, reflecting the strength of these businesses.
• The cost reduction targets through the simplification program are in line with industry efforts to improve operational efficiency.
• The net outflows in Asset Management, particularly in the J O Hambro boutique, are a point of concern compared to peers who have maintained or grown their AUM.

• Shareholders will be impacted by the lower NPAT and the potential legal dispute with KKR, but may benefit from the cost reduction initiatives and debt reduction plans.
• Employees may be affected by the simplification program and the potential sale of Wealth Management.
• Customers of Asset Management may be concerned about the net outflows and the performance of certain strategies.
• Suppliers and creditors may be impacted by the company's debt reduction efforts and any changes resulting from the strategic review.
• Customers of Wealth Management and Corporate Trust should see little impact.

• Continue with the separation and proposed sale of Wealth Management.
• Execute the uplifted simplification program to achieve cost reductions.
• Reduce gross debt to approximately A$750 A$770 million by 30 June 2025.
• Address the net outflows in Asset Management and improve investment performance.
• Resolve the potential legal dispute with KKR.

• 31 December 2024: End of the half year period for which the financial results are reported; Total AUM was A$230.2 billion; Wealth Managements FUA as at 31 December 2024 was A$20.6 billion; Corporate Trusts total Funds Under Administration (FUA) were A$1.25 trillion
• 24 February 2025: Announcement of the termination of the Scheme of Arrangement with KKR.
• 27 February 2025: Date of the ASX announcement of the first half 2025 results.
• 30 June 2025: Expected date for gross debt to reduce to approximately A$750 A$770 million.