PPT
Perpetual Limited
ASX
2024 AGM Addresses and Presentation
Sentiment:
Annual Report
16 October 2024 6:54 PM
Perpetual Limited's 2024 Annual General Meeting revealed strong revenue growth of 32% and a 26% increase in underlying profit after tax, driven by improved performance across its business units, but also significant net outflows from its Asset Management division.
Worse than expected
Despite overall revenue and profit growth, significant net outflows from the Asset Management division were worse than anticipated, leading to a substantial impairment charge and impacting the final dividend.
Delay expected
The timeline for the shareholder vote on the KKR scheme is subject to regulatory approvals and finalization of tax and duty discussions, potentially causing a delay from the initial target of early 2025.
Summary
- Perpetual Limited held its 2024 Annual General Meeting (AGM) on October 17, 2024.
- The meeting covered FY24 financial results, a scheme of arrangement with KKR, board changes, and the FY24 remuneration report.
- FY24 revenue increased by 32% to $1.335 billion, and underlying profit after tax (UPAT) rose by 26% to $206.1 million.
- However, the Asset Management business experienced net outflows of A$18.4 billion, primarily from J O Hambro and TSW.
- A simplification program aims to reduce costs by A$25-A$35 million annually by the end of FY26.
- A final dividend of A$0.53 per share (50% franked) was declared, resulting in total dividends of A$1.18 per share.
- The Scheme of Arrangement with KKR involves the sale of Corporate Trust and Wealth Management businesses for A$2.175 billion.
- Shareholders are expected to receive cash proceeds from the KKR transaction, with an indicative range of A$8.38 to A$9.82 per share.
- The Board is recommending shareholders vote in favor of the Scheme.
- Several board changes were announced, including the appointment of Bernard Reilly as CEO and Managing Director.
- A first strike against the remuneration report is anticipated due to shareholder concerns.
- The company's Q1 FY25 update showed positive net inflows in Asset Management, a significant improvement from the previous quarter.
Sentiment
Score: 5
Explanation: The overall sentiment is mixed. While the company reports strong revenue and profit growth, significant net outflows and an impairment charge temper the positive results. The planned separation of business units and cost-cutting measures suggest a cautious outlook.
Highlights
- FY24 revenue increased by 32% to $1.335 billion.
- FY24 Underlying Profit After Tax (UPAT) increased by 26% to $206.1 million.
- Asset Management reported UPBT of A$200.4 million (compared to $132.7 million in FY23).
- Net outflow from Asset Management was A$18.4 billion at 30 June 2024.
- A simplification program targets A$25-A$35 million in annual cost reductions by FY26.
- Final dividend of A$0.53 per share (50% franked) was declared.
- KKR to acquire Corporate Trust and Wealth Management for A$2.175 billion.
- Indicative cash proceeds from KKR transaction range from A$8.38 to A$9.82 per share.
- AUM increased to A$215 billion in FY24, then to A$222.3 billion in Q1 FY25.
- Impairment of goodwill resulted in a A$547 million charge.
Positives
- FY24 revenue increased by 32%.
- FY24 UPAT increased by 26%.
- Improved performance in Corporate Trust and Wealth Management.
- Synergy achievement of A$80 million completed seven months ahead of schedule.
- Asset Management has strong geographic and product diversification.
- Positive net flows in Asset Management in Q1 FY25.
- Improved investment performance in Asset Management in Q1 FY25, with 71% of strategies outperforming benchmarks.
- Steady growth in Corporate Trust and Wealth Management assets in Q1 FY25.
Negatives
- Significant net outflows of A$18.4 billion from Asset Management in FY24.
- Impairment charge of A$547 million due to reassessment of forward flows.
- Lower final dividend than in previous years.
- Anticipated first strike against the remuneration report.
- Share price not showing improvement compared to the previous year.
Risks
- Continued net outflows from the Asset Management business.
- Impact of structural and cyclical factors in the asset management sector (passive allocations, insourcing, regulatory costs, AI).
- Potential for further impairment charges.
- Uncertainty surrounding the Scheme of Arrangement with KKR.
- Regulatory approvals for the KKR transaction.
- Shareholder vote outcome on the KKR transaction.
Future Outlook
The company expects to improve financial performance with new leadership and a more focused business, but acknowledges structural and cyclical factors impacting the asset management sector. The new CEO plans to implement cost reduction and revenue improvement strategies, with further details to be communicated at the half-year results.
Management Comments
- 'In terms of headline numbers, you will see from this slide that revenues were up 32% and Underlying Profit After Tax (UPAT) was up 26% on the prior financial year.'
- 'The disappointing aspect of our performance relates primarily to the outflow of funds from the Asset Management business throughout FY24, and particularly in the second half of FY24.'
- 'The Board reiterates that we have strong businesses and as we continue the path towards the continued build-out of a leading global multi-boutique Asset Management business, we are confident that financial performance will improve.'
- 'Even in the currently challenging environment, I am very positive about the future prospects for Perpetuals three businesses.'
- 'In Asset Management, my priorities are to: Confirm our future operating model and structure our teams around it. Right size the cost base...Refresh our distribution strategy to support client retention and importantly, growth. And, develop a turnaround plan for the J O Hambro business which has been impacted by material outflows since its acquisition.'
Industry Context
The announcement reflects broader industry trends impacting the asset management sector, including increasing allocations to passive investments, insourcing by pension funds, rising regulatory costs, and the influence of AI. Perpetual's diversification strategies aim to mitigate these challenges.
Next Steps
- Completion of the Scheme of Arrangement with KKR.
- Implementation of the simplification program.
- Development and implementation of a turnaround plan for J O Hambro.
- Review and communication of the dividend policy for the standalone Asset Management business.
- Review of the remuneration framework.
Key Dates
- 24 September 2018: Rob Adams joined as CEO
- February 2022: Australian Retirement Trust formed
- 30 June 2024: End of FY24
- 29 August 2024: FY24 results announced
- 8 May 2024: Transaction with KKR announced
- 21 August 2024: Bernard Reilly appointed as CEO
- 2 September 2024: Bernard Reilly commenced as CEO
- September 2024: Sustainability report released
- 17 October 2024: 2024 AGM held
- 4 October 2024: Final dividend paid
- 30 September 2024: End of Q1 FY25
- Early 2025: Target date for shareholder vote on KKR scheme
Keywords
Perpetual Limited, Annual General Meeting, Asset Management, Financial Results, KKR, Scheme of Arrangement, Dividends, AUM, Wealth Management, Corporate Trust
PPT
Perpetual Limited
ASX
Sector: Financial Services
Filings with Classifications
Worse than expected
14 April 2025 6:55 PM
Quarterly Business Update
- Asset Management AUM decreased by 4% to approximately A$221 billion, indicating worse than expected performance in this segment.
Worse than expected
26 February 2025 4:57 PM
Half Yearly Report and Accounts
- The NPAT was significantly lower than previous periods due to significant items including impairment losses, indicating worse than expected results.
Worse than expected
26 February 2025 4:56 PM
Half Yearly Report and Accounts
- The net profit after tax attributable to equity holders of Perpetual Limited decreased to $12.0 million from $34.5 million year-over-year.
Delay expected
26 February 2025 4:56 PM
Half Yearly Report and Accounts
- The Scheme Implementation Deed with KKR for the sale of Wealth Management and Corporate Trust businesses was terminated after receiving unfavorable views from the ATO and an adverse report from the Independent Expert.
Worse than expected
26 February 2025 4:54 PM
Half Year Results
- The statutory NPAT decreased significantly due to significant items and an impairment in Asset Management, indicating worse than expected results.
Worse than expected
23 February 2025 5:35 PM
Company Update
- The termination of the Scheme of Arrangement with KKR is worse than expected as it represents a failed transaction and incurs significant transaction and separation costs.
Worse than expected
16 December 2024 4:59 PM
Transaction Update
- The Independent Expert's inability to support the deal due to potential tax liabilities is a worse outcome than expected.
Worse than expected
9 December 2024 4:40 PM
Scheme Update
- The potential for a A$488 million tax liability is significantly worse than expected.
- The ATO's position that the entire cash proceeds could be deemed an unfranked dividend is worse than expected.
- The uncertainty surrounding the transaction due to the ATO's stance is worse than expected.
Delay expected
9 December 2024 4:40 PM
Scheme Update
- The document indicates a delay in the finalisation of the transaction due to ongoing engagement with the ATO regarding the tax treatment.
Worse than expected
25 November 2024 1:17 AM
Shareholding Change Notice
- The reduction in Perpetual Limited's shareholding in Kina Securities Limited indicates a negative market sentiment or a strategic decision by the investor to divest from the company.
Worse than expected
21 November 2024 12:33 AM
Change of Substantial Holding Notice
- The decrease in Perpetual Limited's voting power in Healius Limited from 14.505% to 13.467% indicates a reduction in their stake, which is worse than maintaining or increasing their holding.
Worse than expected
18 November 2024 12:49 AM
Substantial Holder Notice
- The results were worse than expected because Perpetual Limited decreased its stake in Infomedia Limited, indicating a potential loss of confidence in the company's future prospects.
Worse than expected
17 October 2024 12:43 AM
Annual General Meeting Results
- The failure of the remuneration report and the election of a non-board endorsed director candidate represent worse-than-expected outcomes for Perpetual Limited.
Delay expected
16 October 2024 6:54 PM
Annual Report
- The timeline for the shareholder vote on the KKR scheme is subject to regulatory approvals and finalization of tax and duty discussions, potentially causing a delay from the initial target of early 2025.
Worse than expected
16 October 2024 6:54 PM
Annual Report
- Despite overall revenue and profit growth, significant net outflows from the Asset Management division were worse than anticipated, leading to a substantial impairment charge and impacting the final dividend.
Better than expected
16 October 2024 5:16 PM
Quarterly Business Update
- The 3% increase in AUM to A$222 billion exceeded expectations, driven by positive market movements and net inflows.
Delay expected
12 September 2024 6:43 PM
Sustainability Report
- The development of a cultural diversity target was paused due to the Strategic Review and potential separation of the Wealth Management and Corporate Trust businesses.
- Some community giving activities were paused due to reduced bandwidth resulting from the Strategic Review.
Worse than expected
12 September 2024 6:43 PM
Annual Report
- While UPAT increased, a significant non-cash impairment charge and other significant items resulted in a statutory net loss, indicating worse-than-expected results.
Delay expected
12 September 2024 6:35 PM
Annual General Meeting Notice
- The allocation of the LTI award to the new CEO is contingent upon the completion of the transaction, which could cause a delay in the award's allocation.
Worse than expected
12 September 2024 6:35 PM
Annual General Meeting Notice
- The statutory net loss after tax of A$472.2 million was significantly worse than expected due to substantial non-cash impairments and other significant items.
Worse than expected
23 July 2024 7:01 PM
Quarterly Business Update
- Asset Management AUM decreased by approximately 5% to A$215 billion, impacted by net outflows, market movements, and currency fluctuations.
Better than expected
7 May 2024 8:35 PM
Strategic Review Announcement
- The strategic review resulted in a cash offer that the board considers superior to other alternatives.
- The transaction unlocks significant value for shareholders through the sale of Wealth Management and Corporate Trust at attractive multiples.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.