PPT
Perpetual Limited
ASX
Annual Report 2024
Sentiment:
Annual Report
12 September 2024 6:43 PM
Perpetual Limited announced a Scheme of Arrangement with KKR to acquire its Wealth Management and Corporate Trust businesses for $2.175 billion, leaving a streamlined, global asset management business.
Worse than expected
While UPAT increased, a significant non-cash impairment charge and other significant items resulted in a statutory net loss, indicating worse-than-expected results.
Summary
- 'Perpetual Limited, an ASX-listed company, released its 2024 Annual Report.
- 'The report covers the financial year ended June 30, 2024.
- 'Perpetual provides asset management, wealth management, and corporate trustee services.
- 'The company announced a strategic review resulting in a Scheme of Arrangement with KKR to acquire its Wealth Management and Corporate Trust businesses for $2.175 billion.
- 'Perpetual shareholders are expected to receive cash proceeds of between $8.38 and $9.82 per share.
- 'Post-transaction, Perpetual will be a simplified, debt-free, global asset management company with $215 billion in assets under management.
- 'Underlying profit after tax (UPAT) was $206.1 million in FY24, up 26% from FY23.
- 'However, the company reported a statutory net loss after tax of $472.2 million due to significant items, including a non-cash impairment charge of $547.4 million.'
- 'Total revenue was $1,349.2 million in FY24, a 32% increase from FY23.
- 'The company experienced larger-than-expected net outflows in its Asset Management business, particularly in the second half of the year, totaling $18.4 billion.'
Sentiment
Score: 5
Explanation: Mixed sentiment. While the KKR deal is positive, the significant net outflows and resulting loss impact the overall score.
Highlights
- 'Perpetual's UPAT was $206.1 million in FY24, a 26% increase from FY23.
- 'The company reported a statutory net loss after tax of $472.2 million in FY24.
- 'Total revenue increased to $1,349.2 million in FY24, a 32% increase from FY23.
- 'Assets under management (AUM) in Asset Management reached $215 billion as of June 30, 2024.
- 'Funds under advice (FUA) in Wealth Management reached $19.8 billion as of June 30, 2024.
- 'Funds under administration (FUA) in Corporate Trust reached $1,206.4 billion as of June 30, 2024.
- 'KKR will acquire Perpetual's Wealth Management and Corporate Trust businesses for $2.175 billion.
- 'Perpetual shareholders are expected to receive between $8.38 and $9.82 per share in cash proceeds.
- 'A non-cash impairment charge of $547.4 million impacted statutory earnings.
- 'Net outflows in Asset Management totaled $18.4 billion in FY24.'
Positives
- 'Underlying profit after tax (UPAT) increased by 26% to $206.1 million in FY24.
- 'Total revenue increased by 32% to $1,349.2 million in FY24.
- 'Successful integration of Pendal Group, delivering synergies ahead of schedule.
- 'Strong performance in Wealth Management and Corporate Trust businesses.
- '$2.175 billion sale of Wealth Management and Corporate Trust businesses to KKR, delivering significant cash returns to shareholders.
- 'Creation of a simplified, debt-free, global asset management business with $215 billion in AUM.'
Negatives
- 'Statutory net loss after tax of $472.2 million in FY24 due to significant items.
- 'Larger-than-expected net outflows in Asset Management, totaling $18.4 billion.
- 'Non-cash impairment charge of $547.4 million against goodwill for J O Hambro and TSW boutiques.'
Risks
- 'Market volatility impacting revenue and earnings.
- 'Competition from other global asset managers.
- 'Regulatory changes in Australia, the US, UK, Europe, and Singapore.
- 'Ability to attract and retain key talent.
- 'Successful separation of Wealth Management and Corporate Trust businesses.
- 'Maximising the value of recent acquisitions, particularly Pendal Group.'
Future Outlook
Following the anticipated completion of the KKR transaction, Perpetual will become a standalone, global multi-boutique Asset Management business with scale, diversified investment strategies, and supported by a leaner and more streamlined structure, with a strong balance sheet. The company remains focused on improving net flows in its Asset Management business, maintaining growth in Wealth Management, and demonstrating resilience and growth in Corporate Trust.
Management Comments
- 'The Board is confident that retaining ownership of our Asset Management business will unlock improved returns to shareholders over the long term.'
- 'The Board believes the transaction is a positive outcome for shareholders, aligned with our strategy to simplify Perpetual and deliver better returns to shareholders.'
- 'The Board is extremely appreciative of Rob’s tenure and the contribution he has made to the Group since he joined in September 2018, and we wish him the very best for the future.'
- 'The Board is confident that following its extensive review, completion of this transaction will deliver the best outcome for shareholders with a cash return and an ongoing investment in a high-quality multi-boutique global asset management business.'
Industry Context
This announcement reflects broader industry trends of consolidation and a focus on specialized asset management boutiques. The sale of the Wealth Management and Corporate Trust businesses allows Perpetual to focus on its core competency in asset management, competing more effectively with larger global players.
Next Steps
- 'Scheme Booklet release in late 2024.
- 'Shareholder vote on the KKR transaction in early 2025.
- 'Completion of the KKR transaction in early 2025.
- 'Transition to a standalone asset management business.
- 'Improved performance in Asset Management business.
- 'Continued growth in Wealth Management and Corporate Trust.'
Key Dates
- 1886: Perpetual established as a trustee company
- 1964: Perpetual listed on the Australian Stock Exchange
- 2020: Perpetual acquired Barrow Hanley and Trillium
- 2021: Perpetual acquired Laminar Capital and Jacaranda Financial Planning
- 2022: Perpetual launched its first active ETF and Corporate Trust reached $1 trillion in funds under administration
- 2023: Perpetual acquired Pendal Group
- 6 December 2023: Perpetual announced a strategic review
- 8 May 2024: Perpetual announced the Scheme Implementation Deed with KKR
- 21 August 2024: Perpetual appointed Bernard Reilly as CEO
- 29 August 2024: Perpetual announced additional Board changes
- 30 June 2024: End of the financial year
- 4 October 2024: Final 2024 ordinary dividend payment date
- 17 October 2024: Annual General Meeting (AGM) date
- Early 2025: Anticipated completion date for the KKR transaction
Keywords
Asset Management, Wealth Management, Corporate Trust, KKR, Acquisition, Scheme of Arrangement, Annual Report, Financial Results, Assets Under Management, Shareholder Return
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.