PPT
Perpetual Limited
ASX
Fourth Quarter FY24 Business Update
Sentiment:
Quarterly Business Update
23 July 2024 7:01 PM
Perpetual Limited's Q4 FY24 business update reveals steady performance in Corporate Trust and Wealth Management, but a decline in Asset Management AUM due to outflows and market fluctuations.
Worse than expected
Asset Management AUM decreased by approximately 5% to A$215 billion, impacted by net outflows, market movements, and currency fluctuations.
Summary
- Perpetual Limited released its fourth quarter business update for the period ending 30 June 2024.
- Asset Management AUM decreased by approximately 5% to A$215 billion, impacted by net outflows, market movements, and currency fluctuations.
- Corporate Trust and Wealth Management divisions delivered steady performance.
- The Asset Management business experienced institutional client redemptions and delays in new inflows.
- J O Hambro, TSW, and Trillium boutiques saw net outflows in global and international strategies.
- Pendal experienced outflows in cash and Australian equities due to manager rationalization and outflows from former Westpac AUM.
- Barrow Hanley saw outflows in US equities but had client interest in emerging markets and fixed income strategies.
- 66% of Perpetual's strategies outperformed over a three-year basis to 30 June 2024.
- New institutional client wins in excess of A$3 billion are expected to fund in the September quarter.
- Corporate Trusts total Funds Under Administration (FUA) reached over A$1.2 trillion.
- Wealth Managements total FUA was A$19.8 billion, down 1% on the prior quarter.
- Expense growth for FY24 is expected to be at the lower end of the previously communicated guidance of 32%-34%.
- Significant items post tax for FY24 are expected to be within the range of A$140 million to A$150 million.
- The integration of Pendal Group is ahead of plan on its targeted A$80 million of synergies as at 30 June 2024.
- Perpetual entered into a Scheme Implementation Deed with KKR for the acquisition of its Wealth Management and Corporate Trust businesses for A$2.175 billion.
- Perpetuals full year results will be announced on Thursday 29 August 2024 at 11am AEST.
Sentiment
Score: 5
Explanation: The sentiment is neutral to slightly negative. While Corporate Trust and Wealth Management showed steady performance, the decline in Asset Management AUM and net outflows temper the overall outlook. The Pendal integration progressing well and the KKR deal provide some positive aspects, but the challenges in Asset Management weigh on the sentiment.
Highlights
- Asset Management AUM decreased by approximately 5% to A$215 billion due to outflows, market movements, and currency impacts.
- Corporate Trust FUA reached over A$1.2 trillion.
- Wealth Management FUA was A$19.8 billion, a 1% decrease from the prior quarter.
- Expense growth for FY24 is expected to be at the lower end of the 32%-34% guidance.
- Significant items post tax for FY24 are expected to be between A$140 million and A$150 million.
- The Pendal Group integration is ahead of schedule, targeting A$80 million in synergies by January 2025.
- Perpetual will become a standalone asset management business after the sale of Wealth Management and Corporate Trust to KKR for A$2.175 billion.
Positives
- Corporate Trust's total Funds Under Administration (FUA) reached over A$1.2 trillion.
- Wealth Management experienced net inflows of A$0.2 billion over the quarter.
- Expense growth for FY24 is expected to be at the lower end of its previously communicated guidance of 32% 34%.
- The integration of Pendal Group is ahead of plan on its targeted A$80 million of synergies as at 30 June 2024.
- New institutional client wins in excess of A$3 billion are expected to fund in the September quarter.
- 66% of Perpetual's strategies outperformed over a three-year basis to 30 June 2024.
Negatives
- Asset Management AUM decreased by approximately 5% to A$215 billion.
- J O Hambro, TSW, and Trillium boutiques experienced net outflows.
- Pendal experienced outflows in cash and Australian equities.
- Wealth Managements total FUA was A$19.8 billion, down 1% on the prior quarter.
Risks
- Asset Management is facing challenges due to institutional client redemptions and delays in new inflows.
- Outflows in specific strategies at J O Hambro, TSW, and Trillium could continue to impact AUM.
- Market and currency movements pose a risk to AUM and overall financial performance.
- The Scheme of Arrangement with KKR is subject to shareholder vote and other conditions, creating uncertainty.
Future Outlook
Perpetual expects new institutional client wins in excess of A$3 billion to fund in the September quarter and will announce its full year results on August 29, 2024, including estimated cash proceeds to shareholders from the KKR transaction.
Management Comments
- The June quarter showed a mixed performance across our business divisions, with Corporate Trust and Wealth Management delivering steady performance, while Asset Management experienced a difficult quarter impacted by net outflows, markets and currency movements.
- Our Asset Management business was impacted by the timing of several institutional client redemptions and short term delays in expected new institutional inflows in specific strategies, as well as softer equity markets in Australian and global indices.
Industry Context
The announcement reflects broader industry trends of asset managers facing pressure from market volatility and client outflows. The strategic decision to sell the Wealth Management and Corporate Trust businesses to focus on Asset Management aligns with a trend of firms streamlining operations to improve focus and efficiency.
Comparison to Industry Standards
- BlackRock, the world's largest asset manager, has also reported facing similar headwinds from market volatility and client risk aversion.
- Other firms like Magellan have also experienced significant outflows, highlighting the challenges in the current environment.
- Perpetual's cost to income ratio being relatively stable is a positive sign compared to some peers who have seen their ratios worsen due to declining revenues.
- The targeted A$80 million in synergies from the Pendal integration is a significant undertaking, comparable to other large mergers in the financial services industry where cost savings are a key driver.
Stakeholder Impact
- Shareholders will receive cash proceeds from the sale of Wealth Management and Corporate Trust businesses to KKR and retain ownership in a streamlined Asset Management business.
- Employees in the Wealth Management and Corporate Trust divisions will be impacted by the change in ownership to KKR.
- Clients of the Asset Management business may be concerned about the recent outflows and market volatility.
- Creditors will see Perpetual become debt-free after the KKR transaction.
Next Steps
- Perpetual will announce its full year results on August 29, 2024.
- Shareholders will vote on the Scheme of Arrangement with KKR.
- The integration of Pendal Group will continue, targeting A$80 million in synergies by January 2025.
Key Dates
- 30 June 2024: End of the reporting period for the fourth quarter business update.
- May 2024: Perpetual entered into a Scheme Implementation Deed with KKR.
- 24 July 2024: Date of the ASX announcement for the Fourth Quarter FY24 Business Update.
- 29 August 2024: Date of the full year results announcement at 11am AEST.
- January 2025: Target date for delivering A$80 million in run-rate synergies from the Pendal integration.
Keywords
Asset Management, Corporate Trust, Wealth Management, AUM, FUA, Outflows, Perpetual, Pendal, KKR, Synergies
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.
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
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.
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.
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.
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.
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.