Perpetual Group (PPT) H2 2024 earnings summary

Executive summary

• Announced a scheme of arrangement with KKR, following a strategic review, to deliver estimated net cash proceeds of AUD 8.38–9.82 per share and create a standalone, debt-free, listed Global Asset Management business.

• Statutory loss of AUD 472.2 million due to a significant goodwill impairment of AUD 547–547.4 million in the Asset Management division, mainly at JO Hambro and TSW.

• Underlying profit after tax (UPAT) rose 26% year-over-year to AUD 206.1 million, driven by the full-year Pendal contribution and growth in Corporate Trust and Wealth Management.

• Integration of Pendal Group completed ahead of schedule, delivering over AUD 80–81.6 million in annualized expense synergies.

• Leadership transition: Bernard Reilly appointed as new CEO from September 2024, with board changes to support the standalone asset management business.

Financial highlights

• Operating revenue increased 32% to AUD 1.335 billion, mainly from the full-year inclusion of Pendal.

• Total expenses rose 32% to AUD 1,051.4 million, reflecting Pendal costs, higher funding costs, and FX impacts.

• Free cash flow for FY24 was AUD 181.9 million, up from AUD 85.8 million in FY23, benefiting from Pendal integration.

• Gearing ratio increased to 28.2% post-impairment, but remains within risk tolerance.

• Total dividends for FY24 were AUD 1.18 per share, with a payout ratio of 65% of UPAT.

Outlook and guidance

• Positive net flow momentum in Q1 FY25, especially in Australia and Barrow Hanley; strong client engagement in Wealth Management and Corporate Trust.

• Expense growth guidance for H1 FY25 set at 2%–4%, mainly from Wealth Management and Corporate Trust.

• Ongoing cost reduction and simplification program targeting AUD 25–35 million in annual savings over two years.

• Scheme separation program on track; new CEO to lead asset management business from September 2024.

• Dividend policy for the asset management business to be reviewed post-separation.