Perpetual Group (PPT) H2 2024 earnings summary

Executive summary

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

• Statutory loss of AUD 472.2 million due to a significant goodwill impairment of AUD 547.4 million in the Hambro and TSW boutiques and one-off integration and strategic review costs.

• Underlying profit after tax (UPAT) rose to AUD 206.1 million, up 26% year-over-year, driven by Pendal's full-year contribution and growth in corporate trust and wealth management.

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

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 was AUD 181.9 million, up from AUD 85.8 million in FY 2023.

• Final dividend declared at AUD 0.53 per share (50% franked), with total FY 2024 dividends at AUD 1.18 per share (65% UPAT payout ratio).

• Diluted EPS on UPAT was 178.6 cents, down 9% due to higher share count post-Pendal acquisition.

Outlook and guidance

• Positive net flow momentum in Q1 FY 2025, especially in Australia and Barrow Hanley, with strong client engagement in Wealth Management and Corporate Trust.

• Expense growth guidance for H1 FY 2025 set at 2–4%, mainly from wealth management and corporate trust.

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

• Scheme separation program on track; Bernard Reilly appointed as new CEO from September 2024.

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