Perpetual reported a statutory after-tax loss of $472.2 million for the full year ended June.
In an announcement by the ASX on Thursday, the company confirmed that pre-tax writedown of $547 million due to net outflows, reported earlier this week, had weighed on results.
This included net outflows of $8 billion from JO Hambro’s UK Dynamic and Global and International Select strategies and $3 billion from TSW’s International Equities strategy.
In the annual results, underlying profit after tax (UPAT) stood at $206.1 million, up 26 percent from the previous corresponding period, while operating revenue reached $1.3 billion, up 32 percent from FY22-23.
The board also announced a final dividend of $0.53 per share, 50 percent franked.
According to Perpetual’s outgoing chief executive Rob Adams, who is expected to hand over the reins to Bernard Reilly in September, the positive impact of Pendal’s integration into the asset management business has been largely overshadowed by capital outflows .
“In asset management, although we have seen some of the positive impacts of the integration of Pendal Group into our business, our performance in FY24 was impacted by larger than expected net outflows, which which was clearly disappointing,” Adams said.
However, supported by improving stock markets and strong investment performance from many of Perpetual’s teams, the firm’s asset management unit saw total assets under management reach $215 billion for the year .
Asset management revenues amounted to $887.6 million, an increase of 48 percent compared to the previous corresponding period.
About 66% of strategies outperformed the benchmark over the three-year period through June 30, 2024, Adams said.
“Solid” client interest in global and emerging markets and fixed income strategies at Barrow Hanley also drove net inflows of $3.4 billion into these capabilities.
“In Australia, we saw positive momentum in net flows, driven by Perpetual’s Australian credit and fixed income capabilities and improved net flows into Australian equities. Pendal was hit by small institutional client losses and a merger of super fund clients,” Adams said.
It reported $3 billion in new institutional clients expected to be funded this quarter and additional gains in various equity and boutique strategies expected to be funded in the first two quarters of the new fiscal year.
Regarding wealth management, the CEO described “strong organic growth,” particularly at his Fordham accounting firm and in non-market revenue.
Wealth Management delivered underlying profit before tax (UPBT) of $54 million, up 15 percent, driven by continued growth across all business segments, continued contributions from the planning boutique financial Jacaranda in the pre-retiree segment and a strong performance from Fordham.
The corporate trust reported UPBT of $85 million, up 4 per cent, while funds under administration stood at around $1.2 trillion, also up 4 per cent.
KKR Transaction Update
The estimated perpetual and confirmed net cash proceeds from the transaction of its wealth management businesses and corporate trust are expected to be between $8.38 and $9.82 per share.
A transition services agreement which will be in place with KKR following completion is expected to cover a significant portion of the stranded costs over a period of 18 months (with two six-month extensions available) from completion.
The estimated stranded costs of the transaction are expected to be approximately $75 million per year, before taxes.
About $50 million a year of those costs will be covered by the deal.
He also announced “orderly changes” to the board in anticipation of the transaction’s completion, with Chairman Tony D’Aloisio set to leave in early 2025. He has served as chairman since 2017.
Following D’Aloisio’s retirement from the board, Gregory Cooper, named vice president in May 2024, will assume the role of president.
Independent non-executive directors, Ian Hammond and Nancy Fox AM, will also retire at the October annual general meeting, in line with Perpetual’s board rotation policy.
