Perpetual profits drop 55% after Pendal acquisition costs

Perpetual Limited has posted a net profit after tax (NPAT) of $26.8 million in the first half of the 2023 financial year, down 55% from $59.3 million a year ago.

This reflected a 104% increase in significant one-off items — including the acquisition of Pendal Group — from $19.8 million to $40.3 million.

This has produced a total interim dividend of 90 cents per share — a 1Q23 dividend of 35 cents per share paid on 8 February and a 2Q23 dividend of 55 cents per share, set to be paid on 31 March, 2023.

The group’s underlying profit after tax (continuing operations) fell 15%, from $79.1 million in 1H22 to $67 million.

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Perpetual’s operating revenue rose 1% to $388.3 million, offset by an 8% increase in total expenses to $298.3 million.

The weaker underlying result was driven by subdued market conditions, resulting in net outflows of $2.8 billion across Perpetual Asset Management Australia (PAMA) and Perpetual Asset Management International (PAMI).

Total assets under management grew just 4% to $93.7 billion, rising to $202 billion when including assets managed by Pendal Group.

Meanwhile, net inflows across Perpetual Private fell from approximately $500 million in 1H22 to $200 million in 1H23, while revenue generated by Perpetual Corporate Trust rose from $76.6 million to $88.7 million.

Perpetual CEO and managing director, Rob Adams, said he was pleased with the result amid challenging market conditions.

“Our first half financial performance was solid in the context of a challenging period for asset managers globally,” Adams said.

“The group’s underlying profit result for the period reflects the varying level of equity market exposure within our business divisions.”

Adams said while the performance was subdued, the company’s investments outperformed the benchmark, making reference to $2.5 billion in global equities inflows across PAM and PAMI.

“While our two asset management divisions were understandably most impacted by lower average equity markets compared with 1H22 and net outflows over the period, our portfolio management teams have continued their trend of strong relative investment outperformance with 89% of all funds ahead of their benchmarks over the three years to 31 December,” he added.

Adams went on to reflect on the recent acquisition of Pendal Group.

“After the end of 1H23, we were delighted to welcome Pendal shareholders and employees to Perpetual following the completion of our transformational acquisition,” he said.

“The combination of these two iconic Australian firms has created a global multi-boutique asset manager of scale, with an enhanced global distribution footprint, strengthened ESG presence and diverse investment capabilities.

“We are progressing well with the integration and establishing the optimal operating model which will support the delivery of $60 million of pre-tax expense synergies.”