Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Perpetual Ltd (ASX:PPT) reported a 4% increase in total operating revenue, reaching $686.2 million for the half year.
• The company's underlying profit after tax rose by 2% to $100.5 million compared to the prior corresponding period.
• Asset management saw a 7% growth in underlying profit before tax, supported by positive market movements and strong investment performance.
• Corporate trust delivered an 8% increase in underlying profit before tax, despite a high interest rate environment.
• Wealth management achieved a 12% growth in underlying profit before tax, driven by solid performance across all segments.

Negative Points

• The statutory net profit after tax was significantly lower, down 65% to $12 million due to one-off items.
• Net outflows for the half year were $3.4 billion, mainly from JR Hambro's global and international equity strategies.
• The simplification program's cost has increased significantly, with expected annualized expense savings now set at $70 to $80 million.
• The gearing ratio is slightly above the internal target at 32%, with plans to reduce it below 30% in the near term.
• There are ongoing concerns about the high level of one-off costs, with significant items impacting the financial results.

Q & A Highlights

• Warning! GuruFocus has detected 10 Warning Signs with ASX:PPT.

Q: Can you discuss the cost outlook for FY26, particularly in light of the simplification program? A: Underlying costs should reduce due to the simplification program. However, overall costs will be influenced by FX impacts and growth in corporate trusts and wealth management. For asset management, we expect underlying expenses to be lower in FY26. (Chris Green, CFO)

Q: What is the strategy for JO Hambro regarding product range pruning? A: We are focusing on strategies that are underperforming or sub-scale and losing money. We've already started reducing and merging funds to improve performance and market interest. (Bernard Riley, CEO)

Q: Can you elaborate on the reset of the distribution strategy? A: We are increasing distribution resources, particularly in the US and Europe, and simplifying the structure to focus on product development and market-facing activities. This includes combining teams to reduce duplication and enhance market presence. (Bernard Riley, CEO)

Q: What are the plans for TSW, given the outflows? A: TSW is a high-quality business with strong medium-term performance. The focus is on maintaining performance, as 83% of TSW strategies are outperforming their benchmarks, which is crucial for retaining and attracting assets. (Bernard Riley, CEO)

Q: What are the expected costs and interest levels in selling the wealth management business? A: The tax implications for selling wealth management are lower than for the combined business. We anticipate costs of $70 to $75 million for the sale and separation. There is significant interest in the business, given its high quality and market position. (Chris Green, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.