Here’s how Perpetual performed in FY21…
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At the time of writing, the Perpetual share price is down 0.58%, trading at $39.24.
Perpetual share price dips despite ‘transformational’ year
Operating revenue increased 31% to $640.6 million
Underlying profit after tax up 26% to $124.1 million with the inclusion of Trillium and Barrow Hanley acquisitions
Total assets under management (AUM) reached $98.3 billion
Net profit after tax fell 9% to $74.9 million due to significant one-off costs
Fully franked final dividend declared of 96 cents per share, bringing total dividends for FY21 to $1.80 per share — an increase of 16% on FY20.
What happened in FY21 for Perpetual?
While the share price movement may have you thinking otherwise today, Perpetual has generated respectable growth across its various financial businesses in FY21.
For those less familiar, Perpetual operates four separate divisions known as Perpetual Asset Management International (PAMI), Perpetual Asset Management Australia (PAMA), Perpetual Corporate Trust (PCT), and Perpetual Private (PP).
Pleasingly for shareholders, the company’s assets under management grew 246% year-over-year to $98.3 billion. Of those funds, a significant amount outperformed their respective benchmarks over the year. Notably, 100% of its PAMI funds outperformed their relative benchmarks. This is crucial for Perpetual’s client satisfaction, retaining, and growing funds — and inevitably the Perpetual share price.
Additionally, with AUM more than tripling, the firm managed to increase operating revenue by 31% to $640.6 million. This was reflective of Perpetual’s successful acquisitions of Trillium and Barrow Hanley.
Investors might be focusing on the firm’s fall in statutory profits. While net profit after tax declined 9% to $74.9 million, this was mostly a result of one-off costs involved with the acquisitions during the financial year.
What did management say?
Commenting on the result, Perpetual CEO and managing director Rob Adams said:
We delivered solid results in FY21, with a strong uplift in earnings. The year was truly transformational for Perpetual and saw our continued evolution from a largely Australian-focused business with A$28.4 billion in AUM, to now managing close to A$100 billion in AUM, with a global footprint, a global client base and a strong forward-looking growth profile.
Furthermore, regarding the company looking forward, Adams said:
At 30 June, the group maintained its strong balance sheet which positions us to drive organic growth and take advantage of inorganic opportunities to add further depth and breadth of capability to our offerings globally.
What’s next for Perpetual?
According to the release, Perpetual will focus on three main priorities in FY22. These are client first, future fit, and new horizons. The new horizons priority involves the continued leveraging and expansion of Jacaranda Financial Planning. In addition, the company will continue to build out further investment capabilities for Trillium and Barrow Hanley.
In terms of guidance, Perpetual shared its expectation of total expenses to be between $549.2 million to $568 million in FY22. This would indicate an increase of 17% at a minimum compared to FY21’s total expenses. The company noted significant integration costs and amortisation of acquired intangibles during the year ahead.
Perpetual share price recap
The Perpetual share price has returned shareholders a solid return of 27.4% over the past 12 months. For comparison, those who simply invested in an index fund tracking the S&P/ASX 200 Index (ASX: XJO) made a 20.9% gain.
Finally, based on the current share price, Perpetual is trading on a price-to-earnings (P/E) ratio of 33.5.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.