Perpetual saw its full-year net profit after tax (NPAT) drop by 17 per cent year-on-year as well as its profit in its advice business, but the group is planning to build its advice business, believing it is well-positioned to “benefit from industry dislocation”.
The group’s NPAT for financial year 2019 came to $115.9 million, while its revenue fell by 4 per cent from FY18 to $14.1 million.
Perpetual cited lower performance fees, net outflows and increased investment in strategic initiatives.
Perpetual Private, the company’s financial advice segment, produced a profit before tax of $41.2 million, 11 per cent down on the year prior.
The decline was said to be largely due to increased investment to support future growth and non-recurring revenue in FY19.
The segment’s EBITDA was $54.1 million, down by 7 per cent, while revenue for the year was $186.1 million, slipping by 1 per cent.
Perpetual Private's funds under advice (FUA) at the end of the year was $14.8 billion, 5 per cent higher than the year before – which Perpetual said was driven by higher equity markets and positive net flows.
Chief executive Rob Adams commented the firm had added five advisers in the first quarter of FY2020, to take advantage of a current industry trend of “dislocation”.
The company a further six advisers would join the company in the second quarter of the year and the company has indicated it could be buying up practices, with an “active M&A pipeline for ‘bolt-on’ acquisitions that align to our model”.
“We observed many players exiting the wealth industry and financial advisers being displaced on a weekly basis,” Mr Adams said.
“We have transformed Perpetual Private’s client offer to provide holistic advice in a professional services model. The new model provides greater transparency in structure and seamless access for clients to a team of experts to meet their advice needs.”
Perpetual Private’s FUA along with funds under management in the investments segment are the main drivers of the group’s total revenue, which are primarily influenced by the level of the Australian equity market.
The company advised in its outlook that its revenue and profitability are sensitive to movements in Australian equity markets, net flows and investment performance, which can be significantly variable during high market volatility.
At the end of FY19, Perpetual Private’s FUA was 58 per cent exposed to equity markets, while investments’ FUM was 71 per cent exposed.
FY19 was Perpetual Private’s sixth consecutive year of positive flows.
Mr Adams added that the business saw continued client growth within its chosen high-net-worth segments, with Perpetual’s accounting business Fordham remaining the lead referral source.
Commenting on the group’s results, chief executive and managing director Rob Adams said the financial services sector “experienced significant disruption” during the period.
“Along with our peers, our business was impacted by market uncertainty and a challenging operating environment,” Mr Adams said.
“We continue to invest in our brand and across the business to adapt to this evolving backdrop and remain focused on developing and deepening our client relationships.”
The philanthropic business now holds $2.9 billion in FUA across charitable funds, private and public ancillary funds.
Meanwhile, the investments business generated a profit before tax of $79.9 million, 29 per cent lower than the year before.
Mr Adams said the segment was challenged by market uncertainty combined with fund outflows throughout the year.
“It was also impacted by prolonged low volatility, record low interest rates, and an extended market cycle favouring passive and growth investment styles, meaning our value style underperformed when compared to the broader peer group,” he said.
Perpetual Corporate Trust’s profit before tax was $47.7 million, rising 12 per cent from FY18.
The company cited continued revenue growth in both debt market and managed fund services, with ongoing activity in their core markets and higher asset prices.
The board declared a final dividend of $1.25 per share, delivering a full-year fully franked dividend of $2.50 per share, 9 per cent lower compared with the year before.
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