Perpetual Annual Report 2016

2016 Group Results

A SOLID RESULT
FOR SHAREHOLDERS

In 2016, Perpetual achieved a solid result for shareholders in challenging conditions, while investing in the business for further growth.

Up 8%

Net profit after tax of $132 million

255 cents

Fully franked full year dividend up 6% per share
FIVE YEAR PROFILE   
    June 201210,11 June 201310,11 June 201410,11 June 201511 June 2016
Total revenue1 $m 357.9 362.9 443.2 500.7 489.6
Underlying EBITDA2 $m 110.5 128.1 180.6 217.2 208.4
Underlying profit before tax3 $m 85.4 105.0 151.3 188.6 177.9
Underlying profit after tax (UPAT)3 $m 59.8 75.1 106.2 133.7 128.2
Net profit after tax (NPAT)4 $m 26.7 61.0 81.6 122.5 132.0
Earnings per share (UPAT)5 cents 143 183 242 290 276
Earnings per share (NPAT)5 cents 64 149 186 265 284
Return on average
shareholders’ equity – UPAT6  		% 18.9 25.8 24.7 23.7 21.6
Return on average
shareholders’ equity – NPAT7 		% 8.4 20.9 19.0 21.7 22.2
Dividend per share – ordinary8 cents 90 130 175 240 255
Total equity at 30 June $m 280.5 323.7 556.4 583.7 605.5
Capital expenditure $m 10.2 14.2 6.6 15.8 20.7
Market capitalisation $m 961 1,486 2,207 2,252 1,915
No. of shares on issue –
weighted average9 		m 41.7 41.0 43.8
46.2 		46.4
No. of shares on issue at 30 June9 m 42.0 42.0 46.6 46.6 46.6
Share price at 30 June $ 22.90 35.40 47.38 48.36 41.12
Share price range for year $ low 19.24 22.30 34.76 41.69 37.87
  $ high 27.35 45.54 52.93 58.24 50.66
  1. Excludes income from structured investments. 
  2. EBITDA represents earnings before interest, taxation, depreciation, amortisation of intangible assets, equity remuneration expense and significant items.
  3. Excludes significant items and costs of major strategic initiatives.
  4. Attributable to equity holders of Perpetual Limited.
  5. Diluted earnings per share calculated using the weighted average number of ordinary shares and potential ordinary shares on issue.
  6. Calculated using underlying profit after tax.
  7. Calculated using net profit after tax.
  8. Dividends declared with respect to the financial year.
  9. Includes ordinary shares and potential ordinary shares. 
  10. Total revenue, underlying EBITDA, underlying profit before tax and underlying profit after tax exclude discontinued operations.
  11. In FY16, the Board approved a proposal to change the recognition of realised gains or losses resulting from the disposal of Perpetual’s seed fund investments from significant items to UPAT. Comparatives have been adjusted to reflect this change. 

Financial results

Perpetual’s statutory net profit after tax for the period ended 30 June 2016 was $132 million, an increase of 8% on FY15. Underlying profit after tax was $128.2 million, 4% lower than in FY15. 

Perpetual generated $494.2 million in operating revenue, a decrease of 1% on FY15. 

The FY16 result reflects a more volatile investment environment and lower average equity markets compared to prior periods. Average levels of the Australian equity market were 6% lower in FY16, which reduced average funds under management and advice. 

The S&P/ASX All Ordinaries Price Index (All Ords) closed at 5,310 on 30 June 2016, down 3% on the closing level of 5,451 on 30 June 2015. The average All Ords in FY16 (5,238) was down 6% on the average All Ords in FY15 (5,562). It is the volatility within the last 12 months that has dented investor confidence the most, and impacted valuations. 

This was partially offset by underlying new business growth (positive flows and net new clients), cost discipline and synergies from the acquisition of The Trust Company. 

Final dividend

The Board determined a FY16 fully franked final dividend of 130 cents per share, bringing total fully franked dividends for the 12 months to 255 cents per share. 

This is up 6% on the past year, reflecting the strength of Perpetual’s business model and the diversity of revenue and earnings from across the business. The final dividend is payable on 28 September. 

Lead, extend, explore

On 1 July 2015, Perpetual formally commenced its new Lead & Grow strategy, following the successful three year Transformation 2015 strategy. 

The Lead & Grow strategy seeks to ‘Lead’ in each of the Group’s core businesses, ‘Extend’ into logical adjacencies and ‘Explore’ new markets and new ventures for the Group over the long term to capture sustainable growth. 

The Lead & Grow strategy is delivering good early momentum, and Perpetual is pleased with progress one year into this multi-year strategy. 

Market environment

Two of the main drivers of total revenue are the value of funds under management (FUM) in Perpetual Investments and funds under advice (FUA) in Perpetual Private, which are primarily influenced by the level of the Australian equity market. At the end of FY16, Perpetual Investments’ FUM and Perpetual Private’s FUA were around 80% and 56% exposed to equity markets respectively.