Perpetual Limited

Good day, and thank you for standing by. Welcome to Perpetual 4-Year Results, Briefing 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Head of Investor Relations, Susie Reinhart.

Please go ahead. Thank you. Good morning, everyone, and welcome to Perpetuals. year 2024 results briefing. Before we begin today, we would like to acknowledge the traditional owners and custodians of the land on which we present from today here in Sydney, the Gadigal people of the Eora Nation, and recognise their continuing connection to the land, waters and community. We pay our respects to Australia's First Peoples and to their elders past and present. We would also like to extend our respect and welcome to any Aboriginal or Torres Strait Islander people who are listening in today. and acknowledge the traditional custodians of the various lands on which you all work today. Presenting with us are Rob Adams, Perpetual's Chief Executive Officer and Managing Director, as well as Chris Green, Perpetual's Chief Financial Officer. There'll be an opportunity to ask questions at the end of the presentation. Please can we ask, that we start with two questions each to ensure we have time for all analysts who are keen to ask questions. Before I hand over to Rob, we would like to draw your attention to the disclaimer on page two of the presentation. Over to you, Rob.

Thanks, Susie. Good morning, everyone. Thanks for joining the call today. Maybe getting straight into it, turning to the first slide, the year in review and results at a high level. Of course, the major event for Perpetual this year was the announcement of the scheme of arrangement with KKR. We announced that back in May, and that followed a comprehensive and thorough strategic review held by our board, which formally commenced back in December of 2023. The strategic review is expected to lead to positive outcomes for our shareholders, which we'll discuss in more detail today. We expect it to deliver estimated cash proceeds of between $8.38 per share and $9.82 per share, plus provide our shareholders with exposure to our global asset management business as it becomes a standalone, debt-free listed business. Importantly, we have progressed the integration of Pendle Group, acquired back in January of 2023 at PACE, and we have delivered in excess of the $80 million in targeted annualised expense synergies earlier than our original target of January 25. Looking now at the headline results, underlying profit after tax was $206.1 million, up from $163.2 million last year, which is driven by the full 12-month contribution from Pendle and growth across both our corporate trust and wealth management businesses. Disappointingly, our asset management division was impacted by greater than expected net outflows throughout the year, which, as we reported earlier this week, has led us to reduce the value of Goodwill on our balance sheet for the Hambro and TSW boutiques. This has been accounted for as a significant item of $547 million, leading to a statutory loss of $472.2 million for the year. Diluted earnings per share on UPAT was 178.6 per share, down 9% on last year due to a higher average weighted number of shares on issue following the Pendle acquisition. The Board is determined to pay a final dividend of 53 cents per share, which will be 50% franked. Turning now to some comments on each of our divisions. In our asset management business, we saw stable total assets under management and margins supported by our diversified investment capabilities and our broader client base across key regions and channels. Revenue was $887.6 million, up from $600.4 million in the prior financial year, and underlying profit before tax was $200.4 million compared to $132.7 million in FY23, which of course only included a partial year of pendal earnings. As I said, total AUM was $215 billion. That was up 1%, driven by market movements and investment performance. Disappointingly, we reported net outflows of $18.4 billion across the year, the majority coming from Hambro and TSW. As we did report through our quarterly market updates, Hambro suffered greater than expected outflows across its global and international select strategies. And you'll recall that its UK dynamic strategy was also a recipient of net outflows following the departure of the main portfolio manager on that strategy. TSW saw net outflows of around $4 billion Australian dollars, mainly in its international equity strategies, which is driven by partial redemptions from a major sub-advisory client. Importantly, this sub-advisory client remains a key client of TSW and has in fact funded a new capability of theirs in recent times. Importantly, as you can see from the chart on the right below, our base management fee margins have been relatively stable year on year despite these outflows. We have had success in attracting new monies into some higher margin capabilities, which we'll talk to during the course of this morning. Turning now to our flow profile, sorry, distribution priorities. Of course, management of our flow profile is our number one priority across the asset management business. It's a clear focus across the business that we have to deliver a better result and a more consistent result. After a number of changes to our distribution team over the last 12 months, I believe we now have a strong team in place to take the business forward. This is reflected in a growing new business pipeline. We have had new appointments in the UK with the new head of distribution for the UK European region appointed in March of this year, and we will have a strengthened team focused on the European continent. We have also executed on a product rationalisation program to ensure that we improve our focus on the products in our business that will generate growth over time. Over the course of FY24, we rationalised 60 products and investment options, really helping to create and drive that focus, whilst also driving operational efficiency. At the same time, we have selectively launched new higher margin products, which include the Perpetual Strategic Capital Fund, which is a specialist focused activist fund leveraging the capabilities of our highly regarded Australian equities team. We launched the Regnan Global Mobility Logistics Fund, which is the second global thematic fund managed by the Regnan team based in London. And Barra Hanley, as we've previously reported, raised their second and third CLO series, bringing their total CLO asset inflows to around $1.1 billion, which has opened up a whole new revenue stream for Barra Hanley. Importantly, we're also strengthening our presence across key channels, such as the US intermediary channel. Through the integration of Pendal, we've unified our US mutual fund platforms, leveraging Pendal's existing platform that has the heritage and network to support better reach across that channel, that intermediary channel, which is, of course, such a key and large channel. So as we've commented on it's been our ambition to give Barra Hanley exposure to the US intermediary channel for the first time in their 40 plus year history and through that work we will now be doing that. The key elements of our strong investment performance, our global distribution team, our more focused product range and prioritisation of key regions and channels give me confidence that our net flow profile will improve. Turning to the results of our other divisions, Firstly, to corporate trust. Our corporate trust business continues to demonstrate its position in the market as a quality sector-leading business with unmatched long-term client relationships that support growth. In corporate trust, underlying profit before tax was up 4% over the year, supported by revenue growth of 6% and fuel growth of 4%. During the year, corporate trusts saw growth across all segments. In DMS, the banks returned to the market after the roll-off of the term funding facility last year, and in our managed fund services segment, we saw continued market activity in the commercial property sector despite the higher interest rate environment. Perpetual Digital saw good momentum with client growth through sales of new and existing SaaS products. EBITDA margin for the year was 51%, down slightly on last year due to business mix and our investments in replacing technology and in cybersecurity. Through the year, we completed a comprehensive technology upgrade, replacing a number of legacy systems across the business. Finally, now turning to wealth management. Our wealth management business saw strong growth in underlying profit before tax for FY24, up 15% on the prior year, with total revenues up 4%, driven by growth across all segments. Funds under advice grew by 7% during the year, supported by positive market movements and net inflows. The diversity of services in wealth management underpins its quality of earnings through market volatility. Importantly, we continue to deliver and innovate for our clients in our wealth management business, with our new ESG reporting tool launched in the first half of the year being one well-received example of that innovation. Our client engagement has remained strong, and despite a period of corporate activity, it was particularly pleasing to see a higher NPS for wealth management this year of plus 48 compared to plus 46 the prior year. I'll now hand over to Chris to provide further details on our results and an update on the scheme of arrangement and we'll come back to give summary and outlook comments.