Australia's biggest independent wealth manager, Perpetual, has posted a surge in full-year profit and an increased dividend, on the back of surging sharemarkets and cost-cutting, but says net flows are unlikely to improve in the short term.
Reporting a 128 per cent rise in net profit, Perpetual did not give specific guidance for this financial year but tipped improved profitability and flows. It pleased investors with a final fully franked dividend of 80¢, taking the total payout to $1.30 a share, up 44 per cent on the previous year.
Perpetual, which operates in fund management, financial advice and trustee services, reported a net profit of $61 million in the year to June 30, up from $26.7 million the year before.
The company's profits depend on how the Australian equities market performs; a 1 per cent movement in the market changes its annualised revenue by up to $2.25 million.
The All Ordinaries Index rose by 15 per cent in 2002-13, and Perpetual's expenses fell by 4 per cent, including the loss of 535 employees.
Chief executive and managing director Geoff Lloyd said investor sentiment remained fragile and volatility was still affecting flows across the industry, but he was "pleased with the positive momentum to improve the business".
Revenue for the year inched up 1 per cent to $369.7 million. Underlying profit of $76.3 million - up 13 per cent - was in line with estimates.
Mr Lloyd said the results showed it had "fixed the business and that it is now capable of a sustained growth. Perpetual is a much leaner business. We have a new, smaller, more senior executive team."
It's been a challenging few years for Perpetual: the big end of town withdrew its money after the departure of fund manager John Sevior, and the board was called "accident prone" when it dumped Chris Ryan after less than a year in the top job.
Perpetual shares closed down 3.24 per cent, or $1.25, on Thursday, in a flat market. At $37.35, they are still below the $38 to $40 a share approach Perpetual received from US private equity house Kohlberg Kravis Roberts in 2010.
Citi analysts Nigel Pittaway and Mark Tomlins said the result was a little below consensus, although the dividend was above consensus.
Ravi Reddy, equities analyst at Morningstar Australasia, said a "key driver of the strong result was the benefit of the transformation program which saw $24.7 million in pretax cost savings realised in 2002-13".