Welcome to Perpetual's Full Year Results Briefing 2026. Following the formal presentation, there will be a Q&A session where participants can ask live audio questions. To ask a live audio question, press the Request to speak button at the top of the broadcast window. The broadcast will be replaced by the audio questions screen. Use the dial-in number and access PIN provided to ask your question via the phone. Alternatively, for those on a home or personal network, you can ask your questions via the web by pressing Join queue. If prompted, select Allow in the pop-up to grant access to your microphone. If you have any issues using the platform, dial-in details can also be found on the homepage under Asking audio questions. Press the Documents icon to see today's files. Select a document to open it. You can still listen to the meeting while you read.
The audio queue is now open. I will now hand over to Suzanne Evans, Chief Financial Officer.
Fantastic. Thanks, Michelle. Good morning, everyone, and good afternoon and evening to those joining us from other parts of the world. Welcome to Perpetual's Full Year Results Briefing for 2026. Before we begin, I would like to acknowledge the traditional owners and custodians of the land from which we are presenting today. Here in Sydney, that is the Gadigal people of the Eora Nation. We recognize their continuing connection to land, waters and community, and pay our respects to elders past and present. We also acknowledge the traditional custodians of the land on which participants are joining us from today, and extend our respect and welcome to any Aboriginal or Torres Strait Islander people joining the call. Presenting today are our CEO and Managing Director, Bernard Reilly, and myself, Suzanne Evans, the Chief Financial Officer.
As Michelle, our operator, has indicated, there will be an opportunity for questions at the end of the presentation. Before I hand over to Bern, I would like to just draw your attention to the disclaimer that is up on screen now on page two. With that, Bern, over to you.
Thank you, Suzanne. Good morning, everyone, and thanks for joining us today. Before I talk through Perpetual's FY 2026 results and further to our ASX announcements, I would like to provide a brief update on the proposals we received from EQT. Subsequent to our announcement on July 29, Perpetual entered into an NDA with EQT and is providing access to limited non-public information on a non-exclusive basis to determine whether an improved proposal can be formulated. The board remains willing to engage constructively with third parties where doing so is in the best interests of shareholders. Moving now to our results. FY 2026 was a year of solid delivery and meaningful progress against our strategic priorities. We have delivered earnings growth through a year of geopolitical and economic uncertainty, supported by a disciplined cost management and strong cash generation.
We have strengthened our financial position, providing greater flexibility to continue investing in growth opportunities. As you can see from the table, our headline results showed total operating revenue of AUD 1.37 billion, in line with FY 2025. Underlying profit after tax of AUD 217 million, up 6% on FY 2025. Diluted EPS on UPAT was 186 cents, 3% higher than FY 2025. The board will pay a final dividend of 63 cents per share unfranked, representing a payout ratio of 70% of the second half UPAT. The full-year dividend increased 6% on FY 2025 in dollar terms, as shown here on the slide. Our teams have delivered strong progress against our priorities through a year of significant corporate and strategic activity. A key focus remained our simplification program, which has now delivered AUD 72.6 million in annualized savings.
This disciplined approach to cost management has improved profitability and created capacity to reinvest in growth initiatives.
In Asset Management, while the year included an impairment charge related to our TSW boutique, overall earnings improvement was supported by stronger equity markets and continued cost discipline. We saw stronger contributions from Barrow Hanley, Perpetual and Pendal, partially offset by net outflows. Corporate Trust performed well, delivering strong growth across all three business lines, reinforcing its importance as a complementary earnings engine for the group. The business benefited from strong securitization markets, continued client growth and investment in new capabilities, including the acquisition of Interfi systems. Finally, in March this year, we signed a binding agreement to sell Wealth Management to Bain Capital. Subject to satisfaction of the remaining conditions precedent, this represents an important step to creating a simpler, more focused group positioned for our next stage of growth. Turning to the next slide.
We made tangible progress across each of our strategic priorities: simplify the group, improve operational excellence, and investing for growth. On simplify, the sale of Wealth Management remains on track, and I will provide more detail on that shortly. The simplification program continues to deliver meaningful efficiencies with further benefits expected to be realized in FY 2027. We continue to evolve our business model to drive end-to-end business accountability while retaining appropriate group oversight. On delivering operational excellence, cost discipline remained a key focus, with the group cost-to-income ratio improving by 119 basis points to 78%. We executed succession planning across our boutiques with leadership appointments at J. O. Hambro, TSW, and Trillium. We organically strengthened the balance sheet, reducing gross debt by 15%. Finally, on investing for growth, Corporate Trust completed the acquisition of Interfi and Income Asset Management's term deposit broking business.
During the year, we launched the Perpetual Diversified Income ETF, which has already grown to AUD 295 million in AUM, and successfully raised a further AUD 268 million for the listed Perpetual Credit Income Trust. We also seeded four new products across international thematic equity strategies globally. I will expand on some of these shortly. Turning to the next slide. The sale of Wealth Management is a key strategic priority and remains on track to complete within the final quarter of the 2026 calendar year. We continue to make progress towards satisfying the conditions precedent, with Perpetual obtaining the required AFSL variations from ASIC and Bain Capital receiving ACCC approval.
Court proceedings have also commenced to facilitate the transfer of certain assets, liabilities, and undertakings related to the wealth business. Under the sale agreement, at completion, Perpetual will receive an upfront cash payment of AUD 500 million, subject to customary adjustments.
There is also the potential for a further AUD 50 million at settlement based on the performance of the advice division, and a further amount of up to AUD 50 million payable two years later related to the performance of the accounting and wealth operations. Throughout this period, Wealth Management continues to attract advisors and stay focused on delivering client outcomes. Net proceeds from the sale will be used to repay debt. Following completion, we expect to move to a net cash position, taking into account expected transaction and separation costs, tax, and other adjustments. Updated assumptions, including a lower expected tax outcome from what was originally estimated, further strengthen this position. Following completion, Perpetual will comprise two complementary businesses, Asset Management and Corporate Trust. Together, they give shareholders a resilient earnings base, a stronger balance sheet, and improved capital flexibility. Turning now to the next slide. Simplification.
Since we launched the simplification program in August 2024, we have delivered tangible results. As at the 30th of June 2026, annualized savings were AUD 72.6 million, well ahead of our FY 2026 aim, and already within our FY 2027 target range. In FY 2026, we realized AUD 60.8 million of gross savings. Majority of these savings have been delivered through operating model efficiencies, such as removing duplication and back-office simplification. For FY 2027, our key focus areas include closing out finance systems transformation and middle-office simplification. We remain on track to deliver annualized savings at the upper end of our AUD 70 million to AUD 89 million target range, with total costs to achieve this remaining unchanged at approximately AUD 55 million. We will be in a better position to assess further efficiency opportunities following the completion of the sale of Wealth Management. Turning to the next slide.
Moving now to our balance sheet, where we have made good progress this year. Strong cash generation and disciplined capital management strengthened our financial position, with gross debt reduced by 15% to AUD 629 million as at the 30th of June 2026. Our gearing ratio fell to 28.8%, with approximately AUD 200 million of available liquidity at year-end. Reflecting this stronger position, the board declared a final dividend of AUD 0.63 per share, unfranked, delivering a higher cash dividend to shareholders than in FY 2025. Our global footprint will limit franking levels. However, we expect franking credits to return gradually. Looking ahead, our stronger balance sheet gives us greater financial flexibility and allows us to assess capacity for capital management opportunities over time. With that, I will now outline how we have allocated capital across the business, starting with Asset Management on the next slide.
Our multi-boutique model brings diversity across capabilities, clients, and regions.
Total assets under management at the 30th of June was AUD 224.4 billion. Net outflows of AUD 25.1 billion remained a headwind during the year, with a further AUD 7.6 billion reduction in AUM from adverse foreign exchange movements. While these impacts were largely offset by stronger equity markets, we recognize that flows remain challenging across the business. That said, we continue to attract new client money across a range of strategies and regions. We also recognize we need to do a better job in delivering investment performance. Throughout FY 2026, underperformance was concentrated in select strategies, particularly within J. O. Hambro, where we are taking appropriate steps to strengthen investment teams and operations.
While market conditions and flows can be cyclical, our focus is on executing the levers that are within our control. We are driving growth through product development and leveraging our global distribution platform to broaden our reach and client access.
Turning now to distribution and growth initiatives. One of the key advantages of the global platform already in place across our boutiques, including established investment capabilities, improved structures, and long-standing distribution relationships, really is a key benefit for Perpetual. Importantly, this platform opportunity extends across our boutique portfolio. Our Australian distribution platform remains a significant strength, providing deep client relationships, especially in the intermediary space, where we have relationships with over 11,000 of the 15,000 advisors, helping connect investors with specialized capabilities across the Perpetual Group. Combined with our global reach, this gives us multiple avenues to broaden client access and support growth. Developing new products and vehicles is an important part of this approach. Active ETFs remain a significant growth opportunity, reflecting growing client demand for actively managed strategies through new distribution channels.
Following the launch of the Perpetual Diversified Income Active ETF, we are seeing encouraging demand from Australian clients for active investment solutions from Perpetual. Building on this momentum, we are also progressing plans for additional active ETF offerings, targeting demand in the U.S. wholesale market. We are also expanding our ICAV-based products across the U.K. and Europe, providing greater flexibility to deliver our investment capabilities to new client segments. The opportunity now is to better leverage the capabilities already embedded within the business, extending successful strategies into new channels and markets. As part of that effort, we seeded four products during FY 2026 across international and thematic equity strategies globally. These investments create a pipeline of future opportunities and support the expansion of our offerings into areas where we see client demand and long-term potential.
Taken together, these initiatives strengthen our distribution reach, broaden client access to capabilities, and position the business to capture future growth. Turning to J.O. Hambro. Restoring J.O. Hambro to its heritage strength will help drive our growth ambitions.
Today, the business remains a differentiated equity specialist with a strong brand and established distribution platform. As at the 30th of June, the business managed around AUD 33 billion in assets. However, it is reliant on a small number of strategies, some of which have experienced challenging flow patterns. Under the new leadership of Bill Street, we have a clear plan to build a more scalable and resilient business with an ambition to grow AUM to around AUD 55 billion-AUD 60 billion by FY 2030. Our priorities are focused on adapting our products and strategies to meet evolving client demand, such as seeing the new climate transition strategy in J.O. Hambro, improving investment performance across our core capabilities to deliver better outcomes for clients and support sustainable long-term growth.
And underpinning all of this, identifying opportunities to simplify our operating model. The work is underway, and these priorities will continue to guide our focus in FY 2027.
Moving to Corporate Trust. Corporate Trust delivered another year of strong growth in FY 2026. Debt market services benefited from the Australian securitization market growing at a near record pace. Managed fund services grew through higher funds under administration and new client wins across property, infrastructure, and credit funds. Momentum continued in Singapore, where the business became the trustee for three new REIT listings on the Singapore Exchange. Growth in ETFs, LITs, and other investment structures continue to support demand for the administration, governance, and fiduciary services that we provide.
Digital markets grew assets under administration by 14%, supported by growth in our Perpetual Intelligence and fixed income portfolio management offerings. This reflects the increasing importance of specialized data, governance, and administration solutions in an evolving regulatory environment. Turning now to the next slide. While market conditions will vary over time, Corporate Trust remains an integral part of Australia's capital markets infrastructure. Its services support funding, lending, and investment activity across the financial system, underpinning a resilient business model built on long-standing client relationships and a long-duration asset base. We continue to invest in capabilities that strengthen our client offering and position us to capture growth opportunities. During the year, we acquired a majority interest in Interfi, which expands our loan servicing and digital capabilities to complement our core debt market services offering, particularly Perpetual Intelligence.
Interfi supports the full loan lifecycle for non-bank lenders with approximately AUD 55 billion in assets under administration. It broadens Perpetual's exposure to a growing segment of the lending market and creates opportunities to deliver more integrated client solutions. Turning to Wealth Management. As I mentioned earlier, the sale of Wealth Management remains on track for completion in the final quarter of 2026 calendar year. Throughout the year, the business stayed focused on delivering for clients. Revenue moderated this year, with market-related revenue benefiting from stronger equity markets, although growth was more modest than in prior years. This was offset by softer non-market revenue, particularly within the accounting and wealth operations. Underlying profit before tax was AUD 44 million, AUD 7.5 million lower than FY 2025, reflecting lower non-market revenue and continued investment in staff and technology to support the business.
Funds under advice increased 3%, and the business achieved a record high net promoter score, highlighting the continued commitment to client outcomes, service quality, and engagement. Achieving this result during a period of significant change reflects the strength of our client relationships and the discipline with which the team has remained focused on delivering for clients. I'll now hand over to Suzanne Evans to walk you through the financial results in detail.
Fantastic. Thanks, Bern. As Bern said, I will just provide a bit of additional detail around the FY 2026 results. If we just start on slide 16, which has a summary of the group's financial performance. Operating revenue for FY 2026 was broadly in line with FY 2025 at AUD 1,374.2 million, with contributions from all parts of our business. Operating expenses of AUD 970.3 million were broadly flat on FY 2025. Cost discipline and our simplification program benefits continued to enhance earnings, together with the completion of a number of key projects during the year. Underlying profit before tax increased 6% to AUD 295.8 million. This reflected continued growth in Corporate Trust, improved Asset Management earnings, and higher income in group investments, as well as lower operating costs.
Underlying profit after tax increased 6% to AUD 217 million, with an underlying effective tax rate of 26.6%. Significant items reduced by 51% and were predominantly non-cash in nature.
Key items recognized during the year included a non-cash impairment of AUD 63.5 million relating to TSW, which was announced last week, as well as tax credits associated with the proposed sale of the Wealth Management business. I will cover significant item movements in more detail shortly. Net profit after tax was AUD 88.9 million, compared to a net loss of AUD 58.2 million in FY 2025. Diluted earnings per share on UPAT increased 3% to AUD 1.86. The board declared a final dividend of AUD 0.63 per share unfranked, to be paid on the 2nd of October 2026. I will now move to Asset Management, slide 17. Asset Management underlying profit before tax rose 3% to AUD 207.5 million, with higher average AUM from improved equity markets and ongoing cost discipline from our simplification program. Management fee revenue was broadly stable.
Higher average AUM was offset in part by asset class mix impacts and lower performance fees. It is worth noting that performance fees remain a modest contributor at just 3% of total revenue in FY 2026. Over the past three years, only a small proportion of our strategies in AUM have carried a performance fee entitlement. Total operating expenses fell 4%, with cost savings flowing through and lower variable remuneration, consistent with the drop in management fee income. Moving now to Corporate Trust on slide 18. Corporate Trust delivered growth in underlying profit before tax of 9% to AUD 98.8 million, with all three businesses contributing to the top-line revenue growth. Debt market services revenue grew 10% on FY 2025, supported by growth in securitization, trust management, and custody volumes. Managed fund services benefited from growth in funds under administration and continued momentum in our Singapore operations.
Digital and markets was supported by growth in Perpetual Intelligence and fixed income portfolio management offerings, albeit at a more moderate pace than the first half of the year. Operating expenses increased to support business growth and capability investment, as well as including costs associated with the Interfi acquisition completed at the end of the financial year. Despite this investment, the cost-to-income ratio has remained stable at 55%. Moving now to group support services. The underlying loss before tax in group support services improved AUD 9.7 million to AUD 54.5 million. Revenue increased, reflecting higher seed fund income and favorable foreign exchange movements. Financing costs were lower following reduction in debt levels and benefits from the refinancing completed just over a year ago. Operating expenses rose on higher distributions on employee-owned Barrow Hanley units following its improved contribution, together with continued investment in technology, artificial intelligence, and productivity initiatives.
I'll move now to the UPAT to NPAT reconciliation on slide 20. During the year, we completed a review of our significant items policy to provide a clearer and simpler view of the underlying businesses. This resulted in a number of aged projects being closed out and, where appropriate, costs moving back above the line. As flagged at our interim results in February, Pendal Group costs were closed out during FY 2026. The remaining cash items were related to the proposed sale of the Wealth Management operations and our simplification program. Simplification program costs are expected to conclude by the end of FY 2027, with costs associated with the Wealth Management sale also expected to cease in a similar timeframe.
The remaining movements primarily relate to the non-cash amortization of acquired intangibles, the non-cash impairment of TSW goodwill, and the accrued incentive compensation liability associated with the employee-owned units in Barrow Hanley.
This is partially offset by unrealized gains on financial assets. It is important to remember that the TSW impairment was recognized as an adjusting item for FY 2025 in line with the accounting standard. However, the impact of the outflow will not be recognized until Q2 of FY 2027. The impairment has no impact on the group's liquidity or borrowing covenants, or on UPAT, the metric on which our dividend payout ratio is determined. After significant items, net profit after tax for the year was AUD 88.9 million. I'll move now to expenses on slide 21. Total FY 2026 expenses were broadly stable at AUD 1,078.5 million. Before external factors, controllable cost growth was 1% towards the bottom end of our guided range, reflecting measured investment in Corporate Trust, costs absorbed within our Wealth Management business, and higher Barrow Hanley distributions. Inflation-related pressures continued across the group.
However, our simplification program benefits provide a meaningful offset. Foreign exchange movements and lower interest expense reduced total reported expenses by a further 3%. This demonstrates the progress made on cost discipline, while still remaining targeted investment in growth and key technology and productivity capabilities. We will also revisit the simplification opportunities following the sale of Wealth, and looking ahead, we expect FY 2027 controllable cost growth to be between 1%-2%. Based on the assumptions set out on the slide, including the expected timing of the Wealth Management sale, it's expected to translate to a cost-to-income ratio of approximately 78% for the group. Moving now to cash flows on Slide 22. Free cash flow increased by AUD 93 million to AUD 228.5 million, reflecting lower transaction-related expenses and ongoing cost discipline.
Strong cash generation supported net debt repayments of AUD 100 million during the year, strengthening the balance sheet and improving financial flexibility. We completed the acquisition of 70% of Interfi at the end of the financial year, again funded from free cash flow. We also continued to actively manage the seed portfolio, recycling seed capital into new opportunities and supporting product development without increasing the overall size of the seed portfolio deployed. After dividends of AUD 126.5 million, the Interfi acquisition, debt repayments, C fund movements, and foreign exchange impacts, total cash at 30 June remained at a healthy AUD 331.8 million. I'll now hand back to Bern to take you through some of the key priorities for the year ahead.
Thanks, Suzanne. Our priorities over the next 12 months are clear. First, we remain focused on completing the sale of Wealth Management, and following completion, further deleverage the balance sheet to increase financial flexibility. Asset Management and Corporate Trust will remain our strategic priorities as we build a simpler business with a stronger balance sheet. In Corporate Trust, we will expand our capabilities and deepen client relationships through innovation, partnerships, and selective bolt-ons. In Asset Management, we will target product innovation and selective investment in new capabilities, and we will also invest in technology and productivity initiatives to support scalable growth while delivering on our cost reduction commitments and building a leaner, more efficient operating model. FY 2026 was a big year for Perpetual. We made good progress on our strategic priorities and remain confident in our direction as we build a simpler, stronger and more focused business.
Thank you for joining us today. I will now hand back to Michelle, our operator, for questions.
Thank you, Bern. If you have not yet joined the live audio queue, please do so now. I will introduce each caller by name and ask you to go ahead. You will then hear a beep indicating your microphone is live. Our first question comes from Nigel Pittaway from Citi. Nigel, please go ahead after the beep.
Good morning, Bern and Suzanne. Question first just on the ambition for J.O. Hambro. Obviously, the performance, even in the emerging markets on sort of a key three-year view, does look slightly negative. Apart from the U.K. Equity Income Fund, which obviously has got very strong performance, this looks like a pretty difficult turnaround. I accept you have got new leadership. But why should we view that as a realistic ambition for 2030?
Hey, Nigel. Nice to hear from you. I would say there is a couple of aspects to that. One, if you look at that emerging markets performance, it is actually quite volatile, so you could expect to see that in the next period presenting a different result relative to benchmarks. I would not just rely on the most recent performance. That being said, it is soft, so I will grant you that. I think there is an element here of really focusing, and Bill and team are very much focused on investment performance, but we are also focused on new channels and building, using that existing capability in those new channels. I mentioned in my remarks earlier about expanding our ICAV range in U.K. Europe. That is an example of where thinking about product and channel, different channels where we can leverage the capability that we already have.
I also mentioned active ETFs in the U.S., which I know we have mentioned in the past, and we have made really good progress on that. We have got in mind at least two ETFs that we are going to be launching in the short-to-term period out of the J.O. Hambro business into the U.S. market. Again, a different channel, a different marketplace for some of those products, and a different channel in particular, where you can see quite a bit of growth. It is an ambition. We thought, I know Suzanne and I think, felt strongly about actually putting an ambition out there so that the team have something clearly to aim for. I can tell you that they are all rallying behind that. There is a number of years yet for us to be able to achieve that.
I am not putting anything into that other than the team are very focused on delivery.
Okay, thank you for that. Maybe just a question on the costs as well. How significant do you think the cost opportunity will be once Wealth Management has gone? Is the AUD 45 million Group Support Services operating costs a number that could potentially come down? I think previously you have talked about cost to income being generated, the improvement being more generated by revenue than costs. Is that still the case?
Okay. Thanks, Nigel. I will have a crack at that one. I think you are right. There is definitely more opportunity for us on the simplification side. As Bern called out, I think a big catalyst for that will be the successful divestment of the Wealth Management business, and then giving us an opportunity to revisit both those group support costs, and are we still sized the right way to be able to support the ongoing businesses, so the Asset Management and Corporate Trust. So I definitely think there is more that we can do there. Probably a little bit early for us to size that, but I think we are starting to take a good look at that now as we get closer to completion of the wealth sale.
On the second part around the cost to income part, absolutely, we want to make sure we maintain momentum in top-line revenue. But we are acutely aware that we have at least one part of our business in Asset Management that is much more exposed to market movements. So I think the area that I have sort of turned my mind to in the near term is very much on the cost side, but we have not lost sight of the importance of investing to make sure that we are still driving top-line revenue growth.
Okay, thank you for that. Then maybe just finally, sorry, it is a small point on the AUM conversion rate, but seems as though that is now being stated at AUD 0.67, whereas I think spot at the time was AUD 0.70, and in the quarterly, you mentioned AUD 0.69. So can we just confirm that that is actually done at AUD 0.67?
Nigel, can I come back to you? I know we have got a call scheduled this afternoon, and we can certainly-
Yeah, sorry. I know it's a bit.
I might need another coffee before that one.
Take that on notice.
Yeah, all right. I know it's a detailed one, but I suspect I'm not the.
Yeah.
Only one with the question. No, all right. That is fine.
Fantastic. No, thank you.
The next question is from Elizabeth Miliatis from Macquarie. Elizabeth, please go ahead.
Good morning, and thank you for taking my questions. First one is just on just the cost-out program. Obviously, you have got it to the top end of that. But I think then also on slide 7, it seems like you have made a comment there, scope for further simplification, and there is a little box with a dotted line. Should we read into how big that box is? Or is it just sort of indicative of more to come?
Hi, Elizabeth. I am Suzanne. That is probably me being a little creative, I think, with some of the charts and graphs. I did not think too much to the scale. What I would say is perhaps do not read too much into the sizing. I do, as I have just said, I do think there is an opportunity for us to be able to do more. We have made really good traction in the program, and ahead of schedule. Again, I would reiterate with the Wealth Management divestment now quite close. Remember when we set this program up originally, we were not anticipating the sale of the Wealth Management business. It is giving us a chance perhaps to go back and test some of our early assumptions.
As I said, probably a little early to put a number to it, but I would definitely say we are confident we can do more to increase that target.
Okay, got it. Thank you. Are you also able to sort of give us a bit of a run-through of the various bids, where appropriate, that you have received and also where is all the different parties at in terms of access to accounts or whatnot? Just a bit of a run-through, because there has been a lot of press, and also statements coming out from you guys as well.
Surely. Let me just sort of reiterate the point I made, I think, at the beginning, and that is that at this point in time, Perpetual has one bid from one party, which being EQT. Subsequent to the announcement that we made on the 29th of July, we have entered into a non-disclosure agreement with EQT or Windflower Pte Limited, their entity. We have given them access to limited non-public information to determine whether that can improve their bid. Yes, there has been speculation in the press, which I obviously cannot comment on, but all I can basically underline is that we are dealing with one party at the moment, and it is also important to note it is on a non-exclusive basis.
Okay. Thank you. That is helpful.
Thanks.
Thank you. There are no further questions. I will now hand back to Bernard Reilly.
Thank you very much. I know for those of you on the call who have not asked questions, that there is a number of analyst meetings today and in the next few days, so I am sure you will have the opportunity to address those questions individually with the team. Thank you for the time today, for listening to our FY 2026 results and to your question and answer, and we look forward to having those meetings going forward in the next few days. Thank you very much.
That concludes today's call. Thank you for joining us. You may now log out.