There’s a simple equation about the performance and share price movement for fund manager and trustee, Perpetual Ltd.
Market up, revenue up, profits up, share price up; share market down, and the reverse happens to revenues and earnings and the share price.
That’s what happened to the company in the year to June; now the market reckons there’s a reasonable chance of the experience of the past couple of years being reversed and a rebound will happen.
Certainly the share price has risen in recent months as the market has recovered its poise and risen strongly since March.
Yesterday that rebound continued in the PPT share rice, up 4%, or $1.40 to $36.70.
The 71% slump in 2009 earnings is in the past.
The company said 2009’s profit came out at $37.7 million compared with $128.8 million in the 2008 year.
Underlying profit fell 51% to $65.7 million.
Perpetual had expected to post an underlying net profit of between $60 million and $70 million, subject to movements in the stock market. The market consensus was $68 million.
Perpetual’s Chairman, Mr Bob Savage, said in the statement that the declining markets had created the worst year on record for the attractiveness of equities.
"This deeply impacted investor sentiment, leading to investment outflows across the industry in 2009.
“The Group’s revenue fell 24 per cent to $375.1 million. Perpetual’s revenues are highly correlated to the market: approximately 70 per cent of the decline in our revenue was attributed almost exclusively to the lower equity markets and the virtual closure of the debt markets.”
“In the face of those challenges, we are very pleased with Perpetual’s continuing investment out performance in key funds, which helped maintain net inflow of funds from our institutional clients even though overall funds flow was negative for the year.”
“Management was also successful at mitigating the impact of revenue falls by restructuring operations, which delivered material fixed cost savings while maintaining and enhancing critical customer facing services.”
Mr Savage said while Perpetual Investments and Perpetual Private Wealth had experienced declines in profitability in line with the market, Perpetual Corporate Trust’s profit before tax had risen 22 per cent.
“The traditional driver of profit in our corporate trustee business is the securitisation market, particularly the higher margin, non-bank segment. Despite the virtual cessation of this market, the business delivered improved profit for the year through cost improvements and by securing new banking clients.”
Mr Savage said the decline in Group earnings had a corresponding impact on dividends.
“Directors have declared a fully-franked final dividend of 60 cents per share to be paid on 30 September 2009 (record date 2 September 2009), bringing a total ordinary dividend paid to shareholders of 100 cents per share for the year ended 30 June 2009,” Mr Savage said.
"The dividend payment represents 108 per cent of net profit after tax for the second half of the 2009 financial year as Perpetual continues its transition to its revised dividend policy of paying out between 80-100 per cent of NPAT.
Perpetual said funds under management as of June 30 were $26.2 billion, down 14% from the year before. But at July 30, that figure had jumped $1 billion to 427.2 billion because of the market rally resumed mid-month.
Skilled Group posted a 28% fall in annual net profit, says it believes the worst of the current recession is past, but to make sure of its financial position, it’s after $80 million from a capital raising to cut debt.
Skilled also announced that it had extended its bank debt facilities for three years.
Trading in the shares was halted yesterday at $2.04, to allow the capital raising to be carried out.
Skilled’s year could be summarised in a three words, recession, jobs, unemployment.
The recession and mining slump cut the demand for jobs, which meant rising unemployment and therefore Skilled’s core business in providing contract labour, took a big hit
Skilled Group said it earned $28.25 million in 2009, down 28.2% per cent on the 2008 result.
"Our business has clearly stabilised in the last few months with revenues across virtually all industries and brands no longer falling," Skilled’s CEO Greg Hargrave said.
The year, he said, saw a very strong first half performance with record revenues, profits and strong EBITDA margin and then a "very challenging second half required strong cost management – more than $44 million was removed in costs."
In fact it was a year of very, contrasting halves: the first half saw records broken, with earnings up 48% and revenue up 16%, the second half saw all those gains lost as the company dropped revenue and earnings.
Skilled told the ASX that revenue for the year was $1.943 billion, up by less than 1%.
At the interim report time, the company said revenue was up 16% to $1.067 billion.
The company declared a final dividend of 1.5 cents, fully franked, down from 14 cents in 2008-09.
That made total dividends for 2009 10.5 cents, down from the 23 cents a share paid to shareholders in the 2008 year.
Mr Hargrave said the company was now confident that it was through the worst.
