Perpetual is in acquisition talks to expand its private wealth business, which posted a 24 per cent decline in annual profit before tax on the back of expenses related to the company’s investment in the division.
Chief executive Chris Ryan said Perpetual is investing heavily in its private wealth business, spurring a 22 per cent lift in full-year expenses to $94.4 million, which, in turn lowered the division’s profit before tax to $13.3 million.
“A substantial amount of investment has already gone into the business,” Ryan told a briefing.
He said private wealth group executive Geoff Lloyd, appointed about a year ago from BT Financial Group, and his team have drawn up a growth strategy.
“Geoff and team are always on the lookout for acquisition opportunities, and that’s a very, very active and well-focused process based on very strict criteria,” Ryan said.
He said the business has been overhauled and, as a result, was focused on providing advice to three key segments: professionals, private business owners and the not-for-profit segment.
Perpetual bought Grosvenor Financial Services in October 2009 for just under $20 million. About two months later, it bought Melbourne-based financial services firm Fordham Group for $35 million.
Asked whether further acquisitions would be of a similar size, Ryan said, “The key thing is around our strategy of professionals, business owners and not for profits, so any businesses we are looking at tend to be focused in that area.
“They tend not to be, on average, the larger ones but there are some larger ones in that segment. We’re not going to rule anything out if it comes up under the right terms and conditions, at the right price, but we don’t have anything large in the headlights at the moment.”
Ryan suggested the hiring process that followed Lloyd’s appointment last year was finished for now. Asked whether people-related expenses were completed, Ryan said: “I think so, yes. Geoff has a very strong team and they’re working very hard towards a specific set of objectives.”
Ryan said the expense line included $1.9 million for a new platform technology project in the second half of 2011. He said Perpetual would unveil details later this year.
The private wealth division’s annual revenue climbed 15 per cent to $116 million, aided by its purchases of Grosvenor and Fordham.
Average funds under advice climbed 7 per cent to $8.7 billion.
Perpetual’s annual results briefing was the first for Ryan, who took the helm in February following the departure of David Deverall.
Underlying profit after tax was steady at $73 million, but net profit fell 31 per cent to $62 million owing in part to a $15 million impairment charge which Perpetual booked following the sale of its smartsuper business at carrying value.
