Annual Report 2023
Enduring Prosperity
Perpetual Group Annual Report 2023
Perpetual Group1 has a strong
heritage in Australia, operating
since 1886 where it began as a
trustee company for individuals.
Our Group
Perpetual Limited (Perpetual) is
an ASX‑listed company (ASX: PPT)
headquartered in Sydney, Australia,
providing asset management, wealth
management and trustee services
to local and international clients.
Our purpose
To create
enduring
prosperity
1. Perpetual Limited and its subsidiaries.
Our values
Excellence,
Integrity,
Partnership
1
2
2
6
8
11
12
18
22
22
30
71
71
105
106
110
120
128
131
140
159
164
174
About Perpetual Group
Group at a glance
Chairman’s Report
CEO’s Report
Strategy update
Business division updates
Sustainability at Perpetual Group
Directors’ Report
Directors’ Report
Remuneration Report
Operating and Financial Review
Operating and Financial Review
Financial Report
Primary statements
Group performance
Operating assets and liabilities
Capital management and financing
Risk management
Other disclosures
Basis of preparation
Directors’ declaration
Securities exchange and investor information
Acknowledgement of Country
Reporting suite
Perpetual acknowledges Aboriginal and Torres Strait Islander
peoples of this nation. We acknowledge the Traditional
Custodians of the lands on which our company is located
and where we conduct our business. We pay our respects to
ancestors, Elders, past and present. Perpetual is committed
to honouring Aboriginal and Torres Strait Islander peoples’
unique cultural and spiritual relationships to the land, waters
and seas and their rich contribution to society.
Perpetual Group presents its 2023 Annual Reporting suite for
the year ended 30 June 2023.
Visit perpetual.com.au/shareholders/reports‑and‑presentations
for more.
Annual
Report
Annual Report 2023
Enduring Prosperity
Corporate
Governance
Statement
Sustainability
Report
Sustainability Report 2023
Enduring Prosperity
Page 1 of 25 | Public / Internal use only / Confidential / Highly confidential / Strictly confidential Corporate Governance Statement For the Year Ended 30 June 2023 Perpetual Limited Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 2
Perpetual Group at a glance
Today, Perpetual Group consists of 11 brands across three distinct businesses:
Asset Management, Wealth Management and Corporate Trust. Through
these businesses, we aim to protect and grow our clients’ wealth, knowing
that by doing so we can make a difference in their lives. Our clients include
Australian and international institutions, not-for-profit organisations, private
businesses, financial advisers, individuals and families.
Asset Management
A global multi‑boutique asset
management business offering
an extensive range of specialist
investment capabilities through
seven boutiques and brands in
key regions globally.
Read more about
Asset Management on page 12
Office locations
We have a growing global footprint, underpinned by our recent
acquisition of asset management business, Pendal Group, that spans
Australia, Asia, Europe, the United Kingdom and United States.
Americas
Boston
Chicago
Dallas
New York
Philadelphia
Richmond
San Francisco
UK & Europe
Amsterdam
Dublin
Edinburgh
London
Munich
Paris
Asia
Hong Kong
Singapore
Perpetual Trillium Barrow Hanley Pendal J O Hambro Regnan TSW
Perpetual Group Annual Report 2023 3
Wealth Management1
Corporate Trust2
The Wealth Management business
consists of Perpetual Private and
three other distinct specialist
businesses (Fordham, Priority Life
and Jacaranda), offering a unique mix
of wealth management, specialised
financial advice and trustee services.
Our Corporate Trust business is a
leading provider of fiduciary and
digital solutions to the banking and
financial services industry in Australia
and Singapore.
Read more about
Wealth Management on page 14
Read more about
Corporate Trust on page 16
Australia
Sydney (Head Office)
Adelaide
Brisbane
Canberra
Melbourne
Perth
Perpetual Trillium Barrow Hanley Pendal J O Hambro Regnan TSW
1. Formerly Perpetual Private.
2. Formerly Perpetual Corporate Trust.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 4
Financial and operational highlights
Building strong foundations
for future growth
The financial result for the year marks our first as a
newly combined Group, with five and a half months
of Pendal Group earnings contributing.
Five-year profile
Total revenue 1 ($m)
Operating revenue 2 ($m)
Underlying EBITDA 3,4,11 ($m)
Underlying profit before tax (UPBT) 4,5,11 ($m)
Underlying profit after tax (UPAT) 4,5,11 ($m)
Net profit after tax (NPAT) 6 ($m)
Earnings per share (UPAT) 7,11 (cents)
Earnings per share (NPAT) 7 (cents)
Return on average shareholders’ equity – UPAT 8,11 (%)
Return on average shareholders’ equity – NPAT 9 (%)
Dividend per share – ordinary 10 (cents)
June
2019
June
2020
June
2021
June
2022
June
2023
512.1
514.1
196.0
162.2
115.9
115.9
246
246
17.5
17.5
250
487.6
650.2
748.2
1,028.0
489.2
640.6
767.7
1,013.8
178.9
136.1
95.1
82.0
200
173
14.4
12.5
155
214.0
169.3
122.8
72.9
218
130
15.7
9.3
180
248.5
201.2
148.2
101.2
258
177
16.2
11.0
209
310.0
219.2
163.2
59.0
197
71
9.9
3.6
155
Total equity at 30 June 11 ($m)
662.2
650.8
907.1
925.8
2,372.0
Assets under management – Asset Management 12,13 ($b)
Funds under advice – Wealth Management 12,14 ($b)
27.1
14.8
28.4
14.3
98.3
17.0
90.4
17.4
212.1
18.5
Funds under administration – Corporate Trust 12,15 ($b)
764.5
941.9
922.8
1,092.3
1,162.5
Capital expenditure ($m)
Market capitalisation ($m)
No. of shares on issue – weighted average 16 (m)
No. of shares on issue at 30 June (m)
Share price at 30 June ($)
Share price range for year ($ low)
($ high)
38.8
1,967
47.1
46.6
42.24
29.70
46.11
12.5
26.2
19.1
1,406
2,266
1,637
47.8
47.4
29.67
20.27
47.27
56.2
56.6
57.3
56.7
40.05
28.88
27.03
40.05
27.87
42.27
22.3
2,912
83.0
112.5
25.88
20.32
34.80
1.
2.
3.
Excludes income from structured investments.
Excludes income from structured investments, transaction and integration costs and unrealised gains/losses on financial assets.
EBITDA represents earnings before interest, taxation, depreciation, amortisation of intangible assets, equity remuneration
expense and significant items.
June 2020 figure re‑presented based on the revised definition of UPAT. Figures prior to June 2020 have not been re‑presented.
Excludes significant items.
Attributable to equity holders of Perpetual Limited.
Diluted earnings per share calculated using the weighted average number of ordinary shares and potential ordinary shares on issue.
Calculated using underlying profit after tax.
Calculated using net profit after tax.
4.
5.
6.
7.
8.
9.
10. Dividends declared with respect to the financial year.
11.
June 2021 and June 2020 figures have been restated for the change in accounting policy relating to Software‑as‑a‑Service (SaaS)
arrangements.
12. Represents 30 June closing balances.
13. Formerly Perpetual Asset Management Australia and Perpetual Asset Management International.
14. Formerly Perpetual Private.
15. Formerly Perpetual Corporate Trust.
16. Includes ordinary shares and potential ordinary shares. The weighted average number of ordinary shares for the June 2021 and
June 2020 period were adjusted retrospectively in accordance with AASB 133 Earnings per Share following the issues of new
shares at a discount to market value during the period.
Perpetual Group Annual Report 2023
5
Group financial highlights
$1,013.8m
$163.2m
$59.0m
Operating revenue 1
Underlying profit after tax
Statutory net profit after tax
32% on FY22
10% on FY22
42% on FY22
155cps
Dividends
26% on FY22
Asset Management
Wealth Management
Corporate Trust
Revenue
Revenue
Revenue
60%
22%
18%
Operating revenue
(excluding Group Services2)
Operating revenue
(excluding Group Services2)
Operating revenue
(excluding Group Services2)
$132.7m
Profit before tax
$47.0m
Profit before tax
$81.6m
Profit before tax
$132.7m
$102.8m
FY23
FY22
$47.0m
$44.3m
FY23
FY22
$81.6m
$72.6m
FY23
FY22
78%
of strategies outperformed
their benchmarks over
three years3
24%
increase in non‑market
revenue, supported by
strong performance in
Fordham and Priority Life
20%
revenue growth in
Perpetual Digital
$212.1b
in assets under management,
up from $90.4 billion in FY22
$1b
surpassed in funds under
advice for Native Title trusts
>$1.16t
Funds under administration
as at 30 June 2023
1. Excludes income from structured investments, transaction and integration costs and unrealised gains/losses on financial assets.
2. Group services provides technology, operations, vendor management, marketing, property, legal, risk, financial management and human resources support to the
business units.
3. Returns are presented gross of investment management fees. Investment performance of the strategies may differ once fees and costs are taken into account.
Past performance is not indicative of future performance. See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com, tswinvest.com and pendalgroup.com for
relevant performance. The product disclosure statements (PDS) or disclosure document of any of the capabilities or funds should be considered before deciding whether to
acquire or hold units in any such offering.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 6
Chairman’s Report
Dear Shareholders,
Over the past four years, Perpetual’s strategy has been to
strengthen its three core businesses with a focus on inorganic
growth and with a specific emphasis on achieving scale in its
asset management business.
Total dividends include the unusual 1H23 dividend period
where we declared two quarterly dividends with the purpose
of aligning the earnings and dividend periods of Perpetual
and Pendal shareholders.
The 2023 financial year was significant for our asset
management business following the successful completion of
the strategically important acquisition of Pendal Group Limited
(Pendal), an ASX‑listed asset management business with
operations in Australia, Europe, the UK and the US, bringing
total assets under management (AUM) to over A$210 billion1
for Perpetual Group.
While our asset management businesses were impacted
by difficult equity market conditions during the year, overall
investment performance has been strong and our combination
of businesses has provided important support, with solid
returns in both our wealth management and corporate trust
businesses. Non‑market revenue in our wealth management
business has delivered strong double‑digit growth during
the year and the continued investment in digital capabilities
in Corporate Trust as well as the acquisition and subsequent
growth in Laminar Capital, has delivered earnings diversification
for Corporate Trust.
Financial results and dividends
The Group reported Underlying Profit After Tax (UPAT) of
$163.2 million in the 2023 financial year, an uplift of 10% on the
prior year, noting that the year included five and a half months
of Pendal earnings. Statutory Net Profit After Tax (NPAT)
was $59.0 million, down 42% on the prior year mainly due to
transaction and integration costs associated with the Pendal
acquisition which are one‑off in nature.
A final dividend of $0.65 was declared which was 40% franked
reflecting the increase in global sources of earnings from our
business and reduction in Australian‑based earnings. Total
dividends for the year were $1.55 per share, representing
a payout ratio of 78% for the full year, within the Board’s
dividend policy to pay between 60% and 90% of UPAT in
dividends to shareholders.
The Board determined to continue with the dividend
reinvestment plan again this year, enabling shareholders
to reinvest their dividends without any transaction costs.
Pendal acquisition accelerates growth and
delivers scale benefits
The acquisition of Pendal has delivered a larger and more
diversified asset management business, with respected brands
and investment capabilities, that is now better positioned for
future growth with the benefits of scale and which will deliver
substantially more upside in value creation and increased
returns to shareholders in the medium to longer term.
In determining to pursue the Pendal acquisition, the Board
carefully assessed all of these benefits, as well as the relative
fundamental value of a combined group, including important
factors such as synergies (both expenses and revenues),
leverage and the benefits of inorganic growth compared to
organic growth of our asset management business.
At the time of finalising this letter, we are just over seven
months into the integration of Pendal and Perpetual and
while it is still early days, the integration has progressed well
and we expect to deliver greater expense synergies than
originally anticipated.2
As at 30 June 2023, annualised expense synergies to be delivered
were $29 million, on track for our targets of $40 million
achieved by January 2024, and an uplifted total of $80 million
in annualised synergies by January 2025.
The Board has established a new Board committee to oversee
and drive the achievement of synergies which I discuss further
on the following page.
1. As at 30 June 2023.
2. Perpetual’s synergy target was upgraded from $60 million to $80 million and announced to the ASX on the 27 April 2023.
Perpetual Group Annual Report 2023 7
In addition, following the retirement of Craig Ueland last
year, and with two other Board members due to retire during
2024 as part of our broader renewal process, we are actively
searching for replacement directors.
Separately, to improve effective governance, two new
committees have been established, effective from July this
year. First, to formalise the Board’s oversight of the integration
of Pendal into our business, including the delivery of synergies,
the Board has established an Integration Committee which
will be chaired by Fiona Trafford‑Walker and include Nancy Fox
and Christopher Jones.
Secondly, the Board has also strengthened its oversight
of Perpetual’s technology and cyber risk through the
establishment of a specific Technology and Cyber Committee,
chaired by Mona Aboelnaga Kanaan and including
Ian Hammond, Fiona Trafford‑Walker and Christopher Jones.
Sustainability
Importantly, we have made progress in the delivery of our
sustainability strategy, Perpetual’s Prosperity Plan, launched
in 2022, which includes commitments across four key pillars:
Governance, Planet, People and Communities. While the
acquisition of Pendal has had some short‑term impact, we have
made progress on a number of fronts and, following detailed
assessment, we remain committed to all our commitments
as a newly combined global Group. More information on our
commitments can be found on page 18 of this report as well
as in our FY23 Sustainability Report.
Conclusion
On behalf of the Board, I would like to acknowledge and thank
our people for their continued dedication and hard work in what
has been a transformational year for the Group. In particular,
I would like to thank the many teams who have worked through
an intense period of change and continue to contribute to
building a strong, successful business.
I would also like to extend the Board’s thanks to the Executive
Committee, led by CEO and Managing Director, Rob Adams,
for their leadership throughout the year.
Importantly, I would like to thank our shareholders for
your continued support and we look forward to meeting
shareholders, both those that are previous Pendal shareholders
as well as existing Perpetual shareholders, at our upcoming
AGM on 19 October 2023.
Tony D’Aloisio AM
Chairman
CEO and senior management
Given the importance of effective execution needed for a
transaction of this size, the Board carefully assessed the internal
capability to deliver benefits from the transaction and has set
milestones to be achieved by the end of year one and then
by end of year two of the acquisition. The Board considers
that Management has the track record in executing complex
transactions. In that regard, the Board reviewed the progress
and benefits that have so far been delivered from both the
Trillium Asset Management (Trillium) and Barrow Hanley
Global Investors (Barrow Hanley) acquisitions in 2020, as well
as a number of acquisitions within Wealth Management and
Corporate Trust.
Since acquiring Trillium, substantial value has been added to
the business via high quality distribution capability and product
structures which have led its AUM to grow from $5.7 billion
as announced on 1 July 2020, to $10 billion as at 30 June 2023.
In Barrow Hanley, while there is more work to do within the
US equities capabilities, flows across their global equities and
emerging markets strategies have grown materially, with net
inflows of $3.6 billion in FY23 compared to net outflows of
$0.2 billion1 in FY21. These results are particularly noteworthy
given the ongoing challenging market environment for asset
managers globally.
Management incentives aligned
to shareholders
The Board has implemented what it believes are appropriate
incentives for Management to deliver for shareholders the
expected benefits from the Pendal transaction and share in
the current and future upside. These incentives are detailed
in the remuneration report of this Annual Report. Importantly
they include long‑term incentives premised on absolute total
shareholder return (ATSR), and include a special grant based
on achieving ATSR above 10%.
Balance Sheet strength
The Board also had careful regard to the balance sheet capacity
of Perpetual as a Group. While there has been an increase in our
debt levels to fund the Pendal transaction, the Board’s view is
that the current level of debt of $734.4 million2 is manageable
and well supported by the diversity of Perpetual’s operations
as well as a paydown schedule. At the time of the acquisition
Management committed to reducing gross debt/pro‑forma
EBITDA from ~1.7x to ~1.2x over the three years following
completion (January 2026) and we remain on track to achieve
this commitment.
Board renewal and Board committees
As part of the acquisition, the Board is undergoing a Board
renewal process. The Board invited two Pendal directors to join,
Kathryn Matthews and Christopher Jones, who commenced in
January this year. Kathryn and Christopher are based in the UK
and USA respectively. Both bring extensive asset management
and financial services experience to the Board and we are
already seeing the benefit of their skills and experience.
Kathryn indicated to the Board that she would be unable
to join the Board on a long‑term basis, beyond our Annual
General Meeting (AGM) in October and we are therefore actively
recruiting her replacement in the UK. Christopher is seeking
election at the AGM in October.
1. Net outflows were from the date of acquisition completion in November 2020 to June 2021.
2. Borrowings, net of costs, as at 30 June 2023.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 8
CEO’s Report
Acquiring Pendal delivers a range of
benefits to shareholders:
High quality, strong and respected brands and
investment capabilities
A diversified asset management business across
key regions, investment products and clients
A significantly larger distribution team able to drive
sales of our broader set of investment capabilities
across all key regions and channels
A stronger position in sustainable investing, with
an expanded range of ESG, impact and sustainable
investment capabilities, and
Enhanced scale and ability to drive efficiencies
$163.2m
Underlying profit after tax
$163.2m
$148.2m
FY23
FY22
$59.0m
Statutory net profit after tax
$59.0m
$101.2m
FY23
FY22
1. Returns are presented gross of investment management fees. Investment
performance of the strategies may differ once fees and costs are taken
into account. Past performance is not indicative of future performance.
See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com,
tswinvest.com and pendalgroup.com for relevant performance. The product
disclosure statements (PDS) or disclosure document of any of the capabilities
or funds should be considered before deciding whether to acquire or hold units
in any such offering.
Dear Shareholders,
Our 2023 financial year was a transformational year for
the Group following the acquisition of Pendal which
was completed in January 2023, and I welcome our new
shareholders to the Group.
Bringing together our two highly regarded and respected
asset management businesses has created a global leader
in multi‑boutique asset management. We have a richness
of investment talent across our seven boutiques and brands
around the world, managing a diversified array of quality
investment capabilities with substantial capacity for future
growth over time.
Our larger, significantly more diverse asset management
business now provides us with a greater ability to manage the
business through investment cycles. We have a broader array
of investment capabilities across regions, investment styles and
asset sectors, which better positions us to deliver sustainable
growth and improved shareholder returns over time.
We are well supported by our diversified portfolio of business,
with Corporate Trust and Wealth Management continuing to
provide strength and growth through this period of change.
Financial and operational results
The financial result for the year marks our first as a newly
combined Group, with five and a half months of Pendal
earnings contributing. Underlying NPAT for the year was
$163.2 million, an increase of 10% on FY22 and statutory NPAT
was $59 million, down 42%, mainly due to transaction and
integration costs associated with the Pendal transaction.
In our asset management businesses, our combined AUM was
$212.1 billion, up 135% compared to FY22 and including Pendal.
The macro environment was challenging in FY23 and is driving
general caution towards equities, particularly in the US. This
environment has impacted net flows and when combined with
outflows linked to underperformance in certain strategies,
led to a disappointing year, with $8.1 billion in net outflows
over the period.
Importantly, relative investment performance within our
asset management business remains strong, with 78% of our
strategies outperforming their benchmarks over the three years
to 30 June 2023.1
Perpetual Group Annual Report 2023
9
Bringing together our two highly regarded
and respected asset management businesses
has created a global leader in multi-boutique
asset management.
Our strategy detailed on page 11, outlines our approach to
building a streamlined and stronger business that best supports
our diversified business model, while freeing up our ability to
invest for sustainable growth and to be better positioned for the
current and expected macroeconomic environment.
Executive Committee changes to support a
simplified global asset management structure
To support our refreshed strategy, we recently announced the
creation of a global asset management leadership team to drive
implementation of our asset management strategy, along with
changes to the Group Executive Committee.
The new structure enables us to have an improved focus
on our global asset management business and successful
execution of strategy, while creating a simplified Perpetual
Group leadership structure focused on driving future growth
across all our businesses.
Commencing 24 August 2023, I have assumed the dual role of
Perpetual Group CEO and Chief Executive, Asset Management.
Progress on Perpetual’s Prosperity Plan
From our origins as a trustee company, Perpetual Group has
supported our clients and communities over generations. Our
commitment to create enduring prosperity for our clients, our
people and the communities we support is longstanding and
embedded in our approach to sustainability.
Since the launch of our sustainability strategy, Perpetual’s
Prosperity Plan, in September 2022, we have made
considerable progress through the year in progressing
many of our commitments.
The acquisition of Pendal has also meant that we can
now offer a broader suite of sustainable and responsible
investment capabilities to our clients through Regnan’s
sustainability‑themed and impact‑focused funds.
Furthermore, our greater scale and depth of responsible
investment expertise will enable more opportunities to share
best practice, systems and expertise across the Group.
In particular, we have seen very strong investment performance
across Perpetual Asset Management in Australia, and Barrow
Hanley and TSW in the US, as well as certain J O Hambro
capabilities managed in the UK. This strong performance
profile, combined with our newly expanded global distribution
team, will greatly assist in driving an improvement in net flows
into the future.
Our wealth management business (formerly Perpetual Private),
comprising both market‑related and non‑market‑related
components, performed well. Market‑related revenue was
impacted by lower average investment markets and some
product repricing earlier in the year, however we continued
to see positive inflows, mainly from our Native Title and
philanthropy client base. Non‑market revenue was strong,
increasing 24% in the year, following record contributions
from Fordham and Priority Life.
Corporate Trust is a high‑quality business with an unrivalled
position in debt markets and securitisation and managed funds
services sector. This position continues to drive consistent
growth, with funds under administration (FUA) growing 6%,
ending the year at $1.16 trillion. Perpetual Digital, Corporate
Trust’s innovation business, attracted new clients throughout
the year and enters FY24 with a solid pipeline of new
business opportunities.
Progress on the Pendal integration
We are focused on integrating Pendal into our business and
while we are only seven months in, we have made solid progress
in delivering the synergy benefits of the acquisition, which are
tracking to plan.
We have now completed key organisational changes across
our business including our global distribution leadership team
restructure, which includes a new head of distribution for the
important Americas region.
A refreshed strategy to create a simpler,
stronger business primed for growth
The acquisition of Pendal completes our 2019 strategy which
was centred on diversifying our earnings across our businesses
and establishing a global presence in our asset management
business, through the right inorganic opportunities. As a result,
we have launched a refreshed strategy focused on unlocking
growth across our portfolio of distinctive businesses, while
simplifying our business so that we are more efficient and better
positioned to innovate, invest and grow.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 10
CEO’s Report continued
It has been a significant year for the Group.
We’ve made good progress but we know we still
have much to do. Our focus for FY24 is on delivering
synergies, improving net flows, unlocking the
benefits from simplifying and delivering returns
on the investments we have made in the past few
years across our quality portfolio of businesses.
The Group’s most valuable asset is the expertise and support
of our people and investing in their wellbeing is critical to our
growth as a business. We have once again been recognised
by the Workplace Gender Equality Agency (WGEA) as an
Employer of Choice for Gender Equality, a position we have
held since 2018. Perpetual will continue to do more to strive for
gender equality and increase the representation of women in
our sector. In FY23, 34% of our global senior leader cohort were
women, in line with FY22.
We are also pleased to report that this year we received a Net
Promoter Score (NPS)1,2 of +57, which was up from +49 in FY22.
This is our highest ever NPS outcome and demonstrates the
ongoing focus we place on supporting our clients.
Unfortunately, however, in June, after we conducted our
NPS study, we experienced an extended outage as a result
of an IT security incident at a third‑party provider to some of
Perpetual’s funds. While there was no impact to any Perpetual
client investments or superannuation accounts, we apologise
for the inconvenience this has caused for our clients.
Following notification of the incident our investigations
identified that some personal information was compromised.
Notwithstanding that there was no notifiable data breach,
given the ongoing and increasing threat of cyber security
events, we took immediate steps to inform all of our clients.
Conclusion and outlook
It has been a significant year for the Group and in particular,
bringing the Perpetual and Pendal businesses together. We
have made good progress, but we know we still have much
to do. Our focus for FY24 is on delivering synergies from the
transaction, improving our net flows in our asset management
business, unlocking the benefits from simplifying our
businesses and delivering returns on the investments we
have made in the past few years across our quality portfolio
of businesses.
I would like to acknowledge and thank the Board for their
guidance and advice as we execute our strategy, and I would
also like to thank my fellow Executive Committee members
and all of our people across the Group for their continued
dedication and professionalism as we worked through a period
of significant change.
Finally, I would like to thank our shareholders for your continued
support of Perpetual Group. I am confident that through solid
execution of our strategy we will unlock the financial and
strategic benefits of this transformational acquisition.
Rob Adams
CEO and Managing Director
1. The Net Promoter Score is a measure of advocacy, or the extent to which our clients are willing to recommend us to friends, colleagues and peers.
2. The Pendal Australia, J O Hambro and TSW businesses were not included in our overall Perpetual NPS.
Perpetual Group Annual Report 2023 11
Our refreshed strategy
Simplifying and driving
sustainable growth
Our purpose
Our values
To create enduring prosperity
Excellence, Integrity, Partnership
Clients
People
Shareholders
Community
Enduring relationships
and trusted brands
Inclusive, empowered
and accountable culture
enabling high performance
Delivering sustainable
quality growth
Supporting strong and
sustainable communities
Unique combination of businesses
Asset Management
Wealth Management
Corporate Trust
Differentiated and active
investment capabilities across
multiple boutiques and asset
classes servicing clients in all key
regions globally
Specialised financial advice
and fiduciary services focused
on the comprehensive needs
of families, businesses and
communities
Leading corporate trustee
and digital solutions provider
to the banking and financial
services industry
Strategic imperatives
Client first
Simplify
Sustainable growth
– Provide trusted advice
and stewardship
– Deliver a high‑quality
client experience
– Deliver strong investment
performance
– Be an employer of choice to
attract and retain the best talent
– Set strong industry standards
in all that we do
Success measures
– Complete a successful integration
and synergy realisation from the
Pendal acquisition
– Unlock benefits of our global
multi‑boutique model and
distribution network
– Seek areas of simplification across
– Leverage strengths in
our portfolio of businesses
– Focus on areas where the Group
adds value
– Maintain focus on building a
simple, efficient, secure and
scalable platform
– Drive proactive risk management
and strong governance standards
sustainable investing to
build competitive advantage
– Targeted investment in
growth engines
– Continue to build‑out
innovative digital solutions
EPS growth
Total shareholder
return
Client NPS
Employee
engagement
Sustainability
commitments
(Our Prosperity Plan)
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 12
Business division updates
Asset
Management
Investment performance across the
business remains strong with 78%
of strategies outperforming their
benchmarks over the important
three-year time horizon.1 In particular,
we have seen very strong investment
performance in Perpetual Asset
Management, in Australia, and
Barrow Hanley and TSW in the US.
Following a seven‑month period of integration of Pendal
and in conjunction with the launch of a refreshed strategy
for the Perpetual Group, on 24 August 2023 we announced
the establishment of a global asset management division,
bringing together both our Australian and international
operations into one business division. As part of this we
announced a number of executive changes which will
enable us to have a much greater focus on our global asset
management business, unlocking synergies from the Pendal
acquisition while creating a simplified leadership structure
to be better positioned to drive future growth.
Financial performance
In FY23, the asset management business reported
Underlying Profit Before Tax (UPBT) of $132.7 million which
was $29.9 million or 29% higher than FY22, mainly due to
the acquisition of Pendal which contributed five and a half
months of its earnings to total divisional earnings. FY23
revenue was $600.4 million, 55% higher than FY22.
FY23 expenses of $467.8 million increased by $182.9 million
or 64% higher than FY22. This increase was largely due to
the incorporation of Pendal’s expenses, combined with
investment in Perpetual’s pre‑existing boutiques across
global distribution capability, key functions to support the
growth and the impact of foreign exchange rate movements.
Asset management AUM as at 30 June 2023 was
$212.1 billion, an increase of A$121.7 billion on the prior year
and includes the newly acquired Pendal Group. Investment
outperformance, market movements and positive foreign
exchange movements helped to offset the $8.1 billion net
outflows reported for FY23.
1. Returns are presented gross of investment management fees. Investment
performance of the strategies may differ once fees and costs are taken
into account. Past performance is not indicative of future performance.
See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com,
tswinvest.com and pendalgroup.com for relevant performance. The product
disclosure statements (PDS) or disclosure document of any of the capabilities
or funds should be considered before deciding whether to acquire or hold units
in any such offering.
Perpetual Group Annual Report 2023 13
$212.1b
Assets under management
$600.4m
Total revenue
$212.1b
FY23
$90.4b
FY22
$600.4m
$387.8m
FY23
FY22
Business performance
Solid progress was made during FY23 in building our distribution
capabilities as well as new product development. In Europe,
we launched two new UCITS sub‑funds, the Trillium ESG Global
Equity Fund and the Barrow Hanley US ESG Value Opportunities
fund, increasing access to European and Asian investors in
Barrow Hanley and Trillium investment capabilities.
We also supported Barrow Hanley in its plan to launch
a Collateralised Loan Obligation (CLO) capability, taking
advantage of the existing expertise within their fixed income
team. While this launch took slightly longer than we had
originally anticipated, we were pleased to report the first in
a series of CLOs launched in the third quarter of the year.
Perpetual Asset Management launched the Barrow Hanley
Emerging Markets Fund in Australia, building on the global
equities funds and growing interest in the Barrow Hanley Global
Equities capability in Australia.
These investments into new products and channels have
helped support Barrow Hanley in delivering new inflows into
their strategies. Barrow Hanley’s global and emerging market
strategies performed strongly through the year, delivering
$3.6 billion in net inflows to the Group, while Trillium delivered in
excess of $1 billion in net flows for the year. US equities remained
challenging through the year, with the asset class suffering
from investor allocation away from US equities, resulting in net
outflows in the category.
In Australia, Vince Pezzullo, was appointed as Head of Equities
for Perpetual Asset Management, continuing a long tradition of
developing and promoting top talent from within the Australian
equities team. The business also received a number of awards
through the including Fund Manager of the Year in the Lonsec
2022 Fund Awards2 and Fund Manager of the Year for the second
consecutive year at the Zenith Fund Awards 2022.3
In the second half of FY23, the acquisition of Pendal was
successfully completed and we are already seeing early benefits
with a significantly larger distribution team across key markets
and covering both institutional and retail/intermediary channels.
Since the acquisition we have focused on successful integration
across the asset management business and retaining key clients
and personnel. While net outflows since acquisition have been
disappointing and concentrated in a small number of strategies,
the quality and diversity of investment teams, strong investment
performance, combined with significant capacity, provides us
with the confidence that we can improve the overall net flow
profile of all our boutiques over time.
Investment performance across the Group remains strong with
78%1 of the Group’s strategies outperforming their benchmarks
over the important three‑year time horizon. In particular, we have
seen very strong investment performance in Perpetual Asset
Management, in Australia, and Barrow Hanley and TSW in the US.
Fund Manager of the Year
Lonsec 2022 Fund Awards2
Fund Manager of the Year
Zenith Fund Awards 20223
As one global division, our multi-boutique business
now comprises seven boutiques and brands with
diversified investment capabilities across equities,
cash and fixed interest, multi-asset and sustainable
investing and with a strong presence in key markets.
Barrow Hanley – US‑based diversified investment
management firm offering value‑focused investment
strategies spanning global equities and fixed income
J O Hambro Capital – Equities specialist asset manager
with investment capabilities across US, UK, European,
Asian, emerging markets and global equities, as well as
multi‑asset capabilities
Pendal – Highly respected investment manager with
leading Australian equities, global equities, cash, fixed
income and sustainable investing capabilities
Perpetual Asset Management – A trusted, dynamic,
active manager, offering an extensive range of specialist
investment capabilities designed to meet the evolving
needs of our clients across the globe
Regnan – Responsible investment brand which
provides advice and insights on important ESG issues,
and also manages thematic and impact‑driven global
investment strategies
Thompson, Siegal and Walmsley (TSW) – US‑based
value‑oriented investment firm, with a 50‑year history
of delivering to clients across US equities, international
equities, fixed income and multi‑asset strategies
Trillium Asset Management – US‑headquartered Trillium
has been at the forefront of ESG investing for over 40 years.
One of the first investment firms to align values with
investment objectives
1. Returns are presented gross of investment management fees. Investment
performance of the strategies may differ once fees and costs are taken
into account. Past performance is not indicative of future performance.
See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com,
tswinvest.com and pendalgroup.com for relevant performance. The
product disclosure statements (PDS) or disclosure document of any of the
capabilities or funds should be considered before deciding whether to acquire
or hold units in any such offering.
2. For important information regarding Lonsec ratings and awards visit:
lonsec.com.au/logo-disclosure.
3. The Zenith Fund Awards were issued on 14 October 2022 by Zenith Investment
Partners (ABN 27 130 132 672, AFSL 226872) and are determined using proprietary
methodologies. The Fund Awards are solely statements of opinion and do not
represent recommendations to purchase, hold or sell any securities or make
any other investment decisions. To the extent that the Fund Awards constitutes
advice, it is General Advice for Wholesale clients only without taking into
consideration the objectives, financial situation or needs of any specific person.
Investors should seek their own independent financial advice before making
any investment decision and should consider the appropriateness of any
advice. Investors should obtain a copy of and consider any relevant PDS or offer
document before making any investment decisions. Past performance is not an
indication of future performance. Fund Awards are current for 12 months from the
date awarded and are subject to change at any time. Fund Awards for previous
years are referenced for historical purposes only.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 14
Business division updates
Wealth
Management
For the 10th consecutive financial year
our wealth management business
recorded positive net flows, a significant
achievement that highlights the trust
and confidence clients place in our
business to protect and grow their
wealth, particularly during a period
of ongoing market volatility.
Financial performance
Wealth Management (formerly known as Perpetual Private)
reported UPBT of $47.0 million, $2.7 million or 6% higher
than FY22.
The increase on FY22 was mainly driven by strong performance
in Fordham, insurance revenue growth from Priority Life and
a higher interest rate environment, partly offset by lower
equity markets and higher expenses driven by continued
investment in supporting future business growth.
Wealth Management generated revenue of $217.4 million,
3% higher than FY22. Market‑related revenue was
$145.1 million, 5% lower than FY22. Importantly, non‑market
related revenue was $72.3 million, $14.0 million or 24% higher
than FY22.
Total expenses were $170.4 million, $3.4 million or 2% higher
than FY22, driven largely by continued investment in staff
and technology to support future business growth.
Funds under advice (FUA) at the end of FY23 were
$18.5 billion, $1.1 billion or 6% higher than FY22, primarily
due to positive net flows supported by organic growth in
the Native Title and not‑for‑profit segments, investment
performance and some improvement in equity markets.
Revenue growth of 3% was supported by stronger
non-market revenue in FY23
FY19
FY20
FY21
FY22
FY23
120
122
127
66
61
57
153
145
58
72
Market related revenue
Non-market related revenue
Perpetual Group Annual Report 2023
15
$18.5b
Funds under advice
$217.4m
Total revenue
$18.5b
$17.4b
FY23
FY22
$217.4m
$211.2m
FY23
FY22
Positive net flows
for 10th consecutive financial year
NPS scores
Our net promoter score
increased +4 on FY22
Case study
Deepening client relationships through a
holistic approach to wealth management
In November 2019, Perpetual acquired Priority Life, one
of Australia’s leading risk advisory firms who have been
protecting medical practitioners, professionals and business
owners across Australian since 1992. In 2019, Priority Life
served 900 clients in one Australian state – today, that has
grown to more than 1,500 clients across a national platform,
supported by the trusted Perpetual brand.
Since the acquisition, Priority Life has strengthened the
wealth management proposition to high‑net‑worth clients
primarily in the medical segment and particularly in the
provision of insurance services.
Priority Life’s insurance expertise combined with a deep
understanding of the specific needs of clients and complex
insurance issues are an incredibly important element of our
wealth management offering.
Bringing together Perpetual’s existing insurance services into
Priority Life’s platform has enabled us to grow our medical
segment premiums in force from $45 million at 30 June 2022
to approximately $50 million at 30 June 2023.
Business commentary
For the 10th consecutive financial year our wealth
management business recorded positive net flows, a
significant achievement that highlights the trust and
confidence clients place in our business to protect and
grow their wealth, particularly during a period of ongoing
market volatility.
Our Native Title business, which manages money and
administers trusts for clients on behalf of 50 Aboriginal and
Torres Strait Islander communities across Australia, passed
$1 billion in FUA in FY23, including around $250 million in
new flows.
More broadly in our philanthropy business, more than 1,400
grant applications were reviewed by our team and our clients
committed more than $38 million to 362 programs through
our IMPACT philanthropy program. Total distributions to
charities saw more than $129 million donated on behalf of our
clients. As one of the largest managers of philanthropic funds
in Australia, we are proud to play such a significant role in the
funding of the non‑profit sector.
Jacaranda Financial Planning completed its first full
financial year as part of Wealth Management, hosting
28 seminars across the east coast of Australia.
Pleasingly, Fordham, a specialist business that provides
tax, accounting and other financial services to more than
3,500 private businesses, recorded their highest year of
revenue since Perpetual acquired the business in 2009.
We have been providing wealth management services
for more than 135 years. It’s the strength of our client
relationships that matter most, and this was once again
recognised in FY23 through our net promoter score results.
All teams across our business scored higher in FY23 than
FY22, with the business recording +46, which is +4 on FY22.
Our Priority Life and Native Title Trusts teams recorded
two of the five highest NPS scores across the entire
Perpetual Group.
Fordham, a specialist business that provides
tax, accounting and other financial services to
more than 3,500 private businesses, recorded
its highest year of revenue since Perpetual
acquired the business in 2009.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 16
Business division updates
Corporate
Trust
Corporate Trust delivered another
solid year of growth, with total
FUA exceeding $1.16 trillion as
at 30 June 2023, an increase of
$70 billion on FY22.
Financial performance
Corporate Trust — consisting of Managed Funds Services
(MFS), Debt Market Services (DMS) and Perpetual Digital
— reported UPBT of $81.6 million in FY23, $9 million or 12%
higher than FY22. Revenue of $178 million increased 12%
on FY22.
MFS revenue of $77.4 million was $7.1 million, or 10% higher
than FY22, driven primarily by continued market activity
within commercial property, both in Australia
and Singapore.
DMS revenue of $77.2 million was up $8.5 million, or 12%,
on FY22. This uplift was driven largely by underlying growth
in the securitisation portfolio from new and existing clients
particularly from non‑bank RMBS and ABS clients, higher
document custody volumes and additional new clients in
trust management.
Perpetual Digital reported revenue of $23.4 million,
$3.9 million or 20% higher than FY22. The increase was
primarily due to the acquisition of Laminar Capital in
FY22 together with continued growth from new and
existing products.
Total expenses in FY23 were $96.4 million, $10.5 million or
12% higher than FY22. The increase was mainly driven by
costs to support investment in new Software‑as‑a‑Service
(Saas) products to transform legacy systems, operating
costs of Laminar Capital and regulatory requirements.
Perpetual Group Annual Report 2023 17
$1,162.5b
Funds under administration
$178.0m
Total revenue
$1,162.5b
$1,092.3b
FY23
FY22
$178.0m
$158.5m
FY23
FY22
Trustee of the Year
KangaNews Awards 2023
for seventh consecutive year
New digital product live
Treasury and Finance
Intelligence launched
Case Study
A unique combination of businesses has
created a market-leading direct fixed income
product for financial services and their clients
In June 2023, we entered a new relationship with a large
Australian wealth management company which will see
the business provide a unique end‑to‑end fixed income
solution for its business and clients. The partnership with
BondAdviser’s research business, combined with PCT’s
unique product offering across our business, with Laminar
Capital’s SaaS product, MFS Custody product and Perpetual
Digital’s institutional cloud infrastructure and project
management capability have all contributed to an exciting
new direct fixed income product to the market.
In a complex regulatory environment, coupled with rising
cyber risks and increasing expectations of consumers across
many sectors, Corporate Trust is focused on delivering a
unique suite of products from our traditional trustee and
custody solutions, through to our SaaS products that will
help enable our client’s success through service excellence
and next generation software.
Business commentary
Corporate Trust delivered another solid year of growth,
with total funds under administration (FUA) exceeding
$1.16 trillion as at 30 June 2023, up $70 billion on FY22.
All our core business divisions continued to perform strongly
despite the uncertain broader macroeconomic environment
and a softer mortgage and property market experienced
during the year.
The MFS division saw particularly strong growth especially
in first half of FY23 and within our Singapore business. FY23
FUA of $471.4 billion was up 15% on FY22, primarily driven
by growth across wholesale trustee, custody and Singapore
due to closing an asset acquisition.
In our DMS division, FUA increased $8.9 billion on FY22 to
$691.1 billion as at 30 June 2023. We experienced strong
growth in the ABS and covered bonds market, as banks
continued to diversify funding.
In Perpetual Digital, our Treasury and Finance Intelligence
product launched in the fourth quarter and we commenced
onboarding clients for future growth.
Throughout the year we have continued to invest in products
and services across all our three divisions to build a strong
pipeline of future growth opportunities. Laminar Capital
continues to attract new clients and win additional work from
existing clients.
The strength of our people engagement and client
relationships continue to be a key enabler for business
growth. Pleasingly, we delivered a record NPS score of +65,
up from +61 in FY22. Our Laminar Capital and Roundtables
teams scored two of the five highest NPS scores across the
Perpetual Group, which is an outstanding achievement.
Once again we were recognised as a leader in the
industry after being awarded Trustee of the Year in the
KangaNews Awards – the seventh consecutive year
Corporate Trust has won the award.
All our core business divisions continued
to perform strongly despite the uncertain
broader macroeconomic environment and
a softer mortgage and property market
experienced during the year.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 18
Sustainability at Perpetual Group
Creating enduring
prosperity has been at
the heart of what we do
for over 135 years
Progress on our Prosperity Plan
The role that we play in helping to create
a sustainable world has never been more
important as we look to the future and
continue to grow globally.
Through our comprehensive Group sustainability strategy,
Perpetual’s Prosperity Plan, we seek to help our clients
navigate the low carbon transition while building an inclusive,
high‑performance culture. We also aim to strengthen
local communities and work to uphold good governance,
accountability and integrity.
Since the launch of our sustainability strategy in September
2022, we have taken considerable steps in progressing
many of our commitments. A high‑level overview of our
progress across our four pillars is set out to the right.
Despite a significant period of change as we brought together
Perpetual Group and Pendal Group, 27 of the 35 commitments
in our sustainability strategy are either on track or have been
achieved. We have plans in place to address those that are
not currently on track. To view the 35 commitments and our
progress on them to date, see our FY23 Sustainability Report
at perpetual.com.au/sustainability.
Sustainability Report 2023
Enduring Prosperity
For more information on our sustainability strategy
and initiatives see our sustainability reporting at
perpetual.com.au/sustainability.
The four pillars of our sustainability strategy
Governance
Committed to the highest standard
Draw on our trusted brand and deep history, to work to uphold
best practices, accountability and integrity in all we do.
Planet
Accelerate the low carbon transition
Seek to help our clients navigate the risks and opportunities
of a low carbon future and reduce the environmental
footprint of our own operations.
People
Champion inclusion and high performance
Create a harmonious, diverse and inclusive workplace
culture that enhances wellbeing and supports each of
our people to bring their best.
Communities
Support strong communities
Leverage our services, time and philanthropy to support
not‑for‑profit organisations, give back to communities,
and help advance First Nations prosperity.
Perpetual Group Annual Report 2023 19
Progress against our commitments
Not on track
On track
Achieved
0
2
5
1
3
5
3
4
6
3
0
3
Governance
Upholding high governance standards
in our business
The Board is committed to upholding high standards of
corporate governance in our business by ensuring we have
the right systems, procedures and practices in place. We
seek to promote a culture that creates an environment of
risk awareness, ownership and responsiveness. During
the year, mandatory training was conducted on topics
such as continuous disclosure and personal trading, anti‑
money laundering and sanctions, and information security
and privacy.
The threat and sophistication of cyber‑attacks continues
to increase for companies and other organisations
as the world becomes more digitally connected. In
June 2023, we experienced an extended outage as a
result of an IT security incident at a registry system
provided by a third‑party for some of Perpetual’s funds.
The third‑party provides unit registry and administration
services to Perpetual’s Asset Management and Wealth
Management divisions’ investment funds, WealthFocus
and Select products.
Our assessment identified that sensitive client data remains
secure and encrypted. A limited amount of personal
information was compromised. Notwithstanding that
there was no notifiable data breach, given the ongoing and
increasing threat of cyber security events, we proactively
informed our clients of this issue.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 20
Sustainability at Perpetual Group
Planet
Accelerating the low carbon transition
As a diversified multi‑boutique and global business, each of
our asset managers have their own investment philosophies
and approaches to managing climate risk and opportunities for
our clients. Consideration of material environmental, social and
governance (ESG) issues is integrated into investment analysis,
decision‑making and ownership practices in the context of
each of our businesses’ investment approaches and the needs
of their clients.
For example, Trillium has an interim target for 75% of the
holdings of Trillium‑advised larger cap‑equity strategies
to commit to set science‑based targets for reducing their
greenhouse gas (GHG) emissions, as approved by the Science
Based Targets Initiative, by the end of 2030. As of 30 June 2023,
70% of Trillium’s investments in larger cap equity strategies had
committed to this, up from 15% on 31 December 2019 (the target
baseline). J O Hambro have developed a probabilistic emissions
projection model, Horizon, which projects a company’s emissions,
after their carbon reduction pledges are accounted for, and
evaluates the likelihood of reaching the target that they have
set. The Perpetual Australian Equities team have developed a
proprietary net zero scoring framework to assess climate‑related
risks and opportunities for listed companies. In FY23, the team
expanded the framework to cover all stocks in their investment
universe as well as ASX300 stocks.
It is also important that we seek to reduce the environmental
impact of our operations while improving our disclosure
on climate. In FY23, we purchased renewable power for
our Australian offices1 and we will be purchasing offsets to
become carbon neutral in our global operations for the FY23
reporting period. As travel restrictions were largely removed
in FY23 and with our business becoming larger and more
global, we have seen an increase in our emissions from
business‑related flights. Paper purchased for printing has
increased in FY23 to 9 tonnes of paper, from 6 tonnes in FY22.
For our environmental metrics see our FY23 Sustainability
Report at perpetual.com.au/sustainability.
Aligning our reporting to the Task Force on Climate-related Financial Disclosures
Climate change is one of the greatest challenges facing
society, and the financial services sector has a key role in
tackling it. We support the recommendations of the Task
Force on Climate‑related Financial Disclosures (TCFD)
for better disclosure on climate and the International
Sustainability Standards Board aim to encourage more
comprehensive, globally consistent sustainability disclosures.
We are committed to transparent reporting and continuously
improving our external disclosures, including further
alignment with the recommendations of the TCFD.
Governance
Our Perpetual Group Board has oversight for our
sustainability strategy and climate‑related issues.
Six‑monthly updates are provided to the Board and
Executive Committee on our sustainability strategy, including
a status update on our climate‑related commitments. The
Chief Risk and Sustainability Officer (CRSO), Sam Mosse, had
sustainability added to her responsibilities in January 2023
ensuring that addressing climate change and sustainability
are championed on our Executive Committee.
Strategy
The acquisition of Pendal has added a broader range of
sustainability‑focused capabilities including thematic
and impact focused funds. Our greater scale and depth
of responsible investment expertise will enable more
opportunities to share best practice, systems and expertise
across the Group, including those relating to climate change.
The Horizon climate model developed by the J O Hambro
Sustainable Investment Team is one example of a tool that
will be made available to other asset management firms in
Perpetual Group over the course of the coming year.
Risk management
We have previously undertaken a climate risk assessment to
identify our climate risks and assess their potential impact.
This identified our universe of climate risks and opportunities
that are the most material for our business. In FY24, we plan
to undertake deeper dives with our divisions to further assess
the key climate risks relating to our business and to identify
the current processes and controls in place to manage
those risks.
Metrics and targets
To prepare for Climate Active certification and to continually
improve our environmental reporting approach, we have
expanded our operational GHG emissions reporting to
include new emissions sources such as waste, water usage,
accommodation for business travel, employees working from
home and some capital expenditure and purchased goods
and services.
For our FY23 GHG metrics please see our FY23 Sustainability
report at perpetual.com.au/sustainability.
1. We purchased GreenPower for our Australian offices in the first half of the calendar year 2023. This has been attributed and reported for the FY23 reporting year,
following guidance and confirmation from Climate Active.
Perpetual Group Annual Report 2023 21
People
Communities
Championing inclusion and high performance
Supporting strong communities
Building a diverse and inclusive workplace is a key priority for
Perpetual Group and we are proud to have been recognised
by Workplace Gender Equality Agency as an Employer of
Choice for Gender Equality, each year, since 2018. Following
the acquisition of Pendal Group, female representation of
the Board is now 44%, up from 38% in FY22. This exceeds our
target of at least 40% representation of women on our Board.1
We also have a target in place to increase the representation
of women in senior leadership roles to 40% by the end of FY24.
As of June 2023, 34% of our senior leader cohort are women,
in line with last year.
We remain committed to creating a more inclusive workplace
across the Group. In the US, Trillium have partnered on
their internship programme with the Wall Street Diversity
Accelerator, which aims to provide teenagers from
underrepresented communities an introduction to career
possibilities in financial services.
We identify priority areas of funding across the philanthropy
sector, which are traditionally underfunded and can
recommend these to our clients, where appropriate. Despite
11% of Australians identifying as being of diverse sexuality, only
the tiniest fraction of grants (50 cents in every 100 philanthropic
dollars) are explicitly given to support LGBTQ+ individuals and
communities. In FY23, on behalf of our clients, we helped to
facilitate $683,000 worth of grants to organisations supporting
LGBTQ+ communities.
Bringing together the Pendal and Perpetual businesses has
involved a substantial organisational change. To help prepare
our people leaders to support their teams and their wellbeing
through this time, all people leaders across the group were
invited to participate in ‘Leading through Complex Change’
workshops in May 2023.
All employees across the Group have access to wellbeing
tools and local employee assistance providers. Perpetual
Group employees in Australia and Singapore can also
access an additional two weeks of Wellbeing and Community
Leave,2 free financial health checks and $275 wellbeing
allowance. During the year, close to 1,100 people took up
this wellbeing allowance.
The Perpetual Group’s vision for reconciliation is a more
equal society, where First Nations Peoples have the same
opportunities for prosperity and a self‑determined future.
As trustee of many Native Title agreements, we work alongside
Aboriginal and Torres Strait Islander communities to address
pressing needs such as health and education, preserving their
cultures, and setting up infrastructure that will allow them to
thrive in future.
We have publicly supported the Uluru Statement from the
Heart and a First Nations Voice to Parliament since 2019. More
recently, in April 2023, we joined a group of philanthropists,
who have announced a combined $17 million pledge to the
Yes campaign, supporting the Voice to Parliament in the
upcoming referendum. As part of the pledge, Perpetual Group
has committed to provide $150,000 in funding, as a corporate,
and we worked with our philanthropy clients to facilitate an
additional $115,000 to support the Yes campaign.
Perpetual is one of the largest managers of philanthropic funds
in Australia. In FY23, our clients granted $129 million of their
philanthropic funds to the charity sector, up from $120 million
in FY22.
Perpetual has made a commitment to give equivalent to 1%
of our UPBT through community giving and volunteering.
We measure community giving and volunteering with the B4SI
framework, which tracks the financial value of our voluntary
support for organisations that have a charitable purpose.
Based on the B4SI framework, our total community giving
and volunteering in FY23 was equivalent to $2.16 million.3
This figure is down from $2.4 million in FY22. Following external
verification of our community reporting, we have changed our
reporting methodology, excluding some memberships, which
are predominately employee or business focused, and only
including part of our sponsorship funding of community causes
to account for the commercial benefit of a portion of that
funding. Our community giving and employee volunteering
hours have also been impacted, as we have brought together
our businesses this year.
In FY23, we continued to support charitable causes across
our global businesses. In Australia, we have a partnership
with LifeChanger Foundation, a preventative mental health
and wellbeing non‑profit that empowers young people to
live thriving, resilient lives. Through our funding in FY23,
LifeChanger Foundation has conducted over 285 workshops,
reaching over 4,900 young people.
1. As per our announcement on 12 December 2022, Kathryn Matthews does not intend to stand for re-election at Perpetual’s AGM in October 2023.
2. To be eligible for Wellbeing leave, employees in Australia and Singapore need to have worked with Perpetual Group for at least 12 months and have two weeks or less of
their annual leave balance remaining. There are no maximum annual leave or minimum tenure requirements for eligible employees in Australia and Singapore to access
Community leave.
3.
We report our community giving using the B4SI framework. This includes cash and in-kind donations, matched giving of staff fundraising, management costs associated
with community giving activities, employee volunteering time and memberships and sponsorship of community organisations.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 22
Directors’ Report
for the year ended 30 June 2023
Directors
The Directors of the Company at any time during or since the end of the financial year are:
Tony D’Aloisio AM
Chairman and Independent Director
Mona Aboelnaga Kanaan
Independent Director
BA LLB (Hons) (Age 73)
BSc (Econ) MBA (Age 55)
Mr D’Aloisio has been an Independent
Non‑executive Director of Perpetual since
December 2016. Mr D’Aloisio became
Chairman of Perpetual in May 2017.
Ms Aboelnaga Kanaan has been an
Independent Non‑executive Director
since 2021.
Skills and experience
Mr D’Aloisio has held leadership roles in listed
and non‑listed companies. He was CEO and
MD at the Australian Securities Exchange from
2004–2006. Mr D’Aloisio was Chief Executive
Partner at Mallesons Stephen Jaques between
1992–2004 having first joined the firm in 1977.
Mr D’Aloisio was appointed a Commissioner
for the Australian Securities and Investments
Commission (ASIC) in 2006 and Chairman in
2007 for a four‑year term. He was Chairman
of the (International) Joint Forum of the Basel
Committee on banking supervision from
2009–2011.
Most recently Mr D’Aloisio was Chairman
of IRESS Limited (technology). He was a
Non‑executive Director of ASX listed Boral
Limited 2002–2004 as well as a director of the
Business Council of Australia 2003–2006 and
the World Federation of Exchanges
2004–2006. He was President of the
Australian Winemakers Federation 2012–2016.
Currently Mr D’Aloisio is President of the
European Capital Markets Cooperative
Research Centre.
Listed company directorships held
during the past three financial years
–
IRESS Limited, ASX: IRE
(from June 2012 to May 2021)
Board Committee memberships
– Chairman of the
Nominations Committee
Skills and experience
Based in New York, USA, Ms Aboelnaga Kanaan
is a seasoned Director, entrepreneur and asset
management executive having held leadership
positions over a distinguished career spanning
more than thirty years. She is currently the
Managing Partner of K6 Investments LLC, an
independent private equity firm which she
founded in 2011.
Previously, Ms Aboelnaga Kanaan served as
President and CEO of Proctor Investment
Managers, a firm she co‑founded in 2002 to
acquire and scale traditional and alternative
asset managers. Ms. Aboelnaga Kanaan sold
the firm to National Bank of Canada in 2006,
acquired affiliates managing nearly $14 billion
in assets under management and continued
as Proctor’s President and CEO until 2013.
With global expertise in public as well
as private financial services firms,
Ms Aboelnaga Kanaan is currently a Director
of Webster Financial Corporation (NYSE: WBS)
and is Chair of the Technology Committee
and a Member of the Executive and Enterprise
Risk Committees; a Director of Mondee
Holdings (Nasdaq: MOND) and is Chair of the
Nominations and Governance Committee and
member of the Audit Committee, Director of
the Egyptian American Enterprise Fund; and
has served as a Board Member of a number of
traditional and alternative asset managers in
the United States.
With a commitment to education and
economic empowerment, Ms Aboelnaga
Kanaan also has extensive non‑profit board
experience in those fields including as an
investment committee member of sizeable
educational endowments.
Listed company directorships held
during the past three financial years
– Webster Financial Corporation, NYSE:
WBS (from February 2022 following
merger with Sterling Bancorp – Present)
– Mondee Holdings, Nasdaq: MOND
(from July 2022 – Present)
– Sterling Bancorp NYSE: STL
(from May 2019 – February 2022)
– Fintech Acquisition Corp. VI
(from February 2021 to December 2022)
Board Committee memberships
– Member of the Investment Committee
– Member of the People and
Remuneration Committee
– Chair of the Technology and
Cyber Security Committee
Perpetual Group Annual Report 2023 23
Gregory Cooper
Independent Director
Nancy Fox AM
Independent Director
Ian Hammond
Independent Director
FIA, FIAA, BEc (Actuarial Studies) (Age 52)
BA JD (Law) FAICD (Age 66)
BA (Hons) FCA FCPA FAICD (Age 65)
Mr Cooper has been an Independent
Non‑executive Director of Perpetual
since September 2019.
Ms Fox has been an Independent
Non‑executive Director of Perpetual
since September 2015.
Mr Hammond has been an Independent
Non‑executive Director of Perpetual
since March 2015.
Skills and experience
Skills and experience
Skills and experience
Mr Cooper has more than 30 years of global
investment industry experience in the UK, Asia
and Australia with a deep understanding of
international funds management.
Mr Cooper brings strong financial services
and strategy expertise to the Perpetual board
predominantly gained from his executive
career at Schroders Australia where he
was the Chief Executive Officer from 2006
to 2018 with responsibility for Schroders’
institutional business across Asia Pacific and
then globally and his current non‑executive
career across the superannuation, banking and
technology sectors.
Mr Cooper currently serves as a Non‑executive
Director of NSW Treasury Corporation, where
he also chairs the Investment Committee.
He is currently the Chairman of Avanteos
Investments Limited (part of the Colonial First
State Group).
Mr Cooper is a Non‑executive Director of
Australian Payments Plus Limited and some
of its subsidiaries/related entities. Previously
Mr Cooper acted as a Non‑executive Director
to the Financial Services Council and held the
position of Chairman from 2014 to 2016.
Board Committee memberships
– Member of the Audit, Risk and
Compliance Committee
– Chairman of the Investment Committee
(appointed Chairman January 2023)
– Member of the People and
Remuneration Committee
Ms Fox has more than 30 years’ of experience
in financial services, securitisation and risk
management gained in Australia, the US and
across Asia. A lawyer by training, she was
Managing Director for Ambac Assurance
Corporation from 2001 to 2011, Managing
Director of ABN Amro Australia from 1997 to
2001 and Vice President of Citibank.
Ms Fox brings to the Board a deep knowledge
of developing and leading successful financial
services businesses and extensive experience
with securitisation, regulatory frameworks,
risk management and governance.
Ms Fox is Chairman of Perpetual Equity
Investment Company Limited and Mission
Australia Housing, and Deputy Chair of the
Rural Fire Service Benevolent Fund. Ms Fox is
a Non‑executive Director of Mission Australia,
Aspect Studios Pty Ltd and O’Connell Street
Associates.
Ms Fox is a Director of Queensland Trustees Pty
Limited, which acts as trustee for Perpetual’s
employee share plans.
Mr Hammond was a partner at
PricewaterhouseCoopers for 26 years and
during that time held a range of senior
management positions including lead partner
for several major financial institutions. He has
previously been a member of the Australian
Accounting Standards Board and represented
Australia on the International Accounting
Standards Board. Previously, Ian was a Director
of Citi’s Australian retail bank and Venues NSW.
Mr Hammond has a deep knowledge of the
financial services industry and brings to the
Board expertise in financial reporting, risk
management, and mergers and acquisitions.
He has provided extensive advisory and audit
services to PwC’s domestic and global clients
in banking, insurance and asset management.
Mr Hammond is Chairman of the
not‑for‑profit organisation Mission Australia
and a Non‑executive Director of Suncorp
Group Limited.
Mr Hammond is a Director of Queensland
Trustees Pty Limited, which acts as trustee for
Perpetual’s employee share plans.
Listed company directorships held
during the past three financial years
– Perpetual Equity Investment Company
Limited, ASX: PIC
(from July 2017 to present)
Listed company directorships held
during the past three financial years
– Suncorp Group Limited, ASX: SUN
(from October 2018 to present)
Board Committee memberships
Board Committee memberships
– Chair of the People and
Remuneration Committee
– Chairman of the Audit, Risk and
Compliance Committee
– Member of the Audit, Risk and
– Member of the Investment Committee
– Member of the Nominations Committee
Compliance Committee
– Member of the Nominations Committee
– Member of the Nominations Committee
– Member of the Technology and
– Member of the Integration Committee
Cyber Security Committee
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 24
Directors’ Report
for the year ended 30 June 2023
Christopher Jones
Independent Director
MA (Cantab) CFA (Age 62)
Kathryn Matthews
Independent Director
BSc BEc (Age 63)
Fiona Trafford-Walker
Independent Director
BEc, M. Fin (Age 56)
Mr Jones was appointed to the Board of
Perpetual in January 2023 following the
acquisition of Pendal Group.
Ms Matthews was appointed to the Board
of Perpetual in January 2023 following the
acquisition of Pendal Group.
Ms Trafford‑Walker has been an Independent
Non‑executive Director of Perpetual
since December 2019.
Skills and experience
Skills and experience
Skills and experience
Mr Jones is based in New York City, USA. He has
over 40 years’ experience in the financial
services industry across both investments and
funds management. Most recently, Mr Jones
was Principal of CMVJ Capital LLC, a private
investor and adviser in the financial services,
asset management and technology industries.
Prior to this, he was Head of Blackrock’s US
Global Fundamental Equity and Co‑head
of Global Active Equity. Previously, he spent
32 years in a range of roles at Robert Fleming
and Co and JP Morgan Asset Management.
Listed company directorships held
during the past three financial years:
– Pendal Group Limited, ASX: PDL
(from 2018 until delisting in
January 2023)
Board Committee memberships
– Member of the People and
Remuneration Committee
(appointed January 2023)
– Member of the Investment Committee
(appointed January 2023)
– Member of the Integration Committee
– Member of the Technology and
Cyber Security Committee
Ms Matthews is based in London, UK. She
brings to the Board over 40 years’ experience
in funds and investment management with
director experience across listed, private
and regulated entities. She has extensive
experience in global investment management
businesses in the UK and Hong Kong,
including as Chief Investment Officer, Asia
Pacific ex Japan at Fidelity International based
in Hong Kong. She commenced her career at
Baring Asset Management, holding a broad
range of roles over sixteen years as a global
equity portfolio manager and latterly as the
Head of Institutional Business, Europe and UK.
Ms Matthews is currently Chair of Barclays
Investment Solutions Limited and is also a
Non‑executive Director of British International
Investment Ltd, Vietnamese Opportunities
Fund and JPMorgan Asia Growth and
Income Fund.
Listed company directorships held
during the past three financial years
– Pendal Group Limited, ASX: PDL
(from 2016 until delisting in
January 2023)
Board Committee memberships
– Member of the Audit, Risk and
Compliance Committee
(appointed January 2023)
– Member of the Investment Committee
(appointed January 2023)
Ms Trafford‑Walker has over 30 years of
senior executive and business management
experience within the investment industry,
bringing extensive knowledge of investment
management and a strong institutional
and international perspective to the
Perpetual board.
Ms Trafford‑Walker began her career in
institutional investment consulting in 1992,
and until December 2019 was an Investment
Director at Frontier Advisors (Frontier). At
various times during her tenure, she was
responsible for the original development and
on‑going management of Frontier’s business,
as well as providing investment and governance
advice to a number of the firm’s clients.
Currently Ms Trafford‑Walker is a
Non‑executive Director of Victorian Funds
Management Corporation, Prospa Group
Ltd, Link Administration Holdings Ltd,
FleetPartners Group (previously known as
Eclipx Group), an Investment Committee
Member of the Walter and Eliza Hall Institute,
Strategic Advisor to the QE Advisory Board
and Independent Advisor to the Investment
Committee of the Australian Retirement Trust.
Listed company directorships held
during the past three financial years
– Prospa Group Limited, ASX: PGL
(from March 2018 to present)
– Link Administration Holdings, ASX: LNK
(from October 2015 to present)
– FleetPartners Group, ASX: FPR
(from July 2021 to present)
Board Committee memberships
– Member of the Investment Committee
– Member of the People and
Remuneration Committee
– Chair of the Integration Committee
– Member of the Technology and
Cyber Security Committee
Perpetual Group Annual Report 2023 25
Directors who retired
during the year
Company Secretary
Rob Adams
Chief Executive Officer and
Managing Director
BBus (Accounting) (Age 57)
Mr Adams has been the Chief Executive
Officer and Managing Director of Perpetual
since September 2018.
Skills and experience
Mr Adams is a proven financial services
business leader with over 30 years’ experience
locally and globally across funds management,
financial advice and fiduciary services.
Before Perpetual, Mr Adams was Head of
Pan‑Asia and a member of the Global
Executive Committee of Janus Henderson
where he had been for six years. Prior to that,
he was Chief Executive of Challenger Funds
Management, and was previously CEO of
First State Investments UK.
P Craig Ueland
Independent Director
Sylvie Dimarco
Company Secretary
BA (Hons and Distinction) MBA (Hons) CFA
(Age 64)
Appointed Director in September 2012.
On 24 January 2023, Mr Ueland retired as a
Director of Perpetual Limited, as Chairman of
the Investment Committee and as a Member
of the Audit, Risk and Compliance Committee
and the Nominations Committee.
LLB, GradDipAppCorpGov, FGIA, GAICD
Ms Dimarco was appointed Company
Secretary of Perpetual in April 2020.
Skills and experience
Ms Dimarco joined Perpetual in 2014 and
is currently Global Head of Governance &
Company Secretary at Perpetual. She is also
Company Secretary of Perpetual Equity
Investment Company Limited (ASX: PIC) and
all of Perpetual’s subsidiary boards. She is a
member of the Perpetual Limited Continuous
Disclosure Committee.
Ms Dimarco has over 16 years’ experience
in company secretariat practice and
administration for listed and unlisted
companies. Before Perpetual, she practiced as
a commercial lawyer in Sydney and Canberra
for 11 years, working in predominantly
mid‑sized law firms.
Ms Dimarco holds a Bachelor of Laws
degree from the University of Sydney and
has completed the Governance Institute
of Australia’s Graduate Diploma of Applied
Corporate Governance. Ms Dimarco is a
Graduate of the Australian Institute of
Company Directors course.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 26
Directors’ Report
for the year ended 30 June 2023
Directors’ meetings
The number of Directors’ meetings which Directors were eligible to attend (including meetings of Board Committees) and the
number of meetings attended by each Director during the financial year to 30 June 2023 were:
BOARD
AUDIT, RISK AND
COMPLIANCE COMMITTEE
(ARCC)
PEOPLE AND
REMUNERATION
COMMITTEE (PARC)
INVESTMENT
COMMITTEE
NOMINATIONS
COMMITTEE
ELIGIBLE
TO ATTEND ATTENDED
MEMBER
ELIGIBLE
TO ATTEND ATTENDED
MEMBER
ELIGIBLE
TO ATTEND ATTENDED
MEMBER
ELIGIBLE
TO ATTEND ATTENDED
MEMBER
ELIGIBLE
TO ATTEND ATTENDED
34
34
34
34
34
10
10
34
24
34
34
33
34
34
34
10
6
34
24
34
–
–
7
7
7
–
3
–
4
–
–
–
7
7
7
–
2
–
4
–
–
7
7
7
–
3
–
7
–
–
–
7
7
7
–
3
–
7
–
–
–
5
5
–
5
2
2
5
3
–
–
5
5
–
5
2
2
4
3
–
3
–
2
3
3
–
–
–
1
–
3
–
2
3
3
–
–
–
1
–
DIRECTOR
Tony D’Aloisio
Mona Aboelnaga
Kanaan
Gregory Cooper
Nancy Fox
Ian Hammond
Chris Jones
Kathryn Matthews1
Fiona Trafford–Walker
Craig Ueland
Rob Adams
1. Kathryn Matthews joined the Board in January 2023, and it is noted (as previously disclosed to the market) that Kathryn Matthews does not intend to stand for
re-election at the upcoming AGM.
Directors from time to time may and do attend committee meetings even though they may not be a member of that committee.
Corporate Governance Statement
Perpetual’s Corporate Governance Statement, which meets the requirements of ASX Listing Rule 4.10.3, is located on the Corporate
Governance page of Perpetual’s website at perpetual.com.au/about/corporate‑governance‑and‑policies.
Principal activities
The principal activities of the consolidated entity during the financial year were portfolio management, financial planning, trustee,
responsible entity and compliance services, executor services, investment administration and custody services.
Review of operations
A review of operations is included in the Operating and Financial Review section of the Annual Report.
For the financial year to 30 June 2023, Perpetual reported a NPAT attributable to equity holders of Perpetual Limited of $59.0 million
compared to the net profit after tax attributable to equity holders of Perpetual Limited for the financial year to 30 June 2022 of
$101.2 million.
For the financial year to 30 June 2023, Perpetual reported an underlying profit after tax (UPAT) attributable to equity holders of
Perpetual Limited of $163.2 million compared to the UPAT attributable to equity holders of Perpetual Limited for the financial year
ended 30 June 2022 of $148.2 million.
Perpetual Group Annual Report 2023 27
UPAT attributable to equity holders of Perpetual Limited excludes certain items, that are either significant by virtue of their size and
impact on NPAT attributable to equity holders of Perpetual Limited, or are determined by the board and management to be outside
normal operating activities. UPAT attributable to equity holders of Perpetual Limited is disclosed as it is useful for investors to gain
a better understanding of Perpetual’s financial results from normal operating activities.
The reconciliation of NPAT attributable to equity holders of Perpetual Limited to UPAT attributable to equity holders of Perpetual
Limited for the financial year to 30 June 2023 is shown below.
Net profit after tax attributable to equity holders of Perpetual Limited
Significant items after tax
Transaction and integration costs1
Non‑cash amortisation of acquired intangible assets2
Unrealised (gains)/losses on financial assets3
Accrued incentive compensation liability4
30 JUNE 2023
$M
30 JUNE 2022
$M
59.0
101.2
80.0
40.6
(16.4)
–
22.2
18.6
10.9
(4.7)
Underlying profit after tax attributable to equity holders of Perpetual Limited
163.2
148.2
1. Relates to costs associated with the acquisition/establishment of Pendal, Trillium, Barrow Hanley and other entities. Costs include professional fees,
administrative and general expenses and staff costs related to specific retention and performance grants.
2. Relates to amortisation expense on customer contracts and non-compete agreements acquired through business combinations.
3. Relates to unrealised mark to market gains and losses on EMCF, seed fund investments and financial assets held for regulatory purposes.
4. This liability reflects the value of employee owned units in Barrow Hanley.
UPAT attributable to equity holders of Perpetual Limited reflects an assessment of the result for the ongoing business of the
consolidated entity as determined by the Board and management. UPAT has been calculated in accordance with ASIC’s Regulatory
Guide 230 – Disclosing non-IFRS financial information. UPAT attributable to equity holders of Perpetual Limited has not been
audited by our external auditors; however, the adjustments to NPAT attributable to equity holders of Perpetual Limited have been
extracted from the books and records that have been audited.
Financial markets are dealing with rising inflation and interest rates impacting global economies and financial markets. The consolidated
entity continues to monitor the impact of these factors on its operations, control environment and financial reporting.
Consistent with the approach applied in the preparation of the half‑year financial statements at 31 December 2022, management
has evaluated whether there were any additional areas of significant judgement or estimation uncertainty, assessed the impact
of market inputs and variables potentially impacted by prevailing conditions on the carrying values of its assets and liabilities, and
considered the impact on the consolidated entity’s financial statement disclosures. The consolidated entity’s revenues have a high
degree of exposure to market volatility which has the potential to lead to a material financial impact. The US and UK operations are
similarly exposed to market movements due to the nature of the business. Whilst this has been factored into the preparation of the
financial report, the accounting policies and methodologies have been applied on a consistent basis to the half year financial report.
The Directors and management continue to closely monitor developments with a focus on potential financial and operational
impacts as developments arise.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
28
Directors’ Report
for the year ended 30 June 2023
Dividends
Dividends paid or provided by the Company to members since the end of the previous financial year were:
Declared and paid during the financial year 2023
Final 2022 ordinary
Special dividend
Interim 2023 ordinary
Total
Declared after the end of the financial year 2023
After balance date, the Directors declared the following dividend:
Final 2023 ordinary
Total
CENTS
PER SHARE
TOTAL
AMOUNT
$M
FRANKED1/
UNFRANKED
DATE OF
PAYMENT
97
35
55
65
55.0
20.1
61.6
136.7
73.1
73.1
100% Franked 30 Sep 2022
100% Franked
8 Feb 2023
40% Franked 31 Mar 2023
40% Franked 29 Sep 2023
1. All franked dividends declared or paid during the year were franked at a tax rate of 30% and paid out of retained earnings.
The financial effect of dividends declared after year end are not reflected in the 30 June 2023 financial statements and will be
recognised in subsequent financial reports.
State of affairs
The acquisition of Pendal Group was completed on 23 January 2023, refer to section 2‑1 Business Combinations for more information.
There were no other significant changes in the state of affairs of the consolidated entity during the financial period.
Events subsequent to reporting date
A final 40% franked dividend of 65 cents per share was declared on 24 August 2023 and is to be paid on 29 September 2023.
Perpetual announced the impact of a decision made in June 2023 regarding the establishment of a global asset management
division. The current regional asset management businesses have come together to form one global division, which will be led by
a newly created role of Chief Executive, Asset Management. Rob Adams will assume the dual role of Perpetual Group CEO and Chief
Executive, Asset Management. This change means that the regional chief executive roles for Europe and UK (EUKA), and the Americas
are no longer needed. Amanda Gillespie will continue to lead Asset Management in Australia as part of the global asset management
leadership team reporting to Rob.
Other than the matters noted above, the Directors are not aware of any other event or circumstance since the end of the financial
year not otherwise dealt with in this report that has affected or may significantly affect the operations of the consolidated entity,
the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.
Likely developments
Information about the business strategies and prospects for future financial years of the consolidated entity are included in the
Operating and Financial Review. With the exception of the previous disclosure regarding the acquisition, further information about
likely developments in the operations of the consolidated entity and the expected results of those operations in future financial
years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice
to the consolidated entity because the information is commercially sensitive.
Environmental regulation
The consolidated entity acts as trustee or custodian for a number of property trusts which have significant developments throughout
Australia. These fiduciary operations are subject to environmental regulations under both Commonwealth and State legislation in
relation to property developments. Approvals for commercial property developments are required by State planning authorities and
environmental protection agencies. The licence requirements relate to air, noise, water and waste disposal. The responsible entity or
manager of each of these property trusts is responsible for compliance and reporting under the government legislation.
The consolidated entity is not aware of any material non‑compliance in relation to these licence requirements during the financial year.
The consolidated entity has determined that it is not required to register to report under the National Greenhouse and Energy
Reporting Act 2007, which is Commonwealth environmental legislation that imposes reporting obligations on entities that reach
reporting thresholds during the financial year.
Perpetual Group Annual Report 2023 29
Indemnification of Directors and officers
The Company and its controlled entities indemnify the current Directors and officers of the companies against all liabilities
to another person (other than the Company or a related body corporate) that may arise from their position as Directors of the
consolidated entity, except where the liabilities arise out of conduct involving a lack of good faith. The Company and its controlled
entities will meet the full amount of any such liabilities, including costs and expenses. The auditor of the Company is in no way
indemnified out of the assets of the Company.
Insurance
In accordance with the provisions of the Corporations Act 2001, the Company has a directors and officers’ liability policy which
covers all Directors and officers of the consolidated entity. The terms of the policy specifically prohibit disclosure of details of the
amount of the insurance cover and the premium paid.
Directors’ interests in registered schemes
As at the date of this report, directors had the following relevant interests in registered schemes made available by the Company
or a related body corporate of the Company.
NAME
Tony D’Aloisio
REGISTERED SCHEME
Perpetual Credit Income Trust
Perpetual Pure Microcap Fund Class A
Perpetual Wholesale Industrial Share Fund
Perpetual Share Plus Long Short Fund
Perpetual Wholesale Global Share Fund
Ian Hammond
Perpetual Wholesale Geared Australian Fund
Nancy Fox
Perpetual Wholesale Industrial Share Fund
Eley Griffiths Group Small Companies Fund
Barrow Hanley Global Share Fund
Perpetual Credit Income Trust
Perpetual ESG Australian Share Fund
Perpetual Global Innovation Share Fund Class A
Perpetual ESG Credit Income Fund
Trillium Global Sustainable Opportunity Fund
Implemented Real Estate Portfolio
Pendal Sustainable Australian Share Fund
Chris Jones
JP Morgan Global Bond Opportunities Fund
Kathryn Matthews
Rob Adams
JPM Equity Premium Income ETF
J O Hambro UK Equity Income Fund
Perpetual Industrial Share Fund
Perpetual Wealthfocus Superannuation Fund
Perpetual Australian Share Fund
Perpetual Wholesale Industrial Fund
1. Craig Ueland retired as Director on 24 January 2023. At the time, Craig Ueland’s holdings were:
–
300,766 units in Perpetual Pure Equity Alpha Fund.
– 87,223 units in Perpetual Global Innovation Share Fund.
RELEVANT
INTEREST
(UNITS)
227,000
65,608
149,490
71,721
77,157
133,660
252,942
191,872
250,000
10,978
46,152
93,337
29,412
29,937
23,535
34,902
79,378
15,118
99,687
65,178
33,975
6,296
154,919
Chief Executive Officer and Managing Director’s and Chief Financial Officer’s declaration
The CEO and Managing Director, and the CFO declared in writing to the Board, in accordance with section 295A of the Corporations
Act 2001, that the financial records of the Company for the financial year have been properly maintained, and that the Company’s
financial report for the year ended 30 June 2023 complies with accounting standards and presents a true and fair view of the
Company’s financial condition and operational results. This statement is required annually.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
30
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Dear Shareholder,
On behalf of your Board, I am pleased to present our Remuneration Report for the financial year ended 30 June 2023 (FY23).
Our Remuneration Report provides our shareholders and other stakeholders with a thorough and transparent explanation of how
remuneration outcomes for our Key Management Personnel (KMP) align with our performance in FY23 and with the longer‑term
interests of our shareholders, clients and other stakeholders.
Strategy and Pendal Group acquisition
Perpetual’s strategy has been to continue to strengthen its three core businesses with an emphasis on providing scale to its asset
management businesses. In FY23 Perpetual announced and completed the acquisition of Pendal Group, becoming a global leader
in multi‑boutique asset management with AUM of A$212b1 across equities, cash and fixed income and multi‑asset strategies.
The Pendal Group transaction is a major acquisition with the objective, when added to our existing asset management businesses,
to deliver strategic value to shareholders by enhancing our ability to capture the benefits of scale, investment diversity and
capability and expanding Perpetual’s global distribution footprint.
The transaction brings together two organisations with complementary strengths and is expected to deliver A$80 million of
annualised pre‑tax synergies within the first two years post‑completion, benefiting both shareholders and clients. A more scaled
asset management business provides Perpetual with a stronger platform for growth, and with the expanded investment capability
and global distribution, creates the potential for meaningful earnings per share (EPS) accretion.
Perpetual’s performance in FY23
Perpetual takes a long‑term view of performance. Successful delivery of strategy is assessed against agreed financial, client and
growth measures which are aligned to long‑term strategic objectives, thereby balancing short‑term outcomes with the necessary
investments for long‑term sustainable growth.
At a Group level, while Perpetual delivered growth in underlying profit after tax (UPAT) to A$163.2m, underlying EPS of A$1.966 was
down 24% on FY22. Continued profit growth was delivered in Corporate Trust and Wealth Management2, however net outflows of
A$8.1b across our Asset Management business impacted earnings at a Group level. Despite this, integration activities associated
with the Pendal Group acquisition progressed well in FY23, and at 30 June 2023 the integration program was assessed by the Board
as being on track to achieve the stated goal of A$80m in run rate synergies within the first two years post‑completion.
Perpetual delivered positive client outcomes in FY23. Our Net Promoter Score (NPS) outcome of +57 in FY23 was a new high,
improving substantially on FY22’s outcome of +49 and remaining above Perpetual’s long‑term target of +40. Our investment teams
continued to deliver strong relative investment performance, with 78%3 of the Group’s strategies outperforming their benchmarks
over a three‑year time horizon.
FY23 variable remuneration outcomes
The People and Remuneration Committee (PARC) and the Board spend considerable time each year evaluating the contribution
and performance of the CEO and other Executive KMP. Perpetual maintains a performance‑driven remuneration framework, linking
KMP bonuses to key financial and strategic objectives.
In arriving at the proposed Variable Incentive outcomes for FY23, the Board weighed up challenging financial results, including
net outflows within our asset management business, alongside continued execution of strategy and delivery of positive client
outcomes. For FY23, the Board has determined to award the CEO a Variable Incentive award of 55% of target, or 31% of maximum
opportunity, with individual outcomes for other Executive KMP averaging 49% of target, or 28% of maximum opportunity. The
aggregate Cash and Unhurdled Variable Incentive outcomes approved for the CEO are down 35% on prior year and for other
Executive KMP are down 32% on prior year. Bonus funding levels approved for the CEO and Executive KMP are aligned to the
bonus funding levels approved for corporate staff more broadly across Perpetual.
1.
As at 30 June 2023.
2.
Wealth Management is the new naming convention for Perpetual Private.
3. Returns are presented gross of investment management fees. Investment performance of the strategies may differ once fees and costs are taken into
account. Past performance is not indicative of future performance. See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com, tswinvest.com
and pendalgroup.com for relevant performance. The product disclosure statements (PDS) or disclosure document of any of the capabilities or funds should
be considered before deciding whether to acquire or hold units in any such offering.
Perpetual Group Annual Report 2023 31
Further alignment of Executive KMP to shareholder experience
As outlined in detail in the FY22 Remuneration Report and Notice of Meeting, shortly after the completion of FY22, the Perpetual
Limited Board awarded a long‑term incentive (Growth LTI) to Executive KMP, incentivising the team to deliver growth above the
existing KMP Variable Incentive scheme reward’s stretch performance. The vesting hurdle for these awards will be a stretch CAGR
absolute TSR of at least 10% (0% vesting) to 15% (100% vesting). Subject to meeting this hurdle, vesting will occur equally after
3, 4 and 5 years, with any vested equity restricted for a full five‑year period. In arriving at this design, the Board intended to create
an incentive arrangement for management to share in the upside of shareholder returns, while ensuring that no vesting will occur
if the compounded stretch targets are not met.
Changes to KMP remuneration in FY23
As foreshadowed in the FY22 Remuneration Report, commencing in FY23, the Hurdled Equity component of the KMP Variable
Incentive was decoupled from the broader Variable Incentive structure. In effect, the Hurdled Equity component is no longer
subject to the group scorecard assessment process prior to allocation. The existing 7–10% CAGR absolute TSR hurdle range remains
unchanged, with any vesting of these awards needing to meet or exceed this hurdle range over a three or four‑year period. For FY23,
the Board determined that all Executive KMP would receive their target Hurdled Equity award1. It is expected that this change will
result in more consistent Hurdled Equity allocations being made to Executive KMP across business cycles – similar to a traditional
long‑term incentive (LTI).
CEO vesting outcomes in FY23
The three‑year tranche of the CEO’s FY19 Hurdled Equity allocation was tested in September 2022 and did not meet the CAGR
absolute TSR hurdle range required for vesting. As a result, this tranche of the CEO’s FY19 Hurdled Equity allocation lapsed and will
not be retested. Other Executive KMP moved to the Hurdled Equity structure of the combined Variable Incentive with effect from
FY20 and the first tranche of Hurdled Equity will be tested in September 2023.
Board composition
Several changes to Board composition occurred in FY23. Following completion of the Pendal Group acquisition in January 2023,
and in recognition of the growing scale and global nature of the business, two internationally based Non‑executive Directors of
Pendal Group, Ms Kathryn Matthews and Mr Christopher Jones, joined the Perpetual Limited Board. Alongside this change, one
of Perpetual’s long serving Australian‑based Non‑executive Directors, Mr Craig Ueland, retired from the Board.
Perpetual Group is now a truly global business, with offices in 10 countries and over 1,900 employees globally. With scale comes the
need for appropriate governance and oversight given the complex regulatory requirements that exist for our businesses globally.
For FY24, the Board has established two new Board committees2 to assist in further directing focus to key areas of oversight.
Conclusion
On behalf of the Board, I would like to thank shareholders and other stakeholders for your valuable feedback and ongoing dialogue
on our remuneration approach. We are confident that we have balanced shareholder interests whilst also ensuring that our team
is appropriately remunerated such that your Company has the best possible opportunity to deliver on our strategic goals.
Yours sincerely,
Nancy Fox
Chairman, People and Remuneration Committee
1.
Consistent with the Variable Incentive forfeiture provisions, any Executive KMP due to depart the business will not receive a Hurdled Equity award.
2.
In August 2023, the Perpetual Limited Board approved the formation of a Technology and Cyber Security Committee and an Integration Committee.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 32
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Contents
1.
2.
3.
4.
Key Management Personnel and executive summary
Governance
Our people
Our remuneration philosophy and structure
5. Managing risk and sustainability within Perpetual
6.
7.
8.
9.
Aligning Perpetual Group performance and reward
Variable Remuneration
Data disclosures – Executive KMP
Non‑executive Director remuneration
10. Key terms
1. Key Management Personnel and executive summary
32
35
36
39
41
45
48
54
64
68
POSITION
TERM AS KMP IN FY23
Chief Executive Officer and Managing Director
Full year
Chief Executive, UK, Europe and Asia (EUKA)
Partial year1
Chief Integration Officer
Chief Executive, Asset Management Australia
Chief Financial Officer
Chief Executive, Americas
Chief Executive, Wealth Management
Chief Executive, Corporate Trust
Chief Risk and Sustainability Officer
Chairman
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Partial year3
Partial year2
Full year
Full year
Full year
Partial year3
Full year
Full year
Mona Aboelnaga Kanaan
Independent Director
Nancy Fox
Independent Director
1. Alexandra Altinger joined as a KMP of Perpetual Limited on 23 January 2023 following the completion of the Pendal Group Acquisition.
2. Craig Ueland retired as an independent Director of Perpetual Limited on 24 January 2023.
3. Kathryn Matthews and Christopher Jones joined as Independent Directors of the Perpetual Limited Board on 24 January 2023 following the completion of the
Pendal Group Acquisition.
NAME
Executive KMP
CEO and Managing Director
Rob Adams
Group Executives
Alexandra Altinger
Amanda Gazal
Amanda Gillespie
Chris Green
David Lane
Mark Smith
Richard McCarthy
Sam Mosse
Non-executive KMP
Non-executive Directors
Tony D’Aloisio
Christopher Jones
Craig Ueland
Fiona Trafford‑Walker
Gregory Cooper
Ian Hammond
Kathryn Matthews
Perpetual Group Annual Report 2023 33
1.1 Summary of key outcomes for Executive KMP
Changes to Executive KMP fixed remuneration and target Variable Incentive levels in FY23
Changes to fixed pay and target Variable Incentive levels for the CEO and KMP in FY23 were as follows.
– As foreshadowed in the FY22 Remuneration Report, aggregate fixed pay increases of 5.3% were agreed and took effect from
1 September 2022. Changes to Variable Incentive targets for some Executive KMP (including the CEO) were also agreed with
effect from 1 July 2022.
– Effective 23 January 2023, additional changes were made for some Executive KMP to reflect the added scope and accountability
arising from the Pendal Group acquisition. These additional fixed pay increases equalled 2.9% of KMP fixed pay in aggregate,
while increases to target Variable Incentive levels equalled 5.5% in aggregate. These increases were more than offset by the cost
savings achieved by bringing the two executive teams together.
– The CEO’s fixed pay did not change during FY23 and has not been increased since his appointment to the role in September
2018. The CEO’s variable incentive targets were adjusted upwards effective 1 July 2022 as part of the annual review cycle.
All increases were determined in consideration of relevant market data and trends, as well as to reflect continued development
in role and the increasing complexity and breadth of managing a larger global business. Section 8 of this report provides detailed
information on individual Executive KMP remuneration levels.
Variable Incentive outcomes for FY23
FY23 was a transformative year for Perpetual, with the announcement and completion of the Pendal Group acquisition. In arriving
at Variable Incentive outcomes for FY23, the Board weighed execution of the strategic plan alongside the financial performance of
the business, including a reduction in underlying EPS in FY23 and continued pressure on net flows. Section 7 of the Remuneration
Report summarises business performance and associated Executive KMP Variable Incentive outcomes, which averaged 49% of
target (28% of maximum target) for Executive KMP (excl. CEO) and 55% of target (31% of max) for the CEO in FY23.
Lapsing of FY19 CEO Hurdled Equity award (3-year tranche)
The three‑year tranche of the CEO’s FY19 Hurdled Equity allocation was tested in September 2022 and did not meet the CAGR
absolute TSR hurdle range required for vesting. As a result, this tranche of the CEO’s FY19 Hurdled Equity allocation lapsed and will
not be retested. Further information is available in Section 7.8.
In September 2023, the following Hurdled Equity awards will be tested against their respective hurdles.
ALLOCATION
DETAILS
FY19 Hurdled Equity
allocation (4‑year tranche)
– The CEO’s FY19 Hurdled Equity allocation is due to be tested against the CAGR absolute TSR hurdle
in September 2023. Other KMP moved onto the Hurdled Equity structure of the combined Variable
Incentive with effect from FY20.
FY20 Hurdled Equity
allocation (3‑year tranche)
– In response to the unfolding COVID‑19 pandemic and the associated market and business
conditions at the time, the Perpetual Limited Board made the decision to allocate CEO and KMP
Variable Incentive awards for FY20 exclusively as Hurdled Equity (i.e., no Cash Variable Incentive or
Unhurdled Variable Incentive were awarded to the CEO or KMP in respect of FY20). The three‑year
tranche of these awards is due to be tested in September 2023.
Decoupling of Hurdled Equity component of Variable Incentive
Perpetual operates a Variable Incentive structure for Executive KMP which consists of a Cash, Unhurdled Equity and Hurdled Equity
component (see Section 4 for more detail). Commencing in FY23, for new grants, the Hurdled Equity component of the KMP
Variable Incentive was decoupled from the broader Variable Incentive structure. In effect, the Hurdled Equity component is no
longer subject to the group scorecard assessment process prior to allocation. The existing 7–10% CAGR absolute TSR hurdle range
remains unchanged, with any vesting of these awards needing to meet or exceed this hurdle range over a three or four‑year period.
Executive KMP members continue to have a Hurdled Equity target, however individual allocations are expected to be more closely
aligned to each individual’s target each year – similar to a traditional Long Term Incentive. Hurdled Equity allocations to be made
in September 2023 are provided in Section 7.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 34
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Arrangements for Executive KMP who joined or ceased in FY23
EXECUTIVE KMP
TREATMENT
Alexandra Altinger,
Chief Executive, UK,
Europe and Asia (EUKA)
– Ms Altinger joined as an Executive KMP of Perpetual Limited on 23 January 2023 following the
completion of the Pendal Group acquisition. Ms Altinger will participate in Perpetual’s KMP
Variable Incentive Plan with effect from her commencement with Perpetual Limited, meaning her
FY23 Variable Incentive award will be pro‑rated from her commencement as a KMP of Perpetual
Limited. Shortly following her commencement with Perpetual Limited, Ms Altinger was awarded
a Growth Incentive allocation with the same hurdles and vesting schedule outlined in the FY22
Remuneration Report.
– As part of the changes announced alongside Perpetual’s full year results, Ms Altinger will cease
employment duties with Perpetual on 24 August 2023.
David Lane,
Chief Executive, Americas
– As announced via the ASX on 23 May 20231, Mr Lane was not able to relocate to the United States
due to personal and family reasons and will cease employment duties with Perpetual Limited on
24 August 2023.
– Mr Lane is eligible for a severance payment in‑line with Perpetual’s Redundancy and
Retrenchment policy for Australian‑based employees and was provided with access to
outplacement services with costs incurred by Perpetual.
– Consistent with the terms and conditions of the Variable Incentive plan (see Section 6.4), Mr Lane’s
unvested or restricted Variable Incentive awards remain in the plan and will be tested relative to
any applicable hurdles or vesting conditions at the original vesting date for each tranche.
– Mr Lane’s Hurdled Growth Long Term Incentive will be pro‑rated to the date of termination and any
remaining unvested Rights or Restricted Shares will remain in the plan and will be tested against
the agreed hurdles at the applicable vesting dates.
2022 Executive KMP Growth Incentive
As outlined in detail in the FY22 Remuneration Report and Notice of Meeting, shortly after the completion of FY22, the Perpetual
Limited Board awarded a long‑term incentive (Growth LTI) to Executive KMP, incentivising the team to deliver growth above the
existing KMP Variable Incentive scheme’s stretch performance. The vesting hurdle for these awards will be CAGR absolute TSR
growth of at least 10% (0% vesting) to 15% (100% vesting). Subject to meeting this hurdle, vesting will occur equally after 3, 4 and
5 years, with any vested equity restricted until year 5. The Board believes this represents a significant degree of stretch performance
when compared to the TSR achieved by the Company in recent years, which will require ongoing expansion in underlying EPS.
Full details of these awards, including individual allocations and associated hurdles and conditions, are provided in Section 7.6.
Fixed Remuneration and Target Incentive changes for FY24
Aggregate fixed pay increases of 1.1% have been agreed for FY24 and will take effect from 1 September 2023. No change to the CEO
and Managing Director’s fixed pay or target Variable Incentive have been made.
1. See ASX announcement: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02668561-2A1450655?access_
token=83ff96335c2d45a094df02a206a39ff4.
Perpetual Group Annual Report 2023 35
1.2 Non-executive Director (NED) fees
As part of the acquisition of Pendal Group, which included the appointment of two Pendal Group Independent Non‑executive
Directors, the Board sought and received shareholder approval at the FY22 Annual General Meeting to increase the NED Fee Cap
to $3.5 million. As outlined in the Notice of Meeting to the FY22 AGM, the Board sought Shareholder approval to increase the
current remuneration pool cap for the following reasons:
1. to give the Company flexibility with regards to the appointment of additional Directors, particularly given the acquisition of
Pendal Group in FY23;
2. to ensure the remuneration pool could accommodate payment of fees to any additional Non‑executive Directors who were appointed;
3. to enable the Company to maintain remuneration arrangements that are market‑competitive, so it can attract and retain high
calibre individuals as Non‑executive Directors; and
4. to provide for Non‑executive Directors’ fees to grow in the future to reflect market trends in the longer term.
No changes were made to NED fee levels for FY23 for Australian or US‑based Independent Non‑executive Directors. For Perpetual’s
new UK‑based Independent Non‑executive Director, Kathryn Matthews, fees for FY23 were agreed to be paid in‑line with the
existing fee structure for UK‑based Independent Non‑executive Directors at Pendal Group. In recognition of the increased oversight
requirements required of the Board, for FY24 the Board has established two new Board committees to assist in further directing
focus to key emerging areas requiring specific oversight.
No changes to Board fees or committee fees will be made for FY24 outside of the establishment of two new committees and
agreeing their associated fees.
Further detail is available in Section 9.
2. Governance
2.1 The People and Remuneration Committee
The People and Remuneration Committee (PARC) is a committee of the Board and is comprised of independent Non‑executive
Directors. Operating under delegated authority from the Board, the PARC evaluates and monitors people and remuneration
practices to ensure that the performance of Perpetual is optimised with an appropriate level of governance while balancing the
interests of shareholders, clients and employees. The PARC’s terms of reference are available on our website1. The terms of reference
are intentionally broad, encompassing remuneration as well as the key elements of Perpetual’s people and culture strategy.
This enables the PARC to focus on ensuring high quality talent management, succession planning and leadership development
at all levels of Perpetual.
The PARC met seven times during the year, with attendance details set out on page 26 of this Annual Report. A standing invitation
exists to all Directors to attend PARC meetings. At the PARC’s invitation, the CEO and Managing Director and the Chief People
Officer attended meetings, except where matters associated with their own performance evaluation, development or remuneration
were considered. The PARC considers advice and views from those invited to attend meetings and draws on services from a range
of external sources, including remuneration advisers where considered appropriate.
2.2 Use of external advisers
During the year, Aon assisted the PARC with providing information on the remuneration competitiveness of the CEO and Executive
KMP as well as market benchmarking information for Independent Non‑executive Directors. The information provided did not
include any specific recommendations in relation to the remuneration or fees paid to KMP.
1. perpetual.com.au/~/media/perpetual/pdf/shareholders/role-of-the-board/people_and_remuneration_committee_terms_of_reference_document.ashx.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 36
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
3. Our people
Our people and culture strategy is focused on enabling Perpetual and our people to do great things and grow. FY23 saw an increased
emphasis on building capability and empowering our people to thrive in a growth‑focused environment. A priority for FY23 has been
the bringing together of the Perpetual and Pendal Group businesses and supporting our teams through times of change. Work has
also continued to enhance the employee experience of our integrated business and bring to life our people promise.
Our people promise
1
2
Join a trusted
brand with
respected expertise
Thrive at work
and home
–
Iconic and respected 135+ year‑old brand
with a proven track record
– Consistent fund management
performance and expertise
– Four generations of clients
– Opportunity to learn from the best
– We invest in the wellbeing of our people
so that they can be their best selves at
work and at home
– Wellbeing programs and initiatives that
enhance physical, mental, social and
financial wellbeing
– Programs that support our people
through different age and life stages
– Market leading parental leave scheme
and support for carers
3
4
Be part of a growing
global team
Experience a
collegial and
inclusive culture
– A growing global brand and team – offices
– Collaborative teams
in Australia, Asia, UK, Europe and USA
– Leaders who encourage innovation,
– Access to global career pathways and
learning and empowerment
mobility opportunities
– Authentically inclusive environment –
– Learn from experts in our global markets
not just lip service
– Diversity and inclusion is highly valued
and there are numerous employee‑led
D&I networks
– Strong commitment to flexibility and
hybrid working
5
6
Make a difference
Grow your career
– Giving back is part of our Perpetual
– Be challenged and supported to grow
– Strong self‑led learning culture
– Leadership development, mentoring
programs and secondment opportunities
to support our people to grow
Group DNA. As one of Australia’s largest
managers of philanthropy funds, we have
a strong commitment to supporting the
communities within which we live and work
– Strong and longstanding community
partnerships and commitment
to sustainability
– Partner with clients as a trusted adviser
and make a difference to their lives
– Contribute openly and have a voice at
the table
– Broad, varied and meaningful roles
– Contribute to the Perpetual Group
purpose of enduring prosperity
Our purpose
To create enduring
prosperity
Our behaviours
Stretch
Own it
Make an Impact
Perpetual Group Annual Report 2023 37
Growing global organisation and commitment to learning
Perpetual offers a range of compelling learning and career advancement opportunities to our people with the aim of building a
learning culture. This is supported through our enterprise‑wide LinkedIn Learning offering, which provides our people access to
thousands of professional and personal development resources. Since the completion of the acquisition, this offering has been
extended to all Pendal Group employees.
In FY23, Perpetual launched its inaugural Talent Accelerator Program – a 12 month talent development program investing in
Perpetual’s future leaders. We have partnered with Bendelta to design and deliver a high‑quality program comprised of, leadership
development workshops, 360‑degree feedback surveys, online learning pathways and executive coaching.
Supporting our people to manage through change
Perpetual is focused on supporting our people through a period of substantial change, including the Pendal Group integration,
by focusing workshops and initiatives targeted at the key moments that matter. Several change interventions were implemented
in FY23 to support employee engagement, productivity, performance and morale.
– Regular monitoring of employee sentiment through group‑wide pulse surveys provides key metrics for Perpetual to track
employee feedback, and actionable insights to enhance the employee experience.
– People Leader change leadership support through leadership workshops, people leader change support guides, LinkedIn
Learning, change leadership learning pathways and increased coaching and support for leadership teams.
– Individual resilience workshops – focused on leading self and others through change, mental health and managing wellbeing.
– Offering Headspace mindfulness and meditation app to all employees of Perpetual Group.
– Building high‑performing teams programs for new people leaders and new and blended teams coming together following
the Pendal Group integration.
Commitment to diversity and inclusion
Perpetual has a longstanding commitment to embracing diversity and fostering an inclusive environment. Across FY23, an average
of 79% of Perpetual Group employees agreed or strongly agreed that Perpetual cultivates an inclusive environment accepting
of diverse views and individual differences.
Perpetual’s Diversity and Inclusion (D&I) Council is chaired by Rob Adams, Perpetual’s Group CEO, and is responsible for the
delivery of Perpetual’s D&I strategy, which has three strategic goals – inclusion, equity and identity. The D&I strategy is supported
by a roadmap that prioritises key initiatives over a three‑year period (FY22–FY24). Initiatives are delivered by several employee‑led
working groups that champion different areas of diversity: gender equality, cultural diversity, ages and life stages, LGBTQ+, disability,
parents and carers, and cognitive diversity. The following illustration highlights our strategic goals and key D&I achievements in FY23.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 38
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Strategic goals
Inclusion
Equity
Identity
A high‑performance
culture, where we empower
our people to grow
A level playing field for all
Our people feel valued and
confident to bring their
unique self to work
Working groups
1
Gender
Equality
2
Cultural
Diversity
3
4
LGBTQ+
Disability
5
Life Stages
& Events
6
Parents &
Carers
7
Cognitive
Diversity
Key achievements FY23
Applying an
inclusive lens
on our policies
Growing our Pride
Network and
marking World
Pride
Supporting
parents
and carers
Developing
employee
personas
Harnessing
the power
of cognitive
diversity
Investing in the
next generation
of female talent
– Members of our
Diversity and
Inclusion Working
Groups reviewed
over 20 internal
policies with a
D&I lens
– Recommend‑
ations are
being finalised
across these
policies, and the
development
of two new
policies has
been proposed
Implemented a
gender‑neutral
20 weeks’ paid
parental leave
policy in Australia
– Since
implementation
in July 2022, the
proportion of
males accessing
parental leave
and the amount
of paid parental
leave accessed
has increased
– Designed and
brought to life
10 employee
personas that
reflect different
life stages of
our people
– These personas
will be used across
business and
D&I initiatives
to consider
the employee
experience across
all life stages
– Continued the
rollout of the
HBDI thinking
preferences tool
for leadership
and talent
cohort across
the business
– Eight employees
accredited to
administer the tool
– Completed our
second program in
partnership with
F3 (Future Females
in Finance)
– Continued our
partnership with
Future IM/Pact
and hosted two
early career events
– Hosted five
Women@Perpetual
events in FY23
– More than
–
doubled our
Pride Network
membership
in FY23
–
Increased
Perpetual’s
LGBTQ+ inclusivity
measure by 20%
– Celebrated World
Pride in Sydney
and Melbourne
offices
– Sponsored
LGBTQ+ leaders to
attend the Human
Rights Conference
in Sydney for
World Pride
Perpetual Group Annual Report 2023 39
4. Our remuneration philosophy and structure
Perpetual’s remuneration philosophy is designed to enable the achievement of our business strategy, ensure that remuneration
outcomes are aligned with our shareholder, client and community best interests and are market competitive. To that end, we have
created a set of guiding principles that direct our remuneration approach.
4.1 Global Remuneration principles
Our remuneration policy is designed around six guiding principles, which aim to:
1. attract, motivate and retain the desired talent within Perpetual
2. balance value creation for shareholders, clients and employees
3. facilitate the accumulation of Perpetual equity or investments in product to drive an ownership mentality and long‑term
alignment of interests
4. embed and encourage sound risk management, behaviours and conduct
5. be simple, transparent, equitable and easily understood and administered; and
6. be supported by a governance framework that avoids conflicts of interest and ensures proper controls are in place.
4.2 Remuneration policy and practice
CEO and other Executive KMP remuneration
Perpetual has implemented a transparent remuneration model that is aligned to our business strategy and supports the attraction
and retention of talent. For FY23, the following applies:
– The Cash and Unhurdled Equity components of the Variable incentive remain unchanged and will continue to be subject to the
group scorecard assessment prior to allocation.
– Commencing FY23, Perpetual decoupled the Hurdled Equity component from the combined Variable Incentive. The Hurdled
Equity component of the Variable Incentive structure remains subject to the existing long‑term absolute TSR performance hurdle
and performance range of 7–10% CAGR, however awards will no longer be subject to the group scorecard assessment prior
to allocation.
Each Executive KMP will continue to have a target Hurdled Equity amount that will form the starting basis for the Board’s
determination of each year’s allocation. While the Board will retain discretion to adjust individual Executive KMP Hurdled Equity
allocations higher or lower each year, it is expected that this change will result in more consistent Hurdled Equity allocations being
made to Executive KMP across business cycles – similar to a traditional Long Term Incentive.
FIXED VS. VARIABLE
COMPONENT
CASH VS. EQUITY
EXPLANATION OF COMPONENT
Fixed
Fixed reward
Paid as cash
Variable Incentive
(subject to group
scorecard prior to
allocation)
Cash
Paid as cash
Unhurdled Equity
Awarded as equity
Variable Incentive
(not subject to group
scorecard prior to
allocation)
Hurdled Equity
Awarded as equity
Set in consideration of the total target remuneration package
and the desired remuneration mix for the role, taking
into account the remuneration of market peers, internal
relativities and the skill and expertise brought to the role.
Calculated on a “total cost to company” basis, consisting of
cash salary, pension, and in Australia, packaged employee
benefits and associated fringe benefits tax (FBT).
Each participant has a Variable Incentive target, expressed
as a defined dollar target amount. Annual Variable Incentive
outcomes are linked to performance against key business
metrics directly linked to our strategy. The Variable Incentive
is awarded as a mix of Cash and Unhurdled Equity.
The Unhurdled Equity component is awarded as Share Rights,
which vest after two years into Restricted Shares for a further
two years.
The Hurdled Equity component is awarded in the form
of Performance Rights (subject to performance hurdles of
absolute total shareholder return) which vests equally over
three and four years (with any vested equity tested after
three years restricted for a further year).
The emphasis on equity ensures that Variable Incentive
outcomes are linked to shareholder experience through
reinforcing long‑term ownership of Perpetual shares.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 40
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Asset manager remuneration
Asset manager remuneration aligns to Perpetual’s performance‑based remuneration philosophy and principles. Perpetual
seeks to align asset manager remuneration with longer‑term value creation for our clients, which in turn is expected to benefit
shareholder outcomes.
COMPONENT
EXPLANATION OF COMPONENT
Structure of
asset manager
incentive schemes
– While the arrangements in place vary across investment teams and boutiques, the following structural
features generally apply:
• Remuneration arrangements for more senior asset managers are typically structured to recognise and
reward growth and retention of revenue or manageable profit of the strategies they support. In some
instances, this results in an agreed revenue or pre‑bonus profit sharing rate between Perpetual and the
asset manager or team.
• Incentive arrangements within certain boutiques are funded based on the financial performance
of the boutique. In some instances, adjustments are also made for investment performance,
growth goals and other strategic focus areas (including risk overlays).
• For research roles and analysts, individual performance is generally assessed with reference to stock
recommendations, attribution to performance, and ultimate investment performance against agreed
investment targets, measured over a range of time horizons.
• Some funds attract performance fees. In the event an investment strategy exceeds a pre‑determined
performance hurdle for a specific fund over the measurement period (generally over either a 6 or
12‑month period) a performance fee is paid by the client. In some instances, the performance fee is
shared between the asset management team and Perpetual.
Deferral/LTI
arrangements
– Generally, asset managers have a portion of their variable remuneration awarded as either deferred short‑
term incentives (STI) or long‑term incentives (LTI) each year. This cycle of rolling awards ensures retention
arrangements are in place and avoids cliff vesting events.
– For most asset managers, deferred incentives can be invested into either Company equity or units in funds
that they are responsible for, further aligning asset managers to client outcomes and shareholder interests.
– Within Barrow Hanley, an agreed portion of the bonus pool is distributed as unit interests in
Barrow Hanley.
General employee remuneration
Perpetual employees globally receive salary, a competitive retirement offering and are commonly eligible to receive an STI or bonus.
In addition, Perpetual offers a comprehensive range of employee benefits across wealth, health and lifestyle categories in the
geographies where staff are employed.
Performance against the group balanced scorecard and other factors determines the size of the bonus pool for the financial year.
Relative divisional performance against a range of inputs then determines the distribution of the bonus pool to each division.
An individual’s performance rating is determined based on performance against objectives agreed at the commencement of the
performance year. An individual’s bonus outcome is generally based on this performance rating, which is reflective of performance
against targets in an individual scorecard, delivery of goals against Perpetual’s behavioural framework and an employee’s approach
to the management of risk.
Most sales employees globally participate in Perpetual’s group short term incentive plan. Where discrete sales plans exist, they
are designed to reward performance specifically for business development managers who work within boutique sales teams.
Awards are determined based on a range of factors, including client retention, actual sales performance, cross‑selling, and other
team behaviours.
Former Pendal Group bonus plans and transition to equivalent Perpetual plans
For group employees, Perpetual is in the process of harmonising global variable incentive schemes to equivalent Perpetual schemes.
Variable incentive opportunity levels for individual employees are set annually in a similar way to Perpetual employees and are
based on regular analysis of competitor market data for each role. It is expected that these plans will be largely consolidated by the
end of FY24.
Perpetual Group Annual Report 2023 41
Details of equity-based remuneration
Some senior employees are also eligible to participate in Perpetual’s Long Term Incentive Plan. Perpetual’s Long Term Incentive Plan
offers either Restricted Shares or Performance Rights to employees, generally vesting over a three‑year period from the grant date.
The number of shares allocated to employees at grant date is based on the value of the equity award they received as part of their
variable reward outcome or other incentive arrangements.
All other Australian‑based employees are eligible to participate in the One Perpetual Share Plan whereby eligible employees can
be awarded annual grants of up to $1,000 of Perpetual shares subject to Perpetual meeting our group profit target. This scheme
is limited to Australian‑based staff due to the legal and tax environments in other geographies.
From a governance and administration perspective, external Trustees are responsible for managing the employee equity plan trusts
which the Group uses to facilitate the acquisition and holding of shares for employee incentive arrangements. Shares awarded
under Perpetual’s employee share plans may be purchased on market or issued subject to Board approval and the requirements
of the Corporations Act 2001 and the ASX Listing Rules.
During FY23, the Trustees of Perpetual’s employee benefit Trusts acquired a total of 861,648 Perpetual Limited shares at an
average price of $22.97 totalling $19,792,676. These securities were acquired to satisfy Perpetual’s obligations under various
employee equity plans.
5. Managing risk and sustainability within Perpetual
Incorporating risk, conduct and behaviours into performance
Risk management continues to be a fundamental focus within our business, with the Perpetual Board having the responsibility
and commitment to ensure that Perpetual has a sound risk management framework in place. Perpetual’s Risk Group is a
centralised corporate function, managed by the Chief Risk and Sustainability Officer, who reports directly to the CEO. The Risk
Group has developed risk measurement systems and practices that are utilised when determining “at risk” remuneration. To this
effect, risk management is a key performance metric at a group, divisional and individual level.
The Board, the PARC and people leaders have a range of mechanisms available to adjust remuneration and incentive outcomes to
reflect behavioural, risk or compliance outcomes (both strong and weak) at a group, divisional and individual level. The table below
summarises the range of mechanisms available and their intended operation.
MECHANISM
DESCRIPTION/INTENTION OF THE MECHANISM
Risk dashboards
(apply at a Group or
divisional level)
Incentive funding can be adjusted (upwards or downwards) following a combined Audit, Risk and Compliance
Committee (ARCC) and PARC review of group and divisional risk “dashboards”, which are produced by the
Risk and Internal Audit functions throughout the year as well as leading into financial year‑end.
Behavioural
ratings – Perpetual
Behaviours and
Risk Ratings
Perpetual is currently integrating the reporting of Pendal Group’s risk reporting into Perpetual’s risk
dashboard framework, meaning that for FY23 risk outcomes for Pendal Group were reported separately
to this framework.
Individual behavioural and risk assessments are collected for most employees at Perpetual – noting that
recently acquired businesses, including Pendal Group operate their own risk and behavioural frameworks.
For Perpetual Group employees, the behavioural and risk components of the scorecard effectively moderate
employee performance outcomes. Behavioural ratings are provided across a four‑point scale and can
result in either upward or downward adjustments to performance ratings and reward or bonus outcomes.
Additionally, a discrete risk assessment is undertaken for most employees using a consistent framework
covering a range of risk measures and expectations across various seniority levels of the organisation.
Malus provisions
or international
equivalents
These allow for the Board to adjust or lapse any unvested incentive awards where, in their opinion of the
Board, the participant has acted fraudulently and/or dishonestly, has breached his or her obligations to
the Group, where outcomes have been misstated, or where the Board determines at its sole discretion that
outcomes are inappropriate.
Clawback provisions
or international
equivalents
These allow for the Board to reclaim (or “claw back”) vested incentives where, in the opinion of the Board,
vesting occurred as a result of fraud, dishonesty, a breach of obligations or where outcomes have been
misstated. This applies to both current and former employees.
Board discretion
Overriding the above mechanisms, the Board, and in some instances management, has discretion to
adjust proposed incentive or vesting outcomes, subject to the applicable rules governing each incentive
plan. The discretion to vary incentive outcomes from the agreed formulas range from absolute unfettered
discretions to more limited discretions which may only be applied in specific circumstances.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 42
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
In addition to the above mechanisms, Perpetual:
– performs detailed scenario testing on potential outcomes under any new or changed incentive plans;
– reviews the alignment between proposed remuneration outcomes and performance achievement for incentive plans on an
annual basis; and
– delivers a significant portion of variable remuneration as deferred incentives (for more senior employees) in equity or investments
in products to align remuneration outcomes with longer term shareholder and client value.
Link between risk and reward
An employee’s approach to managing risk is a key factor when considering his or her yearly performance. Risk management
performance measures are overlaid in employee scorecards as per the graphic below. These measures are considered when
assessing overall performance and incentive payments.
To be eligible for a variable incentive, all employees must meet minimum risk criteria
+
+
+
Applies the Risk
Appetite Statement
in decision making
processes
Escalates issues
to Risk within
five days
Completes
compliance tasks
on time and
accurately (training
and management
of obligations)
Embeds
appropriate risk
behaviours in
all endeavours
and effectively
balances risk
with opportunity
FY23 risk performance
FY23 full year risk performance results demonstrate continued focus on risk across the Group and are considered positive given
the extent of transformational organisational change that has continued over the last 12 months, which has included:
– the acquisition of the Pendal Group and commencement of integration activity globally;
– ongoing integration of acquisitions (Barrow Hanley, Trillium Asset Management, Laminar Capital and Jacaranda Financial Planning);
– growing inbound regulatory engagement in Australia and evolving regulatory operating environment across our expanding
offshore businesses; and
– management of other key initiatives and major project activity throughout the business during a period of challenging market
conditions globally.
Perpetual Group Annual Report 2023 43
Notwithstanding this, there are some isolated metrics across the divisions where improvements are required. Sustained people and
operational related risks remained elevated during the period and continued to impact some metrics. This follows as risk behaviours
continued to be influenced by competing pressures to support Pendal integration and deliver synergies within a condensed
timeframe, alongside business as usual and other competing priorities across the Group. This continues to be closely monitored by
Executives to ensure projects and/or initiatives designed to address risk and promote the desired risk behaviours underpinning our
strong risk culture are prioritised and funded.
On balance, given the above, and the environment in which we have operated in the past 12 months, no risk adjustments to bonus
funding levels were recommended at the Group or divisional level. In addition, no adjustments were made to individual Executive
KMP Variable Incentive outcomes for FY23 based on risk performance.
Further information on the Board’s review of prior year vesting is available in Section 7.7.
Incorporating sustainability into performance
In September 2022, Perpetual’s Prosperity Plan was launched, a key component of the Company’s sustainability strategy.
This consisted of 35 commitments made across four pillars – Planet, People, Communities and Governance. Through the
strategy, Perpetual seeks to help clients navigate the low carbon transition, build an inclusive, high‑performance culture,
strengthen local communities and uphold good governance, accountability and integrity.
As part of the internal alignment and implementation of Perpetual’s sustainability strategy, for FY23 it was agreed that a
sustainability overlay would be applied to bonus funding as part of the FY23 Group Scorecard assessment process (similar
to the current Risk Dashboard overlay).
FY23 sustainability performance
To support the FY23 review of Perpetual’s sustainability performance, an assessment was conducted on progress against of each
of the 35 commitments, giving each of them a ‘red’, ‘amber’ or ‘green’ (RAG) status, with a path to ‘green’. An assessment was also
undertaken of the impact of the acquisition of Pendal Group on the delivery of the 35 commitments.
On balance, given Perpetual’s progress against the commitments, as described in the FY23 Sustainability Report, no adjustments
were made to bonus funding levels at the group or divisional level. In addition, no adjustments were made to individual Executive
KMP Variable Incentive outcomes for FY23 based on sustainability performance.
Minimum shareholding guideline
A minimum shareholding guideline applies to Executive KMP. The purpose of this guideline is to strengthen the alignment between
Executive KMP and shareholders’ interests related to the long‑term performance of Perpetual. Under this guideline, Executive KMP
are expected to establish and hold a minimum shareholding to the value of:
– CEO:
1.5 times fixed remuneration
– Other Executive KMP:
0.5 times fixed remuneration
The value of each vested Restricted Share still held under restriction for the Executive KMP is treated as being equal to 50% of actual
value, as this approximates the value of the share in the hands of the Executive after allowing for tax. Unvested shares or rights do
not count towards the target holding.
A five‑year transition period from the date of appointment to an Executive KMP role gives Executive KMP reasonable time to meet
their shareholding guideline. Where the guideline is not met after the required time period, the CEO and other Executive KMP may
be restricted from trading vested shares.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 44
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
As at 30 June 2023, progress towards the minimum shareholding target for each Executive KMP was as follows. Perpetual’s main equity
vesting events for Executive KMP occur in September each year (see section 8.6 for further information on upcoming vesting events).
Executives
R Adams
A Altinger3
A Gazal
A Gillespie
C Green
D Lane
M Smith
R McCarthy
S Mosse
VALUE OF
ELIGIBLE
SHARE-
HOLDINGS
AS AT 30 JUNE
20231
$
VALUE OF
MINIMUM
SHARE-
HOLDING
GUIDELINE
$
TARGET DATE
TO MEET MINIMUM
SHAREHOLDING GUIDELINE
GUIDELINE
MET2
964,716
1,954,164
24 September 2023
163,148
251,916
295,238
287,500
23 January 2028
7 April 2025
238,665
300,000
18 November 2025
646,030
368,750
403,482
325,000
1 October 2013
10 April 2022
790,802
315,813
19 November 2017
205,086
300,000
15 October 2023
133,696
337,500
18 February 2024
✓
✓
✓
1. Value is calculated through reference to the closing Perpetual share price at 30 June 2023 of AUD $25.88.
2. Executives have a five-year transition period to meet their shareholding requirement.
3. Value of minimum shareholding guideline converted to for Ms. Altinger have been converted to AUD using an FX rate of 0.525.
Hedging and share trading policy
Consistent with Corporations Act obligations, Perpetual’s Share Trading Policy prohibits employees and Directors from entering
into hedging arrangements in relation to Perpetual shares.
Share dealing approval
Perpetual has a policy for trading in Perpetual shares which stipulates certain trading black‑out periods and requires all
employees to seek pre‑trade approval via an automated platform. A copy of the policy has been lodged with the ASX and appears
on Perpetual’s website1.
1. perpetual.com.au/globalassets/_au-site-media/01-documents/04-group/02-governance--policy/2023/trading-in-perpetual-securities-policy_june-2022.pdf.
Perpetual Group Annual Report 2023 45
6. Aligning Perpetual Group performance and reward
6.1 Alignment of performance and reward to strategy
Perpetual’s strategy and purpose is “Enduring Prosperity”. Successful delivery of the strategy is defined by clear client, people,
strategic and financial measures which link our annual targets with our long‑term strategic objectives; that is, balancing short‑term
financial outcomes with the necessary investments for long‑term sustainable growth.
– for our clients, enduring prosperity means pursuing a strategy that is focused on delivering quality products and outstanding service;
– for our people, enduring prosperity means empowering them to deliver superior performance and to explore new capabilities
and establish a global footprint;
– for our shareholders, enduring prosperity means delivering above average, sustainable growth over the medium to long term; and
– for the community, enduring prosperity means delivering a positive contribution to the sustainability of society.
In our view, this is best achieved by having highly engaged people creating superior client outcomes, which in turn delivers
underlying earnings growth for shareholders.
Our 2023 strategy1
Our purpose
Enduring Prosperity
Our vision
Most trusted in
Financial Services
Our values
Excellence, Integrity,
Partnership
Clients
Trusted brand and
enduring relationships
People
Attract, develop and inspire
the best people
Shareholders
Delivering sustainable,
quality growth
Strategic imperatives
Client First
Exceptional products
Outstanding service
– Exceed client needs with
products and services
–
Improve client connectivity and
delivery through innovative
digital solutions
– Set industry leading standards
in all that we do
Enablers
Future Fit
Empowering our people
High performance
New Horizons
New capabilities
Global footprint
– Agile, efficient and scalable operating
– Buy or build global investment &
platform to manage growth
distribution capabilities
– A strong culture where people
are positively challenged and
empowered within our stated
risk appetite
–
Improve and diversify our growth
potential via an active M&A
agenda across our businesses
– Deliver innovative solutions to
– Contemporary technology
our clients
Brand
Leadership
Innovation
Variable remuneration is designed to reward Executive KMP for their performance over the course of the year, provided they have
achieved performance standards based on financial and non‑financial measures focused on delivering short and long‑term value.
The variable remuneration structure is designed to drive business strategy with outcomes being aligned to shareholders.
1. Note that a refreshed strategy was announced on 24 August 2023.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
46
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
6.2 Features of the Executive KMP Variable Incentive Plan
Structure of the KMP Variable Incentive Plan
The diagram below summarises the structure and vesting schedules of the Executive KMP Variable Incentive plan awards for FY23.
The FY23 group scorecard assessment impacts the Variable Incentive Cash and Variable Incentive Unhurdled equity, but no longer
the Hurdled Equity component.
Share rights
Cash
FY23
performance
year Group
scorecard
assessment
50% of Variable Incentive Equity
Restricted shares entitled to dividends
Performance rights
25% of Variable Incentive Equity subject
to a three year CAGR Absolute TSR Hurdle
Restricted shares
entitled to dividends
25% of Variable Incentive Equity subject to a four year CAGR Absolute TSR Hurdle
30 June 2022
30 June 2023
30 June 2024
30 June 2025
30 June 2026
30 June 2027
September 2023
September 2027
Remuneration mix
Executive KMP have a significant portion of their remuneration linked to performance and at risk, with the Board able to risk adjust
remuneration if required. There is a strong alignment to LTI for Executive KMP, as Perpetual believes in meaningful equity ownership
for this key group.
Total remuneration continues to be determined using a range of factors including Perpetual’s market peers. The table below shows
the average on‑target remuneration mix for Perpetual Executive KMP as at 30 June 2023.
Group Executives
37%
CEO
31%
0%
22%
21%
20%
16%
26%
20%
40%
60%
26%
80%
100%
Fixed
Variable Cash
Variable Equity
Unhurdled
Variable Equity
Hurdled
The absolute three and four‑year TSR performance hurdles will be aligned to the following achievement scale.
COMPOUND ANNUAL GROWTH IN TSR
PERCENTAGE OF RELEVANT TRANCHE OF PERFORMANCE RIGHTS THAT VEST
Less than 7% per annum
7% to 10% per annum
10% or above per annum
0%
Straight‑line vesting from 50% to 100%
100%
The number of Performance Rights granted for FY23 performance will be determined by dividing the relevant variable incentive
award dollar amount by the five‑day VWAP1 prior to the grant date. This approach is consistent with the practice adopted every year
for Executive KMP awards.
1. The Volume Weighted Average share price provides the average price that a security has traded at throughout the day or agreed period.
Perpetual Group Annual Report 2023 47
6.3 Approval processes
The Board, through the Chairman of the Board, conducts a formal review of the performance of the CEO and other Executive KMP
on an annual basis. The Chairman, in consultation with the PARC, then makes recommendations directly to the Board for approval
of the Variable Incentive allocation.
For other Executive KMP, the CEO makes recommendations to the PARC on Variable Incentive allocations. Once recommendations
are reviewed and endorsed, the PARC makes recommendations for the Executive KMP to the Board for final approval.
6.4 Termination of employment
Treatment on termination of employment is as follows;
EVENT
AWARDS NOT YET GRANTED
AWARDS GRANTED, BUT NOT YET VESTED
VI CASH & VI UNHURDLED
EQUITY
HURDLED
EQUITY
VI UNHURDLED
EQUITY
VI HURDLED
EQUITY
Resignation
Termination for
poor performance
No further variable incentive is payable in respect of
the current or prior performance years as at the date
of notice.
Forfeited.
VESTED BUT
RESTRICTED
RESTRICTED
SHARES
Retained under
the plan with
restriction periods
continuing
to apply.
Summary
dismissal
Death
Mutual agreement
Retirement
(requires Board
approval)
Redundancy
Total and
permanent
disablement (TPD)
No further variable incentive is payable in respect of
the current or prior performance years as at the date
of notice of termination.
Forfeited.
Forfeited.
A pro-rated variable
incentive based on
the period of the
performance year
completed (excluding
notice paid in lieu or
gardening leave) and
full year performance
score will be delivered
at the normal time. If an
Executive is employed
for only a short period of
the year, the Board may
determine to award no
Variable Incentive.
A pro-rated variable
incentive based on
the period of the
performance year
completed (excluding
notice paid in lieu or
gardening leave) and
full year performance
score will be delivered
at the normal time. If an
Executive is employed
for only a short period of
the year, the Board may
determine to award no
Variable Incentive.
No additional Hurdled
Equity Performance
Rights will be granted.
Immediate vesting and
conversion to unrestricted shares
(subject to Board approval).
Immediate
conversion to
unrestricted
shares (subject to
Board approval).
No additional Hurdled
Equity Performance
Rights will be granted.
Retained under
the plan with
restriction periods
continuing
to apply.
Retained under
the plan with
restriction
periods and
hurdles (where
applicable)
continuing
to apply.
A pro-rated
number of
units based
on proportion
of vesting
period served
to termination
date are retained
under the plan
with restriction
periods
and hurdles
continuing
to apply.
This approach to treatment of incentives on termination of employment in conjunction with the broader plan design strengthens
the alignment of interests between Executive KMP and shareholders over the long term. The extended vesting and restriction
periods encourage Executive KMP to make decisions that are in the long‑term interests of shareholders, with implications of those
decisions extending beyond an Executive KMP’s tenure at Perpetual while they continue to have shares retained in the plan.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 48
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
7. Variable Remuneration
7.1 FY23 Variable Incentive outcomes
In determining annual Variable Incentive outcomes for the Executive KMP, the Board seeks to balance shareholder and client
outcomes, while encouraging and rewarding Executive KMP for creating sustainable shareholder value. Performance, risk and
reward are considered within the context of the longer‑term business strategy.
In arriving at Variable Incentive outcomes for FY23, the Board weighed the financial performance of the business alongside
continued execution of strategy and positive client outcomes. The table below provides the total Variable Incentive outcome (both
cash and equity portions) received by the Executive KMP for FY23, which averaged 49% of target (28% of maximum target) for
Executive KMP (excl. CEO) and 55% of target (31% of max) for the CEO in FY23.
VARIABLE
INCENTIVE
UN-
HURDLED
EQUITY¹
$
TOTAL
VARIABLE
INCENTIVE
(CASH + UN-
HURDLED)
$
FY23
VARIABLE
INCENTIVE
TARGET
(CASH + UN-
HURDLED)
$
FY23
VARIABLE
INCENTIVE
(AS % OF
TARGET)³
$
VARIABLE
INCENTIVE
CASH
$
%
FORFEITED
$
MAX
@ 175%
OF TARGET⁴
$
FY23
VARIABLE
INCENTIVE
(AS % OF
MAX)
$
% OF
MAX VI
FORFEITED
$
TARGET
HURDLED
EQUITY
$
ACTUAL
HURDLED
EQUITY
AWARDED²
$
NAME
Current Executives
R Adams
356,200 602,800 959,000 1,750,000
A Altinger5
49,472
49,472
98,944
494,720
A Gazal
203,425
120,685
324,110
648,219
A Gillespie
154,329
154,329
308,658
617,315
C Green
D Lane
180,411
180,411
360,822
721,644
133,000
133,000 266,000 700,000
M Smith
147,854
182,008
329,862
659,724
R McCarthy
280,000 280,000 560,000 700,000
S Mosse
140,844
140,844
281,688
521,644
Total
1,645,535 1,843,549 3,489,084 6,813,266
55%
20%
50%
50%
50%
38%
50%
80%
54%
50%
45% 3,062,500
80% 865,760
50% 1,134,384
50% 1,080,301
50% 1,262,877
62% 1,225,000
50% 1,154,517
20% 1,225,000
46%
912,877
50% 11,923,215
31%
11%
29%
29%
29%
22%
29%
46%
31%
28%
69% 1,100,000 1,100,000
89% 247,360
–
71% 200,000 200,000
71% 320,000 320,000
71% 375,000
375,000
78% 350,000
–
71% 364,016
364,016
54% 350,000 350,000
69% 275,000
275,000
72% 3,581,376 2,984,016
1. Variable Incentive Unhurdled Equity awarded as Share Rights with tenure based hurdles only.
2. Variable Incentive Hurdled Equity awarded as Performance rights with an absolute Total Shareholder Return hurdle.
3. Represents the sum of the Cash and Unhurdled Variable Incentive outcome for FY23 as a percentage of target Cash and Unhurdled Variable Incentive.
4. Maximum opportunity Executives may earn under the Cash and Unhurdled elements of the Variable Incentive Plan.
5. Variable Incentive amounts for Ms. Altinger are pro rated for the period from 23 January to 30 June and have been converted to AUD using an FX rate of 0.525.
7.2 FY23 Performance commentary
– In FY23 Perpetual announced and completed the acquisition of Pendal Group, becoming a global leader in multi‑boutique asset
management with AUM of A$212b at 30 June 2023. The acquisition of Pendal Group aligns with Perpetual’s longer‑term strategic
focus of enhancing our product offering, diversifying revenue streams, generating scale, and expanding our geographic footprint.
The Pendal Group transaction is a major strategic acquisition with the objective, when added to our existing asset management
businesses, to deliver strategic value to shareholders by materially enhancing scale, investment diversity and capability, and
expanding Perpetual’s global distribution footprint.
– At a Group level, while Perpetual delivered growth in UPAT to A$163.2m, underlying EPS of A$1.966 was down 24% on FY22.
Continued profit growth was delivered in Corporate Trust and Wealth Management, however net outflows of A$8.0b across our
Asset Management business impacted earnings at a Group level. Despite this, integration activities associated with the Pendal
Group acquisition progressed well in FY23, and at 30 June 2023 the integration program was assessed by the Board as being on
track to achieve the stated goal of A$80m in run rate synergies within the first two years post‑completion.
– Corporate Trust delivered strong and sustainable growth again in FY23, with underlying profit before tax (UPBT) increasing to
A$81.6m, representing growth of A$9.0m, or 12% on FY22. Continued investment in Perpetual Digital, Corporate Trust’s start‑up
company, proved important with revenues increasing to A$23.4m (up 20% on FY22). Corporate Trust’s funds under administration
(FUA) was A$1.16 trillion at 30 June 2023, up 6.4% on 30 June 2022. Corporate Trust’s continued growth demonstrates the critical
role it performs as a fiduciary, providing important infrastructure to support the Australian banking and financial services markets.
– Wealth Management delivered UPBT of A$47.0m in FY23, representing growth of 6% on prior year. Wealth Management
delivered a 10th consecutive year of positive net flows, assisted by growth in the recently acquired Jacaranda business, as well as
continued growth across philanthropy and not‑for‑profit clients. Wealth Management’s Native Title business reached A$1.0b
in funds this year with a number of new clients joining Perpetual, contributing approximately A$250m in new flows in FY23.
Funds under advice finished the financial year at A$18.5b, representing growth of 6.3% on 30 June 2022 of A$17.4b.
Perpetual Group Annual Report 2023 49
– Perpetual continues to deliver strong client outcomes. Perpetual’s Net Promoter Score (NPS) outcome of +57 in FY23 was a new
high, improving substantially on FY22’s outcome of +49 and remaining above Perpetual’s long‑term target of +40. Investment
performance across the combined group remains strong and at 30 June 2023, 78%1 of the Group’s strategies were outperforming
their benchmarks over the important three‑year time horizon. In particular, we have seen very strong investment performance
in Perpetual Asset Management, in Australia, and Barrow Hanley and TSW in the US.
7.3 FY23 Group Scorecard assessment
In FY23, the Perpetual scorecard was weighted 60% to financial measures and 40% to non‑financial measures that are designed
to deliver value in current and future years, within appropriate risk tolerance levels. We set our balanced scorecard each year based
on the business and financial plan approved by the Board that is aligned to our strategy. Under our Variable Incentive plan,
our balanced scorecard acts as the starting basis for evaluating current and future value creation with a risk management overlay.
This section explains the performance outcomes delivered for FY23.
STRATEGIC MEASURE
WEIGHT
FULL YEAR PERFORMANCE
Financial
60%
Outcome
Comments
Group UPAT2
30%
$163.2m
Below plan
Target
Above plan
A$193.8m
Underlying
Earnings Per
Share (EPS)
Corporate
Trust – New
Business
Revenue
Asset
Management
Australia –
Annualised Net
Revenue (ANR)
Below plan
Target
A$2.39
Above plan
10%
A$1.97
Below plan
Target
Above plan
A$18.4m
A$19.2m
Below plan
Target
Above plan
+A$7.6m
-A$4.8m
5%
5%
– FY23 UPAT is A$30.6m (15.8%) below plan. Growth in
UPAT relative to FY22 (A$148.2m) was driven primarily
by the approximate 5.5 months of contribution from
the acquired Pendal Group businesses. Continued
organic growth within Corporate Trust (11% growth in
UPBT) and Wealth Management (2%) also supported
Perpetual’s overall profit growth.
– Perpetual’s stand-alone UPAT target for FY23 agreed at
the commencement of FY23 was kept as the baseline
target for FY23 and the expected UPAT contribution
from Pendal Group was added to the stand-alone
Perpetual target following completion.
– Underlying EPS of A$1.97 is below plan by approximately
18% and below prior year (A$2.58) by approximately 24%.
Despite Perpetual’s growth in UPAT, a substantially
higher weighted share count in FY23 resulting from
the acquisition of Pendal Group in January has resulted
in lower underlying EPS.
– Corporate Trust continued to perform strongly in FY23,
delivering new business revenues of A$19.2m, driven
by key client wins across all business lines.
– Corporate Trust continues to deliver on a clear growth
strategy, which includes organic growth in traditional
business lines of Debt Market Services and Managed
Funds Services, supported by new digital products
and revenue streams.
– Asset Management Australia ANR was below plan
and below the FY22 outcome of -A$2.8m. The FY23
outcome was driven by the loss of a small number
of institutional mandates and planned inflows not
being achieved.
– For FY23, targets and actuals presented for this
measure are for Asset Management Australia, exclusive
of Pendal Group. In future years, targets will be set for
the consolidated asset management business.
1. Returns are presented gross of investment management fees. Investment performance of the strategies may differ once fees and costs are taken into
account. Past performance is not indicative of future performance. See perpetual.com.au, barrowhanley.com, trilliuminvest.com, johcm.com, tswinvest.com
and pendalgroup.com for relevant performance. The product disclosure statements (PDS) or disclosure document of any of the capabilities or funds should be
considered before deciding whether to acquire or hold units in any such offering.
2. Perpetual reports profit on both a statutory basis (NPAT) and on an underlying (UPAT) basis. As disclosed previously UPAT adjusts NPAT for significant items
that are material in nature and do not reflect the normal operating activities and excludes the non-cash tax-effected amortisation of acquisition intangibles.
Adjusted items are clearly defined, consistently applied and disclosed in accordance with ASIC Regulatory Guide – 230 – Disclosing “Non IFRS information”.
UPAT is provided as it is considered useful for investors to gain a better understanding of Perpetual’s financial results from normal operating activities. This
measure is an appropriate metric for assessing business and Executive performance within the context of the global business strategy.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 50
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
STRATEGIC MEASURE
WEIGHT
FULL YEAR PERFORMANCE
Asset
Management
International –
Net Flows (+ANR)
5%
Below plan
Target
Above plan
+A$6.9b
-A$1.4b
Wealth
Management –
Net Flows
5%
Below plan
Target
Above plan
A$810m
A$420m
– The FY23 outcome of -A$1.4b is below plan, but
considerably higher than last year’s actual outcome
of -A$5.0b. The headline number was driven primarily
by outflows in US equities in Barrow Hanley, partially
offset by net inflows into Barrow Hanley’s global and
emerging markets strategies. Trillium continued to
deliver positive net flows, despite market volatility,
delivering full year positive net flows of A$0.7b in FY23.
– For FY23, the targets and actuals presented for this
measure are for Asset Management International,
exclusive of Pendal Group. In future years, targets
will be set for the consolidated asset management
business. Pendal Group flows are included lower in
the table under New Horizons.
– Net flows of A$420m was below plan, however Wealth
Management delivered a 10th consecutive year of
positive net flows, assisted by continued growth in
the philanthropy and not-for-profit channels. Wealth
Management’s native title business hit A$1.0bn in
funds under advice, including A$250m in new flows.
At 30 June 2023 funds under advice for Wealth
Management was A$18.5b, representing growth
of 6.3% on 30 June 2022 of A$17.4b.
Client First
10%
Outcome
Comments
Maintain client
advocacy –
external Net
Promoter Score
(NPS) performance
5%
Below plan
Target
Above plan
Maintain above 40
– The FY23 outcome of +57 was a new high for
Perpetual and is substantially above prior year (+49)
and Perpetual’s goal of maintaining NPS above 40.
The result was driven by improvements across
each division:
• Corporate Trust: 65 in FY23 (61 in FY22)
• Wealth Management: 46 in FY23 (42 in FY22)
+57
• Asset Management Australia: 51 in FY23 (46 in FY22)
• Asset Management International: 65 in FY23
(no FY22 baseline)
% of funds/
mandates
meeting
investment
objectives
Funds Target:
60%
Asset
Mgmt
Australia
2.5%
Asset
Mgmt
Int’I.
2.5%
Funds:
Below plan
Target
Above plan
71%
Funds:
Below plan
Target
Above plan
81%
– An NPS survey was not carried out for Pendal Group
this year, however Pendal results will be included in
Perpetual’s FY24 results.
– At 30 June 2023, Perpetual’s international asset
management teams had 71% of funds exceeding
their investment objective over a three year period,
inclusive of TSW and J O Hambro (75% of funds over
five years). Barrow Hanley delivered particularly strong
performance to 30 June, with 86% of funds exceeding
their investment objective over three years.
– At 30 June 2023, Perpetual’s international asset
management teams had 81% of funds exceeding their
investment objective over a three year period (83% of
funds over five years). Perpetual Australia (i.e., exclusive
of Pendal) delivered particularly strong performance to
30 June, with 97% of funds exceeding their investment
objective over both three and five years.
Perpetual Group Annual Report 2023 51
STRATEGIC MEASURE
WEIGHT
FULL YEAR PERFORMANCE
Future Fit
10%
Outcome
Comments
Delivery of
key projects
10%
Board Assessment
Below plan
Target
Above plan
– Of 16 formally funded and commenced projects
planned for FY23, seven were completed, four are
tracking as green vs. agreed financials and timing,
four are tracking as amber and one is tracking as
red. Projects are reviewed quarterly and the project
portfolio has been reviewed leading into FY24.
New Horizons
20%
Outcome
Comments
Pendal 5-month Net Flows
(Feb to June)
Below plan
Target
Above plan
-A$5.0b
Annualised Synergies Secured
(action taken) by 30 June 2023
Below plan
Target
Above plan
5%
5%
– Pendal Group’s net flows since completion have
been impacted primarily in the US market (-A$3.9b),
where JO Hambro’s International Select strategy and
TSW’s International Equity strategy have experienced
outflows. The pace of net outflows in the US market
moderated in May and June 2023. Net flows in
Pendal Australia (-A$491m) and JO Hambro’s UK
and European businesses (-A$770m) have been
more moderate.
– Action taken to achieve annualised synergies at
30 June was assessed by the Board as tracking to
plan. As outlined in Perpetual’s full-year results, as at
30 June 2023 the integration program was assessed
by the Board as being on track to achieving the stated
goal of A$80m in run rate synergies within the first two
years post-completion.
CLO Net Flows
– CLO net flows were below plan in FY23. Barrow Hanley
Below plan
Target
Above plan
2.5%
US$410m
originally planned to launch two CLOs in FY23, however
given dislocation in the US Leverage Loan markets, it
was not possible to launch our first CLOs until H1 FY23;
meaning that the second CLO is now due to launch in
H1 FY24 with the warehouse now open.
– In FY22, Perpetual made the decision to invest for
growth in the US mutual fund channel. Calendar
year 2022 represented a difficult year for US mutual
funds and ETFs, with significant industry outflows
being experienced across this channel. In recognition
of these dynamics and the pending Pendal Group
acquisition, Perpetual slowed its investment in early
FY23, which impacted net inflows for FY23.
– Perpetual remains committed to the US Mutual Fund
channel and with an expanded team of intermediary
distribution professionals in the US following the
acquisition of Pendal Group, is well placed to take
advantage of any recovery in FY24.
– Perpetual Digital continued its growth in FY23, with
revenues increasing by 20% from A$19.5m in FY22 to
A$23.4m in FY23. Perpetual Digital continues to see a
solid level of client interest in our capabilities, including
Laminar Capital’s Treasury Direct SaaS offering.
US Mutual Fund Net Flows
Below plan
Target
Above plan
US$233m
Perpetual Digital Revenue
Below plan
Target
Above plan
A$23.4m
2.5%
2.5%
2.5%
Jacaranda AUM on Platform
– Jacaranda AUM on Platform at 30 June 2023 was
Below plan
Target
Above plan
A$270m, comprised of approx. A$135m of new assets
under administration and approx. A$135m existing.
Jacaranda recorded net inflows of A$67.3m in FY23.
A$270m
Pendal
integration
New Product
Success vs.
Business Case
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 52
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
7.4 Executive KMP Variable Incentive Group, divisional and individual weightings
Individual Variable Incentive awards are determined through an assessment of performance against the group balanced scorecard,
divisional performance against agreed priorities and individual performance, which includes an assessment of behavioural
expectations for all Executive KMP. Executive KMP must also meet risk and compliance requirements to be eligible to receive a
Variable Incentive payment. The relative weights of Company and divisional performance reflect our primary focus on delivering
strong group outcomes for our shareholders.
– CEO outcomes are weighted 70% Perpetual Group performance and 30% individual performance.
– Executive KMP supporting enterprise functions have a weighting of 60% Perpetual Group performance and 40% divisional and
individual performance.
– Commencing FY23, Executive KMP with responsibility for the P&L of each respective division have a weighting of 40% Perpetual
Group performance and 60% division and individual performance. This change recognises the increasing size/scale of the Group
and aims to provide greater focus on delivery against agreed divisional financial and non‑financial goals.
The combined focus on Perpetual Group and divisional/individual performance ensures shared accountability for overall Perpetual
performance among Executive KMP, balanced with the need to deliver on divisional priorities.
CEO
Executive KMP (enterprise functions)
Executive KMP (P&L functions)
70%
60%
40%
0%
30%
40%
60%
PERPETUAL PERFORMANCE
DIVISIONAL PERFORMANCE
INDIVIDUAL PERFORMANCE
7.5 FY23 CEO performance and reward outcomes
The Board has assessed the important contribution of the CEO for FY23. As the CEO carries responsibility for the group scorecard,
this assessment was made both against the group scorecard results, as well as agreed individual priorities set for the CEO. The group
scorecard achievements are set out in Section 7.3 of this report. Overall, and in relation to specific individual priorities, FY23 was a
significant year for the CEO. In addition to leading business as usual initiatives he made significant contributions to the following
in FY23:
– The CEO continued to make decisive and effective decisions on strategic investments. Further to the acquisitions of Barrow
Hanley and Trillium in prior years, the CEO led the acquisition of Pendal Group in FY23. This was part of the Board’s strategy
of a larger, more diversified and more meaningful asset management business to provide medium to long‑term growth for
shareholders coupled with the potential for EPS accretion through synergies in the shorter term. This was a complex and difficult
transaction and was led by the CEO at every stage. The CEO had in place an effective internal and external team complementing
the Board and its independent adviser.
– The CEO has, as part of that acquisition, reviewed and continued to build his executive team focused on achieving benefits
for shareholders. He has allocated resources and responsibilities both on the shorter‑term delivery of synergies and in the
longer‑term initiatives such as global distribution.
– The CEO has led these and other business as usual initiatives through uncertain and volatile market conditions in FY23. He has
continued to achieve high employee sentiment results driven by an open and transparent communication program and has
effectively led investor and shareholder communications.
– In considering these and other relevant matters, and weighing up the overall contribution, the Board has determined to award
the CEO an overall outcome of 55% of target and 31% of maximum in respect of FY23, noting that outcomes from the acquisitions
are in the early stages. Related to this, the Board has determined to award the CEO the full 100% of the Hurdled Equity
component of his remuneration for FY23, enabling the CEO to participate in potential future value with shareholders through
effective execution in the medium to longer term.
Perpetual Group Annual Report 2023 53
7.6 Alignment of Variable Incentive outcomes to five-year group performance
One of Perpetual’s guiding principles for remuneration is that the remuneration structure should balance value creation for our
shareholders, clients and employees. This section displays the degree of alignment between Perpetual group performance and
remuneration outcomes for Executive KMP over the last five years. The table below shows Perpetual’s five‑year performance across
a range of metrics and corresponding incentive outcomes.
Underlying profit after tax – UPAT1
Earnings per share – UPAT
Total dividends paid/payable
per ordinary share2
Closing share price
1‑year TSR
3‑year CAGR TSR
4‑year CAGR TSR
5‑year CAGR TSR
CEO – Variable Incentive as % of target
CEO – Variable Incentive as % of maximum target
GE – Average Variable Incentive as % of target
GE – Average Variable Incentive as % of maximum target
1. UPAT & EPS – UPAT from 5 year profile.
2. Dividends paid are for the respective financial year.
FY19
30 JUNE 2019
FY20
30 JUNE 2020
FY21
30 JUNE 2021
FY22
30 JUNE 2022
FY23
30 JUNE 2023
$m
cps
cps
$
%
%
%
%
%
%
%
%
115.9
246
250
42.24
8
7
2
3
65
37
56
32
95.1
200
155
29.67
‑24
‑13
‑1
‑3
60
34
48
27
122.8
218
180
40.05
40
4
‑3
5
100
57
93
53
148.2
258
209
28.88
‑23
‑6
‑3
‑6
106
61
103
59
163.2
197
155
25.88
‑4
2
‑6
‑3
55
31
49
28
Shareholders
Clients
UPAT
Underlying EPS
3-Year TSR (CAGR)
4-Year TSR (CAGR)
NPS
.
9
5
1
1
1
.
5
9
.
2
8
4
1
.
2
3
6
1
.
8
2
2
1
6
4
2
8
1
0 2
0
2
8
5
2
%
7
%
4
%
2
%
2
9
4
7
5
5
4
4
4
0
4
7
9
1
%
6
-
%
3
1
-
%
1
-
%
3
-
%
3
-
%
6
-
2019
2020 2021 2022
2023
2019
2020 2021 2022
2023
2019
2020 2021 2022
2023
2019
2020 2021 2022
2023
2019
2020 2021 2022
2023
NPS FY19 rebased from 39 to 40 to reflect new target markets.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 54
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
7.7 Executive KMP 2022 Growth Incentive
As outlined in detail in the FY22 Remuneration Report and Notice of Meeting, shortly after the completion of FY22, the Perpetual
Limited Board awarded a long‑term incentive (Growth LTI) to Executive KMP incentivising the team to deliver growth above the
existing KMP Variable Incentive scheme reward’s stretch performance. At the FY22 Annual General Meeting, shareholders approved
the Growth Incentive allocation for the CEO and Managing Director, with the key terms of the structure outlined below.
– Under the Growth LTI, a grant of Performance Rights was made to Executive KMP in September 2022. The threshold for vesting
will be set at 10% CAGR in absolute TSR, with 100% vesting at 15% CAGR absolute TSR (noting vesting commences at 0% for
delivering 10.0% CAGR absolute TSR). The CAGR absolute TSR performance range for existing Hurdled Equity is 7.0% – 10.0%,
meaning value is delivered under this award only where the existing stretch hurdle is exceeded. The Board believes this
represents a significant degree of stretch performance when compared to the TSR achieved by the Company in recent years,
which will require ongoing significant expansion in underlying EPS.
– The Growth LTI will vest in three equal tranches across three, four and five years, subject to meeting the relevant CAGR absolute
TSR performance hurdle. Any Performance Rights that vest at three and four years will be retained as restricted shares until five
years post the initial grant date.
– Performance Rights that do not vest are forfeited and not retested. The five‑year performance and restriction period for the LTI
award extends the time horizon of Executive KMP LTI arrangements to align to the longer‑dated timeframe of the Company
strategy and provides an alignment mechanism for the core executive team during the integration of these acquisitions and
strategic investments.
– The CEO and Managing Director’s Growth Incentive award was approved by shareholders at the 2022 AGM. Full details of this
award were included in the Notice of Meeting for Perpetual’s FY22 AGM1.
– Individual allocations for Perpetual Executive KMP are available in Section 8.6.
7.8 Vesting outcomes of prior year equity awards
The three‑year tranche of the CEO’s FY19 Hurdled Equity allocation was tested in September 2022 and did not meet the CAGR
absolute TSR hurdle range required for vesting. As a result, this tranche of the CEO’s FY19 Hurdled Equity allocation lapsed and will
not be retested. Other KMP moved onto the Hurdled Equity structure of the combined Variable Incentive with effect from FY20.
In September 2023, the following Hurdled Equity awards will be tested against their respective hurdles.
ALLOCATION
DETAILS
FY19 Hurdled
Equity allocation
(4-year tranche)
FY20 Hurdled
Equity allocation
(3-year tranche)
– The CEO’s FY19 Hurdled Equity allocation is due to be tested against the CAGR absolute TSR hurdle in
September 2023.
– In response to the unfolding COVID‑19 pandemic and the associated market and business conditions
at the time, the Perpetual Limited Board made the decision to allocate the CEO and KMP Variable
Incentive awards for FY20 exclusively as Hurdled Equity (i.e., no Cash Variable Incentive or Unhurdled
Variable Incentive were awarded to the CEO or KMP in respect of FY20). The three‑year tranche of
these awards is due to be tested in September 2023.
8. Data disclosures – Executive KMP
8.1 Remuneration of Executive KMP – Statutory Reporting
SHORT-TERM BENEFITS
POST-
EMPLOY-
MENT
BENEFITS
OTHER
LONG-TERM
BENEFITS6
EQUITY-BASED BENEFITS5
CASH
SALARY 1
$
VARIABLE
INCENTIVE
CASH2
$
NON-
MONETARY
BENEFITS3
$
OTHER4
$
SUPER-
ANNUATION
$
LONG
SERVICE
LEAVE
$
VARIABLE
INCENTIVE
EQUITY7
$
PERFOR-
MANCE
RIGHTS
$
TERMI-
NATION
PAYMENTS11
$
SHARES
$
TOTAL
$
NAME
Current
Executives
R Adams
2023
2022
1,277,484 356,200
1,277,776 530,000
–
–
45,539
25,292
21,721 1,491,474
29,998
136,563
– 3,384,271
82,196
25,000
21,722 645,029
170,988
–
– 2,752,711
1. Full details of the award approved by shareholders at the FY22 AGM is available via this link: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-
research/1.0/file/2924-02568866-2A1398826?access_token=83ff96335c2d45a094df02a206a39ff4.
Perpetual Group Annual Report 2023 55
SHORT-TERM BENEFITS
POST-
EMPLOY-
MENT
BENEFITS
OTHER
LONG-TERM
BENEFITS6
EQUITY-BASED BENEFITS5
CASH
SALARY 1
$
VARIABLE
INCENTIVE
CASH2
$
NON-
MONETARY
BENEFITS3
$
OTHER4
$
SUPER-
ANNUATION
$
LONG
SERVICE
LEAVE
$
VARIABLE
INCENTIVE
EQUITY7
$
PERFOR-
MANCE
RIGHTS
$
TERMI-
NATION
PAYMENTS11
$
SHARES
$
TOTAL
$
259,658
49,472
1,090
(4,185)
1,675
–
–
–
–
–
–
50,698
27,761
– 386,169
–
–
–
–
3,072
25,292
11,449
128,115
–
91,198
– 1,003,925
15,878
25,000
9,575
69,329
23,074
–
–
786,189
(8,611)
25,292
16,549
157,172
10,256
25,000
10,465
82,362
30,328
25,292
22,914 354,591
1,651
25,000
15,062
237,644
6,822
25,292
10,531
321,629
21,086
25,000
10,531
207,922
20,425
25,292
8,149 305,723
7,882
25,000
(11,179)
173,222
–
–
–
–
–
–
–
–
–
–
170,860
111,558
– 1,065,487
– 943,808
106,399
– 1,407,008
–
–
1,250,215
241,451 266,800 1,925,673
–
–
1,082,186
91,198
– 1,209,660
–
–
1,143,216
91,198
11,664
– 1,295,495
–
1,018,256
593,432
133,000
480
(9,124)
25,292
17,806 656,536
529,165 300,000
12,882
11,806
25,000
10,752
192,581
NAME
A Altinger9, 10
2023
2022
A Gazal
2023
2022
A Gillespie
2023
2022
C Green
2023
2022
D Lane8
2023
2022
M Smith
2023
2022
R McCarthy
2023
2022
S Mosse
2023
2022
–
–
541,374 203,425
493,333
150,000
549,896
154,329
479,167 225,000
687,073
180,411
645,858 325,000
–
–
–
–
–
–
–
606,334
147,854
606,626
272,051
564,708 280,000
511,667 300,000
747,611
140,844
545,833
172,800
–
–
–
–
–
–
28,558
25,292
16,864
181,713
–
91,198
– 1,232,080
–
25,000
10,573
101,601
20,607
–
–
876,414
Total 2023
5,827,570 1,645,535
1,570
112,824
204,011
125,983 3,596,953
80,696 1,047,826 266,800 12,909,768
Total 2022
5,089,425 2,274,851
12,882
150,755 200,000
77,501 1,709,690
214,669
123,222
– 9,852,995
1. Cash salary is the ordinary cash salary received in the year including payment for annual, long service, sick or other types of paid leave taken.
2.
Variable Incentive cash payments consist of cash payments to be made in September 2023 for the CEO and Group Executives.
3. Non-monetary benefits represents those amounts salary sacrificed from fixed remuneration to pay for benefits such as leased motor vehicles, car parking,
and purchased leave. For Ms. Altinger it represents health and insurance (Includes Medical, Dental, Life & Disability).
4.
Other short-term benefits relate to:
– salary continuance and death and total and permanent disability insurance provided as part of the remuneration package; and
– the value of accrued annual leave for FY23 less leave taken which is depicted as cash salary.
5. Share-based remuneration has been valued using the binomial method, which considers the performance hurdles relevant to each issue of equity instruments.
The value of each equity instrument has been provided by PricewaterhouseCoopers. Share-based remuneration is the amount expensed in the financial
statements for the year and includes adjustments to reflect the most current expectation of vesting of LTI grants with non-market condition hurdles. For grants
with non-market conditions including earnings per share hurdles, the number of shares expected to vest is estimated at the end of each reporting period and
the amount to be expensed in the financial statements is adjusted accordingly. For grants with market conditions such as total shareholder return hurdles, the
number of shares expected to vest is not adjusted during the life of the grant and no adjustment is made to the amount expensed in the financial statements
(except if service conditions are not met). The accounting treatment of non-market and market conditions are in accordance with accounting standards.
6. The value of accrued long service leave for FY23 less leave taken, which is depicted as cash salary.
7. Variable incentive equity includes costs incurred in FY23 for the FY19, FY20, FY21, FY22 Variable Incentive equity grants.
8. Mr Lane will cease to be a KMP on 24 August 2023.
9. Ms Altinger commenced as a KMP on 23 January 2023 and will cease as a KMP in FY24.
10. Short-term benefit and Post-employment benefits amounts for Ms. Altinger are pro rated for the period from 23 January 2023 to 30 June 2023 and have been
converted to AUD using an FX rate of 0.525.
11. Severance payment (excluding payroll tax) and outplacement as part of Mr. Lane’s separation.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 56
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
8.2 Executive KMP Remuneration received FY23
The table below represents the actual remuneration received by the Executive KMP during FY23. This table differs to the statutory
remuneration table on page 54 that has been prepared in accordance with the Corporations Act and Australian Accounting
Standards. The difference between the two tables is predominantly due to the accounting treatment of the share‑based payments.
NAME
Current Executives
R Adams
A Altinger5
A Gazal
A Gillespie
C Green
D Lane
M Smith
R McCarthy
S Mosse
Totals
TOTAL FIXED
REMUNERATION1
$
VARIABLE
INCENTIVE
CASH2
$
EQUITY
VESTED
DURING
YEAR3
$
DIVIDENDS
PAID ON
UNVESTED
SHARES
DURING YEAR4
$
SIGN-ON AND
RELOCATION
BENEFITS
$
PAYMENTS
MADE ON
TERMINATION
$
1,304,911
530,000
257,814
10,390
264,074
–
568,431
150,000
–
–
577,804
225,000
97,262
714,016
325,000
624,768
300,000
633,277
272,051
591,651
300,000
774,554
172,800
–
–
–
–
–
–
–
–
–
–
–
–
–
6,053,485
2,274,851
355,075
10,390
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
$
2,103,114
264,074
718,431
900,065
1,039,016
924,768
905,328
891,651
947,354
8,693,801
1. For Australian based KMP fixed remuneration consists of cash salary, superannuation, packaged employee benefits and associated fringe benefits tax.
For UK based KMP fixed remuneration consists of cash salary, health and insurance benefits and pension payments.
2. Represents the cash portion of Variable Incentive outcome for FY22 paid in September 2022.
3. Represents the value of equity grants awarded in previous years which vested during the year. For Rob sign on and Amanda is LTI allocated prior to
becoming a KMP.
4. Dividends paid during FY23 on sign-on shares granted to Mr Adams on 24 September 2018.
5. Total fixed remuneration amounts for Ms. Altinger are pro rated for the period from 23 January to 30 June and have been converted to AUD using an
FX rate of 0.525.
8.3 Remuneration components as a proportion of total remuneration
The remuneration components below are determined based on the remuneration of the Executive KMP – Statutory Reporting table
on page 54. This table includes fixed remuneration and Variable Incentives – cash and equity.
NAME
Current Executives
R Adams
A Altinger
A Gazal
A Gillespie
C Green
D Lane
M Smith
R McCarthy
S Mosse
PERFORMANCE LINKED BENEFITS
FIXED
REMUNERATION
%
VARIABLE
INCENTIVE
CASH
%
VARIABLE
INCENTIVE
EQUITY
%
OTHER
EQUITY1
TERMINATION
PAYMENTS
40%
67%
58%
55%
54%
33%
54%
48%
66%
11%
13%
20%
14%
13%
7%
12%
22%
11%
48%
7%
22%
31%
33%
47%
34%
31%
22%
1%
13%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14%
0%
0%
0%
TOTAL
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1. Other equity includes sign-on equity for Mr Adams and for Ms Altinger this is unvested Pendal Group deferred equity that was converted to unvested Perpetual
deferred equity as part of the acquisition.
Perpetual Group Annual Report 2023
57
8.4 Value of unvested remuneration that may vest in future years
Estimates of the maximum future cost of equity‑based remuneration granted by Perpetual should all targets be met in the future.
CEO and Managing Director
R Adams
Current Group Executives
A Altinger2
A Gazal
A Gillespie
C Green
D Lane
M Smith
R McCarthy
S Mosse
30/06/20241
MAXIMUM
$
30/06/20251
MAXIMUM
$
30/06/20261
MAXIMUM
$
30/06/20271
MAXIMUM
$
30/06/20281
MAXIMUM
$
1,798,238
1,446,131
830,035
383,103
51,795
171,977
–
245,082
262,906
311,129
303,495
–
167,755
186,727
462,585
396,472
228,374
62,799
419,341
421,186
291,167
–
–
361,697
203,720
391,018
203,846
289,326
177,964
–
88,485
95,252
112,333
–
98,732
97,625
92,423
–
12,600
13,389
15,632
–
13,678
13,586
13,093
1. The minimum value of the grants is $nil if the performance targets are not met. The values above are determined in accordance with accounting standards.
The fair value of granted shares is recognised as an employee expense with a corresponding increase in equity. Fair value is measured at grant date and
amortised over the performance and/or service period.
2. The amounts disclosed reflect the impact of Ms Altinger’s separation, being the acceleration of amortisation for any remaining equity awards not forfeited.
8.5 Shareholdings as at 30 June 2023
The table below summarises the movement in holdings of ordinary shares held during the year and the balance at the end of the
year, directly, indirectly, or by a related party.
NAME
Current
Executives
R Adams
A Altinger
A Gazal
A Gillespie
C Green
D Lane
M Smith
R McCarthy
S Mosse
TOTAL
SHARES
HELD AT
1 JULY 2022
31,841
–
9,734
5,099
30,994
18,423
34,728
9,756
5,671
PURCHASES
VESTING OF
SHARES
VESTING OF
RIGHTS
SALES/
REDUCTIONS
SHARES
CONVERTED
ON
ACQUISITION
OF PENDAL
GROUP
LIMITED
SHARES
HELD
PERSONALLY
AT
30 JUNE 2023
SHARES
HELD
NOMINALLY
AT
30 JUNE 20231
TOTAL
SHARES HELD
AT
30 JUNE 2023
–
–
–
–
–
–
9,788
–
–
10,711
–
–
–
–
–
–
–
–
–
–
–
4,123
–
–
–
–
–
–
–
–
–
–
–
9,788
–
–
–
40,745
1,807
42,552
6,304
–
–
–
–
–
–
–
6,304
9,734
9,222
30,994
18,423
8,343
9,756
5,671
–
–
–
–
–
26,385
–
–
6,304
9,734
9,222
30,994
18,423
34,728
9,756
5,671
1. Shares held nominally are included in the “Total shares held at 30 June 2023” column. Total shares are held directly by the KMP and indirectly by the KMP’s
related parties, inclusive of domestic partner, dependents and entities controlled, jointly controlled or significantly influenced by the KMP.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 58
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
8.6 Unvested Share and Performance Rights holdings of the Executive KMP
The table below summarises the Share and Performance Rights holdings and movements by number granted to the Executive
KMP by Perpetual, for the year ended 30 June 2023. For details of the fair valuation methodology, refer to section 4‑1 of the notes to,
and forming part of, the financial statements.
NAME
INSTRUMENT
GRANT DATE
Current Executives
R Adams
A Altinger
A Gazal
Note: See pages 62 and 63 for table footnotes.
Shares2
Performance Rights4
Performance Rights4
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Performance Rights6
Performance Rights6
Performance Rights6
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
24 September 2018
2 September 2019
2 September 2019
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
1 March 2023
1 March 2023
1 March 2023
Aggregate value
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
VESTING DATE
NUMBER OF INSTRUMENTS
INSTRUMENTS
$
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
GRANTED
FORFEITED
VESTED
30 JUNE 2023 FAIR VALUE OF
HELD AT
NUMBER OF
AT GRANT DATE
INSTRUMENT
MOVEMENT DURING THE YEAR1
GRANT
PRICE
$
42.01
42.01
42.01
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
24.84
24.84
24.84
24.84
24.84
24.84
24.84
8.90
8.25
7.63
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
24 September 2022
1 September 2022
1 September 2023
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 October 2023
1 October 2024
1 October 2025
1 October 2023
1 October 2024
1 October 2025
1 October 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
5,276
–
–
–
–
10,711
–
–
–
–
10,711
5,276
5,275
21,938
21,937
21,560
10,780
10,780
2,821
1,410
1,410
–
–
–
–
–
–
–
–
34,243
19,817
19,817
52,434
56,565
61,162
783
783
783
1,584
1,584
1,584
1,584
22,471
24,242
26,212
–
–
–
5,451
2,725
2,726
22,471
24,242
26,212
$3,433,085
$142,769
$257,814
–
$815,721
$–
$–
$900,009
$–
$–
–
–
5,275
21,938
21,937
21,560
10,780
10,780
34,243
19,817
19,817
52,434
56,565
61,162
783
783
783
1,584
1,584
1,584
1,584
22,471
24,242
26,212
2,821
1,410
1,410
5,451
2,725
2,726
22,471
24,242
26,212
42.01
8.22
8.40
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
6.94
6.55
6.16
24.84
24.84
24.84
24.84
24.84
24.84
24.84
6.23
5.96
5.64
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
Perpetual Group Annual Report 2023 8.6 Unvested Share and Performance Rights holdings of the Executive KMP
The table below summarises the Share and Performance Rights holdings and movements by number granted to the Executive
KMP by Perpetual, for the year ended 30 June 2023. For details of the fair valuation methodology, refer to section 4‑1 of the notes to,
and forming part of, the financial statements.
NAME
INSTRUMENT
GRANT DATE
VESTING DATE
24 September 2022
1 September 2022
1 September 2023
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 October 2023
1 October 2024
1 October 2025
1 October 2023
1 October 2024
1 October 2025
1 October 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
Current Executives
R Adams
A Altinger
A Gazal
Shares2
Performance Rights4
Performance Rights4
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Restricted Shares7
Performance Rights6
Performance Rights6
Performance Rights6
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
24 September 2018
2 September 2019
2 September 2019
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
6 March 2023
1 March 2023
1 March 2023
1 March 2023
Aggregate value
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
GRANT
PRICE
$
42.01
42.01
42.01
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
24.84
24.84
24.84
24.84
24.84
24.84
24.84
8.90
8.25
7.63
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
59
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
MOVEMENT DURING THE YEAR1
GRANTED
FORFEITED
VESTED
NUMBER OF INSTRUMENTS
HELD AT
30 JUNE 2023 FAIR VALUE OF
INSTRUMENT
AT GRANT DATE
$
NUMBER OF
INSTRUMENTS
–
10,711
5,276
–
–
–
–
–
–
–
10,711
5,276
5,275
21,938
21,937
21,560
10,780
10,780
–
–
–
–
–
–
–
–
34,243
19,817
19,817
52,434
56,565
61,162
$3,433,085
$142,769
$257,814
783
783
783
1,584
1,584
1,584
1,584
22,471
24,242
26,212
–
$815,721
$–
$–
2,821
1,410
1,410
–
–
–
5,451
2,725
2,726
22,471
24,242
26,212
$900,009
$–
$–
–
–
5,275
21,938
21,937
21,560
10,780
10,780
34,243
19,817
19,817
52,434
56,565
61,162
783
783
783
1,584
1,584
1,584
1,584
22,471
24,242
26,212
2,821
1,410
1,410
5,451
2,725
2,726
22,471
24,242
26,212
42.01
8.22
8.40
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
6.94
6.55
6.16
24.84
24.84
24.84
24.84
24.84
24.84
24.84
6.23
5.96
5.64
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 60
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
NAME
A Gillespie
C Green
D Lane
INSTRUMENT
Share Rights5
Share Rights5
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
GRANT DATE
1 October 2019
1 October 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
Note: See pages 62 and 63 for table footnotes.
GRANT
PRICE
$
31.53
23.82
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
VESTING DATE
1 October 2022
1 October 2023
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
MOVEMENT DURING THE YEAR1
GRANTED
FORFEITED
VESTED
30 JUNE 2023 FAIR VALUE OF
HELD AT
NUMBER OF
AT GRANT DATE
INSTRUMENT
NUMBER OF INSTRUMENTS
INSTRUMENTS
–
–
4,123
–
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
4,123
6,298
2496
1248
1248
8,026
8,025
7,454
3,727
3,727
6,019
6,019
6,714
3,357
3,357
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,176
4,088
4,088
22,471
24,242
26,212
12,913
6,456
6,457
26,217
28,282
30,581
$1,410,722
10,902
5,451
5,451
22,471
24,242
26,212
$1,049,993
$–
$97,262
–
–
–
–
$–
–
–
$–
–
–
$1,200,032
$–
$–
–
6,298
2,496
1,248
1,248
8,176
4,088
4,088
22,471
24,242
26,212
8,026
8,025
7,454
3,727
3,727
12,913
6,456
6,457
26,217
28,282
30,581
6,019
6,019
6,714
3,357
3,357
10,902
5,451
5,451
22,471
24,242
26,212
$
31.53
23.82
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
Perpetual Group Annual Report 2023 NAME
A Gillespie
C Green
D Lane
INSTRUMENT
Share Rights5
Share Rights5
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
GRANT DATE
1 October 2019
1 October 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
GRANT
PRICE
$
31.53
23.82
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
VESTING DATE
1 October 2022
1 October 2023
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
61
MOVEMENT DURING THE YEAR1
GRANTED
FORFEITED
VESTED
NUMBER OF INSTRUMENTS
HELD AT
30 JUNE 2023 FAIR VALUE OF
INSTRUMENT
AT GRANT DATE
$
NUMBER OF
INSTRUMENTS
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
4,123
6,298
2496
1248
1248
–
–
4,123
–
–
–
–
–
–
8,176
4,088
4,088
22,471
24,242
26,212
$1,049,993
$–
$97,262
–
–
–
–
$–
–
–
$–
–
–
8,026
8,025
7,454
3,727
3,727
6,019
6,019
6,714
3,357
3,357
–
–
–
–
–
12,913
6,456
6,457
26,217
28,282
30,581
$1,410,722
–
–
–
–
–
10,902
5,451
5,451
22,471
24,242
26,212
$1,200,032
$–
$–
–
6,298
2,496
1,248
1,248
8,176
4,088
4,088
22,471
24,242
26,212
8,026
8,025
7,454
3,727
3,727
12,913
6,456
6,457
26,217
28,282
30,581
6,019
6,019
6,714
3,357
3,357
10,902
5,451
5,451
22,471
24,242
26,212
31.53
23.82
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 62
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
NAME
M Smith
R McCarthy
S Mosse
INSTRUMENT
GRANT DATE
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
GRANT
PRICE
$
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
VESTING DATE
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
MOVEMENT DURING THE YEAR1
GRANTED
FORFEITED
VESTED
30 JUNE 2023 FAIR VALUE OF
HELD AT
NUMBER OF
AT GRANT DATE
INSTRUMENT
NUMBER OF INSTRUMENTS
INSTRUMENTS
–
–
–
–
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
6,019
6,019
6,842
3,421
3,421
6,019
6,019
5,509
2,754
2,754
4,013
4,012
3,305
1,652
1,652
12,170
6,085
6,085
22,471
24,242
26,212
$1,269,823
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,902
5,451
5,451
22,471
24,242
26,212
6,279
3,139
3,140
22,471
24,242
26,212
$–
–
–
$–
–
–
$1,200,032
$–
$–
–
–
$945,582
$–
$–
6,019
6,019
6,842
3,421
3,421
12,170
6,085
6,085
22,471
24,242
26,212
6,019
6,019
5,509
2,754
2,754
10,902
5,451
5,451
22,471
24,242
26,212
4,013
4,012
3,305
1,652
1,652
6,279
3,139
3,140
22,471
24,242
26,212
$
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
1. Granted aggregate value is calculated by multiplying the number of instruments by the grant price. Vested and forfeited aggregate value is calculated by
multiplying the number of shares by the Perpetual closing share price on the vesting date.
2. Mr Adams’ shares granted in 2018 are sign-on shares.
3. Share Rights granted to KMP in September 2021 and 2022 convert to Restricted Shares 2 years after the grant date. The holding lock is removed 4 years after the
grant date, as per the terms of the Executive Leadership Team Variable Incentive Plan. These Share Rights are not included in the table after vesting.
4. Performance Rights granted to KMP in September 2019, 2020, 2021 and 2022 were issued as 2 tranches with a TSR hurdle. T1 is subject to a 3 year performance
period before vesting into Restricted Shares for one year. T2 was subject to a 4 year performance period before vesting. Vested Performance Rights with a
holding lock are not included in the table after vesting.
Perpetual Group Annual Report 2023
63
HELD AT
1 JULY 2022
NUMBER OF
INSTRUMENTS
6,019
6,019
6,842
3,421
3,421
6,019
6,019
5,509
2,754
2,754
4,013
4,012
3,305
1,652
1,652
MOVEMENT DURING THE YEAR1
GRANTED
FORFEITED
VESTED
NUMBER OF INSTRUMENTS
HELD AT
30 JUNE 2023 FAIR VALUE OF
INSTRUMENT
AT GRANT DATE
$
NUMBER OF
INSTRUMENTS
–
–
–
–
$–
–
–
$–
–
–
–
–
–
–
–
12,170
6,085
6,085
22,471
24,242
26,212
$1,269,823
–
–
–
–
–
10,902
5,451
5,451
22,471
24,242
26,212
$1,200,032
$–
$–
–
–
–
–
–
–
6,279
3,139
3,140
22,471
24,242
26,212
6,019
6,019
6,842
3,421
3,421
12,170
6,085
6,085
22,471
24,242
26,212
6,019
6,019
5,509
2,754
2,754
10,902
5,451
5,451
22,471
24,242
26,212
4,013
4,012
3,305
1,652
1,652
6,279
3,139
3,140
22,471
24,242
26,212
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
12.09
12.42
34.07
20.14
17.05
21.84
12.70
11.03
8.44
7.85
7.28
GRANT
PRICE
$
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
31.15
31.15
41.23
41.23
41.23
27.52
27.52
27.52
8.90
8.25
7.63
VESTING DATE
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1 September 2023
1 September 2024
1 September 2023
1 September 2024
1 September 2025
1 September 2024
1 September 2025
1 September 2026
1 September 2025
1 September 2026
1 September 2027
1. Granted aggregate value is calculated by multiplying the number of instruments by the grant price. Vested and forfeited aggregate value is calculated by
multiplying the number of shares by the Perpetual closing share price on the vesting date.
2. Mr Adams’ shares granted in 2018 are sign-on shares.
3. Share Rights granted to KMP in September 2021 and 2022 convert to Restricted Shares 2 years after the grant date. The holding lock is removed 4 years after the
grant date, as per the terms of the Executive Leadership Team Variable Incentive Plan. These Share Rights are not included in the table after vesting.
4. Performance Rights granted to KMP in September 2019, 2020, 2021 and 2022 were issued as 2 tranches with a TSR hurdle. T1 is subject to a 3 year performance
period before vesting into Restricted Shares for one year. T2 was subject to a 4 year performance period before vesting. Vested Performance Rights with a
holding lock are not included in the table after vesting.
$945,582
$–
$–
5. Some of Ms Gillespie’s Share Rights were granted prior to her KMP appointment date of 18 November 2020. We have included these holdings for completeness.
6. Performance Rights issued under the “KMP LTI Growth Plan” were issued as 3 tranches with a TSR hurdle. T1 is subject to a 3 year performance period before
vesting into Restricted Shares for two years. T2 is subject to a 4 year performance period before vesting into Restricted Shares for one year. T3 is subject to a
5 year performance period before vesting.
7. Ms Altinger’s restricted shares relate to deferred STI payments made during her time as a KMP of Pendal Group that were converted to Perpetual Limited
restricted shares.
NAME
M Smith
INSTRUMENT
GRANT DATE
R McCarthy
S Mosse
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Share Rights3
Performance Rights4
Performance Rights4
Performance Rights6
Performance Rights6
Performance Rights6
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
1 September 2020
1 September 2020
1 September 2021
1 September 2021
1 September 2021
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
1 September 2022
Aggregate value
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
64
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
8.7 Termination terms for Executive KMP
Following are the Executive KMP contractual arrangements.
TERM
Duration of contract
WHO
CONDITIONS
All Executive KMP
Ongoing until notice is given
by either party
Notice to be provided by the Executive to
terminate the employment agreement
CEO and Managing Director
Other Executive KMP
Notice to be provided by Perpetual to terminate
the employment agreement without cause
CEO and Managing Director
Other Executive KMP
Notice to be provided by Perpetual for
summary dismissal
Post‑employment restraint
All Executive KMP
9 months
6 months
9 months
6 months
No notice
CEO and Managing Director
and Other Executive KMP
12 months from the date on which
notice of termination was given
The agreements also allow Perpetual to make a payment in lieu of notice, subject to Board approval.
9. Non-executive Director remuneration
9.1 Remuneration policy and data
Perpetual’s Remuneration Policy for Non‑executive Directors aims to ensure that we attract and retain suitably skilled, experienced
and committed individuals to serve on your Board. Non‑executive Directors do not receive performance related remuneration and
are not entitled to receive performance shares or options over Perpetual shares as part of their remuneration arrangements.
Fee framework
Non‑executive Directors receive a base fee. Except for the Chairman, they also receive fees for participating in Board committees
(other than the Nominations Committee), either as Chairman or as a member1.
Several changes to Board composition occurred in FY23. Following completion of the Pendal Group acquisition in January 2023,
and in recognition of the growing scale and global nature of the business, two internationally based Non‑executive Directors of
Pendal Group, Ms Kathryn Matthews and Mr Christopher Jones, joined the Perpetual Limited Board. Alongside this change, one
of Perpetual’s long serving Australian‑based Non‑executive Directors, Mr Craig Ueland, retired from the Board.
As part of the acquisition of Pendal Group, which included the appointment of two Pendal Group Independent Non‑executive
Directors, the Board sought and received shareholder approval at the FY22 Annual General Meeting to increase the NED Fee Cap
to $3.5 million. As outlined in the Notice of Meeting to the FY22 AGM, the Board sought Shareholder approval to increase the current
remuneration pool cap for the following reasons:
1. to give the Company flexibility with regards to the appointment of additional Directors, particularly given the acquisition of
Pendal Group in FY23;
2. to ensure the remuneration pool could accommodate payment of fees to any additional Non‑executive Directors who
were appointed;
3. to enable the Company to maintain remuneration arrangements that are market‑competitive, so it can attract and retain high
calibre individuals as Non‑executive Directors; and
4. to provide for Non‑executive Directors’ fees to grow in the future to reflect market trends in the longer term.
1. Any other contracts are at arm’s length in the normal course of business and on normal commercial terms consistent with other employees and clients. Those
transactions may involve investments in Perpetual managed funds and financial advice by Wealth Management.
Perpetual Group Annual Report 2023 65
No changes were made to NED fee levels for FY23 for Australian or US‑based Independent Non‑executive Directors. For Perpetual’s
new UK‑based Independent Non‑executive Director, Kathryn Matthews, fees for FY23 were agreed to be paid in‑line with the
existing fee structure for UK‑based Independent Non‑executive Directors at Pendal Group.
No changes to Board fees or committee fees will be made for FY24, outside of the establishment of two new committees and
agreeing their associated fees.
FY23
FY24
US-BASED1
USD
UK-BASED2
AUD
AU-BASED
AUD
US-BASED1
USD
UK-BASED2
AUD
AU-BASED
AUD
340,000
165,000
180,000
176,000
35,000
17,000
35,000
17,000
25,000
13,000
17,000
22,000
17,000
17,000
13,000
14,300
NON-EXECUTIVE DIRECTORS’ FEES
Chairman
Directors
Audit, Risk and Compliance Committee Chairman
Audit, Risk and Compliance Committee member
People and Remuneration Committee Chairman
People and Remuneration Committee member
Investment Committee Chairman
Investment Committee member
Technology & Cyber‑security Committee
Chairman3
Technology & Cyber‑security Committee member3
Integration Committee Chairman3
Integration Committee member3
No change
No change
No change
No change
No change
No change
No change
No change
13,000
25,000
13,000
Nil
25,000
13,000
14,300
13,000
14,300
Nil
Nil
Nominations Committee member
Nil
Nil
Nil
Overseas travel allowance per trip (long‑haul)4
10,000
10,000
10,000
10,000
10,000
10,000
1. Apply to US based Directors only.
2. Apply to UK based Directors only. This amount is consistent with the rates previously applied to UK-based Non-executive Directors at Pendal Group.
3. These two new committees were formed in August 2023.
4. This allowance is paid once for each return overseas trip where the flight time, one way, is at least 8 hours.
The fees detailed above are inclusive of any superannuation or pension contributions, capped at the maximum prescribed under
any applicable legislation.
Australian‑based Non‑executive Directors may receive employer superannuation contributions in one of Perpetual’s employee
superannuation funds or in a complying fund of their choice. Non‑executive Directors can also salary sacrifice superannuation
contributions out of their base fee.
Total fees paid to Non‑executive Directors in FY23 were $1,896,124. More details are provided in the table on page 66.
Retirement policy
Non‑executive Directors who have held office for three years since their last appointment must retire and seek re‑election at the
Annual General Meeting.
In order to revitalise the Board, Perpetual’s Non‑executive Directors agree not to seek re‑election after three terms of three years.
However, the Board may invite a Non‑executive Director to continue in office beyond nine years if there is a compelling reason and,
as determined by the Board, if in the best interests of shareholders. Outside of superannuation contributions, no retirement benefits
are paid to Non‑executive Directors.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 66
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
Remuneration of the Non-executive Directors (statutory reporting)
Details of Non‑executive Director remuneration are set out in the table below.
NAME
T D’Aloisio5
2023
2022
C Jones1,4
2023
2022
C Ueland5
2023
2022
F Trafford‑Walker5
2023
2022
G Cooper5
2023
2022
I Hammond5
2023
2022
K Matthews4
2023
2022
M A Kanaan1,4
2023
2022
N Fox1
2023
2022
Total 2023
Total 2022
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
PERPETUAL
BOARD FEES
$
SUPER-
ANNUATION2
$
TOTAL3
$
314,708
25,292
340,000
326,432
23,568
350,000
164,045
–
–
–
164,045
–
109,276
11,474
120,750
198,182
18,818
217,000
176,471
18,529
195,000
205,000
–
205,000
217,258
–
217,258
201,818
20,182
222,000
207,940
5,060
213,000
213,318
9,682
223,000
93,358
–
325,713
280,665
–
–
–
–
93,358
–
325,713
280,665
205,389
21,611
227,000
206,364
20,636
227,000
1,814,158
81,966
1,896,124
1,631,779
92,886
1,724,665
1. Mr Jones, Ms Fox & Ms Kanaan’s fees include travel allowance. Ms Fox payment relates to a trip made in FY23 but paid in July 2023.
2. Australian Non-executive Directors can elect to take superannuation contributions in excess of their Superannuation Guarantee Contribution as additional
base fees.
3. Non-executive Directors do not receive any non-cash benefits as part of their remuneration.
4. US or UK based Directors do not receive any payments such as pension contributions in addition to Board fees. US and UK fees are shown as the actual
AUD cost of USD and GBP payments.
5. Reduced fees for Australian based NEDs from FY22 is due to $10,000 travel allowance not being paid in FY23.
Perpetual Group Annual Report 2023
67
Alignment with shareholder interests
The constitution requires Non‑executive Directors to acquire a minimum of 500 Perpetual shares on appointment and hold a total of at
least 1,000 shares when they have held office for three years. However, Non‑executive Directors are encouraged to hold ordinary
Perpetual shares equivalent in value to 100% of their annual base fee within a reasonable period of their appointment.
Non‑executive Directors do not receive share rights or options and are required to comply with Perpetual’s Hedging and Share
Trading policies.
Non-executive Director shareholdings
The table below summarises the Non‑executive Director movement in holdings of ordinary shares held during the year and the
balance at the end of the year. The table includes shares held both in total (directly or indirectly) and held by related parties.
TOTAL SHARES
HELD AT 1 JULY
2022
NUMBER OF
SHARES
PURCHASES
SALES/
REDUCTIONS
SHARES
HELD
PERSONALLY AT
30 JUNE 2023
SHARES
CONVERTED
ON
ACQUISITION
OF PENDAL
GROUP LIMITED
SHARES
HELD
NOMINALLY AT
30 JUNE 20231
TOTAL
SHARES
HELD AT
30 JUNE 2023
1,000
SHARE-
HOLDING
REQUIREMENT
MET
9,072
–
6,082
5,958
12,967
–
500
1,905
7,991
–
–
9,039
474
10,000
–
511
151
–
–
–
–
–
2,149
–
–
–
–
–
–
–
6,432
–
–
1,011
2,056
3,995
–
4,571
–
–
–
3,719
–
–
–
9,072
–
15,121
–
9,072
4,571
15,121
6,432
20,818
20,818
–
–
–
3,996
3,719
1,011
2,056
7,991
✓
✓
✓
✓
✓
✓
✓
✓
✓
NAME
T D’Aloisio
C Jones
G Cooper
N Fox
I Hammond
K Matthews
M Kanaan
F Trafford‑Walker
C Ueland
1. Shares held nominally are included in the “Total shares held at 30 June 2023” column. Total shares are held directly by the KMP and indirectly by the KMP’s
related parties, inclusive of domestic partner, dependents and entities controlled, jointly controlled or significantly influenced by the KMP.
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 68
Directors’ Report
Remuneration Report
for the year ended 30 June 2023
10. Key terms
Asset manager
Balanced scorecard
Cash
Executive KMP
Refers to Perpetual’s asset management teams globally – those individuals and teams responsible for
producing research for clients and/or directly managing AUM.
The performance measures of financial, client, growth and people as agreed by the Board to assess short
and long-term Perpetual Group performance for the purposes of determining the amount of variable
remuneration payable (if any).
Refers to the Cash component of the Variable Incentive plan. The Cash component of the plan is delivered
to KMP following the completion of the performance year.
Executive Key Management Personnel. Those people who have the authority and responsibility for
planning, directing and controlling Perpetual’s activities, either directly or indirectly. Key Management
Personnel disclosed in this report are the CEO and Managing Director and other Executive KMP
(collectively Executive KMP).
Fixed remuneration
Fixed remuneration consists of cash salary, superannuation, packaged employee benefits and associated
fringe benefits tax.
Group
Perpetual Limited and its controlled entities.
Hurdled Equity
Market peers
Mood Monitor
The Hurdled Equity component is awarded in the form of Performance Rights (subject to performance
hurdles of absolute total shareholder return) equally over three years (with any vested equity restricted for
a further year) and four years.
For the purposes of benchmarking remuneration practices and levels, Perpetual’s market peers refers to
listed companies in the diversified financial services industry, excluding major banks and other financial
services companies in the Standard & Poor’s (S&P)/ASX 200.
With the decision not to run a formal engagement survey in FY20, it was decided to implement the Mood
Monitor to seek more frequent, in the moment feedback to gauge the mood of employees through regular
pulse surveys.
Non-executive
Director (NED)
Non-executive Directors (NEDs) or Non-executive KMP are members of a company’s board of directors who
are not part of the executive team.
NPAT
NPAT is the net profit after tax in accordance with the Australian Accounting Standards.
Performance Rights
Performance Rights are granted under the Hurdled Equity component of the Executive Variable Incentive plan.
Restricted Shares
Once Share Rights are held for a two-year vesting period, and if the vesting conditions are met, they are
converted to Restricted Shares on a one share for one Share Right basis. Restricted shares are then held for
a further two years.
Share Rights
STI
Share Rights are issued around September each year, following the performance period. Share Rights have
a two-year vesting period, at which point, if the vesting conditions are met, they are converted to Restricted
Shares on a one share for one Share Right basis.
A short-term incentive paid to employees for meeting annual targets aimed at delivering our longer-term
strategic plan. Under the STI Plan, employees may be paid a discretionary incentive (less applicable taxes)
based on their individual performance as well as business performance. The CEO and Executive KMP
participate in their own Variable Incentive plans, and therefore no longer participate in the Group STI plan.
Unhurdled Equity
The Unhurdled Equity component is awarded as Share Rights, which vest after two years into Restricted
Shares for a further two years.
UPAT
UPAT is underlying net profit after tax in accordance with the Australian Accounting Standards.
Variable Incentive
Variable Incentive includes both cash and equity components of the CEO and other Executive KMP Variable
Incentive Plan.
Perpetual Group Annual Report 2023 69
Non-audit services provided by the External Auditor
Fees for non‑audit services paid to KPMG in the current year were $407,934 (2022: $189,313).
The Board has a review process in relation to any non‑audit services provided by the external auditor. The Board considered the
non‑audit services provided by the auditor and is satisfied that the provision of these non‑audit services by the auditor is compatible
with, and does not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
– all non‑audit services are subject to the corporate governance procedures adopted by the Company and are reviewed by the
Audit, Risk and Compliance Committee to ensure that they do not impact the integrity and objectivity of the auditor; and
– non‑audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s own work, acting in a
management or decision‑making capacity for the Company, acting as an advocate for the Company or jointly sharing risks
and rewards.
The Lead Auditor’s independence declaration for the 30 June 2023 financial year is included at the end of this report.
Rounding off
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 1 April 2016 and, in accordance with that
Instrument, amounts in the Financial Report and the Directors’ Report have been rounded off to the nearest one hundred thousand
dollars, unless otherwise stated.
This report is made in accordance with a resolution of the Directors.
Tony D’Aloisio
Chairman
Rob Adams
Chief Executive Officer and Managing Director
Sydney 24 August 2023
About Perpetual GroupOperating and Financial ReviewFinancial ReportDirectors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
70
Lead Auditor’s Independence Declaration
under Section 307C of the Corporations Act 2001
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Perpetual Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Perpetual Limited for
the financial year ended 30 June 2023, there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Brendan Twining
Partner
Sydney
24 August 2023
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo
are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
47
Perpetual Group Annual Report 2023
Operating and Financial Review
for the 12 months ended 30 June 2023
Disclaimer
The following information should be read
in conjunction with the Group’s audited
consolidated financial statements and
associated notes for the 12 months ended
30 June 2023 contained in the Annual
Report for the financial year ended
30 June 2023 (FY23). The Group’s audited
consolidated financial statements for the
12 months ended 30 June 2023 were subject
to an independent audit by KPMG.
No representation or warranty is made
as to the accuracy, adequacy or reliability
of any statements, estimates, opinions or
other information contained in this review
(any of which may change without notice).
To the maximum extent permitted by law,
the Perpetual Group, its Directors, officers,
employees, agents and contractors and
any other person disclaim all liability and
responsibility (including without limitation
any liability arising from fault or negligence)
for any direct or indirect loss or damage
which may be suffered through use of or
reliance on anything contained in or omitted
from this review.
This review contains forward-looking
statements. These forward-looking
statements should not be relied upon as
a representation or warranty, express or
implied, as to future matters. Prospective
financial information has been based
on current expectations about future
events but is, however, subject to risks,
uncertainties, contingencies, and
assumptions that could cause actual results
to differ materially from the expectations
described in such prospective financial
information. The Perpetual Group
undertakes no obligation to update any
forward-looking statement to reflect events
or circumstances after the date of this
review, subject to disclosure requirements
applicable to the Group.
Contents
Review of Group
1
About Perpetual
1.1 Overview
1.2 Group financial performance
1.3 Group financial position
1.4 Regulatory developments and business risks
1.5 Outlook
Review of Businesses
2
Review of businesses
2.1
Asset Management
2.2 Wealth Management
2.3 Corporate Trust
2.4 Group Support Services
Appendices
3
Appendices
3.1 Appendix A: Segment results
3.2 Appendix B: Bridge for FY23 statutory accounts and OFR
3.3 Appendix C: Average assets under management
3.4 Appendix D: Full time equivalent employees
3.5 Appendix E: Dividend history
3.6 Glossary
71
72
72
72
73
76
78
86
87
87
87
92
93
95
96
96
96
98
102
102
103
104
Notes
Note that in this review:
– FY23 refers to the financial reporting period for the 12 months ended
30 June 2023
– 1H23 refers to the financial reporting period for the 6 months ended
31 December 2022
– 2H23 refers to the financial reporting period for the 6 months ended
30 June 2023
with similar abbreviations for previous and subsequent periods.
This is a review of Perpetual’s operations for the 12 months ended 30 June 2023
(FY23). It also includes a review of its financial position as at 30 June 2023.
The following information should be read in conjunction with the Group’s audited
consolidated financial statements and associated notes for FY23.
All amounts shown are stated in Australian dollars unless otherwise noted and are
subject to rounding.
Additional information is available on the Group’s website perpetual.com.au.
A glossary of frequently used terms and abbreviations can be found at the end of
the review.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 72
Operating and Financial Review
for the 12 months ended 30 June 2023
Part 1 – Review of Group
1 About Perpetual
1.1 Overview
Perpetual Limited (Perpetual) is a diversified global financial services firm operating in asset management, wealth management
and trustee services. Perpetual services a global client base from its offices in Australia as well as its international offices in the
United States, United Kingdom, Europe and Asia. Perpetual earns the majority of its revenue from fees charged on assets under
either management, advice or administration. Revenue is influenced by movement in the underlying asset values, margin on assets
and net client flows. The business model provides Perpetual with recurring revenue streams and leverage to movement in asset values.
As a provider of high‑quality financial services, employment costs comprise the largest component of the Group’s expenses.
The recent acquisition of Pendal Group brings together two of Australia’s most respected active asset management brands to
create a global leader in multi‑boutique asset management with approximately A$200 billion in assets under management.
1.1.1 Strategy
Perpetual’s vision is to create enduring prosperity for its clients, people, communities and shareholders. Perpetual creates enduring
prosperity by offering trusted services in Asset Management, Wealth Management and Corporate Trust.
Perpetual’s long history has led to the evolution of our businesses, leading us to have a unique combination of businesses that
positions us well to navigate global markets and to deliver positive outcomes to our clients. This combination includes material
exposure to non‑market linked revenues; exposure to a broad array of investment capabilities across regions, global markets
and global thematics.
Asset Management’s vision is to be a market‑leading global multi‑boutique asset management business, with world‑class
differentiated active investment capabilities designed to meet the evolving needs of our clients in our chosen markets (US,
Europe, UK, Asia and Australia). The Pendal Group acquisition has brought to Asset Management complementary strengths
in key strategies, regions and operating capabilities. Combined with Perpetual’s pre‑existing asset management business,
the Pendal acquisition provides a global, scalable growth platform for Asset Management.
Wealth Management’s vision is to empower families, businesses and communities to achieve their aspirations by delivering
advisory service excellence. With a trusted fiduciary heritage, Wealth Management assists clients with a “protect” and “grow”
investment philosophy for managing their wealth as their income and needs change over a lifetime.
Corporate Trust’s vision is to be the most trusted fiduciary and the leading digital solutions provider to the banking and financial
services industry, with a mission to support the delivery of its client’s strategy through the provision of service excellence and digital
solutions. Corporate Trust builds on its strategy of enabling client success by leveraging its longstanding relationships and supporting
its clients with innovative and automated digital solutions to help them meet business challenges today and into the future.
To support our strategy in each of these businesses, Perpetual Group have committed to the following strategic imperatives 1:
STRATEGIC IMPERATIVES
CLIENT FIRST
SIMPLIFY
SUSTAINABLE GROWTH
– Deliver trusted advice and stewardship
– Complete successful integration and
– Unlock benefits of our multi‑boutique
– Provide a high‑quality client experience
– Deliver strong investment performance
– Be an Employer of choice to attract
and retain the best talent
– Set strong industry standards in all
that we do
synergy realisation
model and distribution network
– Seek areas of simplification across
– Leverage strengths in sustainable
portfolio of businesses
investing to build competitive advantage
– Focus on areas where the Group
– Targeted investment in growth engines
adds value
– Continue build‑out of innovative
– Maintain focus on building a simple,
digital solutions
efficient, secure and scalable platform
– Drive proactive risk management and
strong governance standards
1. Refreshed strategy announced 24 August 2023.
Perpetual Group Annual Report 2023 73
1.1.2 Operating segments and principal activities
Asset Management is a global multi‑boutique asset management business offering an extensive range of specialist and
differentiated investment capabilities through six boutique and seven brands in key regions globally. Within Australia, Perpetual and
Pendal Group have a broad range of capabilities across Australian and global equities, credit, fixed income, multi‑asset, and
environmental, social and governance (ESG). We have an established and growing presence in the US, UK and Europe through
Barrow Hanley, J O Hambro Capital Management (J O Hambro), Trillium, and Thompson, Siegel and Walmsley (TSW). Trillium and
Regnan, specialist ESG‑focused asset management businesses, provide leading global sustainable and impact‑driven investment
strategies in equities, fixed income and multi‑asset.
The Wealth Management business consists of Perpetual Private and three other distinct specialist businesses (Fordham, Priority
Life and Jacaranda), offering a unique mix of wealth management, advice and trustee services to individuals, families, businesses,
not‑for‑profit organisations and Indigenous communities throughout Australia. Each of the businesses offer a diverse range of
capabilities: Perpetual Private provides strategic advice on superannuation and retirement planning, general investment, asset
protection, insurance, tax management, estate planning, aged care, social security, succession planning and philanthropy; Fordham
acts exclusively for private business owners and their families to manage their businesses and build and protect their wealth; and
Jacaranda Financial Planning provides high‑quality investment and strategic advice to the high‑net‑worth pre‑retiree segment of
the wealth management market. Priority Life is a specialist insurance business focused on meeting the needs of medical specialists
and other professionals across Australia.
Our Corporate Trust business is a leading provider of fiduciary and digital solutions to the banking and financial services industry
in Australia and Singapore. It administers securitisation portfolios, investment and debt structures to protect the interests of our
clients’ investors. Corporate Trust supports clients locally and overseas with a unique offering through five key service offerings:
Debt Market Services; Managed Fund Services; Perpetual Asia, headquartered in Singapore; Perpetual Digital, which provides
data services and software‑as‑a‑service products; and Laminar Capital, which provides fixed income dealing, treasury and
advisory services to government organisations, superannuation funds, local councils, authorised deposit‑taking institutions (ADIs),
not‑for‑profits, wealth managers and sophisticated investors.
The business units are supported by Group Support Services comprising Group Investments, CEO, Finance, Corporate Affairs,
Marketing, Legal, Audit, Risk, Compliance, Company Secretary, Technology, Project & Change Management, Operations, Product,
People & Culture and Sustainability.
1.2 Group financial performance
Profitability and key performance indicators
FOR THE PERIOD
Operating revenue
Total expenses
Underlying profit before tax (UPBT)
Tax expense
Underlying profit after tax (UPAT)1
Significant items2
Net profit after tax (NPAT)
FY23
$M
1,013.8
(794.6)
219.2
(56.0)
163.2
(104.2)
59.0
FY22
$M
767.7
(566.5)
201.2
(53.0)
148.2
(47.0)
101.2
FY23 V
FY22
246.1
(228.1)
18.0
(3.0)
15.0
(57.2)
(42.2)
FY23 V
FY22
32%
(40%)
9%
(6%)
10%
(122%)
(42%)
1. Underlying profit after tax (UPAT) attributable to equity holders of Perpetual Limited reflects an assessment of the result for the ongoing business of the Group
as determined by the Board and management. UPAT has been calculated in accordance with ASIC’s Regulatory Guide 230 – Disclosing non-IFRS financial
information. Refer to Appendix B for a reconciliation of the adjustments between Statutory Accounts and the OFR. UPAT attributable to equity holders of
Perpetual Limited is disclosed as it is useful for investors to gain a better understanding of Perpetual’s financial results from normal operating activities.
2. Significant items include (refer to Appendix A and Appendix B for further details):
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 74
Operating and Financial Review
for the 12 months ended 30 June 2023
FOR THE PERIOD
Transaction and Integration
costs
– Trillium
– Barrow Hanley
– Pendal Group
– Other
Non‑cash amortisation
of acquired intangibles
Unrealised gains/losses
on financial assets
Accrued incentive
compensation liability
FY23
$M
FY22
$M
FY23 V
FY22
FY23 V
FY22
2H23
$M
1H23
$M
2H22
$M
PROFIT/(LOSS) AFTER TAX
(80.0)
(3.5)
(5.4)
(63.1)
(8.0)
(22.2)
(3.0)
(16.8)
–
(2.4)
(57.8)
(260%)
(45.4)
(34.6)
(0.5)
11.4
(63.1)
(5.6)
(16%)
68%
–
(238%)
(1.7)
(0.7)
(36.5)
(6.5)
(1.8)
(4.7)
(26.6)
(1.5)
(5.7)
(1.7)
(2.5)
–
(1.6)
1H22
$M
(16.5)
(1.4)
(14.4)
–
(0.8)
(40.6)
(18.6)
(22.0)
(119%)
(30.6)
(10.0)
(9.0)
(9.5)
16.4
(10.9)
27.3
250%
15.4
–
4.7
(4.7)
100%
(3.4)
1.0
3.4
(10.2)
(0.7)
(2.3)
7.0
Total significant items
(104.2)
(47.0)
(57.2)
(122%)
(63.9)
(40.3)
(27.3)
(19.8)
KEY PERFORMANCE INDICATORS (KPI)
Profitability
UPBT margin on revenue (%)
Shareholder returns
Diluted earnings per share (EPS)1 on NPAT (cps)
Diluted earnings per share (EPS)1 on UPAT (cps)
Dividends (cps)4
Franking rate (%)5
Dividend payout ratio (%)6
Return on equity (ROE)2 on NPAT (%)
Return on equity (ROE)2 on UPAT (%)
Growth
Perpetual average assets under management (AUM) $B3
Average funds under advice (FUA) $B
Closing Debt Markets Services FUA $B
Closing Managed Funds Services FUA $B
FY23
FY22
FY23 V
FY22
FY23 V
FY22
22
26
(5)
71.1
196.6
155.0
40
78
3.6
9.9
154.0
18.1
691.1
471.4
176.5
258.4
209.0
100
80
11.0
16.2
107.2
18.3
682.2
410.1
(105.4)
(61.9)
(54.0)
(60)
(2)
(7.5)
(6.3)
46.7
(0.2)
8.9
61.3
(60%)
(24%)
(26%)
(68%)
(39%)
44%
(1%)
1%
15%
1. Diluted EPS is calculated using the weighted average number of ordinary shares and potential ordinary shares on issue of 83,014,616 for FY23 (FY22: 57,346,980).
2. The return on equity (ROE) quoted in the above table is an annualised rate of return based on actual results for each period. ROE is calculated using the UPAT or
NPAT attributable to equity holders of Perpetual Limited for the period, divided by average equity attributable to equity holders of Perpetual Limited, multiplied
by the number of such periods in a calendar year in order to arrive at an annualised ROE.
3. Refer to Appendix C for a breakdown by operating segment.
4. Made up of special dividend of 35c paid on 8 Feb 2023, interim dividend of 55c paid on 31 March 2023 and final dividend of 65c to be paid on 29 September 2023.
5. The franking rate for the special dividend paid on 8 February 2023 was 100%. Both the interim and final dividends for 2023 were paid using a 40% franking rate.
6. The payout ratio of 78% on full year UPAT includes the 3 months of Pendal earnings from 1 October 2022 to 31 December 2022. The payout ratio on 2H23 UPAT
was 76%.
Perpetual Group Annual Report 2023 75
1.2.1 Financial performance
For the 12 months to 30 June 2023, Perpetual’s UPAT was $163.2 million and NPAT was $59.0 million.
FY23 UPAT was 10% higher than FY22 principally due to:
– Acquisition of the Pendal Group through the boutiques of Pendal, J O Hambro and TSW
– Continued growth in Corporate Trust across all three service lines
– Higher Wealth Management non‑market related revenue relating to Fordham & Priority Life and the higher interest rate
environment
– Reduction in variable remuneration
– Partially offset by:
• Lower average assets under management (AUM) within Perpetual Asset Management and Barrow Hanley, driven mainly due
to prior period outflows;
• Continued investment in the global build‑out of the Asset Management business to support organic business growth; and
• Higher interest expense following the debt raise to partially fund the Pendal Group acquisition and rises in official interest
rates over the period.
FY23 NPAT was 42% lower than FY22, due to higher significant items driven by the Pendal Group acquisition (refer to Appendix A
and B).
The key drivers of revenue and expenses at the Group level are summarised below. Analysis of performance for each of Perpetual’s
operating segments is provided in Section 2.
1.2.2 Revenue
The main driver of revenue in Asset Management is the value of AUM, which is primarily influenced by the level of the US, European
and Australian equity markets. Wealth Management’s main driver of revenue is funds under advice (FUA) and for Corporate Trust
it is funds under administration (FUA). Revenue is sensitive to a number of factors, including but not limited to: the performance of
funds under the Group’s management and advice; the exposure to currency volatility; the impact and timing of flows on AUM and
FUA1 – inflows, outflows and distributions; and changes in pricing policy, channel and product mix.
In FY23, Perpetual generated $1,013.8 million of total operating revenue, which was $246.1 million or 32% higher than FY22. Revenue
growth was primarily driven by the Pendal Group acquisition. Further growth was delivered through Corporate Trust across
all three of its service lines, Wealth Management non‑market, Group Investments and foreign exchange movement, partially
offset by lower equity market‑linked revenue across Asset Management and Wealth Management and net outflows mainly in
Asset Management.
Performance fees earned in FY23 were $15.2 million, $0.9 million lower than FY222.
1.2.3 Expenses
Total expenses in FY23 were $794.6 million, $228.1 million or 40% higher than FY22, impacted by:
– Acquisition of the Pendal Group;
– Continued investment in the global build‑out of our Asset Management business to support organic business growth;
– Normalisation of employment costs from tight labour markets experienced in FY22;
– Foreign exchange movement;
– Higher interest expense following official interest rate rises and the funding costs relating to the Pendal Group acquisition;
– Partially offset by lower variable remuneration.
1.2.4 Shareholder returns and dividends
The Board announced a final 40% franked ordinary dividend for 2H23 of 65 cents per share, to be paid on 29 September 2023.
This represents a payout ratio of 76% of 2H23 UPAT and 78% of full year UPAT (inclusive of Pendal UPAT for the three months from
1 October to 31 December 2022 in addition to post‑acquisition earnings).
This is in line with Perpetual’s dividend policy to pay dividends within a range of 60% to 90% of UPAT on an annualised basis and
maximising returns to shareholders.
The Dividend Reinvestment Plan (DRP) will be operational for the interim dividend. No discount will apply and the DRP will be met
by issuing new shares.
Perpetual’s return on equity (ROE) on NPAT was 3.6% for FY23 compared to 11.0% in FY22.
Perpetual’s return on equity (ROE) on UPAT was 9.9% for FY23 compared to 16.2% in FY22.
1. FUA refers to both funds under advice in Wealth Management and funds under administration in Corporate Trust.
2.
Includes performance fees earned by Asset Management and Wealth Management.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 76
Operating and Financial Review
for the 12 months ended 30 June 2023
1.3 Group financial position
BALANCE SHEET AS AT
Assets
Cash and cash equivalents
Receivables
Structured products – EMCF assets
Liquid investments
Goodwill and other intangibles
Tax assets
Property, plant and equipment
Other assets
Total assets
Liabilities
Payables
Structured products – EMCF liabilities
Derivative financial instruments
Tax liabilities
Employee benefits
Lease liabilities
Provisions
Borrowings
Accrued incentive compensation
Other liabilities
Total liabilities
Net assets
Shareholder funds
Contributed equity
Reserves
Retained earnings
Total equity
2H23
$M
263.2
209.9
163.9
291.4
1H23
$M
133.6
132.3
174.4
149.9
2,717.8
948.8
149.2
104.9
41.7
64.3
71.3
30.0
2H22
$M
1H22
$M
175.4
122.9
186.3
152.0
951.7
57.2
77.8
23.2
130.9
144.5
189.2
154.8
929.2
48.9
84.8
23.2
3,942.0
1,704.6
1,746.5
1,705.5
118.6
164.2
–
166.2
219.3
90.9
9.4
734.4
50.7
16.3
1,570.0
102.9
175.5
11.3
15.9
83.2
65.8
10.9
277.0
46.3
33.5
822.3
2,372.0
882.3
2,190.5
184.4
(2.9)
828.1
28.2
26.0
93.8
187.7
–
14.9
119.4
72.3
10.5
258.4
48.6
15.2
820.7
925.8
817.7
34.3
73.8
2,372.0
882.3
925.8
90.0
189.2
–
19.2
90.2
78.3
10.0
248.1
45.6
15.6
786.2
919.3
815.6
8.8
94.9
919.3
1H22
$M
251.4
21.5%
23x
(0.52)
DEBT METRICS
Corporate debt $M1
Corporate debt to capital ratio%2
Interest coverage calculation for continuing
operations (times)3
NTA per share ($)4
FY23
$M
745.0
23.9%
8x
(2.63)
FY22
$M
260.8
22.0%
34x
(1.14)
2H23
$M
745.0
23.9%
8x
(2.63)
1H23
$M
288.9
24.7%
14x
(1.59)
2H22
$M
260.8
22.0%
34x
(1.14)
1. Corporate debt represents the gross corporate debt excluding the offset of capitalised debt costs.
2. Corporate debt/(corporate debt + equity).
3. EBIT/gross interest expense in accordance with banking covenants.
4. Calculation includes lease assets and liabilities.
Perpetual Group Annual Report 2023 77
CASHFLOW FOR THE PERIOD
Net cash from/(used in) operating activities
Net cash used in investing activities
Net cash from/(used in) financing activities
Effective movements in exchange rates
on cash held
Net increase/(decrease) in cash and cash
equivalents
FY23
$M
134.8
(244.0)
221.6
FY22
$M
170.9
(69.3)
(66.6)
2H23
$M
136.4
(237.7)
263.4
1H23
$M
(1.6)
(6.3)
(41.8)
2H22
$M
135.5
(20.8)
(68.7)
1H22
$M
35.4
(48.5)
2.1
(24.6)
(6.7)
(32.5)
7.9
(1.5)
(5.2)
87.8
28.3
129.6
(41.8)
44.5
(16.2)
1.3.1 Balance sheet analysis
Key movements in Perpetual’s consolidated balance sheet are described below.
– Goodwill and other intangibles increased by $1,766.1 million due to the acquisition of Pendal Group during the year;
– Borrowings increased by $476.0 million primarily due to an additional drawdown of $480.6 million in debt to fund the acquisition
of Pendal Group, offset by $10.5 million of additional capitalised debt raising costs; and
– Contributed equity increased by $1,372.8 million primarily due to $1,359.9 million of shares issued on market in January 2023 as
compensation to Pendal Group shareholders.
1.3.2 Capital management
Perpetual’s principles for its capital management are as follows:
– maximising returns to shareholders;
– enabling the Group’s strategy;
– ensuring compliance with the Group’s Risk Appetite Statement and regulatory requirements; and
– maintaining liquidity lines and cash balance well in excess of regulatory and working capital requirements.
Perpetual maintains a conservative balance sheet with relatively low gearing levels. As part of its capital management strategy,
the Group continually reviews options to ensure that it is optimising its use of capital and maximising returns to shareholders.
During FY23, the Group has maintained its balance sheet strength through:
– continuing to maintain the overall credit quality of the Group’s risk assets;
– maintaining syndicated debt facility arrangements. Arrangements consist of:
• a multi‑currency revolving loan with a maximum commitment of $175 million AUD or equivalent;
• a multi‑currency term loan facility with a maximum commitment of $128 million USD or equivalent, and an AUD redrawable
bank guarantee facility with a maximum commitment of $160 million AUD;
• a multi‑currency revolving loan facility with a maximum commitment of $215 million AUD;
• a UK pound term loan facility with a maximum commitment of £115 million GBP or equivalent; and
– a multi‑currency term loan facility with a maximum commitment of $45 million USD or equivalent.
The Group uses a rolling forecast of net cash flows to assess its capital requirements. The model requires capital to be set aside for
forecast net cash outflows (3‑month average of a rolling 12‑month forecast) offset by heavily discounted revenue forecasts, and any
known capital commitments. At the end of FY23, Perpetual Group held $423 million of available liquid funds, well in excess of the
total base capital requirements of $70 million.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 78
Operating and Financial Review
for the 12 months ended 30 June 2023
1.3.3 Liquidity
The Group actively manages liquidity risk by preparing cash flow forecasts for future periods, reviewing them regularly with senior
management, maintaining a committed credit facility, and engaging regularly with its debt providers.
In FY23, cash and cash equivalents increased by $87.8 million to $263.2 million as at 30 June 2023. This increase was predominantly
driven by inflows from the drawdown of debt and operating cash activities. These were partially offset by outflows associated with
the acquisition of Pendal Group and the payment of the final FY22 and interim FY23 dividends.
1.3.4 Debt
Perpetual’s corporate debt as at 30 June 2023 was $745.0 million compared to $260.8 million at the end of FY22. An additional
$506.6 million of debt was drawn in FY23 (excluding the $150.0 million bridge facility drawdown and repayment). $25.0 million
was used to fund various strategic initiatives and $480.6 million to fund the Pendal Group acquisition. An additional $125.0 million
of debt facilities remain undrawn as at 30 June 2023. $153.2 million of bank guarantees have been issued under the syndicated
facilities. The bank guarantees are not shown on the balance sheet.
The facility is subject to the Group meeting certain debt covenants including shareholder funds as a percentage of total assets,
a maximum ratio of gross debt to EBITDA and a minimum interest cover. The Group complied with all the relevant covenants
throughout the period. The Group’s gearing ratio is 23.9% (FY22: 22.0%) at the end of FY23.
1.4 Regulatory developments and business risks
1.4.1 Regulatory developments
The financial services industry continues to be subject to legislative and regulatory reform which affects or could affect the Group’s
operations globally.
The following summarises key regulatory change projects that commenced in the last reporting period or are set to commence in
this period.
Australia
Financial Accountability Regime (FAR) Bill 2023
The previous Government had proposed to extend the Banking Executive Accountability Regime (BEAR) to all APRA regulated
entities, including RSE licensees – the Financial Accountability Regime (FAR).
The Financial Accountability Regime Bill 2021 (‘the lapsed 2021 Bill’) had been introduced by the former Government on
28 October 2021, however was dissolved following dissolution of the 46th Parliament in light of the election in May 2022.
The current Government has introduced the Financial Accountability Regime Bill 2023 (‘the 2023 Bill’), the contents of which are
similar to the lapsed 2021 Bill. The 2023 Bill has passed the House of Representatives and is currently before the Senate.
The Group is currently awaiting further developments in order to consider impact of the regime on the Group.
Greenwashing Guidance
On 14 June 2022, ASIC released an information sheet (INFO 271) for issuers of managed funds and superannuation products to help
issuers avoid ‘greenwashing’ when offering or promoting sustainability‑related products. Following this, ASIC released a further
report (Report 763 – ASIC’s recent greenwashing interventions) in May 2023, disclosing the 35 interventions it has made in response
to its greenwashing surveillance, and how and why ASIC has taken action against greenwashing.
The Group has conducted gap analysis and has updated disclosure documents, marketing materials and related collateral as
appropriate, to ensure alignment with the ASIC guidance.
Security Legislation Amendment (Critical Infrastructure) Act 2021 (formerly 2020) and Security Legislation Amendment (Critical
Infrastructure Protection) Act 2022 (‘the Acts’)
The Acts propose an enhanced regulatory framework over physical facilities, supply chains, information technologies and
communication networks, which if destroyed, degraded, or rendered unavailable for an extended period, would significantly impact
the social or economic wellbeing of the nation, or affect Australia’s ability to conduct national defence and ensure national security.
The Group has sought clarification from the regulator as to the application of these Acts to the Group’s activities, and has concluded
that it is not captured as a “Responsible Entity” (as defined in the Acts).
Perpetual Group Annual Report 2023 79
ASIC Derivative Transaction Reporting Rules
On 20 December 2022, ASIC released the new derivative transaction reporting rules, which will take effect from the deferred date
of 21 October 2024.
The new rules follow two rounds of consultation, in November 2020 (CP 334) and May 2022 (CP 361), containing significant changes
to the way transactions are to be reported and how reporting entities should approach its reporting.
The Group will review the changes and conduct an impact assessment to establish the scope of change.
Quality of Advice Review
The Quality of Advice Review is a Government undertaking, led by Michelle Levy, into ways to streamline the regulation of quality
financial advice, consistent with recommendations from the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry, whilst acknowledging the significant difficulty that many Australians face in accessing affordable
financial advice.
On 11 March 2022, the Government released the final terms of reference and on 25 March 2022, invited submissions for feedback
on the Issues Paper from industry on how the regulatory framework could simplify and better enable the provision of high‑quality,
accessible and affordable financial advice for retail clients. After considering feedback on the Issues Paper, a Proposals Paper was
released on 29 August 2022 to seek further feedback and assist the Reviewer in the preparation of a final report. The Group did not
make a submission.
The proposals outlined some potentially significant changes, including:
– A much broader definition of ‘Personal Financial Advice’ and removing the concept of ‘General Advice’;
– Far less prescription in the provision of personal advice and who may provide it, removing complexity with reduced red tape
for simpler personal advice, including:
•
•
removing the obligation to provide Statements of Advice and Records of Advice;
removal of the annual Fee Disclosure Statement and replacing it with annual written consent from the client to deduct fees;
– Removal of the safe harbour steps and Best Interests Duty and replaced with an obligation to provide ‘good advice’.
The final report was provided to Government on 16 December 2022. The Government responded to the report on 13 June 2023
as part of its Delivering Better Financial Outcomes package, indicating it will adopt the bulk of Quality of Advice Review
recommendations including to reduce red tape for simpler personal advice as set out above, and continue to consult industry and
consumer stakeholders on the broader definition of ‘Personal Financial Advice’, the removal of the concept of ‘General Advice’ and
the introduction of the Good Advice Duty. The Group continues to consider the impact of any changes to the Group.
Review of Modern Slavery Act 2018
On May 2023, the final review report on the Modern Slavery Act 2018, led by Professor John McMillan, was tabled in Parliament,
following an initial three‑month public consultation on the Issues Paper released in August 2022. Topics included the impact of the
Modern Slavery Act, and administration and enforcement of compliance with the reporting requirement.
The report made 30 recommendations for Government consideration, including amendments to the Act, such as the threshold
and scope of entity reporting; introducing penalties for specific non‑compliance; expanding guidance material; and the role of the
Anti‑Slavery Commissioner in relation to the Act.
The Group recognises the significance of the changes, if approved, and continues to monitor progress through Parliament.
International
EU – Sustainable Finance Disclosure Regulation (SFDR)
SFDR Level 2 came into force on 1 January 2023 which requires mandatory implementation of the Regulatory Technical Standards
(RTS). Previously under Level 1 firms could use the “comply or explain” principle. The RTS lays out the detailed annual reporting
disclosure requirements that in‑scope firms must comply with. The goal of making the RTS mandatory is to ensure the market
gets all the information they need to make informed decisions, and that they understand the sustainability of financial products.
RTS reporting requirements include principle adverse impact (PAI) indicators, pre‑contractual disclosures, periodic disclosures and
website disclosures. In addition, on 30 June 2023 firms were required to publish PAI statements regarding sustainability factors on
their websites. The Group engaged external compliance consultants to assist with ensuring compliance with the new requirements.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 80
Operating and Financial Review
for the 12 months ended 30 June 2023
UK – Consumer Duty
Consumer Duty rules will come into force on 31 July 2023 for open products and services (and 31 July 2024 for closed products).
The Consumer Duty consists of a new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.
These outcomes are focused on products and services, price and value, consumer understanding and consumer support. The new
principle is supported by cross‑cutting rules requiring firms to act in good faith, avoid causing foreseeable harm, and enable and
support customers to pursue their financial objectives. The Duty will cover products and services sold to retail clients, which extends
to firms that are involved in the manufacture or supply of products and services even if they do not have a direct relationship with
the end consumer. The Group continues to assess the impact and scope of the Duty on the services and products offered and has
identified measures to embed it effectively, where applicable.
UK – Appointed Representatives
On 8 December 2022, the Financial Conduct Authority (FCA) introduced important changes to the regime governing Appointed
Representatives (ARs), which carries out regulated activity for which an authorised firm is responsible. The new rules are a response
to the perception that ARs have not been adequately regulated and created a risk of harm to consumers. The rule changes clarify
and enhance principals’ responsibilities for ARs. The Group is currently working on an annual review document and embedding any
changes necessary to the AR monitoring framework.
UK – Investment Research Review
The Investment Research Review was launched on 9 March 2023 and commissioned by the Government to independently review
investment research and its contribution to UK capital markets competitiveness. In particular, the review covered the impact of
the current legislative and regulatory environment on the provision and quality of research including the MiFID II unbundling rules.
Many in the industry have noted there has been a decline in investment coverage in the UK and that the pricing of research in the
UK post‑MiFID II is “broken”. Some preliminary comments and recommendations made by buy‑side and sell‑side firms include
a research platform to help generate research, allowing more options to pay for research, and allowing greater access to investment
research for retail investors. The review is due to run until June 2023 with recommendations to be made following this.
UK – Sustainability Disclosure Requirements (SDR) and FCA Anti-Greenwashing Rule
The FCA has published a consultation paper detailing new SDR designed to enforce a new classification and labelling system for
sustainable investment products. In addition, the FCA has also proposed a new Anti‑Greenwashing rule intended to go live by
the end of the year. This rule will apply to all FCA authorised firms and require them to ensure that the naming and marketing of
financial products/services in the UK is clear, fair and not misleading, and consistent with the sustainability profile of the product
or service. At the core of the FCA’s proposals are sustainable investment labels, classifying investment products into three different
types: sustainable focus, sustainable impact and sustainable improvers.
The Group is currently reviewing the impact of the rules and considering materiality to our business. In particular, we are considering
whether any funds would qualify for a sustainable label and assessing whether any fund names need to be amended to comply
with naming and marketing rules.
US – SEC Advisor Advertisement Rule Changes
Amended Rule 206(4)–1 is a modernised marketing rule that impacts advertising and marketing for registered Investment Advisors,
and came into effect on 4 November 2022. The rule changes have been implemented by the Group’s US businesses.
US – ESG Disclosures for Investment Advisers and Investment Companies
The SEC proposed amendments to rules and disclosure forms to promote consistent, comparable, and reliable information
for investors concerning funds’ and advisers’ incorporation of ESG factors. An extended public comment period closed
1 November 2022. If the proposed rules are adopted, the Group will work through implementation with its US businesses.
Perpetual Group Annual Report 2023 81
US – Tailored Shareholder Reports for Mutual Funds
In October 2022, the SEC adopted rule and form amendments (first proposed in August 2020) for mutual funds and
exchange‑traded funds that will substantially impact the content and scope of disclosure for shareholder reports, as well as
amendments that will require fee comparability in fund advertising. These amendments reflect the SEC’s goal of requiring funds
to present key information to shareholders clearly and concisely. The rules came into effect on 24 January 2023 with an 18‑month
transition period, with the exception of a rule addressing representations of fees and expenses that could be materially misleading
which does not have a transition period.
US – other proposed rules
In October 2022, the SEC proposed a new rule under the US Advisers Act, imposing due diligence, recordkeeping and reporting
obligations on investment advisers who outsource certain key “covered functions” of the adviser’s business to third parties, including
affiliates. If adopted, the proposal will impose additional costs and operational risks on US investment advisers. In November 2022,
the SEC proposed significant changes to the rules governing liquidity risk management and swing pricing for US mutual funds.
The most significant features include: (i) mandated swing pricing for all US mutual funds (other than money market funds) based
on a complex framework set forth in the proposal; and (ii) several major changes to the liquidity risk management framework for
such funds, including expanding the types of assets that will be categorised in the illiquid investment category for purposes of the
framework. If adopted in their current form, the proposed changes will cause significant and fundamental changes to core aspects
of US mutual funds, including to fund management and certain investment strategies, such as bank loan funds.
The Group continues to monitor these proposed rule changes.
Singapore – MAS Business Continuity Management (BCM) Guidelines June 2022
MAS has released updated BCM Guidelines (Guidelines), which aim to share industry best practices, as well as emphasise the need
for financial institutions (FI) to take an end‑to‑end service‑centric view in ensuring the continuous delivery of critical business
services to their customers. The Guidelines have incorporated public feedback from two rounds of consultations, as well as key
learnings from the COVID‑19 pandemic. The extent and degree to which an FI implements the Guidelines should be commensurate
with the nature, size, risk profile and complexity of its business operations. FI’s should meet the new Guidelines and establish a BCM
audit plan within 12 months following its issuance (June 2023). The first BCM audit should be conducted within 24 months of the
Guidelines’ issuance (by June 2024). The Group continues to work through implementation with its Singapore businesses.
1.4.2 Business risks
Risk management framework
Perpetual’s approach to risk management globally is based on a Risk Appetite Statement set by the Perpetual Board, which outlines
the risk boundaries and minimum expectations of Perpetual Management. The Board’s Audit, Risk and Compliance Committee
(ARCC) is responsible for overseeing Perpetual’s risk management process. Perpetual has dedicated Risk and Compliance
functions, led by the Chief Risk and Sustainability Officer, which have day‑to‑day responsibility for the design, implementation and
maintenance of Perpetual’s Risk Management Framework (RMF), and an independent Internal Audit department.
The RMF is underpinned by the Three Lines of Accountability model (3LOA). This model sees the first line, being business unit
management, accountable for the day‑to‑day identification, management and ownership of risks. Perpetual’s Risk, Compliance and
Client Advocacy functions represent the second line and are responsible for overseeing first line activities. Internal Audit provides
independent assurance, representing the third line, and has an independent reporting line to the Chair of the ARCC.
The Group’s RMF and 3LOA model are designed to manage and formulate responses to the key business risks faced by the Group
which are set out below. The primary mitigants in place to manage these risks include Perpetual’s risk and compliance frameworks,
policies, clearly defined behaviours and performance assessment process, education and risk and compliance training, defined
governance processes and delegation of authorities.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 82
Operating and Financial Review
for the 12 months ended 30 June 2023
1.4.3 Key business risks
The key business risks faced by Perpetual are set out below.
RISK CATEGORY
RISK DESCRIPTION/IMPACT
RISK MITIGANTS
Strategy and
Execution
Risk arising from adverse strategic decisions,
improper implementation of strategic decisions,
a lack of responsiveness to industry changes or
exposure to economic, market or demographic
considerations that results in a poorly designed
and/or executed strategy impacting Perpetual’s
market position and client value proposition.
Management
of Change
People
Risks arising from ineffectively managing the
portfolio of change and/or the design and
execution of delivering and embedding change
associated with Perpetual’s strategic priorities
and/or business initiatives. Risk includes impacts to
the realisation of benefits; and/or ability to deliver
change initiatives to plan or expectations; and/or
unintended consequences for our people, clients
and/or business.
Risk arising from an inability to attract, engage,
mobilise and retain experienced, quality people
at appropriate levels to execute Perpetual’s
business strategy, particularly in key investment
management roles.
Risk arising from an inability to safeguard our people,
clients and suppliers from work health and safety
(WH&S) issues with potential detrimental impact.
– Considered strategic and business planning
processes, including well‑defined mergers
and acquisitions (M&A) framework and
integration programs
– Strategic measures cascaded through
performance management
– Application of Risk Appetite Statement in
strategic decision‑making and monitoring
– Ongoing monitoring by Perpetual’s Executive
Committee (ExCo) and reporting to Perpetual’s
Board on strategic execution and achievement
of intended benefits
– Well‑defined and embedded change
management governance, practices,
processes, systems and training
– Adequate resourcing of change
management initiatives
– Ongoing monitoring and reporting on a
portfolio view of change across the organisation,
including change experience and post
implementation reviews
– Succession planning, talent identification
programs, retention strategies, remuneration
benchmarking and reporting to the People and
Remuneration Committee
– Alignment of remuneration outcomes, including
asset manager (portfolio manager and
investment analyst) remuneration, to longer term
value creation for shareholders and clients
– Employee engagement monitoring
– Well‑defined WH&S policies, procedures
and training
– WH&S Committee
– Incident and injury management processes
– Employee Assistance Program
– Employee engagement monitoring
Perpetual Group Annual Report 2023 83
RISK CATEGORY
RISK DESCRIPTION/IMPACT
RISK MITIGANTS
Financial, Market
and Treasury
Risk that the strength of Perpetual’s balance sheet,
profitability or liquidity are inadequate for its
business activities.
Risk that Perpetual breaches its regulatory, legal,
tax and/or financial reporting obligations. Risk
includes incorrect interpretation of requirements
across jurisdictions resulting in inappropriate
financial accounting, reporting, lodgements and
transfer pricing risk or related disclosures.
Exposure to, or reliance on, revenue streams linked
to equity markets resulting in potentially volatile
earnings (revenue diversity and asset pricing
market risk).
– Budget planning process
– Reconciliation and review processes
– Regular income and expense, debt and
equity reviews
– Tax Governance Policy
– Tax Risk Management Policy
– Internal and external auditor
– Diversification of revenue sources
– Active management of the cost base
– Ongoing monitoring of key balance sheet metrics
Impacts on profitability due to currency fluctuations.
– Treasury Risk Management Program
Investment
Product and
Distribution
Risk arising from non‑adherence to investment
style and/or investment governance, ineffective
investment strategies and/or in adequate
management of investment risks (including
market, credit and liquidity) within the funds or
client accounts that results in underperformance
relative to peers, objectives and benchmarks.
Risk that products and client solutions fail to remain
contemporary and do not meet clients’ expectations
resulting in an inability to deliver budgeted fund
and revenue inflows. Risk that the design and/or
execution of the distribution strategy is ineffective,
resulting in a failure to positively identify, engage,
retain and grow new and/or existing channels.
Business
Resilience,
Operational
and Fraud
Risk arising from inadequate, failed or disrupted
processes, systems or people due to internal or
external events. This includes (but is not limited to)
processing errors, fraud or an event which disrupts
business continuity.
– The US and UK denominated debt has been
designated as a net investment hedge in a
foreign operation and provides a natural hedge
for US and UK denominated business line
– Well‑defined and disciplined investment
processes and philosophy for selection
– Established investment governance frameworks
in place
– Robust pre‑and post‑trade investment
compliance
– Independent fund and mandate monitoring
and reporting
– Well‑defined product and distribution strategy
aligned with overall Group strategy
– Established product governance frameworks
in place
– Approved business case for all new products
including how the product will comply with
regulatory obligations
– Conflicts of Interests framework
– Avoidance of business practices and partnerships
which may result in adverse outcomes
– Clearly defined policies, procedures, roles
and responsibilities
– Controls testing in the form of control
self‑assessment
– Effective issues management processes to
respond to events that may arise
– Business continuity planning and disaster
recovery programs
– Independent assurance
– Robust Insurance program covering all material
insurable risks to the Perpetual Group
– Risk awareness programs regarding the potential
for fraud or financial crime events
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 84
Operating and Financial Review
for the 12 months ended 30 June 2023
RISK CATEGORY
RISK DESCRIPTION/IMPACT
RISK MITIGANTS
Information
Technology (IT)
Cyber/Data
Security
Risk arising from failed, corrupted, or inadequate
information systems resulting from inadequate
infrastructure, applications, cloud services and
support. Includes (but is not limited to) loss of
integrity and availability of critical data as well
as business disruption resulting from a failure
of technology or IT service provider to meet
business requirements.
Risk arising from breached information systems
resulting from inadequate infrastructure,
applications, cloud services, security controls
and support. Includes (but is not limited to) loss of
confidentiality, integrity, and availability of sensitive
or critical data, or inappropriate retention of data, as
well as business disruption resulting from a cyber
security event.
Outsourcing
Risk that Perpetual servicing arrangements
and/or services performed by external service
providers, including related and third parties, are not
appropriate and/or are not managed in line with the
servicing contract or the operational standards.
– Continued execution of technology modernisation
programs
– Business continuity planning and disaster
recovery programs
– Independent assurance
– Defined information security strategy, programs
and IT security policies
– Implementation of operational security
technology (including firewalls and antivirus)
– Dedicated Security Operations Centre (providing
24x7 coverage)
– Establishment of global mandate for security
across the Perpetual Group
– Security assurance testing of key systems
(including penetration testing, red teaming and
vulnerability management)
– Information security response plans and regular
testings
– Business continuity planning and disaster
recovery programs
– Independent assurance
– Information security risk awareness programs
– Ongoing, automated phishing training and
testing of employees
– Third party IT due diligence processes
– Cyber Insurance
– Partnered with well‑regarded and proven
strategic partners
– Outsourced relationships are managed at a
senior level
– Outsourcing and vendor management framework
– Legal contracts/service level agreements in place
and monitored
– Independent assurance
Perpetual Group Annual Report 2023 85
RISK CATEGORY
RISK DESCRIPTION/IMPACT
RISK MITIGANTS
Sustainability
and Responsible
Investing
Risk arising from inadequate or inappropriate
integration of sustainability‑related considerations in
strategic, business and investment decision‑making.
Includes the risk of not meeting the evolving
stakeholder expectations, such as products to
meet client needs, ‘greenwashing’ or meeting
disclosure requirements.
– Development and implementation of a
sustainability strategy framework – Perpetual’s
Prosperity Plan and ‘Planet’, ‘People’,
‘Communities’ and ‘Governance’ commitments
– Partner with well‑regarded, environmental and
socially responsible partners
– Continued build‑out of ESG Investment
capability across Perpetual’s global business
reinforcing our commitment to sustainability
and responsible investing
– Well‑defined and embedded governance
framework
– Sustainable Finance Disclosure Regulation (SFDR)
implementation
Compliance
and Legal
The risk that Perpetual breaches its compliance and
legal obligations (including licence conditions and
client commitments). Risk includes an inability to
effectively respond to regulatory change.
– Independent legal and compliance team,
and training across teams
– Compliance obligations are documented
and monitored
Conduct
Risk arising from conduct by Perpetual’s Directors,
employees or contractors that is unethical or does
not align with Perpetual’s values, policies or expected
behaviours or, the expectation of Perpetual’s internal
and external stakeholders.
– Issues and beach management framework
– Controls testing in the form of control
self‑assessment
– Independent assurance
– Effective Risk Management Framework that sets
out how risk is managed, including Three Lines
of Accountability risk model and application
of Perpetual’s Risk Appetite Statement which
outlines the risk behaviours expected of all
Perpetual Directors, employees and contractors
– Mandated training on Perpetual’s Code
of Conduct, Conflicts of Interest and Risk
Management frameworks and behaviours
of all staff that form part of the performance
assessment process
– Media monitoring
– Net Promoter Score measurement and reporting
– Whistleblowing arrangements managed by an
independent vendor
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 86
Operating and Financial Review
for the 12 months ended 30 June 2023
1.5 Outlook
While the macroeconomic and geopolitical conditions continue to pose challenges for the global financial services industry,
the outlook for Perpetual Group remains positive. Perpetual’s unique combination of quality businesses provides the Group with
diversification of earnings and growth opportunities, and resilience in times of market volatility through our non‑market‑linked
revenues in Corporate Trust and Wealth Management.
In addition, the strength of the Perpetual brand, built over generations as a leading provider of fiduciary services, has created
a confidence and trust that gives the Group a strong foundation for future growth.
Asset Management
The operating environment for Asset Management is expected to continue to be challenging with investor caution towards
equities, asset allocation shifts and higher interest rates impacting globally. While economic uncertainty remains a challenge,
we believe this market environment creates opportunities for Perpetual’s asset managers to explore diverging trends and views,
and to capitalise on select opportunities to drive investment outperformance against benchmark. A key feature and strength of
Perpetual’s multi‑boutique model is that Perpetual does not hold a “house” view, and therefore each boutique’s ability to deliver
value to investors is not constrained by views held by any other boutique within our stable. From a distribution and operational
perspective, the successful acquisition of Pendal Group has brought together two complementary businesses and provided
Perpetual with a global, multi‑boutique business with a distribution presence in all our key chosen markets, and a scalable platform
to enable growth. Our focus in the near term is to fully realise the potential of the combined businesses through successful
integration, synergy realisation and by simplifying the management structure to allow us to focus on growing our market presence,
particularly in the US and Europe.
Wealth Management
Positive momentum in Wealth Management, benefiting from expanded products and services driving growth in non‑market‑linked
revenues. Continued growth is expected in the Wealth Management business through its differentiated advice model and new
capabilities via the integration and expansion of Jacaranda Financial Planning and investment in its digital capability to support scale.
Corporate Trust
Continued organic growth in Corporate Trust, despite short‑term headwinds in mortgage and commercial property sectors.
The Corporate Trust business continues to deliver consistent growth in its core offerings while the Perpetual Digital business is
well positioned to support our clients’ needs and maintain its earnings growth rate.
Unique combination of businesses
Perpetual remains focused on its strategy to deliver sustainable growth across our unique combination of quality businesses.
We will be focused on the successful integration of the Pendal Group, improving net flows, unlocking benefits from simplifying,
and delivering returns on investments made across our quality portfolio.
We will continue to provide quarterly business updates on the underlying drivers of our business, the execution of our strategy
and market conditions.
1.
Includes Regnan branded funds
Perpetual Group Annual Report 2023 87
Part 2 – Review of Businesses
2 Review of businesses
The results and drivers of financial performance in FY23 for the three Perpetual Group operating segments are described in the
following sections. A description of revenues and expenses at the Group Support Services level is also provided.
2.1 Asset Management
2.1.1 Business overview
Following the acquisition of the Pendal Group in January of 2023, the Asset Management segment was formed to combine global
investment capabilities into a single segment, consisting of our six boutique managers:
Previously reported Perpetual Asset Management Australia and International boutiques
– Perpetual Asset Management – one of Australia’s most respected and longstanding active investment managers, focused
on the needs of Australian and New Zealand retail and institutional investors. Perpetual Asset Management is a dynamic,
active manager, offering an extensive range of specialist investment capabilities including Australian and global equities,
Australian credit and fixed income, multi‑asset as well as ESG‑focused products
– Barrow Hanley – a US‑based diversified investment management firm offering value‑focused investment strategies spanning
global equities, US equities and fixed income. The business is 75% owned by Perpetual with the remaining interest in the firm
held by employees
– Trillium Asset Management – based out of the US, offering ESG investment management strategies and products. The firm has
been a value‑led, impact‑driven and ESG‑focused asset management business since its foundation in 1982. Trillium combines
impactful investment solutions with active ownership. The firm manages equity, fixed income, and alternative investment
solutions for institutions, intermediaries and high‑net‑worth individuals, as well as charitable and non‑profit organisations with
the goal to provide both positive impact and long‑term value to these clients.
New boutiques added through the Pendal Group acquisition
– Pendal1 – one of Australia’s largest active fund managers with offices in Sydney and Melbourne, managing assets across
Australian and global equities, sustainable and ethical, multi‑asset, bond, income and defensive strategies
– J O Hambro Capital Management (J O Hambro) 1 – a boutique investment management business with offices in London,
Singapore, Munich, Paris, New York, Boston and Berwyn specialising in the active management of equities across a range
of global and regional equity strategies, multi‑asset, global impact and sustainable strategies
– Thompson, Siegel and Walmsley (TSW) – a US‑based value‑oriented investment management and advisory company,
operating primarily in the long‑only equity (international and US) and fixed income asset classes.
1.
Includes Regnan branded funds.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 88
Operating and Financial Review
for the 12 months ended 30 June 2023
2.1.2 Financial performance
FOR THE PERIOD
Management fees by asset class1
– Equities
– Cash and fixed income
– Multi Asset
– Other AUM related
FY23
$M
FY22
$M
FY23 V
FY22
FY23 V
FY22
2H23
$M
1H23
$M
2H22
$M
1H22
$M
508.4
49.6
27.5
3.3
313.2
44.2
15.9
2.9
195.2
5.4
11.6
0.4
Total AUM related management fees
588.8
376.3
212.6
Performance fees by asset class
– Equities
– Cash and fixed income
– Other AUM related
Total Performance fees
Non-AUM related revenue
Total revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration expense
Interest expense
9.5
1.1
0.6
11.1
0.5
10.3
1.2
–
11.5
0.0
600.4
387.8
437.7
162.8
13.2
15.5
1.4
271.2
116.5
7.8
5.2
0.7
Underlying profit before tax
132.7
102.8
62%
12%
73%
13%
56%
(8%)
(10%)
(4%)
(0.8)
(0.1)
0.6
(0.4)
0.5
2,730%
212.7
166.4
46.2
5.4
10.3
0.7
29.9
55%
61%
40%
69%
198%
92%
29%
358.5
150.0
29.8
19.8
2.1
19.7
7.8
1.2
156.2
21.6
7.6
1.4
157.0
22.7
8.3
1.5
410.2
178.7
186.8
189.5
6.8
0.6
0.6
8.0
0.3
418.4
298.5
119.9
9.0
13.3
1.0
2.7
0.5
–
3.2
0.2
5.7
0.6
–
6.4
0.0
4.6
0.6
–
5.1
0.0
182.0
193.2
194.6
139.2
42.8
4.2
2.2
0.4
141.9
51.3
4.0
2.4
0.4
129.4
65.2
3.8
2.8
0.4
96.5
36.1
44.5
58.3
1. Revenue by asset class now presents Multi Asset separately from Equities and Cash and Fixed Income.
In FY23, Asset Management reported UPAT of $132.7 million which was $29.9 million or 29% higher than FY22. This was driven by the
acquisition of Pendal Group through the boutiques of J O Hambro, Pendal and TSW.
The cost to income ratio in FY23 was 78% compared to 73% in FY22. The cost to income ratio increase was due to the global
build‑out of distribution and key functions together with the acquisition of the Pendal Group.
2.1.3 Drivers of performance
Revenue
Asset Management generated revenue of $600.4 million in FY23, an increase of $212.7 million or 55% higher than FY22. The increase
was mainly driven by the contribution of Pendal Group boutiques. Pre‑existing boutiques revenue was lower due to lower average
AUM from lower markets and net outflows, partially offset by foreign exchange movements.
AUM related management fees increased $212.6 million or 56% to $588.8 million in FY23 mainly due to the contribution of Pendal
Group, predominantly within the Equities asset class.
Perpetual Group Annual Report 2023 89
Performance fees of $11.1 million were earned in FY23, $0.4 million or 4% lower than FY22. Performance fees were mainly generated
across the following funds:
– Perpetual Asset Management Pure Equity Alpha Fund
– Perpetual Pure Microcap Fund
– Pendal Opportunities Microcap Fund
– Perpetual Exact Market Return Fund
– Pendal SIV Emerging Companies Fund
– J O Hambro Asia ex Japan All Cap Fund
Other non‑AUM related revenue includes interest earned on operational accounts.
Revenue margin
FOR THE PERIOD
By asset class1
– Equities
– Cash and fixed income
– Multi Asset
– Other AUM related
Average revenue margin
FY23
BPS
FY22
BPS
FY23 V
FY22
FY23 V
FY22
2H23
BPS
1H23
BPS
2H22
BPS
1H22
BPS
44
22
45
6
41
42
25
45
7
39
2
(3)
(0)
(1)
2
5%
(12%)
(0%)
(18%)
5%
46
19
43
5
42
41
27
53
7
39
42
25
44
7
39
42
24
46
7
39
1. Revenue margin now presents Multi Asset separately from Equities and Cash and Fixed Income.
Average revenue margins for FY23 have increased by 2 bps to 41 bps largely due to the contribution of Pendal Group AUM with
higher margins within Equities.
The drivers of revenue margins by asset class are described below:
Equities: Revenue represent fees earned on Australian, Global/International, UK, US, European and Emerging Markets equities
products. Revenue in FY23 was $517.9 million. The average margin in FY23 was 44 bps, 2 bps higher than FY22 due to the
contribution of Pendal Group AUM.
Cash and fixed income: Revenue is derived from the management of cash and fixed income products. Revenue in FY23 was
$50.6 million. The FY23 revenue margin of 22 bps decreased by 3bps compared to FY22 due to proportionately higher AUM from
Pendal Group products.
Multi Asset: Revenue in FY23 was $27.5 million. The FY23 revenue margin of 22 bps was stable compared to FY22.
Movements in average margins usually result from changes in the mix of AUM between lower‑margin institutional and
higher‑margin retail investors, as well as changes in the mix of asset classes such as cash and fixed income (generally lower margin)
and equities (generally higher margin) and the contribution of performance fees earned.
Expenses
FY23 expenses of $467.8 million increased by $182.9 million or 64% higher than FY22. This was driven by Pendal Group expenses,
combined with growth in the pre‑existing boutiques driven by continued investment in global distribution capability and
other key functions. It was also driven by the impact of foreign exchange rate movements, partially offset by lower variable
remuneration including the impact of lower performance fees paid.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 90
Operating and Financial Review
for the 12 months ended 30 June 2023
Australia
Global/International
UK
US
Europe
Emerging markets
Australia
US
2.1.4 Assets under management
AT END OF
Equities
Total Equities
Fixed Income
Total Fixed Income
Multi Asset
Other
Total asset classes (ex-cash)
Cash
Total asset classes2
Institutional
Intermediary & Retail
Westpac
Total distribution channels (ex-cash)
Cash
Total distribution channels
FY23
$B
28.9
69.8
8.8
52.3
1.5
8.1
169.4
10.2
10.0
20.2
9.7
0.8
200.1
12.0
212.1
136.8
59.3
4.0
200.1
12.0
212.1
AUM MOVEMENTS
PENDAL AUM
(AS AT
11 JANUARY
2023)
$B
NET FLOWS
$B
OTHER1
FOREIGN
EXCHANGE
IMPACTS
17.4
47.2
8.7
7.5
1.3
4.8
87.0
6.7
0.1
6.9
6.7
0.2
100.7
9.5
110.2
59.4
32.4
8.8
100.7
9.5
110.2
(1.6)
(0.8)
(0.3)
(6.5)
0.1
1.8
(7.5)
(1.8)
0.2
(1.6)
(0.5)
(0.1)
(9.6)
1.5
(8.1)
(7.1)
(2.1)
(0.4)
(9.6)
1.5
(8.1)
$B
2.0
4.7
(0.4)
4.9
(0.0)
0.3
11.5
0.3
0.1
0.3
0.4
0.0
12.2
0.2
12.5
13.7
2.9
(4.4)
12.2
0.2
12.5
$B
–
3.2
0.7
2.2
0.1
0.2
6.5
–
0.4
0.4
0.1
0.0
7.1
–
7.1
5.2
1.8
7.1
–
–
7.1
FY22
$B
11.2
15.6
44.2
–
–
1.0
71.9
5.0
9.2
14.1
3.0
0.7
89.7
0.7
90.4
65.5
24.3
–
89.7
0.7
90.4
2H23
$B
(0.9)
(2.5)
(0.3)
(2.1)
0.1
1.0
(4.8)
(1.6)
0.3
(1.3)
(0.4)
(0.1)
(6.6)
1.4
(5.2)
(4.1)
(2.1)
(0.4)
(6.6)
1.4
(5.2)
(4.4)
(3.2)
(2.3)
NET FLOWS
1H23
$B
(0.7)
1.7
–
–
0.8
(2.7)
(0.2)
(0.1)
(0.3)
(0.0)
(0.0)
(3.0)
0.1
(2.9)
(3.0)
(0.0)
–
(3.0)
0.1
(2.9)
2H22
$B
(0.3)
1.0
–
–
0.2
(2.3)
0.2
(1.1)
(1.0)
(0.5)
(0.0)
(3.7)
(1.7)
(5.4)
(4.1)
0.3
–
(3.7)
(1.7)
(5.4)
1H22
$B
(0.7)
1.7
–
–
0.2
(1.1)
0.6
(1.4)
(0.9)
0.3
(0.0)
(1.7)
0.0
(1.7)
(2.4)
0.7
–
(1.7)
0.0
(1.7)
1.
Includes changes in market value of assets, income, reinvestments, distributions and asset class rebalancing within the Group’s diversified funds.
2. AUM by asset class now presents Multi Asset separately from Equities and Cash and Fixed Income. Prior period flows have been adjusted due to
misclassification.
AUM
Asset Management AUM as at 30 June 2023 was $212.1 billion. The acquisition of the Pendal Group contributed $110.2 billion.
The year‑on‑year increase excluding Pendal Group’s opening AUM, was $11.5 billion driven by investment performance and
improvement in capital markets together with strengthening of foreign exchange rates. This was partially offset by $8.1 billion net
outflows, predominantly across US Equities strategies.
Outflows were predominantly in the institutional channels and US Equity mandates managed by Barrow Hanley, J O Hambro and
TSW, partially offset by net inflows and strong performance in Trillium.
Perpetual Group Annual Report 2023
91
Australia
Global/International
Emerging markets
UK
US
Europe
Australia
US
2.1.4 Assets under management
AT END OF
Equities
Total Equities
Fixed Income
Total Fixed Income
Multi Asset
Other
Cash
Total asset classes2
Institutional
Intermediary & Retail
Westpac
Cash
misclassification.
AUM
Total asset classes (ex-cash)
Total distribution channels (ex-cash)
Total distribution channels
1.
Includes changes in market value of assets, income, reinvestments, distributions and asset class rebalancing within the Group’s diversified funds.
2. AUM by asset class now presents Multi Asset separately from Equities and Cash and Fixed Income. Prior period flows have been adjusted due to
Asset Management AUM as at 30 June 2023 was $212.1 billion. The acquisition of the Pendal Group contributed $110.2 billion.
The year‑on‑year increase excluding Pendal Group’s opening AUM, was $11.5 billion driven by investment performance and
improvement in capital markets together with strengthening of foreign exchange rates. This was partially offset by $8.1 billion net
outflows, predominantly across US Equities strategies.
Outflows were predominantly in the institutional channels and US Equity mandates managed by Barrow Hanley, J O Hambro and
TSW, partially offset by net inflows and strong performance in Trillium.
AUM MOVEMENTS
PENDAL AUM
(AS AT
11 JANUARY
NET FLOWS
OTHER1
$B
FOREIGN
EXCHANGE
IMPACTS
$B
2.0
4.7
(0.4)
4.9
(0.0)
0.3
11.5
0.3
0.1
0.3
0.4
0.0
12.2
0.2
12.5
13.7
2.9
(4.4)
12.2
0.2
12.5
–
3.2
0.7
2.2
0.1
0.2
6.5
–
0.4
0.4
0.1
0.0
7.1
–
7.1
5.2
1.8
–
7.1
–
7.1
169.4
87.0
FY23
$B
28.9
69.8
8.8
52.3
1.5
8.1
10.2
10.0
20.2
9.7
0.8
200.1
12.0
212.1
136.8
59.3
4.0
200.1
12.0
212.1
2023)
$B
17.4
47.2
8.7
7.5
1.3
4.8
6.7
0.1
6.9
6.7
0.2
100.7
9.5
110.2
59.4
32.4
8.8
100.7
9.5
110.2
$B
(1.6)
(0.8)
(0.3)
(6.5)
0.1
1.8
(7.5)
(1.8)
0.2
(1.6)
(0.5)
(0.1)
(9.6)
1.5
(8.1)
(7.1)
(2.1)
(0.4)
(9.6)
1.5
(8.1)
FY22
$B
11.2
15.6
–
44.2
–
1.0
71.9
5.0
9.2
14.1
3.0
0.7
89.7
0.7
90.4
65.5
24.3
–
89.7
0.7
90.4
2H23
$B
(0.9)
(2.5)
(0.3)
(2.1)
0.1
1.0
(4.8)
(1.6)
0.3
(1.3)
(0.4)
(0.1)
(6.6)
1.4
(5.2)
(4.1)
(2.1)
(0.4)
(6.6)
1.4
(5.2)
NET FLOWS
1H23
$B
(0.7)
1.7
–
(4.4)
–
0.8
(2.7)
(0.2)
(0.1)
(0.3)
(0.0)
(0.0)
(3.0)
0.1
(2.9)
(3.0)
(0.0)
–
(3.0)
0.1
(2.9)
2H22
$B
(0.3)
1.0
–
(3.2)
–
0.2
(2.3)
0.2
(1.1)
(1.0)
(0.5)
(0.0)
(3.7)
(1.7)
(5.4)
(4.1)
0.3
–
(3.7)
(1.7)
(5.4)
1H22
$B
(0.7)
1.7
–
(2.3)
–
0.2
(1.1)
0.6
(1.4)
(0.9)
0.3
(0.0)
(1.7)
0.0
(1.7)
(2.4)
0.7
–
(1.7)
0.0
(1.7)
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
92
Operating and Financial Review
for the 12 months ended 30 June 2023
2.2 Wealth Management
2.2.1 Business overview
Wealth Management (formerly known as Perpetual Private) is one of Australia’s leading wealth management businesses focused
on the comprehensive needs of families, businesses, and communities.
Wealth Management aims to empower families, businesses, and communities to achieve their aspirations by delivering advisory
service excellence. Wealth Management utilises a targeted client segment approach to grow its FUA by offering quality advice and
wealth management services to established wealthy, ultra‑high‑net‑worth clients and family offices, business owners, medical
practitioners and other professionals, not‑for‑profit organisations and Indigenous communities.
Wealth Management is one of Australia’s largest managers of philanthropic funds. Philanthropy and fiduciary services remain
an important part of our heritage and contributor to our business.
FY23 V
FY22
FY23 V
FY22
2.2.2 Financial performance
FOR THE PERIOD
Market related revenue
Non‑market related revenue
Total revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration expense
Interest expense
FY23
$M
145.1
72.3
217.4
FY22
$M
153.0
58.3
211.2
(155.4)
(151.5)
62.0
59.7
(9.1)
(4.6)
(1.3)
(9.3)
(4.0)
(2.1)
Underlying profit before tax
47.0
44.3
(7.9)
14.0
6.2
(3.9)
2.3
0.2
(0.6)
0.8
2.7
Funds under advice ($B)
Closing FUA
Average FUA
$18.5B
$17.4B
$1.1B
$18.1B
$18.3B
$(0.2)B
2H23
$M
71.3
39.1
110.4
(77.8)
32.6
(4.3)
(2.4)
(1.1)
24.9
1H23
$M
73.8
33.2
107.0
(77.6)
29.3
(4.8)
(2.2)
(0.2)
22.1
2H22
$M
75.1
29.1
104.3
(75.9)
28.3
(4.7)
(2.2)
(1.1)
1H22
$M
77.9
29.1
107.0
(75.6)
31.4
(4.7)
(1.8)
(1.0)
20.4
23.9
$18.5B
$17.9B
$17.4B
$19.0B
$18.4B
$17.8B
$18.4B
$18.3B
(5%)
24%
3%
(3%)
4%
2%
(15%)
39%
6%
6%
(1%)
Market related revenue margin
80bps
84bps
–
(4bps)
77bps
83bps
82bps
85bps
2.2.3 Drivers of performance
In FY23, Wealth Management reported underlying profit before tax of $47.0 million, $2.7 million or 6% higher than FY22.
The increase on FY22 was mainly driven by strong Fordham performance, insurance revenue growth from Priority Life and a
higher interest rate environment, partly offsetting lower equity markets and higher expenses driven by continued investment
in supporting future business growth.
In FY23, Wealth Management experienced continued new client growth within the Native Title segment, not‑for‑profit segment
and Priority Life. This was supported by the organic growth of the business as well as continued contributions from Jacaranda in
the pre‑retiree segment. The cost to income ratio in FY23 was 78% compared to 79% in FY22.
Revenue
Wealth Management generated revenue of $217.4 million in FY23, $6.2 million or 3% higher than FY22.
Market related revenue was $145.1 million, $7.9 million or 5% lower than FY22. The decrease on FY22 was mainly due to lower average
equity markets, lower performance fees as well as repricing of the Select Super portfolio in March 2022. Performance fees revenue
in FY23 was $4.1 million, $1.8 million lower than FY22.
Non‑market related revenue was $72.3 million, $14.0 million or 24% higher than FY22. The increase was mainly driven by strong
Fordham performance, higher insurance revenue driven by Priority Life and a higher interest rate environment. Priority Life gross
written premiums in FY23 passed $50 million of gross written premium, $5 million higher than FY22.
Wealth Management’s market related revenue margin was 80 bps (78 bps excluding performance fees) in FY23 compared to 84 bps
in FY22 (80 bps excluding performance fees) due to Select Super repricing.
Expenses
Total expenses for Wealth Management in FY23 were $170.4 million, $3.4 million or 2% higher than FY22. The increase in expenses
on FY22 was mainly driven by continued investment in staff and technology to support future business and an earnout payment
in Priority Life due of an outperformance in the revenue of the business (part of the deferred earnout of the consideration of the
acquisition in November 2019).
Perpetual Group Annual Report 2023 93
2.2.4 Funds under advice
Wealth Management’s FUA at the end of FY23 was 18.5 billion, $1.1 billion or 6% higher than FY22 primarily due to positive net flows
in the Native Title and not‑for‑profit segments, investment performance and some improvement in equity markets. Net flows of
$0.4 billion was $0.6 billion lower than FY23 due to $0.5 million Laminar flows in FY22. Funds under advice for charitable trusts and
endowments funds was $3.3 billion. Wealth Management’s Native Title business passed $1 billion in FUA in FY23.
AT END OF
Total FUA
FY23
$B
NET FLOWS
$B
OTHER1
$B
18.5
0.4
0.7
FY22
$B
17.4
2H23
$B
18.5
1H23
$B
17.9
2H22
$B
17.4
1H22
$B
19.0
1.
Includes reinvestments, distributions, income and asset growth.
2.3 Corporate Trust
2.3.1 Business overview
Corporate Trust (CT) is the leading provider of corporate trustee, agency, custody and digital solutions to the banking and financial
services markets comprising of the following:
Debt Market Services – provides a holistic suite of products which include trustee, agency, trust management, accounting,
document custody and standby servicing solutions to the global debt capital markets and securitisation industry.
Managed Funds Services – provides services including independent responsible entity, custodian, wholesale trustee, investment
management and accounting. Singapore products include trustee, agency and escrow services. Managed Funds Services has
a global client base serviced from our Singapore and Australian offices, administrating a broad range of asset classes including
commercial property (office, industrial, retail and infrastructure), debt, fixed income, equity, private equity, emerging markets and
hedge funds.
Perpetual Digital – combines CT’s existing digital assets and the platform of Laminar Capital, acquired in October 2021, to provide
innovative solutions to CT clients. Perpetual Digital provides a holistic and growing number of products including Data Services
(RBA & ESMA regulatory, investor and intermediary reporting), Perpetual Roundtables (benchmarking, industry and client
portfolio insights) and our new Perpetual Intelligence SaaS products providing a multitude of digital solutions to the banking and
financial services industry. Laminar Capital, a specialist debt markets and advisory business, includes the Treasury Direct SaaS
Platform.
2.3.2 Financial performance
FOR THE PERIOD
Debt Market Services
Managed Funds Services
Perpetual Digital
Total revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration expense
Interest expense
Underlying profit before tax
FY23
$M
77.2
77.4
23.4
178.0
(85.1)
92.9
(8.4)
(2.4)
(0.5)
81.6
FY22
$M
68.7
70.3
19.5
158.5
(75.4)
83.1
(8.0)
(1.8)
(0.7)
72.6
FY23 V
FY22
FY23 V
FY22
8.5
7.1
3.9
19.5
(9.7)
9.8
(0.3)
(0.6)
0.2
9.0
12%
10%
20%
12%
(13%)
12%
(4%)
(35%)
23%
12%
2H23
$M
38.9
38.3
12.1
89.3
(43.4)
45.9
(4.3)
(1.4)
(0.3)
40.0
1H23
$M
38.3
39.0
11.3
88.7
(41.7)
46.9
(4.1)
(1.0)
(0.3)
41.7
2H22
$M
35.6
36.8
9.6
82.0
(41.0)
40.9
(4.0)
(1.1)
(0.3)
35.5
1H22
$M
33.1
33.5
9.9
76.6
(34.4)
42.1
(4.0)
(0.7)
(0.4)
37.1
In FY23, Corporate Trust reported underlying profit before tax of $81.6 million, $9 million or 12% higher than FY22 with growth cross
all three revenue lines. The cost to income ratio was stable at 54%.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 94
Operating and Financial Review
for the 12 months ended 30 June 2023
2.3.3 Drivers of performance
Revenue
Corporate Trust generated revenue of $178 million in FY23, $19.5 million or 12% higher than in FY22. The main drivers of the
improvement by business line were as detailed below.
In FY23, Debt Markets Services revenue was $77.2 million, $8.5 million or 12% higher than in FY22. The primary drivers for the
increase on FY22 were underlying growth in the securitisation portfolio from new and existing clients due to higher average FUA
from non‑bank RMBS and ABS sectors, higher document custody volumes and additional new clients in trust management.
In FY23, Managed Funds Services revenue was $77.4 million, $7.1 million or 10% higher than FY22. The increase was primarily
due to continued market activity within commercial property (office, industrial, retail and infrastructure) and fixed income.
In FY23, Perpetual Digital revenue was $23.4 million, $3.9 million or 20% higher than FY22. The increase was primarily due to the
acquisition of Laminar Capital together with continued growth from new and existing clients.
Expenses
Total expenses for Corporate Trust in FY23 were $96.4 million, $10.5 million or 12% higher than FY22.
The increase in expenses on FY22 was mainly driven by costs to support investment in new SaaS products to digitally transform
Corporate Trust’s operating legacy technology systems, and new products to clients, increased client volumes, operating costs
of Laminar Capital and regulatory requirements.
2.3.4 Funds under administration
AT END OF
Public Market Securitisation
RMBS – bank (ADI)
RMBS – non‑bank
ABS & CMBS
Balance Sheet Securitisation
RMBS – repos
Covered bonds
FY23
$B
52.4
79.3
60.7
57.4
78.4
52.3
393.3
89.2
398.9
76.3
Debt Market Services – Securitisation1
674.9
663.4
Corporate and Structured Finance
Total Debt Market Services
Custody
Wholesale Trustee
Responsible Entity
Singapore
Managed Funds Services
16.2
691.1
244.5
115.7
52.1
59.0
471.4
18.8
682.2
212.0
100.6
49.5
48.0
410.1
Total FUA
1,162.5
1,092.3
1.
Includes warehouse and liquidity finance facilities.
FY22
$B
FY23 V
FY22
FY23 V
FY22
2H23
$B
1H23
$B
2H22
$B
1H22
$B
57.7
70.1
45.5
366.1
73.2
612.7
18.2
52.4
79.3
60.7
393.3
89.2
54.3
83.0
61.7
393.1
83.4
57.4
78.4
52.3
398.9
76.3
674.9
675.5
663.4
18.4
18.8
16.2
691.1
693.9
682.2
630.9
244.5
229.6
115.7
52.1
59.0
117.2
51.6
51.5
471.4
449.9
212.0
100.6
49.5
48.0
410.1
187.9
83.1
46.0
42.5
359.5
(9%)
1%
16%
(1%)
17%
2%
(14%)
1%
15%
15%
5%
23%
15%
6%
1,162.5
1,143.8
1,092.3
990.4
(5.1)
0.9
8.5
(5.6)
12.9
11.5
(2.6)
8.9
32.5
15.1
2.7
11.0
61.3
70.2
At the end of FY23, Debt Market Services business was $691.1 billion, an increase of $8.9 billion or 1% on FY22. The movement was
driven by continued growth in the ABS and CMBS segments, as well as Covered Bonds and continued slowing of RMBS sector due
to higher cash rate.
At the end of FY23, Managed Funds Services FUA was $471.4 billion, an increase of $61.3 billion or 15% on FY22. The increase was
driven by growth mainly across real assets products Wholesale Trustee, Custody and Singapore.
Perpetual Group Annual Report 2023
95
2.4 Group Support Services
2.4.1 Business overview
Group Support Services consist of Group Investments, CEO, Finance, Corporate Affairs, Marketing, Legal, Audit, Risk, Compliance,
Company Secretary, Technology, Project & Change Management, Operations, Product, People & Culture and Sustainability.
It provides technology, operations, vendor management, marketing, property, legal, risk, financial management and human
resources support to the business units.
Costs retained by Group Support Services reflect costs that management deems to be associated with corporate functions
rather than reportable business segment activity. These include costs associated with the Board of Directors and 50% of the costs
associated with the Group Executives of each of the Group Support Services business units. Costs and revenues associated with
the capital structure of the Group, including interest income and expense, financing costs, ASX listing fees and distributions of
employee‑owned units of acquired entities are also retained within Group Support Services.
2.4.2 Financial performance
FOR THE PERIOD
Interest Income
Other Income
Total revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration expense
Interest expense
Underlying profit before tax
2.4.3 Drivers of performance
Revenue
FY23
$M
3.9
14.1
18.0
(25.7)
(7.7)
(2.3)
(0.4)
(31.7)
(42.1)
FY22
$M
0.3
9.9
10.2
(21.0)
(10.9)
(2.1)
(0.1)
(5.5)
FY23 V
FY22
3.6
4.2
7.8
(4.6)
3.2
(0.2)
(0.4)
FY23 V
FY22
1,377%
43%
77%
(22%)
29%
(10%)
(468%)
(26.2)
(477%)
(18.5)
(23.6)
(127%)
2H23
$M
3.0
4.3
7.3
(14.7)
(7.4)
(1.1)
(0.1)
(23.6)
(32.2)
1H23
$M
0.9
9.8
10.7
(10.9)
(0.2)
(1.2)
(0.3)
(8.1)
(9.9)
2H22
$M
0.2
3.2
3.4
(8.4)
(5.0)
(1.0)
0.3
(3.1)
(8.8)
1H22
$M
0.1
6.7
6.8
(12.6)
(5.8)
(1.1)
(0.4)
(2.4)
(9.7)
In FY23, Group Investments revenue was $18.0 million, $7.8 million or 77% higher than FY22. The increase was mainly due to
movement in the investing in product (IIP) portfolio, higher distribution income received from unit trust investments held in seed
funds, partially offset by a decrease in the net gain on sale of seed funds.
Expenses
Total expenses, comprising operating expenses, depreciation, amortisation, equity remuneration and interest expenses for
Group Support Services in FY23 were $60.1 million, $31.4 million or 109% higher than in FY22. The increase in total expenses was
predominantly due to higher interest expense following interest rate rises commencing in late 2H22 together with funding costs
for the Pendal Group acquisition.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 96
Operating and Financial Review
for the 12 months ended 30 June 2023
Part 3 – Appendices
3 Appendices
3.1 Appendix A: Segment results
PERIOD
Operating revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration
EBIT
Interest expense
UPBT
Significant Items Pre Tax
Reportable Segment NPBT
PERIOD
Operating revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration
EBIT
Interest expense
UPBT
Significant Items Pre Tax
Reportable Segment NPBT
FY23
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
600.4
(437.7)
162.8
(13.2)
(15.5)
134.1
(1.4)
132.7
(134.3)
(1.6)
217.4
(155.4)
62.0
(9.1)
(4.6)
48.3
(1.3)
47.0
(5.8)
41.2
18.0
(25.7)
(7.7)
(2.3)
(0.4)
(10.4)
(31.7)
(42.1)
12.0
(30.1)
178.0
(85.1)
92.9
(8.4)
(2.4)
82.1
(0.5)
81.6
(1.9)
79.7
FY22
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
387.8
(271.2)
116.5
(7.8)
(5.2)
103.5
(0.7)
102.8
(43.1)
59.7
211.2
(151.5)
59.7
(9.3)
(4.0)
46.4
(2.1)
44.3
(5.0)
39.2
158.5
(75.4)
83.1
(8.0)
(1.8)
73.3
(0.7)
72.6
(2.7)
69.9
10.2
(21.0)
(10.9)
(2.1)
(0.1)
(13.0)
(5.5)
(18.5)
(13.1)
(31.6)
TOTAL
$M
1,013.8
(703.9)
310.0
(33.0)
(22.9)
254.1
(34.9)
219.2
(130.0)
89.2
TOTAL
$M
767.7
(519.2)
248.5
(27.2)
(11.0)
210.2
(9.0)
201.2
(64.0)
137.2
ASSET
MANAGEMENT
$M
418.4
(298.5)
119.9
(9.0)
(13.3)
97.6
(1.0)
96.5
(119.3)
(22.7)
ASSET
MANAGEMENT
$M
193.2
(141.9)
51.3
(4.0)
(2.4)
44.9
(0.4)
44.5
(22.5)
22.0
WEALTH
CORPORATE
MANAGEMENT
TOTAL
MANAGEMENT
MANAGEMENT
ASSET
WEALTH
CORPORATE
GROUP
SUPPORT
SERVICES
2H23
$M
110.4
(77.8)
32.6
(4.3)
(2.4)
25.9
(1.1)
24.9
(3.0)
21.9
2H22
$M
104.3
(75.9)
28.3
(4.7)
(2.2)
21.5
(1.1)
20.4
(3.1)
17.3
TRUST
$M
89.3
(43.4)
45.9
(4.3)
(1.4)
40.2
(0.3)
40.0
(0.8)
39.2
TRUST
$M
82.0
(41.0)
40.9
(4.0)
(1.1)
35.8
(0.3)
35.5
(0.9)
34.7
$M
7.3
(14.7)
(7.4)
(1.1)
(0.1)
(8.6)
(23.6)
(32.2)
38.0
5.8
$M
3.4
(8.4)
(5.0)
(1.0)
0.3
(5.7)
(3.1)
(8.8)
(13.1)
(21.9)
$M
625.5
(434.4)
191.1
(18.7)
(17.2)
155.1
(25.9)
129.2
(85.0)
44.2
$M
382.8
(267.2)
115.6
(13.7)
(5.4)
96.5
(4.9)
91.6
(39.6)
52.0
$M
182.0
(139.2)
42.8
(4.2)
(2.2)
36.5
(0.4)
36.1
(15.0)
21.1
$M
194.6
(129.4)
65.2
(3.8)
(2.8)
58.6
(0.4)
58.3
(20.6)
37.6
1H23
1H22
TRUST
$M
88.7
(41.7)
46.9
(4.1)
(1.0)
41.9
(0.3)
41.7
(1.1)
40.5
TRUST
$M
76.6
(34.4)
42.1
(4.0)
(0.7)
37.5
(0.4)
37.1
(1.8)
35.3
GROUP
SUPPORT
SERVICES
$M
10.7
(10.9)
(0.2)
(1.2)
(0.3)
(1.8)
(8.1)
(9.9)
(26.1)
(36.0)
GROUP
SUPPORT
SERVICES
$M
6.8
(12.6)
(5.8)
(1.1)
(0.4)
(7.3)
(2.4)
(9.7)
(0.0)
(9.7)
$M
107.0
(77.6)
29.3
(4.8)
(2.2)
22.4
(0.2)
22.1
(2.8)
19.3
$M
107.0
(75.6)
31.4
(4.7)
(1.8)
24.9
(1.0)
23.9
(2.0)
22.0
TOTAL
$M
388.3
(269.5)
118.9
(14.2)
(5.7)
99.0
(9.0)
90.0
(45.0)
45.0
TOTAL
$M
384.9
(252.0)
132.9
(13.6)
(5.6)
113.8
(4.1)
109.6
(24.4)
85.2
WEALTH
CORPORATE
MANAGEMENT
TOTAL
MANAGEMENT
MANAGEMENT
ASSET
WEALTH
CORPORATE
GROUP
SUPPORT
SERVICES
Perpetual Group Annual Report 2023 97
Part 3 – Appendices
3 Appendices
3.1 Appendix A: Segment results
PERIOD
Operating revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration
Interest expense
EBIT
UPBT
Significant Items Pre Tax
Reportable Segment NPBT
PERIOD
Operating revenue
Operating expenses
EBITDA
Depreciation and amortisation
Equity remuneration
Interest expense
EBIT
UPBT
Significant Items Pre Tax
Reportable Segment NPBT
$M
600.4
(437.7)
162.8
(13.2)
(15.5)
134.1
(1.4)
132.7
(134.3)
(1.6)
$M
387.8
(271.2)
116.5
(7.8)
(5.2)
103.5
(0.7)
102.8
(43.1)
59.7
$M
217.4
(155.4)
62.0
(9.1)
(4.6)
48.3
(1.3)
47.0
(5.8)
41.2
$M
211.2
(151.5)
59.7
(9.3)
(4.0)
46.4
(2.1)
44.3
(5.0)
39.2
FY22
TRUST
$M
178.0
(85.1)
92.9
(8.4)
(2.4)
82.1
(0.5)
81.6
(1.9)
79.7
TRUST
$M
158.5
(75.4)
83.1
(8.0)
(1.8)
73.3
(0.7)
72.6
(2.7)
69.9
$M
18.0
(25.7)
(7.7)
(2.3)
(0.4)
(10.4)
(31.7)
(42.1)
12.0
(30.1)
$M
10.2
(21.0)
(10.9)
(2.1)
(0.1)
(13.0)
(5.5)
(18.5)
(13.1)
(31.6)
$M
1,013.8
(703.9)
310.0
(33.0)
(22.9)
254.1
(34.9)
219.2
(130.0)
89.2
$M
767.7
(519.2)
248.5
(27.2)
(11.0)
210.2
(9.0)
201.2
(64.0)
137.2
ASSET
$M
418.4
(298.5)
119.9
(9.0)
(13.3)
97.6
(1.0)
96.5
(119.3)
(22.7)
ASSET
$M
193.2
(141.9)
51.3
(4.0)
(2.4)
44.9
(0.4)
44.5
(22.5)
22.0
FY23
2H23
1H23
ASSET
WEALTH
CORPORATE
MANAGEMENT
MANAGEMENT
GROUP
SUPPORT
SERVICES
TOTAL
MANAGEMENT
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
89.3
(43.4)
45.9
(4.3)
(1.4)
40.2
(0.3)
40.0
(0.8)
39.2
7.3
(14.7)
(7.4)
(1.1)
(0.1)
(8.6)
(23.6)
(32.2)
38.0
5.8
110.4
(77.8)
32.6
(4.3)
(2.4)
25.9
(1.1)
24.9
(3.0)
21.9
2H22
ASSET
WEALTH
CORPORATE
MANAGEMENT
MANAGEMENT
GROUP
SUPPORT
SERVICES
TOTAL
MANAGEMENT
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
104.3
(75.9)
28.3
(4.7)
(2.2)
21.5
(1.1)
20.4
(3.1)
17.3
82.0
(41.0)
40.9
(4.0)
(1.1)
35.8
(0.3)
35.5
(0.9)
34.7
3.4
(8.4)
(5.0)
(1.0)
0.3
(5.7)
(3.1)
(8.8)
(13.1)
(21.9)
TOTAL
$M
625.5
(434.4)
191.1
(18.7)
(17.2)
155.1
(25.9)
129.2
(85.0)
44.2
TOTAL
$M
382.8
(267.2)
115.6
(13.7)
(5.4)
96.5
(4.9)
91.6
(39.6)
52.0
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
182.0
(139.2)
42.8
(4.2)
(2.2)
36.5
(0.4)
36.1
(15.0)
21.1
107.0
(77.6)
29.3
(4.8)
(2.2)
22.4
(0.2)
22.1
(2.8)
19.3
88.7
(41.7)
46.9
(4.1)
(1.0)
41.9
(0.3)
41.7
(1.1)
40.5
1H22
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
194.6
(129.4)
65.2
(3.8)
(2.8)
58.6
(0.4)
58.3
(20.6)
37.6
107.0
(75.6)
31.4
(4.7)
(1.8)
24.9
(1.0)
23.9
(2.0)
22.0
76.6
(34.4)
42.1
(4.0)
(0.7)
37.5
(0.4)
37.1
(1.8)
35.3
GROUP
SUPPORT
SERVICES
$M
10.7
(10.9)
(0.2)
(1.2)
(0.3)
(1.8)
(8.1)
(9.9)
(26.1)
(36.0)
GROUP
SUPPORT
SERVICES
$M
6.8
(12.6)
(5.8)
(1.1)
(0.4)
(7.3)
(2.4)
(9.7)
(0.0)
(9.7)
TOTAL
$M
388.3
(269.5)
118.9
(14.2)
(5.7)
99.0
(9.0)
90.0
(45.0)
45.0
TOTAL
$M
384.9
(252.0)
132.9
(13.6)
(5.6)
113.8
(4.1)
109.6
(24.4)
85.2
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 98
Operating and Financial Review
for the 12 months ended 30 June 2023
3.1.1 Breakdown of significant items pre tax
PERIOD
Transaction and Integration costs1
– Trillium
– Barrow Hanley
– Pendal Group2
– Other
Non‑cash amortisation of acquired
intangibles3
Unrealised gains/losses on financial assets4
Accrued incentive compensation liability5
FY23
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
(89.2)
(4.0)
(7.6)
(77.6)
–
(46.2)
1.1
–
(2.9)
(0.7)
(5.2)
(2.9)
(2.9)
–
(0.7)
(1.2)
(5.2)
–
17.2
TOTAL
$M
(98.0)
(4.0)
(7.6)
(77.6)
(8.8)
(50.3)
18.3
–
ASSET
MANAGEMENT
$M
(80.6)
(2.0)
(1.0)
(77.6)
0.1
(35.1)
0.7
(4.3)
Significant items pre tax
(134.3)
(5.8)
(1.9)
12.0
(130.0)
(119.3)
(3.0)
(0.8)
(85.0)
(15.0)
(2.8)
(1.1)
(26.0)
(45.0)
1. Relates to costs associated with the acquisition/establishment of Barrow Hanley, Trillium, Pendal Group and other entities. Costs include professional fees,
administrative and general expenses and staff costs related to specific retention and performance grants.
2. 1H23 costs have been restated to show all costs related to Pendal Group acquisition under Asset Management.
3. Relates to amortisation expense on customer contracts and non-compete agreements acquired through business combinations.
4. Relates to unrealised mark to market gains and losses on EMCF, seed fund investments and financial assets held for regulatory purposes.
5. This liability reflects the value of employee-owned units in Barrow Hanley.
3.2 Appendix B: Bridge for FY23 statutory accounts and OFR
UPAT represents Perpetual’s measure of the results for the ongoing business of the Group as determined by the Board and
management. UPAT has been calculated in accordance with ASIC’s Regulatory Guide 230 – Disclosing non‑IFRS financial
information has been followed when presenting this information. UPAT attributable to equity holders of Perpetual Limited has not
been audited by the Group’s external auditors, however, the adjustments have been extracted from the books and records that have
been reviewed. Underlying profit after tax attributable to equity holders of Perpetual Limited is disclosed as it is useful for investors
to gain a better understanding of Perpetual’s financial results from normal operating activities.
Post completion of Barrow Hanley acquisition in November 2020, the definition of UPAT was revised to reflect changes to the
Group’s operating cash flows from both existing and future opportunities. As shown in the table below, FY23 reporting adjusted
NPAT for the four types of significant items:
– those that are material in nature and in Perpetual’s view do not reflect normal operating activities;
– non‑cash tax‑effected amortisation of acquired intangibles;
– tax‑effected unrealised gains/losses on financial assets, this excludes unrealised gains/losses on financial assets held as a hedge
to the Investing in Product scheme; and
– accrued incentive compensation liability.
WEALTH
CORPORATE
MANAGEMENT
TOTAL
MANAGEMENT
MANAGEMENT
ASSET
WEALTH
CORPORATE
2H23
$M
(1.6)
–
–
–
–
–
(1.6)
(1.4)
TRUST
$M
(0.2)
–
–
–
–
–
(0.2)
(0.6)
GROUP
SUPPORT
SERVICES
$M
22.0
–
–
–
27.2
(5.2)
16.0
(0.0)
38.0
$M
(60.3)
(2.0)
(1.0)
(50.4)
(6.9)
(37.1)
16.7
(4.3)
$M
(8.6)
(2.0)
(6.6)
–
(0.1)
(11.1)
0.4
4.3
1H23
TRUST
$M
(0.5)
GROUP
SUPPORT
SERVICES
$M
(27.2)
(0.5)
(0.6)
–
–
(27.2)
–
1.2
0.0
$M
(1.3)
(1.3)
(1.5)
–
–
TOTAL
$M
(37.7)
(2.0)
(6.6)
(27.2)
(1.9)
(13.2)
1.6
4.3
Perpetual Group Annual Report 2023 99
2H23
1H23
Significant items pre tax
(134.3)
(5.8)
(1.9)
12.0
(130.0)
(119.3)
(3.0)
(0.8)
–
–
–
(1.6)
(1.4)
–
–
–
–
–
(0.2)
(0.6)
–
–
–
–
27.2
(5.2)
–
16.0
(0.0)
38.0
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
(1.6)
(0.2)
22.0
ASSET
MANAGEMENT
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
GROUP
SUPPORT
SERVICES
$M
(8.6)
(2.0)
(6.6)
–
(0.1)
(11.1)
0.4
4.3
(1.3)
(0.5)
(27.2)
(1.3)
(1.5)
–
–
(0.5)
(0.6)
–
–
(27.2)
–
1.2
0.0
TOTAL
$M
(60.3)
(2.0)
(1.0)
(50.4)
(6.9)
(37.1)
16.7
(4.3)
TOTAL
$M
(37.7)
(2.0)
(6.6)
(27.2)
(1.9)
(13.2)
1.6
4.3
(85.0)
(15.0)
(2.8)
(1.1)
(26.0)
(45.0)
3.1.1 Breakdown of significant items pre tax
PERIOD
Transaction and Integration costs1
– Trillium
– Barrow Hanley
– Pendal Group2
– Other
Non‑cash amortisation of acquired
intangibles3
Unrealised gains/losses on financial assets4
Accrued incentive compensation liability5
$M
(89.2)
(4.0)
(7.6)
(77.6)
(46.2)
–
1.1
–
ASSET
WEALTH
CORPORATE
MANAGEMENT
MANAGEMENT
TOTAL
MANAGEMENT
FY23
TRUST
$M
(0.7)
GROUP
SUPPORT
SERVICES
$M
(5.2)
(0.7)
(1.2)
(5.2)
–
17.2
$M
(2.9)
(2.9)
(2.9)
–
$M
(98.0)
(4.0)
(7.6)
(77.6)
(8.8)
(50.3)
18.3
–
ASSET
$M
(80.6)
(2.0)
(1.0)
(77.6)
0.1
(35.1)
0.7
(4.3)
1. Relates to costs associated with the acquisition/establishment of Barrow Hanley, Trillium, Pendal Group and other entities. Costs include professional fees,
administrative and general expenses and staff costs related to specific retention and performance grants.
2. 1H23 costs have been restated to show all costs related to Pendal Group acquisition under Asset Management.
3. Relates to amortisation expense on customer contracts and non-compete agreements acquired through business combinations.
4. Relates to unrealised mark to market gains and losses on EMCF, seed fund investments and financial assets held for regulatory purposes.
5. This liability reflects the value of employee-owned units in Barrow Hanley.
3.2 Appendix B: Bridge for FY23 statutory accounts and OFR
UPAT represents Perpetual’s measure of the results for the ongoing business of the Group as determined by the Board and
management. UPAT has been calculated in accordance with ASIC’s Regulatory Guide 230 – Disclosing non‑IFRS financial
information has been followed when presenting this information. UPAT attributable to equity holders of Perpetual Limited has not
been audited by the Group’s external auditors, however, the adjustments have been extracted from the books and records that have
been reviewed. Underlying profit after tax attributable to equity holders of Perpetual Limited is disclosed as it is useful for investors
to gain a better understanding of Perpetual’s financial results from normal operating activities.
Post completion of Barrow Hanley acquisition in November 2020, the definition of UPAT was revised to reflect changes to the
Group’s operating cash flows from both existing and future opportunities. As shown in the table below, FY23 reporting adjusted
NPAT for the four types of significant items:
– those that are material in nature and in Perpetual’s view do not reflect normal operating activities;
– non‑cash tax‑effected amortisation of acquired intangibles;
– tax‑effected unrealised gains/losses on financial assets, this excludes unrealised gains/losses on financial assets held as a hedge
to the Investing in Product scheme; and
– accrued incentive compensation liability.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 100
Operating and Financial Review
for the 12 months ended 30 June 2023
Revenue
Staff related expenses excluding equity remuneration expense
Occupancy expenses
Administrative and general expenses
Distributions and expenses relating to structured products
Equity remuneration expense
Depreciation and amortisation expense
Financing costs
Total expenses
Net profit before tax
Income tax expense
Net profit after tax
Significant Items (net of tax)
Transaction and Integration costs
– Trillium
– Barrow Hanley
– Pendal Group
– Other
Non‑cash amortisation of acquired intangibles
Unrealised gains/losses on financial assets
Accrued incentive compensation liability
Net profit after tax attributable to equity holders
FY23
STATUTORY
ACCOUNTS
$M
1,034.1
EMCF1
$M
(5.0)
(524.8)
(10.6)
(237.4)
(5.0)
(39.2)
(83.2)
(44.8)
(945.0)
89.1
(30.1)
59.0
5.0
5.0
–
–
–
OFR ADJUSTMENTS
TRANSACTION AND INTEGRATION COSTS
TRILLIUM
$M
BARROW
$M
HANLEY
PENDAL GROUP
NON-CASH
AMORTISATION
OF ACQUIRED
INTANGIBLES
$M
OTHER
$M
UNREALISED
GAINS/LOSSES
ON FINANCIAL
ASSETS
$M
(21.2)
ACCRUED
INCENTIVE
COMPEN-
SATION
LIABILITY
$M
$M
5.9
25.7
33.8
9.5
2.7
71.7
77.6
(14.5)
63.1
(1.7)
6.8
0.1
–
2.4
7.6
7.6
(2.2)
5.4
2.8
1.5
4.6
–
8.9
8.9
(0.9)
8.0
2.1
1.9
4.0
4.0
(0.5)
3.5
50.3
50.3
50.3
(9.7)
40.6
2.9
2.9
(18.3)
1.9
(16.4)
–
–
–
–
–
FY23 OFR
$M
1,013.8
(498.0)
(10.6)
(195.3)
–
(22.9)
(33.0)
(34.9)
(794.6)
219.2
(56.0)
163.2
(3.5)
(5.4)
(63.1)
(8.0)
(40.6)
16.4
–
59.0
1.
Income from the EMCF structured products is recorded on a net basis, for statutory purposes, revenue and distributions are adjusted to reflect the gross
revenue and expenses of these products.
Perpetual Group Annual Report 2023 FY23
STATUTORY
ACCOUNTS
$M
1,034.1
EMCF1
$M
(5.0)
(524.8)
(10.6)
(237.4)
(5.0)
(39.2)
(83.2)
(44.8)
(945.0)
89.1
(30.1)
59.0
5.0
5.0
–
–
–
OFR ADJUSTMENTS
TRANSACTION AND INTEGRATION COSTS
TRILLIUM
$M
BARROW
HANLEY
$M
PENDAL GROUP
$M
OTHER
$M
(1.7)
6.8
0.1
–
2.4
7.6
7.6
(2.2)
5.4
5.9
25.7
33.8
9.5
2.7
71.7
77.6
(14.5)
63.1
2.8
1.5
4.6
–
8.9
8.9
(0.9)
8.0
2.1
1.9
4.0
4.0
(0.5)
3.5
NON-CASH
AMORTISATION
OF ACQUIRED
INTANGIBLES
$M
UNREALISED
GAINS/LOSSES
ON FINANCIAL
ASSETS
$M
(21.2)
ACCRUED
INCENTIVE
COMPEN-
SATION
LIABILITY
$M
–
–
–
–
–
50.3
50.3
50.3
(9.7)
40.6
2.9
2.9
(18.3)
1.9
(16.4)
Revenue
Staff related expenses excluding equity remuneration expense
Occupancy expenses
Administrative and general expenses
Distributions and expenses relating to structured products
Equity remuneration expense
Depreciation and amortisation expense
Financing costs
Total expenses
Net profit before tax
Income tax expense
Net profit after tax
– Trillium
– Barrow Hanley
– Pendal Group
– Other
Significant Items (net of tax)
Transaction and Integration costs
Non‑cash amortisation of acquired intangibles
Unrealised gains/losses on financial assets
Accrued incentive compensation liability
Net profit after tax attributable to equity holders
1.
Income from the EMCF structured products is recorded on a net basis, for statutory purposes, revenue and distributions are adjusted to reflect the gross
revenue and expenses of these products.
101
FY23 OFR
$M
1,013.8
(498.0)
(10.6)
(195.3)
–
(22.9)
(33.0)
(34.9)
(794.6)
219.2
(56.0)
163.2
(3.5)
(5.4)
(63.1)
(8.0)
(40.6)
16.4
–
59.0
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 102
Operating and Financial Review
for the 12 months ended 30 June 2023
3.3 Appendix C: Average assets under management
FOR THE PERIOD
IN AUSTRALIAN DOLLARS
FY23
$B
FY22
$B
FY23 V
FY22
FY23 V
FY22
Equities
– Australia
– Global/International
– US
– UK
– Europe
Emerging Markets
Total Equities
Fixed income
– Australia
– US
Multi Asset
Other
Total Asset Management
Average AUM (ex-cash)
Cash
Total Asset Management
Average AUM
Wealth Management
Average AUM
Total Group average AUM
19.8
40.3
47.9
4.1
0.7
4.0
116.8
7.9
9.6
6.1
0.8
141.1
5.8
12.8
15.1
48.3
–
–
0.7
77.0
4.8
11.1
3.5
0.8
97.2
2.3
7.0
25.2
(0.4)
4.1
0.7
3.3
39.8
3.1
(1.5)
2.6
(0.0)
44.0
3.5
54%
167%
(1%)
100%
100%
100%
52%
64%
(14%)
74%
(2%)
45%
149%
2H23
$B
28.0
64.1
50.6
8.2
1.3
6.9
1H23
$B
11.7
16.5
45.3
–
–
1.1
159.1
74.5
10.9
9.9
9.3
0.8
190.0
10.7
4.9
9.2
2.9
0.7
92.3
0.8
2H22
$B
12.7
15.7
47.6
–
–
0.8
76.8
5.0
10.2
3.5
0.8
96.2
2.3
1H22
$B
13.0
14.5
49.0
–
–
0.6
77.2
4.6
12.0
3.6
0.8
98.2
2.4
146.9
99.5
47.4
48%
200.7
93.1
98.4
100.6
7.5
154.4
7.7
107.2
(0.3)
47.1
(4%)
44%
7.6
7.3
208.3
100.4
7.7
106.1
7.8
108.4
3.4 Appendix D: Full time equivalent employees
AT END OF
Asset Management
Wealth Management
Corporate Trust
Group Support Services
Total operations
Permanent
Contractors
Total operations
2H23
522
468
307
571
1,870
1,845
24
1,870
1H23
266
419
299
428
1,411
1,378
33
1,411
2H22
265
419
286
400
1,370
1,346
25
1,370
1H22
245
371
234
378
1,228
1,211
16
1,228
Perpetual Group Annual Report 2023 103
3.5 Appendix E: Dividend history
Perpetual’s payout ratio is in line with Perpetual’s dividend policy to pay dividends within the range of 60% and 90% of UPAT on
an annualised basis. An extended history of Perpetual’s dividends paid including the dividend reinvestment price can be found
via this link: perpetual.com.au/about/shareholders/dividend‑history.
YEAR
FY23
FY23
FY23
FY22
FY22
FY21
FY21
FY20
FY20
FY19
FY19
FY18
FY18
FY17
FY17
DIVIDEND
DATE PAID
Final
Interim
Special
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
29 Sep 2023
31 Mar 2023
8 Feb 2023
30 Sep 2022
1 Apr 2022
24 Sep 2021
26 Mar 2021
25 Sep 2020
27 Mar 2020
30 Sep 2019
29 Mar 2019
8 Oct 2018
26 Mar 2018
29 Sep 2017
24 Mar 2017
DIVIDEND
PER SHARE
65 cents
55 cents
35 cents
97 cents
112 cents
96 cents
84 cents
50 cents
105 cents
125 cents
125 cents
140 cents
135 cents
135 cents
130 cents
FRANKING
RATE
COMPANY
TAX RATE
40%
40%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
DRP PRICE
NOT DETERMINED AT
TIME OF PUBLICATION
$21.39
$26.08
$25.18
$34.67
$41.31
$32.34
$28.54
$28.06
$36.70
$41.62
$42.20
$50.34
$52.33
$51.86
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 104
Operating and Financial Review
for the 12 months ended 30 June 2023
3.6 Glossary
3LOA
ABS
ADI
Three Lines of Accountability model
Asset‑backed securities
Authorised deposit‑taking institution
GBP
IFRS
IIP
All Ords
All Ordinaries Price Index
Asset Management
British pounds
International Financial Reporting Standards
Investing in Product – portfolio managers
can invest deferred incentives into units
in their own funds, aligning deferred
remuneration to client outcomes
AM
APRA
ARs
ARCC
ASIC
ASX
AUD
AUM
B
BCM
BEAR
bps
CEO
CMBS
Australian Prudential Regulatory Authority
IT
Information technology
Appointed Representatives
J O Hambro
J O Hambro Capital Management
Audit, Risk and Compliance Committee
Australian Securities and Investments
Commission
Australian Securities Exchange
Australian dollars
Assets under management
Billion
Business Continuity Management
Banking Executive Accountability Regime
Basis point (0.01%)
Chief executive officer
Commercial mortgage‑backed securities
KPI
M
M&A
MAS
NPBT
NPAT
NTA
OFR
PAI
Key performance indicator
Million
Mergers and Acquisitions
Monetary Authority of Singapore
Net profit before tax
Net profit after tax
Net tangible asset
Operating and Financial Review
Principle adverse impact
Pendal
Pendal Asset Management
Pendal Group
Acquired 23rd January consisting of the
Pendal, J O Hambro and TSW boutiques
COVID-19
Coronavirus disease
cps
CT
DPS
DRP
EBIT
EBITDA
EMCF
EPS
ESG
ESMA
ExCo
FAR
FCA
FI
FTE
FUA
Group
Cents per share
Corporate Trust
Dividend(s) per share
Dividend Reinvestment Plan
Earnings before interest and tax
Earnings before interest, tax, depreciation
and amortisation of intangible assets, equity
remuneration expense, and significant items
Perpetual Exact Market Cash Fund
Earnings per share
Environmental, Social and Governance
European Securities and Markets Authority
Perpetual’s Executive Committee
Financial Accountability Regime
Financial Conduct Authority
Financial Institutions
Full time equivalent employee
Funds under advice (for Wealth
Management) or funds under administration
(for Corporate Trust)
Perpetual Limited and its controlled
entities (the consolidated entity) and the
consolidated entity’s interests in associates
RAS
Regnan
RBA
RMBS
RMF
ROE
RSE
RTS
SaaS
SDR
SEC
SFDR
TSW
UK
UPAT
UPBT
US
USD
Risk Appetite Statement
A trading name of J O Hambro specialising
in impact investment
Reserve Bank of Australia
Residential mortgage‑backed securities
Risk Management Framework
Return on equity
Registrable Superannuation Entity
Regulatory Technical Standards
Software‑as‑a‑Service
Sustainable Disclosure Requirements
Securities and exchange commission
Sustainable Finance Disclosure Regulation
Thompson, Siegel and Walmsley
United Kingdom
Underlying profit after tax
Underlying profit before tax
United States
United States dollars
WH&S
Work health and safety
Perpetual Group Annual Report 2023 Financial Statements of Perpetual Limited and its
controlled entities for the year ended 30 June 2023
Table of contents
Primary statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Section 1 – Group performance
110
Section 4 – Risk management
1‑1 Operating segments
1‑2 Revenue
1‑3 Expenses
1‑4 Income taxes
1‑5 Earnings per share
1‑6 Dividends
1‑7 Net cash from operating activities
110
113
114
115
117
118
119
4‑1 Financial risk management
Section 5 – Other disclosures
5‑1 Structured products assets and liabilities
5‑2 Parent entity disclosures
5‑3 Controlled entities
5‑4 Deed of cross guarantee
5‑5 Unconsolidated structured entities
Section 2 – Operating assets and liabilities
120
5‑6 Share‑based payments
2‑1 Business combinations
2‑2 Receivables
2‑3 Other financial assets
2‑4 Intangibles
2‑5 Provisions
2‑6 Employee benefits
2‑7 Accrued incentive compensation
120
123
123
124
126
127
127
5‑7 Key management personnel and related parties
5‑8 Auditor’s remuneration
5‑9 Subsequent events
Section 6 – Basis of preparation
6‑1 Reporting entity
6‑2 Basis of preparation
6‑3 Other significant accounting policies
Section 3 – Capital management and financing
128
6‑4 Changes in significant accounting policies
3‑1 Cash and cash equivalents
3‑2 Borrowings
3‑3 Contributed equity
3‑4 Reserves
3‑5 Commitments and contingencies
128
128
129
130
130
6‑5 New standards and interpretations not yet adopted
Directors’ declaration
Independent Auditor’s Report to the Members of Perpetual Limited
Additional information
Securities exchange and investor information
105
106
107
108
109
131
131
140
140
142
143
147
149
149
156
157
158
159
159
159
161
163
163
164
165
174
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 106
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
for the year ended 30 June 2023
Revenue
Expenses
Financing costs
Net profit before tax
Income tax expense
Net profit after tax
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive income, net of income tax
Total comprehensive income
Total comprehensive income attributable to:
Equity holders of Perpetual Limited
Earnings per share
Basic earnings per share – cents per share
Diluted earnings per share – cents per share
SECTION
1‑2
1‑3
1‑4
2023
$M
1,034.1
(900.2)
(44.8)
89.1
(30.1)
59.0
87.8
87.8
146.8
2022
$M
749.6
(603.1)
(9.2)
137.3
(36.1)
101.2
32.2
32.2
133.4
146.8
133.4
1‑5
1‑5
73.2
71.1
179.6
176.5
The Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the ‘Notes to and
forming part of the financial statements’ set out on pages 110 to 163.
Perpetual Group Annual Report 2023 Consolidated Statement of Financial Position
as at 30 June 2023
107
Assets
Cash and cash equivalents
Receivables
Current tax assets
Structured products – EMCF assets
Other assets
Total current assets
Other financial assets
Property, plant and equipment
Intangibles
Deferred tax assets
Other assets
Total non-current assets
Total assets
Liabilities
Payables
Structured products – EMCF liabilities
Employee benefits
Lease liabilities
Provisions
Other liabilities
Total current liabilities
Payables
Borrowings
Deferred tax liabilities
Employee benefits
Accrued incentive compensation
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
SECTION
2023
$M
2022
$M
3‑1
2‑2
1‑4
5‑1
2‑3
2‑4
1‑4
5‑1
2‑6
2‑5
3‑2
1‑4
2‑6
2‑7
2‑5
3‑3
3‑4
263.2
209.9
33.2
163.9
32.3
702.5
291.4
104.9
2,717.8
116.0
9.4
175.4
122.9
3.6
186.3
10.2
498.4
152.0
77.8
951.7
53.6
13.0
3,239.5
1,248.1
3,942.0
1,746.5
93.0
164.2
164.8
19.6
4.5
16.3
462.4
25.6
734.4
166.2
54.5
50.7
71.3
4.9
1,107.6
1,570.0
2,372.0
2,190.5
184.4
(2.9)
54.0
187.7
90.1
16.4
5.8
15.2
369.2
39.7
258.4
14.9
29.3
48.6
55.9
4.7
451.5
820.7
925.8
817.7
34.3
73.8
Total equity attributable to equity holders of Perpetual Limited
2,372.0
925.8
The Consolidated Statement of Financial Position is to be read in conjunction with the ‘Notes to and forming part of the financial
statements’ set out on pages 110 to 163.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 108
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
$M
GROSS
CONTRIBUTED
EQUITY
TREASURY
SHARE
RESERVE
EQUITY
COMPENSATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVES
RETAINED
EARNINGS
TOTAL EQUITY
ATTRIBUTABLE
TO SHARE-
HOLDERS
OF PERPETUAL
LIMITED
Balance at 1 July 2022
858.1
(40.4)
20.9
Treasury shares acquired through employee
benefit schemes
Total comprehensive income/(expense)
Movement on treasury shares
Issue of ordinary shares
–
–
(1.9)
25.1
Issue of ordinary shares arising from business
combinations
1,359.9
Repurchase of shares on market
Equity remuneration expense
Dividends paid to shareholders
–
–
–
14.8
–
14.6
(19.9)
–
(19.8)
–
–
Balance at 30 June 2023
2,241.2
(50.7)
–
–
(13.7)
–
36.8
–
39.2
–
83.2
13.4
–
87.8
–
–
–
–
–
–
73.8
925.8
–
59.0
1.0
–
–
–
–
(136.7)
14.8
146.8
–
5.2
1,396.7
(19.8)
39.2
(136.7)
101.2
(2.9)
2,372.0
$M
Balance at 1 July 2021
Total comprehensive income/(expense)
Movement on treasury shares
Issue of ordinary shares
Transaction costs
Repurchase of shares on market
Equity remuneration expense
Dividends paid to shareholders
GROSS
CONTRIBUTED
EQUITY
TREASURY
SHARE
RESERVE
EQUITY
COMPENSATION
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVES
RETAINED
EARNINGS
854.6
–
(1.8)
5.3
–
–
–
–
(39.3)
–
14.6
–
–
(15.7)
–
–
21.3
–
(13.8)
–
–
–
13.4
–
20.9
(18.8)
32.2
–
–
–
–
–
–
13.4
89.3
101.2
1.0
–
–
–
–
(117.7)
73.8
TOTAL EQUITY
ATTRIBUTABLE
TO SHARE-
HOLDERS
OF PERPETUAL
LIMITED
907.1
133.4
–
5.3
–
(15.7)
13.4
(117.7)
925.8
Balance at 30 June 2022
858.1
(40.4)
The Consolidated Statement of Changes in Equity is to be read in conjunction with the ‘Notes to and forming part of the financial
statements’ set out on pages 110 to 163.
Perpetual Group Annual Report 2023 Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Dividends received
Interest received
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant, equipment and software
Payments for investments
Payment for acquisition of a business
Cash acquired as part of acquisition of business
Proceeds from sale of investments
Net cash used in investing activities
Cash flows from financing activities
Transaction costs related to borrowings
Lease financing costs
Receipt from borrowings
Repurchase of shares on market
Dividends paid
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of movements in exchange rates on cash held
Cash and cash equivalents at 30 June
109
SECTION
2023
$M
2022
$M
1‑7
1,079.2
(876.2)
0.8
6.7
(26.9)
(48.8)
134.8
(25.4)
(54.4)
(624.5)
149.0
311.3
834.1
(596.4)
0.5
0.4
(8.2)
(59.6)
170.8
(15.0)
(43.1)
(49.8)
3.5
35.2
(244.0)
(69.2)
(13.2)
(18.8)
405.0
(19.8)
(131.6)
221.6
112.4
175.4
(24.6)
–
(14.4)
75.0
(14.8)
(112.4)
(66.6)
35.0
147.1
(6.7)
3‑1
263.2
175.4
The Consolidated Statement of Cash Flows is to be read in conjunction with the ‘Notes to and forming part of the financial
statements’ set out on pages 110 to 163.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 110
Notes to and forming part of the financial statements
for the year ended 30 June 2023
Section 1 – Group performance
This section focuses on the results and performance of Perpetual as a consolidated entity. On the following pages you
will find disclosures explaining Perpetual’s results for the year, segmental information, taxation, earnings per share and
dividend information.
Where an accounting policy is specific to a single note, the policy is described in the section to which it relates.
1-1 Operating segments
An operating segment is a component of the consolidated entity that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the consolidated entity’s other
components and for which discrete financial information is available. All operating segments’ operating results are regularly reviewed
by the consolidated entity’s CEO to make decisions about resources to be allocated to the segment and assess their performance.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office expenses, income tax
expenses, assets and liabilities.
During the year, the consolidated entity completed the acquisition of Pendal Group, a leading global multi‑boutique asset manager.
This resulted in management creating a new segment, Asset Management. The comparative period information has been
re‑presented to include Perpetual Asset Management, International and Perpetual Asset Management, Australia which now form
part of the Asset Management segment.
The following summary describes the operations in each of the reportable segments:
i. Services provided
Perpetual is a global financial services firm operating in Australia, United States, United Kingdom, the Netherlands, Singapore and
Hong Kong. Perpetual provides a diverse range of financial products and services including asset management, financial advisory
and trustee services via its four business segments, supported by Group Support Services.
Asset Management
A global multi-boutique asset management business offering an extensive range of specialist and
differentiated investment capabilities through seven boutique brands in key regions globally.
Wealth Management
The wealth management business offers a unique mix of wealth management, advice and trustee
services to individuals, families, businesses, not-for-profit organisations and Indigenous communities
throughout Australia.
Corporate Trust
Our corporate trust business is a leading provider of fiduciary and digital solutions to the banking and
financial services industry in Australia and Singapore.
Group Support Services
The business units are supported by Group Support Services comprising Group Investments, CEO,
Finance, Corporate Affairs, Marketing, Legal, Audit, Risk, Compliance, Company Secretary, Technology,
Project & Change Management, Operations, Product and People & Culture.
ii. Geographical information
The consolidated entity is a global business that operates in Australia, United States, United Kingdom, the Netherlands, Republic
of Ireland, Singapore and Hong Kong. The majority of the consolidated entity’s revenue and assets relate to operations in Australia,
United States and United Kingdom. The Australian operations are represented by Asset Management, Wealth Management and
Corporate Trust. The United States and United Kingdom Operations are also represented by Asset Management. The geographic
information analyses the consolidated entity’s revenue and non‑current assets by the Company’s country of domicile. In presenting
the geographic information revenue has been based on the country of domicile of the Company recognising it and segment assets
were based on the geographic location of the assets.
Perpetual Group Annual Report 2023 111
iii. Major customer
Operating revenue by segment
The consolidated entity does not rely on any major customer.
30 June 2023
Major service lines
Equities
Cash and fixed income
Multi Asset
Other AUM related
Wealth Management market
related
Wealth Management
non‑market related
Debt Market Services
Managed Funds Services
Perpetual Digital
Investment income/(loss)
Unrealised gains on
financial assets
Total revenue
Operating expenses
Depreciation and amortisation
Equity remuneration
amortisation
Financing costs
Profit/(loss) before tax
Income tax expense
Net profit after tax
Reportable segment assets
Reportable segment liabilities
Capital expenditure
ASSET
MANAGEMENT1,2
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
TOTAL
REPORTABLE
SEGMENT
$M
GROUP
SUPPORT
SERVICES
$M
SIGNIFICANT
ITEMS3
$M
CONSOLIDATED
INCOME
STATEMENT
$M
516.2
55.7
27.5
3.9
–
–
–
–
–
1.8
1.4
606.5
(442.7)
(13.2)
(15.5)
(1.4)
133.7
2,231.4
(501.4)
28.1
–
–
–
–
145.1
69.5
–
–
–
2.8
–
217.4
(155.4)
(9.1)
(4.6)
(1.3)
47.0
247.6
(34.6)
0.1
–
–
–
–
–
–
77.2
77.1
23.4
0.3
–
178.0
(85.1)
(8.4)
(2.4)
(0.5)
81.6
516.2
55.7
27.5
3.9
145.1
69.5
77.2
77.1
23.4
4.9
1.4
1,001.9
(683.2)
(30.7)
(22.5)
(3.2)
262.3
–
–
–
–
–
–
–
–
–
17.2
0.8
18.0
(25.7)
(2.3)
(0.4)
(31.7)
(42.1)
–
–
–
–
–
–
–
–
–
(5.9)
20.1
14.2
(68.9)
(50.2)
(16.3)
(9.9)
(131.1)
250.2
2,729.2
1,212.8
(16.0)
10.2
(552.0)
(1,018.0)
38.4
11.8
516.2
55.7
27.5
3.9
145.1
69.5
77.2
77.1
23.4
16.2
22.3
1,034.1
(777.8)
(83.2)
(39.2)
(44.8)
89.1
(30.1)
59.0
3,942.0
(1,570.0)
50.2
1. Asset Management is a new segment following the acquisition of Pendal Group. The previous Perpetual Asset Management, International and Perpetual Asset
Management, Australia segments now form part of the Asset Management segment. Prior period comparatives has been restated to include Perpetual
Asset Management, International and Perpetual Asset Management, Australia, which now form part of the Asset Management segment.
2. Segment information for Asset Management includes the Perpetual Exact Market Return Fund, refer to section 5-1(i).
3. Significant items includes:
costs associated with the acquisition and establishment of Pendal (2023 only), Trillium, Barrow Hanley and other entities.
–
–
amortisation expense on customer contracts and non-compete agreements acquired through business combinations.
– unrealised mark to market gains and losses on seed fund investments and financial assets held for regulatory purposes.
–
value of employee owned units in Barrow Hanley.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 112
Notes to and forming part of the financial statements
for the year ended 30 June 2023
1-1 Operating segments continued
ASSET
MANAGEMENT1,2
(RESTATED)
$M
WEALTH
MANAGEMENT
$M
CORPORATE
TRUST
$M
TOTAL
REPORTABLE
SEGMENT
$M
GROUP
SUPPORT
SERVICES
$M
SIGNIFICANT
ITEMS3
$M
CONSOLIDATED
INCOME
STATEMENT
$M
30 June 2022
Major service lines
Equities
Cash and fixed income
Multi Asset
Other AUM Related
Wealth Management
market related
Wealth Management
non‑market related
Debt Market Services
Managed Funds Services
Perpetual Digital
Investment income
Unrealised (losses) on
financial assets
Total revenue
Operating expenses
Depreciation and amortisation
Equity remuneration
amortisation
Financing costs
Profit/(loss) before tax
Income tax expense
Net profit after tax
Reportable segment assets
Reportable segment liabilities
Capital expenditure
323.6
45.6
15.9
2.9
–
–
–
–
–
–
(2.0)
386.0
(271.4)
(7.8)
(5.2)
(0.7)
100.9
922.8
(344.1)
2.9
–
–
–
–
153.0
55.2
–
–
3.0
–
211.2
(151.5)
(9.3)
(4.0)
(2.1)
44.3
252.8
(44.0)
0.1
–
–
–
–
–
–
68.7
70.3
19.5
–
–
158.5
(75.4)
(8.0)
(1.8)
(0.7)
72.6
323.6
45.6
15.9
2.9
153.0
55.2
68.7
70.3
19.5
3.0
(2.0)
755.7
(498.3)
(25.1)
(11.0)
(3.5)
217.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17.0
(1.2)
(6.8)
10.2
(21.0)
(2.1)
(0.1)
(5.5)
(18.5)
(15.1)
(16.3)
(17.7)
(25.5)
(2.3)
(0.2)
(62.0)
246.6
(22.9)
6.0
1,422.2
(411.0)
9.0
324.3
(409.7)
7.6
323.6
45.6
15.9
2.9
153.0
55.2
68.7
70.3
19.5
18.8
(23.9)
749.6
(537.0)
(52.7)
(13.4)
(9.2)
137.3
(36.1)
101.2
1,746.5
(820.7)
16.6
1. Asset Management is a new segment following the acquisition of Pendal Group. The previous Perpetual Asset Management, International and Perpetual Asset
Management, Australia segments now form part of the Asset Management segment. Prior period comparatives has been restated to include Perpetual
Asset Management, International and Perpetual Asset Management, Australia, which now form part of the Asset Management segment.
2. Segment information for Asset Management includes the Perpetual Exact Market Return Fund, refer to section 5-1(i).
3. Significant items includes:
costs associated with the acquisition and establishment of Pendal (2023 only), Trillium, Barrow Hanley and other entities.
–
–
amortisation expense on customer contracts and non-compete agreements acquired through business combinations.
– unrealised mark to market gains and losses on seed fund investments and financial assets held for regulatory purposes.
–
value of employee owned units in Barrow Hanley.
Perpetual Group Annual Report 2023 Revenue
Australia
United States
United Kingdom
Other countries
Non-current assets
Australia
United States
United Kingdom
Other countries
1-2 Revenue
Revenue from contracts with customers
Income from structured products
Dividends
Interest and unit trust distributions
Net realised (loss)/gains on sale of investments
Unrealised gains/(losses) on financial assets
Other
113
2022
$M
531.8
212.2
–
5.6
2023
$M
620.0
315.3
55.3
43.5
1,034.1
749.6
1,968.1
1,217.4
51.0
3.0
599.5
638.6
1.1
8.9
3,239.5
1,248.1
2023
$M
989.5
6.1
0.8
5.4
(0.9)
22.3
10.9
2022
$M
753.3
1.4
0.6
5.4
3.4
(23.9)
9.4
1,034.1
749.6
Accounting policies
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf
of third parties. The consolidated entity recognises revenue when it transfers control over a product or service to a customer.
Revenue from contracts with customers
The consolidated entity earns revenue from the provision of financial products and services. These include investment
management and administration, financial advisory and trustee services (including responsible entity, superannuation,
philanthropic and estate administration).
The majority of the consolidated entity’s revenue arises from service contracts where performance obligations are satisfied over
time. Customers obtain control of services as they are delivered, and revenue is recognised over time as those services are provided.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 114
Notes to and forming part of the financial statements
for the year ended 30 June 2023
1-2 Revenue continued
Revenue from contracts with customers continued
Investment management and administration revenue is calculated as a percentage of the funds invested in accordance with
the investment mandates or the respective product disclosure statements. Some investment products and mandates include
performance fees, which are contingent on achieving or exceeding a defined performance hurdle and the revenue is recognised when
it is highly probable that a significant reversal in the cumulative amount of the revenue would not occur. Whilst performance fees are
recognised over time, they are typically constrained until meeting or exceeding the performance hurdle due to market volatility.
Revenue from financial advisory services is assessed on a contract by contract basis. Revenue is recognised over the period the
services are provided. Revenue may be charged on a fixed fee, fee for service (“time and costs”) or as a percentage of assets under
administration basis:
– Under fixed fee contracts, revenue is recognised as the related services are provided on a percentage of completion basis,
or when specified milestones in the contract have been achieved. Fees received in advance are deferred as a contract liability
until the service has been provided.
– Revenue charged under fee for service contracts is recognised based on the amount the consolidated entity is entitled to invoice
for services performed to date, based on the contracted rates.
Trustee Services are also assessed on a contract by contract basis. Contracts may include a fee to establish a trust, as well as ongoing
trustee and other service fees. Establishment fees are recognised when the trust has been established and is based on the standalone
value of the service.
A small part of the consolidated entity’s revenue is recognised at a point in time, generally when a performance obligation is linked
to a particular event (i.e. an application or redemption transaction for a customer). Revenue is recognised when the consolidated
entity executes a specific transaction on behalf of the customer.
Income from structured products
Income represents fees earned from managing the Exact Market Cash Funds.
Dividends
Dividend income is recognised in profit or loss on the date the consolidated entity’s right to receive payment is established which,
in the case of quoted securities, is the ex‑dividend date.
Interest and unit trust distributions
Interest income is recognised as it accrues, taking into account the effective yield of the financial asset.
Unit trust distributions are recognised in profit or loss as they are received.
Net realised gains on sale of investments
Net gain on sale of investments represents proceeds less costs on sale of financial assets.
Unrealised gains on financial assets
Represents movement in the fair value of the consolidated entity’s financial assets classified as Fair Value Through Profit and Loss
(FVTPL) during the financial year.
1-3 Expenses
Staff related expenses excluding equity remuneration expense1
Occupancy expenses
Administrative and general expenses
Distributions and expenses relating to structured products
Equity remuneration expense
Depreciation and amortisation expense
2023
$M
524.8
10.6
237.4
5.0
39.2
83.2
2022
$M
367.8
6.4
162.6
0.2
13.4
52.7
900.2
603.1
1.
Includes an amount related to Perpetual Group’s defined contributions to employees’ superannuation and pensions of $27.6m (2022: $20.4m).
Accounting policies
Expenses are recognised at the fair value of the consideration paid or payable when services are received.
Perpetual Group Annual Report 2023 1-4 Income taxes
Current year tax expense
Current year tax expense
Prior year adjustments
Total current tax expense impacting income taxes payable
Deferred tax expense
Prior year adjustments
Temporary differences
Total deferred tax expense
Total income tax expenses
Net profit before tax for the year
Prima facie income tax expense calculated at 30% (2022: 30%) on
profit for the year
– Recognition of previously unrecognised capital and revenue losses
– Non‑assessable income
– Prior year adjustments
– Effect of tax rates in foreign jurisdictions
– Other non‑taxable income/expenses and tax credits
– Other non‑deductible expenses
Total
Effective tax rate (ETR)
Income taxes (receivable)/payable at the beginning of the year
Income taxes payable for the financial year
Less: Tax paid during the year
Acquisition from Pendal
Other
Income taxes receivable at the end of the year
Represented in the Statement of Financial Position by:
Current tax assets
Basis of calculation of ETR
115
2022
$M
48.1
0.8
48.9
(0.8)
(12.0)
(12.8)
36.1
137.3
41.2
(2.5)
(2.8)
–
(1.7)
–
1.9
36.1
2023
$M
38.5
(2.5)
36.0
2.7
(8.6)
(5.9)
30.1
89.1
26.7
(0.1)
(3.3)
0.2
(1.7)
(2.8)
11.1
30.1
33.8%
26.3%
(3.6)
38.5
(48.8)
(17.0)
(2.3)
(33.2)
7.6
48.9
(59.6)
–
(0.5)
(3.6)
33.2
3.6
The ETR is calculated as total income tax expenses divided by net profit before tax for the year.
The consolidated entity currently has tax obligations in Australia, United States, Singapore, the UK, Republic of Ireland, Hong Kong and
the Netherlands. United States operations include Trillium, Barrow Hanley Global Investors, J O Hambro and TSW. UK and Singapore
operations include J O Hambro. Operations in Hong Kong and the Netherlands do not currently have a material tax impact.
Explanation of variance to the legislated 30% tax rate
The consolidated entity’s effective tax rate for the year was 33.8% (2022: 26.3%). The increase of 3.8% in the effective tax rate
compared to the legislated 30% is mainly attributable to non‑deductible expenses related to Pendal acquisition costs, which are
partially offset by prior year adjustments related to Australian R&D claim and income referable to Non Controlled Interests in trusts,
and exclusion of non‑assessable accounting income arising from an adjustment to the Laminar earnout calculation.
Capital tax (gains)/losses calculated at 30% tax in Australia
The total tax benefits of realised capital losses are $21,290,329 (2022: $21,327,854), comprising $3,000,000 (2022: $3,000,000)
recognised in deferred tax assets and $18,290,329 (2022: $18,327,854) not recognised in deferred tax assets. These are net of realised
tax capital gains and losses incurred in the current and/or prior year and are available to be utilised by the Australian income tax
consolidated group in future years.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 116
Notes to and forming part of the financial statements
for the year ended 30 June 2023
1-4 Income taxes continued
Movement in deferred tax balances
2023
Deferred tax assets
Provisions and accruals
Capital expenditure deductible over five years
Employee benefits
Property, plant and equipment
Intangible assets
Recognised capital losses
Unrealised net capital losses
Lease adjustments AASB 16
Other items
Deferred tax assets
Deferred tax liabilities
Intangible assets
Lease adjustment AASB 16
Unrealised net capital gains
Capital raising costs
Other items
Deferred tax liabilities
Net deferred tax assets
2022
Deferred tax assets
Provisions and accruals
Capital expenditure deductible over five years
Employee benefits
Property, plant and equipment
Intangible assets
Recognised capital losses
Unrealised net capital losses
Lease adjustments AASB 16
Other items
Deferred tax assets
Deferred tax liabilities
Intangible assets
Lease adjustment AASB 16
Unrealised net capital gains
Capital raising costs
Other items
Deferred tax liabilities
Net deferred tax assets
BALANCE
1 JULY 2022
$M
RECOGNISED
IN PROFIT
OR LOSS
$M
ACQUIRED
IN BUSINESS
COMBINATION
$M
BALANCE
30 JUNE 2023
$M
6.2
0.2
29.9
3.2
3.5
3.0
1.0
4.5
2.1
53.6
(11.9)
(0.5)
–
(2.1)
(0.4)
(14.9)
38.7
2.1
0.3
9.2
0.5
0.1
–
(1.4)
–
1.1
11.9
2.5
(0.1)
(2.0)
0.3
(4.6)
(3.9)
8.0
1.4
5.5
21.3
–
20.4
–
0.5
1.4
–
9.7
6.0
60.4
3.7
24.0
3.0
0.1
5.9
3.2
50.5
116.0
(147.4)
(156.8)
–
–
–
–
(0.6)
(2.0)
(1.8)
(5.0)
(147.4)
(166.2)
(96.9)
(50.2)
BALANCE
1 JULY 2021
$M
RECOGNISED
IN PROFIT
OR LOSS
$M
ACQUIRED
IN BUSINESS
COMBINATION
$M
BALANCE
30 JUNE 2022
$M
4.7
0.2
29.1
2.4
3.7
3.0
–
4.1
–
47.2
(6.8)
–
(6.1)
(2.4)
(0.3)
(15.6)
31.6
1.5
–
0.7
0.8
(0.2)
–
1.0
0.3
2.1
6.2
0.8
(0.5)
6.1
0.3
(0.1)
6.6
12.8
–
–
0.1
–
–
–
–
0.1
–
0.2
(5.9)
–
–
–
–
(5.9)
(5.7)
6.2
0.2
29.9
3.2
3.5
3.0
1.0
4.5
2.1
53.6
(11.9)
(0.5)
–
(2.1)
(0.4)
(14.9)
38.7
Perpetual Group Annual Report 2023 117
Accounting policies
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the net profit or loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in other comprehensive income. Current
tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at reporting
date and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between carrying amounts of assets and liabilities for financial
reporting purposes and amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences:
– the initial recognition of goodwill
– the initial recognition of assets or liabilities that affect neither accounting nor taxable profit
– differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based
on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
temporary differences can be utilised. Deferred tax assets are reviewed at each balance date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are netted when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the
related dividend is recognised.
Perpetual Limited and its wholly owned Australian entities elected to form an income tax consolidated group as of 1 July 2002. As a
consequence, all members of the tax consolidated group are taxed as a single entity and governed by a tax funding agreement.
Under the agreement, all wholly owned Australian entities fully compensate Perpetual Limited for any current income tax payable
assumed and are compensated by Perpetual Limited for any current tax receivable and deferred tax assets relating to unused tax
losses or unused tax credits that are transferred to Perpetual Limited under the income tax consolidation legislation. The funding
amounts are determined by reference to the amounts recognised in the members’ financial statements.
1-5 Earnings per share
Basic earnings per share
Diluted earnings per share
Net profit after tax attributable to equity holders of Perpetual Limited
Weighted average number of ordinary shares (basic)
Effect of dilutive potential ordinary shares (including those subject to rights)
Weighted average number of ordinary shares (diluted)
2023
CENTS PER
SHARE
2022
CENTS PER
SHARE
73.2
71.1
2023
$M
59.0
179.6
176.5
2022
$M
101.2
2023
NUMBER OF
SHARES
2022
NUMBER OF
SHARES
80,564,501
56,356,663
2,450,115
990,317
83,014,616
57,346,980
Accounting policies
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the net profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period, adjusted for shares held by the Company’s employee share plan trust.
Diluted EPS is determined by dividing the net profit or loss attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding, adjusted for shares held by the Company’s sponsored employee share plan trust and for the effects
of all dilutive potential ordinary shares, which comprise shares and options/rights granted to employees under long‑term incentive
and retention plans.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 118
Notes to and forming part of the financial statements
for the year ended 30 June 2023
1-6 Dividends
2023
Final 2022 ordinary
Special dividend
Interim 2023 ordinary
Total amount
2022
Final 2021 ordinary
Interim 2022 ordinary
Total amount
CENTS PER
SHARE
TOTAL
AMOUNT
$M
FRANKED/UNFRANKED
DATE OF
PAYMENT
97
35
55
187
96
112
208
55.0
20.1
61.6
136.7
54.3
63.4
117.7
100% Franked 30 Sep 2022
100% Franked
8 Feb 2023
40% Franked 31 Mar 2023
100% Franked 24 Sep 2021
100% Franked
1 Apr 2022
All franked dividends declared or paid during the year were franked at a tax rate of 30% and paid out of retained earnings.
The Company’s Dividend Reinvestment Plan (DRP) is optional and offers ordinary shareholders in Australia and New Zealand the
opportunity to acquire fully paid ordinary shares, without transaction costs. Shareholders can elect to participate in or terminate
their involvement in the DRP at any time.
Subsequent events
Since the end of the financial year, the Directors declared the following dividend. The dividend has not been provided for and there
are no tax consequences.
CENTS PER
SHARE
TOTAL
AMOUNT1
$M
FRANKED/UNFRANKED
DATE OF
PAYMENT
Final 2023 ordinary
65
73.1
40% Franked 29 Sep 2023
1. Calculation based on the estimated ordinary shares on issue at the record date.
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2023
and will be recognised in subsequent financial reports.
DIVIDEND FRANKING ACCOUNT
Amount of franking credits available to shareholders for subsequent financial years
2023
$M
9.6
2022
$M
27.8
The above available amounts are based on the balance of the dividend franking account at 30 June 2023 adjusted for franking
credits that will arise from the payment of the current tax liabilities, and franking credits that will arise from the receipt of dividends
recognised as receivables by the tax consolidated group at the year end.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact
on the dividend franking account of dividends proposed after the balance date, but not recognised as a liability, is to reduce it to
($2,900,000) (2022: $4,200,000).
Accounting policies
Dividends are recognised as a liability in the year in which they are declared.
Perpetual Group Annual Report 2023 1-7 Net cash from operating activities
Reconciliation of profit for the year to net cash from operating activities
Profit for the year
Items classified as investing/financing activities:
Loss/(Profit) on sale of investments
Realised loss on forward exchange contract
Deferred acquisition consideration
Operating (liabilities)/assets acquired from business combinations
Lease financing costs
Non-cash items:
Depreciation and amortisation expense
Equity remuneration expense
Transfer to foreign currency translation reserve
Reinvestment of dividends and unit distributions
Accrued fixed asset additions
Mark to market movements on financial assets
Fair value adjustment to put liability
Other
(Increase)/decrease in assets
Receivables
Current tax assets
Other assets
Deferred tax assets
Increase/(decrease) in liabilities
Payables
Provisions
Current tax liabilities
Deferred tax liabilities
Employee benefits
Net cash from operating activities
119
2023
$M
2022
$M
59.0
101.2
0.9
5.9
2.6
(127.0)
18.8
83.2
39.2
(4.3)
(6.1)
1.6
(22.3)
–
5.8
(87.0)
(29.6)
(18.5)
(62.4)
24.9
(1.1)
–
151.3
99.9
134.8
(3.4)
–
16.1
3.5
14.4
52.7
13.4
(32.2)
(4.0)
(1.5)
23.9
(4.7)
(7.4)
9.8
(3.6)
(1.6)
(6.4)
3.0
4.1
(7.6)
(0.7)
1.8
170.8
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
120
Notes to and forming part of the financial statements
for the year ended 30 June 2023
Section 2 – Operating assets and liabilities
This section shows the assets used to generate Perpetual’s trading performance and the liabilities incurred as a result.
Liabilities relating to the consolidated entity’s financing activities are addressed in section 3.
2-1 Business combinations
Pendal Group
On 23 January 2023, Perpetual acquired 100% of the share capital of Pendal Group (‘Pendal’) by way of a Scheme of Arrangement
(‘the Acquisition’). The acquisition created a global multi‑boutique asset manager with significant scale, diversified investment
strategies, ESG capabilities and a global distribution capability, complemented by Perpetual’s wealth management and trustee
businesses.
For the period post acquisition and ending 30 June 2023, Pendal contributed revenue of $231.4 million and profit (before tax)
of $22.5 million to the consolidated entity’s results. If the acquisition had occurred on 1 July 2022, management estimates that
consolidated revenue would have been $519.2 million and consolidated profit (before tax) for the year would have been $47.1 million.
In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on
the date of acquisition would have been the same if the acquisition had occurred on 1 July 2022.
Consideration transferred
The acquisition was effected via a share exchange with every seven shares of Pendal stock exchanged for one newly issued
Perpetual share and $1.65 cash per Pendal share held, less the final FY22 Pendal dividend of 3.5 cents per share paid to Pendal
shareholders on 15 December 2023. A total of 54,747,428 Perpetual shares were issued to Pendal shareholders as part of the
consideration.
The following table summarises the acquisition date fair value of each major class of consideration transferred:
Share consideration1
Cash consideration2
Replacement share‑based payment awards
Total consideration transferred
$M
1,359.9
618.8
36.8
2,015.5
Replacement share-based payment awards
In accordance with the terms of the acquisition agreement, the Group exchanged equity‑settled share‑based payment awards held
by employees of Pendal (the acquiree’s awards) for equity settled share‑based payment awards of the Company (the replacement
awards). The vesting dates of the replacement awards replicate the existing acquiree’s awards.
The consideration for the business combination includes $36.8 million transferred to employees of Pendal when the acquiree’s
awards were substituted by the replacement awards, which relate to past service.
Refer to 5‑6 Share‑based payments for more information.
Acquisition-related costs
The consolidated entity incurred acquisition and integration related costs of $50.7 million before tax which are included in expenses
in the consolidated entity’s statement of profit and loss and other comprehensive income and borrowing costs of $13.2 million
associated with the acquisition which were capitalised.
1. The Scheme Implementation Deed was approved by the Supreme Court of New South Wales on 11 January 2023 and became effective and binding on
12 January 2023. On this date, the Scheme became unconditional and control was acquired in accordance with AASB 10 Consolidated Financial Statements.
Therefore, 11 January 2023 has been assessed as the acquisition date under AASB 3 Business Combinations (‘AASB 3’). The fair value of ordinary shares issued
was based on the closing share price of Perpetual Limited on 11 January 2023 of $24.84.
2. The cash consideration was based on the number of Pendal shares acquired of 383,149,490.
Perpetual Group Annual Report 2023 121
Provisional value of identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Prepayments
Derivative financial instruments
Property, plant and equipment
Deferred tax assets
Intangible assets
Current tax asset
Trade and other payables
Employee benefits
Provisions
Lease liability
Borrowings
Deferred tax liabilities
Total identifiable net assets acquired
$M
149.0
79.3
335.0
10.0
0.4
41.7
49.7
784.5
17.0
(60.0)
(74.5)
(0.4)
(33.7)
(50.6)
(138.1)
1,109.3
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
ASSETS ACQUIRED
VALUATION TECHNIQUES
Intangible assets:
Customer contracts
Multi-period excess earnings method: The multi-period excess earnings method considers the present
value of net cash flows expected to be generated by the customer relationships, by excluding any cash
flows related to contributory assets.
Intangible assets: Brands
Relief from royalty method: The relief-from-royalty method considers the discounted estimated royalty
payments that are expected to be avoided as a result of the patents being owned.
All trade receivables were expected to be recoverable at the acquisition date.
Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Total consideration transferred
Less: Provisional value of identifiable net assets
Goodwill
$M
2,015.5
(1,109.3)
906.2
The goodwill is attributable mainly to the skills and technical talent of Pendal’s work force and the synergies expected to be
achieved from integrating the company into the Group’s existing asset management business. None of the goodwill recognised
is expected to be deductible for tax purposes, aside from the goodwill recognised by Pendal upon its acquisition of TSW in 2021,
which continues to be deductible in the US.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 122
Notes to and forming part of the financial statements
for the year ended 30 June 2023
2-1 Business combinations continued
Critical accounting assumptions and estimates
Accounting for acquisitions is inherently complex, requiring a number of judgements and estimates to be made.
The acquisition of Pendal was effected through a Scheme of Arrangement under which the Company acquired all of the shares in
Pendal. While the Scheme of Arrangement was implemented on 23 January 2023, the Scheme Implementation Deed was approved
by the Supreme Court of New South Wales on 11 January 2023 and became effective and binding on 12 January 2023. On this date,
the Scheme became unconditional and control was acquired in accordance with AASB 10 Consolidated Financial Statements.
Therefore, 11 January 2023 has been assessed as the acquisition date under AASB 3 Business Combinations.
Management judgement is required to determine the fair value of identifiable assets and liabilities acquired in business combinations.
A number of judgements have been made in relation to the identification of fair values attributable to separately identifiable assets
and liabilities acquired, including customer relationships and brands. This work was performed by an external valuation expert.
The determination of fair values requires the use of valuation techniques based on assumptions including future cash flows, revenue
growth, margins, customer attrition rates and weighted‑average cost of capital.
In accordance with the terms of the acquisition agreement, the Consolidated Entity exchanged equity‑settled share‑based payment
awards held by employees of Pendal (the acquiree’s awards) for equity settled share‑based payment awards of the Company (the
replacement awards) as part of the consideration. The fair value of the replacement awards was measured by reference to the fair
value of the equity instruments at the acquisition date. The fair value calculation was performed by an external valuation expert
and determined using the Black Scholes Model and other market‑based valuation techniques, taking into account the terms and
conditions upon which the replacement awards were granted. The valuation methodologies involve a number of judgements
and assumptions which may affect the value of pre‑acquisition expense taken as part of consideration transferred, as well as the
post‑acquisition share‑based payment expense taken to profit and loss and equity.
Accounting policies
Business combinations are accounted for using the acquisition method as at the acquisition date of 11 January 2023, which is the
date on which control is transferred to the consolidated entity. In assessing control, the consolidated entity takes into consideration
potential voting rights that currently are exercisable.
As at 30 June 2023 the acquisition accounting balances were provisional and have been accounted for in these financial statements
on that basis. These balances may be revised up to 12 months from the acquisition date in accordance with AASB 3.
The consolidated entity measures goodwill at the acquisition date as:
– the fair value of the consideration transferred; plus
– the recognised amount of any non‑controlling interests in the acquiree; plus if the business combination is achieved in stages,
the fair value of the existing equity interest in the acquiree; less
– the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre‑existing relationships. Such amounts are
generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the consolidated entity
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified
as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognised in profit or loss.
When share‑based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and related to past services, then all or a portion of the amount of the acquirer’s replacement
award is included in measuring the consideration transferred in the business combination. This determination is based on the
market‑based value of the replacement awards compared with the market‑based value of the acquiree’s awards and the extent to
which the replacement awards relate to past and/or future service.
Perpetual Group Annual Report 2023 2-2 Receivables
Current
Trade receivables
Less: Provision for doubtful debts
Other receivables
Movements in the provision for doubtful debts are as follows:
Balance as at beginning of the year
Doubtful debts provided for during the year
Receivables written off during the year as uncollectible
Balance as at end of the year
123
2023
$M
2022
$M
193.1
(2.5)
190.6
19.3
209.9
3.0
1.1
(1.6)
2.5
120.5
(3.0)
117.5
5.4
122.9
3.1
1.7
(1.8)
3.0
Movements in the provision for doubtful debts have been recognised in Administrative and general expenses in section 1‑3. Amounts
charged to the provision account are generally written off when there is no expectation of additional recoveries. In subsequent
periods, any recoveries of amounts previously written off are credited against Administrative and general expenses in section 1‑3.
Based on the analysis at the end of the reporting period, the collectively provided impairment under the expected credit loss (ECL)
method is considered to be immaterial and currently no amount is recognised in the financial statements.
Accounting policies
Receivables comprise trade and other receivables. Trade and other receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less an allowance for ECL. Collectability of trade receivables is reviewed
on an ongoing basis and at balance date, in addition to the ECL, specific impairment losses are recorded for any doubtful debts.
2-3 Other financial assets
Non-current
Listed equity securities
Unlisted unit trusts
Debt securities
Unlisted investment funds
Accounting policies
Financial assets
2023
$M
56.2
205.8
3.7
25.7
291.4
2022
$M
50.2
89.8
3.4
8.6
152.0
The consolidated entity’s investments in equity securities, unlisted unit trusts, unlisted investment funds and debt securities are
classified at Fair Value Through Profit and Loss (FVTPL) with the associated realised and unrealised gains and losses taken to the
Income Statement. Refer to section 4‑1 (iv).
Fair values for investments in equity securities, unlisted unit trusts and other securities are obtained from quoted market prices in
active markets, including market transactions and valuation techniques (such as discounted cash flow models and option pricing
models), as appropriate.
Unlisted investment funds represent an equity interest in an unlisted investment fund established to invest its assets primarily in
the economic equity interests of multiple collateralised loan obligation (CLO) transactions and warehouse facilities in connection
therewith. Fair values for unlisted investment funds are obtained from an independent, third‑party fund administrator and are
based on the net asset value of the fund at the reporting date.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report GOODWILL
CUSTOMER
CONTRACTS
CAPITALISED
SOFTWARE
PROJECT WORK
IN PROGRESS
OTHER
TOTAL
INTANGIBLE ASSETS
124
Notes to and forming part of the financial statements
for the year ended 30 June 2023
2-4 Intangibles
$M
Year ended 30 June 2023
At cost
Foreign exchange movement
Accumulated amortisation
Carrying amount
Balance at 1 July 2022
Additions
Additions through business combinations
Transfers
Foreign exchange movement
Amortisation expense
1,508.0
1,077.6
71.9
–
67.3
(127.9)
1,579.9
1,017.0
616.7
–
906.2
–
57.0
–
241.8
0.9
763.6
–
55.1
(44.4)
Balance as at 30 June 2023
1,579.9
1,017.0
Year ended 30 June 2022
At cost
Foreign exchange movement
Accumulated amortisation
Carrying amount
Balance at 1 July 2021
Additions
Additions through business combinations
Transfers
Foreign exchange movement
Amortisation expense
Balance as at 30 June 2022
601.8
14.9
–
616.7
554.5
–
39.5
–
22.7
–
616.7
313.1
12.2
(83.5)
241.8
224.3
–
19.7
–
19.3
(21.5)
241.8
102.4
0.5
(83.5)
19.4
21.3
–
1.1
6.8
0.2
(10.0)
19.4
94.5
0.3
(73.5)
21.3
19.2
–
1.1
10.1
0.3
(9.4)
21.3
39.7
–
–
39.7
25.4
20.3
0.8
(6.8)
–
–
39.7
25.4
–
–
25.4
17.3
18.2
–
(10.1)
–
–
25.4
Goodwill Impairment Testing
The following cash‑generating units have significant carrying amounts of goodwill:
Wealth Management
Corporate Trust
Asset Management, comprising CGU:
– Perpetual Asset Management
– Trillium Asset Management
– Barrow Hanley
– TSW
– J O Hambro
– Pendal
73.3
4.5
(16.0)
61.8
46.5
–
18.8
–
2.0
(5.5)
61.8
54.5
2.5
(10.5)
46.5
47.6
–
–
–
4.1
(5.2)
46.5
2,801.0
144.2
(227.4)
2,717.8
951.7
21.2
1,690.5
–
114.3
(59.9)
2,717.8
1,089.3
29.9
(167.5)
951.7
862.9
18.2
60.3
–
46.4
(36.1)
951.7
2023
$M
2022
$M
190.2
158.7
3.5
52.1
222.7
208.8
538.3
205.6
190.2
158.7
3.5
50.0
214.3
–
–
–
1,579.9
616.7
Perpetual Group Annual Report 2023 125
The recoverable amount has been determined on a consistent basis across each cash‑generating unit (CGU) by using their value
in use. The following assumptions have been applied across each CGU:
– The value in use is estimated based on the net present value of future cash flow projections to be realised from each of the CGUs
over the next five years plus a terminal value.
– The pre‑tax discount rates used in the current year ranged from 13.5% to 15.7% (2022: 14.0% to 15.9%) for Australian CGUs and from
13.1% to 14.2% (2022: 15.0% to 15.4%) for Non‑Australian CGUs.
The forecast cash flows used in impairment testing are based on assumptions as to the level of profitability for each business over
a projected five‑year period. These forecasted cash flows are based on a five‑year forecast, three years of which has been approved
by the Board and a further two years of management forecasts have been applied.
The main drivers of revenue growth are the value of assets under management (AUM) in the Trillium, Barrow Hanley, Perpetual
Australia Asset Management, Pendal JOHCM and TSW CGUs, funds under advice (FUA) in the Wealth Management CGU and
securitisation and capital flows in the Corporate Trust CGU. A terminal value with a growth rate of 2.1% for US CGUs and 2.5% for
UK and Australia CGUs has also been applied.
Other than the normal operating changes linked to ongoing business initiatives, the assumptions do not include the effects of any
future restructuring to which the consolidated entity is not yet committed or of future cash outflows by the consolidated entity
which will improve or enhance the consolidated entity’s performance. At the reporting date, there is no reasonable change in key
assumptions that could cause the carrying amount to exceed the recoverable amount.
The estimated recoverable amount is greater than the carrying value for each CGU. For the estimated recoverable amount to
be equal to the carrying amount, the pre‑tax discount rate would have to increase from 13.5% to 28.9% (2022: 14.0% to 26.4%) for
Australian CGUs and from 13.1% to 43.4% (2022: 15.0% to 25.3%) for Non‑Australian CGUs.
Accounting policies
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets.
Goodwill represents the excess of acquisition cost over the fair value of the consolidated entity’s share of the net identifiable assets
of the acquired subsidiary or associate at the date of acquisition. Goodwill is allocated to cash‑generating units and is not amortised,
but tested for impairment annually.
Goodwill is measured at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Amortisation
For those intangible assets which are amortised, the amortisation is calculated over the cost of the asset, or another amount
substituted for cost, less its residual value.
The estimated useful lives in the current and comparative periods are as follows:
– capitalised software: 2.5–8 years
– customer contracts and relationships acquired: 5–16 years
– non‑compete (included in other intangible assets): 3–5 years.
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
Software
Certain internal and external costs directly incurred in acquiring and developing software have been capitalised and are amortised
over their useful lives. Development costs include only those costs directly attributable to the development phase and are only
recognised following completion of a technical feasibility study and where the consolidated entity has an intention and ability to use
the asset. Costs incurred on software maintenance are expensed as incurred.
Other intangible assets
Brand names acquired by the consolidated entity are included in other intangible assets. Brand names have an indefinite useful life
and are not amortised, but tested for impairment annually. Brand names are measured at cost less accumulated impairment losses.
Other intangible assets acquired by the consolidated entity, which have finite useful lives, are stated at cost less accumulated
amortisation and impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases future economic benefits embodied in the specific asset to which
it relates. All other expenditure is expensed as incurred.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 126
Notes to and forming part of the financial statements
for the year ended 30 June 2023
2-5 Provisions
Current
Insurance and legal provision
Operational process review provision
Make good and other occupancy related provisions
Non-current
Make good and other occupancy related provisions
$M
Legal provision
Operational process review provision
Make good and other occupancy related provisions
Total provisions
Accounting policies
2023
$M
–
4.5
–
4.5
4.9
4.9
2022
$M
1.8
3.6
0.4
5.8
4.7
4.7
CARRYING
AMOUNT AT
1 JULY 2022
ADDITIONAL
PROVISION
MADE
UNUSED
AMOUNTS
REVERSED
PAYMENTS
MADE
CARRYING
AMOUNT AT
30 JUNE 2023
1.8
3.6
5.1
10.5
0.8
3.0
0.4
4.2
(0.3)
–
–
(0.3)
(2.3)
(2.1)
(0.6)
(5.0)
–
4.5
4.9
9.4
A provision is recognised in the Statement of Financial Position when the consolidated entity has a present legal or constructive
obligation as a result of a past event that can be measured reliably and it is probable that an outflow of economic benefits will be
required to settle the obligation.
Management exercises judgement in estimating provision amounts. It may be possible, based on existing knowledge, that outcomes
in the next annual reporting period differ from amounts provided and may require adjustment to the carrying amount of the
liability affected.
Provisions are determined by discounting the expected future cash flows at a pre‑tax rate that reflects current market assessments
of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised
as a finance cost.
Legal provision
A provision for litigation is recognised when reported litigation claims arise and are measured at the cost that the consolidated
entity expects to incur in settling the claim (refer to section 3‑5).
Operational process review
A provision for operational process reviews is recognised when operational errors are identified and represents the cost that the
consolidated entity expects to incur in rectification and restitution costs.
Make good and other occupancy related provisions
A provision for make good and other occupancy related provisions is recognised when certain make good conditions exist upon exit
of a premises lease. The provision is expected to be settled at the end of the term of the related lease.
Perpetual Group Annual Report 2023
127
2-6 Employee benefits
Aggregate liability for employee benefits, including on-costs
$M
Provision for annual leave
Provision for long service leave
Other employee benefits1
Provision for distribution – Barrow Hanley
Provision for long‑term incentive plans
Restructuring provision
1 Short-term incentives (STI) and deferred STI.
2023
2022
CURRENT NON-CURRENT
CURRENT NON-CURRENT
13.0
12.1
129.6
2.9
–
7.2
164.8
–
3.8
37.4
–
13.3
–
54.5
8.1
8.7
70.6
2.6
–
0.1
90.1
–
2.5
9.9
–
16.9
–
29.3
The non‑current portion of the long service leave provision has been discounted using a rate of 5.6% (2022: 5.3%) which is based on
the 10 year corporate bond rate. The provision for long‑term incentive plans has been discounted using a range of 3.77% to 3.80%
(2022: 3.0% to 3.1%), which is based on the relevant US Treasury note rate that matches the expected payment term.
The number of full time equivalent employees at 30 June 2023 was 1,870 (2022: 1,370).
Accounting policies
Short-term employee benefits
Short‑term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected
to be paid if the consolidated entity has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Other long-term employee benefits and provision for long-term incentive plans
The consolidated entity’s net obligation in respect of long‑term employee benefits and long‑term incentive plans are the amount
of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted
to determine its present value. Re‑measurements are recognised in profit or loss in the period in which they arise. The provision
for long‑term incentive plans relates to schemes operated by Barrow Hanley.
Restructuring
A provision for restructuring is recognised when the consolidated entity has approved a detailed and formal restructuring plan
and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
Critical assumptions and estimates
The provision for other long‑term incentive plans are dependent on the achievement of future revenue and profit hurdles, which
have been measured using management’s estimate of likely outcomes. Key assumptions requiring judgement include projected
cash flows, growth rate assumptions and margins. The provision represents the pro‑rated portion (based on service provided to
date) of the estimated future cash payments, discounted using the relevant US Treasury bond rate. The liability will be reassessed
at each reporting period based on the latest consolidated entity’s forecasts, with fair value adjustments recognised in profit and loss.
2-7 Accrued incentive compensation
Non-current
Accrued incentive compensation
2023
$M
50.7
50.7
2022
$M
48.6
48.6
Barrow Hanley, a Group Subsidiary, has a profit‑sharing plan (the Plan). Under the Plan, Barrow Hanley may award annual bonuses to
key employees, a portion of which may be paid to the eligible employees through the issuance of unit interests. The awards of unit
interests have a three‑year vesting period from the grant date, and the value is determined at grant date based on a predetermined
formula. Under the provisions of the Plan, these awards contain a feature whereby shares may be put back to the Parent of Barrow
Hanley (Perpetual US Holding Company, Inc) in the future.
Movement in the fair value of the liability is taken to staff related expenses. The liability is re‑measured each period until settlement.
Unit interests are also entitled to distributions, which are accrued at each reporting date. An increase to staff related expenses is
recorded with the corresponding increase to the liability included in employee benefits.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
128
Notes to and forming part of the financial statements
for the year ended 30 June 2023
Section 3 – Capital management and financing
This section outlines how Perpetual manages its capital structure and related financing costs, including its balance
sheet liquidity and access to capital markets. Perpetual’s objectives when managing capital are to safeguard its ability
to continue as a going concern, to continue to provide returns to shareholders and benefits to other stakeholders, and
to reduce the cost of capital.
3-1 Cash and cash equivalents
Bank balances
Short‑term deposits
Short‑term deposits represent rolling 90 day term deposits.
3-2 Borrowings
The consolidated entity has access to the following credit facilities:
Total facility used
Facility unused
2023
$M
232.4
30.8
263.2
2022
$M
158.4
17.0
175.4
2023
$M
2022
$M
734.4
125.0
258.4
122.3
In November 2022, the consolidated entity refinanced and entered into a new syndicated facility arrangement. The arrangement
comprises of a core facility which refinanced the previous debt facility, and an acquisition facility which funded the cash portion
of the Pendal acquisition.
The core facility comprises of a revolving loan facility with a maximum commitment of A$175 million or equivalent (Core Facility 1),
a USD term loan facility with a maximum commitment of US$128 million (Core Facility 2) and a bank guarantee facility with a
maximum commitment of A$160 million (Core Facility 3).
The acquisition facility comprises of a revolving loan facility with a maximum commitment of A$215 million (Acquisition Facility 1),
a GBP term loan facility with a maximum commitment of £115 million (Acquisition Facility 2) and a USD term loan facility with a
maximum commitment of US$45 million (Acquisition Facility 3).
Core Facility 1 and Acquisition Facility 1 have an interest rate equal to BBSY plus a margin, Core Facility 2 and Acquisition Facility 2
have an interest rate equal to SOFR plus a margin, Acquisition Facility 3 have an interest rate equal to SONIA plus a margin and
Core Facility 3 is at a flat rate. Core Facilities 1 and 3 and Acquisition Facilities 1 and 2 have a term of three years. Core Facility 2 and
Acquisition Facility 3 have a term of four years.
The syndicated facility had a weighted average floating interest rate of 6.00% at 30 June 2023, exclusive of bank guarantees and the
undrawn line fee (30 June 2022: 2.09%)1.
The consolidated entity relies on bank guarantees issued under Core Facility 3 to meet its regulatory capital requirements.
In establishing the new syndicated facility arrangement, the consolidated entity incurred costs of $13.2 million (including
underwriting fees). These costs have been capitalised and net off against the total facility used. Costs will be released to profit and
loss over the term of the facility. There currently remains $10.5 million of capitalised borrowing costs that have yet to be released to
the profit and loss account.
The consolidated entity has agreed to various debt covenants including shareholders’ funds as a specified percentage of total
assets, a maximum ratio of gross debt to EBITDA and a minimum interest cover. The consolidated entity is in compliance with the
covenants at 30 June 2023 and anticipates being compliant going forward. Should the consolidated entity not satisfy any of these
covenants, the outstanding balance of the loans may become due and payable.
1. Prior year has been restated.
Perpetual Group Annual Report 2023 129
Accounting policies
Borrowings are initially recognised at fair value net of transaction costs incurred. Subsequent to initial recognition, interest‑bearing
borrowings are stated at amortised cost. The financial liability under the facility has a fair value equal to its carrying amount.
Interest‑bearing borrowings are removed from the Consolidated Statement of Financial Position when the obligation specified
in the contract is discharged, cancelled or expired.
Financing costs comprise interest payments on borrowings calculated using the effective interest method, and unwinding
of discounts on provisions.
3-3 Contributed equity
Fully paid ordinary shares 112,517,592 (2022: 56,713,419)
Treasury shares 1,636,431 (2022: 651,437)
Movements in share capital
Balance at beginning of year
Shares issued:
– Issue of ordinary shares1
– Movement on treasury shares
Balance at end of year
2023
$M
2,241.2
(50.7)
2,190.5
2022
$M
858.1
(40.4)
817.7
2023
2022
NUMBER
OF SHARES
$M
NUMBER
OF SHARES
$M
56,061,982
817.7
55,958,199
815.3
55,804,173
1,385.0
140,140
(984,994)
(12.2)
(36,357)
5.3
(2.9)
110,881,161
2,190.5
56,061,982
817.7
1. The consolidated entity issued 500,000 ($12.4 million) shares in September 2022 and 340,000 ($7.5 million) shares in March 2023 to Queensland Trustees Pty
Ltd Long Term Incentive Plan Trust to satisfy employee share scheme commitments during the period. In addition, 216,745 ($5.2 million) shares were issued on
market to satisfy Dividend Re-investment Plan requirements, and 54,747,428 ($1,359.9 million) shares were issued on market in January 2023 as compensation
to Pendal shareholders.
The Company does not have authorised capital or par value in respect of its issued shares.
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to any surplus capital.
Accounting policies
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised
as a deduction from equity, net of any tax effects.
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased or held by employee share plans and subject to vesting conditions, the
amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. When treasury
shares are sold or reissued subsequently, the amount received is recognised as an increase in equity.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
130
Notes to and forming part of the financial statements
for the year ended 30 June 2023
3-4 Reserves
Foreign currency translation reserve
General reserve
Equity compensation reserve
Accounting policies
Foreign currency translation reserve
2023
$M
101.1
0.1
101.2
83.2
184.4
2022
$M
13.3
0.1
13.4
20.9
34.3
The Foreign Currency Translation Reserve (FCTR) records the foreign currency differences from the translation of the financial
information of foreign operations that have a functional currency other than Australian dollars.
Equity compensation reserve
The equity compensation reserve represents the value of the Company’s own shares held by an equity compensation plan that
the consolidated entity is required to include in the consolidated financial statements. This reserve will be reversed against share
capital when the underlying shares vest to the employee. No gain or loss is recognised in profit or loss on the purchase, sale, issue
or cancellation of the consolidated entity’s own equity instruments.
3-5 Commitments and contingencies
(a) Commitments
Capital expenditure commitments
Contracted but not provided for and payable within one year
2023
$M
2022
$M
21.9
38.6
Capital expenditure contracted but not provided for and payable within one year primarily relates to further investments in the
unlisted investment fund which is primarily invested in multiple collateralised loan obligation transactions and warehouse facilities
in connection therewith.
(b) Contingencies
Contingent liabilities
Bank guarantee in favour of the ASX Settlement and Transfer Corporation Pty Limited with respect to
trading activities
Bank guarantee in favour of certain Group subsidiaries in relation to the provision of responsible entity
services and custodial or depository services
Bank guarantee issued in respect of the lease of premises
2023
$M
2022
$M
1.0
1.0
146.9
2.5
150.4
127.8
0.6
129.4
In the ordinary course of business, contingent liabilities exist in respect of claims and potential claims against entities in the
consolidated entity. The consolidated entity does not consider that the outcomes of any such claims known to exist at the date
of this report, either individually or in aggregate, are likely to have a material effect on its operations or financial position.
Accounting policies
Contingent liabilities
A contingent liability is a possible obligation arising from past events that may be incurred subject to the outcome of an uncertain
future event not wholly within the consolidated entity’s control.
Perpetual Group Annual Report 2023 131
Section 4 – Risk management
Perpetual’s activities expose it to a variety of financial and non-financial risks. Financial risks include credit risk, liquidity
risk and market risks (including currency risk, interest rate risk and price risk). Key financial exposures are operational risk
and a failure to meet regulatory compliance obligations. The nature of the financial risk exposures arising from financial
instruments, the objectives, policies and processes for managing these risks, and the methods used to measure them are
detailed below.
4-1 Financial risk management
Perpetual recognises that risk is part of doing business and that the ongoing management of risk is critical to its success.
The approach to managing risk is articulated in the Risk Management Framework. The Risk Management Framework is supported
by the Risk Group, who is responsible for the design and maintenance of the framework, establishing and maintaining group‑wide
risk management policies, and providing regular risk reporting to the Board, the Audit, Risk and Compliance Committee (ARCC)
and the Group Executive Leadership Team. This framework is approved by the Perpetual Board of Directors (the Board) and is
reviewed for adequacy and appropriateness on an annual basis.
The Board regularly monitors the overall risk profile of the consolidated entity and sets the risk appetite for the consolidated entity,
usually in conjunction with the annual planning process. The Board is responsible for ensuring that management has appropriate
processes in place for managing all types of risk, ranging from financial risk to operational risk. To assist in providing ongoing
assurance and comfort to the Board, responsibility for risk management oversight has been delegated to the ARCC. The main
functions of this Committee are to oversee the consolidated entity’s accounting policies and practices, the integrity of financial
statements and reports, the scope, quality and independence of external audit arrangements, the monitoring of the internal
audit function, the effectiveness of risk management policies and the adequacy of insurance programs. This Committee is also
responsible for monitoring overall legal and regulatory compliance.
The activities of the consolidated entity expose it to the following financial risks: credit risk, liquidity risk and market risk. These are
distinct from the financial risks borne by customers which arise from financial assets managed by the consolidated entity in its
role as fund manager, trustee and responsible entity.
The risk management approach to, and exposures arising from, the Exact Market Cash Fund (EMCF 1) are disclosed in section 5‑1.
i. Credit risk
Credit risk refers to the risk that a customer or counterparty to a financial instrument will fail to meet its contractual obligations resulting
in financial loss to the consolidated entity. Credit risk arises principally from the consolidated entity’s cash and trade receivables.
The consolidated entity mitigates its credit risk by ensuring cash deposits are held with high credit quality financial institutions
and other highly liquid investments are held with trusts operated by the entity.
The maximum exposure of the consolidated entity to credit risk on financial assets which have been recognised on the Consolidated
Statement of Financial Position is the carrying amount, net of any provision for doubtful debts. The table below outlines the
consolidated entity’s maximum exposure to credit risk as at reporting date.
Cash and cash equivalents
Trade receivables
Other receivables and other financial assets
Listed equity securities and unlisted unit trusts
Unlisted investment fund
Debt securities
Details of the assets held in debt securities are listed below:
2023
$M
263.2
190.6
19.3
262.0
25.7
3.7
2023
Debt securities
AAA TO
AA-
$M
0.2
A+ TO
A-
$M
1.0
BBB+ TO
BBB-
$M
2.5
2022
$M
175.4
117.4
5.5
140.0
8.6
3.4
TOTAL
$M
3.7
Credit risk is managed on a functional basis across the various business segments. As a result of the swap agreements between
EMCF 1 and the consolidated entity, the consolidated entity consolidates EMCF 1 and is hence exposed to credit risk on its exposure
to the $163.9 million (2022: $186.3 million) of underlying investments held by EMCF 1.
The maximum exposure would only be realised in the unlikely event that the recoverable value of all the underlying investments
held by EMCF 1 decline to $nil. Further details of the credit risk relating to EMCF 1 are disclosed in section 5‑1.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 132
Notes to and forming part of the financial statements
for the year ended 30 June 2023
4-1 Financial risk management continued
i. Credit risk continued
(a)
Investments held by seed fund investments
Perpetual incubates new investment strategies through the establishment of seed funds for the purpose of building investment
track records and developing asset management skills before releasing products to Perpetual’s investors. Exposure to credit risk
arises on the consolidated entity’s financial assets held by the seed funds, mainly being debt securities, loans, deposits with financial
institutions and derivative financial instruments.
The exposure to credit risk is monitored on an ongoing basis by the funds’ investment managers and managed in accordance
with the investment mandate of the funds.
(b) Other financial assets
The consolidated entity’s exposure to trade receivables is influenced mainly by the individual characteristic of each customer.
Trade receivables are managed by the accounts receivable department. Outstanding fees and receivables are monitored on a
daily basis and an aged debtors report is prepared and monitored by Group Finance. Management assesses the credit quality
of customers by taking into account their financial position, past experience and other factors.
Credit risk further arises in relation to financial guarantees given to wholly owned subsidiaries. Such guarantees are only provided
in exceptional circumstances and are subject to specific Board approval and are monitored on a quarterly basis as part of the
consolidated entity’s regulatory reporting.
The consolidated entity held cash and cash equivalents of $263.2 million at 30 June 2023 (2022: $175.4 million). The cash and cash
equivalents are held with bank and financial institution counterparties, which are predominantly rated ‘BBB’ or higher, based on
Standard & Poor’s rating.
The credit quality of financial assets that are neither past due nor impaired is assessed by reference to external credit ratings,
if available, or to historical information on counterparty default rates.
The tables below provide an aged analysis of the financial assets which were past due but not impaired:
30 JUNE 2023
30 JUNE 2022
LESS
THAN
30 DAYS
$M
30 TO
60 DAYS
$M
60 TO
90 DAYS
$M
MORE
THAN
90 DAYS
$M
LESS
THAN
30 DAYS
$M
TOTAL
$M
30 TO
60 DAYS
$M
60 TO
90 DAYS
$M
MORE
THAN
90 DAYS
$M
TOTAL
$M
Trade and other
receivables
4.5
3.9
0.6
0.4
9.4
5.0
1.3
1.2
1.8
9.3
The nominal values of financial assets which were impaired and have been provided for are as follows:
Trade and other receivables
2023
$M
2.5
2022
$M
3.0
The impaired financial assets relate mainly to independent customers and investors who are in unexpectedly difficult economic
situations, where the consolidated entity is of the view that the full carrying value of the receivable cannot be recovered.
The consolidated entity does not hold any collateral against the trade and other receivables.
(c) Unlisted investment fund
The consolidated entity holds an equity interest in an unlisted investment fund established to invest its assets primarily in the
economic equity interests of multiple collateralised loan obligation (CLO) transactions and warehouse facilities in connection
therewith. Exposure to credit risk arises on the underlying pool of bank loan assets which serve as collateral for the CLO’s.
At 30 June 2023, the underlying pool of bank loan assets were issued by counterparties rated ‘B‑‘ or higher, based on Standard
& Poor’s rating.
Exposure to credit risk is monitored on an ongoing basis by the funds’ investment managers and managed in accordance with
the investment mandate of the funds.
Perpetual Group Annual Report 2023 133
ii. Liquidity risk
Liquidity risk is the risk that the financial obligations of the consolidated entity cannot be met as and when they fall due without
incurring significant costs.
The consolidated entity’s approach to managing liquidity is to maintain a level of cash or liquid investments sufficient to meet
its ongoing financial obligations. The consolidated entity has a robust liquidity risk framework in place which is principally driven
by the Capital Management Review (refer to section 4‑1(v) for further information).
At 30 June 2023, total base capital requirements were $70 million, as per the Group Treasury Policy, compared to $423 million
of available liquid funds.
The consolidated entity manages liquidity risk by continually monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradeable in
highly liquid markets. In addition, a six month forecast of liquid assets, cash flows and balance sheet is reviewed by the Board
on a semi‑annual basis to ensure there is sufficient liquidity within the consolidated entity.
The tables below show the maturity profiles of the financial liabilities for the consolidated entity. These have been calculated using
the contractual undiscounted cash flows.
30 JUNE 2023
30 JUNE 2022
LESS THAN
1 YEAR
$M
1 TO 5 YEARS
$M
GREATER THAN
5 YEARS
$M
TOTAL
$M
LESS THAN
1 YEAR
$M
1 TO 5 YEARS
$M
GREATER THAN
5 YEARS
$M
93.0
–
23.4
116.4
25.6
745.0
50.1
820.7
–
–
9.5
9.5
118.6
745.0
83.0
946.6
58.1
–
13.8
71.9
39.7
260.8
41.3
341.8
–
–
6.8
6.8
TOTAL
$M
97.8
260.8
61.9
420.5
Liabilities
Payables
Borrowings
Lease liabilities
iii. Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity prices – will affect
the consolidated entity’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The consolidated entity is subject to the following market risks:
(a) Currency risk
The consolidated entity’s investment of capital in foreign operations – for example, subsidiaries or associates with functional
currencies other than the Australian dollar – exposes the consolidated entity to the risk of changes in foreign exchange rates.
Variations in the value of these foreign operations arising as a result of exchange differences are reflected in the foreign currency
translation reserve in equity.
The consolidated entity is exposed to currency risk relating to the United States (USD), United Kingdom (GBP), Singapore (SGD),
Europe (EUR) and the Hong Kong (HKD) operations.
Where it is considered appropriate, the consolidated entity takes out economic hedges against larger foreign exchange
denominated revenue streams (primarily USD). The primary objective of hedging is to ensure that, if practical, the effect of changes
in foreign exchange rates on the consolidated capital ratios are minimised.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 134
Notes to and forming part of the financial statements
for the year ended 30 June 2023
4-1 Financial risk management continued
iii. Market risk continued
(a) Currency risk continued
Exposure to currency risk
The summary quantitative data about the consolidated entity’s exposure to currency risk as reported to management of the
consolidated entity is as follows. The following are financial assets and liabilities in currencies other than the reporting currency
of the consolidated entity.
30 JUNE 2023
30 JUNE 2022
USD
$M
GBP
$M
SGD
$M
EUR
$M
HKD
$M
USD
$M
GBP
$M
SGD
$M
EUR
$M
HKD
$M
Financial assets
and liabilities
Cash and cash
equivalents
Receivables
Other financial assets
Unlisted investment
fund
Payables
Borrowings
Net statement of
financial position
exposure
82.0
84.2
95.5
25.7
(10.9)
60.4
17.3
–
–
(18.7)
(260.9)
(219.0)
35.2
1.9
–
–
(1.2)
–
10.3
4.7
–
–
(0.2)
–
1.7
–
–
–
(0.1)
72.3
35.0
50.6
8.6
(4.3)
–
(185.8)
3.3
–
–
–
(0.1)
–
11.2
1.6
–
–
(0.3)
–
1.3
–
–
–
–
–
1.3
–
–
–
(0.1)
–
15.6
(160.0)
35.9
14.8
1.6
(23.6)
3.2
12.5
1.3
1.2
The table below demonstrates the impact of a 10% strengthening/(weakening) of the Australian dollar against the currencies noted
above at 30 June, on the net profit after tax and equity of the consolidated entity with all other variables held constant:
+/‑ 10%
AUD weakens by 10%
30 JUNE 2023
30 JUNE 2022
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
(9.3)/9.3
7.1/(7.1)
(4.5)/4.5
0.4/(0.4)
9.3
(7.1)
4.5
(0.4)
Perpetual Group Annual Report 2023 135
b) Interest rate risk
Interest rate risk is the risk to the consolidated entity’s earnings and capital arising from changes in market interest rates.
The financial instruments held that are impacted by interest rate risk consist of cash and borrowings.
The consolidated entity’s exposure to interest rate risk arises predominantly on the $870.0 million syndicated facility, of which
$745.0 million was drawn as at 30 June 2023 (refer to section 3‑2). This loan facility is rolled on a one month, three month or
six month term.
The consolidated entity’s exposure to interest rate risk for the financial assets and liabilities is set out as follows:
At 30 June 2023
Financial assets
Cash and cash equivalents
Receivables
Other financial assets
Financial liabilities
Payables
Lease liabilities
Borrowings
At 30 June 2022
Financial assets
Cash and cash equivalents
Receivables
Other financial assets
Financial liabilities
Payables
Lease liabilities
Borrowings
FLOATING
INTEREST
RATE
$M
FIXED
INTEREST
RATE
$M
NON-INTEREST
BEARING
$M
206.4
1.3
0.5
208.2
–
–
745.0
745.0
158.4
1.3
0.4
160.1
–
–
260.8
260.8
30.8
–
3.2
34.0
–
90.9
–
90.9
17.0
–
3.0
20.0
–
72.3
–
72.3
26.0
208.6
287.7
522.3
118.6
–
–
118.6
–
121.6
148.6
270.2
93.7
–
–
93.7
TOTAL
$M
263.2
209.9
291.4
764.5
118.6
90.9
745.0
954.5
175.4
122.9
152.0
450.3
93.7
72.3
260.8
426.8
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 136
Notes to and forming part of the financial statements
for the year ended 30 June 2023
4-1 Financial risk management continued
iii. Market risk continued
b)
Interest rate risk continued
The table below demonstrates the impact of a 1% change in interest rates, with all other variables held constant, on the NPAT and
equity of the consolidated entity.
+/‑ 1%
30 JUNE 2023
30 JUNE 2022
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
(3.8)/3.8
(3.8)/3.8
(0.7)/0.7
(0.7)/0.7
The impact on NPAT for the year would be mainly as a result of an (increase)/decrease in interest expense on borrowings.
(c) Market risks arising from Assets Under Management and Funds Under Advice
The consolidated entity’s revenue is significantly dependent on AUM and FUA. Management calculates the expected impact to
annualised revenue from a 10% movement in AUM and FUA to be approximately $99.0 million.
(d) Market risks arising from seed funds
The consolidated entity is exposed to equity price risk on investments held by its seed funds. The funds may also be exposed to the
other risks which influence the value of those shares or units (including foreign exchange rates and interest rates).
The Asset Management divisions’ Investment Review Committee is responsible for reviewing and recommending new incubation
strategies and ensuring management has appropriate processes and systems in place for managing investment risk for each fund.
Risk management techniques are used in the selection of investments, including derivatives, which are only acquired if they meet
specified investment criteria. Daily monitoring of trade restrictions and derivative exposure against limits is undertaken with any
breach of these restrictions reported to the Chief Risk & Sustainability Officer.
These funds may be party to derivative financial instruments in the normal course of business in order to hedge exposure to
fluctuations in foreign exchange rates, interest rates and equity indices in accordance with the funds’ investment guidelines.
The seed funds may be exposed to currency risk and interest rate risk. Their investment managers may enter into derivative contracts
(such as forwards, swaps, options and futures) through approved counterparties to manage this risk. However, the use of these
contracts must be consistent with the investment strategy and restrictions of each seed fund, and agreed acceptable level of risk.
These funds are also exposed to interest rate risk on cash holdings. Interest income from cash holdings is earned at variable interest
rates and investments in cash holdings are at call.
(e) Market risks arising from the Exact Market Cash Fund
The consolidated entity is further subject to market risks through the Exact Market Cash Fund (EMCF 1). The Fund was established
with the purpose of providing an exact return utilising the Bloomberg AusBond Bank Bill Index (the benchmark index) to investors.
The impact of EMCF 1 on the consolidated entity’s financial results is dependent on the performance of the Fund relative to the
benchmark. Unrealised gains/losses are taken through profit and loss.
The risk management approach to, and exposures arising from EMCF 1 are disclosed in section 5‑1.
iv. Fair value
The following tables present the consolidated entity’s assets and liabilities measured and recognised at fair value, by valuation
method, at 30 June 2023. The different levels have been defined as follows:
Level 1: Quoted prices in active markets for identical assets and liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly; and
Level 3: Inputs for the asset or liability that are not based on observable market data.
Perpetual Group Annual Report 2023 137
LEVEL 1
$M
LEVEL 2
$M
LEVEL 3
$M
TOTAL
$M
At 30 June 2023
Financial assets
Listed equity securities
Unlisted unit trusts
Unlisted investment fund
Structured products – EMCF assets
Debt securities
At 30 June 2022
Financial assets
Listed equity securities
Unlisted unit trusts
Unlisted investment fund
Structured products – EMCF assets
Debt securities
56.2
–
–
0.8
3.7
–
205.8
–
163.1
–
–
–
25.7
–
–
60.7
368.9
25.7
50.2
–
–
1.8
3.4
55.4
–
89.8
–
184.5
–
274.3
–
–
8.6
–
–
8.6
The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values:
Balance at 1 July
Investments
Capital returns
Withdrawals
Foreign exchange movements
Net change in fair value (unrealised)
Balance at 30 June
2023
$M
8.6
14.9
–
–
1.7
0.5
25.7
56.2
205.8
25.7
163.9
3.7
455.3
50.2
89.8
8.6
186.3
3.4
338.3
2022
$M
–
9.2
(0.6)
–
0.7
(0.7)
8.6
The investment in the unlisted investment fund, representing equity interests of multiple collateralised loan obligation (CLO)
transactions, is classified as a Level 3 fair value instrument as it is an unlisted entity, valued using unobservable inputs. The fair value
of the unlisted investment fund has been determined using the net asset value of the fund as at 30 June 2023 obtained from an
independent, third‑party fund administrator.
For the fair value of the unlisted investment fund, reasonably possible changes at the reporting date to the net asset value of the
fund, holding other inputs constant, would have the following effects:
+/‑ 10%
30 JUNE 2023
30 JUNE 2022
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
IMPACT ON NET
PROFIT AFTER
TAX
$M
IMPACT ON
EQUITY
$M
1.8/(1.8)
1.8/(1.8)
0.6/(0.6)
0.6/(0.6)
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 138
Notes to and forming part of the financial statements
for the year ended 30 June 2023
4-1 Financial risk management continued
iv. Fair value continued
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading securities) is based
on quoted market prices at the reporting date. The quoted market price used for financial assets held by the consolidated entity is
the last traded price. Marketable shares included in other financial assets are traded in an organised financial market and their fair
value is the current quoted last traded price for an asset. The carrying amounts of bank term deposits and receivables approximate
fair value. The fair value of investments in unlisted shares in other corporations is determined by reference to the underlying net
assets and an assessment of future maintainable earnings and cash flows of the respective corporations.
The fair value of financial instruments that are not traded in an active market (for example, over‑the‑counter derivatives) is determined
using valuation techniques. The estimates of fair value where valuation techniques are applied are subjective and involve the exercise of
judgement. Changing one or more of the assumptions applied in valuation techniques to reasonably possible alternative assumptions
may impact on the amounts disclosed.
The carrying amount of financial assets and financial liabilities, less any impairment, approximates their fair value, except for those
outlined in the table below, which are stated at amortised cost.
Structured products – EMCF liabilities
v. Capital risk management
2023
2022
CARRYING
AMOUNT
$M
164.2
FAIR
VALUE
$M
163.9
CARRYING
AMOUNT
$M
187.7
FAIR
VALUE
$M
186.3
A Capital Management Review is carried out on an annual basis and is submitted to the CFO for review and approval. If changes are
required to funding requirements, the capital structure or to the capital management strategy of the consolidated entity, the CFO
will present their recommendation to the Board via the Audit, Risk and Compliance Committee. The Group Policy – Treasury ensures
that the level of financial conservatism is appropriate for the Company’s businesses including acting as custodian and manager of
clients’ assets and operation as a trustee company. This policy also aims to provide business stability and accommodate the growth
needs of the consolidated entity. This policy comprises three parts:
(a) Dividend policy
Dividends paid to shareholders are typically in the range of 60–90% of the consolidated entity’s UPAT attributable to members of
the Company, which is line with the new policy announced in December 2020. In certain circumstances, the Board may declare a
dividend outside of that range.
(b) Review of capital and distribution of excess capital
A review of the consolidated entity’s capital base is performed at least semi‑annually and excess capital that is surplus to the
consolidated entity’s current requirements may potentially be returned to shareholders in the absence of a strategically aligned,
value accretive investment opportunity.
(c) Gearing policy
The current gearing policy aims to target an investment grade credit rating by maintaining a corporate debt to capital ratio
(corporate debt/(corporate debt + equity)) of 30% or less and EBIT interest cover (EBIT/interest expense) of more than 10 times.
The gearing ratio is 23.9% as at 30 June 2023 (2022: 22.0%). The EBIT interest cover ratio for the consolidated entity
as at 30 June 2023 was 8 times (2022: 21 times).
Perpetual Group Annual Report 2023 139
Accounting policies
The consolidated entity initially recognises receivables on the date that they are originated. All other financial assets (including
assets designated at fair value through profit or loss) are recognised initially on the trade date at which the consolidated entity
becomes a party to the contractual provisions of the instrument.
Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date
at which the consolidated entity becomes a party to the contractual provisions of the instrument. The consolidated entity
derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
(a) Financial assets at fair value through profit or loss
Financial assets are mandatorily classified and measured at fair value through profit or loss on initial recognition. Attributable
transaction costs are recognised in profit or loss when incurred. Financial assets mandatorily classified at fair value through profit
or loss are measured at fair value and changes recognised in profit or loss.
(b) Receivables
Receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
receivables are measured at amortised cost using the effective interest method less impairment losses.
The consolidated entity derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by
the consolidated entity is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the Consolidated Statement of Financial Position when,
and only when, the consolidated entity has a legal right to offset the amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
(c) Derivative financial instruments
The consolidated entity holds derivative financial instruments within funds to hedge its interest rate, foreign exchange and market
risk exposures.
Derivatives are recognised initially at fair value. Attributable transaction costs are recognised in profit or loss when incurred.
(d) Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. Financial guarantees are given
to wholly owned subsidiaries, within the consolidated entity. Such guarantees are only provided in exceptional circumstances and are
subject to specific Board approval and are monitored on a quarterly basis as part of the consolidated entity’s regulatory reporting.
The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137
Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation,
where appropriate.
Where guarantees in relation to loans or other payables of subsidiaries are provided for no compensation, the fair values are
accounted for as contributions and recognised as part of the cost of the investment.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 140
Notes to and forming part of the financial statements
for the year ended 30 June 2023
Section 5 – Other disclosures
This section contains other miscellaneous disclosures that are required by accounting standards.
5-1 Structured products assets and liabilities
i. Exact Market Cash Fund
Current assets
Perpetual Exact Market Cash Fund
Current liabilities
Perpetual Exact Market Cash Fund
2023
$M
2022
$M
163.9
163.9
164.2
164.2
186.3
186.3
187.7
187.7
The Exact Market Cash Fund (EMCF 1) current asset balances reflect the fair value of the net assets held by the Fund. The current
liabilities balances represent the consolidated entity’s obligation to the Fund’s investors. The difference between the current assets
and current liabilities balance has been recorded in profit and loss.
EMCF 1 was established with the purpose of providing an exact return that matched the Bloomberg AusBond Bank Bill Index (the
benchmark index) to investors. The Fund’s ability to pay the benchmark return to the investors is guaranteed by the consolidated
entity. The National Australia Bank has provided EMCF 1 product with a guarantee to the value of $3 million (2022: $3 million) to be
called upon in the event that the consolidated entity is unable to meet its obligations. Due to the guaranteed benchmark return to
investors, the consolidated entity is exposed to the risk that the return of EMCF 1 differs from that of the benchmark. The return of
EMCF 1 is affected by risks to the underlying investments in the EMCF 1 portfolio, which are market, liquidity and credit risks.
The underlying investments of EMCF 1 are valued on a hold to maturity basis for unit pricing purposes, which is consistent with
the way in which Perpetual manages the portfolio.
EMCF 1 use professional investment managers to manage the impact of the above risks by using prudent investment guidelines
and investment processes. The investment managers explicitly target low volatility and aim to achieve this through a quality
screening process that is designed to assess the likelihood of default and difficult trading patterns during periods of rapid
systematic risk reduction.
There is a clearly defined mandate for the inclusion of sectors and issuances. In periods of risk reduction, diversification may be
narrowly focused on cash and highly liquid investment‑grade assets. At times of higher risk tolerance, appropriate diversification
should be expected.
Interest rate exposure is limited to +/‑ 90 days versus the benchmark. The portfolios are constructed with the goal of having
a diversified set of securities, while largely retaining the low risk characteristics of a cash investment.
Liquidity risk of EMCF 1 is managed by maintaining a level of cash or liquid investments in the portfolios which is sufficient to meet a
level and pattern of investor redemptions (consistent with past experience), distributions or other of the Fund’s financial obligations.
This is complemented by a dynamic portfolio management process that ensures liquidity is increased when there is an expectation
of a deterioration in market conditions. Cash flow forecasts are prepared for the Fund, including the consideration of the maturity
profile of the securities, interest and other income earned by the Fund, and projected investor flows based on historical trends and
future expectations.
Furthermore, the credit quality of financial assets is managed by EMCF 1 using Standard & Poor’s rating categories or equivalent, in
accordance with the investment mandate of EMCF 1. The exposure in each credit rating category is monitored on a daily basis. This
review process allows assessment of potential losses as a result of risks and the undertaking of corrective actions. The investment
managers have undertaken to restrict the asset portfolio of the underlying funds to securities, deposits or obligations with a
Standard & Poor’s or equivalent ‘BBB‑’ fund credit quality rating or higher.
The investment managers of the underlying Funds invested by EMCF 1 enter into a variety of derivative financial instruments such
as credit default swaps and foreign exchange forwards in the normal course of business in order to mitigate credit risk exposure
and to hedge fluctuations in foreign exchange rates.
Perpetual Group Annual Report 2023 Details of the assets held by the underlying Funds are set out below:
30 JUNE 2023
Corporate bonds and money market securities
Mortgage and asset backed securities
Cash
Other
30 JUNE 2022
Corporate bonds and money market securities
Mortgage and asset backed securities
Cash
AAA TO
AA-
$M
75.1
50.2
0.8
126.1
AAA TO
AA-
$M
66.4
70.2
1.8
A+ TO
A-
$M
30.6
–
–
30.6
A+ TO
A-
$M
40.5
–
–
138.4
40.5
BBB+ TO
BBB-
$M
8.7
–
–
8.7
BBB+ TO
BBB-
$M
7.4
–
–
7.4
141
TOTAL
$M
114.4
50.2
0.8
165.4
(1.5)
163.9
TOTAL
$M
114.3
70.2
1.8
186.3
The table below demonstrates the impact of a 1% change in the fair value of the underlying assets of EMCF 1, due to market price
movements, based on the values at reporting date.
1% increase
1% decrease
2023
$M
1.6
(1.6)
2022
$M
1.9
(1.9)
The actual impact of a change in the fair value of the underlying assets of EMCF 1 on the consolidated profit before tax is dependent
on the performance of the Fund relative to the benchmark index. If the Fund’s performance is below the benchmark return, then
the consolidated entity will be obliged to make payments to the investor. Conversely, if the Fund’s performance is higher than the
benchmark, then the benefit of the higher performance accrues to the consolidated entity.
In addition, any variance between the consolidated entity’s current assets EMCF 1 balance and the consolidated entity’s current
liabilities EMCF 1 balance would be reflected in profit and loss.
Accounting policies
The EMCF product, consisting of EMCF 1, is consolidated as the consolidated entity is exposed to variable returns and has the power
to affect those returns. The swap agreements result in the benchmark rate of return being paid to the unitholders in the Fund.
The swap agreements are inter‑company transactions between a subsidiary of the Company and the Funds and are eliminated on
consolidation.
Assets and liabilities of EMCF 1 are disclosed separately on the face of the Consolidated Statement of Financial Position as structured
product assets and structured product liabilities. The benchmark return generated by EMCF 1 and distributions to unitholders are
disclosed in section 1‑3 Expenses as distributions and expenses related to structured products.
The financial assets represented by the structured products assets balance are accounted for in accordance with the underlying
accounting policies of the consolidated entity. These consist of investments that are mandatorily classified at FVTPL.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 142
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-2 Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2023 the parent entity of the consolidated entity was Perpetual Limited.
Result of the parent entity
Profit after tax for the year
Total comprehensive income for the year
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Share capital
Reserves
Retained earnings
Total equity
Parent entity contingencies
2023
$M
305.6
305.6
2,530.2
3,645.7
435.5
1,216.1
2,195.0
(3.5)
238.1
2022
$M
61.6
61.6
523.5
1,644.4
438.3
749.7
817.7
7.3
69.7
2,429.6
894.7
The Directors are of the opinion that provisions are not required in respect of any parent entity contingencies, as it is not probable
that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Uncalled capital of the controlled entities
2023
$M
12.5
2022
$M
12.5
In the ordinary course of business, contingent liabilities exist in respect of claims and potential claims against the parent entity. The
parent entity does not consider that the outcome of any such claims known to exist at the date of this report, either individually or in
aggregate, are likely to have a material effect on its operations or financial position.
Parent entity guarantees
In November 2022, the Company provided a financial guarantee to secure a syndicated banking facility (refer to section 3‑2). The
bank facility covers a period of up to four years.
No liability was recognised by the Company in relation to this guarantee as the fair value of this guarantee is considered to be
immaterial. The Company does not expect the financial guarantee to be called upon.
Perpetual Group Annual Report 2023 5-3 Controlled entities
NAME OF COMPANY
Perpetual Limited5
Controlled Entities1
Perpetual Investment Management Limited
Perpetual Assets Pty. Ltd.2
Australian Trustees Limited5
Commonwealth Trustees Pty. Ltd.2
Perpetual Trustee Company (Canberra) Limited5
Perpetual Trustees Consolidated Limited5
Perpetual Trustees Queensland Limited5
Perpetual Trustees Victoria Limited5
Perpetual Trustees W.A. Ltd5
Queensland Trustees Pty. Ltd.2
Fordham Business Advisors Pty Ltd2
Perpetual Superannuation Limited
Perpetual Nominees Limited
Perpetual Tax and Accounting Pty Ltd2
Perpetual Services Pty Limited2
Perpetual Mortgage Services Pty Limited2
Perpetual Australia Pty Limited2,5
Perpetual Trust Services Limited
Trillium ESG Global High Conviction Equity Fund
Barrow Hanley US ESG Value
BHMS All Country World Ex-U.S. Value
BHMS Credit
BHMS Concentrated U.S. Opportunities
Trillium ESG Global Equity Fund
BHMS US Opportunistic Value DLCV, SCV
BHMS Diversified Small Cap Value Strategy
Trillium ESG International Conviction
Barrow Hanley Concentrated Global Equity
Barrow Hanley Emerging Markets Ex China Value Equity
Perpetual Exact Market Cash Fund
143
BENEFICIAL INTEREST
2023
%
2022
%
COUNTRY OF
INCORPORATION AND
PRINCIPAL PLACE OF
BUSINESS
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
47
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
52
100
100
–
–
–
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
100
Australia
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 144
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-3 Controlled entities continued
NAME OF COMPANY
Entities under the control of Perpetual Digital Holdings Pty Limited
Perpetual Digital Pty Ltd2
Perpetual Roundtables Pty Limited2
Perpetual Wholesale Fiduciary Services Pty Ltd2
Laminar Capital Pty Ltd
Entities under the control of Laminar Capital Pty Ltd
Easterly Asset Management Pty Ltd2
Laminar Advisory Pty Ltd2
Entities under the control of Perpetual Trustee Company Limited
Perpetual Corporate Trust Limited
Perpetual Custodians Ltd
P.T. Limited
Perpetual Legal Services Pty Ltd2,6
Entities under the control of P.T. Limited
Perpetrust Nominees Proprietary Limited2
Entities under the control of Perpetual Acquisition Company Limited
The Trust Company Limited
Fintuition Pty Limited2
Fintuition Institute Pty Limited2
Skinner Macarounas Pty Limited2
Perpetual US Holding Company, Inc
Perpetual Asset Management UK Limited
Trillium Asset Management UK Limited
Perpetual Europe Holding Company B.V.
Jacaranda Financial Planning Ltd
Perpetual Asia – Hong Kong Limited
Perpetual Finance UK Ltd
Pendal Group Limited7
Entities under the control of Perpetual Finance UK Ltd
Barrow Hanley Concentrated Emerging Markets Fund
Trillium ESG Global Conviction Fund
Barrow Hanley US ESG Value Opportunities Fund
BENEFICIAL INTEREST
2023
%
2022
%
COUNTRY OF
INCORPORATION AND
PRINCIPAL PLACE OF
BUSINESS
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
–
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
UK
UK
Netherlands
Australia
Hong Kong
UK
Australia
UK
UK
UK
Perpetual Group Annual Report 2023 145
BENEFICIAL INTEREST
2023
%
2022
%
COUNTRY OF
INCORPORATION AND
PRINCIPAL PLACE OF
BUSINESS
100
100
100
100
100
100
100
100
100
100
50
100
100
100
–
100
100
100
100
100
100
100
Netherlands
–
–
–
–
–
–
–
–
–
–
100
100
100
100
100
100
100
100
100
–
Australia
Australia
Singapore
UK
UK
Ireland
USA
USA
USA
USA
Singapore
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Singapore
Singapore
NAME OF COMPANY
Entities under the control of Perpetual Europe Holding Company B.V
Perpetual Nertherlands B.V.
Entities under the control of Pendal Group Limited7
Pendal Institutional Limited7
Pendal Fund Services Limited7
JOHCM (Singapore) PTE. Limited7
JOHCM Funds (UK) Limited7
J O Hambro Capital Management Limited7
JOHCM Funds (Ireland) Limited7
Pendal USA Inc.7
Entities under the control of Pendal USA Inc.7
JOHCM (USA) Inc.7
Thompson, Siegel & Walmsley LLC7
Entities under the control of Thompson, Siegel & Walmsley LLC7
WPS Capital Management, LLC7
Entities under the control of The Trust Company Limited
Perpetual (Asia Holdings) Pte. Ltd.
The Trust Company (Australia) Limited
The Trust Company (UTCCL) Limited
Perpetual CT (Asia) Limited8
Entities under the control of The Trust Company (Australia) Limited
The Trust Company (Nominees) Limited
The Trust Company (PTAL) Limited
The Trust Company (RE Services) Limited
Entities under the control of The Trust Company (RE Services) Limited
The Trust Company (Sydney Airport) Limited
Entities under the control of Perpetual (Asia Holdings) Pte. Ltd.
Perpetual (Asia) Limited
Perpetual Wealth Management PTE. Limited9
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 146
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-3 Controlled entities continued
BENEFICIAL INTEREST
NAME OF COMPANY
Entities under the control of Perpetual US Holding Company, Inc
Trillium Asset Management Group, LLC
Perpetual US Services, LLC
Perpetual US TDC, LLC
Barrow Hanley Mewhinney & Strauss, LLC
BHMS Investment GP, LLC
Entities under the control of Trillium Asset Management Group, LLC
Trillium Asset Management, LLC
Trillium Impact GP, LLC
Entities under the control of Perpetual US TDC, LLC
Barrow Hanley Concentrated Emerging Markets ESG Opportunities Fund10
Barrow Hanley Emerging Markets Value Fund
Entities under the control of Barrow Hanley Mewhinney & Strauss, LLC
BH Credit Holdings GP, LLC
BH Credit Management, LLC
Barrow Hanley Holding GP, LLC
Associates
Loan RQ Ltd3
2023
%
100
100
100
77
100
100
100
–
71
100
100
100
–
COUNTRY OF
INCORPORATION AND
PRINCIPAL PLACE OF
BUSINESS
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
2022
%
100
100
100
74
100
100
100
50
100
–
–
–
26
Australia
1. Entities in bold are directly owned by Perpetual Limited.
2. A small proprietary company as defined by the Corporations Act 2001 and is not required to be audited for statutory purposes.
3. Loan RQ Ltd was deregistered on 27 November 2022.
4. Perpetual Trustee Company Limited has a branch operation in New Zealand known as Perpetual Trustee Company Limited (New Zealand branch).
5. Company is a party to the Deed of Cross Guarantee as noted in section 5-4.
6.
Indirectly owned through PLS Charitable Trust Fund.
7. Pendal Group and its related entities were acquired on 11 January 2023.
8. Perpetual CT (Asia) Limited was deregistered on 17 March 2023.
9. Perpetual Wealth Management PTE. Limited was incorporated on 5 August 2022.
10. Barrow Hanley Concentrated Emerging Markets ESG Opportunities Fund ceased to be a controlled entity in December 2022.
Perpetual Group Annual Report 2023 147
5-4 Deed of cross guarantee
Perpetual Limited and certain wholly owned subsidiaries listed below (collectively, ‘the Closed Group’) have entered into a Deed
of Cross Guarantee (‘the Deed’) effective 29 June 2017. The effect of the Deed is that Perpetual Limited has guaranteed to pay any
deficiency in the event of a winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001.
The subsidiaries have also given a similar guarantee in the event that Perpetual Limited is wound up.
Pursuant to ASIC Corporations (wholly owned companies) Instrument 2016/785 (‘Instrument’), the wholly owned subsidiaries noted
below within the Closed Group are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of
their financial reports.
The subsidiaries to the Deed forming the Closed Group are;
– Perpetual Trustees Consolidated Limited
– Perpetual Trustee Company (Canberra) Limited
– Perpetual Trustees Victoria Limited
– Perpetual Trustees Queensland Limited
– Perpetual Trustees WA Limited
– Perpetual Australia Pty Limited
– Perpetual Acquisition Company Limited
– Australian Trustees Limited
A summarised Consolidated Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of Financial
Position comprising the Closed Group as at 30 June 2023 are set out below.
Revenue
Expenses
Financing costs
Net profit before tax
Income tax benefit
Net profit after tax
Other comprehensive income, net of income tax
Total comprehensive income
Total comprehensive income attributable to:
Equity holders of the Company
YEAR ENDED
30 JUNE 2023
$M
YEAR ENDED
30 JUNE 2022
$M
404.4
(82.2)
(37.9)
284.3
23.0
307.3
–
307.3
97.3
(42.9)
(8.1)
46.3
14.7
61.0
–
61.0
307.3
61.0
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 148
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-4 Deed of cross guarantee continued
Current assets
Cash and cash equivalents
Receivables
Current tax assets
Structured Products – EMCF assets
Prepayments
Other assets
Total current assets
Non-current assets
Prepayments
Other financial assets
Property, plant and equipment
Intangibles
Deferred tax assets
Other assets
Total non-current assets
Total assets
Current liabilities
Payables
Structured Products – EMCF liabilities
Employee benefits
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Employee benefits
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2023
$M
34.2
178.8
21.1
163.9
17.0
0.8
2022
$M
65.9
278.4
4.1
186.3
5.8
–
415.8
540.5
2.7
–
3,075.6
1,083.9
46.8
0.4
35.5
–
3,161.0
3,576.8
175.3
164.2
62.8
12.1
2.3
53.3
–
38.9
0.9
1,177.0
1,717.5
288.7
187.7
69.3
11.7
–
416.7
557.4
734.4
258.4
1.5
12.4
27.5
4.7
780.5
1,197.2
2,379.6
2,195.0
(3.4)
188.0
–
17.0
37.9
4.6
317.9
875.3
842.2
817.7
7.3
17.2
2,379.6
842.2
Perpetual Group Annual Report 2023 149
5-5 Unconsolidated structured entities
Perpetual Limited and its subsidiaries have interests in various structured entities that are not consolidated. A structured entity is
an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity,
such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual
arrangements.
Perpetual has an interest in a structured entity when the Company has a contractual or non‑contractual involvement that exposes
it to variable returns from the performance of the entity. The Company’s interest includes investments held in securities or units
issued by these entities and fees earned from management of the assets within these entities.
Information on the Company’s interests in unconsolidated structured entities as at 30 June is as follows:
INVESTMENT FUNDS – COMPANY MANAGED
Year ended 30 June 2023
Statement of Financial Position line item
Other financial assets – non‑current
Year ended 30 June 2022
Statement of Financial Position line item
Other financial assets – non‑current
CARRYING
AMOUNT
$M
MAXIMUM
EXPOSURE
TO LOSS1
$M
189.8
186.5
96.7
98.3
1. The maximum exposure to loss is the maximum loss that could be recorded through profit and loss as a result of the involvement with these entities.
Company managed investment funds
The Company manages unlisted unit trusts and investment funds through asset management subsidiaries. Control over these
managed unlisted unit trusts and investment funds may exist since the Company has power over the activities of the funds.
However, these unlisted unit trusts and investment funds have not been consolidated because the Company does not have the
ability to affect the level of returns and is not exposed to significant variability in returns from the funds. The Company earns
management fees from the management of these unlisted unit trusts and investment funds which are commensurate with
the services provided and are reported in revenue from the provision of services. Management fees are generally based on the
value of the AUM. Therefore, the fees earned are impacted by the composition of the AUM and fluctuations in financial markets.
The revenue earned is included in revenue from the provision of services in section 1‑2.
Unlisted unit trusts and investment funds are investment vehicles that consist of a pool of funds collected from several investors
for the purpose of investing in securities such as money market instruments, debt securities, equity securities and other similar
assets. For all unlisted unit trusts and investment funds, the Company’s maximum exposure to loss is equivalent to the cost of
the investment in the fund. Unlisted unit trusts and investment funds are generally financed through the issuance of fund units.
5-6 Share-based payments
i. Employee share schemes
(a) Long-term Incentive Plan (LTI)
Management and specialist employees may be eligible to receive ordinary shares in the Company on an annual basis as part of their
variable remuneration. The vesting conditions are continued employment and minimum individual performance requirements.
The vesting period is three years.
(b) One Perpetual Share Plan (OPSP)
The OPSP awards eligible employees with annual grants of up to $1,000 worth of Perpetual shares subject to the Company meeting
its net profit after tax target. Shares granted under the OPSP cannot be sold or transferred until the earlier of three years from the
date the shares are allocated or cessation of employment. Employees who are granted shares have full dividend and voting rights
during this time.
For financial accounting purposes, shares granted under the OPSP are deemed to vest immediately because there is no risk of
forfeiture. Accordingly, the fair value of the grant is recognised as an expense over the performance period with the corresponding
entry directly in equity.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 150
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-6 Share-based payments continued
i. Employee share schemes continued
(c) Perpetual Asset Manager Deferred Short-term Incentive
Investment managers are paid a combination of fixed and variable reward in the form of cash and mandatory deferred ordinary
shares in the Company. The vesting condition is continued employment. The vesting period is up to three years.
(d) Pendal Australia Boutique Variable Reward Scheme
Eligible fund managers receive variable remuneration based on a profit share arrangement directly attributed to the boutique,
with a portion of the variable reward deferred into ordinary shares in the Company. The vesting condition is continued employment.
The vesting period is up to five years.
(e) Pendal Australia/JOHCM Corporate Variable Reward Scheme
Management employees are paid a combination of fixed and variable reward in the form of cash and mandatory deferred ordinary
shares in the Company. The vesting condition is continued employment. The vesting period is up to five years.
(f)
JOHCM/TSW Fund Manager Variable Reward Scheme
Eligible fund managers receive variable remuneration based on a revenue share arrangement with a portion of the variable reward
deferred into ordinary shares in the Company. The vesting condition is continued employment. The vesting period is up to five years.
(g) New and existing employee grants
New and existing employees may receive one‑off grants of deferred ordinary shares for retention. The vesting condition is continued
employment. The vesting period is up to three years.
Details of the movement in employee shares
All shares granted during the year were issued at market price. The number of shares granted is determined by dividing the value
of the grant by the VWAP of Perpetual shares traded on the ASX in the five business days up to and including the grant date.
Dividends on employee shares are either received directly by the employees or held in the share plan bank account depending
on the likelihood of the shares vesting.
During the year, $39,245,074 (2022: $13,531,639) of amortisation relating to shares, performance rights and share rights was
recognised as an expense with the corresponding entry directly in equity.
The following table illustrates the movement in employee shares during the financial year:
NUMBER
2023
2022
OPENING
BALANCE
1 JULY
VESTED
SHARES
SHARES
PURCHASED
ON MARKET
SHARES
ISSUED
ON MARKET
ACQUISITION
OF EMPLOYEE
BENEFITS
TRUST (EBT)
FORFEITED
SHARES
GRANTED
SHARES1
CLOSING
BALANCE AT
30 JUNE
651,437
(434,267)
861,648
840,000
(282,387)
(3,146,196)
3,146,196
1,636,431
615,080
(366,205)
402,562
–
–
(204,479)
204,479
651,437
1. Granted shares includes replacement awards issued in connection with the acquisition of Pendal Group.
ii. Rights
(a) Long-Term Incentive (LTI)
Management and specialist employees may be eligible to receive performance Rights on an annual basis as part of their variable
remuneration. The vesting conditions are continued employment and minimum individual performance requirements. The vesting
period is three years.
(b) Executive KMP Variable Incentive Plan
Executive KMP are eligible to receive variable remuneration in the form of Performance Rights on an annual basis, subject to
performance against Company and individual scorecards. The vesting conditions are continued employment and performance
hurdles based on total shareholder return (TSR). The vesting period is up to four years.
(c) Executive KMP Growth Incentive
A one‑off award of Performance Rights to Executive KMP in FY23 as a retention incentive. The vesting conditions are continued
employment and performance hurdles based on TSR. The vesting period is up to five years.
Perpetual Group Annual Report 2023 151
(d) New and existing employee grants
New and existing employees may receive one‑off grants of Performance Rights for retention. The vesting condition is continued
employment. The vesting period is up to three years.
Detail of movement in rights
During the year, the Company granted $52,155,190 (30 June 2022: $11,057,375) of Share Rights and Performance Rights.
Share Rights are granted to Executives under the Variable Incentive Plan. The number of Share Rights granted is determined by
dividing the value of the grant by the VWAP of Perpetual shares traded on the ASX in the five business days up to and including
the grant date.
Performance Rights are granted to eligible employees under the LTI Plan. The number of Performance Rights granted is
determined by dividing the value of the LTI grant by the VWAP of Perpetual shares traded on the ASX in the five business days up
to and including the grant date, discounted for the non‑payment of dividends during the performance period, as calculated by an
independent external adviser.
Performance Rights and Share Rights do not receive dividends or have voting rights until they have vested and have been
converted into Perpetual shares.
30 JUNE 2023
MOVEMENT IN NUMBER OF RIGHTS GRANTED
GRANT DATE
VEST
DATE
EXPIRY DATE
TSR HURDLE
OR NON-TSR
HURDLE
ISSUE PRICE
1 JULY 2022
GRANTED
FORFEITED
VESTED
Oct 2017
Oct 2020
Sep 2032
Non TSR
$44.64
2,989
Jul 2018
Jul 2018
Jul 2018
Jul 2018
Sep 2021
Sep 2034
Non TSR
$28.70
44,864
Sep 2022
Sep 2034
TSR
Oct 2022
Oct 2034
Non TSR
Sep 2023
Sep 2034
TSR
$8.22
$31.53
$8.40
5,276
11,131
5,275
Sep 2018
Sep 2020
Sep 2033
Non TSR
$37.03
30,951
Oct 2018
Oct 2021
Oct 2033
Non TSR
$34.97
140,416
Jul 2019
Jul 2019
Sep 2023
Sep 2035
Sep 2024
Sep 2035
TSR
TSR
$12.30
52,034
$12.63
52,031
Oct 2019
Oct 2022
Oct 2034
Non TSR
$31.53
157,766
Oct 2020
Oct 2023
Oct 2030
Non TSR
$23.82
284,912
Jul 2020
Sep 2023
N/A1
Jul 2020
Sep 2024
N/A1
Jul 2020
Sep 2025
N/A1
Oct 2021
Oct 2024
N/A1
Dec 2021
Dec 2024
N/A1
Sep 2022
Aug 2024
N/A1
Sep 2022
Aug 2025
N/A1
Sep 2022
Aug 2025
N/A1
Sep 2022
Aug 2025
N/A1
Sep 2022
Sep 2025
N/A1
Sep 2022
Aug 2026
N/A1
Sep 2022
Aug 2026
N/A1
Sep 2022
Aug 2026
N/A1
Sep 2022
Sep 2026
N/A1
Sep 2022
Aug 2027
N/A1
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
TSR
TSR
TSR
TSR
TSR
TSR
TSR
TSR
TSR
TSR
$33.72
56,701
$19.93
28,349
$16.88
28,349
$32.66
237,210
$34.43
$22.50
$6.94
$8.44
$13.30
$8.44
$6.55
$7.85
$11.26
$7.85
$6.16
4,646
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
101,036
52,434
161,043
53,212
44,942
56,565
173,734
53,215
48,484
61,162
OUTSTANDING
AT 30 JUNE
2023
1,869
44,864
–
–
–
–
–
52,034
52,031
–
222,113
56,701
28,349
28,349
–
–
(5,276)
(1,120)
–
–
–
(11,131)
(5,275)
–
–
–
–
–
(30,951)
(140,416)
–
–
(4,870)
(152,896)
(45,301)
(17,498)
–
–
–
–
–
–
(51,452)
(5,948)
179,810
(1,452)
(1,258)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,936
101,036
52,434
161,043
53,212
44,942
56,565
173,734
53,215
48,484
61,162
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 152
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-6 Share-based payments continued
ii. Rights continued
Detail of movement in rights continued
30 JUNE 2023
MOVEMENT IN NUMBER OF RIGHTS GRANTED
GRANT DATE
VEST
DATE
EXPIRY DATE
TSR HURDLE
OR NON-TSR
HURDLE
ISSUE PRICE
1 JULY 2022
GRANTED
FORFEITED
VESTED
OUTSTANDING
AT 30 JUNE
2023
Sep 2022
Aug 2027
N/A1
Sep 2022
Sep 2027
N/A1
Oct 2022
Oct 2025
Mar 2023
Jul 2023
N/A1
N/A1
Mar 2023
Mar 2024
N/A1
Mar 2023
Jul 2024
N/A1
Mar 2023
Sep 2025
N/A1
Oct 2022
Oct 2025
N/A1
Mar 2023
Sep 2025
N/A1
Mar 2023
Sep 2026
N/A1
Mar 2023
Sep 2027
N/A1
Mar 2023
Oct 2023
N/A1
Mar 2023
Oct 2024
N/A1
Mar 2023
Oct 2025
Mar 2023
Oct 2026
Mar 2023
Oct 2027
Mar 2023
Jul 2024
Mar 2023
Jan 2026
Jun 2023
Jul 2024
Jun 2023
Jan 2026
N/A1
N/A1
N/A1
N/A1
N/A1
N/A1
N/A1
TSR
TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
TSR
TSR
TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
$7.28
$7.28
$23.47
$24.37
$23.24
$22.70
$20.65
$24.842
$6.23
$5.96
$5.64
$24.842
$24.842
$24.842
$24.842
$24.842
$24.842
$24.842
$24.842
$24.842
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
187,853
52,424
67,527
135,436
52,685
118,938
59,327
16,490
22,471
24,242
26,212
10,386
10,386
3,026
2,295
1,828
532,678
596,905
49,400
55,357
–
–
(67,527)
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,346)
(4,870)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
187,853
52,424
–
135,436
52,685
118,938
59,327
16,490
22,471
24,242
26,212
10,386
10,386
3,026
2,295
1,828
528,332
592,035
49,400
55,357
1. Rights either vest or are forfeited on the vesting date, or part of new scheme terms, hence there is no expiry date.
2. The replacement awards included restricted, unhurdled share rights which entitle holders to ordinary shares following their vesting date. The fair value of these
awards were measured by reference to the fair value of the equity instruments at the acquisition date, being 11 January 2023. The fair value calculation was
performed by an external valuation expert and determined using the Black Scholes Model and other market-based valuation techniques, taking into account
the terms and conditions upon which the replacement awards were granted. Since the rights permit dividend entitlement, the fair value of these awards is
equal to the share price of Perpetual on the acquisition date, being $24.84. Refer to 2-1 Business Combinations for more information.
1,142,900
2,831,693
(190,369)
(361,218)
3,423,006
Perpetual Group Annual Report 2023 30 JUNE 2022
MOVEMENT IN NUMBER OF RIGHTS GRANTED
GRANT DATE
VEST
DATE
EXPIRY DATE
TSR HURDLE
OR NON-TSR
HURDLE
ISSUE PRICE
1 JULY 2021
GRANTED
FORFEITED
VESTED
Oct 2016
Oct 2019
Sep 2031
Non TSR
$39.40
1,776
Sep 2017
Sep 2019
Sep 2032
Non TSR
$46.93
21,386
Oct 2017
Oct 2020
Sep 2032
Non TSR
$44.64
6,013
Jul 2018
Sep 2021
Sep 2034
Non TSR
$28.70
44,864
Jul 2018
Sep 2022
Sep 2034
TSR
Jul 2018
Oct 2022
Oct 2034
Non TSR
Jul 2018
Sep 2023
Sep 2034
TSR
$8.22
$31.53
$8.40
5,276
11,131
5,275
Sep 2018
Sep 2020
Sep 2033
Non TSR
$37.03
30,951
Oct 2018
Oct 2021
Oct 2033
Non TSR
$34.97
246,288
Jul 2019
Sep 2023
Sep 2035
Jul 2019
Sep 2024
Sep 2035
TSR
TSR
Oct 2019
Oct 2021
Oct 2034
Non TSR
$12.30
52,034
$12.63
$33.64
52,031
13,811
Oct 2019
Oct 2022
Oct 2034
Non TSR
$31.53
171,487
Oct 2020
Oct 2023
Oct 2030
Non TSR
$23.82
305,280
–
–
–
–
–
–
–
–
–
–
–
–
–
–
153
OUTSTANDING
AT 30 JUNE
2022
–
–
2,989
44,864
5,276
11,131
5,275
30,951
–
–
–
–
–
–
–
–
(1,776)
(21,386)
(3,024)
–
–
–
–
–
(2,593)
(103,279)
140,416
–
–
–
–
(1,039)
(12,772)
52,034
52,031
–
(11,303)
(2,418)
157,766
(18,992)
(1,376)
284,912
Jul 2020
Sep 2023
Jul 2020
Sep 2024
Jul 2020
Sep 2025
Oct 2021
Oct 2024
Dec 2021
Dec 2024
N/A1
N/A1
N/A1
N/A1
N/A1
Non TSR
Non TSR
Non TSR
Non TSR
Non TSR
$33.72
$19.93
$16.88
$32.66
$34.43
–
–
–
–
–
56,701
28,349
28,349
–
–
–
243,177
(5,967)
4,646
–
–
–
–
–
–
56,701
28,349
28,349
237,210
4,646
967,603
361,222
(39,894)
(146,031)
1,142,900
1. Rights either vest or are forfeited on the vesting Date, or part of new scheme terms, hence there is no expiry date.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 154
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-6 Share-based payments continued
ii. Rights continued
The fair value of services received in return for Performance Rights and Share Rights granted is based on the fair value of rights
granted, measured using a face value approach for scorecard performance conditions, Monte Carlo simulation for TSR performance
conditions and the Black Scholes option pricing formula for share rights and EPS performance conditions, with the following inputs:
VALUATION
DATE
1 OCT 2016
VALUATION
DATE
1 SEP 2017
VALUATION
DATE
1 OCT 2017
VALUATION
DATE
1 SEPT 2018
VALUATION
DATE
1 OCT 2018
VALUATION
DATE
1 OCT 2018
VALUATION
DATE
1 OCT 2018
VALUATION
DATE
1 SEP 2019
VALUATION
DATE
1 SEP 2019
Performance period
3 years
2 years
3 years
2 years
Share price ($)
46.28
54.70
51.94
43.89
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
5.5
N/A
N/A
5.1
25
N/A
5.2
N/A
N/A
6.4
20
N/A
1 year
42.40
6.6
N/A
1.93
2 years
3 years
42.40
42.40
6.6
N/A
2.00
6.6
N/A
2.07
1 year
35.55
6.5
30
0.70
2 years
35.55
6.7
30
0.70
VALUATION
DATE
1 SEP 2019
VALUATION
DATE
1 OCT 2019
VALUATION
DATE
1 OCT 2019
VALUATION
DATE
1 OCT 2019
VALUATION
DATE
1 SEP 2020
VALUATION
DATE
1 SEP 2020
VALUATION
DATE
1 OCT 2020
VALUATION
DATE
1 OCT 2020
VALUATION
DATE
1 OCT 2020
Performance period
3 years
Share price ($)
Dividend yield (%)
Expected volatility (%)
35.55
6.7
30
Risk free interest rate (%)
0.70
1 year
37.85
5.7
N/A
N/A
2 years
3 years
3 years
4 years
37.85
37.85
30.62
30.62
5.9
N/A
N/A
6.1
N/A
N/A
5.5
40
0.27
5.5
40
0.39
1 year
28.40
5.0
N/A
N/A
2 years
3 years
28.40
28.40
5.5
N/A
N/A
5.9
N/A
N/A
VALUATION
DATE
1 SEP 2021
VALUATION
DATE
1 SEP 2021
VALUATION
DATE
1 SEP 2021
VALUATION
DATE
1 SEP 2022
VALUATION
DATE
1 SEP 2022
VALUATION
DATE
1 SEP 2022
VALUATION
DATE
1 SEP 2022
VALUATION
DATE
1 SEP 2022
VALUATION
DATE
1 SEP 2022
Performance period
2 years
3 years
4 years
2 years
3 years
4 years
3 years
4 years
5 years
Share price ($)
41.66
41.66
41.66
27.06
27.06
27.06
27.06
27.06
27.06
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
4.8
30
0.01
5.0
30
5.0
30
0.44
0.44
6.8
28
3.02
7.2
28
3.31
7.2
28
3.36
6.3
31
3.28
6.3
31
3.37
6.3
31
3.43
Performance period
Share price ($)
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
VALUATION
DATE
20 OCT 2022
VALUATION
DATE
20 OCT 2022
VALUATION
DATE
20 OCT 2022
VALUATION
DATE
1 MAR 2023
VALUATION
DATE
1 MAR 2023
VALUATION
DATE
1 MAR 2023
2.9 years
3.9 years
4.9 years
3 years
4 years
5 years
24.89
24.89
24.89
24.48
24.48
24.48
6.3
31
3.57
6.3
31
3.67
6.3
31
3.75
6.6
31
3.51
6.6
31
3.50
6.6
31
3.53
Perpetual Group Annual Report 2023 155
Critical accounting assumptions and estimates
The cost of equity‑settled share‑based payments is measured by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value calculation is performed by an external valuation expert and is determined using the Black
Scholes Model and Binomial/Monte‑Carlo simulation valuation techniques and other market‑based valuation techniques, taking
into account the terms and conditions upon which the equity instruments were granted. The valuation methodologies involve a
number of judgements and assumptions which may affect the share‑based payment expense taken to profit and loss and equity.
The tax effect of the excess of estimated future tax deductions for share‑based payments over the related cumulative remuneration
expense is recognised directly in equity. The estimated future tax deduction is based on the share price of ordinary shares in the
Company at balance date in accordance with AASB 112 Income Taxes.
Accounting policies
Employee share purchase plans
Share incentive programs allow employees to acquire shares in the Company. The fair value of shares and/or rights granted under
these programs is recognised as an employee expense with a corresponding increase in equity. Fair value is measured at grant
date and amortised over the period during which employees become unconditionally entitled to the shares.
The fair value of the rights granted is measured using a binomial model, taking into account the terms and conditions upon which
the rights were granted. The amount recognised as an expense is adjusted to reflect the actual number of rights that vest except
where forfeiture is due to share prices not achieving their threshold for vesting.
Deferred staff incentives
The Company grants certain employees shares under long‑term incentive, short‑term incentive and retention plans. Under these
plans, shares vest to employees over relevant vesting periods. To satisfy the long‑term incentives granted, the Company purchases
or issues shares under the LTI Plan.
The fair value of the shares granted is measured by the share price adjusted for the terms and conditions upon which the shares
were granted. This fair value is amortised on a straight‑line basis over the applicable performance and vesting period.
The consolidated entity makes estimates of the number of shares that are expected to vest. Where appropriate, revised estimates
are reflected in profit or loss with the corresponding adjustment to the equity compensation reserve. Where shares containing a
market linked hurdle do not vest, due to total shareholder return not achieving the threshold for vesting, an adjustment is made
to retained earnings and equity compensation reserve.
Rights
Performance Rights and Share Rights are issued for the benefit of eligible Perpetual employees pursuant to the LTI Plan.
Unlike Perpetual’s other employee share plans, there will be no treasury shares issued to employees at the rights grant date.
Over the vesting period of the rights, an equity remuneration expense will be amortised to the equity compensation reserve based
on the fair value of the rights at the grant date.
On vesting, the intention is to settle the rights with available treasury shares. A fair value adjustment between contributed equity
and treasury shares will be recognised to revalue the recycled shares to the fair value of the rights at the vesting date.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 156
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-7 Key management personnel and related parties
The Executive and Non‑executive KMP of Perpetual Limited during the period were as follows:
NAME
Executive KMP
Rob Adams
Alexandra Altinger
Amanda Gazal
Amanda Gillespie
Chris Green
David Lane
Mark Smith
Richard McCarthy
Sam Mosse
Non-executive KMP
Tony D’Aloisio
Christopher Jones
Craig Ueland
Fiona Trafford‑Walker
Gregory Cooper
Ian Hammond
Kathryn Matthews
POSITION
TERM AS KMP IN FY23
Chief Executive Officer and Managing Director
Chief Executive, UK, Europe and Asia (EUKA)
Full year
Partial Year1
Chief Integration Officer
Chief Executive, Asset Management Australia
Chief Financial Officer
Chief Executive, Americas
Chief Executive, Wealth Management
Chief Executive, Corporate Trust
Chief Risk and Sustainability Officer
Chairman
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Partial Year3
Partial Year2
Full year
Full year
Full year
Partial Year3
Full year
Full year
Mona Aboelnaga Kanaan
Independent Director
Nancy Fox
Independent Director
1. Alexandra Altinger joined as a KMP of Perpetual Limited on 23 January 2023 following the completion of the Pendal Group acquisition.
2. Craig Ueland retired as an independent Director of Perpetual Limited on 24 January 2023.
3. Kathryn Matthews and Christopher Jones joined as Independent Directors of the Perpetual Limited Board on 24 January 2023 following the completion of the
Pendal Group acquisition.
Total compensation of key management personnel
Short‑term
Post‑employment
Share‑based
Other long‑term
Termination benefits
Total
Related party disclosures
2023
$
2022
$
9,401,657
9,159,692
285,977
292,886
4,725,475
2,047,581
125,983
266,800
77,501
–
14,805,892
11,577,660
Executives have not entered into material contracts with the Company or a member of the consolidated entity since the end of the
previous financial year and there were no material contracts involving key management personnel’s interests existing at year end.
Perpetual services and products, including financial advice by Wealth Management, are made available to Directors and KMP on
normal commercial terms consistent with other employees and clients.
Controlled entities and associates
The consolidated entity has a related party relationship with its KMP (see Remuneration Report).
Business transactions with related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
Perpetual Group Annual Report 2023
5-8 Auditor’s remuneration
Audit and review services
Auditors of the Group – KPMG Australia
Audit and review of financial statements – Group
Audit and review of financial statements – Controlled entities
Audit and review of financial statements – Perpetual funds1
Audit and review of financial statements – Administrator or Trustee2
Overseas KPMG Firms
Audit and review of financial statements – Group
Audit and review of financial statements – Controlled entities
Audit and review of financial statements – Perpetual funds1
Total audit and review services
Assurance services
Auditors of the Group – KPMG Australia
Regulatory assurance services
Assurance over internal controls reports
Sustainability assurance services
Other assurance services
Overseas KPMG Firms
Regulatory assurance services
Other assurance services
Total Assurance Services
Other services3
Auditors of the Group – KPMG Australia
Advisory Services
Transactional services
Other non‑assurance services
Overseas KPMG Firms
Other non‑assurance services
Total Other Services
157
2023
$
2022
$
1,767,620
852,443
315,019
205,961
1,944,319
1,992,612
445,221
396,797
4,472,179
3,447,813
592,480
964,656
469,080
194,513
304,515
–
2,026,216
499,028
6,498,395
3,946,841
414,729
255,426
433,678
436,645
95,000
36,048
–
33,533
979,455
725,604
514,286
112,873
21,160
23,164
627,159
44,324
1,606,614
769,928
46,058
242,130
64,693
153,558
–
35,755
352,881
189,313
55,053
55,053
–
407,934
189,313
8,512,943
4,906,082
1. These fees are incurred by the consolidated entity on behalf of managed funds and superannuation funds for which Perpetual Investment Management
Limited and Perpetual Superannuation Limited act as responsible entity or trustee for and are recovered from the funds via management fees.
2. These fees are incurred as part of the audit of the Group by the consolidated entity on behalf of external funds for which the consolidated entity act as
administrator or trustee for and are recovered from the funds via management fees.
3. Other services primarily relate to the provision of risk and controls gap analysis and agreed upon procedures.
Non‑audit services paid to KPMG are in accordance with the Company’s auditor independence policy as outlined in Perpetual’s
Corporate Responsibility Statement.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report
158
Notes to and forming part of the financial statements
for the year ended 30 June 2023
5-9 Subsequent events
A final 40% franked dividend of 65 cents per share was declared on 24 August 2023 and is to be paid on 29 September 2023.
Perpetual announced the impact of a decision made in June 2023 regarding the establishment of a global asset management
division. The current regional asset management businesses have come together to form one global division, which will be led by a
newly created role of Chief Executive, Asset Management. Rob Adams will assume the dual role of Perpetual Group CEO and Chief
Executive, Asset Management. This change means that the regional chief executive roles for Europe and UK (EUKA), and the Americas
are no longer needed. Amanda Gillespie will continue to lead asset management in Australia as part of the global asset management
leadership team reporting to Rob.
Other than the matters noted above, the Directors are not aware of any other event or circumstance since the end of the financial
year not otherwise dealt with in this report that has affected or may significantly affect the operations of the consolidated entity,
the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.
Perpetual Group Annual Report 2023 159
Section 6 – Basis of preparation
This section sets out Perpetual’s accounting policies that relate to the financial statements as a whole. Where an
accounting policy is specific to a single note, the policy is described in the note to which it relates. This section also shows
new accounting standards, amendments and interpretations, and whether they are effective in 2023 or later years.
We explain how these changes are expected to impact the financial position and performance of Perpetual.
6-1 Reporting entity
Use of judgements and estimates
Perpetual Limited (‘the Company’) is domiciled in Australia.
The consolidated financial report of the Company as at and for
the year ended 30 June 2023 comprises the Company and its
controlled entities (together referred to as ‘the consolidated
entity’) and the consolidated entity’s interests in associates.
Perpetual is a for‑profit entity and primarily involved in portfolio
management, financial planning, trustee, responsible entity
and compliance services, executor services, investment
administration and custody services.
The financial report was authorised for issue by the Directors
on 24 August 2023.
The Company is a public company listed on the Australian
Securities Exchange (ASX: PPT), incorporated in Australia and
operating in Australia, United States, United Kingdom, Republic
of Ireland, the Netherlands, Singapore and Hong Kong.
The consolidated annual report for the consolidated entity
as at and for the year ended 30 June 2023 is available at
perpetual.com.au.
6-2 Basis of preparation
i. Statement of compliance
The financial report is a general purpose financial report
prepared in accordance with Australian Accounting Standards
adopted by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001.
The financial report of the consolidated entity also complies with
International Financial Reporting Standards (IFRS) adopted by
the International Accounting Standards Board (IASB).
The preparation of the financial statements requires
management to make judgements, estimates and assumptions
that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised prospectively.
Financial markets are dealing with rising inflation and interest
rates impacting global economies and financial markets.
The consolidated entity continues to monitor the impact
of these factors on its operations, control environment and
financial reporting.
Management has evaluated whether there were any additional
areas of significant judgment or estimation uncertainty, assessed
the impact of market inputs and variables potentially impacted
by prevailing conditions on the carrying values of its assets
and liabilities, and considered the impact on the consolidated
entity’s financial statement disclosures. The consolidated entity’s
revenues have a high degree of exposure to market volatility
which has the potential to lead to a material financial impact.
The US and UK operations are similarly exposed to market
movements due to the nature of the business. Whilst this has
been factored into the preparation of the financial report, the
accounting policies and methodologies have been applied on
a consistent basis throughout the financial year. The Directors
and management continue to closely monitor developments
with a focus on potential financial and operational impacts as
developments arise.
Significant areas of estimation, uncertainty and critical
judgements in applying accounting policies are described below:
ii. Basis of preparation
(a) Judgements
Information about critical judgements in applying accounting
policies in accordance with Australian Accounting Standard
AASB 10 Consolidated Financial Statements is included in
section 5‑3 Controlled entities.
The consolidated financial statements have been prepared
on a historical cost basis, except for financial assets which are
measured at fair value.
The consolidated financial statements are presented in
Australian dollars, which is the functional currency of the
majority of the consolidated entity.
The Company is of a kind referred to in ASIC Corporations
Instrument 2016/191 dated 1 April 2016 and in accordance
with that Instrument, all financial information presented
in Australian dollars has been rounded to the nearest one
hundred thousand dollars, unless otherwise stated.
Where necessary, comparative information has been restated
to conform to changes in presentation in the current year.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 160
Notes to and forming part of the financial statements
for the year ended 30 June 2023
When measuring the fair value of an asset or a liability, the
consolidated entity uses market observable data as far as
possible. Fair values are categorised into different levels in a
fair value hierarchy based on the inputs used in the valuation
techniques as follows:
– Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
– Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
– Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in
its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
The consolidated entity recognises transfers between levels
of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in measuring
fair values is included in the following notes:
– Section 2‑6 Employee benefits
– Section 2‑7 Accrued incentive compensation
– Section 4‑1 Financial risk management
– Section 5‑1 Structured products assets and liabilities
– Section 5‑6 Share‑based payments
6-2 Basis of preparation continued
ii. Basis of preparation continued
(b) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties
that have a significant risk of resulting in a material adjustment
within the year ended 30 June 2023 are included in the
following notes:
– Section 1‑2 Revenue
– Section 1‑3 Expenses
– Section 1‑4 Income taxes
– Section 2‑1 Business combinations
– Section 2‑4 Intangibles
– Section 2‑5 Provisions
– Section 2‑6 Employee benefits
– Section 2‑7 Accrued incentive compensation
– Section 3‑5 Commitments and contingencies
– Section 4‑1 Financial risk management
– Section 5‑1 Structured products assets and liabilities
– Section 5‑6 Share‑based payments
The consolidated entity has considered the impact of prevailing
conditions specifically with respect to the recognition of
Expected Credit Losses (ECLs) on the consolidated entity’s
Receivables (Section 2‑2), Intangibles and the impairment of
Goodwill and Other intangible assets (Section 2‑4), Structured
products assets and liabilities (Section 5‑1), and Other financial
assets (Section 2‑3).
Whilst there has been an increase in the estimation uncertainty
and the application of further judgement within these areas,
they are not considered to have had a material financial impact
on these areas.
Measurement of fair values
A number of the consolidated entity’s accounting policies and
disclosures require the measurement of fair values for both
financial and non‑financial assets and liabilities.
The consolidated entity has an established control framework
with respect to the measurement of fair values. This includes
overseeing all significant fair value measurements.
Significant unobservable inputs and valuation adjustments
are regularly reviewed. If third party information, such as
broker quotes or pricing services, is used to measure fair
values, an assessment is made of the evidence obtained from
the third parties. This is used to support the conclusion that
such valuations meet the requirements of AASB 9 Financial
Instruments, including the level in the fair value hierarchy in
which such valuations should be classified.
Significant valuation issues are reported to the Audit, Risk
and Compliance Committee.
Perpetual Group Annual Report 2023 161
6-3 Other significant accounting policies
Significant accounting policies have been included in the
relevant notes to which the policies relate. Other significant
accounting policies are listed below:
Translation differences on financial assets and liabilities carried
at fair value are reported as part of their fair value gain or loss.
Translation differences on non‑monetary financial assets and
liabilities such as equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair value gain or loss.
i. Basis of consolidation
(a) Subsidiaries
Subsidiaries are entities controlled by the consolidated entity.
The consolidated entity controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the
date control commences until the date control ceases.
(b) Transactions eliminated on consolidation
Intra‑group balances and transactions, and any unrealised
income and expenses arising from intra‑group transactions,
are eliminated in preparing consolidated financial statements.
Unrealised gains arising from transactions with associates
are eliminated against the investment to the extent of the
consolidated entity’s interest in the associate. Unrealised losses
are eliminated in the same way as unrealised gains, but only to
the extent that there is no evidence of impairment. Gains and
losses are recognised when the contributed assets are consumed
or sold by the associates or, if not consumed or sold, when the
consolidated entity’s interest in such entities is disposed of.
(c) Collateralised loan obligation (CLO)
Perpetual holds an equity interest in a collateralised loan
obligation investment fund (the ‘Fund’) established to invest
its assets primarily in the economic equity interests of multiple
CLO transactions and warehouse facilities in connection
therewith. The Fund is managed by Barrow Hanley Credit
Management LLC (‘BH Credit’).
A significant judgement for Perpetual is whether the Group
controls the Fund and is therefore required to consolidate
the Fund in the results of the consolidated entity. Control is
determined based on the consolidated entity’s assessment
of decision making authority, rights held by other parties,
remuneration and exposure to returns.
In assessing whether the consolidated entity controls the Fund
it is necessary to consider whether the consolidated entity
acts in capacity of principal or agent for the Fund. In doing so,
the consolidated entity has assessed in combination, whether
the kick‑out rights of third‑party investors into the Fund are
substantive and the aggregate economic interest of the
consolidated entity into the Fund. Based on our assessment,
we have determined that the Fund does not require
consolidation into the Group.
ii. Foreign currency
(a) Foreign currency transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the profit or loss.
(b) Foreign operations
The results and financial position of subsidiaries that have a
functional currency different from the presentation currency
are translated into Australian dollars as follows:
– Assets and liabilities for each statement of financial position
item presented are translated at the closing rate at the date
of that statement of financial position.
– Income and expenses for each statement of
comprehensive income item are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions).
Foreign currency differences are recognised in other
comprehensive income. When an international operation is
disposed of, in part or in full, the relevant amount in the foreign
currency translation reserve is transferred to profit or loss or to
non‑controlling interest as part of the profit or loss on disposal.
iii. Payables
Payables are non‑interest‑bearing and are stated at amortised
cost, with the exception of contingent consideration recognised
in business combinations, which is recorded at fair value at the
acquisition date.
Contingent consideration recognised in business combinations
is classified as a financial liability and is subsequently remeasured
to fair value with changes in fair value recognised in profit or loss.
Impairment
iv.
(a) Financial assets (including receivables)
ECLs are a probability‑weighted estimate of credit losses.
Credit losses are measured as the difference between the
present value of the cash flows due to the entity in accordance
with the contract and the present value of cash flows that
the consolidated entity expects to receive.
The consolidated entity has applied the simplified approach
under AASB 9 to calculate expected credit losses for Receivables.
Under this approach, expected credit losses are calculated
based on the life of the instrument. During this process, the
probability of the non‑payment of the receivables is assessed
using the single loss rate approach.
Impairment losses on financial assets measured at amortised
cost are recognised in profit or loss and deducted from the
gross carrying amount of the assets. When a subsequent
event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profit or loss.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 162
Notes to and forming part of the financial statements
for the year ended 30 June 2023
6-3 Other significant accounting policies
v. Hedge accounting
A foreign currency exposure arises from a net investment in
subsidiaries that have a different functional currency from that
of the consolidated entity. The risk arises from the fluctuation
in spot exchange rates between the functional currency
of the subsidiaries and the consolidated entity’s functional
currency, which causes the amount of the net investment to
vary in the consolidated financial statements. This risk may
have a significant impact on the consolidated entity’s financial
statements. The consolidated entity’s policy is to hedge these
exposures only when not doing so would be expected to have
a significant impact on the regulatory capital ratios of the
Company and its subsidiaries.
The hedged risk in the net investment hedge is the variability
in the US dollar exchange rate against the Australian dollar
that will result in a reduction in the carrying amount of the
consolidated entity’s net investment in the subsidiaries.
An economic relationship exists between the hedged net
investment and hedging instrument due to the shared
foreign currency risk exposure.
The consolidated entity uses foreign currency denominated
debt as a hedging instrument. The consolidated entity
assesses effectiveness by comparing past changes in the
carrying amount of the debt that are attributable to a change
in the spot rate with past changes in the investment in the
foreign operation due to movement in the spot rate (the
offset method).
The consolidated entity’s policy is to hedge the net investment
only to the extent of the debt principal; therefore, the hedge
ratio is established by aligning the principal amount of the
debt with the carrying amount of the net investment that is
designated. There are no sources of ineffectiveness because
changes in the spot exchange rate are designated as the
hedged risk.
continued
Impairment continued
iv.
(b) Non-financial assets
The carrying amounts of the consolidated entity’s non‑financial
assets, other than deferred tax assets (see section 1‑4), are
reviewed at each reporting date to determine whether there
is any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated. For goodwill and
intangible assets that have indefinite lives or that are not yet
available for use, recoverable amount is estimated at each
reporting date.
The recoverable amount of an asset or cash‑generating unit is
the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre‑tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset. For the purpose of
impairment testing, assets that cannot be tested individually
are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups
of assets (the ‘cash‑generating unit’ or CGU).
Subject to an operating segment ceiling test, for the purposes
of goodwill impairment testing, CGUs to which goodwill has
been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill
is monitored for internal reporting purposes.
The consolidated entity’s corporate assets do not generate
separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is
determined for the CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of
an asset or its cash‑generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement
of Comprehensive Income. Impairment losses recognised in
respect of cash‑generating units are allocated first to reduce
the carrying amount of any goodwill allocated to the units
and then, to reduce the carrying amount of the other assets
in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognised in
prior periods are assessed at each balance sheet date for any
indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
Perpetual Group Annual Report 2023 163
6-4 Changes in significant accounting policies
Except as described below, the accounting policies applied in
these financial statements are the same as those applied in the
consolidated entity’s financial statements as at and for the year
ended 30 June 2022.
a.
Derivative financial instruments and
hedge accounting
The Group holds derivative financial instruments to hedge
its foreign currency risk exposures. Derivatives are initially
measured at fair value. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein
are generally recognised in profit or loss.
The Group designates certain derivatives as hedging
instruments to hedge the variability in cash flows associated
with highly probably forecast transactions arising from changes
in foreign exchange rates and non‑derivative financial liabilities
as hedges of foreign exchange risk on a net investment in a
foreign operation.
At inception of designated hedging relationships, the Group
documents the risk management objective and strategy
for undertaking the hedge. The Group also documents
the economic relationship between the hedged item and the
hedging instrument, including whether changes in cash flows
of the hedged item and hedging instrument are expected to
offset each other.
b. Cash flow hedges
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value
of the derivative is recognised in other comprehensive income
(OCI) and accumulated in the cash flow hedge reserve. The
effective portion of changes in the fair value of the derivative
that is recognised in OCI is limited to the cumulative change
in fair value of the hedged item, determined on a present value
basis, from inception of the hedge. Any ineffective portion
of changes in the fair value of the derivative is recognised
immediately in profit or loss.
6-5 New standards and interpretations
not yet adopted
There are no new standards, amendments to standards,
and interpretations effective for the first time in the current
financial period that would have a material impact to the
consolidated entity.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 164
Directors’ declaration
1. In the opinion of the Directors of Perpetual Limited (the ‘Company’):
(a) the consolidated financial statements and notes set out on pages 106 to 163, and the Remuneration Report in the Directors’
Report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. There are reasonable grounds to believe that the Company and the certain wholly owned subsidiaries identified in section 5‑3 will
be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee
between the Company and these entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Managing Director and the Chief Financial Officer for the financial year ended 30 June 2023.
4. The Directors draw attention to section 6‑2(i) to the consolidated financial statements which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Dated at Sydney this 24th day of August 2023.
Tony D’Aloisio
Chairman
Rob Adams
Chief Executive Officer & Managing Director
Perpetual Group Annual Report 2023
Independent Auditor’s Report
to the Members of Perpetual Limited
165
Independent Auditor’s Report
To the shareholders of Perpetual Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Perpetual Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:
• giving a true and fair view of the
Consolidated Entity’s financial position as
at 30 June 2023 and of its financial
performance for the year ended on that
date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at
30 June 2023;
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement
of changes in equity, and Consolidated statement
of cash flows for the year then ended;
• Notes including a summary of significant
accounting policies; and
• Directors’ Declaration.
The Consolidated Entity consists of the Company
and the entities it controlled at the year-end or from
time to time during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Consolidated Entity in accordance with the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to
our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
Key Audit Matters
The Key Audit Matters we identified are:
• Acquisition accounting;
• Valuation of goodwill;
• Revenue; and
• Employee remuneration.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.
126
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Independent Auditor’s Report
to the Members of Perpetual Limited
Acquisition accounting ($2,015.5m purchase consideration resulting in $906.2m in goodwill)
Refer to Section 2-1 ‘Business combinations’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
During the year, the Consolidated Entity
acquired 100% of Pendal Group Limited
(Pendal) for consideration of $2,015.5m,
resulting in the recognition of various assets
and liabilities including customer contracts,
brand intangible assets and goodwill.
This acquisition is considered to be a key audit
matter due to the:
• Size of the acquisition having a significant
impact on the Consolidated Entity’s financial
statements;
• Consolidated Entity’s judgement and
complexity relating to the items below, each
requiring significant audit effort from us to
assess:
−
the determination of the acquisition date
and consideration transferred, including
replacement share-based payment
awards, where the Consolidated Entity
engaged external accounting and
valuation experts to assist. We focussed
on the key inputs to the valuation
including the grant date share price on
valuation date and vesting periods;
−
−
the determination of the provisional fair
value of assets acquired and liabilities
assumed. We focussed on customer
contracts and brand intangible assets
acquired where the Consolidated Entity
engaged external valuation experts to
assess the fair value; and
the alignment of accounting policies
between Pendal and the Consolidated
Entity and consequential impacts on the
classification and measurement of
acquired assets and liabilities assumed.
• The Consolidated Entity’s valuation model
used to determine the provisional fair value
of acquired intangible assets is complex and
sensitive to changes in a number of key
assumptions. This drives additional audit
effort specific to the feasibility of these key
assumptions and consistency of application
to the Consolidated Entity’s strategy. The key
assumptions we focused on in the valuation
of intangible assets included forecast
revenues, forecast margins, discount rates
(weighted average cost of capital), attrition
Our procedures included:
• Evaluating the acquisition accounting by the
Consolidated Entity against the requirements of the
accounting standards.
• Reading the underlying transaction agreements to
understand the terms of the acquisition and nature
of the assets and liabilities acquired.
• Working with our technical accounting specialists,
we assessed the appropriateness of the acquisition
date in accordance with the requirements of the
accounting standards.
• Assessing the consideration transferred to acquire
Pendal based on the underlying transaction
agreements, facility drawdown notices and
statement from the registry of new shares issued.
• Considering the objectivity, competence and scope
of the Consolidated Entity’s external valuation
experts.
• In relation to the replacement share-based payment
awards:
− Working with our technical accounting
specialists, we assessed the appropriateness of
the accounting treatment for replacement share-
based payment awards against the
requirements of the accounting standards.
− Working with our valuation specialists, we
assessed the appropriateness of the valuation
methodology applied by the Consolidated
entity’s external experts against market practice
and the requirements of the accounting
standards.
− Working with our valuation specialists, we
assessed key inputs used by the Consolidated
entity’s external experts in their valuation of
replacement share-based payment awards, such
as the grant date share price and vesting period,
against the Consolidated Entity’s share price on
valuation date and vesting periods based on a
sample of share-based payment agreements
and underlying offer letters; and
− We recalculated the consideration transferred
based on our procedures above and compared
this to the consideration recorded in the
Financial Report by the Consolidated Entity.
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167
rates and royalty rates.
We involved our valuation and technical
accounting specialists to supplement our
senior audit team members in assessing this
key audit matter.
• Working with our technical accounting specialists,
we checked the alignment in accounting policies
between Pendal and the Consolidated Entity against
the requirements of the accounting standards and
the consequential impact on the classification and
measurement of acquired assets and liabilities
assumed by the Consolidated Entity.
• Working with our valuation specialists, we:
− Evaluated the valuation methodology used to
determine the provisional fair value of assets
acquired and liabilities assumed, considering
accounting standard requirements and
observed industry practices.
− Assessed the key assumptions in the
Consolidated Entity’s external valuation expert
report prepared in relation to the identification
and valuation of customer contracts and brand
intangible assets. We did this by:
checking forecast revenue and forecast
margin assumptions for consistency with
the Consolidated Entity’s valuation model
used as part of the pre-acquisition due
diligence process;
independently developing an attrition rate
considered comparable using publicly
available market data for comparable
entities, adjusted by risk factors specific to
the Consolidated Entity and the industry it
operates in;
independently developing a royalty rate
considered comparable using publicly
available market data for comparable
entities, adjusted by risk factors specific to
the Consolidated Entity and the industry it
operates in; and
independently developing a discount rate
range considered comparable using
publicly available market data for
comparable entities, adjusted by risk
factors specific to the Consolidated Entity
and the industry it operates in.
• We recalculated the goodwill balance recognised as
a result of the transaction and compared it to the
goodwill amount recorded by the Consolidated
Entity.
• We assessed the adequacy of disclosures in the
financial report using the understanding obtained
from our testing and against the requirements of
the accounting standards
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Independent Auditor’s Report
to the Members of Perpetual Limited
Valuation of goodwill ($1,579.9m)
Refer to Section 2-4 ‘Intangibles’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Consolidated Entity’s annual testing of
goodwill for impairment is a key audit matter given
the:
• size of the balance (being 40% of total assets);
• Consolidated Entity made a significant
acquisition of Pendal Group Limited during the
year, necessitating our consideration of the
Consolidated Entity’s determination of CGUs,
based on the smallest group of assets to
generate largely independent cash inflows;
• net outflow of FUM experienced by certain Cash
Generating Units (CGUs) of the Consolidated
Entity in the current year. This increases the
possibility of goodwill being impaired;
• judgement applied by us when evaluating the
evidence available for forward-looking
assumptions applied by the Consolidated Entity
in its value-in-use models, including:
−
−
forecast operating cash flows, growth rates
and terminal growth rates which are
influenced by subjective drivers such as
forecast FUM. These are difficult to predict
as they rely on the Consolidated Entity’s
expectation of future customer activity and
market performance, which can be
impacted by economic uncertainties arising
from the ongoing geopolitical events,
increasing the risk of future fluctuations and
inaccurate forecasting where there is a
wider range of possible outcomes;
the Consolidated Entity operating across
different geographies with varying
pressures on market performance and
capital flows, which increases the risk of an
inaccurate forecast or a wider range of
possible outcomes; and
− discount rates, including CGU specific risk
premiums, which are complicated in nature
and vary according to the conditions and
environment the specific CGU is subject to
from time to time.
We involved valuation specialists to supplement
our senior audit team members in assessing this
key audit matter.
Working with our valuation specialists, our
procedures included:
• Evaluating the Consolidated Entity’s
determination of their CGUs based on our
understanding of the operations of the
Consolidated Entity’s business, impact of the
acquisition of Pendal Group Limited, and how
independent cash inflows are generated, against
the requirements of the accounting standards;
• Assessing the appropriateness of the value in
use method applied by the Consolidated Entity
to perform the annual test of goodwill for
impairment against the requirements of the
accounting standards;
• Assessing the integrity of the value-in-use
models used, including the determination of
carrying values and the accuracy of the
underlying calculation formulas;
• Assessing the accuracy of previous Consolidated
Entity forecasts to inform our evaluation of
forecasts incorporated in the models;
• Comparing the forecast cash flows contained in
the value-in-use models to Board approved
forecasts and our inquiries with management of
the Consolidated Entity for consistency;
• Challenging the Consolidated Entity’s forecast
operating cash flows and growth assumptions in
light of the Consolidated Entity’s net FUM flows
and the ongoing economic uncertainty arising
from the geopolitical events in the current year.
We compared forecast growth rates and
terminal growth rates to published studies of
industry trends and expectations. In doing so,
we also considered the differences between
industry trends and the Consolidated Entity’s
operations and used our knowledge of the
Consolidated Entity, its past performance,
business activities, customer base, committed
future strategic plans, and our industry
experience;
• Independently developing a range of discount
rates considered comparable with the
Consolidated Entity, using publicly available
market data for comparable entities, adjusted by
CGU specific risk factors;
• Performing sensitivity analysis by varying key
assumptions, such as forecast growth rates,
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terminal growth rates and discount rates, within
a reasonably possible range to identify CGUs at
higher risk of impairment, assumptions at higher
risk of bias and determining where to focus our
further procedures; and
• Assessing the disclosures in the financial report
using our understanding of the issues obtained
from our testing, and against the requirements
of the accounting standards.
Revenue ($1,034.1m)
Refer to Section 1-2 ‘Revenue’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
Revenue is a key audit matter due to:
Our procedures included:
• its significance to the financial performance
of the Consolidated Entity;
• the significant audit effort required as a result
of:
−
the various streams of revenue
generated from a diverse range of
products and services and across
geographies, each with varying fee rates
and contractual terms;
− high volume of transactions across key
revenue streams; and
− key inputs used in the calculation of
revenue being sourced from several of
the Consolidated Entity’s third party
service organisations which provide
custody, investment administration and
unit registry services, as well as
custodian banks. This required us to
understand the key processes and
assess the key controls of these service
organisations relevant to the
Consolidated Entity’s revenue
recognition.
• judgements applied in the Consolidation
Entity’s revenue recognition policy for
performance fees, particularly where the
point of revenue recognition is dependent on
varying contractual terms.
We involved senior team members in
assessing this key audit matter.
• Inquiring of management and inspecting underlying
documentation to understand processes for key
revenue streams, and testing key controls at the
Consolidated Entity related to these revenue
streams;
• Assessing the Consolidated Entity’s revenue
recognition policies, including how contractual
terms impact performance fees, against the
requirements of the accounting standards;
• Testing statistical samples of revenue across each
key revenue stream. We performed the following:
−
Inspected contracts and assessed the revenue
recognised against the revenue recognition
criteria, considering the satisfaction of
performance obligations;
− Recalculated the investment management and
financial advice services revenue recognised
based on the various fee rates in the
underlying contracts, and the underlying funds
under management (FUM) or funds under
advice (FUA) sourced from third party service
organisation reports or statements from
custodial banks;
− Tested trustee services, securitisation services
and document custodian services revenue by
checking to invoices and subsequent cash
receipts; and
− Tested financial advice and accounting services
revenue by checking to invoices, engagement
letters and subsequent cash receipts.
Significant revenue streams include fees from:
• the provision of investment management
services to institutional mandate clients,
investment funds and superannuation funds;
• Analysing data within the investment management
revenue stream to identify trends and outliers to
further inform our work. Examples of outliers
included contracts where fees exhibit an inverse
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Independent Auditor’s Report
to the Members of Perpetual Limited
• trustee and document custodian services;
• management and administrative services for
securitisation trusts; and
• the provision of financial advice and
accounting services.
movement to FUM flows or client fees falling
considerably outside of statistical trends. For
outliers identified, we recalculated the revenue
recognised based on the underlying contracts and
the FUM;
• Obtaining and reading the Consolidated Entity’s
third party service organisations’ GS007 (Guidance
Statement 007 Audit Implications of the Use of
Service Organisations for Investment Management
Services), ISAE 3402 (International Standard on
Assurance Engagements 3402 Assurance Reports
on Controls at a Service Organisation) and SOC 1
(System and Organisation Controls) assurance
reports (together “controls assurance reports”) to
understand the service organisations’ processes
and assess controls related to investment
administration and custody;
• We obtained and read the Consolidated Entity’s
bridging letters over the period not covered by the
relevant controls assurance reports. We compared
the information presented in the bridging letter for
consistency with those in the controls assurance
reports;
• Assessing the reputation, professional competence
and independence of the auditors of the GS007 and
SOC 1 assurance reports;
• Recalculating a sample of performance fee revenue
based on the underlying contractual terms and
product performance relative to the benchmark,
such as the Reserve Bank of Australia Cash Rate,
and checking the inputs to source. We compared to
amounts recorded in the Consolidated Entity’s bank
statements; and
• Assessing the disclosures in the financial report
using our understanding obtained from our testing
and against the requirements of the accounting
standard.
Employee remuneration (included within staff related and equity remuneration expenses of
$564m)
Refer to Section 1-3 ‘Expenses’, Section 2-6 ‘Employee benefits’, Section 2-7 ‘Accrued Incentive
Compensation’, and Section 5-6 ‘Share-based payments’ of the Financial Report
The key audit matter
How the matter was addressed in our audit
Employee remuneration is a key audit matter
due to:
• the size of the balance relative to the
Consolidated Entity’s results (63% of
expenses);
• complexities associated with various share
Our procedures included:
• Enquiring of the Consolidated Entity and inspecting
a sample of share incentive programs and other
employee benefit plans to understand the
remuneration process, structure and various share
incentive programs and other employee benefit plan
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171
incentive programs and other employee
benefits plans across the Consolidated Entity
which impact employee remuneration. This
increases the risk of interpretational
differences against the principles-based
criteria contained in the accounting
standards;
• judgements made by the Consolidated
Entity, with assistance from their external
valuation experts, in the determination of the
fair value of share-based payments granted
during the year, of which the grant date
share price on valuation date and vesting
periods are key inputs for us to assess;
• the significant judgement required by us
when evaluating the evidence available for
forward-looking assumptions applied by the
Consolidated Entity in valuing its long-term
employee benefit plans, including forecast
business growth assumptions and the
achievement of performance hurdles. These
are influenced by subjective drivers such as
FUM flows across different geographies, and
are difficult to predict as they rely on the
Consolidated Entity’s expectation of future
customer activity and market performance.
This increases the risk of inaccurate
forecasts by the Consolidated Entity or wider
range of possible outcomes for us to
consider; and
• the calculation of equity remuneration
expenses is performed manually which
increases the risk of error. This required
significant audit effort.
We involved our technical accounting and
valuation specialists to supplement our senior
audit team members in assessing this key audit
matter.
offerings;
• Working with our technical accounting specialists,
assessing the Consolidated Entity’s accounting
treatment of share incentive program arrangements
and employee benefit plans against the principles-
based criteria in the accounting standards;
• Evaluating the Consolidated Entity’s external
valuation expert’s scope of work, competence and
objectivity with respect to their valuation of share-
based payments granted during the year;
• Working with our valuation specialists, assessing
the external valuation expert’s methodology against
industry practice and the requirements of the
accounting standards;
• Checking the grant date share price and vesting
period used in the external expert’s valuation
against the Consolidated Entity’s share price on
valuation date and vesting period based on a sample
of share-based payment agreements and underlying
offer letters;
• Testing a sample of equity remuneration expenses.
We checked the various inputs to the Consolidated
Entity’s manual calculation, such as new grants,
awards vested and forfeitures to underlying offer
letters, share incentive program agreements and
the grant date fair value calculated by the
Consolidated Entity’s external expert. We
recalculated the equity remuneration expense and
compared this to the expense recognised by the
Consolidated Entity;
• Challenging the Consolidated Entity’s forecast
business growth assumptions and judgement
related to the achievement of performance hurdles
in the measurement of complex employee benefit
plans across different geographies. We did this by
comparing forecast FUM growth rates to industry
trends and expectations. In doing so, we also
considered the differences between industry trends
and the Consolidated Entity’s operations using our
industry experience and our knowledge of the
Consolidated Entity, its past performance, business
activities, customer base and committed future
strategic plans; and
• Assessing the disclosures in the financial report
using our understanding obtained from our testing
and against the requirements of the accounting
standard.
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Independent Auditor’s Report
to the Members of Perpetual Limited
Other Information
Other Information is financial and non-financial information in Perpetual Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for
the Other Information.
The Other Information we obtained prior to the date of this Auditor’s report was the Directors’ Report,
Corporate Governance Statement, Remuneration Report, Operating and Financial Review and Securities
Exchange and Investor Information. The Chairman’s report, 2023 Highlights, CEO’s Report, 2023 Group
Results and Business Unit Overview and 2023 Sustainability Report are expected to be made available
to us after the date of the Auditor’s Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Consolidated Entity’s and Company’s ability to continue as a going concern and
whether the use of the going concern basis of accounting is appropriate. This includes disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Consolidated Entity and Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
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Perpetual Group Annual Report 2023
173
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Perpetual Limited for the year ended 30 June
2023, complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration
Report in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 13 to 45 of the Directors’ report for the year
ended 30 June 2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
Brendan Twining
Partner
Sydney
24 August 2023
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174
Securities exchange and investor information
2023 Annual General Meeting
The 2023 Annual General Meeting of the Company will be held at Swissotel, 68 Market Street, Sydney, New South Wales,
on Thursday 19 October 2023 commencing at 10:00 am. Shareholders can also participate online.
Securities exchange listing
The ordinary shares of Perpetual Limited are listed on the Australian Securities Exchange (ASX) under the ASX code PPT, with Sydney
being the home exchange.
Substantial shareholders
NAME
Blackrock Group
State Street Corporation
Vanguard Group and its
controlled entities
NUMBER OF SHARES
% OF INTEREST
DATE OF LAST SUBSTANTIAL
SHAREHOLDER NOTIFICATION
6,628,016
5,622,675
2,836,386
5.90
5.01
5.00
17 March 2023
15 March 2023
4 May 2022
Unmarketable parcels of shares
There are 808 shareholders holding less than a marketable parcel of ordinary shares, as at 3 August 2023.
DISTRIBUTION SCHEDULE OF HOLDINGS
AS AT 3 AUGUST 2023
1 – 1,000 shares
1,001 – 5,000 shares
5,001 – 10,000 shares
10,001 – 100,000 shares
100,001 and over shares
Total
NUMBER OF
HOLDERS
NUMBER OF
SHARES
35,318
12,789,216
10,791
22,496,626
1,032
7,322,153
482
10,122,926
37
59,787,168
47,660
112,518,089
Perpetual Group Annual Report 2023 Twenty largest shareholders as at 3 August 2023
NAME
HSBC Custody Nominees (Australia) Limited1
JP Morgan Nominees Australia Pty Limited1
Citicorp Nominees Pty Limited1
National Nominees Limited1
Pacific Custodians Pty Limited (PPT Plans Ctrl)1
Washington H Soul Pattinson and Company Limited
BNP Paribas Noms Pty Limited (DRP)1
Mutual Trust Pty Limited
Mr Chris Lees
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Limited (DRP A.C)1
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)1
Queensland Trustees Pty Limited (Long Term Incentive Plan)2
Equiniti TST (Jersey) Limited
Carlton Hotel Limited
Queensland Trustees Pty Limited (Employee Share Services)2
Enbeear Pty Limited
Netwealth Investments Limited
National Investment Holdings Pty Limited
Bond Street Custodians Limited
First Samuel Ltd
Total
1. Held in capacity as executor, trustee or agent.
175
NUMBER OF
ORDINARY
SHARES
PERCENTAGE
OF ISSUED
CAPITAL
18,591,315
11,294,255
10,530,224
3,334,582
3,074,012
1,979,278
1,955,833
1,650,852
930,321
750,918
671,207
537,627
508,003
424,964
402,439
369,832
347,541
245,115
225,509
225,287
16.52%
10.04%
9.36%
2.96%
2.73%
1.76%
1.74%
1.47%
0.83%
0.67%
0.60%
0.48%
0.45%
0.38%
0.36%
0.33%
0.31%
0.22%
0.20%
0.20%
58,049,114
51.61%
2. The total number of shares held by Queensland Trustees Pty Ltd as trustee of the various Employee Share Plans is 940,067 shares.
Directors’ ReportAbout Perpetual GroupOperating and Financial ReviewFinancial Report 176
Securities exchange and investor information
Restricted securities
Final dividend
There are no securities subject to voluntary escrow.
Unquoted securities
The final dividend of 65 cents per share will be paid on
29 September 2023 to shareholders entitled to receive dividends
and registered on 8 September 2023, being the record date.
The Company has the following unquoted rights on issue
under its Employee Share Plans:
Enquiries
– 3,386,893 performance rights
For further information, please refer to Section 5‑6 in the
Financial Report.
Other information
Perpetual Limited, incorporated and domiciled in Australia,
is a publicly listed company limited by shares.
Voting rights
Under the Company’s Constitution, each member present
at a general meeting (whether in person, by proxy, attorney
or corporate representative) is entitled:
1. on a show of hands to one vote, and
2. on a poll to one vote for each share held.
If a member is present in person, any proxy of that member
is not entitled to vote.
If you have any questions about your shareholding or matters
such as dividend payments, tax file numbers or change of
address, you are invited to contact the Company’s share registry
office below, or visit its website at linkmarketservices.com.au
or email PPT@linkmarketservices.com.au.
Link Market Services Limited
Building 6&8 Parramatta Square
10 Darcy Street
Parramatta NSW 2150
Locked Bag A14
Sydney South NSW 1235
Perpetual Shareholder Information Line:
1300 732 806
Fax: (02) 9287 0303
Any other enquiries which you may have about the Company
can be directed to the Company’s registered office, or visit the
Company’s website at perpetual.com.au.
Voting by proxy
Principal registered office
Voting by proxy allows shareholders to express their views on
the direction and management of the economic entity without
attending a meeting in person.
Level 18
123 Pitt Street
Sydney NSW 2000
Shareholders who are unable to attend the 2023 Annual General
Meeting are encouraged to complete and return the proxy form
that accompanies the notice of meeting enclosed with this report.
Tel: (02) 9229 9000
Fax: (02) 8256 1427
On-market buyback
There is no current on‑market buyback.
Company Secretary
Sylvie Dimarco
Website address: perpetual.com.au
Perpetual Group Annual Report 2023
About Perpetual Group
Directors’ Report
Operating and Financial Review
Financial Report
177
Perpetual Limited (“Perpetual”) is an ASX listed (ASX:PPT)
global financial services firm operating a multi‑boutique asset
management business, as well as wealth management and
trustee services businesses.
Perpetual Group owns leading asset management brands
including Perpetual, Pendal, Barrow Hanley, J O Hambro,
Regnan, Trillium and TSW.
The Wealth Management business services high‑net worth
clients, not for profits, and small businesses through brands
such as Perpetual Private, Jacaranda Financial Planning and
Fordham.
The Group’s Corporate Trust business provides services to
managed funds, the debt market and includes a growing digital
business, encompassing Laminar Capital.
Headquartered in Sydney, Perpetual Group services its global
client base from offices across Australia as well as internationally
from Asia, Europe, the United Kingdom and United States.
perpetual.com.au
perpetual.com.au
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