AGMs: Perpetual Looking At Flattish Interim Profit

By Glenn Dyer | More Articles by Glenn Dyer

Perpetual says it expects net profit in the current half year to be $35 million to $40 million, provided equity markets remain stable.

That’s around the $36 million of underlying profit it earned in the first half of 2010.

So give or take four of five million, the result looks like being all but unchanged on the previous first half.

If the group was expecting a surge of earnings to help repel the advance from KKR, then it’s not there in yesterday’s statement at the AGM.

"If equity markets remain stable for the remainder of the calendar year, we expect our underlying profit after tax for the six months to December 31, 2010, to be in the range of $35 to $40 million," Perpetual chairman Bob Savage told the AGM in Sydney yesterday.

Mr Savage said “After a brief period of weakness in the second quarter of the 2010 calendar year, markets have trended up, although in a volatile fashion. Investor sentiment is still cautious and industry flows remain weak.

"Therefore, it is difficult to be categorical about the market outlook and consequently about our own performance expectations.

“The recovery of losses from the Exact Market Cash Fund (EMCF), which makes up most of the significant items accounting for the difference between underlying profit after tax and net profit after tax, has continued to benefit from more stable conditions.

"Assuming no impairments, we expect the EMCF to earn approximately $6 million of profit after tax in the six months ending 31 December 2010.

"In the three months to 30 September 2010, we recorded around $4 million of profit after tax from the EMCF."

At the same time, Perpetual confirmed that its chairman-elect Peter Scott would lead talks with US private equity firm Kohlberg Kravis Roberts (KKR) who have made a tentative proposal to take over the company.

KKR has made an indicative, non-binding proposal to acquire all the shares in Perpetual at $38 to $40. Perpetual shares rose from $30.97 on October 15 to a peak of $38.14, before closing yesterday unchanged at $37.90.

Perpetual rejected the KKR proposal on Monday, but left room for further talks by allowing the US group some limited due diligence of its books.

Mr Savage is standing down as chairman at the meeting, to be replaced by Mr Scott.

Perpetual’s chief executive officer, David Deverall is also standing down, but will stay until a replacement is found.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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