$547m impairment colours Adams’ Perpetual exit

Perpetual Limited has revealed just what it can cost when an investment manager loses a key investment talent, announcing it expects to recognise a non-cash impairment charge of approximately $547 million in its upcoming full-year results.

The impairment relates to JO Hambro Capital Management with Perpetual announcing in April that the departure of the portfolio manager for its UK Dynamic Strategy, Alex Savvides, had resulted in outflows of $2.2 billion.

Savvides announced in January that he would be leaving JO Hambro Capital Management to join UK-based fund manager, Jupiter.

Perpetual picked up ownership of JO Hambro via its acquisition of Pendal which had acquired JO Hambro in 2011.

The Perpetual impairment announcement rules a line under the issue for its new chief executive, Bernard Reilly, with the outgoing chief executive, Rob Adams, tasked with presenting the full-year results on Thursday.

Perpetual yesterday told the Australian Securities Exchange (ASX) that as a result of the outflows and having undertaken impairment testing, the company expected to recognise the $547 million pre-tax impairment in its financial year.

“As previously announced in its quarterly updates throughout FY24, and in the second half of FY24 in particular, some key strategies experienced greater than expected net outflows, with net outflows of $8 billion for JO Hambro and $4 billion for TSW,” it said.

The announcement said that based on the projected earnings impact of the outflows and a resulting moderation of expectations for future flows, compared to assumptions made at the time of the Pendal Group acquisition, a non-cash impairment charge of $417 million would be recognised against the carrying value of goodwill for JO Hambro, and $130 million for TSW.

“This will impact the statutory results of the Group for the FY24 financial year,” it said.