On 8 November 2018, Pendal Group Ltd (ASX: PDL) released it FY18 Annual Report highlighting the continued growth in earnings, achievement of $100 billion in funds under management and Sixth consecutive year of growth in full-year dividend. Following the release, the share price of the company increased by 3.532 percent as on 8 November 2018.
The Cash NPAT of the company increased by 17 percent to $201.6 million in FY18 compared to the last year, while the Cash earnings per share (Cash EPS) increased by 15 percent. This result was underpinned by continued strong growth in base management fee revenue, which increased by 12 percent to $501.1 million. The average funds under management (FUM) rose by 10 percent to $99.5 billion, and this increase was assisted by higher markets, with the average level of the MSCI All Countries World Index in local currency terms up 13 percent, and the average level of the S&P/ASX 300 Index 6 percent higher compared to previous corresponding year.
The company experienced net outflows of $3.7 billion in FY 2018, which were driven by redemptions associated with the BT Financial Group MySuper portfolio reconfiguration, as well as a mandated loss from a UK Equities strategy following the retirement of a key fund manager in late 2017. The cash operating expenses of the company increased by 12 percent to $316.9 Mn, and it is reflecting higher occupancy costs as the business expands, the Pendal brand and identity launch, and increased regulatory costs associated with the European Union’s MiFID II implementation. The operating profit margin for the year was 43 percent and it was in line with the previous corresponding period.
The board declared final dividend of 30.0 cents per share (15% franked) which will be paid on 20 December 2018 for its shareholders. This summarized a total dividend payment of 52.0 cents per share for the full year, showing 16% rise on Y-o-Y basis.
As per Company’s CEO Mr. Emilio Gonzalez, the global trend towards increased regulation is driving the compliance costs higher as more resources are required to meet the needs of increased regulation. The positive side of the growing regulatory scrutiny is that it increases the barriers to entry and makes it very expensive for teams to ‘go out on their own’. In commenting on Pendal Group’s outlook and strategy Mr. Gonzalez said the company will continue to build out its global business by looking for new investment talent that can add to its existing capabilities, invest seed capital in strategies that cater to the changing global demographics, and expand and build on its distribution channels to drive sales.
In the last six months, the share price of the company decreased by 9.28 percent as on 7 November 2018, traded at PE level of 12.440x. PDL’s shares traded at $8.50 with a market capitalization of $2.61 billion as on 8 November 2018 (AEST 4:00 PM).
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