Perth-based investment company Perron Group has reported another big profit while flagging plans to diversify its portfolio, anchored by property assets like Central Park and Cockburn Gateway.
Perth-based investment company Perron Group has reported another big profit while flagging plans to diversify its portfolio, which is anchored by property assets like Central Park and Cockburn Gateway.
Perron has announced an 11 per cent increase in operating profit before tax and unrealised gains and losses, to $425 million for the year to June 2024.
The group said this reflected generally favourable conditions across most of its portfolio along with another strong contribution from its Toyota WA wholesale business.
Toyota WA had a record year of vehicle and parts sales, with 29,000 new vehicles delivered.
The profit figures rank Perron as one of WA’s most profitable private companies, according to data compiled by Business News.
The only private WA groups with a larger profit are Gina Rinehart’s Hancock Prospecting, Kerry Stokes’ Australian Capital Equity and Laurence Escalante’s VGW Holdings.
Perron Group said higher interest rates impacted the valuation of its retail property assets, which include Belmont Forum, a 50 per cent stake in Galleria Shopping Centre and several east coast shopping centres.
This led to a $147 million decline in property valuations, partly offset by a $105 million increase in valuations across listed equities, infrastructure, private equity and other assets.
After adjusting for the net writedown, Perron Group’s profit before tax was $382 million.
Chief executive Adam Irving said highlights for the year included the start of construction of a $115 million Toyota WA parts distribution centre in Kewdale and completion of the facade upgrade on the half-owned Central Park office tower.
The group also achieved first settlements from its half-owned SkyRidge land development in Queensland.
The project will deliver some 2,000 residential lots in the Gold Coast region over the next 10 years.
With total assets of $6.5 billion, Mr Irving noted the continued build-out of the group’s non-property portfolio, which comprises 42 per cent of its total portfolio.
This includes minority stakes in three privatised airport companies – Queensland Airports, North Queensland Airports and Adelaide Airport.
Since the death of its founder in 2018, Perron Group has operated as a permanent endowment to fund the Stan Perron Charitable Foundation.
Mr Irving said the group’s investment portfolio was evolving, to ensure it can meet the needs of the foundation.
"We are by no means there yet, and it will be some years before all the key components of this strategy are in place, but the ultimate objective is that our investment portfolio will allow us to generate the earnings that will allow us to meet the growing needs of the foundation," he said.
Having said that, the group’s profits have consistently been far in excess of the needs of the foundation.
The group’s net profit has exceeded $300 million for the past four years, while the foundation’s annual distributions have grown to $26 million.
That number has increased substantially in recent years and is expected to grow further, evidenced by its recent commitment of $135 million over 10 years to enable the establishment of WA's first Kids Comprehensive Cancer Centre.
The foundation doubled its donation to the Channel 7 Telethon Trust this year to $8 million.
That made it the second largest donor to Telethon.
"As the potential size of the foundation's giving increases, we have an obligation to be ready to step up with the required earnings to fund the commitments being made,” Mr Irving said.
This meant the portfolio would become more diversified.
"At some point, every business sector and asset class go through cycles, and we want to ensure that we have a more even balance of underlying drivers to increase the probability of maintaining and growing the capacity to fund the activities of the foundation for generations to come,” he said.
"So, while the assets we add may increase year-on-year volatility, they should ultimately provide a more stable earnings profile through market cycles and a wider range of economic conditions.
“This is consistent with the practice of most endowments and foundations."
Perron Group noted that it is comprised of a number of separate legal entities that are managed as a whole.
Therefore, the reported profit numbers do not align with the statutory results of any single legal entity, such as Perron Investments.
