The Perpetual Limited (ASX: PPT) share price is pushing higher on Friday.
In morning trade, the fund manager's shares are up 1% to $39.82.
Why is the Perpetual share price rising on Friday?
Investors have been bidding the Perpetual share price higher today following the release of an update on its significant items.
Late last month, the company released its fourth quarter update and revealed that it expects to report significant items of $48 million.
This comprises $45.6 million of transaction and integration costs, and non-cash amortisation of acquired intangibles, and $2.1 million of fair value movements associated with the Barrow Hanley accrued incentive compensation liability.
In addition, it provided guidance of unrealised gains of $11.3 million (before tax), resulting in total significant items of $39.8 million.
What's the latest?
According to today's release, Perpetual's transaction and integration costs and non-cash amortisation of acquired intangibles components remain in line with its original guidance. However, the methodology used in the calculation of the Barrow Hanley accrued incentive compensation liability has been amended to align with the treatment of similar schemes within Perpetual.
This change effectively brings forward fair value movements associated with the vesting of incentives that would otherwise have come through significant items in the FY 2022 and FY 2023 financial years.
As a result, the associated fair value movement is now $10.2 million after tax, an $8.1 million increase from the $2.1 million figure previously provided. Furthermore, the unrealised gains on financial assets are now lower at $6.7 million after tax. This compares to previous guidance of $7.9 million after tax ($11.3 million before tax).
This means that its total significant items for FY 2021 will be $49.2 million, up 23.6% on its previous guidance of $39.8 million. And while this looks bad initially on paper, it is worth noting that it has only pulled forward items that would have been recorded in future periods. As a result, valuation models are unlikely to have been impacted by the change.
The Perpetual share price is up 14% year to date.
