Barely half of publicly-listed AFSLs in the black

Reporting season has again confirmed that while many individual financial advice practices have rarely been busier or more profitable, keeping shareholders happy as a publicly-listed owner of an Australian Financial Services License remains a challenge.

The bottom line for the publicly-listed AFSLs is that barely half of them emerged running their financial advice businesses in the black, with the two largest players – AMP Limited and Insignia Financial still yet to break even, albeit Insignia is getting closer.

An analysis of the publicly-listed AFSLs reporting their half-year results revealed the following bottom lines in terms of NPAT:

AMP Advice                        NPAT (underlying)        ($47 million)

Insignia Financial             NPAT (underlying)        ($700,000)

Count Limited                   NPAT (underlying)          $2.613 million

Diverger                             NPAT                                  ($1.04 million)

WT Financial                    NPAT                                   $2.191 million

Centrepoint Alliance       NPAT                                   $4.9 million

Sequoia Financial            NPAT                                   $27.8 million

Clime IM                           NPAT                                  ($1.6 million)

The challenge for the mid-size AFSLs is not only to build scale but to then turn that scale into positive results on their balance sheets.

Looking beyond the blunt NPAT numbers, the reality is that a significant number of factors have been at play, not least Count’s efforts to bed-down its acquisition of Affinia and its acquisition of Diverger.

Count has certainly built scale via the two acquisitions but shareholder enthusiasm is yet to be reflected in the company’s share price even allowing for it going ex-dividend.

The release of Centrepoint Alliance’s results appeared to please investors with its share price lifting to 35 cents notwithstanding its NPAT being flattered by tax credit but a part of that share price positivity might also be owed to COG Financial taking a 20% stake in the company.

Sequoia is arguably the most cashed-up of all the listed AFSLs almost entirely as a result of its sale of 80% of  Morrison Securities which lifted its NPAT by 4317% but the company’s share price has yet to reflect its potential.

WT Financial, which is currently bedding down its acquisition of Millennium3 from Insignia, has also thus far failed to excite the market with its share price closing out last week sitting at around 65 cents after closing out 2023 at 83 cents.

Not unlike Count Limited, WT has managed to develop scale via its acquisition of Sentry, then Synchron and now Millennium3 but investors will clearly be looking to see how the company extracts the necessary synergies to drive its balance sheet.

Clime Investment Management, which owns Madison Financial,  is clearly amongst the most challenged of the publicly listed AFSLs reporting an after tax operating loss of $1.6 million and feeling the need to point to having achieved profits before tax in December and January.

The company is emphasising the measures it has taken to cut costs and is pointing its strategy around new client acquisition and its strategic partnership with the TIP Group.