Insignia divestments turn losses into profit

Insignia Financial’s strategy of advice business divestments and master trust technology and operational outsourcing has paid balance sheet dividends with the company reporting a significant full-year profit turnaround.

The company’s full-year results released to the Australian Securities Exchange (ASX) revealed the company recorded a net profit after tax (NPAT) of $16.1 million up from the $185.3 million NPAT loss recorded a year earlier.

Just as importantly, the company reported an 18.9% improvement in EBITDA to $453.2 million.

The result represents positive news in circumstances where the board is recommending shareholders accept the private equity takeover bid from CC Capital.

The company noted that consistent with the Scheme Implementation Deed with CC Capital no FY final dividend had been declared.

Commenting on the result, Insignia chief executive, Scott Hartley described it as a strong outcome noting that underlying net profit after tax was up 16.6% and noting that the 2024 loss was attributable to a remediation provision.

He described FY25 as having bene a pivotal transformation year for Insignia which included delivery of several key strategic initiatives including the separation of MLC from National Australia Bank (NAB) and the establishment of an industry-first partnership with SS&C successfully transitioning Insignia’s Master Trust Technology and Operations functions and nearly 1300 people.

The company’s ASX announcement pointed to the manner in which its creation of Rhombus and related divestments had paid dividends with the Advice business unit delivering a 55.3% improvement in EBITDA and 73.1% improvement in underlying net profit after tax to $27 million.

It said net revenue increased 7.1% over the prior corresponding period primarily as a result of strong new client growth and higher asset-based fee income in Shadforth, partially offset by lower insurance commissions.

“Operating expenses reduced due to the realisation of optimisation benefits from simplification post-Rhombus Advisory separation, partially offset by increases in salaries and Adviser incentives,” it said.

The report noted that adviser numbers had declined in Bridges due “to resizing of the adviser footprint”.