Sequoia posts modest NPAT growth

Sequoia Financial Group has posted a 3% growth in net profit after tax (NPAT) to $5.7 million for the 2022 full-year results compared to the same period a year ago.

The modest growth was driven largely by higher OPEX, strategic investments in boosting sales and marketing efforts as well as enhancing the company’s cyber security capabilities, technology upgrades and services uplift, the firm said in the announcement made to the Australian Securities Exchange (ASX) on Thursday.

At the same time, the company’s total revenue went up by 26.5% to $147.3 million helped by greater financial advisory commission earned, continued increase in wholesale clearing and execution transaction services as well as acquisition of Panthercorp and Tag Insurance Brokers customer list.

“The EBITDA of $12.4 million also increased 7% from FY21. From a consolidated viewpoint this resulted in a 26% operating return on shareholder equity, giving us the confidence that our diversified services offering is both profitable and in growing demand,” the firm added.

According to Sequoia, for the advice industry this was a “difficult but opportunistic year”, with inflation and rising interest rates, global tensions and COVID-19 pandemic having created volatility for investment returns.

Additionally, labour shortages and wage pressures associated with inflation continuing to place pressure on advisers and their licensee’s cost of service delivery margins.

But the exit of personal advice from banks and insurance companies had continued to see demand for financial advice from independent financial advisers (IFA) market place increase to record level while demand for outsourcing of services by intermediaries and other licensees continued to accelerate.

The group said it would continue to acquire retiring advisers practices and recruit more salaried financial planners into Interprac Securities.

Discussing the outlook, the group said the margin in its professional services and direct investment divisions was above 25% and was expected to see very strong revenue growth in these divisions in the year ahead while margin within equity markets and licensee services were also expected to lift to above 10%.

Sequoia posted a 33% increase in dividend payout ratio which represented a 1.4 cents per share FY22 distribution and an increase of 40% on FY21.

“The company remains focused on our dividend strategy, where we are gradually increasing dividends, whilst continuing to us a larger part of our profit to fund acquisitions. We are again pleased to report an increase in the dividend pay-out ratio to 33% in 2022, representing 1.4 cents of fully franked dividend, which is a 40% uplift from the 1 cent distributed in 2021,” the firm said.