WT Financial and Sequoia a story of cash and scale

Mike Taylor

Managing Editor/Publisher, Financial Newswire

9 August 2023

While Insignia Financial has changed its financial advice strategy with the creation of a new company and AMP Limited continues to worry about even reaching break-even, two publicly-listed financial planning licensees have painted optimistic pictures of their performance.

Ahead of releasing their results later this month, both WT Financial Group and Sequoia have signalled improved outcomes with WT announcing a 57% increase in revenue and a more doubling of net profit before tax while Sequoia pointed to normalised EBITDA of $9 million on revenue of $130 million.

In the case of WT Financial Group much of the improvement was attributable to its acquisition strategy which saw it pick up both Sentry Financial Group and Synchron Advice.

Indeed, WT Financial chief executive, Keith Cullen attributed the upturn to “our strategic acquisitions – the methodical rationalisation of our network and operations – and restructuring of our legacy processes and paradigms”.

He later went on to say that “at a time when others have turned their back on wealth advice and personal risk insurance advice, we have recognised the incredible importance of the profession in supporting Australian families”.

The WT Financial announcement to the ASX stated that revenue and other income was up 57% to $162.4 million with direct cost of sales standing at $145.40 million resulting in an expected gross profit increase of 54% to $17.08 million.

It said earnings before interest and tax was expected to be up 99% to $5.59 million.

For its part, Sequoia said the company’s unaudited results are revenue of approximately $130 million on EBITDA of approximately $5.5 million.

However, and importantly, it said the sale of its Morrison business was expected to finalise at the end of this month and that, therefore, “all gains from the sale will be booked in the first half of FY24”.

Sequoia is set to receive a total cash consideration of $40.5 million for its 80% equity interest in Morrison Securities which was sold to New Quantum.

The Sequoia announcement needs to be seen against the background of the company having previously stated as a financial target generating normalised FY2023 EBITDA of $10 million.