Sequoia shares results after ‘disruptive’ FY24
Sequoia has reported a $24 million statutory net profit after tax (NPAT), boosted by the sale of Morrison Securities, while the exit of “smaller non-economic advisers” has improved net margin.
The firm divested 80 per cent of Morrison Securities in September 2023 for $40.5 million, having first acquired it in September 2017.
In its full-year results for the FY24, the firm said the divestment contributed $27.1 million to its statutory NPAT. This offset losses of $3.1 million from its continuing activities.
During the year, it also acquired the customer book of Castle Corporate, Castle Legal, and Australian Business Structures, and acquired Clique Paraplanning.
Revenue in its licensee and adviser services division rose 27 per cent. The firm flagged its adviser growth and retention during the period.
“All of this growth was organic as adviser income supported by the move from commissions to annual fees, the increase of clients per adviser, and the need for advice increasing from the IFA space as the adviser pool shrunk and the availability of receiving advice from a bank or product provider continued to close.
“Over the 12-month period we increased the number of advisers by 14 but most importantly successfully added 70 new advisers to the group, with the majority of the 56 exits associated with smaller non-economic advisers retiring from the business, and this was a key factor which improved net margin.”
Since the end of the financial year, the firm has announced it will sell its general insurance broking business for between $4.4 million and $5 million.
Garry Crole, chief executive, acknowledged FY24 had been “disruptive” after a group of shareholders attempted to change the constituents on the board. This impacted operating momentum, caused unrest among employees and advisers, and resulted in additional costs to maintain businesses and staff throughout the period.
The bid was ultimately unsuccessful at an extraordinary general meeting in June, but several changes have since been made to the business in response.
This includes the streamlining of its existing divisional structure from four to two, and an agreement that Crole will step back from the leadership role by FY27.
Crole said: “As we reflect on the past year, we have faced considerable challenges. Disruption in the second half impacted operating momentum, caused unrest amongst employees and advisers, and resulted in additional costs to maintain business and staff. Despite these hurdles, we are proud to report strong growth in revenue and operating profit.
“We are streamlining our business to ensure greater efficiency and agility, positioning Sequoia for continued profitable growth.”
Looking ahead, the firm split its focus between organic and inorganic focus. Organic focus considers horizontal expansion and cross-marketing of its services, technology enhancements and adviser growth, while inorganic focus looks at bolt-on acquisitions in its legal and administration service division and acquiring well-established advice practices within the Sequoia network.
It declared a fully franked dividend for the full year of 7¢ per share, which includes a special dividend of 2.5¢ per share.
AUTHOR
Laura Dew
Recommended for you
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
