AFS feels the sting of an economic downturn, which will dampen growth in 2008/09.
Privately-owned dealer group Australian Financial Services (AFS) does not expect market conditions to improve before 2009, according to AFS director Peter Daly.
Daly forecasts a moderate increase in growth and profitability in budgets for 2008/09 than in the previous year.
"We've seen one of the worst financial years since 1981-82. We are anticipating that the remainder of this year is going to get worse before it's going to get better," Daly told InvestorDaily.
"In our planning before this month began, we perceived that the market would stabilise by the end of the financial year and that improvements would emerge in 2009. As a consequence of that I'm budgeting for a more moderate increase in both growth and profitability."
AFS has changed its financial year from a calendar year to a year ending on 30 June. Over the six months from 1 January to 30 June 2008, it achieved a profit growth of 40 per cent. This compares with a 57 per cent increase over the 12 months ending 31 December 2007.
"It was an unfortunate time to change financial years," he said.
Daly said he expected to add 20 practices with a gross annual income of at least $500,000 in the calendar year 2008.
So far, the group has added 13 practices and is on track to achieve its acquisition goal. However, the economic downturn has made it more difficult to recruit new practices, especially in the last twelve months, Daly said.
"Dealer groups are looking to retain the practices they've purchased and so there are some spectacular incentive programs in the market. It is certainly a far more difficult market place to recruit practices," he said.
Despite the economic downturn, AFS is still hopeful to list on the Australian Securities Exchange in the first quarter of 2011.
"I have an EBIT [earnings before income and tax] target, which I want to achieve by 31 December 2010, and this will propel us forward," Daly said.
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