Snowball Group has reported a rise in its underlying profit, helped by the market rebound, contributions from previous acquisitions and a moderate increase in net fund flows.
Operating earnings before interest, taxation, depreciation and amortisation came in at $4.79 million over the six months to 31 December 2009, a rise of 14 per cent compared to the same period in 2008.
The group's net profit fell 39 per cent compared to the same period in 2008 as a result of one-off items relating to the takeover of Officium Capital announced in December last year.
The acquisition costs will also affect the group's earnings per share over 2010.
"Assuming the acquisition of Officium Capital is effective 1 February 2010, and taking into account the one-off transaction costs, the group's forecast earnings per share for the 2010 financial year is expected to be approximately 6.8 per cent lower than it otherwise would have been in 2010 as a result of the acquisition," Snowball said.
The acquisition of Officium Capital, which had $465 million in funds under management at 31 December 2009, is expected to contribute to profits from 2011.
Snowball expects to see an uplift in its net profit in the second half of the financial year.
"We're not seeing consumers bashing down the doors yet," Snowball Group managing director Tony McDonald said. "But we have witnessed an improvement in general customer sentiment."
McDonald said the group has seen a decreased use of managed funds in favour of direct equities.
"Consumers have started to ask: how do managed funds work again?" he said. "It is by no means the death of the managed funds, but we need to explain better how they work."
Although Snowball planners also offer separately and individually managed accounts, these products have generally not enjoyed a significant uptake, McDonald said.
"There is a need for greater education of consumers," he said. "On the other hand, advisers feel separately managed accounts are not always well integrated with their back office systems."
