Brisbane-based Tranzact said in its latest annual report it had experienced an impairment write-down on its SMSF administration business of $967,000, and “sustained a loss of client funds greater than expected”.
The sale to SuperIQ, which is 49 per cent owned by AMP, will result in “a number of staff redundancies due to a change in the location of the administration of the business”, Tranzact said in a statement to the Australian Securities Exchange (ASX).
The proceeds of the sale of approximately $1.35 million compares with the written down carrying value of $2.15 million, as at 30 June 2013, Tranzact said.
"Consequently, the sale will result in a non-recurring write off of $800,000 in the current 2014 financial year," the statement said.
“Additional costs are expected relating to redundancies and other costs of exiting the business, but which have not been fully quantified at this stage. The significant loss of funds in recent months was a major factor in the sale proceeds being lower than the directors’ valuation of the business reflected in the annual report.”
The company said the SMSF business had “suffered a significant decline in the number of client funds due to competitive pressures”.
“Whilst the profitability of the business had improved following last year’s cost restructure, the reduced scale of the business has impacted its ability to sustain a satisfactory level of profitability,” Tranzact stated.
The sale came amid plans for a broader scale down of its Australian and New Zealand financial planning businesses following a strategic review.
The transaction follows the deal in September last year, under which SuperIQ acquired former Perpetual SMSF business Smartsuper for an undisclosed sum.
SuperIQ general manager Peter Lalor said the agreement is “good for Tranzact’s SMSF customers and good for SuperIQ”.
“Tranzact’s SMSF customers will have access to SuperIQ’s market-leading SMSF administration service and technology platform, and SuperIQ will benefit from increased scale. Increased scale will allow us to continue to invest in enhancing services for customers, advisers and accountants,” he said.
“We will begin to engage with advisers and trustees who have been using Tranzact’s SMSF service today to understand what they value and how we can use the capabilities of SuperIQ to improve the experience they have with SMSF administration.”
He said the transition to SuperIQ should be smooth for trustees and advisers.
“We have become quite experienced at migrating funds, trustees and advisers to our offering, having now completed a number of acquisitions like this one. Acquisitions continue to be an important part of our growth strategy and we are constantly looking for more, or in discussion with potential sellers” Mr Lalor added.
SuperIQ has now been operating for almost two years after launching its service at the end of October 2011.