Fiducian has seen its net underlying net profit after tax grow by 15 per cent over the half year ending 31 December, to $5.7 million from the prior corresponding period, although its assets dropped over the period, due to market declines.
Net revenue came to $18.2 million, increasing by 11 per cent from the pcp while the firm’s underlying EBITDA came to $7.9 million, up by 13 per cent.
The company’s shares jumped up by 22 per cent to 11 cents a share from the prior corresponding period (pcp).
Fiducian had $6.3 million of funds under management, advice and administration (FUMAA), a slight decrease from $6.31 the year before.
Funds under administration came to $1.8 billion, a decrease of 6.2 per cent over the half, with Fiducian citing share market declines.
As of 31 December, funds under management were $2.2 billion, a decrease of 6.3 per cent, as funds under advice were $2.2 billion, a drop of 5.8 per cent from the pcp.
Operating revenue came to $24.6 million, a 10 per cent increase from the pcp while statutory NPAT came to $5 million, going up by 15 per cent.
The company said that while the past-half was unsettling for financial markets and related businesses, the market’s reaction in Fiducian’s view was overdone, and that volatility in the markets is going to become the norm, rather than the exception.
“There has been volatility in share markets around the world as investors worried about global trade wars, likelihood of further rises in US interest rates and Brexit repercussions,” Fiducian said in its half-year results.
“At home, there was negative investor sentiment from the royal commission on mismanagement by large institutions and banks as well as the looming uncertainty of a government change in Australia this year which could result in tax and policy changes.
“When share markets decline by 10 per cent to 15 per cent as they have, asset values fall, some investors defer decisions and consequently the rate of revenue growth slows.”
Fiducian noted the government’s agreement to end grandfathered commissions from 1 January 2021.
The company began work on converting commissions to fees-for-service that are agreed on with clients, following the implementation of the Future of Financial Advice (FOFA) reforms.
The bulk of its clients are already on fees-for-service arrangements, Fiducian said, with around 4 per cent of the group’s net revenue coming from grandfathered commissions.
It said insurance commissions and mortgage broking which have been adversely impacted are not its core business and won’t impact its revenue in any material way.
In the past half, Fiducian also entered the markets of separately managed accounts administration, licensing financial planning software to external dealer groups.
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