Sequoia Financial Group generated a $1 million loss for financial year 2019, a drastic drop from the prior year’s profit of $2.3 million.
The financial services provider generated $83 million in revenue, an increase of 9 per cent from FY18, while operating profit was $1 million, under a quarter of what it was the year before at $4.3 million.
The wealth group, which comprises the company’s wealth management, financial planning and corporate advisory units saw its revenue rise by 41 per cent to $26.8 million for the year, although the segment lost $438,307 in its portfolio investments. This produced a total revenue for wealth of $26.3 million.
Adjusted EBITDA for the division came to $1.9 million, down by 29 per cent.
Meanwhile the direct investment group saw its revenue fall by 39 per cent to $3.1 million and EBITDA down 7 per cent to $878,496.
The group was also said to incur heavy acquisition-related costs, redundancy costs and contact renegotiation costs associated with improving technology solutions in the clearing, direct to market sales units and the legal document business.
Non-executive chairman John Larsen called the 2019 financial year “extremely challenging for everyone associated with Sequoia.”
The largest test however was said to be within the equity markets division, wrapped up in the company’s 2018 Morrison Securities acquisition.
The arm made $48.5 million million in revenue, up by 6 per cent, with a loss of $3,144 in its portfolio investments. Its adjusted EBITDA was $2.7 million, increasing 53 per cent.
Mr Larsen said Sequoia needed to overhaul Morrison’s existing outsourced clearing and execution model, to become a direct service provider to group companies and other licensees. The shift was said to have a significant impact on the first half results, but Sequoia is now “coming out the other side.”
The Professional Services division providing SMSF solutions to planners, brokers and accountants, generated a revenue of $4.6 million, up by 11 per cent, with an adjusted EBIDTA of $1.8 million, increasing 54 per cent.
The company saw increases across its superannuation and structured product revenue, however there were drops across its data subscription fees, brokerage and commissions and media revenue. Corporate advisory fee revenue plummeted by 63 per cent.
Despite the weak full-year results, Mr Larsen remained positive in his outlook.
“The board and I understand that shareholders have borne some of the pain in positioning ourselves for the FY20 and beyond with the share price underperforming but we firmly believe the business has shown improvement in the second half and is primed for sustained growth and profitability,” he said.
“The changes occurring in the financial industry are profound and part of the reasoning for seeking to put the company on a sounder financial footing is to take advantage of these changes.
“Sequoia is positioned as an attractive partner to advisers looking to relocate from the major banks and life companies and we will continue to add advisers where it makes sense to do so.”
At the start of the month, the group said it would be acquiring Libertas Financial Planning, an advice dealer group with around 70 authorised representatives.
Sequoia said the acquisition would provide it with further scale in the advice marketplace.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
T. Rowe Price has assessed the growing parallels between 1970s stagflation and today. ...
CommSec has predicted local shares will move higher during 2022-23. ...