Sequoia Financial Group saw a $1 million loss for financial year 2019, a period that chairman John Larsen said was “extremely challenging for everyone associated” with the business.
The loss was a stark contrast against its prior profit of $2.3 million in FY18.
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 on 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.
The company saw increases across its superannuation and structured product revenue, however there were drops across its data subscription fees and media revenue. Corporate advisory fee revenue plummeted by 63 per cent.
While Sequoia is phasing out commission-based remuneration in its advice business, brokerage and commissions across the group accounted for $37.7 million in revenue, a boost of 31 per cent.
The group’s number of advisers authorised under fully owned AFSLs grew by 14 per cent.
At the start of the month, the group said it would acquire 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.
The company also said it incurred heavy acquisition related costs during the year, along with redundancy and contact renegotiation costs associated with improving technology solutions in the clearing, direct to market sales units and the legal document business.
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 by 54 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.
However, Sequoia said the largest test was within the equity markets division, wrapped up in the company’s 2018 Morrison Securities acquisition.
The arm made $48.5 million in revenue, up 6 per cent, with a loss of $3,144 on its portfolio investments. Its adjusted EBITDA was $2.7 million, a 53 per cent increase.
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. He said the shift has a significant impact on the first half results, but Sequoia is now “coming out the other side”.
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 FY2020 and beyond with the share price under-performing 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.”
APRA-regulated super funds could create better member outcomes by taking the sam...
Australian high-net-worth investors lost more money than their global counterpar...
The negative impact of COVID-related market volatility on clients’ super inves...