Wealth manager SFG Australia Ltd is ready for more transformational mergers and acquisitions after its friendly merger with Shadforth Financial Group helped boost interim profit by 84 per cent.
Formerly Snowball Group Ltd, SFG on Monday posted the 84 per cent net profit after tax of $13.5 million for the six months to December 31, 2011.
One-off tax benefits absent in the first half of 2010/11 drove profits higher by $4.9 million, and these probably will not recur, SFG managing director Tony Fenning told analysts.
Revenue surged 46 per cent to $64.3 million during the period, and operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew five per cent to $19.9 million.
Shadforth and the then Snowball Group combined forces in a friendly, scrip merger last May, involving Shadforth shareholders acquiring 2.15 Snowball shares for each Shadforth share they owned.
The combined Sydney-based group has 188 financial advisers across Australia and aims to stand as an alternative wealth management, insurance and stockbroking provider to banks and industry funds.
With the integration firmly on track, Mr Fenning says SFG can eye more big deals.
“We’re deal-ready to consider further transformational transactions,” he said.
Cost savings, synergies and the merger boosted underlying earnings during the reporting period, and are expected to drive operating EBITDA $2 million higher during the second half of 2011/12, Mr Fenning said.
The company also upgraded its expected annualised savings and synergies from the merger with Shadforth which came into effect on June 26, 2011.
Savings and synergies from the merger will now reach $10.5 million per year by the end of 2012/13, up from $6.8 million, after SFG successfully renegotiated portfolio administration supply contracts.
SFG achieved the profit growth despite weak consumer sentiment and a deterioration in market conditions, Mr Fenning said.
“The economic conditions the industry is being faced with at the moment are some of the toughest I’ve seen in my 20-years-plus career in financial services,” he said.
“Taking away the impact of markets, we are fortunate that we can achieve growth through cost savings and synergies, and use this time to prepare the company for when market conditions eventually improve.”
SFG’s total funds under advice were $10.8 billion on December 31, down seven per cent on a year earlier because of the poorer market conditions.
But net inflows into the company’s new fixed interest trust boosted total funds under management to $4.0 billion, up six per cent on a year earlier.
SFG’s board declared an interim dividend of one cent per share, fully franked, which was 33 per cent lower than a year earlier on a proforma basis.
SFG’s shares firmed 0.5 cents to 33.5 cents.
