Insignia Financial shares soar 11% on HY results
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The news: Insignia Financial shares surged nearly 12% in early trading, after the financial services company posted growth in underlying profit, revenue and funds under management.
The numbers: Insignia shares were 11.5% higher to $2.52 at 11:49am AEDT.
Earlier on Thursday, the Melbourne-based company reported a statutory net loss after tax of $49.9 million for the six months to December 2023, following a $45.1 million net profit during the prior corresponding period.
However, underlying net profit grew 1.2% to $95.5 million, with net revenue up 0.6% to $695.7 million. Closing funds under management and administration (FUMA) increased 5.4% to $300.6 million year on year.
Insignia also upgraded its full-year guidance to a group net revenue margin of between 45.5 to 46 basis points, up from 44.8 to 45.8bps, while EBITDA margin increased to 11.8 to 12.2bps from 11.3 to 11.8 bps.
Its platforms business underlying NPAT declined 9% to $10.6 million, driven largely by increased expenditure on cyber security, governance, and license condition rectification.
The advice segment posted a revenue increase of 3.8% to $107.6 million, driven by higher ongoing client fees from repricing in Shadford and Bridges. However, adviser numbers dropped 326 to 1,199 mainly due to the sale of Millennium3, closure of Lonsdale licence, and right sizing of Bridges.
The asset management business' underlying NPAT fell 13.3% to $30.2 million due to the 45% equity sale of Jana in December 2022.
Insignia declared an interim dividend of 9.3 cents per share, down from 11 cents per share a year earlier.
The context: The statutory net loss was attributed to remediation costs of $64.5 million and transformation and integration costs of $111 million. The remediation was related to ANZ's fee-for-no-service issues as Insignia bought ANZ's advice business in 2018. Insignia said its quality of advice and structured historical product remediation programs were expected to be substantially completed by 30 June 2024.
The transformation costs were related to platform simplification, separation of the MLC and ANZ P&I businesses, MLC Wrap migration and the transition to advice services partnership model.
The results follow news earlier this month that former AMP Australia CEO Scott Hartley will replace current Insignia CEO Renato Mota from 1 March.
What they said: Insignia's outgoing CEO Renato Mota said: "The current period profit result reflects significant investments in future growth and our desire to complete the remediation programmes."
"It's pleasing to see strong early progress against our FY24-26 strategic initiatives as we strengthen our foundation for growth and deliver the benefits of scale to our members, clients, and shareholders."
The source: ASX announcement
