Snowball positions itself for change

Listed financial services group Snowball has reported net profit of close to $1.8 million for the half year ended December 31, 2009.

The result represented a 39 per cent fall in net profit compared with the half year ended December 31, 2008, which the group attributed to one-off factors.

The acquisition of Officium Capital, for example, incurred $325,000 in one-off costs, while in the previous corresponding period Snowball took $732,000 in one-off profit on the sale of Outlook Tax & Accounting Solutions, as well as merging with NSW accounting firm, Duncan Dovico.

The group is hoping for a lift in net profit in the second half of this financial year, while noting an increase in earnings before interest, taxes, depreciation and amortization of 14 per cent to $592,000.

The group said the market rebound, contributions from previous acquisitions, and a “moderate increase in net fund flows” were the drivers of an improved operating result.

Snowball reported a 22 per cent increase in funds under advice, reflecting an improvement in new business inflows, acquisitions and positive market movements. But the group said while it had witnessed a general improvement in customer sentiment, its clients remained cautious.

Revenue was up 9 per cent to $1,126,000, but operating costs also increased by 6 per cent to $510,000.

The group’s interest expenses increased by 226 per cent to $208,000 as a result of previous debt-funded business acquisitions.

Snowball managing director Tony McDonald said the acquisition of Officium Capital and “re-investment in the business to address foreshadowed industry changes have been the major focus for Snowball in the first half”.

The group reported spending $190,000 on “costs incurred in pro-actively preparing for changes to the business model in light of proposed regulatory changes”.

The acquisition of Officium Capital was approved by shareholders at a general meeting held last Friday, February 12.