WT Financial turns to organic growth following M3 acquisition

With three years of M&A activity under its belt, WT Financial says it is now well positioned to achieve organic growth.

Announcing its half-year results to 31 December 2023, the diversified financial services group said its net profit after tax (NPAT) declined from $2.3 million in the prior period to $2.2 million over 1H24.

The firm’s operating cash flow increased by 72 per cent to $1.8 million with $5.2 million cash at hand, despite settling its acquisition of Millennium3 (M3) with cash in December. The firm acquired 100 per cent of the firm from Insignia last year in a deal for $2 million, bringing over 140 advisers and $5 billion in assets under management.

The deal is expected to add over $50 million of revenue, approximately $4.5 million in gross profit and over $500,000 of net profit before tax (NPBT).

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Moreover, the M3 network has added approximately $5 billion in funds under administration (FUA), bringing WT Financial’s FUA to $23 billion.

Speaking on the half-year results, WT Financial chief executive Keith Cullen said: “Our focus is to ensure strong alignment in culture, values and upside with the advice practices we support.

“That focus led to some rationalisation of our networks last financial year which is now being rewarded with significantly improved profit for our advice network operations – with our core B2B segment recording a 19 per cent improvement in EBITDA to $3.8 million.”

Over the past three years, WT Financial has completed several M&A deals as it acquired Synchron in March 2022 and Perth-based Sentry Group in June 2021.

Cullen previously said, however, that WT Financial has ceased its formal M&A strategy, and the M3 acquisition was a one-off opportunity where it was approached by Insignia.

“Having completed the Synchron acquisition last year, we were very comfortable and I said that M&A is no longer part of our strategy although if the right opportunity arose then we would look at them, and this was one of those,” he said in 2023 about the acquisition.

In the firm’s 1H24 interim report, WT Financial reconfirmed the conclusion of its deliberate inorganic growth strategy as it looks to more internal growth.

“The completion of its various acquisitions over the past three years has represented the conclusion of a very deliberate strategy by WT Financial to shift from its previous direct to consumer (or B2C) focus to an advice network (or B2B) focus to capitalise on industry disruption,” the report stated.

As a result, the business is “well positioned” to achieve organic growth by expanding its existing advice practices, product and service innovation and the recruitment of more advice firms.

“While the company has now surpassed the critical scale it was striving to achieve through its acquisition and renovation strategy and its focus is primarily growth in profits of itself and the practices it supports, the directors will continue to consider corporate opportunities on their merits as and when they arise.”