Sequoia has detailed multiple “abnormal items” which have led to the firm cautioining on its short-term performance.
In an update to the Australian Securities Exchange (ASX), the licensee said there had been a delay in recovery of claims cost repatriation of more than $2 million as well as increased adviser servicing costs, which had led to a shortfall in its licensee servicing division.
“Whilst we have made progress in seeking a recovery of these payments from our professional indemnity insurers, we have not recognised a contingent asset at this stage.”
In the direct investment division, Sequoia said it had fallen short of its EBITDA budget in the first half by approximately $500k after it had taken longer than anticipated to integrate the various companies within this division.
Lastly, there had been an unanticipated reduction in marketing of new specialist investment products in the current period which saw EBITDA in the equity markets division reduce by more than $500k against the corresponding period in FY22
However, it had successfully managed to grow its adviser numbers thanks to organic recruitment, particularly under Interprac Financial Planning.
“On the positive side, the number of advisers we provide licensee services to under four separate AFS licences has increased in recent months because of successful organic recruitment particularly under the Interprac Financial Planning AFS licence and expect to see the Licensee Services division record a very strong 2H23.
“The group is actively looking to recruit additional brokers in Melbourne and Sydney and considering a consolidation in the number of AFS licences it operates reducing this number from four to three by this year-end which we expect will have a positive impact on divisional margin.”
The firm said it expected to increase its half-year dividend by 40% from 0.5 cents per share to 0.7 cents per share and would announce its half-year results on 16 February.
