Sequoia Financial Group has announced a 55.6 per cent drop in EBITDA to $5.5 million for FY23, citing weaker equity market conditions and non-recurring expenses, though it remains focused on inorganic growth through acquisitions within its professional services and licensees services divisions.
In the year to 30 June 2023, revenue fell to $131.5 million, a 10.7 per cent loss from $147.3 million in FY22.
It said results were affected by weaker equity market conditions, non-recurring expenses, notably claims and penalties of $2 million, and unrealised losses on its share portfolio of $0.7 million.
Despite these impacts, the business ended FY23 with a “far stronger balance sheet and in more recent times core business is again experiencing strong growth”, the ASX announcement stated.
According to Garry Crole, Sequoia chief executive and managing director, FY23 was a “year of transition” for the firm.
“The year tested the resilience of the financial services industry with rising interest rates, global inflation, a reduction in the available adviser pool and a heavy fall in market volumes,” he commented.
“Positively, we navigated the delicate balancing act of maintaining profitability while absorbing increased operational expenses from an inflationary market in addition to several significant non-recurring expenses.”
The sale of its equities clearing business, Morrison Securities, in March for a total cash consideration of $40.5 million, is expected to provide liquid capital for future mergers, where it will focus on general insurance broking, financial planner customer books and self-managed super fund (SMSF) administration roll-ups.
In June, it acquired a 20 per cent stake in Euree Asset Management which looks to open further multi-asset fund options for Sequoia’s advisers.
Moreover, it acquired the business assets of an expert company registration provider Castle Corporate and Castle Legal in August 2023, which will boost its professional services division’s market share and annual profit earnings contribution with immediate earnings enhancement.
Currently in the third year of a five-year growth plan with a target of $300 million, Sequoia said now it does not expect to reach the target within the time frame.
However, it remains committed to reaching this milestone by June 2026.
The firm was also busy with appointments, as it announced the hire of Jonathan Trapnell, former Synchron head of adviser support, to assist the group in managing its education and licensee partnership programs.
Effective 28 August 2023, Trapnell will manage the running of Sequoia’s adviser education programs as well as the associated relationships with the group’s industry partners.
Trapnell worked with Synchron for over a decade, including his seven years as head of adviser support, and began working in financial services in 2006.
The firm recently appointed Martin Morris, former chief distribution officer and director at Praemium for seven years, as its chief operating officer in August.
Morris has over 30 years’ experience in financial services across superannuation, financial advice, business development and distribution.
