Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Resolved the last of the legacy issues, including the settlement of representative proceedings.
- Finalized the simplification of the funds business, including the internalization of VRF.
- Strong revenue and earnings growth in E&P Wealth, with a year-on-year improvement in annualized revenues across all divisions.
- Significant improvement in the second half of the year, with net revenue up 9% and underlying EBITDA of $6.6 million.
- Continued investment in high-quality people and enhancement of capital markets offering.
Negative Points
- Group net revenue down 16% to $140.9 million due to lower transaction volumes and market environment.
- Underlying EBITDA of only $2 million for the year, significantly lower than the prior year.
- Statutory net loss of $27.7 million driven by non-cash impairment of $19.3 million in E&P Capital.
- Directors determined not to declare a dividend for the year due to financial performance.
- Operating expenses were only 3% lower than the prior period, indicating limited cost-saving measures.
Q & A Highlights
Q: Can you provide more details on the significant improvement in the second half of the year?
A: Ben Keeble, CEO: The second half saw net revenue up 9%, despite a 30% decline in funds revenue. Underlying EBITDA was $6.6 million compared to a loss of $4.7 million in the first half. This improvement was driven by strong revenue and earnings growth in E&P Wealth and a pickup in capital markets activity.
Q: What are the key strategic focuses for E&P Financial Group moving forward?
A: Ben Keeble, CEO: Our strategy includes delivering top-line growth, expanding our product offering in the wealth space, enhancing our capital markets offering, and focusing on restoring value for shareholders. We also aim to invest in high-quality people and enhance our fixed income capability.
Q: How is the company addressing the challenges in the M&A environment?
A: Ben Keeble, CEO: While M&A is operating in a more challenging environment, it remains an important part of our client coverage model. We have seen a significant improvement in the second half due to a pickup in activity, particularly in capital markets.
Q: Can you elaborate on the financial performance of E&P Wealth?
A: Ben Keeble, CEO: E&P Wealth saw growth in funds under advice to $29.4 million as of June 30, 2024. This was driven by an increase in family office pipeline balances, solid investment performance, and growth in full-service client numbers. Net revenue and underlying EBITDA both improved, reflecting the benefits of strategic initiatives.
Q: What are the company's plans regarding dividends?
A: Ben Keeble, CEO: The directors have determined not to declare a dividend for the year due to the full-year financial performance. However, the Board remains committed to a full-year dividend policy of 75% to 85% of NPATA in a normal operating environment.
Q: How is E&P Financial Group addressing ESG and sustainability?
A: Ben Keeble, CEO: We have several initiatives, including over $60 million growth in sustainable products under advice and the launch of a sustainable multi-asset portfolio. We also executed over $140 million worth of transactions in sustainable areas and achieved carbon neutrality with Scope 1 and 2 emissions.
Q: What is the outlook for E&P Financial Group?
A: Ben Keeble, CEO: With legacy issues resolved and business simplification complete, we are focused on returning to long-term profit growth and restoring value for shareholders. July 2024 trading was consistent with the improved performance seen in the second half of FY24.
Q: Can you provide more details on the company's cash position and debt?
A: Robert Darwell, CFO: As of June 30, 2024, the group held $48.9 million in cash and no debt. Since then, we entered into an insurance premium financing facility for $2.1 million, which will be fully amortized by the financial year-end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
