Highlights

• Fiducian Group (ASX:FID) has stayed resilient to the global economic slowdown
• The company continues to have a clean balance sheet and remains debt free with a positive working capital and cash flow position.
• FID plans to upscale its existing capacity and leverage its relatively low fixed-cost base, a strategy which it claims has helped it in uncertain times.

Fiducian Group Limited’s (ASX:FID) Executive Chairman has presented a report on the consolidated operating performance of the company and controlled operating entities for the year ended 30 June 2022.

FID is a diversified financial company that offers a range of premium wealth services and solutions. During its 26th financial year, the company has continued to capitalise on what it says are the main revenue-earning segments of its business model - Platform Administration, Funds Management, and Financial Planning.

Successfully weathering the global economy slowdown

Despite the world economy facing headwinds since the month of February (resulting from the Russia‑Ukraine conflict and China’s recent COVID-19 scare), the company registered its highest-ever net inflows of AU$309 million over the year. The global economy has been going south since February this year. Inflation has reached higher levels too.

Let’s have a look at some global macro forecasts:

Source: ©2022 Kalkine Media® | Data source: Company update

Despite the slump in the global economy, the company claims that its business model remains resilient as it redelivered double-digit underlying earnings per share growth for its shareholders.

FID remains hopeful for future growth, with a wide network of financial advisers expected to deliver funds flows that exceed their recent record-shattering year. FID is investing considerable efforts towards the distribution of new products and services while looking for further earnings per share accretive acquisitions of client bases.

Financial performance for the year

FID believes that its business model has been resilient while weathering the adverse impact of a changing economic environment and has enabled the consolidated entity to clock an increase of 9% in the Statutory Net Profit after Tax to AU$13.3 million in 2022 (2021: AU$12.2 million).

The underlying earnings per share increased 11.1% from 44.9 cents in 2021 to 49.9 cents in the current year. Further, after acquiring client bases while absorbing recent ups and downs in the share market, the combined FUMAA increased 5% to AU$10.9 billion over the previous year (June 2021: AU$10.4 billion).

FID continues to maintain a clean balance sheet while remaining debt free with a favourable working capital and cash flow position. However, if required, FID might consider capital raising or debt funding if presented with business growth opportunities or favourable acquisitions.

Final dividend, Cash flow and financial highlights

The Board is prudent yet confident that the future of their business is positive and likely to continue to strengthen through organic growth and acquiring client bases that can benefit from the Fiducian process.

A fully franked final dividend of 14.90 cents per share was declared, which catapulted the total fully franked dividend declared for FY2022 to 29.7 cents, a rise of 10% (2021: 26.90 cents).

Net operating cash flows increased from AU$16.0 million in 2021 to AU$18.7 million in 2022. During the year, FID benefitted from growth opportunities through the acquisition of the People’s Choice Credit Union (PCCU) business and funding of two salaried and franchisee offices, among other investment activities. These totalled at AU$9.7million, along with dividends of AU$9.3million and AU$1.5million in other financing activities paid during the year.

Source: © Ipopba | Megapixl.com

Net revenue to 30 June increased 19% to AU$51.2 million from AU$42.9 million in the prior year. Statutory NPAT increased by 9% to AU$13.3 million. Basic earnings per share on Underlying Net Profit After Tax (UNPAT) rose 11% to 49.9 cents.

Financial planning and offices

During the year, Funds under Advice rose from AU$3.7 billion in June 2021 to AU$4.4 billion in June 2022. FID grew its domestic footprint in South Australia and Northern Territory via acquisition of PCCU’s financial planning business. This acquisition raised the Group’s funds under management by nearly AU$1.1 billion. Based on current estimates, this could annually contribute a recurring revenue of AU$6.4 million.

FID will focus on delivering inflows by growth - organic and inorganic, along with the engagements in negotiating further acquisitions of client bases and increases in franchised offices.

Source: © Ipopba | Megapixl.com

FID now owns offices with salaried financial planners across Australia, all of whom continue to contribute to the company’s overall robust performance. Salaried offices now comprise more than 55.6% of Funds under Advice, with the number of salaried advisers now at 41.

Franchised offices now comprise nearly 44.4% of FID’s Funds under Advice, with a total of 45 franchised financial planners nationwide.

Platform administration and Funds under management

FID believes that platform administration is important to offer accurate and efficient services. Therefore, in April this year, the company rolled out a new platform, Auxilium.

As a disruptor, it offers SMAs and wide-ranging investment options to external dealer groups and small self-licensed financial advisers who are currently using platforms of large competitors. On a positive note, the company’s business development team has recently been successful in registering external licensees to start using their platforms.

The report states that the company’s in-house Manage-the-Manager system of investment continues to attract most retail funds placed with them.

Furthermore, Fiducian Funds have performed well in the medium to long term in their respective categories. The company is diversifying its assets through a variety of underlying fund managers to reduce risk and volatility.

Information technology game on point

System enhancements from the company’s IT team provide integration with their online reporting tools, providing them with an edge when competing for administration-related business. FORCe, which is the company’s financial planning system, and FasTrack, a platform administration system, have been the focus of these said system enhancements.

Way ahead for FID

As has been for the last 26 years, the company’s focus remains on enabling upscaling on their existing capacity while leveraging their relatively low fixed cost base. It is FID’s strategy which has benefited the company with rising revenues and increasing profits even in these uncertain times. The Board’s aim remains to build scale and deliver stable double-digit earnings growth in future years in the long run.