Wealth management company, Netwealth Group Limited (ASX: NWL) has released its half-year results for FY 2019. For the half-year period, the company has reported revenue from ordinary activities of $48.2 million which is 19% higher than the previous corresponding period (pcp). The company has reported an underlying NPAT of $17.0 million which is 21.1 percent higher than pcp. Following the announcement, the share price of the company has risen 7% on 18 February 2019.
The company’s Board has declared fully franked interim dividend of 5.5 cents per share with the payment date of 28 March 2019 and record date of 26 February 2019.
In 1H 2019, the company delivered FUA (Funds Under Administration) growth of 5.7%. As at 31 December 2018, the company had $19.0 billion of FUA and $3.1 billion of Funds Under Management. The company’s Fee Paying FUA decreased from 65.2% at 31 December 2017 to 61.6% as at 30 June 2018. In 1HFY19, the Fee Paying FUA has increased by 70bps to 62.3% over the past six months.
The company has reported Underlying EBITDA of $24.8 million in H1 FY 2019 which is 21.2% higher than pcp. Further, the company has reported an underlying EBITDA margin of 51.5% which is 1 per cent higher than pcp.
In 1H FY 2019, the platform revenue of the company increased by 18.2% on pcp. During the half year period, the total operating expenses increased by 16.8% to $23.4 million on pcp. As at 31 December 2018, the client account pooled cash balance was $1.6 billion. The cash administration fee earned in the first half of FY 2019 was around $0.6 million higher than the run rate based on 31 December 2019 balance.
To capitalize on the significant market opportunities and to increase the new business inflows, the company brought forward the additional of resources in IT & Sales into 1H 2019, largely offset by lower personnel costs in other areas.
The company’s IT team is focused on increasing its data analytical capability to streamline product and service innovation, maximize margins and improve customer service.
While providing the outlook for 2019, the company informed that a number of advisers and intermediaries have recently selected Netwealth as their preferred platform against incumbent platforms and in-house administration. The company is confident that its FUA net inflows for FY 2019 will be greater than FY 2018.
The company is seeking to offer value by providing the best service and functionality, at a competitive price. In the second half of FY 2019, the company will continue to increase its investment in IT, Sales, product and operations staff levels.
NWL’s stock is currently trading at a price of $7.490 with a market capitalization of ~$1.66 Billion. The counter opened the day at $7.200 and reached the day’s high of $7.505 and touched the day’s low of $6.940 with a daily volume of ~426,184. The stock has provided a YTD return of -7.89% & also posted returns of -12.38%, -7.28% over the past six months and three months period respectively. It had a 52-week high price of $9.927 and touched 52 weeks low of $52.773, with an average volume of ~359,525.
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