Prime Financial Group Witnessed 255% Growth In Its Reported EBITDA For 1H19

Prime Financial Group Limited (ASX:PFG) is a diversified financial service and advisory company. The Company provides financial advice, funds management, corporate advisory and finance.

The company has recently released its Half Year Report for the period ended 31 December 2018. As per the same, 1H19 Prime’s revenue decreased by $68,189 i.e., 1% to $11.1 million in 1H FY19 as compared to the previous corresponding period (pcp). The decrease in revenue was driven by the decline in Other Income and Equity Accounted Profit. Revenue from the company’s core business operations increased by $170,004.

Although Wealth Management, which includes SMSF (Self-Managed Super Fund), was mostly flat due to lower transactional and investment brokerage revenue, the dedicated SMSF team have made a positive revenue contribution since expansion in July 2018. The investment made in this team has yielded prospective revenue on a 12-month view of more than $700,000, this is expected to be earnings accretive in 2H19.

Operating Overheads for 1H19 were negatively impacted by an increase in Employee Benefits, increasing from $5.7 million in 1H18 to $6.3 million in 1H19. Approximately $350,000 - $400,000 of this expense is non-recurring in nature. However, the difference relates substantially to additional resourcing for our SMSF and Capital Advisory teams. This additional capacity is part of driving the organic revenue growth for the firm.

The reported earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) attributable to members for the period was $1.7 million compared to a loss of $1.1 million in 1H18 which represents an increase of 255%.

In 1H19 the Group generated net positive cash flow from operating activities of $1.6 million.  This was offset by cash outflows from investing activities of $3.2 million, substantially due to the buyback of the institution’s equity in PWM and dividends advanced or paid to non-controlling interests. The Cash inflows from financing activities were $0.8 million.

At 31 December 2018, the Group net debt, calculated as borrowings less cash and cash equivalents, was $9.8 million (30 June 2018: $7.7 million). The main reason for the $2.1 million increase in debt was for acquisitions ($1.7 million).

The Board has resolved to declare a fully franked interim dividend of 0.20 cents per share, which is a reduction on the prior year interim dividend of 0.45 cents per ordinary share. Profits are being retained to take advantage of growth opportunities and reduce acquisition-related debt. The record date for determining the eligibility has been decided April 5, 2019, and the Payment Date shall be May 3, 2019.

Now, let’s have a glance at the Prime Financial Group’s stock performance and the return it has posted over the last few months. The stock last traded at a price of $0.090, down by 5.263 % during the day’s trade with a market capitalisation of ~$18.14 Mn as on 27 February 2019. The counter opened the day at $ 0.095, which was also the day’s high and touched a day’s low of $ 0.090 with a daily volume of ~ 82,838. In the last six months, the share price of the company decreased by 29.63% as on 26 February 2019. It had a 52-week high price of $ 0.165 and touched 52 weeks low of $ 0.084, with an average volume of ~ 158,414 approximately.

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