Centrepoint Alliance Limited reports profit turnaround and new revenue model as business transformation progresses swiftly

From

Alan Fisher

Business services provider to financial advisers, Centrepoint Alliance Limited (ASX: CAF) (‘Centrepoint’, the ‘Company’ or the ‘Group’), has announced a turnaround in profit for the financial year ended 30 June 2019 (FY19), and a successful transition to a new revenue model.

The company reported a pre-tax profit of $1.2m (compared to FY18 $3.4m loss) and earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.4m (compared to FY18 $1.6m loss).

Chief Executive Officer Angus Benbow said the FY19 results validated the new strategy announced in August 2018. “Last year, we embarked on a new strategy to focus on providing services to advisers, with the introduction of a new pricing model which repositions the business for growth. I’m very pleased to say these initiatives are showing strong signs of success.”

Centrepoint was one of the first in the market to move to a fee-based revenue model. “The financial advice sector’s business model need to change”, he said. “We are leading by example and we were one of the first scaled advice businesses to reset pricing.”

Mr Benbow said that 86% of firms in the Centrepoint authorised representative network had transitioned to the new pricing model. “Our revenue mix is moving to be predominantly sourced from service fees paid by advisers.”

FY19 Summary

  • Profit before tax of $1.2m (FY18 $3.4m loss)
  • EBITDA of $2.4m (FY18 $1.6m loss)
  • Accelerated transition of revenue mix towards recurring fees
  • 86% of adviser firms retained under new pricing model (195 of 227 firms)
  • 80% increase in new onboarded advisers
  • Chairman, Alan Fisher, said: “Centrepoint is well placed to take advantage of the disruption in the wealth management sector.

“Our business transformation is progressing well, and we remain focussed on assessing partnerships, acquisition opportunities and enhancing shareholder value.

“During the year, we have welcomed new advice businesses to the network and continue to see financial advisers proactively looking for a quality business services partner. In fact, we recruited a record number of new financial advisers in the fourth quarter of FY19. We continue to assess more firms, as they are increasingly attracted to our service offer.”

Mr Benbow said that there is ever more pressure on advisers and advice firms – costs are rising, regulatory requirements are increasing, and revised education standards are transforming the industry. “We know advisers are feeling fatigued with the level of change,” he said.

“This is why we have implemented a model where both self-licensed and corporate licensed advisers can access a full suite of business services and support. With the quality and scale of our offer, we are well placed to support advisers as they adapt to this new landscape by providing the tools and services they need to succeed.”

Centrepoint offers a complete suite of governance, business management, client growth and advice services that enable advisers to spend more time providing advice to their clients.

Looking forward, Mr Benbow said that Centrepoint’s areas of focus for FY20 are to:

  • Launch fee-based offer for self-licensed advisers
  • Drive continued growth in licensed network
  • Further invest in technology and data to enable greater scale and superior service to advice firms

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