Praemium spruiks ‘positive momentum’ amid 30% FUA growth

In an ASX announcement on Monday morning, Praemium reported a statutory net profit after tax (NPAT) of $8.8 million for the 2023–24 financial year, down 42 per cent from $15.2 million at the close of FY22–23.

However, the company pointed to a second half uplift in its earnings of 39 per cent as a sign of “positive momentum”, taking its EBITDA to $21.5 million over the final six months of FY23–24.

For the full year, revenue and other income of $84.9 million was up 12 per cent compared with $76.0 million for the year to 30 June 2023. Praemium added that its second half revenue “improved significantly” with repricing and FUA and portfolio number growth.

Specifically, 1 April 2024 repricing of SMA fees added 6 bps to the average revenue margin for separately managed accounts (39 bps quarter to June 2024 versus 33 bps for the nine months to March 2024).

In its annual report, Praemium chairman Barry Lewin and chief executive Anthony Wamsteker said: “As the wealth management industry in Australia continues its rapid growth, investment platforms, such as that provided by Praemium, are a valuable component of the overall industry architecture.

“Praemium is relatively unusual in that it originally built its technology from scratch, using very little of the existing financial services technology that still underlies much of the platform market today.

“The particular focus of the Praemium technology became very attractive to sophisticated financial advisers with high-net-worth clients. This more affluent segment remains the primary target market for Praemium today.”

Praemium’s total funds under administration (FUA) at 30 June 2024 was $57.4 billion, up 30 per cent from $44 billion in FY22–23.

Broken down into segments, platform FUA reached $28.1 billion, up 26 per cent from $22.2 billion. SMA FUA was $11.3 billion, up 18 per cent from $9.6 billion, Powerwrap FUA was up just 1 per cent to $12.7 billion ($12.6 billion in FY22–23), while the OneVue acquisition added $4.0 billion to Praemium’s platform FUA.

VMAAS non-custodial portfolio administration and reporting service FUA was $29.3 billion, up 34 per cent from $21.8 billion.

“Praemium enters 2025 with optimism and positive momentum. The SMA platform’s premium offer is priced at competitive levels consistent with the market we serve,” Wamsteker said.

“We will look to that experience as a model for ensuring the same rigorous review is applied to our VMA and VMAAS offers in 2025. Our investments in capability and resilience have set us up for long-term success.”

He added that the firm’s OneVue platform acquisition is “on track”.

“We have finalised plans for migration of OneVue clients to Praemium solutions. Each client has had this plan agreed with them. Our plans have confirmed that $3 million in synergies is both achievable and expected,” Wamsteker said.

Praemium added that its earlier experience acquiring Powerwrap saw the firm “successfully integrate technology and workflow to produce synergies in costs”.

“This is experience which will be brought to bear in adding OneVue clients and funds to the Praemium technology suite, resulting in an estimated synergies and earnings uplift of $3 million per year,” it said.

According to Praemium, OneVue’s FUA at its acquisition date of 15 April was approximately $4.1 billion.

“This would result in $6.7 million in contingent consideration if there were no changes, excluding market revaluation impacts, to that position up to the 18-month measurement date,” it said.

“Notwithstanding the above, OneVue, experienced a net outflow of $126 million over the June 2024 quarter. Quarterly outflows are expected to remain at $100 million during the two measurement periods and FUA is forecasted to be $3.7 billion at 15 January 2025 (nine months) and $3.4 billion at 15 October 2025 (18 months).”