E&P spruiks ‘resolution of legacy issues’ in full-year results

In an ASX announcement on Thursday morning, E&P Financial Group announced that its funds under advice (FUA) grew to $29.4 billion at the end of the 2023–24 financial year.

This represented a 26 per cent increase from $23.4 billion in FY22–23, which the firm attributed to an “uplift in family investment office client balances and growth in the value of existing client portfolios driven by increased share of wallet and solid investment performance”.

However, the group also reported a statutory loss after tax of $27.7 million, which it said was “heavily impacted by a non-cash goodwill impairment of $19.3 million in E&P Capital recognised in 1H24”.

E&P also noted that the “quality” of its wealth division’s FUA had improved, with more of its clients either joining or transferring to an FUA-based fee service.

“At 30 June 2024, 69 per cent of all client FUA was serviced under a FUA-based fee arrangement, up from 62 per cent at 30 June 2023 and 41 per cent at June 2020. These numbers are a reflection of the success of previous initiatives to transition the broader service offering to a contemporary FUA-based model,” E&P said.

“Overall, total client numbers of approximately 7,400 as at 30 June 2024 were broadly stable compared to 30 June 2023, as full-service client growth led by Retail Wealth Management (RWM) was offset by a reduced number of clients on a fixed-fee arrangement.”

In April, the Federal Court of Australia approved the settlement of the class action filed by Shine Lawyers in December 2021 against Dixon Advisory & Superannuation Services (DASS), E&P, Alan Dixon and Christopher Brown for $16 million.

E&P managing director and chief executive, Ben Keeble, said this was an “important milestone”.

“Financial year 2024 was a transitional year, marked by several key developments as we resolved our outstanding legacy issues, reset our strategy for the future and solidified our core business. However, challenging market conditions impacted the level of activity in our transactional businesses as mentioned in our first half result,” Keeble said.

“The group reached a settlement of the Representative Proceeding against EP1, DASS and former directors, which was approved in the Federal Court, representing an important milestone in the resolution of legacy issues. Additionally, the transformation of the E&P funds division was completed during the period.”

The group’s wealth division also delivered an 8 per cent growth in revenue compared with FY22–23, with E&P noting that the higher proportion of FUA-based fees “should provide strong momentum for future periods”.

According to the ASX announcement, E&P Funds completed the “rationalisation of real asset strategies during the period”, which included the responsible entity internalisation of the US Masters Residential Property Fund (URF) – the fund at the heart of the Dixon collapse.

Looking ahead, E&P said it would look to accelerate revenue growth across each of E&P Wealth, E&P Capital and E&P Funds, as well as enhancing its “product offering for key segments and ensuring optimal client experience across the business”.

“With legacy issues resolved and business rationalisation complete, the active focus for the group is on returning EP1 to long-term profit growth and restoring value for shareholders. This includes the consideration of formally applying to the ASX to delist the company,” E&P said.

“The start of FY25 has been promising, with July trading consistent with the improved performance in the second half of FY24. The implementation of strategic initiatives aimed at driving revenue growth and enhancing operating margins continues to progress as planned.”