SFG Australia plans to acquire up to 15 additional financial planning practices licensed through its subsidiary, Western Pacific Financial Advisers, while continuing to scour the broader market for suitable accounting and advice businesses to buy.
SFG inherited the Western Pacific dealer group through its 2011 merger with Snowball Group, and recently acquired three underlying practices including Western Pacific North Sydney and Western Pacific Cleveland.
Tony Fenning, SFG managing director, said there was an expectation within Western Pacific that SFG would be a potential acquirer of their businesses over time, provided the practices continued to grow and had the right business model.
He described the process of identifying and buying businesses as “slow and meticulous”, noting that merger and acquisition activity in the financial planning space had “slowed down” since the introduction of the Future of Financial Advice reforms on July 1.
However, Fenning said SFG still had a “huge pipeline” of other potential targets to work through, adding that the group’s acquisition of wealth management and accounting firm Lachlan Partners earlier in the year had opened up a whole new world of opportunities in the accounting space.
The accountant consolidator space has traditionally been the domain of groups like CountPlus and WHK, which changed its name to Crowe Horwath Australasia on August 1. Fenning said he still hadn’t given up on the idea of a merger between SFG and Crowe Horwath Australasia despite abandoning talks in May. However, he needed time to “digest” Crowe Horwath Australasia’s full-year results and the circumstances around the $70-million legal claim filed against one of the company’s member firms in New Zealand.
He said the group would pursue a strategy of “tuck-in acquisitions” in the accounting space, which would deliver complementary skills and services.
“With the integration of Lachlan Partners, we’re finding that there are as many accounting firms that want to talk to us as there are on the advice side,” he said.
“Accountants are really strong in the SME market and have a natural relationship with business owners, just as we believe we have a natural relationship with high net-wealth people coming out of senior positions in the professions, corporates and government.”
Fenning’s comments followed the group’s full-year results on Thursday, which featured a 14-per-cent increase in underlying net profit after tax to $32.5 million for the year to June 30, 2013, and a 15-per-cent increase on operating EBITDA of $48.1 million.
Funds under advice surged 16 per cent to $12.6 billion due to favourable market conditions and the addition of Lachlan Partners and several small tuck-in acquisitions throughout the year. Funds under management grew by 15 per cent to reach $5 billion.
The board announced a final dividend of 1.4 cents per share, pushing the full-year dividend to 2.6 cents, up 30 per cent on the previous year.
The dividend is fully franked and is payable on October 24.
