Keith Cullen

WT Financial Group has defied a drop in revenue by posting growth in profits, due to a strategy of rationalising its advice network to focus on supporting fewer, more profitable practices.

In the group’s 1H24 results posted to the ASX on Thursday morning, Wealth Today said the results for the half-year reflected the “continued success” of the integration of previous acquisitions and the slight decline in revenue was the result of rationalisation of its networks and operations to focus on profitability.

Total revenue and other income during the period decreased from $83.45 million in 1H23 to $80.14 million, while direct costs of revenue decreased from $74.88 million to $71.75 million.

EBITDA (earnings before interest, taxes, depreciation, and amortisation) grew 8 per cent from $2.88 million in 1H23 to $3.11 million.

Net profit before tax was up 7 per cent from $2.11 million to $2.26 million, but net profit after tax was down 4 per cent from $2.285 million to $2.19 million, which the company said was due to an income tax benefit of $171,000 in 1H23.

Keith Cullen told Professional Planner the rationalisation of the advice network included the departure of 100 advisers.

“There’s probably 20 of those we would have really liked to have kept, the balance of them were people that hadn’t done FASEA or that didn’t fit comfortably inside our network or they sold their business – there’s been a lot of consolidation of practices as everybody knows,” Cullen said.

The licensee business had largely shifted from a flat fee model to variable fees based on profit, which Cullen said explains the revenue drop but revenue boost.

“A key differentiator for us is we’re focused on the profitability of individual practices because with the vast majority of our practices we share in the revenue,” Cullen said.

“We’re one of the few licensees that can have a net reduction in adviser numbers and actually end up more profitable.”