Sequoia Financial Group (ASX:SEQ) 1H FY25 results presentation, February 2025

Sequoia Financial Group (ASX:SEQ) has reported its first-half FY25 financial results, highlighting a 137% increase in Net Profit After Tax (NPAT) despite a 3.5% decline in revenue due to divestments and restructuring efforts.

Key Financial Results (1HFY25)

• Revenue: $60.6 million (down 3.5% on PCP)
• NPAT: $3.6 million (up 136.8% on PCP)
• Operating cash flow: $3.4 million (up 61.9% on PCP)
• Interim dividend: 2.0 cents per share (fully franked, same as PCP)
• Operating profit (EBITDA): $2.7 million (down 14.6% on PCP)

Revenue decline due to divestments

The company attributed its slight revenue drop to strategic changes within its Licensee and Adviser Services Division, which involved closing or divesting certain businesses. However, this was partially offset by strong growth in its Legal and Administration Services Division, which saw a 70% increase in operating profit over the prior corresponding period.

Sequoia also divested two general insurance broking companies and two media businesses to streamline operations and focus on core services.

Cost efficiencies and workforce reduction

The group has undergone a major restructuring, simplifying its business model and cutting headcount by more than 10%, leading to an estimated $1.5 million in annual employment cost savings. While the company incurred upfront restructuring and rebranding expenses, it expects these changes to drive long-term efficiency and profitability.

Capital management and dividends

Sequoia declared an interim fully franked dividend of 2.0 cents per share, maintaining a payout ratio of 70%. Looking ahead, the board intends to maintain a payout ratio of 40-60% over the next 2-3 years, up from the previously stated 20-50% range.

Additionally, the company reduced its issued capital by 5% through an on-market share buyback, purchasing shares at an average price of 41.5 cents per share.

Outlook for 2HFY25

Sequoia remains optimistic about its strategic realignment, expecting a strong second half as recent changes take effect. The company is positioning itself to capitalize on increasing demand for financial advice, particularly as more Australians focus on wealth management and retirement planning.