SFG Australia’s funds under management grow to $5 billion

Acquisitions and synergies have been a winning combination for shareholders in SFG.

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Previously known as Snowball Group, the renamed SFG Australia (ASX: SFW) has reported an impressive set of results for the financial year ending 30 June 2013. SFG focuses on delivers services ranging from portfolio construction and management to stockbroking and insurance to affluent clients including business owners, family offices and high net worth individuals.

The financial advice and wealth management firm has over the past 12 months not only increased its total funds under management (FUM) by 15% to $5 billion but also boosted revenues by 14% to $134.3 million and underlying net profit after tax (NPAT) by 14% to $32.5 million.

Growth in FUM, revenue and earnings was helped not just by improving market conditions but also by strategic acquisitions, including the acquisition of Lachlan Partners, which contributed $5.5 million to revenues since being acquired in March, and further synergies from the prior acquisition between Snowball and Shadforth.

Shareholders can expect more acquisitions by SFG in the future. Management stated that it will continue its “long standing strategy to pursue and deliver attractive transforming and tuck-in transactions in a continually consolidating and rapidly changing industry.” Consolidation across the sector continues with both Perpetual (ASX: PPT) and Equity Trustees (ASX: EQT) currently battling it out for control of Trust Company (ASX: TRU).

The improved earnings led the board to increase both the interim and final dividends during the year. A final dividend of 1.4 cents per share (cps) has been declared, bringing the full year fully franked dividend to 2.6 cps, up 30% on FY2012.

Foolish takeaway

With the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) increasing by around 14% over FY2013, it has been a positive environment for the financial advice and wealth management sectors. This backdrop has helped SFG’s share price race 77% higher over the 12 months to June, while peer Yellow Brick Road (ASX: YBR) surged 125%.

With management stating that they expect to see continuing momentum in FY2014, the financial services sector would appear to have the momentum to continue to perform well over the current financial year.

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Motley Fool contributor Tim McArthur owns shares in Perpetual.

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