The S&P/ASX 200 Index (ASX: XJO) is up 0.2%, but it's certainly not getting any help from this crashing ASX 200 stock.
Shares in the financial services company closed yesterday trading for $2.93. In morning trade on Thursday, shares were just swapping hands for $2.46 apiece, down 16.0%. After some likely bargain hunting, shares are trading for $2.55 at the time of writing, down 12.9%.
Any guesses?
If you said Insignia Financial Ltd (ASX: IFL), give yourself a virtual gold star.
The Insignia share price is coming under heavy selling pressure today following the release of the company's 2024 financial year results (FY 2024).
Here are the highlights.
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Insignia Financial share price dives on full year losses
- Net revenue of $1.39 billion, up 0.9% from FY 2023
- Operating expenses of $1.01 billion, up 2.3% year on year
- Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $381 million, up 10.8% from FY 2023
- Statutory net profit after tax (NPAT) a loss of $185 million, compared to a positive $51 million the prior year
- No final FY 2024 dividend declared; the FY 2023 final dividend was 9.3 cents per share
What else happened with the ASX 200 stock in FY 2024?
Investors are bidding down the ASX 200 stock despite a 13.6% year-on-year increase in underlying NPAT to $216 million, which is towards the upper end of guidance.
The stark difference between the $216 million in underlying profit and the $185 million statutory loss was reported to be due to:
- The impact in FY 2024 of $257.7 million of transformation and separation costs
- Remediation costs and penalties of $243.1 million were provided for in FY 2024
- The inclusion in FY 2023 Statutory NPAT of the gain on sale of AET of $43.2 million after-tax
"Notwithstanding the positive momentum in the underlying business, NPAT was impacted by an increase in remediation provisions, as well as strategic investments," Insignia Financial CEO Scott Hartley said.
The 2.3% increase in full-year operating expenses may also have caught some by surprise. Management stated on 22 July that optimisation benefits were expected to see a net reduction in operating costs of $20 million to $25 million compared to FY 2023.
In other core financial metrics, average funds under management and administration (FUMA) increased by 3.2% year on year to $301.2 billion. Closing FUMA of $311.3 billion was up 5.5%.
With no final dividend paid, the full-year payout from the ASX 200 stock comes to 9.3 cents per share. That's down 53% from the passive income paid out in FY 2023.
As at 30 June, Insignia Financial had net debt of $371 million, $281 million of corporate cash and $318 million of undrawn senior debt.
What did management say?
Commenting on the results sending the ASX 200 stock sliding today, Hartley said, "It is pleasing to report strong underlying net profit after tax growth of 13.6% to $216.6 million, underpinned by a net reduction in costs of $24 million."
Hartley added:
We acknowledge the pause in dividend payments will be disappointing for some of our shareholders however, at this time, we must prioritise strengthening our balance sheet…
Over the last 12 months, we have successfully migrated MLC Wrap to Expand, restructured our Advice business, and divested non-core assets, demonstrating our strong track record of execution.
We continue to simplify our business and the recently announced new operating structure will drive enhanced accountability and improve efficiency.
What's next for the ASX 200 stock?
Looking at what might impact the ASX 200 stock in the year ahead, Insignia Financial said its key FY 2025 priority was to accelerate the implementation of its cost optimisation program to deliver additional cost benefits.
Net revenue margin is forecast to be in the range of 42.5 bps to 43.3 bps. FY 2025 operating expenses are expected to be between $947 million and $952 million.
Insignia Financial share price snapshot
With today's retrace in the Insignia Financial share price factored in, the ASX 200 stock is down 11% over 12 months and up 9% year to date.
