Fiducian grows Funds Under Management by 6.2 percent to $13.7 B for the 3 months to March 2024

About Fiducian Limited

Fiducian Group Limited (Fiducian, the Group, ASX: FID), is an ASX-listed financial services business that has operated for the past 28 years. The Group’s operating divisions cover financial planning, investment funds management, superannuation, investment platform administration and information technology solutions. Fiducian also provides technology solutions for financial planners and their clients.

Strong March quarter Funds Under Management inflows

Buoyant equity market conditions throughout the 2024 March quarter have boosted Fiducian’s Funds Under Management, Administration and Advice (FUMMA) by an impressive 6.2 percent to $13.7 billion during the 3 months to March 2024, up from $12.9 billion as at 31 December 2023. This compares to $12.3 billion a year ago, representing an increase of 11.3 percent per annum.

The Australian share market hit an all-time high in the March quarter, despite elevated household debt levels relative to household income. The strong employment market and only a third of Australian households having a mortgage, are factors that continue to support Australia’s resilient economy. Historically high house prices and a buoyant share market create a wealth effect in the minds of many Australians, and this is supporting consumer confidence which in turn is driving steady economic growth.

Strong operating cash flow supports 60 – 70 percent dividend payout ratio

Annual double-digit FUMMA growth leverages Fiducian’s earnings and operating cash flow because the Group’s relatively fixed cost base and superior digital processing capabilities ensure that incremental income is greater than incremental costs. This means that an increasing scale of operations lifts EBITDA at an accelerating rate above the Group’s fixed cost base. The Group’s quarterly cash flow report to 31 March 2024 illustrates this operating leverage with net cash from operations of $4.7 million for this 3-month period, compared to an after-tax profit of $6.8 million for the 6 months to 31 December 2023. These numbers highlight Fiducian’s impressive profit to cash conversion ratio which was 1.16 times for the June 2023 financial year when Fiducian recorded a statutory net profit after tax of $12.3 million, and an operating cash flow of $14.3 million. The high cash-backed profits support Fiducian’s generous dividend pay-out ratio of between 60 and 70 percent of net profit after tax. This high payout ratio is sustainable given the Group’s robust balance sheet with no debt and $20.4 million cash as at 31 March 2024.

Looking Ahead

The share market in April has been impacted by a mix of geopolitical tensions in the Middle East and sticky inflation. Consequently, the strong ASX market performance in the March quarter may pause until there are clear signs that inflation is under control and existing geopolitical tensions de-escalate.

Fiducian’s FUMMA inflows are strongest during periods of positive investment markets. Accordingly, Fudician’s rate of investment inflows may slow in the immediate period ahead after a year of solid performance. However, markets recover, and Fiducian’s investment funds inflow is highly likely to remain positive at least over the medium-term. Furthermore, Fiducian’s superior platform functionality and wide range of investment choices for clients should see ongoing FUMMA and double-digit earnings growth maintained at least over the medium term.