In morning trade the HUB24 Ltd (ASX: HUB) share price has charged higher following the release of the investment platform provider's full year results.
At the time of writing the HUB24 share price is up 5% to $11.65.
What did HUB24 report?
In FY 2019 HUB24 continued its strong form with Funds Under Administration (FUA) increasing 54% to $12.9 billion. Incidentally, since then its FUA have continued to rise and stood at $13.6 billion on August 23.
This led to the company reporting a 36% increase in platform revenue compared to the prior corresponding period to $54.1 million. Platform EBITDA came in 52% higher at $18 million and underlying NPAT grew 27% year on year to $6.8 million.
In light of its solid profit growth, the HUB24 board increased its second half dividend to 2.6 cents per share. This brought its full year dividend to 4.6 cents per share, which was 31% higher than the prior corresponding period.
What drove the solid result?
Management advised that its growth in FUA continues to be driven by organic opportunities from both existing and new adviser relationships and transition opportunities from other platforms. This is because "Advisers and their clients are seeking the benefits of value and choice from using HUB24's market-leading platform."
It also revealed that its investment in growing the platform's distribution footprint has resulted in 84 new agreements signed with licensees, 398 new advisers introduced to the platform, and record annual net inflows of $3.9 billion during FY 2019.
The good news is that management expects this solid growth to continue thanks to the increasing market opportunity.
It explained: "As more financial advisers move away from institutions and the demand for choice, value and market-leading platforms increases, the contestable market for HUB24 is expanding. The opportunity for growth is now significantly larger and in FY20 HUB24 will be making further strategic investments to capture growth."
It intends to do this by growing its distribution footprint nationally by recruiting approximately eight new staff to take advantage of this unprecedented opportunity.
It also plans to extend its leadership in Managed Portfolios by investing in an additional IT scrum team, which will deliver innovative solutions that provide enhanced accessibility and outcomes for clients.
Overall, these investments are expected to increase net flows to the platform and generate ongoing FUA growth. This means the company is now targeting a FUA range of $22 billion to $26 billion by the end of FY 2021, compared to its previous target of $19 billion to $23 billion.
The company's Managing Director, Andrew Alcock, concluded: "the future Australian Wealth Management landscape is now taking shape and we are continuing to move forward with positive momentum and an unprecedented growth opportunity. We are continuing to invest and based on our growth to date and strong pipeline, have upgraded our target FUA range for 30 June 2021."
