Finexia delivers solid $1.82m half-year net profit as key business segments grow

Diversified financial services group Finexia Financial (ASX: FNX) has delivered a solid underlying earnings performance in line with forecasts for the first half of FY23 by posting a $1.82 million net profit after tax.

The result was supported by an 18 per cent lift in group revenue to $7.06 million with Finexia reporting that each of its business segments - Private Credit, Funds & Asset Management, and Equity Capital Markets - outperformed the previous corresponding period.

“It’s pleasing to note that we’ve been able to increase revenue despite the macroeconomic headwinds being felt across the broader economy,” says Finexia’s managing director Neil Sheather.

Finexia, an ASX-listed specialist asset manager with key strengths in private credit and equity markets, expanded its funds management operations during the half year following the launch of the Childcare Centre Incubation Fund.

The fund secured $50 million in preliminary commitments from wholesale investors and seed funding from the founders at the end of December, a figure that has since grown to more than $55 million.

“We’ve been extremely pleased with the level of interest being expressed in the fund by both investors and childcare operators,” says Sheather.

“The fund will provide significant positive momentum in the current half year which will be reflected in the full-year results for FY23.

“This has given us confidence to affirm our previous group operating profit guidance target of $4.3 million.”

Sheather says Finexia continues to pursue opportunities to secure a wholesale funding facility to fuel the next phase of corporate growth.

The company delivered a pre-tax operating profit of $2.44 million for the first half of FY23, down from $2.87 million in the previous corresponding period, while the net profit of $1.82 million compares with $2.56 million previously. However, the latest result largely reflects a change in the group’s tax position and provision for an impairment on a single isolated secured loan.

During the half-year, Finexia’s Stayco Resort Accommodation Fund doubled operating revenue as it capitalised on a strong domestic tourism market in southeast Queensland.

The Asset & Funds Management division, which includes the Childcare Centre Incubation Fund, currently accounts for just 9 per cent of group revenue.

“The Finexia board expects this division to grow its contribution to overall group revenue significantly and is projected to eventually account for approximately 30 per cent of revenue,” says Sheather.

Finexia delivered a cash operating profit of $3.11 million for the December half, allowing the company to consolidate and grow its cash position in tandem with the net tangible asset backing of its shares.

Finexia lifted total group assets to $73.95 million during the half year, up 42.4 per cent from a year earlier.

The group had $10.1 million cash at bank on 31 December 2022, but has subsequently completed a non-renounceable pro-rata rights issue of one new share for every two shares held, raising a total of $1.29 million before costs.

“Among Finexia’s key priorities is to generate sustainable recurring cash profit which will be pivotal in realising our future dividend ambitions,” says Sheather. “We have a firm commitment to developing a sustainable dividend program for Finexia shareholders.”

Finexia employs a group of highly experienced corporate advisory and capital markets professionals with decades of market experience specialising in finance structuring and tailoring investment solutions across the client spectrum. The company has offices in Sydney, Queensland and San Francisco.