Evans Dixon profit takes big COVID hit

The wealth manager will not pay a dividend in order to preserve liquidity.

The firm said it would, as an interim measure, not pay a final dividend for the 2020 financial year

Wealth manager Evans Dixon has cut 22 per cent of its staff as the COVID-19 pandemic hits its revenue and profits in an industry undergoing disruption and structural changes amid concerns about a prolonged recovery from the global pandemic.

The firm said it would, as an interim measure, not pay a final dividend for the 2020 financial year as it “considers it prudent to preserve liquidity at this time”.

Evans Dixon reported on Thursday a 10 per cent drop in revenues for 2020 to $191.8m, blaming the weaker performance of its funds management business and the impact of its restructure, which included a considerable turnover of its executive team.

The wealth manager and broker said the reduction in its headcount would save it $13m in fixed remuneration costs on an annual basis, which started to flow through for the second half of its result.

Evans Dixon announced a statutory loss of $30.5m following $38.7m non-cash impairments of goodwill, other intangibles and jointly controlled entities arising from past merger and acquisition activity, resulting from industry disruption and structuring changes in the funds management sector.

Underlying earnings before interest and tax, depreciation and amortisation was down 19 per cent from the previous year, while underlying net profit after tax of $13.3m signified a 40 per cent fall.

“The effects of the COVID-19 pandemic have resulted in significant disruption to global financial markets and heightened uncertainty for the global economic outlook. We have implemented a number of initiatives to support our staff and clients across this turbulent period,” chief executive Peter Anderson said when announcing the results.

“The 2020 financial year has been a period of substantial transition for Evans Dixon as we build a sustainable platform for future growth. The softer financial performance reflects the ongoing business model transformation coupled with the challenging economic backdrop.”

Revenues from Evans Dixon’s funds management division fell 17 per cent to $57.9m, reducing the contribution it made to the overall business by 10 per cent.

The company said the result was partly due to the winding down of the Dixon Projects and “a pivot from related-party revenues”. Funds under management at June 30 was $6.7bn, down 1 per cent from 12 months previously.

The wealth advice division delivered a 2 per cent increase in revenue and underlying EBITDA, reaching $92.5m and $19.4m respectively.

Evans Dixon shares fell 13.46 per cent to close at 45c.