Transformation Costs Weigh on SelfWealth as Bell Acquisition Looms
SelfWealth Ltd reported a 4% revenue increase and sustained profitability in H1 2025, while advancing a major transformation program and entering a proposed acquisition deal with Bell Financial Group.
- 4% revenue growth to $14.1 million in H1 2025
- Underlying EBITDA declined 63% to $1.3 million due to transformation costs
- Funds under administration rose 15% to $11.6 billion
- Trading revenue surged 27.5% with increased brokerage fees and volumes
- Entered scheme implementation deed with Bell Financial Group for acquisition
Solid Revenue Growth Amid Transformation
SelfWealth Ltd (ASX: SWF), a prominent Australian fixed-fee broker, has released its half-year financial results for the six months ending 31 December 2024, revealing a 4.3% increase in operating revenue to $14.1 million. This growth was driven by a notable 27.5% jump in trading revenue to $4.4 million, underpinned by higher brokerage fees and a 9.3% rise in trade volumes to 406,000 trades.
Funds under administration (FUA) also expanded by 15% to $11.6 billion, reflecting continued client asset growth despite a highly competitive brokerage market. The number of active traders remained stable at approximately 129,000, indicating strong customer retention during a period of significant operational change.
Profitability Pressured by Transformation Investments
While SelfWealth maintained profitability with an underlying EBITDA of $1.3 million and a net profit after tax (NPAT) of $0.4 million, these figures represent steep declines of 63% and 75% respectively compared to the previous corresponding period. The company attributed this contraction primarily to accelerated investments in its transformation program, which aims to shift from a technology-centric model to a customer-led growth strategy.
Operating expenses, adjusted for non-recurring items, rose to $9.3 million from $6.5 million a year earlier. These costs reflect increased spending on IT security, compliance, system upgrades, and customer engagement initiatives designed to enhance platform functionality and reduce the cost to serve over the medium term.
Strategic Acquisition Proposal by Bell Financial Group
In a significant development, SelfWealth announced it had entered into a scheme implementation deed with Bell Financial Group to be acquired for $0.25 cash per share, with an option for Bell shares as consideration. The Board views this offer as compelling for shareholders, employees, and clients alike, highlighting the strength of SelfWealth’s market position and the value of its ongoing transformation.
The scheme meeting is expected before the end of March 2025, with a detailed scheme booklet to be distributed to shareholders outlining the rationale and independent expert opinions. Meanwhile, SelfWealth has paused its on-market share buy-back program initiated earlier in 2024, which had repurchased over 3.3 million shares.
Outlook and Market Positioning
CEO Craig Keary emphasised the company’s focus on improving customer service and operational efficiency during this intense period of change. Despite the short-term profit pressures, the company’s cash position remains strong at $10.1 million, with no debt and steady net operating cash flow of $1.3 million.
As SelfWealth transitions through its transformation and potential acquisition, the market will be watching closely to see how these strategic moves translate into sustainable growth and profitability in a fiercely competitive brokerage landscape.
Bottom Line?
SelfWealth’s next chapters hinge on the success of its transformation and the Bell acquisition’s shareholder approval.
Questions in the middle?
- How will the Bell acquisition impact SelfWealth’s strategic direction and operational autonomy?
- Can SelfWealth sustain profitability once transformation investments stabilize?
- What competitive pressures might intensify as SelfWealth shifts to a customer-led growth model?
