SelfWealth Posts $14.1M Revenue, $407K Profit; Bell Acquisition Valued at $58M
SelfWealth Limited reported a modest revenue increase for the half-year ended December 2024, yet profits plunged sharply due to higher operating expenses as the company prepares for a potential acquisition by Bell Financial Group.
- Revenue increased 4.3% to $14.1 million
- Profit after tax fell 75.1% to $407,483
- Operating expenses surged due to infrastructure, security, and management hires
- Bell Financial Group agreed to acquire SelfWealth at a 108% premium
- On-market share buy-back paused following acquisition offer
Revenue Growth Amidst Rising Costs
SelfWealth Limited has posted a 4.3% increase in revenue to $14.1 million for the half-year ended 31 December 2024, driven primarily by a 27.5% surge in trading revenue to $4.4 million. This growth was supported by increased brokerage fees across both Australian and US markets, with trading volumes rising 9.1% to 406,000 trades. However, interest income from customer cash balances declined by 3.8%, reflecting lower cash holdings on behalf of customers.
Profitability Takes a Hit
Despite the revenue uptick, SelfWealth’s profit after tax plummeted 75.1% to just $407,483, down from $1.63 million in the prior corresponding period. The steep decline is attributed to a significant rise in operating expenses, which increased to $10 million (adjusted for $0.7 million in non-recurring costs related to the Bell acquisition). These expenses stemmed from investments in infrastructure, enhanced security measures, compliance costs, and the recruitment of a highly experienced management team to drive the company’s next phase of transformation.
Strategic Acquisition by Bell Financial Group
In a major development, SelfWealth entered into a scheme implementation deed with Bell Financial Group in November 2024, under which Bell has agreed to acquire 100% of SelfWealth’s shares for $0.25 per share, or via a Bell share alternative. This offer values SelfWealth at approximately $58 million, representing a 108% premium over the share price prior to the announcement. The acquisition is subject to shareholder approval expected by March 2025, with the SelfWealth board unanimously recommending acceptance in the absence of a superior proposal.
Capital Management and Share Buy-Back
SelfWealth continued its on-market share buy-back program during the half-year, acquiring over 1.3 million shares for $161,000. However, the buy-back was paused following Bell’s unsolicited acquisition offer. The company remains debt-free with cash and cash equivalents of $10.1 million at period end, down slightly from $11.4 million six months prior. Funds under administration increased 14.8% to $11.6 billion, reflecting ongoing platform growth.
Looking Ahead
SelfWealth’s interim results highlight the tension between growth ambitions and rising operational costs amid a transformative period. The pending Bell acquisition introduces a new chapter that could reshape the company’s strategic direction and shareholder value. Investors will be watching closely as the scheme meeting approaches and the company navigates integration and cost management challenges.
Bottom Line?
SelfWealth’s near-term profitability is under pressure, but the Bell acquisition could unlock new growth pathways or risks.
Questions in the middle?
- Will the Bell acquisition proceed smoothly and on what terms?
- How will SelfWealth manage rising operating costs post-acquisition?
- What impact will the acquisition have on SelfWealth’s competitive positioning in brokerage?