Rising Debt and Integration Risks Shadow Prime Financial Group’s Profit Surge

Strong Financial Performance

Prime Financial Group Ltd has delivered a compelling set of results for the year ended 30 June 2025, underscoring its position as a leading player in Australia’s mid-market financial services sector. The company reported a 21% increase in total revenue to $49.4 million, driven by organic growth and strategic acquisitions. Net profit after tax attributable to members surged 62% to $4.61 million, reflecting improved operational efficiency and enhanced earnings quality.

Underlying EBITDA, a key profitability metric for Prime, rose 17% to $11.9 million, while reported EBITDA jumped 39% to $10.6 million. Earnings per share increased 37% to 1.87 cents, signaling strong shareholder returns. The Board declared a fully franked final dividend of 0.89 cents per share, lifting the total dividend for FY25 by 4% to 1.66 cents per share, consistent with the company’s policy of distributing 50-70% of maintainable earnings.

Strategic Acquisition Enhances Wealth Management

A highlight of the year was the acquisition of Lincoln Indicators Pty Ltd, a Melbourne-based investment research, portfolio, platform, and fund management business. This transaction, valued at approximately $9 million, significantly expands Prime’s Wealth segment, adding around 3,300 high-net-worth clients and increasing funds under management by $600 million. Lincoln’s quantitative investment methodology and suite of managed funds complement Prime’s existing offerings, enhancing its ability to deliver sophisticated, connected advice and investment solutions.

The acquisition aligns with Prime’s strategy of pursuing accretive acquisitions that diversify revenue streams and deepen client relationships. Lincoln Indicators contributed approximately $1.5 million in revenue and $400,000 in profit before tax since acquisition, demonstrating immediate earnings accretion.

Robust Balance Sheet and Capital Management

Prime maintains a strong balance sheet with net debt of $14.87 million as at 30 June 2025, supported by an upgraded $41 million funding facility with Westpac Banking Corporation. The company’s gearing ratio stands at 20.3%, within its target range of 10-25%, providing financial flexibility to fund organic growth and further acquisitions.

Operating cash flow was $2.9 million, down 49% from the prior year, reflecting working capital movements and investment in growth initiatives. The company continues to focus on improving working capital efficiency while investing in technology enhancements, including piloting artificial intelligence tools to drive operational efficiencies and client engagement.

Focus on Client-Centric Growth and Innovation

Prime’s leadership emphasizes a client-centric approach, delivering integrated advisory, capital, and asset management services tailored to private businesses, founders, and high-net-worth investors. The company hosted over 60 client events during the year, strengthening relationships and brand presence.

Technology remains a strategic priority, with initiatives to consolidate data, enhance customer relationship management systems, and leverage AI tools. The firm’s culture of ownership and team engagement is reflected in stable employee satisfaction scores and expanded ownership models, including overseas team members.

Outlook and Strategic Ambitions

Looking ahead, Prime targets $100 million in revenue and a 30% underlying EBITDA margin by FY28-30. The company plans to continue delivering organic growth through cross-selling and scaling new products, alongside accretive acquisitions that build scale and diversify its platform. Prime is well-positioned to capitalize on the anticipated wave of business succession in Australia, estimated at 400,000 transfers over the next decade, leveraging its comprehensive advisory and asset management capabilities.