Praemium (ASX:PPS) - record inflows with Powerwrap acquisition


by Melissa Darmawan

Praemium Limited (ASX:PPS) CEO and Managing Director Michael Ohanessian talks about the company's strong 1H21 results, the successful acquisition of Powerwrap, platform enhancements and outlook.

Melissa Darmawan: Hello. I'm Melissa Darmawan for the Finance News Network. Joining me from Praemium (ASX:PPS) is CEO Michael Ohanessian. Michael, welcome to FNN.

Michael Ohanessian: Thank you, Melissa. Nice to see you.

Melissa Darmawan: Good to have you. Praemium started as a managed accounts platform provider. Talk us through what the company looks like today.

Michael Ohanessian: We started really as a portfolio system, so to really get the reporting and tax correct for hundreds of thousands of investors now around the world. And that's why three of the four big banks are big users of our system, because the one thing that they can give their investors in the wealth space is an accurate report for tax, performance and so on. And that's really our core strength. More recently, over the last five to 10 years, we've become an investment platform as well. This is software that advisors use to make their lives more efficient and to give their investors more visibility on their holdings, on their performance, on their trading and so on. And so that's kind of what Praemium is today. One of the things that makes us a bit different to our peers in Australia is that we also do this in the UK. So we have two versions of our software, one here and one in London.

Melissa Darmawan: Thanks Michael. Now to your first half 2021 results. What were the highlights, starting with financials?

Michael Ohanessian: When I started with the company, we were a loss-making business, but for the last 14 halves, consecutively, we've increased our underlying EBITDA. And we did 7.3 million in EBITDA for the December half of 2020. And it was also quite transformational because, in that half, we also acquired a fellow listed company called Powerwrap. It is a transformational acquisition for us. Our revenue, as a consequence, as grown very strongly, as you can imagine, and they've added about $10 billion of assets to our platform. And compared to where we were a year ago, we're a much, much bigger business.

Melissa Darmawan: And operations?

Michael Ohanessian: Up until two years ago, we were a very niche platform to the extent that we had custody of people's assets. And what we were specialists at was separately managed accounts or SMA. This is where advisors outsource investment management to an investment manager. Now, two years ago, we decided to upgrade our platform so that we could service the whole platform market. And to give you a sense of that change, we've gone from servicing a market that was between $10 to $20 billion here in Australia to a market that's now, in Australia, almost $900 billion. So it was a 50-fold increase in available market, and that really launched our new strategy. Two years ago, we did that upgrade. We've been now working very hard on getting out there and telling our story and growing our business. And what's really interesting, Melissa, is that, from the time we launched this new platform in February 2019, over that two-year period, we've had a year of lockdown with the pandemic, and that affected our business and our advisors' businesses through 2020. And yet we've managed to have a fantastic year. And the real good evidence of that is that if you look at where we are today at the end of March, compared to March 2020, when it comes to assets under administration, we have doubled in size. We're double the size company. Our inflows in Australia are 200% higher than they were a year ago. And our inflows for the March quarter in the international business was 110% higher. So, in almost every way our business has literally doubled through the period of COVID-19.

Melissa Darmawan: And Michael, can you tell us about your strategy and the opportunities for the company?

Michael Ohanessian: Our key differentiators, of course, is that we get the reporting right. The one thing that all investors have to think about is filing their tax return. And the one thing that Praemium can do that nobody else can do is that it doesn't matter whether they're invested in a complicated security like a Westfield, or if the ATO issues of class ruling, whatever it is, we get it right. And we can certainly add a lot of value to advice businesses because they can now provide that service to their clients. It's a very important value add. For anybody that's involved in stock picking or day trading, you'll appreciate just how complicated it can be. But if you're part of the Praemium universe, all of that pain goes away.

Melissa Darmawan: Last question, Michael. Is there anything else that you'd like to add?

Michael Ohanessian: Praemium is two years into a growth strategy where we've dramatically increased our available market. In fact, if you think about the UK platform market that we serve and the Australian platform market, we're talking about an addressable market of $1.8 trillion almost. And we've only been two years into our execution strategy of going out there and selling our new proposition. And remember we lost a year because of the pandemic. So, to all the investors out there, we think that we've got really good momentum and we think we've got the best technology. So, hopefully, we've got a bright future ahead.

Melissa Darmawan: Michael Ohanessian, thanks for the update and congratulations on the strong performance.

Michael Ohanessian: Thank you, Melissa.


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