Praemium Limited to focus on international growth


by Carolyn Herbert

Transcription of Finance News Network Interview with Praemium Limited (ASX:PPS) CEO and Managing Direct, Michael Ohanessian
Carolyn Herbert: Praemium Limited (ASX:PPS) is a global leader in the provision of investment administration and Separately Managed Account and financial planning technology platforms with offices in Australia, Europe and Asia. I’m Carolyn Herbert and joining me at the CEO Sessions in Melbourne, is the Company’s CEO and Managing Director, Michael Ohanessian. Michael welcome to FNN.
Michael Ohanessian: Thank you.
Carolyn Herbert: Now the company has just released its full year results for FY2015. What were the highlights?
Michael Ohanessian: Well I think the biggest highlight is after nine years on the Stock Exchange; Praemium had its first pre-tax profit with an EBITDA of $2 million, having grown our top line by 28 per cent.
Carolyn Herbert: Looking at Australia first, what’s the revenue split between the company’s products and services?
Michael Ohanessian: So Australia, total revenue of about $18 million of which $12 million was our portfolio administration system, which is our original product. And almost $6 million in our newer product, which is our platform, our SMA platform.
Carolyn Herbert: Where do you see growth locally?
Michael Ohanessian: The growth really right now is our SMA platform. SMA has become very popular now in Australia and we are the market leader in SMA. And for us, it is growing very very strongly.
Carolyn Herbert: Now to the UK, Praemium has been operating in the UK for more than five years. What are your key strategies for growth?
Michael Ohanessian: The UK platform have actually done very well in the last 12 months. We grew our top line by 63 per cent; we grew our cost base by only 24 per cent. So we’re now really starting to accelerate that business. We’ve also put together our own investment management team that really adds a lot of scalability and extra margin, for our platform there. Having restructured that company, we feel it’s now on the right path.
Carolyn Herbert: Can you tell us about the recent acquisition of Plum Software and, how does that fit in with your offering?
Michael Ohanessian: We bought this business in Coventry, England. They do financial planning backoffice systems. We have another more modern financial planning system called WealthCraft. And the Plum acquisition will really accelerate that development for the UK market, which has some rather complicated third party what we call, tax wrappers. And the Plum team will really help us with that strategy.
Carolyn Herbert: Further afield, can you tell us about your plans for other international markets?
Michael Ohanessian: The great thing about our strategy is that we have in Australia, a version of the software that services the Australian market. But our London based version, services the UK market and the entire expat market. So we have clients already now based in Asia, in the Middle East and Europe and these are expats, served by expat financial advisors. As you can imagine, it’s a pretty big market, it’s not very well served. We’re still early days in our international strategy, but we think that that’s going to be a big blue-sky opportunity for us.
Carolyn Herbert: You’ve recently launched retail superSMA and self-managed superfund capability. What are you offering and why did you decide on this strategy?
Michael Ohanessian: The Australian superannuation market is already about $2 trillion; it’s a massive market. Retail superannuation is something we’ve been under represented in and having now launched that product, that’s growing very strongly on our SMA. But SMSF is also very important. If you think about half of the investors on our platform, be they our portfolio administration system or our SMA, they are actually SMSF accounts. Which kind of makes sense, because we’re very good at direct equities.And a lot of SMSF trustees/members really are self directed, either directly themselves or through an adviser.
So it made sense for us, given our strengths in tax reporting and so on, portfolio administration, for us to add SMSF accounting and monitoring capabilities, within our portfolio administration system. We think that’s going to be very popular with the market.
Carolyn Herbert: Finally Michael. What’s your priority for the next 12 months and what should investors be looking out for?
Michael Ohanessian: So our priority for the next 12 months is a lot more development. Roughly about 40 per cent of our people are actually IT development people. To really sort of enhance our offering, particularly with all the digital experiences that people expect now. We’re going to continue to grow our SMA platform very strongly we believe, both here and in the UK.
Our in-house investment management team we think has a lot more upside. It achieved $343 million in assets under management, after its first full year. And I think our investment in superannuation will really start to pay off, both here and also in the UK, where there’s been pension reform. So we see a lot of great opportunities. We see growth across our entire product range and across all the regions, in which we operate.
Carolyn Herbert: What’s your outlook for FY2016?
Michael Ohanessian: We don’t give guidance. But I’ll say that if you look at our past performance, where our revenue line is growing much more strongly than our cost line, we’ll continue to see that going forward.
Carolyn Herbert: Michael, thank you for the update.
Michael Ohanessian: Thank you Carolyn.