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Jarden to hive off profitable wealth business by March 2024

Jarden Securities is planning to hive off its profitable wealth management business from its other stock broking and merchant banking activities.

Thursday, August 3rd 2023, 6:00AM 1 Comment

by Jenny Ruth

“Jarden Securities intends to transfer the wealth division to a separate entity within the Jarden group,” the firm says in its annual report.

“The transfer is estimated to complete within the next 12 months upon meeting licensing conditions for the new entity,” it says.

“Intangible assets amounting to $918,000 relating to the wealth division have been reclassified to non-current assets held for disposal.”

The report shows the wealth division made a net profit of $11.1 million in the 15 months ended March 31 – the company changed its balance date from December 31.

But the company's continuing operations made a $40.3 million net loss for the 15 months, including a tax benefit of almost $12 million, compared with a $13.1 million profit for calendar 2021.

The 2021 profit was after a $10.7 million tax payment.

The loss from continuing operations meant the company failed to meet its minimum profitability banking covenant for the period ended March 31 and the notes to the accounts say the banks, Westpac, ASB Bank and ANZ Bank, granted it a waiver.

The company suffered a $101 million cash outflow from operations for the 15 months after positive cashflow of $24.4 million in calendar 2021 but had net cash of $48.1 million at March 31.

“The group and company directors have made operational changes to the company and business (primarily reducing staff costs),” notes to the accounts say.

The bottom line, including contributions from both the wealth business and the now sold Jarden Direct business, was a $19.9 million net profit for the 15 months, down from the $25.8 million net profit for calendar 2021.

Although the sale was completed on Aug 1 last year, Jarden expects to continue operating the Jarden Direct business until its transition to Hatch Invest NZ is completed, which is estimated to be in the first half of 2024. The sale price was $47.5 million in cash and a 25% stake in Hatch which Jarden values at $8.5 million and which has since been distributed to Jarden Partners.

Jarden booked a $44.9 million gain on the sale, which Jarden's auditors, KPMG, flagged as a key audit matter “due to the number of judgements and estimates included in the fair value calculation of the Hatch investment and the significance of the company's financial performance. Changes in these assumptions can result in a materially different outcome.”

After its review of the sale, including using its internal valuation specialists to assess the reasonableness of the Hatch stake's value, KPMG signed off the accounts as presenting “fairly” Jarden's financial position and performance.

Tags: Jarden

« Generate lifts profits as other managers report falling profitsTough times ahead for NZ economy: Nikko economist »

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Comments from our readers

On 3 August 2023 at 9:46 am Pragmatic said:
Wow - another institutional demonstration that transactionary financial services is highly commoditized and low value, whereas cottage financial advice (whilst extremely high touch) still commands a premium albeit is difficult to scale.

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