In an ASX announcement on Thursday morning, Insignia Financial declared an underlying net profit after tax (NPAT) of $216.6 million for the 2023-24 financial year, up 13.6% on the 2023-23 financial year.

However, the statutory result was less positive, showing a loss of $185.3 million, compared to a statutory NPAT of $51.2 million in FY22-23.

Insignia said the loss was mainly due to the impact in FY23-24 of $257.7 million in transformation and separation costs, recovery costs and penalties of $243.1 million expected in FY23-24 and the inclusion in the statutory FY22-23 NPAT on AET sale profit of $43.2 million after tax.

Average funds under management rose slightly from $292 billion a year ago to $301 billion.

During the financial year, the firm said it had begun the successful restructuring of its consultancy business from loss-making to positive EBITDA, boosted by the spin-off of Rhombus Advisory, the creation of an innovative partnership for self-employed consultants and an increased focus on wholly owned and managed consultancy firms, Bridges and Shadforth.

Commenting on the results, chief executive Scott Hartley said the strong underlying result was cause for celebration, adding that it was underpinned by a net cost reduction of $24 million.

However, Hartley confirmed that the firm will suspend this year's dividend to provide strategic and balance sheet flexibility.

"Irrespective of the positive momentum in the core business, NPAT was impacted by an increase in remediation provisions as well as strategic investments," Hartley said.

“We recognize that the pause in dividend payments will be disappointing for some of our shareholders, but at this time we must prioritize strengthening our balance sheet.

“As an organization, we delivered on our FY24 priorities, which further simplified our business and reduced costs. We remain on track and are committed to delivering on our FY24-26 commitments and, in addition, accelerating our cost optimization program and revising our Master Trust end-state operating model.”

Insignia said its net advice income increased by 0.5 per cent in FY23-24, driven by strong new client growth, improved client retention within Bridges, as well as a "focus on clients with higher value'.

“This growth in net income was partially offset by sales and non-renewals of low-fee customers. Operating expenses decreased by 15.8% during the year due to the realization of the benefits of the cost optimization program,” said Insignia.

It also noted that the number of advisers had fallen from 1,413 to 1,086 and the number of practices from 461 to 322 following the sale of Millennium3, the departure of Godfrey Pembroke, the closure of the Lonsdale license and the "right-sizing" of the number of advisers of Bridges.

Group net income increased by 0.9% from $1,379.7 million in FY22–23 to $1,392.8 million in FY23–24, while operating expenses decreased by 2.3% from $1,035.7 million in FY22–23 to $1,011.5 million in FY23–24.

"Over the past 12 months, we have successfully migrated MLC Wrap to Expand, restructured our advisory business and sold non-core assets, demonstrating our strong execution track record," said Hartley.

"We continue to simplify our business and the recently announced new operating structure will lead to improved accountability and efficiency."

"Insignia Financial's strong, scalable positions in the wealth management value chain create an opportunity to deliver long-term sustainable growth for our shareholders and improved outcomes for clients."

As of June 30, 2024 Insignia said it had net debt of $371 million; $281 million in corporate cash and $318 million in undrawn senior debt, providing capacity to fund recovery costs and strategic investments.

Advisory and product recovery programs impacted cash, provisions and deferred tax assets during the year. These include $70 million in cash payments to customers for advice in FY23-24 and $75 million in cash payments to customers for product corrections, as well as increases in provisions for the two recovery programs.