Praemium's new leadership toughens earnings yardstick

Praemium's new leadership will be keeping a close eye on costs, with new chief executive Denis Orrock noting he will make sure the technology upgrade underway translates into stronger earnings and better returns for shareholders.

Late September, Praemium brought forward its board leadership transition, with board member Matthew Quinn replacing chair Barry Lewin, who stepped down after almost a decade from the role. Quinn joined the Praemium board on June 1 as a non-executive director and assumed the chair role on September 22.

Acting chief commercial officer Denis Orrock took over the role of the acting chief executive as the board looks for a permanent replacement for the top job.

In his first address at the annual general meeting Orrock announced a change in the way the platform accounts for its Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA).

"Whilst underlying EBITDA increased, this did not translate to Net Profit After Tax (NPAT) and cash flow due to amortisation and a high amount of non-operating costs," Orrock said.

"We don't expect this high level of non-operating costs to recur, and we will be focused on delivering clean results with higher cash conversion. To demonstrate this focus, our future reporting will be based on cash EBITDA, that is EBITDA less capitalised development expenditure, and this change will apply from the 1H27 results."

He added the board has changed management incentive from EBITDA to cash EBITDA, with the full support of the executive team.

"This discipline gives us a stronger base from which to pursue a clear and substantial market opportunity," Orrock said.

The platform reported funds under administration (FUA) jump of 7.4% to $34.4 billion in the quarter.

The platform is currently midway through a technology overhaul, Orrock called "P2," whose first release went live last month. He said clients should see meaningful improvements from early 2027, with the transition to complete by the end of that year.

"Our current platform has served Praemium well for 25 years, but the architecture needs to be modernised so we can move faster, reduce manual processing and give clients better functionality," Orrock said.

"This is not simply a technology refresh. It is a significant leap forward to a more modern, more flexible platform, which we call P2."

Orrock said Praemium will use automation, AI and machine learning where they make a real difference: taking manual work out, speeding up processing, improving accuracy and giving advisers more time back.

"For clients, the aim is not just a newer platform. It is a platform that helps them run their business more efficiently, serve their clients better and compete more strongly," he said.

Chair Quinn said both internal and external candidates will be considered by the board and Orrock has already flagged his interest in the permanent role.

"We know from experience in working with him that Denis shares the board's vision for Praemium to be a leading platform provider focused on delivering outstanding products to our customers," Quinn said.