Centrepoint Alliance has reported a loss of $13.1 million for the 12 months ending June 30, despite revenue being up 2% to $58.3 million.

The bulk of the losses came from the company’s recently acquired dealer group Professional Investment Holdings (PIH).

The dealer group reported a $12.7 million loss based on increased client claims from previous advice, redundancies and expenses connected with the PIH merger.

The only good news for Centrepoint was its premium funding business, which made a $415,000 profit.

“Insurance funding has traded profitably during the financial year showing good growth in the volume of loans written and net interest revenues in comparison to the core business figures for the previous year,” Centrepoint MD Tony Robinson said.

The business was transferred to a new wholly owned subsidiary, Centrepoint Alliance Premium Funding, to improve its internal monitoring.

Mr Robinson says PIH losses were larger than forecast due to the growing number of client claims and the greater-than-expected loses from PIH’s overseas operations.

Also included in the losses was $530,000 in fees paid to Ernst & Young to act as independent experts on an Australian Securities and Investments Commission (ASIC) enforceable undertaking. This is expected to be completed by early next year.

Mr Robinson says completion of the undertaking will strengthen internal processes and meet concerns raised by ASIC.

He says future earnings for Centrepoint will be challenged by the global economic outlook and the Federal Government’s Future of Financial Advice reforms.

“Claims related to advice provided in previous financial years are anticipated to continue to trouble PIH in the forthcoming year,” he said.

“They impact directly on performance results through increased provisioning and indirectly through higher professional fees and insurance costs.”

But Mr Robinson says the group is now well prepared to grow on its position as the largest independent network of advisers and accountants in the country.

The outlook for the premium funding business is expected to improve next year as the business rebuilds its former markets, he says.