– By Caroline Falls –
McMillan Shakespeare aroused investors in the sector last week when it posted its latest profit report and talked about its new acquisitions. The fleet and salary packaging services group’s shares surged more than 10 percent to end the first week of March on a five-month high of $12.38.
While the headline result – a 4 percent rise in net profit to $40.24 million for the six months ended December 31 – isn’t the double-digit increase we are used to seeing from McMillan, there is clearly something to like about this still solid result.
Certainly, the 21.6 percent return on equity is nice. Strong 19 percent net profit growth of in McMillan’s key asset and fleet management unit is encouraging – the unit is the biggest revenue earner and provides fleet finance and management services on vehicles. An interim dividend payout of 31 cents a share is also attractive, giving the stock a yield of 5.35 percent.
In an overview of the results, MacMillan Shakespeare said the number of salary packages it handles increased 7.6 percent to 297,100. Separately the number of novated leases on its books increased 6.6 percent to 56,900. Among other key operating metrics highlighted was a 24 percent growth in the net amount financed to $1.13 billion.
Results from various divisions within the group were mixed: while asset management services’ profit rose 19 percent, group remuneration services (the company’s second biggest revenue earner) was little changed and retail financial services’ profit fell 14 percent.
Talking about the drop in the financial services unit, the company said in a statement, “The reduction … was largely due to a change in the mix of financing and uncertainty regarding potential regulatory changes.”
It’s also noteworthy that the company’s 50 percent U.K.-based joint venture Maxxia, posted a loss.
Elsewhere, the results include a note showing that expenses related to the December 2016 acquisition of U.K. finance broker European Vehicle Contracts in the half-year period came to some $593,000. EVC operates through a network of 400 new and used car dealers using an online quotation system.
