– By Caroline Falls –
Smartgroup, one of Australia’s four listed fleet management and novated lease providers, posted a rise in full-year revenue and profit and said it’s still keen on acquisitions to expand.
And this is how long-time CEO and managing director Deven Billimoria will leave the company to his successor Tim Looi, presently chief financial officer. Billimoria retires on February 28. Nigel Underwood, has been named to take up the CFO role from April. Underwood is presently CFO at baby formula group Bellamy’s Australia and has had senior financial roles at Qantas and Virgin Australia.
Billimoria led the group to its listing on the Australian Stock Exchange in 2015 and has overseen an expansion of its services, both by buying up other companies and through organic growth.
“Smartgroup finished 2019 with steady growth across key financial and operational metrics,” said Billimoria. “This result is particularly pleasing in the context of some industry headwinds.”
Like other listed fleet management and novated lease providers reporting financial results recently, Smartgroup said headwinds included a fall in new car sales and uncertainty around a regulatory review of certain add-on insurances.
Smartgroup posted a four percent increase in headline net profit to $81 million in the year ended December 31. This was on a three percent lift in revenue to $249.8 million. Earnings per share rose to 61.5 cents from 59.4 cents a year earlier. The board declared a final dividend of 21.5 cents, up from 21 cents in the same period a year earlier.
Highlights included a net growth of some 3,500 novated leases, and an increase in the number of fleet vehicles under management to 24,000. The group’s focus on expanding its client base and getting them to use more of its services has also been rewarded, with a 22 percent increase year on year in those using two or more. The growth in clients and those using multiple services has been quite dramatic since the group was listed. In December, 2015 Smartgroup had 150 clients, with only one using two or more services; in December 2019, it had 4,000 clients, with some 200 using two or more.
“Smartgroup remains a customer-focussed organisation with an ongoing program of greater automation and service expansion through partnerships and acquisition,” Smartgroup Chairman Michael Carapiet said in a statement announcing the results.
The group has expanded significantly through buying up other companies in its five years as a public company. Smartgroup brands include Smartsalary, AccessPay, Advantage and Autopia. In 2019, Smartgroup acquired mylease, Pay-Plan, and Lease & Asset Finance.
Another thing worth mentioning, and one which both Carapiet and Billimoria touted, is the company’s amazing record of customer service, innovation and employee happiness. The company has won multiple awards for all three indicators. In 2019, Smartgroup was named a National Service Champion by the Customer Service Institute of Australia, and Best Under a Billion by Forbes Asia.
Smartgroup also noted in its financial report that it has estimated it takes in about $17 million a year in revenue from add-on insurance style products that are subject of regulatory reviews.
The corporate watchdog ASIC, the Australian Securities and Investments Commission, is presently reviewing the sale of add-on financial products through car-yard intermediaries. The Treasury Department has also recently a paper that includes draft legislation relating to add-on insurances.
Smartgroup said it isn’t able to provide specific details on the quantum and timing of such impacts, and whether or not they will be material.
“Smartgroup will continue to consult with both ASIC and Treasury in relation to proposed reforms,” the company said in its presentation to investors.
—Caroline Falls is a freelance reporter, writing for Australian and international publications. She can be contacted at carolinefalls@gmail.com.
