– By Caroline Falls –
Fleet services and salary packaging company Smartgroup announced strong growth in revenue and profits for the six months ended June 30 sparking a run up in its share price.
The shareprice shot up to a record $13.34 from $11.38 immediately before the results were released. It settled back to $12.71 by the end of the trading week, up 17 percent on a year ago, outstripping broader stock market indicators such as the S&P/ASX200.
What’s to like about Smartgroup? Revenue rose 26 percent to $122.6 million from the same period a year earlier. Net profit after tax and amortisisation rose 27 percent to $38.5 million.
It saw growth in its three major operating area: salary packaging (up 25 percent), novated leases (16 percent) and fleet vehicles (up 12 percent) in the half year compared with the previous corresponding period. Its clients include state and federal government departments, big and small corporates, and public benevolent institutions.
“It has been another successul six months for the group with positive financial results, continued client growth and initial success in delivering multiple services to clients,” said Deven Billimoria, Chief Executive Officer at Smartgroup. “The integration of acquisitions is tracking well and we remain focused on operational excellence as we consolidate our salary packaging service delivery.”
Smartgroup has expanded largely thanks to acquisitions. It’s made nine since it was listed on the Australian Stock Exchange in November 2015. Since then salary packages under management have more than doubled to 334,000, and novated leases under management have doubled to 64,000.
Smartgroup’s fleet managed vehicles grew to 22,000 from 15,000 in the 32 months to June 2018. Most of this was through organic growth with a boost of 2,800 vehicles from its Fleet West acquisition earlier this year.
Smartgroup expensed $3.8 million in the first-half accounts against an IT contract, that the company said was primarily for the build of a unified salary packaging platform. It’s made six acquisitions since listing adding to its smartsalary the following brands: AccessPay, Advantage, salarysolutions, Selectus, Autopia and Aspire.
“Platform consolidation to continue in 2019, building out novated leasing capabilities,” Smartgroup said in a presentation on the results.
A survey of cross selling of the group’s services showed 138 clients use two services, including typically fleet management and salary packaging. Smartgroup announced a fully franked divident of 20.5 cents per share, up 24 percent from the first-half a year ago.
