– By Caroline Falls –
Novated lease provider Smartgroup put a positive spin on its slowing growth, calling it “another successful six months”. Indeed, set against a backdrop of a slump in new vehicle sales, Smartgroup’s growth in novated leases is noteworthy.
“Smartgroup’s novated leasing volumes have continued to grow, despite the nine percent downturn in private new vehicle sales,” the company said in a presentation to investors, announcing its first-half results.
Profit after tax rose five percent to $40.5 million for the six months ended June 30 compared with the same period a year earlier. This is a slowing from double-digit growth in every half since the company listed on the Australian Stock Exchange in 2014. Revenue for the half year rose three percent to $128.5 million.
“It has been another successful six months for the group with positive financial performance, client growth and continued success in expanding our service offering. We have made progress with the integration of acquired businesses and we remain focused on operational excellence and improving customer outcomes,” said Smartgroup CEO Deven Billimoria.
Smartgroup acquired two businesses in the period — mylease in April and Pay-Plan in June. The group has expanded significantly through buying up other salary packaging, novated leasing and payment services companies in its five years as a public company. Smartgroup brands include Selectus, salarysolutions, Aspire, Autopia, and smartsalary.
Drilling down into the results reveals net growth of about 1,000 novated leases and 5,000 salary packages in the six month period. Fleet vehicles under management held stable at about 22,000.
The company’s growth also comes on the back of increasing its service offerings to current clients. Smartgroup said 180 clients now use two or more of its services, some 20 percent more than a year ago.
Smartgroup is also consolidating — integrating systems of acquired business and cutting offices. The group said it occupies six premises presently compared with 17 some 18 months ago.
A chart in the group’s results also highlights the contribution of so-called organic growth. In December 2015, the group maintained 132,500 packages (salary or novated leasing), which has almost trebled to 348,000 as at June 30. About 157,000 was from acquisitions, leaving near 60,000 to have come from group sales.
Smartgroup announced a fully franked dividend of 21.5 cents for the first half, a 15 percent increase on the previous corresponding period.
Smartgroup announced plans for a small buyback of 240,000 shares, from an unused employee share scheme allocation, paying $8.95 a share. Smartgroup has some 132 million ordinary shares, which at that price capitalises the company at near $1.2 billion.