PPS’s Shares Tumble on ASX Following the Release of its Half-year Results

PPS

Information Technology Company, Praemium Limited (ASX: PPS) has released its half-year results for FY 2019. For the half-year period, the company has reported an underlying EBITDA of $5.1 million which is 19% higher than the previous corresponding period (pcp). The revenue and other income of the company increased by 7% to $22.9 million. Further, the company’s Funds Under Administration (FUA) increased by 14% to $8.4 billion. The consolidated profit after tax attributable to the members of the Group was $633,647 in H1 FY19, which is 13% less than the profit after tax of $724,558 for the half year to 31 December 2017. Following the release of the results, the share price of the company decreased by 15% as on 11 February 2019 (AEST 1:46 PM).

According to the company, in Australia, the company’s business continued its positive momentum during the half-year period, with revenue increasing by 13% as compared to pcp. Moreover, the strong inflows to the company’s Managed Accounts investment platform resulted in a 28% increase in SMA (Separately Managed Accounts) revenue. In Australia, the company’s portfolio services revenue increased 2% from the growth of institutional clients on Praemium’s Virtual Managed Account (VMA). 

The EBITDA for the Australian business increased by 12% to $6.5 million while the EBITDA margins were consistent to the prior period at 42% of revenue. During the half year period, the company made investments to support its revenue-generating opportunities, with additions to sales & marketing to support the considerable pipeline of new business and accelerating inflows, and client services to improve client engagement.

The international segment of Praemium Limited is comprised of the United Kingdom and Asia business units. For the half year ended 31 December 2018, the international segment of the company reported an EBITDA loss of $1.0 million which is 4% less than pcp. The UK division reported an EBITDA loss of $0.6 million and Asia division reported an EBITDA loss of $0.4 million. The business in the UK was impacted by significant declines in global equity markets and outflows in the Smartfund Protected range of managed funds.

Asia’s EBITDA loss decreased by 31% to $0.4 million in H1 FY19 while its revenue increased by 116% compared to the pcp. This was due to an increase in WealthCraft CRM and planning software licences in 2018, which grew 43% internationally from 503 to 718.

As of 31 December 2018, the company’ balance sheet was strong with net assets of $20.9 million and $11.3 million held in cash. The total assets of the company increased by 7% during the half year period to $32.4 million and total liabilities increased by 14% to $11.5 million.

Recently, the company launched its “welcome to the upgrade” campaign, with expanded platform capabilities. The launch was supported by a brand refresh and marketing campaign to reach the Australian adviser community.

Meanwhile, in the past six months, the share price of the company decreased by 14.63% as on 8 February 2019. PPS’s shares traded at $0.595 with a market capitalization of circa $283.69 million as on 11 February 2019 (AEST 1:46 PM).


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