A Look At Smartgroup Corporation

  • May 19, 2019 AEST
  • Team Kalkine
A Look At Smartgroup Corporation

Smartgroup Corporation Ltd (ASX:SIQ) is a specialist provider of various employee management services. It was a web-based comparison tool in its initial days. Presently, these services include salary packaging, novated leasing and fleet management. SIQ also provides payroll administration services, employee share plan administration and workforce optimisation services.

Below is the depiction of what the company caters to:

Based in Sydney, the company partners with organisations across Australia to deliver its services. These partners are NPO’s, healthcare providers, corporate organisations, government sector and education providers. SIQ thrives to reduce unnecessary processes and maintain flexibility.

On 13th May 2019, the company issued 383,648 fully paid ordinary shares under the Smartgroup Loan Funded Share Plan at $8.20 per loan share.

The Managing Director and CEO, Deven Billimoria, conducted the Annual General Meeting on 9th May 2019. The company achieved continued growth in 2018. Considering 2017 as the previous corresponding period, the below table provides the financial highlights from the AGM presentation:

The company had grown salary packages and novated leases along with its fleet management footprint, both organically and through acquisitions. The company’s client base is growing. The company is successfully delivering multiple services, especially to the PBI clients, amongst other clients. SIQ is focussing on customer service excellence via digital channels and automating core systems. This makes the operational efficiency of the company better positioned.

Final fully franked dividend of 21.0 cps brought the full year dividends to 41.5 cps (fully franked), up 19% on PCP. The special dividend of 20.0 cps was paid on 6 May 2019.

On the acquisitions front, the company acquired the leasing assets of Mylease for $6.9m in cash from iNovation Pty Ltd, including $1.0m retained in escrow. It also acquired salary packaging and novated leasing business (100%) for $2.2m in cash, including $0.7m retained in escrow.

In the AGM, all resolutions discussed were passed after the poll was conducted. Chairman of the Board, Michael Carapiet, welcomed Carolyn Colley as a new member to the Board. He also stated that as a good corporate citizen, the company had established the Smartgroup Foundation. The foundation would receive an initial grant from the company which would then be directed to certain charities with DGR status. The staff would decide on charities that would benefit.

As per the company’s FY18 results published in February this year, SIQ has increased its novated leasing volumes, even though the private new vehicle sales fell across 2017 and 2018. The Novated leasing yields, however, remained relatively stable over the 2016-2018 period.

Share Price Information:

The market capitalisation of the company is A$1.11 billion. The 52-week high and low of the stock is A$13.017 and A$7.079 respectively. The stock made an intraday high of A$8.565 and closed at A$8.390 (down by 0.238% compared to its previous close of A$8.410), as of 17th May 2019. In the last one year, the stock has delivered a return of -25.00%, and the YTD return stands at -2.54%.


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