McMillan Shakespeare Ltd (ASX: MMS) reported its half year results this morning for the period ending 31st December 2018.
McMillan Shakespeare is Australia’s largest provider of salary packaging and novated leasing services as well as a provider of fleet and asset management and financing. From its beginning in 1988, McMillan Shakespeare now has over 1,200 staff and 21 subsidiaries that include Maxxia, RemServ and Holden Leasing.
Here Are The 5 Key Points
- Revenue increased 1.2% to $273.1 million
- EBITDA was down 3.8% to $65.3 million
- Underlying NPATA was down 3.9% to $42.6 million
- Underlying EPS decreased 4.1% to 51.5 cents per share
- Dividend was up 3% to 34 cents per share, fully franked
Analyst Targets
According to Bell Potter, estimates for McMillan Shakespeare NPAT were $46 million. Actual NPAT attributable to members was reported as $34.5 million, down 1.2%. Underlying NPATA, which includes acquisition amortisation, was $42.6 million.
Segment Performance
Group remuneration services saw EBITDA up 5.2% and an increase in UNPATA of 1%. McMillan Shakespeare’s strategy is to expand the product suite and to improve margins via technology advancements.
The asset management segment suffered a steep drop in UNPATA, down 31%. Assets managed was also reduced during the half by 1.9%. The reasoning for this was stated as, “softer economic conditions in the UK couple with increased expenditure for the broker network expansion”. It was also stated that market conditions in that segment are driving increased competition and lower margins.
The retail financial services sector was also hurt in 1H19, with UNPATA down 17.4%. This drop is partly due to the closure of the Money Now POS motor vehicle consumer finance business.
What Now?
McMillan Shakespeare has not delivered a promising result for 1H19 and failed to meet analyst targets.
Moving forward, the big news for McMillan Shakespeare will continue to be the proposed merger with Eclipx Group Ltd (ASX: ECX). The last update on this merger came on the 29th of January when McMillan Shakespeare announced that they were considering ECX NPATA and further work was required. Both MMS and ECX share prices were down more than 3.5% yesterday.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
