Smartgroup (SIQ) H2 2019 earnings summary

Executive summary

• FY19 delivered continued financial and operational growth despite industry headwinds; revenue rose 3% to $249.8m and NPATA rose 4% to $81.0m.

• Organic growth added c.24,700 salary packages and c.3,500 novated leases; net growth after acquisitions and client losses was c.15,500 packages and c.3,250 leases.

• Adjusted after-tax operating cash flow was 110% of NPATA; net corporate debt/EBITDA was 0.2x.

Financial highlights

• Adjusted revenue was $249.8m, up 3% YoY; adjusted EBITDA was $118.2m, up 3%; adjusted NPAT was $62.5m, up 5%; adjusted NPATA was $81.0m, up 4%.

• NPATA per share increased 4% to 61.5cps; shares on issue rose 1% to 131.7m.

• Adjusted net cash from operating activities was $89.4m versus $80.5m in CY18; adjusted capex was $0.9m versus $0.4m.

Outlook and guidance

• Salary Packaging and Novated Leasing service delivery was planned to consolidate to four businesses in CY20.

• Victorian health contracts covering c.12,000 packages were renewed in H2 2019.

• Draft Treasury add-on insurance reforms were expected to be introduced to Parliament by mid-2020; consultation was open until 28 February 2020.