Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Smartgroup ticking all the revenue, earnings boxes
They were an impressive set of numbers. For the full year to December 31, 2024, Smartgroup Corporation (ASX:SIQ), an employee services and fleet solutions provider, reported a net profit after tax of $75.6 million, up 22 per cent on the previous corresponding period.
Indeed, every financial number had a positive look compared with 2023. Revenue was up 22 per cent to $305.8 million, underpinned by higher novated leasing volumes; operating EBITDA of $118.7 million was ahead 18 per cent; and the EBITDA margin was 39 per cent (40 per cent in 2023); and this was despite the cost of implementing the South Australia Government contract.
In addition, operating cash flow was strong at 108 per cent of NPATA (net profit after tax and amortisation), and capitalised IT development costs of $12 million were in line with market guidance.
Scott Wharton (pictured), Smartgroup managing director and chief executive officer, was not gilding the lily when he said it was a strong financial and operational performance in 2024, with growth in revenue and earnings, as well as improved customer experience supporting the retention of key clients and attracting new ones.
“In 2024, we continued to invest in customer experience and acquisition, delivering record customer numbers across salary packaging, novated leasing and fleet.
“We’re making progress against our strategic priorities, announced in February 2024. This includes our new digital customer home, Smart.com.au, as well as our enhanced car leasing portal, both delivering improved functionality and better customer experience.”
He added that client benefits were expanded via partnerships, including Qantas and Intellihub. “The group further simplified its operations in 2024, divesting two non-core businesses and transitioning our Advantage brand customers and clients to the new Smart brand.”
Looking ahead to the 2025 financial year, he said although the group remained cautiously optimistic, there was some uncertainty in the near term from continuing high interest rates and inflation, international factors and the plug-in hybrid electric vehicle (PHEV) incentive ending in March.
“We made strong progress last year. Our customer-centric focus and stronger digital proposition, backed up by the energy in our business, are delivering. We are well-positioned within the industry to deliver profitable growth through the implementation of our strategic priorities.
“Importantly, we will continue to focus on the delivery of our digital assets in our leasing and salary packaging businesses. These investments will further improve customer experience and increase efficiency and scalability. We continue to make investments to deliver our strategic priorities with 2025 technology capex expected to be between $11 and $13 million.”
For shareholders, there was a final dividend of 20 cents a share that came with an interim dividend of 17.5 cents and a special dividend of 11 cents, putting 48.5 cents a share in their pockets for 2024. And it all came fully franked.
The previous year was also rewarding for shareholders with final and interim dividends of 16 cents and 15.5 cents, respectively, that were topped up by a generous special dividend of 16 cents. Again, it was fully franked.
So, for the Smartgroup bord and senior management, it must be somewhat perplexing that the market is not more appreciative of what’s been achieved. In the past 12 months, the share price has fallen 19 per cent to close at $7.70 on Tuesday. Over a five-year timeframe, the stock has only advanced 28 per cent to Tuesday’s close, a lacklustre performance – at best. The market can be a hard taskmaster.
