SIQ - Smartgroup Corporation

[ROE]

Smartgroup, collectively Smartgroup Corporation Ltd and its
subsidiaries, consists of a group of businesses offering salary
packaging (comprising salary packaging administration and
novated leasing) and fleet management services to employers
and their employees in Australia.

http://smartgroup.com.au/

Smart Salary
Manages outsourced salary packaging administration of over 110,000
employees (Employee Customers) for their employers (Employer Clients)

Seqoya
Specialist salary packaging software licensed to Employer Clients to
manage salary packaging in house


PBI Solution
Provider of marketing and administrative services for Employee Benefit Cards
on behalf of an Australian bank

Smart Leasing
Transactional services for motor vehicle novated leases, finance and other
associated vehicle products under a salary packaging arrangement

Smart Fleet
Fleet management services provided through a web-based fleet management system and a
comprehensive suite of vehicle management services

 

[VSntchr]

Re: SIQ - Smartgroup Corporation Ltd

Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.

 

[ROE]

Re: SIQ - Smartgroup Corporation Ltd

Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.

I think now they know the regulative risk, they will try and diversified the business away from FBT dependent business and hopefully by the time it comes it wont do too much damage ... I think Smartgroup already trying becomes a brokers for products they can get their hand one ..stuff like this


https://smartdiscounts.rewardgateway.com.au/

 

[skc]

Re: SIQ - Smartgroup Corporation Ltd

Interesting to see this one list. Will be adding it to the watchlist, always good to have another listed competitor for a company that I already follow.

Interestingly, SG Fleet is the other recently listed company in the same space. It crashed on debut but has almost recovered back to the $1.85 issue price.

IMO the listing of 2 similar businesses after the PBT scare was no coincidence... and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.

 

[VSntchr]

Re: SIQ - Smartgroup Corporation Ltd

and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.

That's a thought provoking point, one that reminds me of portfolio theory back at uni!

 

[KnowThePast]

Re: SIQ - Smartgroup Corporation Ltd

Interestingly, SG Fleet is the other recently listed company in the same space. It crashed on debut but has almost recovered back to the $1.85 issue price.

IMO the listing of 2 similar businesses after the PBT scare was no coincidence... and it seems silly for a company like this to diversify the regulatory risk. I'd say leave that to individual investors.

Hi skc,

On one hand, yes, one could think that owners may want to see out as they suspect it can happen again in a few years time.

On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?

 

[skc]

Re: SIQ - Smartgroup Corporation Ltd

Hi skc,

On one hand, yes, one could think that owners may want to see out as they suspect it can happen again in a few years time.

On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?

No listing doesn't take that long. It can be done in about 20 weeks according to the ASX website.

http://www.asx.com.au/listings/listing-capital-raising/listing-process.htm

 

[McLovin]

Re: SIQ - Smartgroup Corporation Ltd

On the other hand - can a company be listed within a year? I've always thought that the process takes a few years, so it would have been started before last year's circus. Can anyone with experience here add your thoughts?

Yes, well under a year. IB's were sounding out companies last year which is where the current torrent of floats comes from. I know two different companies that are involved in the IPO process at the moment. One started in about March the other in about June. Both will probably float by October.

 

[Klogg]

Taking a look at the most recent half-year results and I'm a little confused by "A2 - Significant Items".
Entire section posted below:

On July 2 2014, Smartgroup Corporation Ltd (formerly Smartgroup Investments Ltd) undertook an initial public offering on the Australian Stock Exchange. In the half year ended 30 June 2014, the Group incurred qualifying transaction costs of $2,467,000 in anticipation of the issurance of orginary shares under the initial public offering. The qualifying transaction costs have been measured as being the portion ofthe transaction costs that relate to the issue of new shares under the initial public offering.

The Group has elected to defer the qualifying transaction costs of $1,727,000, net of income tax, on the balance sheet as at 30 June 2014 until the shares are issued on the date of the Initial public offering. The deferred costs will be subsequently reclassified as a deduction from equity when the shares are recognised as required under AASB 132. The cash outflows that relate to these qualifying transaction costs has been recofnised as a Cashflow from financing activities in the Conslidated statement of cash flows.

The Group has also incurred several transction costs which are not considered to be qualifying assets. These have been classified as Transaction costs in profit and loss for the half year ended 30 June 2014, a total of $10,636,000. The portion of cash outflows that relate to other expenses incurred in relation to the initial public offering have been classified as Cashflow from operating activities in the Consolidated statement of cash flows.

(Apologies if there are spelling errors, I had to type it all)

My understanding of this is:
- $2.467m of costs were incurred for issuing new shares alone
- Of this, $1.727m will be deferred until the new shares are shown on the balance sheet (i.e. next set of financials) and deducted from shareholder equity.
- $10.636m additional costs, not related to issuing new shares were incurred in this transaction. This is expensed in this set of financials and shown under "Transaction Costs" on the Income statement.

What I'm unsure of is:
- Given only $1.727m of share issuance costs are being deferred, when is the remaining $740k ($2.467m - $1.727m) being expensed? (I can't find it on the income statement)
- What is the typical cost of an IPO for a company of similar size?

I understand this hasn't been listed very long, so I don't know if anyone is looking at it. Nevertheless, any help (specifically on the first question) would be greatly appreciated.

In the meantime, I'm on the hunt for IPOs of a similar size and the costs incurred.

Thanks

EDIT: Found a PWC document that gives a range of IPO costs based on Gross Proceeds:
http://www.google.com.au/url?sa=t&r...G3mTJrRhyRjA9JJKaSE-zSg&bvm=bv.77161500,d.cGU

 

[Klogg]

Well, after my insane ramblings about IPO costs, I took a fair holding at ~$1.27. If only I could say I meant to time it so well...

The report is very positive, and the 70% payout ratio implies a FF dividend of 12.2cps, or 7.9% fully franked, if earnings remain flat.

That said, I do still have this nagging voice in my head reminding me of the potential FBT changes to car leasing...

 

[ROE]

Nice, I package with these guys and their IT and forms are top, that should help drive efficiency in processing.

There virtual no need to contact them, filled in the form and email all done right every time.

 

[peter2]

SIQ: I like the trade opportunity. I can't call it a break-out, but price is back at an older level (1.60) after a genuine BO failure.
Good news popped the price higher late Feb. but it has drifted down to fill the gap and now looks like it's ready to move up.

Knowing nothing of the company, I read that it's into salary packaging. Seems to me that there's a few others in this space (incl a new listing ECX).

 

[Klogg]

Nice, I package with these guys and their IT and forms are top, that should help drive efficiency in processing.

There virtual no need to contact them, filled in the form and email all done right every time.

@ROE - Do you know the date of expiration of the Dept of Defence contract?
I'm not too concerned about them losing it, as management have loaded up on stock - but it's always better to remove any doubt.

 

[ROE]

@ROE - Do you know the date of expiration of the Dept of Defence contract?
I'm not too concerned about them losing it, as management have loaded up on stock - but it's always better to remove any doubt.

Just out defence renew for another 6 years...stocked jump 16%.
I package with them and very happy, efficient and very fast.. I am not surprise many resign

 

[Klogg]

Just out defence renew for another 6 years...stocked jump 16%.
I package with them and very happy, efficient and very fast.. I am not surprise many resign

Yeah, that's great news. I somewhat expected this, given the MD's large on-market purchases somewhat recently.
Great result

 

[ROE]

cracker result, nice cash flow, margin expansion, win more clients, good dividend and take over possibility with AP Eager creeping up on the register in the background should keep this stock trading at a premium

 

[Klogg]

cracker result, nice cash flow, margin expansion, win more clients, good dividend and take over possibility with AP Eager creeping up on the register in the background should keep this stock trading at a premium

It's not even trading at a premium. If 1H profit is annualised, it's trading at about 11-12* earnings.

Compare it to MMS and SGF and it's relatively cheap (granted MMS is larger, less single client risk).

 

[ROE]

It's not even trading at a premium. If 1H profit is annualised, it's trading at about 11-12* earnings.

Compare it to MMS and SGF and it's relatively cheap (granted MMS is larger, less single client risk).

look like AP Eager has to sit on the register for a bit longer cos they need to pay some serious premium for this baby

 

[efoyzer]

Hi All


Are the directors doing a defensive buy up to protect against a buy out? or cashing in to cash out???

Interesting buys over the past few days!!

 

[Klogg]

Given the run this has had, and the underlying regulatory risk (IMO somewhat heightened as a result of falling government revenues), I couldn't hold it any longer. Sold it today.

That said, the management team are really delivering, so this may cost me.