McMillan Shakespeare Limited's (ASX: MMS) shares climbed as much as 9% higher in early morning trade, but have since retreated to be around 3% up.
The salary packaging and financing company today reported a net profit after tax of $55 million, 12% lower than the previous year, due to a temporary disruption caused by the previous government's proposed changes to fringe benefits tax (FBT).
McMillan declared a final dividend of 31 cents per share, taking the full 2014 financial year dividend to 52 cents, putting the company on a fully franked dividend yield of 4.7%.
The company divides its business into two segments, Group Remuneration Services (GRS) and Asset Management (AM). Asset Management includes the group's UK business.
GRS full year net profit was down 10% to $42 million, thanks mainly to higher employee expenses. Pleasingly, the second half was very strong, with net profit up 16% over the previous year.
The AM business saw net profit fall 7% to $14.0 million, mostly as a result of depreciation costs associated with a new asset management system. McMillan says the UK business is expected to turn profitable this year, and says it has entered the UK market at a fortuitous time. The company says the UK economy is gathering momentum and there's a favourable tax ruling on the proposed car salary sacrifice product.
Looking to 2015, McMillan says it expects to see another year of profitable growth in 'all lines of business'. The company says it will launch new products into both the Australian and UK markets this financial year. Bolt-on acquisitions could be on the cards with $71 million in cash in the bank, although the company has slightly increased its borrowings to $144 million, from $125 million last year.
With the FBT debacle behind it, McMillan Shakespeare appears set for a strong year in 2015, although it faces some competition in ASX-listed Smartgroup Corporation Ltd (ASX: SIQ) and to a lesser extent SG Fleet Group Ltd (ASX: SGF). At current prices the company is trading on an undemanding P/E ratio of 14.6x, and paying a 4.7% fully franked dividend yield.
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