This morning, fund management business Blackwall Ltd (ASX: BWF) reported its annual result for year ended 30 June 2018 showing that total revenue grew by 49% to $26 million.
Blackwall has three elements to its business – WOTSO, property asset management and investments.
WOTSO earns income from leasing desks in its workspace network. WOTSO grew revenue by 37% to $8.45 million. WOTSO grew the number of desks by 118% to 4,900 desks in FY18 and plans to increase this to at least 6,700 desks in FY19 with the current locked-in deals. WOTSO now has locations in Australia as well as one in Singapore and two in Malaysia.
Blackwall Asset Management grew revenue by 43% to $13.6 million. Within this segment, management fees increased by 15% to $5.7 million and performance & transaction fees grew by 73% to $7.9 million. BlackWall Property Trust (ASX: BWR) is selling the Bakehouse Quarter for $380 million, which will settle in February 2019.
The investment revenue, mostly related to unrealised gains with the Blackwall Property Trust, grew by 127% to $3.9 million.
The consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 108% to $11.7 million, mostly driven by the strong fee performance from the property asset management segment, without a similar rise in expenses.
Net profit after tax (NPAT) increased by an impressive 122% and earnings per share grew by 120% to 13.4 cents.
Blackwall increased the full-year dividend by 11% to 4 cents per share.
Blackwall highlighted 31% net tangible assets (NTA) per share growth per annum since 2012, at the end of the financial year it reached 49 cents per share. Property borrowings decreased by $1.4 million to $2.1 million and cash increased by $235,000 to $923,000. The balance sheet is in a stronger position, particularly with its various investments.
Outlook
The WOTSO segment is on track for further growth. WOTSO generates revenue of around $4,750 per desk per annum, including 5% vacancy and down time. Economic maturity takes around three years. When the current 6,700 total desks are mature it has the capacity to generate 'WOTSO Turnover' of nearly $32 million, in FY18 only $9.5 million of WOTSO Turnover was generated. Some WOTSO locations are management agreements or joint ventures, which is why Blackwall didn't quite receive as much as $9.5 million WOTSO revenue last year.
Foolish takeaway
Blackwall is an impressive little business that's growing at a good rate and has ambitious growth plans for the next few years. Whilst it doesn't operate in sectors I'm particularly interested in, it is delivering on its growth plans and could be one to watch. Particularly as it's only trading at 7x FY18's earnings with a grossed-up dividend yield of 6.3%.
