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Praemium share price crashes lower after reporting first half profits fell

This morning Praemium Ltd (ASX: PPS) reported its half-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding half.

  • Net profit after tax $634,000, down 13%
  • Revenue of $22.96m, up 7%
  • Underlying EBITDA of $5.05m, up 19%
  • Operating expenses of $17.1m, up 4%
  • Total funds under administration (FUA) $8.4b, up 14%
  • Administers more than 500,000 investor accounts
  • Debt free with $11.3m cash on hand

This was something of a mixed half for the provider of investment platforms and portfolio administration services that saw its core Australian business continue to perform well, while its international operations are still a work in progress.

As a result the Premium share price is down 18% to 57 cents at the time of writing.

In Australia the group grew revenue 13% thanks to strong inflows into its managed accounts segment that helped it deliver half-year EBITDA of $5.7 million on an EBITDA margin of 42%.

However, the international businesses posted an EBITDA loss of $1 million, with the UK losing $0.6m and Asian operations $0.4m. Management blamed the UK result partly on uncertainty around the UK’s proposed “Brexit” from the European Union.

Management declined to provide a forecast for the full year other than to say it’s focused on “accelerating growth” thanks to investments in technology, sales and marketing.

The company has a market value around $284 million at 70 cents per share and exists in a space with other platform providers such as Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL).

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia owns shares of Netwealth. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.