- Smartgroup Corporation (SIQ) is down almost 16 per cent today after announcing it would receive $4 million less in after-tax profits
- The employee management servicer says its insurance underwriting partner intends to make changes to the terms of the insurance products sold by its authorised representatives
- These changes will be executed as part of the renewal of Smartgroup’s contract with its underwriter in May 2020
- The company’s share price has fallen heavily since Managing Director and CEO Deven Billimoria announced his plans to retire in October
- Smartgroup’s share price is currently down 15.2 per cent with shares trading for $7.59
Smartgroup Corporation (SIQ) is down almost 16 per cent today after announcing it would receive $4 million less in after-tax profits.
Smartgroup’s insurance underwriting partner has advised the company that it intends to make changes to the terms of the insurance products sold by its authorised representatives.
It is proposed that these changes will be implemented as part of the renewal of Smartgroup’s contract with its underwriter in May 2020 with an execution date of July 1, 2020.
It is expected that the absolute financial impact of these changes in 2020 will be a reduction in Smartgroup’s after-tax net profits of approximately $4 million.
If this is anything to go by, Smartgroup received $40.5 million in profit after tax for the first half of the 2019 calendar year, compared to $38.4 million over the same period last year.
It also received revenue totalling $125.8 million, up three per cent on the previous period.
Smartgroup simplifies salary packaging, fleet management and a range of other employee management services for organisations across Australia.
While this increase in revenue and profit is good for the company its shares have fallen heavily since Deven Billimoria announced his plan to retire from Managing Director and CEO in October.
He will step down at the end of February 2020 after the release of Smartgroup’s 2019 financial year results.
Deven has been with the company for more than 19 years, having joined the company in 2000 and being appointed CEO in 2002.
Even though Smartgroup revealed that its current Chief Financial Officer Tim Looi will replace Deven, some shareholders remain wary.
Smartgroup’s share price is currently down 15.2 per cent with shares trading for $7.59 at 3:48 pm AEDT.