Investment Matters

Company News: AGM season

The following companies held their annual general meetings this week:

Primary Health Care

Primary Health Care continues to execute its strategy across medical, imaging and pathology divisions. In medical, Project Leapfrog (its program to increase consulting space and efficiency of its people/processes), is well underway, with the first centre conversion in progress at Maroubra. The company anticipates conversion will be completed across 17 sites by the end of this financial year. Furthermore, the company is seeing an increase gross billing for centres that have undergone Leapfrog process efficiency and online programs. For Q1FY-19 volumes have recovered in line with forecasts after a weak flu season. It expects growth to normalise for the second half of FY-19 and has upgraded its guidance for underlying net profit after tax (NPAT) to $100m for FY-19 – (after previously guiding it would be at or above FY18 profit of $92.3m).


Threat Protect Solutions

Threat Protect has gained another 1000 reseller subscriptions in Q1FY-19 bringing total number subscriptions to 53 thousand. The company continues to pursue a strategy to acquire large and independent security monitoring businesses, which will allow margin to flow through to the company and result in a 300% increase in revenue per connection.


TZ Limited

TZL outlined the restructure of the business and board over the last year with a renewed focus on higher margin corporate, retail and education sectors and a move away from lower margin postal businesses.  There has been significant change to organisational structure, which will allow for greater accountability, better governance and control while the company continues to invest in cost reduction, product improvement and development. Its focus for this financial year will be to continue to build market awareness of its value proposition as it targets higher margin markets.


CML Group Limited

It has been a better than expected start to the year for CML with Q1FY-19 revenue of $12m (+4% on Q1FY18) and an underlying EBITDA of $5.1m (+28% on Q1FY19). It has subsequently upgraded its forecast for FY-19 underlying EBITDA from $20-21m to in excess of $21m (+2-% on FY-18). The company has begun its expansion into invoice discounting, which services larger organisations at a lower margin (higher turnover, lower margin) and broadens its potential market. Furthermore invoices purchased continue to grow as the company increases its marketing and leverages technology to facilitate a more efficient application process and real-time monitoring of businesses.


MMA Offshore

The company continues to see signs of a recovery in the oil and gas market, with increased seismic and exploration drilling (the early stages of the oil and gas life cycle) as well as improved profitability for oil and gas companies (as a result of higher prices). Furthermore rig utilisation and day rates have moved upwards and utilisation of offshore vessels has steadily increased. As such the company expects utilisation rates to increase as new projects move through their development cycle. It expects to be cash flow neutral in FY-2019 after interest and maintenance capex which translates to an EBITDA of $27m – up from $19m in FY-18.


Murray River Group (extended small cap portfolio)

Murray River guided towards sales that will broadly be in line with FY-18 ($68.5m) but with a focus on improving operating margins. It anticipates an EBITDA loss of $2.8 to $3.2m, an improvement of ~$11m from FY-18. We expect a ramp up in EBITDA in the future as management continues to improve efficiency and more vines reach maturity over the next three years.

- Paul Grace