MYOB leads the market for online subscriber growth, adding 229,000 in FY18, Solid full year results delivered through first year of accelerated investment
FY2018 Results Market Release
Sydney, Feb 21, 2019 AEST (ABN Newswire) - MYOB Group Limited (MYOB) (
ASX:MYO), a leading provider of online business management solutions to Australian and New Zealand businesses is pleased to announce its full year results for the 12 months ended 31 December 2018.
Highlights
- MYOB delivers a solid set of financial results for FY18, in line with guidance; Revenue up 7 per cent to $445 million, underlying EBITDA stable at $190 million during investment period, NPATA up 2 per cent to $104 million, and free cash flow of $107 million
- Online subscriber growth puts MYOB in leadership position, adding 229,000 in the 12 months to December 2018; total online subscribers reached 628,000, up 57 per cent on FY17, and the Company remains on track to reach 1 million online subscribers in 2020
- Delivery of the MYOB Platform accelerates with more than half of the platform modules developed and in market; significant progress made in compliance (client accounting and tax), corporate compliance and document management with delivery dates for the release of these modules brought forward to 2019. Practice Management module now under development
- New strategic partnership with Mastercard extends MYOB's payments services to payables (both suppliers and payroll) within MYOB's software; opening up a c.$200bn transaction volume opportunity for MYOB
- FY19 guidance updated, organic revenue growth expected to be 6-8 per cent; R&D investment to be ~20 per cent of revenue; underlying EBITDA margin expected to be >38 per cent
- Proposed Scheme of Arrangement with KKR remains ongoing. An update will be provided to the market on Friday, 22nd February 2019 post the conclusion of the 'go-shop' period
Justin Milne, Chairman:
"2018 has been an eventful year for MYOB. The decision to accelerate investment and fast track the delivery of the MYOB Platform has been an important one for the Company, setting its trajectory on a path for future growth and success. The delivery of a single, integrated and efficient online platform, is a clear differentiator for MYOB, its clients and its shareholders.
In 2018, MYOB generated positive financial results notwithstanding the first year of investment, with revenues up 7 per cent to $445 million and underlying EBITDA maintained at $190 million.
MYOB's online subscribers grew 57 per cent, reaching 628,000 in FY18, maintaining momentum to achieve its goal of reaching 1 million online subscribers in 2020.
In addition, MYOB's Enterprise Solutions and Payment Solutions continues to deliver strong results. The opportunities for growth expansion in each of these areas is significant, with Enterprise continuing to leverage its first mover advantage in cloud ERP and integrated payroll with MYOB Advanced, and in our Payments segment, the recently announced partnership with Mastercard opens up significant opportunity for growth for MYOB and its clients."
Tim Reed, Chief Executive Officer:
"I am excited with the progress we're making as a business.
In 2018, we delivered a solid set of financial results and commenced our accelerated investment, the benefits of which are already being realised by our clients.
The superior growth we've seen in online subscribers has placed us in the leadership position in the online accounting market, with 229,000 added over the 12 months to December 2018.
I'm delighted to report that we've made significant progress in the development of the MYOB Platform. We've accelerated the delivery of compliance, corporate compliance and document management modules, all of which are expected to be in market in 2019. In addition, Practice Management has advanced and is now under development. The feedback we have received from clients trialing our BETA products has been overwhelmingly positive, and further reinforces our investment decision.
This is an important time for MYOB, as we double down and focus on completing the MYOB Platform, which we believe will create significant efficiencies for our SMEs and their Advisers, and positions the Company and our clients for future growth."
Financial Summary
Revenue for the 12 months to 31 December 2018 increased to $445 million, up 7 per cent on the prior year, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) remained stable at $190 million. MYOB's preferred measure of after-tax profit, NPATA(see Note 1 below), was $104 million, 2 per cent higher than the prior year, with associated NPATA earnings per share of 17.6 cents, 4 per cent higher than FY17.
For details on segment revenue performance, please see the FY18 Investor Presentation, available on the MYOB Investor website: http://investors.myob.com.au
Capital Management
MYOB's commitment to delivering value to shareholders through capital management continued in 2018. In late 2017, the Company announced an on-market share buyback program, which was completed in August 2018. The Company has acquired a total of 15.6 million shares amounting to $48 million, funded by existing cash. In addition, MYOB returned capital to investors through the interim dividend of 5.75 cents per share at 30 June 2018, representing 75% of 1H18 NPATA. Total capital returned to shareholders from the share buyback and dividends paid in 2018 was $113 million.
Under the scheme implementation agreement currently in place with KKR, MYOB cannot declare and pay any dividend without KKR's prior written consent. On the basis of this restriction, the MYOB Board has not declared a final dividend for the financial year ended 31 December 2018. If the proposed scheme of arrangement with KKR does not proceed, the MYOB Board will consider whether or not it will declare a special dividend at that time. For further details on the transaction with KKR, please refer below.
Scheme of Arrangement with KKR
On 23 December 2018, MYOB entered into a Scheme of Arrangement with affiliates of Kohlberg Kravis Roberts & Co. L.P. (KKR) under which KKR will acquire all the remaining shares in MYOB, that it does not currently own(see Note 2 below), for A$3.40 per share (cash consideration). If the Scheme is implemented, MYOB shareholders would be entitled to receive A$3.40 in cash per MYOB share. The offer price assumes no final dividend for the 2018 financial year is paid. As part of the arrangements, MYOB agreed to 'goshop' provisions with KKR that permit MYOB and its advisers, up to and including 21 February 2019, to solicit competing proposals and with a commitment from KKR to sell its shareholding into, or vote in favour of, any Qualifying Superior Proposal(see Note 3 below). MYOB will separately provide the market an update on the outcome post the 'go-shop' period, expected to be on 22 February 2019.
Under the proposed Scheme of Arrangement with KKR, in mid to late March 2019, each shareholder would receive a copy of the Scheme Booklet which would contain detailed information about the Scheme of Arrangement, the Independent Expert's Report and details of the Scheme meeting which is expected to be held in Sydney in mid to late April 2019.
Indicative Scheme Timetable
First court hearing: Mid-March 2019
Despatch of Scheme Booklet to MYOB shareholders: Mid to late March 2019
Scheme Meeting: Mid to late April 2019
Further information and web conference details
The MYOB ASX release should be read in conjunction with the corresponding 2018 Full Year Results Presentation and 2018 Full Year Financial Statements. Both documents are available on the MYOB Investor website: http://investors.myob.com.au
A live webcast and conference call will be held at 10.00am (AEDT) and can be accessed via the following the link http://webcast.openbriefing.com/4980/
Playback facilities and a conference call transcript will be made available on our investor site.
MYOB's 2018 Annual Report will be released on 29 March 2019.
Dial in details
Conference Call ID: 5598132
Country Number Country Number
Australia toll: +61 2 8038 5221
Australia toll free: 1800 123 296
Canada: 1855 5616 766
China: 4001 203 085
Hong Kong: 800 908 865
India: 1800 2666 836
Japan: 0120 994 669
New Zealand: 0800 452 782
Singapore: 800 616 2288
United Kingdom: 0808 234 0757
United States: 1855 293 1544
Notes:
1 MYOB considers NPATA (net profit after tax and after adding back the tax effected amortisation expense related to acquired intangibles), rather than NPAT, to be a more meaningful measure of after-tax profit due to the large amount of non-cash amortisation of acquired intangibles that is reflected in NPAT.
2 KKR currently has a legal and economic interest in MYOB shares of approximately 19.9%
3 Qualifying Superior Proposal means a Superior Proposal in respect of 100% of MYOB shares that is at least 5% higher than KKR's scheme consideration of $3.40 in cash, that is recommended by a majority of the MYOB Board and in respect of which MYOB enters into an implementation agreement.
To view tables, please visit:
http://abnnewswire.net/lnk/ZGK79563
To view the presentation, please visit:
http://abnnewswire.net/lnk/V0BQU4YP
About Myob Group Ltd
MYOB Group Ltd (ASX:MYO) is a leading provider of online business management solutions. It makes business life easier for approximately 1.2 million businesses and accountants across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, job costing, inventory and more. MYOB operates across three core segments – Clients and Partners (business solutions to SMEs and Advisers); Enterprise Solutions (larger businesses) and Payment Solutions. It provides ongoing support through client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly through its Connected Practice Strategy and through the development of the MYOB Platform. For more information, follow @MYOB on Twitter or visit https://investors.myob.com.au/Investors
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