McMillan hits out at Labor on tax policy
The company, which generates three-quarters of its earnings from financing car leases, has refused to deal with investors since the changes were announced last month.
In its financial accounts released late on Tuesday, McMillan also refused to speculate on the impact that the changes to the fringe benefits tax will have on its earnings.
Last month the company took the unprecedented step of saying it would not talk to analysts, shareholders or the media until the outcome of the federal election was known.
In its full-year results, it reasserted this stance, saying: "This review is written in a climate of great uncertainty.
"Until the election is held on September 7 and the winner declared, (and perhaps even after that should Labor win), there is no reasonable basis to make any comment on the effect of the July 16 announcement on [changes to the fringe benefits tax] and our business more generally."
The accounts show McMillan posted a net profit of $62.1 million for the year to June, up 14.5 per cent from a year earlier.
It added, however, that should the changes to the tax go ahead, they would have an adverse impact on the company's business.
"The proposed changes require the passing of legislation to become effective and if enacted will have a material adverse impact on the future earnings of the company," the review said.
"If the Coalition wins the election, it would appear from their policy statements, we should be able to move back to business as usual."
Investors deserted the salary packaging company last month after the Labor government announced plans to restrict tax benefits for employer-provided cars.
McMillan generates its revenue from salary packaging fees, fleet management fees, and finance trail commission, helping to run fleets of taxpayer-subsidised cars.
Despite its outrage at the proposed changes, as early as 2010 McMillan had warned investors it needed to diversify away from the "incumbent risks of changes" to the fringe benefits tax regime.
Last month, the company asked the ASX to keep its shares in a trading halt until after the election, but the ASX refused the request, saying the market could not be interrupted simply for "ongoing uncertainty".
The company's shares began trading again on July 25, when more than half a billion dollars were wiped from its market value.
McMillan shares fell 0.8 per cent on Tuesday to close at $11.76.
In the past year its shares have touched a high of $18.64.
Frequently Asked Questions about this Article…
McMillan Shakespeare suspended its dividend amid uncertainty after the federal government's proposed tightening of the fringe benefits tax (FBT) regime. The company says the proposed FBT changes could have an adverse, material impact on its future earnings, so it has paused dividend commentary while the election outcome is resolved.
Very reliant — the company generates about three-quarters of its earnings from financing car leases. That high exposure to employer-provided car arrangements is why proposed FBT changes are a major concern for the business.
After the FBT changes were announced, McMillan said it would not speak to analysts, shareholders or the media until the federal election result is known. It refused to deal with investors and declined to speculate on the impact of the July 16 announcement on its business.
While the company declined to quantify the effect, its full-year review warned that if the proposed FBT changes are enacted they would have a material adverse impact on the company's future earnings and an adverse impact on its business.
Investors deserted McMillan after the announcement. The company asked the ASX for a trading halt until after the election but the request was refused. When shares resumed trading on July 25, more than half a billion dollars was wiped from its market value; shares later closed down at $11.76, having hit a 12-month high of $18.64 earlier in the year.
McMillan earns revenue from salary packaging fees, fleet management fees and finance trail commissions. The business helps run fleets of taxpayer‑subsidised cars, which links it closely to any changes in FBT rules.
McMillan reported a net profit of $62.1 million for the year to June, up 14.5% from the previous year, according to its released financial accounts.
Yes. McMillan said there is great uncertainty until the election on September 7 and that if the Coalition wins — based on their policy statements — the company should be able to return to business as usual. The FBT changes require legislation to take effect, so the election outcome matters for the company's prospects.
Call 1300 880 160
Start a chat
Schedule a call
