Hancock & Gore's Financial Performance: Revenue Up, Profit Down
HNG (HNG) Share Update November 2024 Tuesday 26th
Hancock & Gore Reports 40% Drop in Profit Despite Revenue Growth
Hancock & Gore Limited (ASX: HNG) has announced its preliminary financial results for the year ending 30 September 2024, revealing a significant drop in profit despite an increase in revenue.
Instant Summary:
- Revenue increased by 5.2% to $7.27 million.
- Profit after tax decreased by 40% to $4.91 million.
- Earnings per share fell by 51.4% to 1.8 cents.
- Net tangible assets per share rose by 2.2% to 31.4 cents.
- Final dividend declared at 1.0 cent per share.
Financial Performance Overview
Hancock & Gore Limited reported a 5.2% increase in revenues from ordinary activities, reaching $7.27 million for the year ended 30 September 2024. Despite this growth, the company's profit from ordinary activities after tax attributable to members fell by 40% to $4.91 million, down from $8.17 million in the previous year.
The decline in profit is attributed to several factors, including acquisition costs related to the merger with Schoolblazer and interest costs on deferred considerations. Additionally, the company faced mark-to-market adjustments for its listed investments, which contributed to the reduced profit figures.
Dividend and Shareholder Returns
On 26 November 2024, the directors declared a fully franked final dividend of 1.0 cent per share, payable on 20 December 2024, to shareholders of record on 6 December 2024. This follows the interim dividend of 1.0 cent per share paid earlier in the year.
Strategic Developments
During the year, Hancock & Gore completed the acquisition of Mountcastle Pty Ltd, gaining control of its subsidiaries and a 75% interest in Stateman Hats. This acquisition is part of the company's strategy to expand its investment portfolio and capabilities.
The company also disposed of its 76% interest in Hyde Road Trust, which contributed $77,000 to the current year's income.
The significant drop in profit despite revenue growth indicates challenges in managing costs and investments. The acquisition costs and interest expenses have notably impacted the bottom line. Investors might view the decrease in earnings per share and profit as a concern, potentially affecting the stock's market performance.
Investor Reaction:
Analysts are likely to express concern over the decline in profit and earnings per share, despite the revenue increase. The company's strategic acquisitions and disposals will be closely monitored for their long-term impact on financial performance.
Conclusion:
Investors should consider the potential for future growth from Hancock & Gore's strategic acquisitions while being cautious of the current profit decline. Monitoring the company's ability to manage costs and improve profitability will be crucial in assessing its future performance.