Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2010 Earnings Presentation
27 slides from Mcmillan Shakespeare's earnings presentation, Aug 17, 2010
Slide 1: FY10 Results Presentation
For personal use only Presentation by McMillan Shakespeare Limited FY10 Results Presentation August 2010
Slide 2: Financial Highlights
Financial Highlights For personal use only Consolidated NPAT from operating activities of $27.9m (1). After tax gain on acquisition of Interleasing (ILA) $17.1m. EBIT growth of 27% on “original” business. Normalised(1) EPS growth of 35.7% to 41.2 cents per share. Final dividend of 14.0 cents per sha
Slide 3: Consolidated Financial Performance
Consolidated Financial Performance For personal use only FY09 FY10 % FY10 FY10 FY10 Incre $000 $000 ase $000 $000 $000 Remuneration Remuneration Asset Services Services finance (1) Unallocated Total ("Original" ("Original" business) business) Revenue from operating activities 76,000 92,139 21% 38,88
Slide 4: NPAT bridge FY09 to FY10
NPAT bridge FY09 to FY10 For personal use only 50 45 Growth 36% Represents NPAT since acquisition 40 (1 April10) Growth 23% 17.1 35 30 (0.6) 3.3 ($m) 25 4.7 45.0 20 15 27.9 10 20.5 5 0 NPAT FY09 Remuneration ILA Acquistion Normalised Aquisition Gain NPAT FY10 Services Growth funding costs NPAT FY10
Slide 5: Historical normalised NPAT
Historical normalised NPAT(1) For personal use only 35 NPAT 5-year CAGR of 39.9% 30 27.9 25 20 20.5 ($m) 17.4 15 13.2 10 11.3 5 5.2 0 FY05 FY06 FY07 FY08 FY09 FY10 NPAT Note 1: Normalised NPAT excludes the profit recognised on acquisition as a result of the business combination of ILA. P4 August 201
Slide 6: Earnings and dividends per share
Earnings and dividends per share For personal use only Normalised earnings per share (EPS) (1) Total dividends per share 50.0 30 EPS 5-year CAGR of 39.0% 45.0 40.0 25 35.0 20 30.0 cents cents 25.0 15 20.0 15.0 10 10.0 5 5.0 0.0 0 FY04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY04 FY 05 FY 06 FY 07 FY 08
Slide 7: Definition of segments
Definition of segments For personal use only Remuneration Services segment definition: The segment provides administrative services in respect of salary packaging and facilitates the settlement of motor vehicle novated leases for customers, but does not provide financing. The segment also provides a
Slide 8: Remuneration Services segment
For personal use only Remuneration Services segment P7 August 2010
Slide 9: Remuneration Services segment highlights
Remuneration Services segment highlights For personal use only Revenue growth 21% on PCP. NPAT growth(1) 23% on PCP. Core operating contribution(2) increase of 38.8% over PCP. Customer metrics exceeding our benchmarks. Ongoing productivity improvements. Note 1: To provide a meaningful NPAT compariso
Slide 10: Remuneration Services financial performance
Remuneration Services financial performance For personal use only FY10 FY09 % Comment $000 $000 Inc Segment revenue 92,139 76,000 21% Operating expenses Employee and director benefits expenses 39,282 34,309 14% Significantly below revenue growth Depn and amort of PPE and software 2,222 1,436 55% Inv
Slide 11: Productivity and Customer Satisfaction Indices
Productivity and Customer Satisfaction Indices For personal use only MSL Productivity Index (July 08 = 100) MSL Customer Satisfaction Index [Rolling 3 month Non-Interest Revenue / FTE] December 2008 = 100 250 135 130 200 125 150 120 115 100 110 105 50 100 0 95 Nov-08 Jan-09 Mar-09 Nov-09 Jan-10 Mar-
Slide 12: Asset Finance segment
For personal use only Asset Finance segment P 11 August 2010
Slide 13: Asset Finance segment highlights
Asset Finance segment highlights For personal use only Performance for 4QFY10 exceeded “deal” evaluation projections. Satisfactory residual value performance. Strong credit process and performance. Self funding during 4QFY10. P 12 August 2010
Slide 14: Asset Finance performance
Asset Finance performance For personal use only FY10(1) $000 Revenue from operating activities 38,882 Operating costs Depreciation of motor vehicle fleet 15,989 Interest on fleet financing 2,359 Motor vehicle fleet expenses 13,064 Employee and director benefits expenses 2,180 Other expenses 718 Tota
Slide 15: Asset Finance key balance sheet numbers
Asset Finance key balance sheet numbers For personal use only 30th June 1st April 2010 2010 $000 $000 Operating lease assets and motor vehicle inventories 204,281 205,169 Finance leases(1) 9,226 48,154 Fleet financing borrowings 112,727 112,727 Maintenance instalments received in advance 8,653 8,622
Slide 16: Funding and capital management
For personal use only Funding and capital management P 15 August 2010
Slide 17: Final ILA acquisition position
Final ILA acquisition position For personal use only $000 Net assets acquired 229,381 Purchase price 208,390 Acquisition costs – net of tax 3,936 Total purchase price and acquisition costs – net of tax 212,326 After tax gain on acquisition 17,055 P 16 August 2010
Slide 18: Transaction funding for ILA and net debt as at June 2010
Transaction funding for ILA and net debt as at 30 June 2010 For personal use only Acquisition Balance at details 30 June 2010 $000 $000 Acquisition and transaction costs 214,097 Sources of funds Debt funding into ILA 112,727 112,727 Debt Funding into MMS 30,000 30,000 Surplus cash used 30,630 Cash a
Slide 19: Gearing
Gearing For personal use only Balance at 30th June 2010 $000 Net debt 125,970 Book value of equity 89,417 Gearing - net debt / (net debt + equity) 58% Interest times cover (4Q FY10) 5.80 ** As at 30th June 2010 the group is well within its banking covenants. P 18 August 2010
Slide 20: Cash flow - excluding ILA purchase consideration
Cash flow - excluding ILA purchase consideration For personal use only Remuneration Total Services Asset Finance $000 $000 $000 Cash flow from operations 34,449 26,955 61,404 Capex including motor vehicle purchases 5,055 25,263 30,318 Free cash flow 29,394 1,692 31,086 Fleet financing / (repayments)
Slide 21: Debt facilities
Debt facilities For personal use only Existing bank facilities include: Facility A - $30.0 million debt funding provided to MMS (Termination date 31 March 2013) - amortises $4m every 6 months commencing December, 2010. Facility B - $5.0 million working capital facility provided to MMS (Termination d
Slide 22: Key Sensitivities
Key Sensitivities For personal use only New car sales market. Second hand car values. Interest rates. Interest rate margin on operating leases. Key contract tender. Economic conditions generally. P 21 August 2010
Slide 23: The combined business – the first months
The combined business – the first 3 months For personal use only New value proposition well received by market. Complementary cash flow dynamics and capital requirements of the two business segments are attractive to financiers and provide mitigation against any credit tightening. Strong competitive
Slide 24: The combined business – the first months (cont.)
The combined business – the first 3 months (cont.) For personal use only Preliminary work well underway for ILA fleet leasing systems upgrade. Tender processes with suppliers underway; motor vehicle purchasing completed with pleasing results. Integration running well: • All business sites and people
Slide 25: Key Activities FY10
Key Activities FY10 For personal use only Solid growth, investing for the future and building competitive advantage. Heavy participation and investment in the Henry Inquiry into the tax system; positive Government response with no adverse impact on business. Acquisition of Interleasing business at a
Slide 26: Key Activities FY10 (cont.)
Key Activities FY10 (cont.) For personal use only Customer service metrics now exceed our benchmarks in all business units. New industrialised IT infrastructure with disaster recovery and “warm sites” delivered on time and on budget. New CRM system delivered on time and on budget. New telephony syst
Slide 27: Outlook
Outlook For personal use only A year of prioritisation and execution. Complete integration of Interleasing. Prepare for Interleasing fleet lease system upgrade. CAPEX allowed for, with contingency, in acquisition modeling. Ongoing profitable growth through: • New customer acquisition. • Cross-sellin