Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2016 Earnings Presentation
37 slides from Mcmillan Shakespeare's earnings presentation, Aug 24, 2016
Slide 1: FY16 Results Presentation
For personal use only MMS Group FY16 Results Presentation Presenters Mike Salisbury, CEO Mark Blackburn, CFO McMillanShakespeareGroup
Slide 2: Overview
For personal use only Overview Overview 1
Slide 3: MMS delivers another record result
Overview MMS delivers another record result 50 For personal use only UNPATA1 performance ($m) 87.2 Segment Revenue4 up 29.9% to $503.2 million 69.6 EBITDA up 30.6% to $137.3 million 62.2 11 year CAGR: 29.2% 54.3 55.9 43.5 UNPATA up 25.3% to $87.2 million FY05 FY05 27.9 FY05 20.5 Free Cash Flow5 up 4
Slide 4: Consistent delivery of earnings growth
Overview Consistent delivery of earnings growth For personal use only Underlying EPS1 performance (cents) 105.1 Underlying EPS up 17.2% to 105.1 cents/share 89.7 83.4 Dividend payout ratio of 11 year CAGR: 26.5% 76.6 60% of UNPATA 75.3 64.0 Fully franked dividend 3 41.3 63.0 cents/share (vs 52 cents
Slide 5: Record FY16 profit result with strong free cash flow
Overview Overview For personal use only Record FY16 profit result with strong free cash flow – Segment revenue of $503.2m, +29.9% – EBITDA $137.3m, +30.6% – Underlying NPATA $87.2m, +25.3% – Free cash flow $93.5m, +42.1% – Full year dividend 63.0 cps, +21.2% – ROE 24.1%, ROCE 21.9% Profitable growth
Slide 6: Results Summary
Overview Results Summary Improved profit performance and strong free cash flow For personal use only $m FY16 FY15 Variance Segment revenue 503.2 387.3 29.9% EBITDA 137.3 105.1 30.6% EBITDA margin (%) 27.3% 27.1% NPBT 125.0 96.4 29.7% NPAT 82.5 67.5 22.2% Underlying NPATA1 87.2 69.6 25.3% Basic earni
Slide 7: Financial performance
For personal use only Financial performance Financial performance 6
Slide 8: Segment Review
Financial performance Segment Review Improved profit performance across all segments For personal use only Group Remuneration Services Asset Management Retail Financial Total Services $m FY16 FY15 % FY16 FY15 % FY16 FY15 FY16 FY15 % Revenue from operating activities 188.3 176.1 6.9% 204.8 188.1 8.9%
Slide 9: Positive margin performance
Financial performance Positive margin performance For personal use only Operating expenses ($m) EBITDA margin (%) 600.0 28.0% 27.1% 27.3% 26.9% 525.0 27.0% 25.8% 450.0 25.4% 26.0% 375.0 25.0% 59.9 300.0 24.0% 60.1 50.0 225.0 42.5 78.6 23.0% 43.2 50.7 39.4 52.7 47.4 150.0 50.9 83.0 22.0% 81.5 167.2 7
Slide 10: Strong Balance Sheet
Financial performance Strong Balance Sheet For personal use only FY16 FY15 $m AM Other Group Group Cash at bank 12.6 83.0 95.6 85.7 Cash less corporate debt Other current assets 26.9 20.4 47.3 55.4 (excluding fleet funded debt) Total fleet funded assets1 Goodwill / intangibles 435.7 39.6 215.0 - 435
Slide 11: Funding Overview
Financial performance Funding Overview Diversified funding model to enhance returns For personal use only Renegotiated asset financing facilities to ensure more diversified among big four Australian banks and to stratify loan maturity dates Progressed towards a more capital-light funding model, afte
Slide 12: Cashflow
Financial performance Cashflow 42% increase in free cash flow funds growth and shareholder returns For personal use only FY16 FY15 Group Retail Remuneration Asset Financial Unallocated / MMS MMS $m Services Management Services parent co. Group Total Group Total Segment NPAT 58.7 14.6 11.8 (2.7) 82.5
Slide 13: Segment performance
For personal use only Segment performance Segment performance 12
Slide 14: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) Financial Performance For personal use only $m FY16 FY15 Variance Revenue 188.3 176.1 6.9% Commentary Employee expenses 74.3 71.6 3.8% Revenue growth of 6.9% on pcp with key Property & other expenses 25.1 24.8 1.6% revenue drivers (number of sala
Slide 15: GRS Revenue drivers: Strong organic growth
Segment performance GRS Revenue drivers: Strong organic growth For personal use only Salary packages (000)1 Novated vehicles (000)2 4 year CAGR: 5.7% 4 year CAGR: 10.9% 293.0 269.7 55.8 245.7 255.7 50.9 235.1 45.8 42.7 36.9 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Net new customers: 12,800
Slide 16: People and technology drive productivity and customer satisfaction
Segment performance GRS Combined approach of people & technology drives productivity & customer satisfaction For personal use only On-line claims take-up rate (%) Productivity index1 Customer satisfaction index3 80 180 300 Launch of the 250 60 mobile claims 160 App 200 Launch of the online claims 40
Slide 17: Asset Management (AM) – Aust/NZ
Segment performance Asset Management (AM) – Aust/NZ Disciplined approach to asset growth, enhanced returns For personal use only $m FY16 FY15 Variance Revenue 179.5 175.4 2.3% Commentary Fleet depreciation 78.6 83.0 (5.3%) Generated revenue growth off a marginal Lease and vehicle increase in the val
Slide 18: AM – Aust/NZ Operating metrics
Segment performance AM – Aust/NZ Operating metrics For personal use only Fleet assets written down value ($m) 1 FY16 WDV industry breakdown 5% ■ Mining and Construction 15% 320 314 307 ■ Manufacturing 304 24% ■ Industry 262 $306.8m 21% ■ Wholesale and Retail Trade 12% ■ Services 23% ■ Other FY16 Rev
Slide 19: AM – UK Financial Performance
Segment performance AM – UK Financial Performance For personal use only $m FY16 FY15 Variance Revenue 25.3 12.6 100.2% Commentary Lease and vehicle 5.0 1.3 294.8% Acquired Anglo Scottish (asset finance broker) management expenses Employee and other expenses 14.8 8.9 65.9% in November 2015 increasing
Slide 20: AM – UK Operating Metrics
Segment performance AM – UK Operating Metrics For personal use only Fixed assets written down value ($m) FY16 WDV industry breakdown 5% ■ Services 9% 129 ■ Transportation and Communication 113 10% 41% ■ Finance $128.9m ■ Manufacturing 13% ■ Wholesale and Trade 14 22% ■ Other FY14 FY15 FY16 FY16 Reve
Slide 21: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) Financial Performance For personal use only $m FY161 Proforma Variance FY15 2,3 Commentary Revenue 110.0 109.3 0.6% Completed UFS acquisition in July 2015 Employee and other expenses 24.3 Net claims and brokerage commissions 54.8 New pricing arrang
Slide 22: RFS Operating Metrics
Segment performance RFS Operating Metrics For personal use only Net amount financed ($m) FY16 Revenue Extensive national breakdown distribution footprint 936.7 12% 855.4 Dealers – 39 Brokers – 1 32% $110.0m 56% Dealers – 1,416 Brokers – 46 Dealers – 773 MoneyNow – 5 Brokers – 17 MoneyNow – 3 Dealers
Slide 23: Risks and sensitivities
For personal use only Risks and sensitivities Risks and sensitivities 22
Slide 24: Risks and sensitivities
Risks and sensitivities Risks and sensitivities For personal use only Interest rates (earnings on float) Second hand car prices (remarketing earnings) New and used car sales Government policy development Loss of major customers General economic conditions and consumer confidence Acquisition and inte
Slide 25: Specific risks
Risks and sensitivities Specific risks For personal use only Major novated – As planned, our largest client is currently evaluating tender proposals to provide novated leasing services. leasing contract – If reappointed, MMS expects UNPATA may reduce by approximately $450,000 to $650,000 per month.
Slide 26: Growth initiatives and summary
For personal use only Growth initiatives and summary Growth initiatives and summary 25
Slide 27: Integrated model drives sustainable performance
Growth initiatives and summary Integrated model drives sustainable performance For personal use only Integrated Leverage Profitable growth and enhanced shareholder service and strong customer returns will be delivered by leveraging core delivery model relationships Group Remuneration Services streng
Slide 28: Maxxia Plus – new employee benefits offering
Growth initiatives and summary Maxxia Plus – new employee benefits offering For personal use only Leverage existing RFS vehicle finance solutions, partnerships and networks to GRS customers Market Size GRS customer base estimated to be 1.0 million people Group Estimated that 29% of GRS customers who
Slide 29: Enhanced technology drive
Growth initiatives and summary Enhanced technology drive For personal use only Utilise core technology expertise across all aspects of the business to drive additional revenue growth and productivity improvements RFS: Data mining of RFS customer base GRS: Salary packaging / novated leasing online to
Slide 30: Selective acquisition pathway
Growth initiatives and summary Selective acquisition pathway For personal use only GRS – Selective, disciplined and accretive acquisitions AM – Extend depth, reach and distribution through aggregating key asset finance brokers in the UK RFS – Consider acquisitions that broaden our finance broking ca
Slide 31: Summary
Growth initiatives and summary Summary For personal use only Record profit result in FY16 with strong free cash flow: – Segment revenue $503.2m +29.9% – UNPATA $87.2m, +25.3% – Free cash flow $93.5m, +42.1% Extends track record of delivering earnings growth, +26.5% CAGR over last 11 years Focus on c
Slide 32: Appendix
For personal use only Appendix Appendix 31
Slide 33: Complementary diversification across the MMS Group
Appendix Complementary diversification across the MMS Group For personal use only Group Remuneration Services Asset Management Retail Financial Services Brands Primary service – Salary packaging – Vehicle fleet leasing and – Vehicle finance, insurance – Novated leases management and warranty broking
Slide 34: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA For personal use only $m FY16 FY15 NPAT 82.5 67.5 Acquisition transactions cost after-tax 1.9 1.5 Amortisation of intangibles from acquisitions after-tax 2.8 0.6 UNPATA 87.2 69.6 33
Slide 35: RFS Integration Report Card
Appendix Retail Financial Services Integration Report Card For personal use only Integration Report Card PROCESS Stage of Completion Renegotiation of finance terms 100% Warranty cross-sell into GRS 100% Integration of newly acquired IT development team 95% Consolidation of back office functions and
Slide 36: Disclaimer and important notice
Appendix Disclaimer and important notice For personal use only This presentation has been prepared by McMillan Shakespeare Limited ABN 74 107 233 983 (“MMS”). It contains summary information about MMS and its subsidiaries and their activities current as at the date of this presentation. The presenta
Slide 37: For personal use only
For personal use only McMillanShakespeareGroup