Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — Merrill Lynch Presentation (September 2010)
17 slides from Mcmillan Shakespeare's conference presentation, Sep 28, 2010
Slide 1: Merrill Lynch Presentation
For personal use only Presentation by McMillan Shakespeare Limited Merrill Lynch Presentation September 2010
Slide 2: Background
Background For personal use only Australia’s largest provider of salary packaging and novated lease facilitation. Following recent acquisition of Interleasing/Holden Leasing, now Australia’s only provider of total corporate vehicle services i.e.: - fleet management; - operating, finance and novated
Slide 3: 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. P2 September
Slide 4: 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 5: Strategic rationale for Interleasing acquisition
Strategic rationale for Interleasing acquisition For personal use only Acquiring the Interleasing business at a discount to net assets provides MMS a low risk opportunity to transform its business: - Creates a unique value proposition of high value to customers underpinned by a unique grouping of sk
Slide 6: Strategic rationale for Interleasing acquisition (cont'd)
Strategic rationale for Interleasing acquisition(cont’d) For personal use only - Interleasing has strong NSW presence which complements MMS major sites in Vic and QLD and adds scale in SA, WA and Tas. - Immediate cross-sell opportunities (Interleasing has mostly private sector customers, has very lo
Slide 7: A Converging Market
A Converging Market For personal use only Novated Salary Packagers Operating Leasing Providers Leasing Skills Skills Business process outsourced. Financing High transaction loads. Fleet Management FBT administration. Access to vehicle value chain Retail sales and marketing. (procurement, management
Slide 8: Service driven solutions
Service driven solutions For personal use only Client Challenges MMS Solutions Employers face a Relationships, experience & series of complex expertise layer issues outside of their Dedicated specialists in FBT, core business exemptions and managing the activities when dealing vehicle value chain wi
Slide 9: 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 10: Sources of revenue
Sources of revenue For personal use only Salary Packaging Novated Lease Novated Lease Operating Leases Management Services (including motor Management Distribution Fees vehicles) Portion of employee’s pre- Recurring Income MMS can procure and ILA rents passenger & ILA receives tax salary is transfer
Slide 11: Market opportunity
Market opportunity For personal use only Full FBT Rebatable FBT $17,000 Exempt $30,000 Exempt Types of Employers Government departments Independent schools Public hospitals Public benevolent institutions Private companies Sporting clubs Private not-for-profit hospitals Charities Public companies Rel
Slide 12: Market opportunity (cont'd)
Market opportunity (cont’d) For personal use only Australian Fleet Lessors Association (AFLA) - Total Portfolio at July 2010 By Type of Facility (units/%) ILA is a tier 2 industry player. 40,867 - 8% - Operating ILA share of novated leases as Leases - Funding % of total fleet significantly less only
Slide 13: Asset management commercial opportunities
Asset management commercial opportunities For personal use only Replenished sales force with key appointments across Australia. Individual and team targets established; compensation scheme directed to drive appropriate behaviour. Prospecting Maxxia customer base for operating lease opportunities – s
Slide 14: Credit Risk
Credit Risk For personal use only The risk that customers can not pay their lease installments or do not pay on time, resulting in losses on collecting monies owed All new business proposals reviewed prior to credit advanced, using robust rules. Annual reviews of all credit line facilities undertake
Slide 15: Interest Rate Risk
Interest Rate Risk For personal use only The risk that as interest rates move up or down, the net profit of the business moves likewise Leases are for fixed terms at fixed interest rates. Revenue side locked in. McMillan matches to the profile of how leases amortise, the funding term of what we borr
Slide 16: Residual Value Risk
Residual Value Risk For personal use only The risk that the estimated future value used to calculate the monthly rentals higher than the actual sales proceeds received on disposal of the asset Approach used – highly professional and disciplined approach to pricing. People assessing and monitoring ar
Slide 17: Regulatory themes post Henry
Regulatory themes post Henry For personal use only Government has ruled out changes to FBT exemptions for NFP’s “at any time”. Henry has recommended flat rate (20%) for FBT on motor vehicles. No government response, however, no material impact envisaged. Henry recommended government consider taxing
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