Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2012 Earnings Presentation
30 slides from Mcmillan Shakespeare's earnings presentation, Aug 21, 2012
Slide 1: MMS Group FY12 Results Presentation
MMS Group FY12 Results Presentation For personal use only August 2012
Slide 2: Consolidated financial performance
Page 2 MMS Group FY12 Results Presentation For personal use only Consolidated financial performance FY12 FY11 % FY12 FY11 % FY12 FY11 $000 $000 Increase $000 $000 Increase $000 $000 Group Group Remuneration Remuneration Asset Asset Services Services Management Management Total Total Revenue from ope
Slide 3: Financial highlights
Page 3 MMS Group FY12 Results Presentation For personal use only Financial highlights A year of consistent delivery, ongoing organic profitable growth and gathering momentum. Consolidated NPAT of $54.3m (growth of 25%). Diluted EPS growth of 21%. Group Remuneration Services NPAT of $40.3m (27% growt
Slide 4: Financial highlights (cont'd)
Page 4 MMS Group FY12 Results Presentation For personal use only Financial highlights (cont’d) Final dividend of 25cps (total FY12 dividend of 47cps versus 38cps FY11) FY12 payout ratio of 61%. Return on equity of 38%. Parent company debt fully repaid i.e. the $30m facility drawn in April 2010 to pa
Slide 5: NPAT bridge FY11 to FY12
Page 5 MMS Group FY12 Results Presentation For personal use only NPAT bridge FY11 to FY12 60 Growth 27% Growth 6% Growth 24% Growth 25% 0.3 50 0.8 1.1 8.6 40 ($m) 30 54.0 54.3 43.5 20 10 0 NPAT FY11 Group Asset Aquisition Normalised NPAT Cessation of NPAT FY12 Remuneration Management funding costs,
Slide 6: Normalised NPAT
Page 6 MMS Group FY12 Results Presentation For personal use only (1) Normalised NPAT 54.3 55 50 45 NPAT 7-year CAGR of 40% 43.5 40 35 ($m) 30 27.9 25 20.5 20 17.4 15 13.2 11.3 10 5.2 5 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Note 1: Normalised NPAT excludes the profit recognised on acquisition of
Slide 7: Historical earnings and dividends per share
Page 7 MMS Group FY12 Results Presentation For personal use only Historical earnings and dividends per share Normalised (1) earnings per share (EPS) Total dividends per share 90.0 50.0 Basic EPS 7-year CAGR of 38.2% 80.0 45.0 70.0 40.0 60.0 35.0 50.0 cents 30.0 cents 40.0 25.0 30.0 20.0 20.0 15.0 10
Slide 8: Definition of segments
Page 8 MMS Group FY12 Results Presentation For personal use only Definition of segments Group Remuneration Services segment definition: The segment provides administrative services in respect of salary packaging and facilitates the settlement of motor vehicle novated leases for customers, but does n
Slide 9: Group Remuneration Services financial performance
Page 9 MMS Group FY12 Results Presentation For personal use only Group Remuneration Services financial performance 100.0% 140 90.0% Revenue 7-year CAGR 21% 137.1 EBIT 7-year CAGR 30% 120 FY05-FY12 80.0% 111.6 70.0% 100 60.0% ($m) 92.1 80 50.0% 76.0 60 65.8 40.0% 57.2 54.1 48.2 30.0% 40 45.3 35.6 35.
Slide 10: Group Remuneration Services financial performance (cont'd)
Page 10 MMS Group FY12 Results Presentation For personal use only Group Remuneration Services financial performance (cont’d) FY12 FY11 % $000 $000 Inc Comment Segment revenue 137,284 111,648 23% (ex float interest 24%) Expenses Employee expenses 54,250 43,908 24% SA Govt transition / Customer relati
Slide 11: Competitive strengths and performance indices
Page 11 MMS Group FY12 Results Presentation For personal use only Competitive strengths and performance indices Group Remuneration Services Productivity Index (07/08 = 100) MMS Customer Satisfaction Index [Rolling 3 month Revenue (ex SP Interest) / FTE] December 2008 = 100 165 250 160 155 150 200 14
Slide 12: Group Remuneration Services commentary
Page 12 MMS Group FY12 Results Presentation For personal use only Group Remuneration Services commentary Maintenance of strong momentum in new business and participation growth. Investment in customer relationship capability bearing fruit. Core operating contribution growth of 28%. Strong H2FY12 res
Slide 13: Asset Management segment financial performance (cont'd)
Page 13 MMS Group FY12 Results Presentation For personal use only Asset Management segment financial performance (cont’d) FY12 FY11 % $000 $000 Inc Comment Segment revenue 163,342 158,890 3% Expenses Depreciation of motor vehicle fleet 66,942 63,681 5% Interest on fleet financing 9,524 9,464 1% Leas
Slide 14: Asset Management segment commentary
Page 14 MMS Group FY12 Results Presentation For personal use only Asset Management segment commentary Business growth gathering momentum (assets under finance $262m versus $220 FY11; $214m FY10). Strong NPAT performance of 6% growth (normalised for FY11 tyre and maintenance release – 21%). Conduit f
Slide 15: Asset Management segment commentary (cont'd)
Page 15 MMS Group FY12 Results Presentation For personal use only Asset Management segment commentary (cont’d) Credit losses of less than $40,000. Interest rate risk managed through hedging facilities. Prudent provisioning against possible future losses on residual values increased to $1.9m.
Slide 16: Fleet assets WDV
Page 16 MMS Group FY12 Results Presentation For personal use only Fleet assets WDV 300 Growth 19.1% 250 262 Growth 2.8% Growth 0.5% 200 214 220 213 ($m) 150 100 50 0 Acquisition 30-Jun-10 30-Jun-11 30-Jun-12 1 April 2010 Fleet WDV assets
Slide 17: Remarketing performance
Page 17 MMS Group FY12 Results Presentation For personal use only Remarketing performance FY12 gross profits from end of lease motor vehicle sales (remarketing profits) increased by 31% vs pcp. The strong remarketing profit contribution was driven by: o Volume of returning vehicles as old book ran o
Slide 18: Asset Management – key balance sheet numbers
Page 18 MMS Group FY12 Results Presentation For personal use only Asset Management – key balance sheet numbers FY12 FY11 Movement $000 $000 $000 Operating lease assets 244,023 210,661 33,362 Motor vehicle inventories 1,980 1,477 503 Finance leases & CHP 15,561 7,948 7,613 Total funded fleet assets 2
Slide 19: Gearing
Page 19 MMS Group FY12 Results Presentation For personal use only Gearing MMS & Group Remuneration Asset Group Balance Group Balance Services Management at at 30-Jun-12 30-Jun-12 30-Jun-12 30-Jun-11 $000 $000 $000 $000 Net debt -52,167 153,748 101,580 114,966 Book value of equity 70,282 97,769 168,0
Slide 20: Cash Flow
Page 20 MMS Group FY12 Results Presentation For personal use only Cash Flow Group Remuneration Asset Unallocated / MMS Group Services Management parent co. Total $000 $000 $000 $000 Segment NPAT 40,265 14,268 (228) 54,305 Non-fleet depn/amort, reserves and fleet prov movements 5,760 1,777 - 7,537 Wo
Slide 21: Funding
Page 21 MMS Group FY12 Results Presentation For personal use only Funding The Group renegotiated its borrowing arrangements for Asset Management subsequent to reporting date. The objectives of the renegotiation were to: provide longer-term funding facilities to enhance liquidity position; reduce fun
Slide 22: FY12 Key points
Page 22 MMS Group FY12 Results Presentation For personal use only FY12 Key points Business combination (Group Remuneration Services and Asset Management) strategy working well. 79% of new business and cross-sales in private sector. Continued investment in business to reinforce competitive strengths
Slide 23: Sensitivities
Page 23 MMS Group FY12 Results Presentation For personal use only Sensitivities Interest rates (earnings on float). Second hand car prices (remarketing earnings). New car sales (novated lease participation). Government austerity/redundancy programs. Delivery of new IT programs.
Slide 24: Outlook
Page 24 MMS Group FY12 Results Presentation For personal use only Outlook Ongoing profitable growth in Group Remuneration Services through new contracts won over the past 12-18 months and ongoing participation growth. Asset Management earnings development may not be as strong in FY13 due to a combin
Slide 25: Appendix I: Accounting for Operating Leases
Page 25 MMS Group FY12 Results Presentation For personal use only Appendix I Accounting for Operating Leases
Slide 26: Accounting for Operating Leases
Page 26 MMS Group FY12 Results Presentation For personal use only Accounting for Operating Leases Governed by International Financial Reporting Standards (IFRS). Rental, comprising principal and interest, management fees and all charges for services such as maintenance, tyres, automobile association
Slide 27: Accounting for Operating Leases: Impairment
Page 27 MMS Group FY12 Results Presentation For personal use only Accounting for Operating Leases Impairment Impairment of Residual Values tested annually. Impairment loss brought to profit and loss as part of Depreciation and Amortisation and Impairment Expenses. Impairment amount reduces the “cost
Slide 28: Operating Lease Example
Page 28 MMS Group FY12 Results Presentation For personal use only Operating Lease Example Cost of Asset $25,000 PROFIT AND LOSS Residual Value $14,200 Revenue ($700*12) $8,400 Term 36 months Less: Depreciation ([$25,000 - $14,200]/36) ($3,600) Less: Interest ($1,656) Monthly Rental $700 per month Le
Slide 29: Year Lease – Returned in Good Condition
Page 29 MMS Group FY12 Results Presentation For personal use only 3 Year Lease – Returned in Good Condition Yr 1 Yr 2 Yr 3 Total Profit & Loss $ $ $ $ • Assumptions (as per presentation) plus: Revenue 8,400 8,400 8,400 25,200 Profit on Sale (@ 5%) - - 710 - • 20% equity Depreciation (3,600) (3,600)
Slide 30: Year Lease – Lower Disposal Result
Page 30 MMS Group FY12 Results Presentation For personal use only 3 Year Lease – Lower Disposal Result Yr 1 Yr 2 Yr 3 Total Profit & Loss $ $ $ $ • Assumptions (as per presentation) Revenue 8,400 8,400 8,400 25,200 Profit on Sale (@ 1%) - - 142 142 plus: Depreciation (3,600) (3,600) (3,600) (10,800)