Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2021 Earnings Presentation
48 slides from Mcmillan Shakespeare's earnings presentation, Aug 24, 2021
Slide 1: McMillan Shakespeare Limited 2021 Investor Presentation
24 August 2021 Manager Company Announcements ASX Limited Level 4 20 Bridge Street SYDNEY NSW 2000 By E-lodgement McMillan Shakespeare Limited 2021 Investor Presentation This release contains an announcement to the Australian Securities Exchange Limited (ASX) regarding the following: 1. FY21 Results
Slide 2: FY21 Results Presentation
Overview Focusing on our strengths FY21 Results Presentation 24 August 2021 Presenters Mike Salisbury, CEO & Managing Director Ashley Conn, CFO McMillanShakespeareGroup i
Slide 3: Overview
MoNiillanShakespeareGroup
Slide 4: FY21 highlights
Overview FY21 highlights Delivering results in challenging conditions FY21 UNPATA1 $79.2m (14.8% growth versus pcp) influenced by the auto supply dynamic, benefits from the UK restructure and growth in Plan Partners GRS: Salary Packaging GRS: Asset Management Asset Management and Novated Leasing Pla
Slide 5: Progress made on our growth priorities
Overview Progress made on our growth priorities Our growth priorities GRS: GRS: Portfolio Shareholder Salary Packaging & Plan Partners realignment returns Novated Leasing growth growth Our progress Improvements in activity in COVID-19 Organic funds under management AM UK ROCE +13.6% in last 5 years
Slide 6: Group UNPATA bridge
Overview Group UNPATA bridge Revenue EBITDA1 UNPATA2 Underlying EPS $544.5m $130.7m $79.2m 102.4 cps up 10.2% up 31.4% up 14.8% up 17.1% GRS AM - A&NZ AM - UK Corporate RFS $(0.5m) ($0.5m) $0.2m $4.8m $6.1m 6.1 (0.4) (0.1) (0.5) 4.8 0.2 (18.1) 69.0 79.2 61.1 FY20 GRS AM: A&NZ AM: UK Aggregation Reta
Slide 7: Ongoing resilient performance
Overview Ongoing resilient performance 357,388 73,375 33,591 $363m Salary packages1 Novated leases Assets pool – units Assets managed – WDV 2 Down (1.0%) Up 2.2% Down (15.2%) Down (18.3%) $2,770m $1,179m 1,276 60 Net amount financed Plan Partners client funds Average employees Net Promoter Score (NP
Slide 8: COVID-19 management
Overview COVID-19 management COVID-19 was a sharp and severe impact UNPATA ($m) FY19 to FY21 – UNPATA excl. JobKeeper for FY21 was $71.9m 9.5m UNPATA returned to 89% – Qualified for JobKeeper in April 20, ended in September 20 19.7m 7.3 of pre COVID-19 levels 7.0 Focus on our people 88.7 62.0 71.9 –
Slide 9: Auto sector influences
Overview Auto sector influences Constrained supply continued through FY21 and is expected to remain through FY22 FY21 observations Australian new car sales (‘000)1 – Increased vehicle demand reducing overall stock levels, FY21 consistent with the declining trend of recent years believed to be at lea
Slide 10: Our investment in sustainability / ESG
Overview Our investment in sustainability / ESG MMS sustainability strategy further developed during FY21, focussing on creating shared value for our stakeholders and our business. FY21 foundations laid FY22 strategy rollout MMS sustainability strategy Sustainability strategy approved Develop pathwa
Slide 11: Our priorities for FY22
Overview Our priorities for FY22 Our growth priorities GRS: GRS: Portfolio Shareholder Salary Packaging & Plan Partners realignment returns Novated Leasing growth growth Outlook for FY22 Demand impacted by lockdowns Continue to invest in business Complete on executed RFS Focus on ROCE in NSW and VIC
Slide 12: Financial performance
Confidential : Preliminary Draft for Discussion Purposes Only Financial performance 10
Slide 13: Improved financial performance
Financial performance Improved financial performance $m FY21 FY20 Variance Revenue 544.5 494.0 10.2% EBITDA 130.7 99.5 31.4% EBITDA margin (%) 24.0% 20.1% NPBT 97.1 24.9 >100% NPAT (MMS share)4 61.1 1.3 >100% UNPATA 79.2 69.0 14.8% Basic earnings per share (cents) 78.9 1.6 >100% Underlying earnings
Slide 14: Well positioned balance sheet with low leverage
Financial performance Well positioned balance sheet with low leverage 30 June 2021 30 June 2020 $m AM Other Group Group Net debt to EBITDA1 Cash at bank 38.1 119.9 158.0 91.4 0.5x vs 2.0x pcp Other current assets 25.1 25.7 50.9 79.0 Group gearing 2 Group Total fleet funded assets 276.9 - 276.9 336.7
Slide 15: Cash flow statement
Financial performance Cash flow statement FY21 FY20 Group Retail Remuneration Asset Financial Unallocated / MMS MMS $m Services Management Services parent co. Group Total Group Total NPAT 61.2 (0.6) 2.0 (1.5) 61.1 1.3 Non-fleet depn/amort, reserves and other non-cash items 15.8 18.5 1.3 - 35.6 91.3
Slide 16: Warehouse update
Financial performance Warehouse update First lease expected in 1H221 Strategy Implementation update – Establish a revolving warehouse as an additional source – First lease to be funded post credit licence approval of funding for novated leases (currently all sourced from – Targeting 20% of monthly n
Slide 17: Segment performance
Segment performance 15
Slide 18: GRS: Highlights
Segment performance GRS: Highlights Revenue growth and restructured cost base 221.9 214.8 228.8 Commentary Revenue – COVID-19 impact > Increase in carryover to over 500% of FY19 levels $228.8m > Limited supply of new vehicles increased retail prices and average net amount financed with resultant pos
Slide 19: GRS: Operating metrics
Segment performance GRS: Operating metrics Resilient performance under challenging conditions Salary packages1 Novated leases2 Salary packages by industry segment 357,388 73,375 (1.0%) 2.2% → → 361.0 357.4 71.8 73.4 3% 334.9 343.1 68.0 13% 317.5 63.5 59.8 26% (’000) (’000) 58% FY17 FY18 FY19 FY20 FY
Slide 20: GRS: Novated Leasing
Segment performance GRS: Novated Leasing Strong demand will benefit future periods Supply dynamic resulted in Activity levels remain strong, elevated novated yields and however carryover has increased subdued sales through FY21 to over 5 times historical levels Sales volumes indexed to FY19 Orders-
Slide 21: GRS: Digital investment update
Segment performance GRS: Digital investment update Enhancements to customer experience and lowering cost to serve FY21 Update Personalised Budget management – Digital estimate and salary package online set-up continual digital estimate within app improvement program > Improved employer search functi
Slide 22: GRS: Plan Partners
Segment performance GRS: Plan Partners Investing for future growth and our customers – NDIS rollout now at 93% complete (circa 466,0001 people) with 49% of Funds under Support plans now eligible for Plan Management (vs 40% 12 months prior) administration $m coordination hours – Established brand wit
Slide 23: AM ANZ: Highlights
Segment performance AM ANZ: Highlights Supply constraints delivering improved remarketing profits 181.9 173.7 153.5 Commentary Revenue – COVID-19 impact > Limited supply of new vehicles and increase in demand $153.5m for used vehicles resulted in increased remarketing yields > Customers have returne
Slide 24: AM ANZ: Operating metrics
Segment performance AM ANZ: Operating metrics WDV growth constrained as a result of market conditions Written down value Remarketing yields remain elevated and sales remain subdued – expect to continue through FY22 $311.2m (11.2%) Remarketing units - indexed to FY19 Remarketing yield - indexed to FY
Slide 25: AM UK: Highlights
Segment performance AM UK: Highlights Restructured and returned to profit 63.9 55.6 102.8 Commentary Revenue – Off balance sheet originations increased 21% on prior year supported by UK government CBILS loans attracting lower margins $102.8m – Divestment of EVC completed 11 March 2021 – Acquisition
Slide 26: AM UK: Operating metrics
Segment performance AM UK: Operating metrics Restructured with focus on off-balance sheet funding Net amount financed ($m) FY21 WDV breakdown ■ Services 986.9 9% 886.5 872.5 890.0 ■ Transportation, communication, 14% electric, gas & sanitary service ■ Finance, insurance & real estate $51.9m 39% 10%
Slide 27: RFS: Highlights
Segment performance RFS: Highlights Revenue growth offset by extension to deferred income pattern. Agreement executed to sell Retail business 80.7 49.5 59.2 Commentary Revenue – Recovery from heavily COVID-19 impacted FY20 > Aggregation net amount financed up 7% on pcp $59.2m > Warranty sales down 8
Slide 28: RFS: Operating metrics
Segment performance RFS: Operating metrics Improvements in performance offset by extension to deferred income pattern Net amount financed ($m) Revenue breakdown ($m)1 UNPATA breakdown ($m)2 12.1 0.1 52.8 39.3 3.0 1.2 0.3 1.6 24.9 21.2 17.4 15.3 15.4 14.9 12.6 12.8 481.9 485.9 521.5 496.7 514.4 427.8
Slide 29: Summary and outlook
MoNiillanShakespeareGroup
Slide 30: Summary and outlook
Summary and outlook Summary and outlook Summary Outlook – Improved profit performance in a challenging market – COVID-19 and related lockdowns remain a key variable – Engaged & supported workforce – Constrained auto market limiting supply and – Strengthened balance sheet and cash position increasing
Slide 31: Appendix 1: Warehouse update
Appendix 1: Warehouse update 29
Slide 32: The changing funding landscape has led MMS to implement a securitisation warehouse
Appendix 1 The changing funding landscape has led MMS to implement a securitisation warehouse In 2020 MMS decided to pursue its own securitisation warehouse as a funding option alongside existing Principal & Agency (P&A) funders. MMS will continue to fund ~80% of deals via P&A and expects warehouse
Slide 33: The Warehouse will provide strategic and financial benefits
Appendix 1 The Warehouse will provide strategic and financial benefits Secures and Competition Increase in Higher overall New source diversifies our and price benefits annuity based value per of income funding sources for our customer income transaction Establishment of the Creation of the The Wareh
Slide 34: Features of P&A and warehouse securitisation models
Appendix 1 Features of P&A and warehouse securitisation models P&A model Warehouse securitisation model Under a P&A model, the “agent” (MMS) has The warehouse securitisation model is when specific authority conferred upon them by an financial assets (ie leases) are pooled into a agreement to create
Slide 35: Comparison of each funding model
Appendix 1 Comparison of each funding model P&A Warehouse Diversification of funding model NO YES Annuity income earnings benefits NO YES Upfront brokerage fees YES NO Committed source of funding NO YES Access to capital markets investors ~ NO YES domestic and international Self-managed funding NO Y
Slide 36: Accounting impacts and changes
Appendix 1 Accounting impacts and changes P&L Balance Sheet – Annuity income received as a net interest margin – Accounting treatment will result in on-balance sheet (“NIM”) replaces upfront brokerage under P&A. recognition of the Warehouse in the consolidated Only applicable to the ~20% of lease se
Slide 37: The Warehouse has a positive long-term value impact
Appendix 1 The Warehouse has a positive long-term value impact – Single lease NPV 114.6% of traditional P&A Cumulative NIM2 comparison P&A vs Securitisation – Objective to fund 20% of novated leases originated 113% 115% 102% 986.9 through Maxxia and Remserv into the Warehouse 886.5 100% 85% – The Wa
Slide 38: Appendix 2: Other
MoNiillanShakespeareGroup
Slide 39: Reconciliation between NPAT and UNPATA
Appendix 2 Reconciliation between NPAT and UNPATA $’000 FY21 FY20 Variance NPAT 61,065 1,269 >100.0% 1. Amortisation of intangibles from acquisitions 1,578 2,918 (45.9%) 2. UK restructure costs - cash 1,805 - >100.0% 3. UK restructure costs - non-cash 12,755 - >100.0% 4. Asset impairment in relation
Slide 40: Funding overview
Appendix 2 Funding overview – Right sized the debt facilities for Asset Financing Australia and New Zealand, reducing the cost of undrawn facilities > Facilities reduced from $238m to $190m > No revolving lines are current until FY23 – Extended UK corporate debt facility to June 2023 – Diversity of
Slide 41: Agreement to sell RFS Retail business
Appendix 2 Agreement to sell RFS Retail business As at 30 June 2021 $’000 On 23 August 2021 MMS entered into an agreement to sell its RFS Retail Current assets business to the current management team. This will include Cash and cash equivalents 20,513 the sale of the Davantage Group Pty Ltd (trading
Slide 42: Segment review
Appendix 2 Segment review Group Remuneration Services Asset Management Retail Financial Services Unallocated Total $m FY21 FY20 % FY21 FY20 % FY21 FY20 % FY21 FY20 % FY21 FY20 % Revenue 228.8 214.8 6.5% 256.3 229.3 11.8% 59.2 49.5 19.5% 0.2 0.3 (52.0%) 544.5 494.0 10.2% Expenses 124.3 111.5 11.4% 23
Slide 43: GRS: Financials
Appendix 2 GRS: Financials Half yearly split Full Year 2nd Half 1st Half Half Yearly Split FY21 FY20 Variance 2H21 2H20 Variance 1H21 1H20 Variance 2H21 1H21 2H20 1H20 Revenue 228.8 214.8 6.5% 117.0 106.0 10.3% 111.8 108.8 2.8% 51.1% 48.9% 49.4% 50.6% Employee expenses4 90.1 85.5 5.4% 51.0 38.3 33.0
Slide 44: AM-ANZ: Financials
Appendix 2 AM-ANZ: Financials Half yearly split Full Year 2nd Half 1st Half Half Yearly Split FY21 FY20 Variance 2H21 2H20 Variance 1H21 1H20 Variance 2H21 1H21 2H20 1H20 Revenue 153.5 173.7 (11.6%) 77.7 82.7 (6.1%) 75.9 91.0 (16.6%) 50.6% 49.4% 47.6% 52.4% Fleet depreciation 46.3 59.0 (21.5%) 22.8
Slide 45: AM-UK: Financials
Appendix 2 AM-UK: Financials Half yearly split Full Year 2nd Half 1st Half Half Yearly Split FY21 FY20 Variance 2H21 2H20 Variance 1H21 1H20 Variance 2H21 1H21 2H20 1H20 Revenue 102.8 55.6 84.8% 72.7 23.4 >100% 30.0 32.2 (6.7%) 70.8% 29.2% 42.1% 57.9% Lease and vehicle management expenses 79.5 29.3
Slide 46: RFS: Financials
Appendix 2 RFS: Financials Half yearly split Full Year 2nd Half 1st Half Half Yearly Split FY21 FY20 Variance 2H21 2H20 Variance 1H21 1H20 Variance 2H21 1H21 2H20 1H20 Revenue 59.2 49.5 19.5% 29.3 11.3 >100% 29.9 38.3 (21.8%) 49.5% 50.5% 22.8% 77.2% Brokerage commissions 27.5 30.9 (11.0%) 14.2 13.1
Slide 47: Disclaimer and important notice
Appendix 2 Disclaimer and important notice 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 presentation contains selec
Slide 48: McMillanShakespeareGroup
MMS MoMiilanShakespeareGroup