Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2019 Earnings Presentation
41 slides from Mcmillan Shakespeare's earnings presentation, Aug 21, 2019
Slide 1: FY19 Results Presentation
FY19 Results McMillan Presentation Shakespeare 21 August 2019 Limited Presenters Mike Salisbury, CEO Mark Blackburn, CFO
Slide 2: Overview / Key Financial Metrics
Overview Key Financial Metrics S Overview
Slide 3: Core growth, improvements and efficiencies
Overview Core growth, improvements and efficiencies Financial performance > Recorded UNPATA of $88.7m GRS core business continues to deliver growth > Novated sales outstrip retail market by 14% > Industry leading value proposition wins blue chip Victorian health client Innovation driving new profit
Slide 4: Group UNPATA bridge
Overview Group UNPATA bridge Revenue EBITDA UNPATA1,2 Underlying EPS Fully franked dividend $549.7m $132.8m $88.7m 107.3 cps 74.0 cps up 0.8% down 7.4% down 5.1% down 5.2% up 1.4% Corporate GRS $2.0m AM - A&NZ $(1.8m) AM - UK $(2.5m) RFS $(2.2m) ($0.3m) 1.8 (2.2) 2.4 (0.8) (1.0) (1.9) (0.6) 1.0 (1.8
Slide 5: Continued growth in customers and assets
Overview Continued growth in customers and assets Outperforming industry metrics 343,100 68,000 45,100 $500m Salary packages Novated leases Asset pool Assets managed 2.5% 7.4% (Units) (WDV )1 5.4 % 3.9% $2,950m $269m 1,312 52.9 Net amount financed Plan Partners client funds Average Net Promoter Scor
Slide 6: Scorecard
Overview Scorecard Disciplined execution of growth and productivity strategies Segment Stated strategy FY19 impact Group > Continue organic growth – Strong organic growth rates with salary packages increasing 2.5%, novated leasing Remuneration > Margin improvement via increasing 7.4% compared to pcp
Slide 7: GRS organic growth underpinned by novated leasing sales
Overview Key Financial GRS organic growth Metrics underpinned by novated leasing sales S Customer service and technology generate outperformance Australian New Car Sales MMS Novated Leasing Sales (000’s) Rolling 12 month avg (Indexed to June 2017) 1,200 3.8% 4% 120 1.3% 1,150 0% 110 0.4% 1,100 (4%)
Slide 8: Beyond 2020
Overview Beyond 2020 Driving novated leasing growth and improved operating margin in FY19 and beyond Core technology platform upgrade Novated leasing uplift and operational efficiencies Upgrade core IT platforms to increase speed of delivery, Increase novated sales conversions by automating the sale
Slide 9: Plan Partners initiative
Overview Plan Partners initiative Profitable results, building scale with scope for sustained growth Plan Partners (PP) remains focused on providing intermediary services, via expertise in the disability sector, and funds and payment Key Plan Partners statistics administration to National Disability
Slide 10: UK operations overview
Overview UK operations overview Economic and market conditions affect results UK market conditions Assets Financed to May (£bn) Economic and market uncertainty remains, 32.0 33.9 impacting consumer and business confidence 3.4 ■ Plant and machinery 3.2 > GDP growth to hit a five year low of 1.2% for
Slide 11: Significant capital management strategy
Overview Significant capital management strategy MMS announces $80m off-market buy-back Capital management strategy Current position Off-market buy-back key terms $80m off-market buy-back, Maintain conservative gearing Net cash, excluding fleet funded with tender discount from 10% to support busines
Slide 12: Financial performance
Financial performance
Slide 13: Underlying NPAT
Financial performance Underlying NPAT $m FY19 FY18 Variance Revenue 549.7 545.4 0.8% EBITDA 132.8 143.4 (7.4%) EBITDA margin (%) 24.2% 26.3% NPBT 99.7 85.0 17.3% NPAT 63.7 50.3 26.6% Underlying NPATA 88.7 93.5 (5.1%) Basic earnings per share (cents) 77.0 60.9 26.4% Underlying earnings per share (cen
Slide 14: Strong balance sheet funds growth and capital management strategies
Financial performance Strong balance sheet funds growth and capital management strategies 30 June 19 30 June 18 $m AM Other Group Group Net debt to EBITDA1 Cash at bank Other current assets 65.0 (13.3) 72.8 74.8 137.8 61.5 99.7 59.4 1.4x Total fleet funded assets 431.1 0.0 431.1 484.7 Group gearing2
Slide 15: All business segments deliver positive free cash flow
Financial performance All business segments deliver positive free cash flow FY19 FY18 Group Retail Remuneration Asset Financial Unallocated / MMS MMS $m Services Management Services parent co. Group Total Group Total NPAT 66.1 12.4 (14.0) (0.8) 63.7 50.3 Non-fleet depn/amort, reserves and other non-
Slide 16: Funds flow bridge
Financial performance Funds flow bridge $m Permanent Timing Permanent Timing Differences Differences Differences Differences 120 0.3 107.4 7.7 12.0 100 5.0 4.9 5.7 10.3 12.6 3.0 80 84.0 8.3 3.3 1.1 66.4 60 40 20 0 FY17 NPAT Capex VAT Cash Other FY18 NPAT Capex VAT Cash Australian tax UK tax Other FY
Slide 17: Ten year track record - delivering returns for shareholders
Financial performance Ten year track record - delivering returns for shareholders 10 year historical performance FY19 FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 CAGR Revenue $m 549.7 545.4 523.4 504.7 389.6 347.5 330.1 302.0 271.3 132.0 17.2% EBITDA $m 132.8 143.4 137.3 135.8 104.9 87.1 93.4 82.0
Slide 18: Segment performance
Segment performance
Slide 19: Segment Review
Segment performance Segment Review Group Remuneration Services Asset Management Retail Financial Services Unallocated Total $m FY19 FY18 % FY19 FY18 % FY19 FY18 % FY19 FY18 % FY19 FY18 % Revenue 221.9 207.8 6.8% 245.8 243.7 0.9% 80.7 92.5 (12.8%) 1.3 1.4 (7.1%) 549.7 545.4 0.8% Expenses 119.3 110.8
Slide 20: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) $m FY19 FY18 Variance Revenue 221.9 207.8 6.8% Commentary Employee expenses 91.5 85.2 7.4% Strong operational performance with a 2.5% in salary packages Property & other expenses 27.8 25.6 8.6% and a 7.4% in novated leasing units EBITDA 102.6 97.
Slide 21: GRS operating metrics
Segment performance GRS operating metrics Salary packages (000’s)1 Novated vehicles (000’s)2 5 year CAGR: 6.1% 5 year CAGR: 8.2% 334.9 343.1 63.3 68.0 317.5 59.8 292.8 55.8 269.7 50.9 255.7 45.8 FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 New clients: 3,400 packages New clients: 1,70
Slide 22: GRS dashboard - ongoing operational improvements
Segment performance GRS dashboard - ongoing operational improvements On-line claims take-up rate (%) Productivity index1 Customer satisfaction index3 100 200 250 90 Target 80 70 150 200 60 50 NPS Benchmark 40 2 100 150 30 20 10 0 50 100 Dec Dec June Dec June Dec June Dec June Dec June June June June
Slide 23: Asset Management (AM) – Australia & New Zealand
Segment performance Asset Management (AM) – Australia & New Zealand $m FY19 FY18 Variance Revenue 181.9 182.3 (0.2%) Commentary Fleet depreciation 66.2 71.2 (7.0%) Market remains challenging, is highly competitive with customers Lease and vehicle management expenses 67.4 62.6 7.7% extending leases r
Slide 24: AM – Australia & New Zealand operating metrics
Segment performance AM – Australia & New Zealand operating metrics Fleet assets written down value ($m) FY19 FY19 WDV breakdown Revenue breakdown 319 313 306 335 377 380 8% 10 40 69 24% 10% 36% $380.2m $181.9m 48% 19% 29% 319 313 306 325 336 312 16% 10% FY14 FY15 FY16 FY17 FY18 FY19 ■ Mining and con
Slide 25: AM – United Kingdom
Segment performance AM – United Kingdom $m FY19 FY18 Variance Revenue 63.9 61.4 4.1% Commentary Lease and vehicle management expenses 33.0 30.3 8.9% Market remains challenging with uncertainty surrounding the Employee expenses 15.5 13.4 15.7% economic environment, coupled with consumer and business
Slide 26: AM – United Kingdom operating metrics
Segment performance AM – United Kingdom operating metrics Assets written down value ($m) FY19 WDV on balance sheet breakdown 166 ■ Finance 95 10% 20% ■ Industry 27 4 ■ Finance 149 144 14% $118.1m ■ Manufacturing 129 113 118 10% ■ Wholesale & retail trade 6% ■ Portfolio sales ■ Other 14 19% ■ On bala
Slide 27: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) $m FY19 FY18 Variance Revenue 80.7 92.5 (12.8%) Commentary Brokerage commissions 36.5 42.0 (13.1%) Aggregation business performed strongly despite a softer motor Employee expenses 15.0 18.4 (18.5%) vehicle market Net claims 13.1 11.1 18.0% > Delive
Slide 28: RFS operating metrics
Segment performance RFS operating metrics Net amount financed ($m) Revenue breakdown ($m) UNPATA breakdown ($m) 1,062 1,033 92.5 80.7 8.6 6.4 15 46.1 92 92 1,018 2.8 969 969 32.7 37.7 7.1 6.1 46.4 54.8 48.0 -0.7 FY18 FY19 FY18 FY19 FY18 FY19 ■ Aggregation ■ Retail 27
Slide 29: Summary
Summary
Slide 30: Summary
Summary Summary FY19 performance - UNPATA of $88.7m Continuing growth and efficiencies in the GRS core – Novated lease volumes outstripping retail market by 14% – Customer service and technology initiatives generate outperformance versus competitors Disciplined execution of growth – Beyond 2020 - dr
Slide 31: Appendix
Appendix
Slide 32: Complementary diversification across the MMS Group
Appendix Complementary diversification across the MMS Group Group Remuneration Services Asset Management Retail Financial Services Brands Primary service – Salary packaging – Vehicle fleet leasing and management – Vehicle finance, insurance – Novated leases – Vehicle finance, insurance and broking a
Slide 33: Funding Overview
Appendix Funding Overview Highly competitive Club debt facilities priced at upper investment grade based on common terms Diversity of on and off balance sheet funding from Australia’s major banks All facilities extended beyond 12 months Local Currency Australian Dollars ($m) Amount Amount Currency F
Slide 34: Risks and sensitivities
Appendix Risks and sensitivities Regulation of consumer insurance products1 Regulation of consumer lending products2 Ongoing potential risk of consumer action Second hand car prices (remarketing earnings) New and used car sales Interest rates (earnings on float) Loss or repricing of major customers
Slide 35: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA $m FY19 FY18 Variance NPAT 63.7 50.3 26.6% 1. Amortisation of intangibles from acquisitions after tax 3.6 3.5 1.5% 2. Deferred consideration after tax (1.0) (5.5) (81.8%) 3. Costs associated with discontinued operations after tax - 6.9 (100.0%) 4. Asse
Slide 36: Group Remuneration Services
Appendix Group Remuneration Services Half yearly performance Full Year 2nd Half 1st Half Half Yearly Split $m FY19 FY18 Variance 2H19 2H18 Variance 1H19 1H18 Variance 2H19 1H19 2H18 1H18 Revenue 221.9 207.8 6.8% 115.9 108.2 7.1% 106.0 99.6 6.4% 52% 48% 52% 48% Employee expenses 91.5 85.2 7.4% 48.0 4
Slide 37: Asset Management – Australia & New Zealand
Appendix Asset Management – Australia & New Zealand Half yearly performance Full Year 2nd Half 1st Half Half Yearly Split $m FY19 FY18 Variance 2H19 2H18 Variance 1H19 1H18 Variance 2H19 1H19 2H18 1H18 Revenue 181.9 182.3 (0.2%) 88.6 90.8 (2.4%) 93.3 91.5 2.0% 49% 51% 50% 50% Fleet depreciation 66.2
Slide 38: Asset Management – United Kingdom
Appendix Asset Management – United Kingdom Half yearly performance Full Year 2nd Half 1st Half Half Yearly Split $m FY19 FY18 Variance 2H19 2H18 Variance 1H19 1H18 Variance 2H19 1H19 2H18 1H18 Revenue 63.9 61.4 4.1% 33.0 32.5 1.5% 30.9 28.9 6.9% 52% 48% 53% 47% Lease and vehicle management expenses
Slide 39: Retail Financial Services
Appendix Retail Financial Services Half yearly performance Full Year 2nd Half 1st Half Half Yearly Split $m FY19 FY18 Variance 2H19 2H18 Variance 1H19 1H18 Variance 2H19 1H19 2H18 1H18 Revenue 80.7 90.5 (10.8%) 38.4 41.6 (7.7%) 42.3 48.9 (13.5%) 48% 52% 47% 53% Brokerage commissions 36.5 40.0 (8.8%)
Slide 40: Disclaimer and important notice
Appendix 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 selected
Slide 41: McMillan Shakespeare Limited
McMillan Shakespeare Limited