Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2020 Earnings Presentation
42 slides from Mcmillan Shakespeare's earnings presentation, Aug 20, 2020
Slide 1: ASX cover letter: FY20 Results Presentation amended appendix pages
For personal use only 20 August 2020 Manager Company Announcements ASX Limited Level 4 20 Bridge Street SYDNEY NSW 2000 By E-lodgement McMillan Shakespeare Limited FY20 Results Presentation We refer to the FY20 Results Presentation lodged with the ASX yesterday, 19 August 2020. We advise that two pa
Slide 2: FY20 Results Presentation
For personal use only McMillan Shakespeare FY20 Results Presentation Limited 19 August 2020 Presenters Mike Salisbury, CEO Mark Blackburn, CFO
Slide 3: Overview
Overview Key Financial Metrics S For personal use only Overview
Slide 4: Resilient performance despite challenging conditions
Overview Resilient performance despite challenging conditions For personal use only Financial performance Capital management Operational performance > FY20 UNPATA of $69.0m > Extension of all revolving debt > Salary Packaging growth of 17,900 customers > FY20 total dividend 34 cents per facilities b
Slide 5: Group UNPATA bridge
Overview Group UNPATA bridge For personal use only Revenue EBITDA UNPATA1,2 Underlying EPS $494.0m $99.5m $69.0m 87.4 cps down (10.1%) down (25.1%) down (22.2%) down (18.5%) AM - A&NZ Corporate GRS ($5.2m) AM - UK $(8.0m) RFS $(3.2m) ($0.1m) $(3.2m) (7.9) 2.7 (3.2) 88.7 (4.4) (3.6) (2.9) (0.2) (0.1)
Slide 6: Cashflow and shareholder returns
Overview Cashflow and shareholder returns For personal use only Consistent free cash flow generation has delivered $335m in shareholder distributions over the past five years including $80m buy-back Free cashflow1 $m Shareholder returns $m 107.4 80.0 103.3 93.5 84.0 66.4 60.3 61.4 52.4 54.9 26.3 FY1
Slide 7: COVID-19 — Our response
Overview COVID-19 — Our response For personal use only COVID-19 was a sharp and severe impact Continued progress on strategic initiatives – Qualified for JobKeeper in April – Beyond 2020, Warehouse, Digital, IT strategy Focus on our people Resilient performance in Q4 with some encouraging – Retained
Slide 8: Continued growth in customers
Overview Continued growth in customers Resilient performance and solid base for growth For personal use only 361,000 71,800 39,600 $444m Salary packages Novated leases Asset pool Assets managed 5.2% 5.6% (Units) (WDV )1 (12.0%) (10.8%) $2,617m $669m 1,304 52 Net amount financed Plan Partners client
Slide 9: Plan Partners
Overview Plan Partners Empowering people to live the life they want For personal use only Purchase of 25% share for $8m completed, Key Plan Partners statistics now 100% owned Unique service providers on our platform at NDIS rollout approximately 73%1 complete 21,650 30 June 2020 (up from 10,200 at 3
Slide 10: UK strategic review update
Overview UK strategic review update Hold and restructure For personal use only Rationale for Strategic Review Update : Hold and restructure Financial performance of the business has been Continue current operations and deliver on cost behind our expectations out program The UK lending market is curr
Slide 11: Digital program expansion (continuation of Beyond 2020)
Overview Digital program expansion (continuation of Beyond 2020) Investing in our future For personal use only FY20 program > Built core CX, EX and data science capabilities > Accelerated digital transformation to respond to COVID-19 Key Achievements > Redesigned the role of Live Chat > Enhanced the
Slide 12: MMS funding warehouse
Overview MMS funding warehouse On track for delivery 2H21 For personal use only Strategy Update > Establishing a revolving warehouse as > Warehouse to be established by 2H21 an additional source of funding for novated > Policy documents and design of an operating leases during FY21 model well advanc
Slide 13: Lower CAPEX Higher OPEX
Overview Lower CAPEX Higher OPEX For personal use only Rationale > IT Strategy delivering lower overall capital costs – Shift towards licenced cloud and storage based solutions > Digital projects are more agile requiring continual development > Larger infrastructure projects (for example funding war
Slide 14: Financial performance
For personal use only Financial performance
Slide 15: Results summary
Financial performance Results summary For personal use only $m FY20 FY19 Variance Revenue 494.0 549.7 (10.1%) EBITDA4 99.5 132.8 (25.1%) EBITDA margin (%) 20.1% 24.2% NPBT 24.9 99.7 (75.0%) NPAT (MMS share) 1.3 63.7 (98.0%) Underlying NPATA 69.0 88.7 ( 22.2%) Basic earnings per share (cents) 1.6 77.
Slide 16: Balance sheet
Financial performance Balance sheet For personal use only 30 June 20 30 June 19 $m AM Other Group Group Net debt to EBITDA1 Cash at bank Other current assets 33.6 49.8 57.8 28.1 91.4 77.9 137.8 70.0 2.0x vs 1.4 pcp Total fleet funded assets 336.7 0.0 336.7 431.1 Group gearing2 Group Goodwill / intan
Slide 17: All business segments deliver positive free cash flow
Financial performance All business segments deliver positive free cash flow For personal use only FY20 FY19 Group Retail Remuneration Asset Financial Unallocated / MMS MMS $m Services Management Services parent co. Group Total Group Total NPAT 60.9 (9.8) (47.3) (2.5) 1.3 63.7 Non-fleet depn/amort, r
Slide 18: Segment performance
For personal use only Segment performance
Slide 19: Segment Review
Segment performance Segment Review For personal use only Group Remuneration Services Asset Management Retail Financial Services Unallocated Total $m FY20 FY19 % FY20 FY19 % FY20 FY19 % FY20 FY19 % FY20 FY19 % Revenue 214.8 221.9 (3.2%) 229.3 245.8 (6.7%) 49.7 80.7 (38.4%) 0.3 1.3 (75.5%) 493.9 549.7
Slide 20: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) For personal use only $m FY20 FY19 Variance Commentary Revenue 214.8 221.9 (3.2%) 5.2% increase in salary packages and 5.6% increase in Employee expenses 4 85.5 91.5 (6.6%) novated fleet units Property & other expenses 26.0 27.8 (6.6%) COVID-19 i
Slide 21: GRS operating metrics
Segment performance GRS operating metrics For personal use only Salary packages (000’s)1 Novated vehicles (000’s)2 Salary packages by Industry segment 4% 361.0 71.8 9% 334.9 343.1 68.0 317.5 63.5 26% 292.8 59.8 269.7 54.7 50.0 61% FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 New clien
Slide 22: GRS novated leasing performance
Segment performance Key Financial GRS novated leasing Metricsperformance S For personal use only Car sales for FY20 down 13.6% on prior comparable period COVID-19 recovery commenced in May and continued through June and July June Australian new car sales increase driven by tax incentives and governm
Slide 23: Asset Management (AM) – Australia & New Zealand
Segment performance Asset Management (AM) – Australia & New Zealand For personal use only $m FY20 FY19 Variance Commentary Revenue 173.7 181.9 (4.5%) COVID-19 impacts Fleet depreciation 59.0 66.2 (10.9%) – Renegotiated contract extensions for 21 customers Lease and vehicle management expenses 74.0 6
Slide 24: AM – ANZ operating metrics
Segment performance AM – ANZ operating metrics For personal use only Fleet assets written down value ($m) FY20 FY20 WDV breakdown Revenue breakdown 306 334 376 381 350 9 40 69 7% 106 8% 27% 306 325 336 312 245 $350.3m 41% $173.7m 46% 28% 20% 10% 14% FY16 FY17 FY18 FY19 FY20 ■ On balance sheet ■ Mini
Slide 25: AM – United Kingdom
Segment performance AM – United Kingdom For personal use only $m FY20 FY19 Variance Commentary Revenue 55.6 63.9 (12.9%) COVID-19 impacts Lease and vehicle management expenses 29.3 33.0 (11.3%) – Originations in Q4 down 52% on prior year (April down 71%) Employee expenses 15.4 15.5 (0.6%) – Granted
Slide 26: AM – UK operating metrics
Segment performance AM – UK operating metrics For personal use only Assets written down value ($m) FY20 WDV on balance sheet breakdown ■ Services 8% ■ Transportation, Comms, Electric, Gas & Waste 165.8 95 18% 36% ■ Finance 4 27 149 144 101.5 $94.2m ■ Manufacturing 129 118.1 113 10% ■ Wholesale & ret
Slide 27: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) For personal use only $m FY20 FY19 Variance Commentary Revenue 49.7 80.7 (38.4%) COVID-19 impacted sales activity in Q4 Brokerage commissions 30.9 36.5 (15.4%) – Aggregation down 25% on prior year (April down 50%) Employee expenses 4 14.1 15.0 (6.0
Slide 28: RFS operating metrics
Segment performance RFS operating metrics For personal use only Net amount financed ($m) Revenue breakdown ($m) UNPATA breakdown ($m) 52.8 39.2 12.1 2.9 0.1 1.2 24.9 0.3 1.6 21.2 18.0 3.6 3.4 3.5 14.7 15.4 14.9 2.7 2.7 24 24.3 23.7 481.9 487.1 521.5 496.5 514.4 427.8 22.4 22.9 17.1 1.4 -0.5 -0.6 1H1
Slide 29: Risks and sensitivities
Segment performance Risks and sensitivities For personal use only COVID-19 pandemic and associated restrictions Regulation of consumer insurance products Regulation of consumer lending products Lenders risk appetite (availability of credit) Ongoing potential risk of consumer action Loss of major cli
Slide 30: Summary
For personal use only Summary
Slide 31: Summary and FY20 Outlook
Summary Summary For personal use only FY20 Outlook COVID-19 restrictions impacted activity levels Uncertainty of COVID-19 in relation to further Prioritised the health and welfare of our people restrictions and associated impacts on performance and delivery of service to our customers Redesigning ou
Slide 32: Appendix
For personal use only Appendix
Slide 33: Business on a page
Appendix Business on a page For personal use only 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 and warrant
Slide 34: Funding Overview
Appendix Funding Overview For personal use only Successfully extended all revolving debt facilities Highly competitive debt facilities priced at investment grade based on common terms Diversity of on and off balance sheet funding of operating lease portfolio from Australia’s major banks, with over 3
Slide 35: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA For personal use only $m FY20 FY19 Variance NPAT 1.3 63.7 (98.0%) 1. Amortisation of intangibles from acquisitions 3.0 3.5 (13.5%) 2. Deferred consideration (no longer payable) (1.5) (0.9) 54.8% 3. Due diligence and restructuring costs 1.2 0.5 127.0% 4
Slide 36: AASB16 Lease accounting
Appendix AASB16 Lease accounting For personal use only AASB FY20 (excl. $m FY20 FY20 AASB16) FY19 Variance Revenue 494.0 494.0 549.7 (10.1%) Expenses 394.9 6.4 401.3 416.8 (3.7%) EBITDA 99.0 (6.4) 92.6 132.8 (30.3%) EBITDA margin (%) 20.0% 0.0% 18.8% 24.2% (22.4%) D&A of PPE and software 20.4 (5.5)
Slide 37: Group Remuneration Services Half yearly performance
Appendix Group Remuneration Services Half yearly performance For personal use only Full Year 2nd Half 1st Half Half Yearly Split $m FY20 FY19 Variance 2H20 2H19 Variance 1H20 1H19 Variance 2H20 1H20 2H19 1H19 Revenue 214.8 221.9 (3.2%) 106.0 115.9 (8.5%) 108.8 106.0 2.6% 49% 51% 52% 48% Employee exp
Slide 38: Asset Management – Australia & New Zealand Half yearly performance
Appendix Asset Management – Australia & New Zealand Half yearly performance For personal use only Full Year 2nd Half 1st Half Half Yearly Split $m FY20 FY19 Variance 2H20 2H19 Variance 1H20 1H19 Variance 2H20 1H20 2H19 1H19 Revenue 173.7 181.9 (4.5%) 82.7 88.6 (6.7%) 91.0 93.3 (2.5%) 48% 52% 49% 51%
Slide 39: Asset Management – United Kingdom Half yearly performance
Appendix Asset Management – United Kingdom Half yearly performance For personal use only Full Year 2nd Half 1st Half Half Yearly Split $m FY20 FY19 Variance 2H20 2H19 Variance 1H20 1H19 Variance 2H20 1H20 2H19 1H19 Revenue 55.6 63.9 (12.9%) 23.4 33.0 (29.0%) 32.2 30.9 4.2% 42% 58% 52% 48% Lease and
Slide 40: Retail Financial Services Half yearly performance
Appendix Retail Financial Services Half yearly performance For personal use only Full Year 2nd Half 1st Half Half Yearly Split $m FY20 FY19 Variance 2H20 2H19 Variance 1H20 1H19 Variance 2H20 1H20 2H19 1H19 Revenue 49.7 80.7 (38.4%) 11.4 38.4 (70.2%) 38.3 42.3 (9.6%) 2H20 1H20 2H19 1H19 Brokerage co
Slide 41: 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 42: McMillan Shakespeare Limited
For personal use only McMillan Shakespeare Limited