Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2020 Earnings Presentation
41 slides from Mcmillan Shakespeare's earnings presentation, Aug 19, 2020
Slide 1: FY20 Results Presentation
McMillan Shakespeare FY20 Results Presentation Limited 19 August 2020 Presenters Mike Salisbury, CEO Mark Blackburn, CFO
Slide 2: Overview
Overview Key Financial Metrics S Overview
Slide 3: Resilient performance despite challenging conditions
Overview Resilient performance despite challenging conditions 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 beyond 12 months – Up 5
Slide 4: Group UNPATA bridge
Overview Group UNPATA bridge 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) 69.0 42.1 FY19 GRS Pl
Slide 5: Cashflow and shareholder returns
Overview Cashflow and shareholder returns 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 FY16 FY17 FY18 FY19 FY20
Slide 6: COVID-19 — Our response
Overview COVID-19 — Our response 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 100% of our workforce
Slide 7: Continued growth in customers
Overview Continued growth in customers Resilient performance and solid base for growth 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 funds Average Net Prom
Slide 8: Plan Partners
Overview Plan Partners Empowering people to live the life they want 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 30 June 2019) (circa 36
Slide 9: UK strategic review update
Overview UK strategic review update Hold and restructure 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 currently structurally Res
Slide 10: Digital program expansion (continuation of Beyond 2020)
Overview Digital program expansion (continuation of Beyond 2020) Investing in our future 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 AI chat bot > Transfo
Slide 11: MMS funding warehouse
Overview MMS funding warehouse On track for delivery 2H21 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 advanced Rationale > The pre
Slide 12: Lower CAPEX Higher OPEX
Overview Lower CAPEX Higher OPEX 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 warehouse) will continue
Slide 13: Financial performance
Financial performance
Slide 14: Results summary
Financial performance Results summary $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 77.0 (97.8%) Underlying e
Slide 15: Balance sheet
Financial performance Balance sheet 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 / intangibles 32.0 108.4 140.
Slide 16: All business segments deliver positive free cash flow
Financial performance All business segments deliver positive free cash flow 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, reserves and other non-
Slide 17: Segment performance
Segment performance
Slide 18: Segment Review
Segment performance Segment Review 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 (10.1%) Expenses 111.
Slide 19: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) $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 impacted novated leasin
Slide 20: GRS operating metrics
Segment performance GRS operating metrics 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 clients: 17,300 packages Ne
Slide 21: GRS novated leasing
Segment performance Key Financial GRS novated leasing Metricsperformance S 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 government support to SME bus
Slide 22: Asset Management (AM) – Australia & New Zealand
Segment performance Asset Management (AM) – Australia & New Zealand $m FY20 FY19 Variance Commentary Revenue 173.7 181.9 (4.5%) COVID-19 impacts Fleet depreciation 59.0 66.2 (10.9%) – Renegotiated contract extensions for 21 customers Lease and vehicle management expenses 74.0 67.4 9.9% – Granted int
Slide 23: AM – ANZ operating metrics
Segment performance AM – ANZ operating metrics Fleet assets written down value ($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 ■ Mining and construction ■
Slide 24: AM – United Kingdom
Segment performance AM – United Kingdom $m FY20 FY19 Variance Commentary Revenue 55.6 63.9 (12.9%) COVID-19 impacts Lease and vehicle management expenses 29.3 33.0 (11.3%) – Originations in Q4 down 52% on prior year (April down 71%) Employee expenses 15.4 15.5 (0.6%) – Granted repayment holidays for
Slide 25: AM – UK operating metrics
Segment performance AM – UK operating metrics Assets written down value ($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 & retail trade 94.2 ■ Portf
Slide 26: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) $m FY20 FY19 Variance Commentary Revenue 49.7 80.7 (38.4%) COVID-19 impacted sales activity in Q4 Brokerage commissions 30.9 36.5 (15.4%) – Aggregation down 25% on prior year (April down 50%) Employee expenses 4 14.1 15.0 (6.0%) – Warranty down 23%
Slide 27: RFS operating metrics
Segment performance RFS operating metrics Net amount financed ($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 1H18 2H18 1H19 2H19 1H20
Slide 28: Risks and sensitivities
Segment performance Risks and sensitivities 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 client Second hand car pr
Slide 29: Summary
Summary
Slide 30: Summary and FY20 Outlook
Summary Summary 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 our future ways of worki
Slide 31: Appendix
Appendix
Slide 32: Business on a page
Appendix Business on a page 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 warranty broking – Plan manag
Slide 33: Funding Overview
Appendix Funding Overview 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 30% of the AM-ANZ portf
Slide 34: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA $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. Share buy back costs
Slide 35: AASB16 Lease accounting
Appendix AASB16 Lease accounting 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) 14.9 10.3 44.8% Amorti
Slide 36: Group Remuneration Services
Appendix Group Remuneration Services Half yearly performance 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 expenses 85.5 91.5 (6.6%)
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 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% Fleet depreciation 59
Slide 38: Asset Management – United Kingdom
Appendix Asset Management – United Kingdom Half yearly performance 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 vehicle management exp
Slide 39: Retail Financial Services
Appendix Retail Financial Services Half yearly performance 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 commissions 30.9 36.5 (1
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