Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2018 Earnings Presentation
41 slides from Mcmillan Shakespeare's earnings presentation, Aug 22, 2018
Slide 1: FY18 Results Presentation
McMillan Shakespeare Limited FY18 Results Presentation Presenters Mike Salisbury, CEO Mark Blackburn, CFO
Slide 2: Overview
Overview McMillanShakespeareGroup
Slide 3: Key Financial Metrics
Overview Key Financial Metrics Revenue up 4.2% to UNPATA Performance ($m) $545.4 million 93.5 87.2 87.2 EBITDA up 4.4% to $143.4 million 62.2 69.6 UNPATA1 up 7.2% to 54.3 55.9 $93.5 million 43.5 Underlying EPS1 up 8.0% to 27.9 113.2 cps 20.5 Fully franked dividends up 10.6% 73.0 cps FY09 FY10 FY11 F
Slide 4: Scorecard
Overview Scorecard Executing strategies to drive long term growth and sustainable returns Segment Stated strategy FY18 impact Group > Continue organic growth – Increasing participation, re-lease levels and new business wins resulted in salary Remuneration > Margin improvement via packages increasing
Slide 5: Continued growth in customers and assets
Overview Continued growth in customers and assets Organic volume growth driving future profitability 334,850 63,300 42,750 $521m Salary packages Novated leases Assets managed Assets managed 5.5% 5.9% (Units) (WDV)1 2.3 % 7.6% $2,850m $395m 1,260 49.1 Net amount financed Average salary Average employ
Slide 6: Strategic initiatives to drive long term growth, returns and profitability
Overview Strategic initiatives to drive long term growth, returns and profitability Investment in core technology platforms – In FY19, we commence a two year rebuild / redesign of our core GRS technology, transforming our platforms and systems – Additional cost in FY19 and FY20 is $8.2m, split $7.0m
Slide 7: Update core technology platforms
Overview Update core technology platforms What is the Strategy? What does it involve? Program of work to deliver IT platforms required to Create A new platform to allow a true single customer view – Meet the Beyond 2020 sales and operational initiative – Increase speed of delivery Re-platform Progre
Slide 8: Drive NL growth, improve operating margins
Overview Drive NL growth, improve operating margins What is the Strategy? Augmented Reality Increase novated sales conversion – Improve customer communications – Revolutionise the sales activity system via automation – Better understand customer behaviour Improve GRS operations productivity – Fully
Slide 9: Consolidate UK growth, improve return on capital
Overview Consolidate UK growth, improve return on capital Objectives Originate NAF of £1.0 billion within 3 years Improve use of capital Strategy 1,000 Organic growth from existing businesses – Extract further synergies from centralised treasury and deal settlements capability, cross selling product
Slide 10: Market leadership in NDIS of plan management
Overview Market leadership in NDIS of plan management National Disability Insurance Scheme (NDIS) to support 460,000 participants with sector funding to grow to $22 billion annually by 2021 Plan Partners focused on providing intermediary services, via expertise in the disability sector, and funds an
Slide 11: Financial performance
Financial performance Financial performance 10
Slide 12: Results Summary
Financial performance Results Summary $m FY18 FY17 Variance Revenue1 545.4 523.4 4.2% EBITDA 143.4 137.3 4.4% EBITDA margin (%) 26.3% 26.2% NPBT 84.9 101.3 (16.2%) NPAT 50.3 67.9 (25.9%) UNPATA 93.5 87.2 7.2% Basic earnings per share (cents) 60.9 81.6 (25.4%) Underlying earnings per share (cents) 11
Slide 13: Balance Sheet
Financial performance Balance Sheet Conservative capital structure June 2018 June 2017 $m AM Other Group Group Net debt to EBITDA1 Cash at bank Other current assets 21.1 22.5 78.6 36.9 99.7 59.4 59.4 54.7 1.7x Group gearing2 Group Total fleet funded assets 484.7 - 484.7 473.4 Goodwill / intangibles
Slide 14: Funds Flow
Financial performance Funds Flow Strong operating cash flow generation, resulting in cash increasing by $40.3m Operating - 107.4 Investing - (4.4) Financing - (62.7) $m 180 3.5 0.9 1.7 8.2 160 13.3 18.9 51.5 140 56.2 120 100 50.3 99.7 80 60 59.4 40 ■ Cash Inflow 20 ■ Cash Outflow 0 ■ Balance FY17 Ca
Slide 15: Performance metrics
Financial performance Performance metrics 10 year historical performance FY18 FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 10 Year CAGR Revenue $m 545.4 523.4 504.7 389.6 347.5 330.1 302.0 271.3 132.0 77.3 24.2% EBITDA $m 143.4 137.3 135.8 104.9 87.1 93.4 82.0 67.5 63.9 30.3 18.9% EBITDA margin % 26
Slide 16: Segment performance
Segment performance Segment performance 15
Slide 17: Segment Review
Segment performance Segment Review Group Remuneration Services Asset Management Retail Financial Services Unallocated Total $m FY18 FY17 % FY18 FY17 % FY18 FY17 % FY18 FY17 % FY18 FY17 % Revenue 207.8 189.7 9.6% 243.7 226.1 7.8% 92.5 106.0 (12.7%) 1.4 1.6 (12.5%) 545.4 523.4 4.2% Expenses 110.8 100.
Slide 18: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) Strong results, investing for sustained growth and performance $m FY18 FY17 Variance Revenue 207.8 189.7 9.6% Commentary Employee expenses 85.2 73.5 15.9% Revenue improvement of 9.6% primarily achieved via Property & other expenses 25.6 26.6 (3.7
Slide 19: GRS
Segment performance GRS New customer wins and increasing penetration resulting in organic volume growth Salary packages (000’s)1 Novated vehicles (000's)2 5 year CAGR: 6.4% 5 year CAGR: 8.2% 334.9 317.5 292.8 269.7 63.3 255.7 59.8 245.7 55.8 50.9 45.8 42.7 FY13 FY14 FY15 FY16 FY17 FY18 FY13 FY14 FY1
Slide 20: GRS
Segment performance GRS Technology investments drive new levels of customer engagement and conversion On-line claims take-up rate (%) Productivity Index1 Customer Satisfaction 100 Index3 Target 80 180 300 250 60 160 200 40 140 150 NPS Benchmark 4 100 20 120 50 2 0 100 0 Nov Sep July May Jun Jul Jan
Slide 21: Asset Management (AM) – Australia & New Zealand
Segment performance Asset Management (AM) – Australia & New Zealand Diversified funding model supports capital light growth and margin expansion $m FY18 FY17 Variance Revenue 182.3 179.4 1.6% Commentary Fleet depreciation 71.2 75.5 (5.7%) EBITDA margin improvement of 1.1% to 13.3% driven by Lease an
Slide 22: AM – Australia & New Zealand
Segment performance AM – Australia & New Zealand Disciplined approach with strong risk and returns control Fleet assets written down value ($m) FY18 FY18 WDV breakdown Revenue breakdown 41 10 336 319 325 11% 313 306 304 22% 10% $376.7m 32% $182.3m 53% 17% 29% 15% 10% FY14 FY15 FY16 FY17 FY18 ■ Minin
Slide 23: AM – United Kingdom
Segment performance AM – United Kingdom Performing well, positioned to step up growth and scale $m FY18 FY17 Variance Revenue1 61.4 46.7 31.5% Commentary Lease and vehicle management expenses 30.3 23.2 30.6% Employee expenses 13.4 10.0 34.0% Strong NAF growth of 67% (in local currency) over pcp Shar
Slide 24: AM – United Kingdom
Segment performance AM – United Kingdom Operating Metrics Assets WDV – On and off FY18 WDV breakdown balance sheet ($m) 95 ■ Services 9% 27 4 9% ■ Finance 149 144 36% ■ Wholesale and Retail Trade 129 113 9% $144.0m ■ Manufacturing ■ Industry 14 17% FY14 FY15 FY16 FY17 FY18 20% ■ Other ■ ■ Assets mov
Slide 25: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) Restructure complete, sustainable distribution footprint with enhanced customer offering $m FY18 FY17 Variance Revenue 92.5 106.0 (12.7%) Commentary Brokerage commissions 42.0 45.7 (8.1%) Strategic review completed, resulted in closure of Money Now
Slide 26: RFS
Segment performance RFS Operating Metrics Net amount financed ($m) Revenue UNPATA breakdown ($m) breakdown ($m) 106.0 12.4 58.4 92.5 8.3 1081 1061 54.8 937 8.6 855 6.3 47.6 37.7 4.1 2.3 Proforma at FY16 FY17 FY18 FY17 FY18 FY17 FY18 acquisition 1 ■ Retail ■ Retail ■ Aggregation ■ Aggregation 1 Profo
Slide 27: Summary
Summary McMillanShakespeareGroup
Slide 28: Summary
Summary Summary Strong FY18 performance – $93.5m UNPATA – in-line with guidance – Strong organic growth Free cash flow, up 28% – Continued focus on capital management, increase returns through capital light model – Dividend payout ratio1 of 64.5%, dividend up 10.6% Long term growth strategies – exec
Slide 29: Appendix
Appendix McMillanShakespeareGroup
Slide 30: Key initiatives for building long term shareholder value
Appendix Key initiatives for building long term shareholder value Broadening the suite of high quality products and industry leading service to drive organic growth Investing in technology resulting in an improved customer experience and lower operating cost Capturing synergy benefits from a fully i
Slide 31: 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 mgt – Vehicle finance, insurance – Novated leases – Vehicle finance, insurance and broking and warr
Slide 32: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA $m FY18 FY17 Variance NPAT 50.3 67.9 (25.4%) 1. Amortisation of intangibles from acquisitions after-tax 3.5 3.0 17.1% 2. Deferred consideration (5.5) - 3. Costs associated with discontinued operations 6.9 - 4. Asset impairment in relation to warranty a
Slide 33: Funding Overview
Appendix Funding Overview Competitive finance rates and long term duration driven by MMS scale and quality of customer base Renegotiated the current component of the Asset Financing facilities in each jurisdiction, extending the maturity dates beyond the next 12 months Refinanced the CLM acquisition
Slide 34: Funds Flow
Appendix Funds Flow FY18 FY17 Unallocated / MMS MMS $m GRS AM RFS parent co. Group Total Group Total NPAT 64.1 25.5 (38.5) (0.8) 50.3 67.9 Non-fleet depn/amort, reserves and other non-cash items 7.5 0.7 50.5 0.0 58.7 30.9 Capex (non fleet) and software upgrade (10.5) (2.2) (0.6) 0.0 (13.3) (8.0) Tax
Slide 35: Risks and sensitivities
Appendix Risks and sensitivities Regulation of consumer insurance products1 Regulation of consumer lending products2 Ongoing potential risk of consumer action, including class actions Acquisition and integration risk Second hand car prices (remarketing earnings) New and used car sales Interest rates
Slide 36: Group Remuneration Services
Appendix Group Remuneration Services Half yearly performance FY18 FY17 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 99.7 108.2 207.8 90.5 99.2 189.7 10.1% 9.0% 9.6% Employee expenses 42.3 42.9 85.2 34.3 39.2 73.5 23.3% 9.4% 15.9% Property & other expenses 13.3 12.3 25.6 12.9 13.7 26.6 3.3% (10.4%)
Slide 37: Asset Management – Australia & New Zealand
Appendix Asset Management – Australia & New Zealand Half yearly performance FY18 FY17 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 91.5 90.8 182.3 90.2 89.2 179.4 1.4% (1.8%) 1.6% Fleet depreciation 36.6 34.6 71.2 38.3 37.2 75.5 (4.4%) (7.0%) (5.7%) Lease and vehicle management expenses 30.6 32.0
Slide 38: Asset Management – United Kingdom
Appendix Asset Management – United Kingdom Half yearly performance FY18 FY17 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 21.5 39.9 61.4 13.8 22.5 46.7 55.8% 21.3% 31.5% Lease and vehicle management expenses 6.8 23.5 30.3 4.2 19.0 23.2 61.9% 23.7% 30.6% Employee expenses 6.5 6.9 13.4 3.9 6.1 10.0
Slide 39: Retail Financial Services
Appendix Retail Financial Services Half yearly performance FY18 FY17 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 48.9 43.6 92.5 55.9 50.1 106.0 (12.5%) (13.0%) (12.7%) Brokerage commissions 21.8 20.2 42.0 24.1 21.6 45.7 (9.5%) (6.5%) (8.1%) Employee expenses 10.7 7.7 18.4 12.0 10.9 22.9 (10.8%) (
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
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