Mcmillan Shakespeare Limited · ASX:MMS

Mcmillan Shakespeare — FY2014 Earnings Presentation

28 slides from Mcmillan Shakespeare's earnings presentation, Aug 25, 2014

1. Slide 1: MMS Group FY14 Results Presentation

   For personal use only MMS Group FY14 Results Presentation August 2014

2. Slide 2: FY14 Key Points

   MMSG Group FY14 Results Presentation 2 FY14 Key Points For personal use only  Business has fully recovered from the 16 July, 2013 proposed changes to novated leasing benefits and returned to strong growth:  Group Remuneration Services (GRS) 2HFY14 revenue grew 8% on PCP (10% ex interest on the flo

3. Slide 3: FY14 – Key Points (cont’d)

   MMSG Group FY14 Results Presentation 3 FY14 – Key Points (cont’d) For personal use only  Asset Management NPAT $13.6m. Result includes UK JV losses, new system depreciation, lease extensions and the resultant impact on end-of-life (remarketing) profits.  Final dividend(1) of 31cps; total FY14 divi

4. Slide 4: FY14 Key Points (cont’d)

   MMSG Group FY14 Results Presentation 4 FY14 Key Points (cont’d) For personal use only  Assets under finance and management continued to grow ($27m or 9% on PCP), despite patchy economic conditions and a very competitive market.  CLM (UK) acquired for $A14m ($A12.4m net of cash acquired) in October

5. Slide 5: FY14 Key Points (cont’d)

   MMSG Group FY14 Results Presentation 5 FY14 Key Points (cont’d) For personal use only  Business and staff proved very resilient in the face of proposed FBT changes.  Development of enterprise wide innovation platform; to be rolled out in September 2014.  Productivity improvements in 2HFY14 a comb

6. Slide 6: Consolidated Financial Performance

   MMSG Group FY14 Results Presentation 6 Consolidated Financial Performance For personal use only 2014 2013 % 2014 2013 % 2014 2013 $000 $000 Incr. $000 $000 Incr. $000 $000 Group Group Remuneration Remuneration Asset Asset Services Services Management(1) Management Total Total Revenue from operating

7. Slide 7: Historical earnings and dividends per share

   MMSG Group FY14 Results Presentation 7 Historical earnings and dividends per share For personal use only Normalised earnings per share Dividends per share 90.0 60.0 80.0 Dividend 9 year CAGR 33% 50.0 52.0 70.0 47.0 Normalised Basic EPS 9-year CAGR 28% 60.0 40.0 42.0 cents cents 38.0 50.0 30.0 40.0 3

8. Slide 8: Normalised NPAT Performance

   MMSG Group FY14 Results Presentation 8 Normalised NPAT Performance(1) For personal use only 70 60 62.2 NPAT 9 year CAGR 30% 55.0 50 54.3 43.5 40 $m 30 27.9 20 20.5 17.4 13.2 10 11.3 5.2 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Note 1: Normalised NPAT excludes the profit recognised on acqu

9. Slide 9: Definition of Segments

   MMSG Group FY14 Results Presentation 9 Definition of Segments For personal use only Group Remuneration Services segment definition: The segment provides administrative services in respect of salary packaging and facilitates the settlement of motor vehicle novated leases for customers, but does not p

10. Slide 10: Group Remuneration Services FY14 Financial Performance

    MMSG Group FY14 Results Presentation 10 Group Remuneration Services FY14 Financial Performance For personal use only 2014 2013 % $000 $000 Inc Comment Segment revenue 157,247 155,855 1% (Note 1: ex float interest growth of 2%) Expenses Employee expenses 67,138 62,408 8% Depn and amort of PPE and sof

11. Slide 11: Group Remuneration Services 2HFY14 Financial Performance

    MMSG Group FY14 Results Presentation 11 Group Remuneration Services 2HFY14 Financial Performance For personal use only 2HFY14 2HFY13 % $000 $000 Inc Segment revenue 86,699 80,098 8% (Note 1: ex float interest 10%) Expenses Employee expenses 32,482 31,516 3% Depn and amort of PPE and software 1,884 1

12. Slide 12: Group Remuneration Services Financial Performance (cont’d)

    MMSG Group FY14 Results Presentation 12 Group Remuneration Services Financial Performance (cont’d) For personal use only FY05 – FY14 160 100% 156 157 90% 140 PBT 9-year CAGR 23% 137 80% Revenue 9-year CAGR 18% 120 70% 112 100 60% $m 92 80 50% 76 40% 60 66 67 57 60 54 30% 40 48 45 36 35 20% 20 28 24

13. Slide 13: Group Remuneration Services Financial Performance (cont’d)

    MMSG Group FY14 Results Presentation 13 Group Remuneration Services Financial Performance (cont’d) For personal use only 2HFY05 – 2HFY14 100 100% 90% 87 80 80% 80 73 70% Revenue 9-year CAGR 18% PBT 9-year CAGR 26% 60 60% $m 58 50% 49 40 40% 39 40 34 35 30% 31 28 20 25 24 20% 20 20 5 13 15 10% 9 10 0

14. Slide 14: Competitive Strengths and Performance Indices

    MMSG Group FY14 Results Presentation 14 Competitive Strengths and Performance Indices For personal use only MMS Customer Satisfaction Index Group Remuneration Services Productivity Index (7/08 = 100) December 2008 = 100 [Rolling 3 month Revenue (ex SP Interest) / FTE] 170 300 165 160 250 155 150 145

15. Slide 15: Group Remuneration Services Commentary

    MMSG Group FY14 Results Presentation 15 Group Remuneration Services Commentary For personal use only  FY14 NPAT of $42m was $4.8m (10%) less than PCP including reduction in revenue and increased staff costs as a result of the decision to retain all staff.  2HFY14 GRS NPAT growth on PCP of 16% on P

16. Slide 16: Asset Management (AM) Financial Performance

    MMSG Group FY14 Results Presentation 16 Asset Management (AM) Financial Performance For personal use only CLM & UK Australia Group AM AM Australia AM Group AM Group AM AM 2014 2014 2014 2013 % % $000 $000 $000 $000 Inc Inc Segment revenue 188,069 9,874 178,195 171,962 9% 4% (1) Expenses Depreciation

17. Slide 17: Asset Management Commentary

    MMSG Group FY14 Results Presentation 17 Asset Management Commentary For personal use only  9% portfolio growth on PCP in a low growth economic environment.  Commenced funding in the UK.  Implemented new asset management system on time and on budget – this has improved capability to better service

18. Slide 18: Asset Management Commentary (cont’d)

    MMSG Group FY14 Results Presentation 18 Asset Management Commentary (cont’d) For personal use only  16 July, 2013 (Proposed FBT changes) caused considerable confusion in respect of tool of trade vehicles (move from Statutory to Operating Cost method) - customers elected to delay replacements.  Inc

19. Slide 19: Asset Management Commentary (cont’d)

    MMSG Group FY14 Results Presentation 19 Asset Management Commentary (cont’d) For personal use only  RV provision at 30 June 2014 of $2.0m.  Uncertain economic conditions meant significant number of lease extensions rather than investing in new assets i.e. fewer cars returning for remarketing; lowe

20. Slide 20: End of lease profit

    MMSG Group FY14 Results Presentation 20 End of lease profit For personal use only End of lease profit - FY11 base index = 100 120 111 100 100 96 80 81 Index 60 40 20 0 FY11 FY12 FY13 FY14 End of lease profit

21. Slide 21: Fleet Assets WDV

    MMSG Group FY14 Results Presentation 21 Fleet Assets WDV For personal use only 400 Growth 8.8% 350 Growth 17.2% 334 300 307 Growth 19.1% ($m) 250 262 Growth 0.5% Growth 2.8% 220 200 213 214 150 100 50 0 Acquisition 1 April 30-Jun-10 30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 2010

22. Slide 22: Asset Management Key Balance Sheet Numbers

    MMSG Group FY14 Results Presentation 22 Asset Management Key Balance Sheet Numbers For personal use only 30-Jun-14 30-Jun-13 Movement $000 $000 $000 Operating lease assets 303,408 287,749 15,659 Motor vehicle inventories 5,379 4,844 535 Finance leases & commercial hire purchase 24,906 14,577 10,329

23. Slide 23: Gearing

    MMSG Group FY14 Results Presentation 23 Gearing For personal use only MMS & Group Remuneration Asset Group Group Services Management Balance at Balance at 30-Jun-14 30-Jun-14 30-Jun-14 30-Jun-13 $000 $000 $000 $000 Net debt (64,502) 208,405 143,903 124,761 Book value of equity 98,588 125,259 223,847

24. Slide 24: FY14 Cashflow

    MMSG Group FY14 Results Presentation 24 FY14 Cashflow For personal use only Group Remuneration Asset Unallocated / MMS Group Services Management parent co. Total $000 $000 $000 $000 Segment NPAT 41,988 13,557 (575) 54,970 Non-fleet depn/amort, reserves and other non-cash items 6,643 4,106 - 10,749 W

25. Slide 25: Funding

    MMSG Group FY14 Results Presentation 25 Funding For personal use only  Additional major Australian bank added to the MMS Club funding facility bringing the total to 3 of the 4 major Australian banks.  Club facility extended in March 2017 with an increase in the facility limit to $A300m (unused $10

26. Slide 26: Risks and Sensitivities

    MMSG Group FY14 Results Presentation 26 Risks and Sensitivities For personal use only  Interest rates movements (earnings on float).  Second hand car prices (remarketing earnings).  New car sales (novated lease participation).  Government austerity/redundancy programs.  Government policy develo

27. Slide 27: Outlook

    MMSG Group FY14 Results Presentation 27 Outlook For personal use only  FY15 should see another year of profitable growth in all lines of business.  UK business expected to gain momentum; new car salary sacrifice product launch.  Phase 2 of salary packaging systems has been delivered which will dr

28. Slide 28: MMS overview

    MMSG Group FY14 Results Presentation 28 MMS overview For personal use only McMillan Shakespeare Group (ASX: MMS) Group Remuneration Services Asset Management • Salary packaging United Kingdom Australia & NZ administration • Novated leases • Fleet Management • Hospitals, health & charity 100% owned 5

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