Mcmillan Shakespeare Limited · ASX:MMS
Mcmillan Shakespeare — FY2017 Earnings Presentation
43 slides from Mcmillan Shakespeare's earnings presentation, Aug 23, 2017
Slide 1: FY17 Results Presentation
For personal use only MMS Group FY17 Results Presentation Presenters Mike Salisbury, CEO Mark Blackburn, CFO McMillanShakespeareGroup
Slide 2: Overview
For personal use only Overview Overview 1
Slide 3: Key continuing initiatives for building long term shareholder value
Overview Key continuing initiatives for building long term shareholder value For personal use only Broadening the suite of high quality products and industry leading service to drive organic growth Investing in technology resulting in an improved customer experience Capturing synergy benefits from a
Slide 4: Key Financial Metrics
Overview Key Financial Metrics Solid 2H recovery, momentum building For personal use only Revenue up 1.6% to “Experienced... interruption in 1H17, $513.0 million recovery in 2H17, EBITDA up 1.0% to momentum building for FY18 $137.3 million and beyond” UNPATA1 unchanged at $87.2 million Salary packag
Slide 5: Driving value from our integrated model
Overview Driving value from our integrated model For personal use only Segment Stated strategy FY17 impact Group > Continue organic growth – Record 2H organic growth: salary packages up 21.4%, novated leases up 20.8% Remuneration > Margin improvement via compared to pcp Services technology advanceme
Slide 6: Continued growth in customers and assets
Overview Continued growth in customers and assets Lead indicators for future profitability For personal use only 317,500 59,800 41,800 $484m Salary packages Novated leases Assets managed Assets managed 8.4% 7.2% (Units) (WDV) 12.3 % 11.0% $2,400m 1,180,0001 1,170 50.3 Net amount financed Total new c
Slide 7: Financial performance
For personal use only Financial performance Financial performance 6
Slide 8: Results Summary
Financial performance Results Summary For personal use only $m FY17 FY16 Variance Revenue 513.0 504.7 1.6% EBITDA 137.3 135.9 1.0% EBITDA margin (%) 26.8% 26.9% NPBT 101.3 119.5 (15.2%) NPAT 67.9 82.5 (17.7%) Underlying NPATA 87.2 87.2 - Basic earnings per share (cents) 81.6 99.4 (17.9%) Underlying
Slide 9: Balance Sheet
Financial performance Balance Sheet Conservative capital structure to fund growth and enhanced returns For personal use only 30.06.17 30.06.16 $m AM Other Group Group Net cash positive1 Cash at bank Other current assets 10.7 (0.2) 48.7 54.9 59.4 54.7 95.6 47.3 $7.1 million Total fleet funded assets
Slide 10: Funding Overview
Financial performance Funding Overview Diversified funding model with long term duration For personal use only Competitive finance rates and long term duration driven by MMS scale and quality of customer base Renegotiated the Australian and New Zealand asset financing facility, extending the maturit
Slide 11: Cashflow
Financial performance Cashflow For personal use only FY17 FY16 Group Retail Remuneration Asset Financial Unallocated / MMS MMS $m Services Management Services parent co. Group Total Group Total NPAT 58.3 16.6 (5.0) (2.0) 67.9 82.5 Non-fleet depn/amort, reserves and other non-cash items 5.6 5.8 19.5
Slide 12: Half yearly performance
Financial performance Financial performance Half yearly performance For personal use only FY17 FY16 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 251.3 261.7 513.0 244.3 260.4 504.7 2.9% 0.5% 1.6% Expenses 184.8 190.9 375.7 178.9 189.8 368.7 3.3% 0.5% 1.9% EBITDA 66.5 70.6 137.3 65.4 70.6 135.9 1.7
Slide 13: Performance ratios
Financial performance Performance ratios Delivering double digit earnings growth For personal use only 10 year historical performance FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 10 Year CAGR Revenue $m 513.0 504.7 389.6 347.5 330.1 302.0 271.3 132.0 77.3 66.6 25.5% EBITDA $m 137.3 135.8 104.9
Slide 14: Segment performance
For personal use only Segment performance Segment performance 13
Slide 15: Segment Review
Segment performance Segment Review For personal use only Group Remuneration Services Asset Management Retail Financial Services Unallocated Total $m FY17 FY16 % FY17 FY16 % FY17 FY16 % FY17 FY16 % FY17 FY16 % Revenue 189.7 188.3 0.7% 215.7 204.8 5.8% 106.0 110.0 (3.6%) 1.6 1.6 - 513.0 504.7 1.6% Exp
Slide 16: Group Remuneration Services (GRS)
Segment performance Group Remuneration Services (GRS) Momentum building after interruption in 1H For personal use only $m FY17 FY16 Variance Revenue 189.7 188.3 0.7% Commentary Employee expenses 73.5 74.3 (1.0%) Record 2H17 organic growth of 20,400 packages and 2,900 leases Property & other expenses
Slide 17: GRS: Salary packages growth
Segment performance GRS Salary packages: Record net organic 2H growth of 20,400 packages For personal use only Salary packages (000’s)1 Annual increase (000’s) Annual increase (000’s) Half on half split New clients v increased penetration 5 year CAGR: 6.2% 24.7 24.7 317.5 23.1 23.1 292.8 20.4 6.0 26
Slide 18: GRS: Novated leases growth
Segment performance GRS Novated leases: Net organic 2H growth of 2,900 leases For personal use only Novated vehicles (000’s)1 Annual increase (000’s) Annual increase (000’s) Half on half split New clients v increased penetration 5 year CAGR: 10.1% 59.8 55.8 5.1 5.1 4.9 4.9 50.9 45.8 2.8 3.9 2.4 4.0
Slide 19: GRS: Technology investments drive innovation and productivity
Segment performance GRS Technology investments drive new levels of innovation and productivity For personal use only On-line claims take-up rate (%) Productivity index1 Customer satisfaction index3 100 MMS Benchmark 80 180 300 Launch of the mobile claims 250 App 160 60 200 Launch of the online claim
Slide 20: GRS: New card program
Segment performance GRS New card program: Combining two benefits into one For personal use only Commentary Partnering with Emerchants Limited to provide GRS customers the latest in payment technology Combines two benefits, salary packaging and meal entertainment, into one card This innovative produc
Slide 21: GRS: Maxxia / RemServ Wallet
Segment performance GRS Maxxia / RemServ Wallet offering more innovation, technology and convenience For personal use only Uniquely positioned technology developed in house, further enhancements in the near term Real time View transaction Transaction Claim anywhere, wallet balances details informati
Slide 22: Asset Management – Australia & New Zealand
Segment performance Asset Management (AM) – Australia & New Zealand Asset book returned to growth For personal use only $m FY17 FY16 Variance Revenue 179.4 179.5 (0.1%) Commentary Fleet depreciation 75.5 78.6 (3.9%) Assets under management increased by 9% over pcp Lease and vehicle management 59.3 5
Slide 23: AM – Australia & New Zealand: Disciplined approach
Segment performance AM – Australia & New Zealand Disciplined approach with strong controls For personal use only Fleet assets written down value ($m)1 FY17 FY17 WDV breakdown Revenue breakdown 10 319 313 325 304 306 15% 14% 13% 19% $335.1m 36% $179.4m 52% 12% 28% 12% FY13 FY13 FY14 FY14 FY15 FY15 FY
Slide 24: AM – United Kingdom
Segment performance AM – United Kingdom Building scale and performing well For personal use only $m FY17 FY16 Variance Revenue 36.3 25.3 43.5% Commentary Lease and vehicle management expenses 12.8 5.0 156.0% Employee expenses 10.0 7.7 29.9% Net amount financed breaks through $500m per Share of JV 1.
Slide 25: AM – United Kingdom Operating Metrics
Segment performance AM – United Kingdom Operating Metrics For personal use only Assets written down value (£m)1 FY17 WDV breakdown 88 ■ Services 7% 71 11% ■ Transportation and communication 53 35% ■ Finance 11% $149.0m ■ Manufacturing ■ Wholesale and trade 8 15% 21% ■ Other FY14 FY15 FY16 FY17 Net a
Slide 26: AM – United Kingdom Market strategy
Segment performance AM – United Kingdom Market strategy For personal use only Stated strategy The leading provider of a fully integrated financial services offering The leading provider of a portable employee lease The aggregator of choice to the financial intermediary/broker community Maxxia to bec
Slide 27: Retail Financial Services (RFS)
Segment performance Retail Financial Services (RFS) Transitioning to a sustainable, profitable and market leading business with a strong distribution footprint and scope for growth For personal use only $m FY17 FY161 Variance Revenue 106.0 110.0 (3.6%) Commentary Net claims and brokerage commissions
Slide 28: RFS Operating Metrics
Segment performance RFS Operating Metrics For personal use only Net amount financed ($m) FY17 Revenue FY17 Gross Margin breakdown breakdown ($m) 55.3 50.9 15.2 18.9 40.1 1,081 32.0 36% $106.0m 64% 937 855 Proforma at FY16 FY17 FY16 FY17 acquisition ■ Finance ■ Finance ■ Warranty and insurance ■ Warr
Slide 29: Summary
For personal use only Summary Summary 28
Slide 30: Summary
Summary Summary For personal use only Experienced an interruption in 1H, recovery in 2H, momentum building for FY18 and beyond Strong 2H performance, growth in lead indicators has returned – GRS – Organic increase in 2H packages (up 21% vs pcp) and leases (up 20% vs pcp) – AM (A&NZ) – Asset book has
Slide 31: Appendix
For personal use only Appendix Appendix 30
Slide 32: Complementary diversification across the MMS Group
Appendix Complementary diversification across the MMS Group For personal use only 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, insuranc
Slide 33: European Vehicle Contracts Limited acquisition
Appendix European Vehicle Contracts Limited acquisition For personal use only MMS acquired EVC on 1 December 2016 Provides product and channel diversification EVC (trading as Eurodrive) is a UK leader in the point of sale (POS) provision of Provides a foothold into the B2C market (through motor vehi
Slide 34: Capex Asset Finance Limited acquisition
Appendix Capex Asset Finance Limited acquisition For personal use only Acquired on 6 January 2017 Provides geographic diversification Capex provides an extensive portfolio of finance solutions to business The acquisition of Capex continues MMS’s stated customers in the asset finance and vehicle fina
Slide 35: Risks and sensitivities
Appendix Risks and sensitivities For personal use only Regulation of consumer insurance products1 Regulation of consumer lending products2 Ongoing potential risk of consumer action Acquisition and integration risk Second hand car prices (remarketing earnings) New and used car sales Interest rates (e
Slide 36: Reconciliation between NPAT and UNPATA
Appendix Reconciliation between NPAT and UNPATA For personal use only $m FY17 FY16 Variance NPAT 67.9 82.5 (17.7%) Acquisition transactions cost after-tax 1.0 1.9 (47.4%) Amortisation of intangibles from acquisitions after-tax 3.0 2.8 7.1% Asset impairment in relation to warranty and insurance busin
Slide 37: Group Remuneration Services Half yearly performance
Appendix Group Remuneration Services Half yearly performance For personal use only FY17 FY16 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 90.5 99.2 189.7 91.4 96.9 188.3 (1.0%) 2.4% 0.7% Employee expenses 34.3 39.3 73.5 36.8 37.5 74.3 (7.0%) 5.0% (1.0%) Property & other expenses 12.9 13.7 26.6 12.
Slide 38: Asset Management – Australia & New Zealand Half yearly performance
Appendix Asset Management – Australia & New Zealand Half yearly performance For personal use only FY17 FY16 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 90.2 89.2 179.4 87.0 92.5 179.5 3.6% (3.6%) - Fleet depreciation 38.3 37.2 75.5 39.4 39.1 78.6 (2.8%) (4.9%) (3.9%) Lease and vehicle management
Slide 39: Asset Management – United Kingdom Half yearly performance
Appendix Asset Management – United Kingdom Half yearly performance For personal use only FY17 FY16 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 13.8 22.5 36.3 10.4 14.9 25.3 32.9% 51.0% 43.5% Lease and vehicle management expenses 4.2 8.6 12.8 0.6 4.4 5.0 625.1% 93.1% 156.0% Employee expenses 3.9 6
Slide 40: Retail Financial Services Half yearly performance
Appendix Retail Financial Services Half yearly performance For personal use only FY17 FY16 Variance $m 1H 2H FY 1H 2H FY 1H 2H FY Revenue 55.9 50.1 106.0 54.6 55.4 110.0 2.3% (9.5%) (3.6%) Employee expenses 12.1 10.8 22.9 12.1 12.3 24.3 0.1% (11.8%) (5.8%) Net claims and brokerage commissions 28.7 2
Slide 41: Group Funding Strategy
Appendix Group Funding Strategy For personal use only MMS Group Funding Strategy Business segment GRS RFS Asset Management Corporate Committed Uncommitted Amortising Facility type Origination Origination Revolving Club P&A Committed Club Balance sheet – Off balance sheet ✓ ✓ ✓ ✓ ✗ – On balance sheet
Slide 42: 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 43: For personal use only
For personal use only McMillanShakespeareGroup