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    MMS   AU000000MMS5

MCMILLAN SHAKESPEARE LIMITED

(MMS)
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McMillan Shakespeare : FY17-Results-Presentation

08/25/2017 | 10:58am EDT

MMS Group

FY17 Results Presentation

Presenters Mike Salisbury, CEO Mark Blackburn, CFO

McMillanShakespeareGroup

Overview

Overview

1

Overview

Key continuing 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

Capturing synergy benefits from a fully integrated business

Continuing to deliver high returns on capital and free cash flow

Selectively approaching acquisitions to complement organic growth

Overview

Key Financial Metrics

Solid 2H recovery, momentum building

Revenue up 1.6% to

$513.0 million

EBITDA up 1.0% to

$137.3 million

UNPATA1 unchanged at

"Experienced... interruption in 1H17, recovery in 2H17, momentum building for FY18 and beyond"

$87.2 million

Underlying EPS down 0.3% to

104.8 cents/share

Salary package increase (000's)

16.8

20.4

Novated lease increase (000's)

Fully franked dividend up 4.8%

66.0 cents/share

6.3

1H16

2.9

2.5

2.4

1.1

2H16

4.3

1H17

2H17

1H16

2H16

1H17

2H17

1 Underlying NPATA excludes one-off payments in relation to transaction costs incurred in acquisitions, amortisation of acquisition intangibles and asset impairment of acquired intangible assets

Overview

Driving value from our integrated model

Segment

Stated strategy

FY17 impact

Group Remuneration Services

> Continue organic growth

> Margin improvement via technology advancements

> Broaden product suite

Asset Management

> Disciplined approach to growth

> Grow capital light business model

> Leverage UK asset finance platform to grow market share

Retail Financial Services

> Partner of choice

> Continue integration of acquired businesses

> Capture identified synergies

> Broaden asset class

  • Record 2H organic growth: salary packages up 21.4%, novated leases up 20.8% compared to pcp

  • 1H17 impacted by interruption of marketing activities while negotiating major contract

  • Successfully transitioned 70,000 customers onto new innovative card program

  • Excluding $1.5m one-off card program costs, EBITDA margin improvement of 0.8%

  • Successful launch of bus travel pass benefits, Maxxia/Remserv wallet

  • Australia & New Zealand asset book returned to growth, up 9.0%

  • Established new distribution for remarketing

  • A&NZ UNPATA growth 5.3%, P&A funding $10.0m

  • UK building scale and performing well; strengthened funding panel and product offering

  • Broadened asset finance platform with two acquisitions (EVC and Capex)

  • UK UNPATA up 60.0%, NAF up 62.2%

  • Transitioning to a sustainable, profitable business

  • NAF up 15.4%, UNPATA down 11.4%

  • Third party funding appetite remains strong however margins have reduced

  • Regulatory and market uncertainty remains, however product development underway to benefit from changing markets

  • Carrying value of intangibles for the warranty and insurance business impaired

Overview

Continued growth in customers and assets

Lead indicators for future profitability

317,500

Salary packages

8.4%

59,800

Novated leases

7.2%

41,800

Assets managed (Units)

12.3 %

$484m

Assets managed (WDV)

11.0%

$2,400m

Net amount financed

23.1%

1,180,0001

Total new car sales

3.8%

1,170

Employees21

2.5%

50.3

Net Promoter Score

Average monthly score for FY17

  1. Based on Australian Bureau of Statistic's information (Sales of New Motor Vehicles, Australia - June 2017)

  2. Average employees

Financial performance

Financial performance

6

Financial performance

Results Summary

$m

FY17

FY16

Variance

Revenue

513.0

504.7

1.6%

EBITDA

137.3

135.9

1.0%

EBITDA margin (%)

26.8%

26.9%

(15.2%)

NPBT

101.3

119.5

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 earnings per share (cents)

104.8

105.1

(0.3%)

Final dividend per share (cents)

35.0

34.0

2.9%

Total dividend per share (cents)

66.0

63.0

4.8%

Payout ratio (%)1

63.0%

59.9%

Free cash flow2

84.0

93.5

(10.2%)

Return on equity (%)3

23.6%

25.6%

Return on capital employed (%)3

20.1%

20.8%

  1. Payout ratio calculated by total dividend per share (cents) divided by underlying earnings per share (cents)

  2. Free operating cash flow before investing, financing activities and fleet increases

  3. Return on equity and capital employed has been adjusted to reflect 12 months trading for acquisitions made during the financial year,

both calculations exclude one-off payments in relation to transaction costs incurred in acquisitions, the amortisation of acquisition intangibles and impairment of acquired intangible assets.

Financial performance

Balance Sheet

Net cash positive1

$7.1 million

Net debt to EBITDA2

2.0x

Debt to funded fleet WDV3

63% vs 67% pcp

Group gearing4

43% vs 40% pcp

Interest times cover5

11.2x vs 11.9x pcp

Compared to previous corresponding period (pcp)

Conservative capital structure to fund growth and enhanced returns

$m

30.06.17

30.06.16

AM

Other

Group

Group

Cash at bank

10.7

48.7

59.4

95.6

Other current assets

(0.2)

54.9

54.7

47.3

Total fleet funded assets

473.4

0.0

473.4

435.7

Goodwill / intangibles

50.0

200.7

250.7

261.4

Other non-current assets

4.7

5.9

10.7

12.2

Total Assets

538.7

310.3

849.0

852.2

Borrowings (current)

77.2

11.5

88.7

12.9

Other current liabilities

38.6

76.7

115.2

116.9

Borrowings (non-current)

220.8

30.1

250.9

332.6

Other non-current liabilities

16.7

6.4

23.2

19.3

Total Liabilities

353.3

124.7

478.0

481.7

Net Assets

185.4

185.6

371.0

370.5

  1. Other cash ($48.7m) less corporate debt ($41.6m) excludes fleet funded debt

  2. Net debt defined as current and non-current borrowings less cash

  3. AM borrowings (current and non-current) / total fleet funded assets

  4. Group net debt / (equity + net debt)

  5. Net interest (interest expense less interest income) / EBIT

Financial performance

Funding Overview

Diversified funding model with long term duration

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 maturity date to March 2020 on one tranche of funding

MMS entered into a new five year, £5.7m floating rate amortising term loan facility ending on March 2022 to facilitate 100% debt funding of the EVC and Capex acquisitions

Local Currency

Australian Dollars ($m)

Currency

Facility

size

Facility

size

Amount drawn

Amount undrawn

Duration

Asset Financing Australia

Revolving

A$

175.0

175.0

151.0

24.0

(A$50m) 31 March 2018

(A$75m) 31 March 2019

(A$70m) 31 March 2020

Asset Financing NZ

Revolving

NZ$

21.0

20.0

14.0

6.0

Asset Financing UK

Revolving

GBP

12.0

20.3

19.5

0.8

31 March 2018

GBP

35.0

59.2

59.2

0.0

31 March 2019

GBP

42.0

71.1

38.2

32.9

31 March 2020

Purchase of Presidian

Amortising

A$

41.6

41.6

41.6

-

31 March 2020

Purchase of CLM UK

Amortising

GBP

4.0

6.7

6.7

-

31 March 2018

Purchase of EVC/Capex UK

Amortising

GBP

5.7

9.7

9.7

-

22 March 2022

Financial performance

Cashflow

FY17

FY16

Group Remuneration

Services

Asset Management

Retail Financial Services

Unallocated / parent co.

MMS

Group Total

MMS

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

0.0

30.9

18.2

Capex (non fleet) and software upgrade

(7.1)

(0.3)

(0.6)

0.0

(8.0)

(7.5)

Tax payments in excess of tax expense

0.8

(0.5)

(2.8)

0.0

(2.5)

3.4

Working capital inflow / (outflow)

(0.2)

(3.5)

(0.6)

0.0

(4.3)

(3.1)

Free cashflow from operations

57.4

18.1

10.5

(2.0)

84.0

93.5

Investing activities and fleet increase:

Net growth in Asset Management portfolio

0.0

(45.8)

0.0

0.0

(45.8)

(34.3)

Sale of fleet portfolio

0.0

0.0

0.0

0.0

0.0

27.4

Investment in acquisitions (net of cash acquired)

0.0

(8.9)

(0.0)

0.0

(8.9)

(39.0)

Other

(2.4)

1.2

0.0

0.0

(1.2)

(1.4)

Free cashflow from operations and investing activities

55.0

(35.4)

10.5

(2.0)

28.1

46.2

Financing activities:

Equity contribution (exercise of options)

0.0

0.0

0.0

0.0

0.0

5.4

Intercompany funding

(30.9)

31.2

(0.3)

0.0

0.0

0.0

Repayment of borrowings

0.0

(46.6)

0.0

(11.5)

(58.1)

(111.5)

New borrowings

0.0

58.2

0.0

0.0

58.2

116.4

Treasury reserve for share-based payments

0.0

0.0

0.0

(10.2)

(10.2)

0.0

Dividends paid

0.0

0.0

0.0

(54.1)

(54.1)

(46.6)

Net cash movement

24.1

7.4

10.2

(77.8)

(36.2)

9.9

Opening cash (June)

95.6

85.7

Closing cash (June)

59.4

95.6

$m

Financial performance

Financial performance

Half yearly performance

FY17

1H

2H

FY

Revenue

Expenses

251.3

184.8

261.7

190.9

513.0

375.7

EBITDA

66.5

70.6

137.3

EBITDA margin

26.5%

26.9%

26.8%

Depreciation

4.3

4.7

9.0

Amortisation and impairment of intangibles

1.7

22.7

24.4

Corporate interest expense

0.8

0.7

1.5

Acquisition expense

0.6

0.5

1.1

NPBT

59.1

42.0

101.3

Tax

18.7

14.7

33.4

NPAT

40.4

27.3

67.9

UNPATA

42.1

45.1

87.2

FY16

1H

2H

FY

244.3

260.4

504.7

178.9

189.8

368.7

65.4

70.6

135.9

26.8%

27.1%

26.9%

4.4

4.0

8.4

1.6

2.2

3.8

1.0

1.0

1.9

2.3

(0.0)

2.3

56.1

63.4

119.5

17.2

19.8

37.0

38.9

43.5

82.5

41.8

45.4

87.2

Variance

1H

2H

FY

2.9%

0.5%

1.6%

3.3%

0.5%

1.9%

1.7%

0.1%

1.0%

(2.3%)

18.0%

7.4%

4.3%

>100%

>100%

(18.1%)

(26.9%)

(22.5%)

(74.1%)

(53.0%)

5.4%

(33.8%)

(15.2%)

8.9%

(25.8%)

(9.7%)

3.8%

(37.2%)

(17.7%)

0.8%

(0.7%)

-

$m

Key operational metrics

297,100

317,500

Salary packages (units)

Novated leases (fleet units)

56,900

59,800

Assets managed (units)

38,400

41,800

Assets written down value ($m)

460

484

Average employees (FTE's)

1,140

1,206

276,000

293,000

53,400

55,800

39,100

37,100

438

435

1,121

1,168

7.6%

8.4%

6.6%

7.2%

(1.8%)

12.7%

5.0%

11.0%

1.6%

3.3%

McMillan Shakespeare Limited published this content on 23 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 25 August 2017 14:57:08 UTC.


© Publicnow 2017
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Net Debt 2021 133 M 97,6 M 97,6 M
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Last Close Price 12,66 AUD
Average target price 13,66 AUD
Spread / Average Target 7,86%
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Managers and Directors
Michael Neil Salisbury Chief Executive Officer, MD & Executive Director
Ashley Conn Chief Financial Officer & Secretary
Helen Kurincic Chairman
Geoffrey Robert Kruyt Chief Operating Officer
Kathy Parsons Independent Non-Executive Director