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
Based on Australian Bureau of Statistic's information (Sales of New Motor Vehicles, Australia - June 2017)
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% |
Payout ratio calculated by total dividend per share (cents) divided by underlying earnings per share (cents)
Free operating cash flow before investing, financing activities and fleet increases
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 |
Other cash ($48.7m) less corporate debt ($41.6m) excludes fleet funded debt
Net debt defined as current and non-current borrowings less cash
AM borrowings (current and non-current) / total fleet funded assets
Group net debt / (equity + net debt)
Net interest (interest expense less interest income) / EBIT
Financial performance
Funding Overview
Diversified funding model with long term duration
Competitive finance rates and long term duration driven by MMS scale and quality of customer base
Renegotiated the Australian and New Zealand asset financing facility, extending the maturity date to March 2020 on one tranche of funding
MMS entered into a new five year, £5.7m floating rate amortising term loan facility ending on March 2022 to facilitate 100% debt funding of the EVC and Capex acquisitions
Local Currency | Australian Dollars ($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.
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