McMillan Shakespeare (MMS) H2 2024 earnings summary

Executive summary

• Achieved strong organic growth and margin expansion across all segments, with group remuneration services (GRS) leading performance and novated lease sales up 23%.

• Strategic initiatives under the Simply Stronger program advanced, focusing on customer experience, technology-enabled productivity, and broadening solutions.

• Launched Oly, a digital novated leasing solution targeting small and medium-sized businesses, expanding market reach.

• Supported Australia's transition to a low-carbon future, with EVs comprising 43% of new novated orders and average customer tailpipe emissions reduced by 10%.

• Completed sale of U.K. and Australian businesses, with results now reflecting continuing operations.

Financial highlights

• Normalized revenue from continuing operations rose 11.5% to AUD 525.8 million year-over-year.

• Normalized EBITDA increased 34.8% to AUD 177 million; normalized UNPATA up 38.2% to AUD 107.6 million.

• Fully franked full-year dividend of AUD 1.54 per share, representing a 100% payout ratio of normalized UNPATA.

• Cash conversion at 136% of group UNPATA; total cash AUD 153 million, net cash AUD 86.7 million.

• Debt to EBITDA at 0.5x; interest coverage at 11.7x.

Outlook and guidance

• FY 2025 expected to see continued inflation, cost of living pressures, and intensified price competition as more EV brands and models enter the market.

• FBT benefit on plug-in hybrids expires April 2025; battery EV exemption continues, with review by mid-2027.

• Oly to be fully rolled out and promoted, targeting market expansion.

• Onboard Finance warehouse to maintain ~20% of novated lease volume (excluding Oly) in FY 2025; normalization adjustment of AUD 9 million expected.

• Approximately AUD 11 million in capital expenditure allocated for FY 2025, focused on digital solutions and technology modernization.