Presentation by McMillan Shakespeare Limited Annual General Meeting Michael Kay October 2010
Financial Performance FY09 FY10 % increase over prior year $000 $000 Revenue from operating activities 77,259 131,021 69.6% Profit before tax and acquisition profit 28,912 39,904 38.0% NPAT before acquisition profit 20,523 27,905 36.0% After tax profit arising from acquisition - 17,055 - NPAT 20,523 44,960 119.1% Basic EPS (cents) 30.4 66.5 119.0% Normalised basic EPS (cents) 30.4 41.2 35.8% Dividends declared per share (cents) 19.0 24.0 26.3% Amount franked 100% 100% Normalised ROE (%) 39% 42% 5 year normalised EPS CAGR 39% Normalised numbers exclude the $17.1m acquisition profit recognised in FY10 as a result of the business combination of ILA. P 1 October 2010
Historical normalised NPAT (1) Profit 17.1 recognised on 40 ILA business combination Normalised NPAT 5-year CAGR of 39.9% 30 $ m 27.9 20 20 20.5 17.4 13.2 10 11.3 5.2 0 FY05 FY06 FY07 FY08 FY09 FY10 NPAT (continuing operations) Acquisition Gain Note 1: Normalised numbers exclude the $17.1m acquisition profit recognised in FY10 as a result of the business combination of ILA P 2 September2010
NPAT bridge FY09 to FY10 50 45 Growth 36% Represents NPAT 40 since acquisition (1 April10) Growth 23% 17.1 35 30 (0.6) 3.3 ($ m) 25 4.7 4.7 45.0 45.0 20 15 27.9 10 20.5 5 0 NPAT FY09 Remuneration ILA Acquistion Normalised Aquisition Gain NPAT FY10 Services funding costs NPAT FY10 Growth (parent co.) P 3 October 2010
Historical Key Financial Performance Measures Total dividends per share Normalised earnings per share (EPS) (1) 50.0 30 EPS 5-year CAGR of 39.0% 45.0 25 40.0 35.0 20 30.0 cents cents 25.0 15 15 cen ce 20.0 10 15.0 10.0 5 5.0 0.0 0 FY04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 Basic EPS Cash EPS Note 1: Normalised EPS excludes the profit recognised on acquisition as a result of the business combination of ILA P 4 October 2010
Remuneration Services segment highlights � Revenue growth 21% on PCP. � NPAT growth (1) 23% on PCP. � Core operating contribution (2) increase of 38.8% over PCP. � Customer metrics exceeding our benchmarks. � Customer metrics exceeding our benchmarks. � Ongoing productivity improvements. � FY2011 year to date performance in line with expectations. Note 1 : To provide a meaningful NPAT comparison to FY09 NPAT, growth includes interest on surplus cash but excludes any interest on funds borrowed to acquire ILA. Note 2 : Core operating contribution - profit before finance, tax and depreciation as a percentage of revenue derived directly from salary packages managed and novated leasing. P 5 October 2010
Remuneration Services financial performance FY10 FY09 % Comment $000 $000 Inc Segment revenue 92,139 76,000 21% Operating expenses Employee and director benefits expenses 39,282 34,309 14% Significantly below revenue growth Depn and amort of PPE and software 2,222 1,436 55% Investment in IT, CRM, BCP/DRP and new premises Amortisation of contracts acquired 1,084 386 181% Increase due to $5.2m contract rights payments in FY09 - Impairment of goodwill 36 Technology and communication expenses 3,172 3,163 0% Maintained at FY09 level Property and corporate expenses Property and corporate expenses 2,502 2,502 2,297 2,297 9% 9% Increase reflects additional space and new premises Increase reflects additional space and new premises Consulting costs 1,274 1,033 23% Includes Henry review costs Marketing costs 2,550 1,111 130% Launch of Maxxia brand and focus on driving revenue growth Other expenses 4,932 4,576 8% Significantly below revenue growth Total expenses 57,018 48,347 18% Profit before tax from continuing operations 35,121 27,653 27% P 6 October 2010
Productivity and Customer Satisfaction Indices Productivity Index Customer Satisfaction Index ����������������������������������� MMS Customer Satisfaction Index ��������������� �!��"������#������������$%&' December 2008 = 100 140 250 135 200 130 125 150 120 115 100 110 50 105 100 0 95 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Rolling 3m Increased head count to maintain client service levels during the end of FBT year process. P 7 October 2010
Asset Finance segment highlights � Performance for 4QFY10 exceeded “deal” evaluation projections. � Satisfactory residual value performance. This has continued in 1QFY11. � Strong credit process and performance. � Self funding during 4QFY10. � Self funding during 4QFY10. � Performance for 1QFY11 in line with expectations. P 8 October 2010
Asset Finance performance FY10 (1) $000 Revenue from operating activities 38,882 Operating costs Depreciation of motor vehicle fleet 15,989 Interest on fleet financing Interest on fleet financing 2,359 2,359 Motor vehicle fleet expenses 13,064 Employee and director benefits expenses 2,180 Other expenses 718 Total operating costs 34,309 Profit before tax from continuing operations 4,573 Note 1: The profit represents profits arising since the acquisition of ILA which occurred effective 1 April 2010. P 9 October 2010
Key Activities FY10 � Solid growth, investing for the future and building comparative/competitive advantage. � Heavy participation and investment in the Henry Inquiry into the tax system; positive Government response with no adverse impact on business. � � Acquisition of Interleasing business at a significant discount to NTA, Acquisition of Interleasing business at a significant discount to NTA, thus strengthening our strategic position, setting the platform for ongoing profitable growth and further expansion into financial services. � All major contracts retained. � Successful launch of Maxxia operating brand. � We have commenced business in New Zealand. 18 months in planning. P 10 October 2010
Key Activities FY10 (cont.) � Customer service metrics now exceed our benchmarks in all business units. � New industrialised IT infrastructure with disaster recovery and “warm sites” delivered on time and on budget. � � New CRM system delivered on time and on budget. New CRM system delivered on time and on budget. � New telephony system delivered on time and on budget. � Moved Melbourne office (300 people) on time and under budget. � Ongoing strengthening of skills and knowledge with Abe Tomas (former Australian CEO & global CFO of LeasePlan) and Michael Mitrovits (former MD of Interleasing) joining our Executive team. P 11 October 2010
Our unique market position Core Skills Core Skills Operating Lessors/ � Proactive sales culture � Managing vehicle value Salary Packagers Fleet Managers � Retail sales and marketing chain: procurement, � Budgeting/ BPO processing maintenance and disposals � Tax knowledge base (insurance, fuel, tyres, etc.) Novated � Fringe Benefits Tax � Fleet management Leases � Treasury, financing and RV administration and reporting � Agency model, success risk management � Wholesale channel based fees � High transaction loads � Ability to offer clients a “one car” solution (operating, novated and managed leases and Fringe Benefits Tax management). � Novated leases require salary packing AND operating lease skill sets because they involve the purchase and financing of motor vehicles AND Fringe Benefits Tax management and administration. � Many customers prefer to deal with one supplier. � Cross selling opportunities. P 12 October 2010
The combined business – the first 6 months � Integration running well. � New value proposition well received by market. � Complementary cash flow dynamics and capital requirements of the two business segments are attractive to financiers and provide mitigation against any credit tightening. � � Strong competitive position emerging. Strong competitive position emerging. � 8 new business contracts won. � 10 new cross-sell arrangements with existing customers. � 2 new contracts won in combination with GM Holden Fleet team – a strong and constructive relationship emerging. � Full tender book. P 13 October 2010
Outlook � 1Q FY11 results in accordance with our budgetary expectations. � A year of prioritisation and execution. � Complete integration of Interleasing. � Prepare for Interleasing fleet lease system upgrade. CAPEX allowed for, with contingency, in acquisition modeling. � Ongoing profitable growth through: • New customer acquisition. • Cross-selling between business units. • Improving participation rates. • Maintenance of outstanding customer service metrics. • Ongoing productivity improvements. • Careful management of residual, credit and interest rate risks. P 14 October 2010
Key Sensitivities for FY11 � New car sales market. � Second hand car values. � Interest rates. � Interest rate margin on operating leases. � Key contract tender. � Economic conditions generally. P 15 October 2010
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