– By Caroline Falls –
McMillan Shakespeare profit growth slowed to single digit in the last financial year with its fleet management services unit a star, showing double-digit profit growth and expanded margins.
Total group revenue rose 4.2 percent to $545.4 million in the year ended June 30 from a year earlier. The salary, vehicle and client services provider reported headline underlying profit after tax and amortization rose 7.2 percent in the year to $93.5 million.
Meanwhile, profit for the asset management unit which embodies fleet management services rose 17 percent.
The healthy outcome in the vehicle management unit was attributed to improved returns from better cost management and enhanced distribution capability for marketing used vehicles through its Just Honk retail car yard in NSW. The company also cited continued growth in the United Kingdom for the better performance.
The group operates in three segments: asset management, group remuneration services, and retail financial services.
Remuneration services showed increasing participation, re-lease and new participation resulted in a 5.5 percent increase in salary packages managed (to 334,850) and a 5.9 percent increase in novated leasing (to 63,300) compared with the year earlier. This segment also showed margin improvement and the launch of a new product Plan Partners rolled out to participants in the National Disability Insurance Scheme.
This scheme holds a big promise for growth. McMillan Shakespeare said it is the only national service provider, operating in six states and two territories. It has an esatblished network of 3,500 providers and expects to become profitable in the current financial year.
Plan Partners administers all aspects of a participant’s NDIS plan. It keeps track of spending, spending plan status, and can locate and connect with service providers. It can also be used to assist setup service agreements with providers.
Retail financial services saw an 18.7 percent increase in the net amount financed to total A$2.8 billion, however the sector was impacted by market and regulatory uncertainty with commissions cut and profit falling.
McMillan Shakespeare outlined in a presentation on its annual results its strategies to drive long-term growth and build sustainable returns.
Looking to the future, CEO Mike Salisbury and CFO Mark Blackburn drew attention to the group’s strategy to invest almost $20 over the next two years on its “Beyond 2020” project of rebuilding its core technology platforms.
“The project will create a more personalised experience, one that’s more customer focussed, mobile and user-friendly,” McMillan Shakespeare’s leading executives said in their presentation on the results. It will also increase the speed of service delivery and improve operational performance and delivery, they said. The new platform will allow a single customer view, and will transfer to a cloud-based platform that’s structured for automation, scalability and flexibility.
Other goals McMillan Shakespeare spelled out include: better understand customer behaviour, complete self-serve capability, standardise product offering, simplify communications and cut the cost-to-serve ratio from 53 percent to 40 percent.
In the UK, the Maxxia brand is expected to make an improved return on capital as more synergies are extracted from centralised back office procedures. The group is also targeting expansion by buying existing brokerages, saying it had identified an active pipeline of acquisitions.
Other brands in McMillan Shakespeare’s stable include RemServe, Presidian, United Financial ServiceInterleasing and CLM. Final dividend announced is 73 cents a share, 10.6 percent more than the year earlier’s.
