– By Caroline Falls –
McMillan Shakespeare, an Australian stock exchange listed fleet services group, said acquisitions are key to building value in the company. Meanwhile it remains focused on drawing value from earlier bolt-ons, and newer ones including financiers EVC and Capex in the UK where the company is expanding.
The company forecast savings of $6.5 million in the year ending June 30, 2018 from such things as the integration of systems to manage various new and old brands for its novated leasing and salary packaging services. Other brands include Presidian, United, RemServe, Maxxia, Interleasing, and CLM.
“Capturing synergy benefits from a fully integrated business,” and “selectively approaching acquisitions to complement organic growth,” are key growth strategies cited by the company in a statement on its latest financial report.
McMillan’s business grew on a lot of fronts during the year. Assets managed rose 11 percent to a value of $484 million, salaries packaged rose 8 percent to 317,500, novated leases increased 7.2 percent to 59,800 and, in the big business of financing, the net amount financed rose 23.1 percent to $2.4 billion.
The company cited contract wins including remuneration services for QLD and NSW state governments, record organic growth of 20,400 salary packages in the second half, and a 20 percent increase in novated leases in the second half.
Still its headline profit barely grew, rising 1 percent to $137.3 million.in the year ended June 30. The company posted a 1.6 percent increase in revenue to $513 million. Cash at the bank fell to $60 million from $95 million a year ago.
The company blamed flat revenue growth on a restriction on marketing while it negotiated a major contract in the first half.
The widely watched underlying earnings-per-share measure was little changed at 104.8 cents a share, down 0.3 percent from a year earlier. This indicator strips out new businesses, basically comparing like with like year on year. The real earnings per share, with the business as it is today, compared to how it was a year ago, fell 18 percent to 81.6 cents from 99.4 cents.
A 4.5 percent increase in the dividend — to 66 cents — was announced.
For the outlook McMillan pointed to margin improvement from ongoing productivity and technology gains. Of particular promise is a new payment card for salary packaged clients, which it has rolled out to 70,000 customers since April. It covers meals, entertainment and other out of pockets and enables online claims. The card is being offered under the Maxxia and RemServe brands and provides transaction and account information, and paywave technology.
Its UK business broke through $500 million a year and is a key driver for increased profit and bigger margins. McMillan said it is scouting for “accretive acquisitions that enhance UK scale”. The value of finance deals in the UK almost doubled.
“MMS is performing well, focused on key drivers and is well positioned for growth in FY18 and beyond,” McMillan said in a statement.
