Rising Costs and Normalisation End Pose Challenges for McMillan Shakespeare
McMillan Shakespeare Limited reported steady FY25 growth with Normalised UNPATA of $103.2 million and an 8.3% dividend yield, underpinned by digital innovation and strategic investments.
- Normalised UNPATA of $103.2 million with 3% revenue growth
- Dividend yield increased to 8.3%, payout ratio at 100%
- Onboard Finance warehouse facility extended and increased
- Strong customer growth across novated leases and NDIS plan management
- Digital platforms and AI driving productivity and customer experience
FY25 Financial Performance
McMillan Shakespeare Limited (ASX – MMS) has delivered a solid FY25 financial performance, reporting a Normalised Underlying Net Profit After Tax and Amortisation (UNPATA) of $103.2 million, a slight decline of 4.1% compared to the prior year but supported by a 3% increase in normalised revenue across continuing operations. Statutory revenue grew by 8.1%, reflecting sustained momentum across all business segments.
The company maintained a strong dividend policy, declaring an 8.3% yield with a 100% payout ratio, signaling confidence in cash flow generation despite ongoing investments in growth and productivity.
Strategic Investments and Digital Innovation
MMS highlighted the impact of its strategic investments in customer growth and digital solutions. The launch of the MyMaxxia app, rated 4.5 stars on the Apple App Store, alongside a new employer portal and digitised vehicle trade-in processes, have enhanced customer convenience and operational efficiency. Robotics and AI technologies have improved processing speeds and fraud detection, reducing after-call work time by 23% and increasing digitally processed invoices by 56 percentage points.
Onboard Finance, a key growth driver, saw its receivables increase by 54.7% to $503 million, with FY25 marking the final year of normalisation adjustments. The company also completed a $300 million private placement and extended its Onboard Finance warehouse facility by one year to March 2027, strengthening its funding diversity and recurring income streams.
Segment Highlights
The Group Remuneration Services (GRS) segment experienced modest revenue growth of 0.3%, with novated lease sales up 4.1%, supported by faster order-to-sale conversion and stable yields. Despite an 8.9% decline in EBITDA due to increased investments, productivity gains were evident with a 15% increase in customers per full-time employee.
Asset Management Services (AMS) grew revenue by 4.3%, driven by a 6.4% increase in the written down value of assets and a 6.5% rise in remarketing units, despite a slight yield moderation. Plan and Support Services (PSS) showed robust growth with an 11.5% revenue increase and a 20.9% rise in EBITDA, reflecting strong customer growth and operational leverage.
Sustainability and Market Outlook
MMS continues to embed sustainability into its operations, supporting customers’ transition to a low carbon future with 48% of new novated lease sales comprising electric vehicles. The company also maintains strong social impact initiatives, including gender pay equity and community support programs.
Looking ahead to FY26, MMS expects stable market conditions with consistent auto supply and used car values, continued customer growth, and disciplined investment in strategic priorities. The Federal Government’s commitment to maintain battery EV exemptions until mid-2027 and anticipated cash rate reductions are expected to support customer confidence.
Bottom Line?
McMillan Shakespeare’s FY25 results underscore a resilient business model balancing growth investments with shareholder returns, setting the stage for sustained momentum into FY26.
Questions in the middle?
- How will the conclusion of Onboard Finance normalisation impact future earnings?
- What are the risks and opportunities from evolving NDIS funding and regulatory changes?
- How effectively can MMS leverage AI and digital platforms to drive further productivity gains?
