Annual
Report
2022
Making a difference
to people’s lives
Annual General Meeting
The Annual General Meeting of the members of McMillan Shakespeare Limited
A.B.N. 74 107 233 983 will be held virtually and in person on 28 October 2022 at 10.00am.
Please refer to the AGM notice for further details.
mmsg.com.au
The McMillan Shakespeare Group is a provider of salary
packaging, novated leasing, disability plan management
and support co-ordination, asset management and
related financial products and services.
Through its subsidiaries, it offers a breadth of services
and expertise, designed to responsibly deliver long-
term value to its customers. The Group employs a highly
committed team of c.1,300 people across Australia,
New Zealand and the United Kingdom and domestically
manages programs for some of the largest public sector,
corporate and charitable organisations.
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Contents
Chair and Chief Executive Officer’s Joint Report
Our Vision, Purpose and Values
Key Metrics
Directors’ Report
2
5
6
8
8
Directors
9
Directors’ meetings
10
Principal activities
10
Results
10
Dividends
11
Review of operations
13
State of affairs
14
Risks
16
Outlook and likely developments
Events subsequent to balance date
16
Directors’ experience and special responsibilities 17
18
Company Secretary
19
Remuneration Report
38
Unissued shares
38
Directors’ interests
38
Environmental regulations
38
39
39
39
39
40
Non-audit services
Corporate governance practices
Auditor’s independence declaration
Directors’ declaration
Five year summary
Indemnification and insurance
Financial Report
Directors’ Declaration
Independent Audit Report
Auditor’s Independence Declaration
Shareholder Information
Corporate Directory
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Chair and Chief Executive Officer’s
Joint Report
The McMillan Shakespeare (MMS) Group delivered strong
financial performance in FY22 with normalised1 underlying net
profit after tax (UNPATA) of $83.8 million, up 16.5%. A fully-franked
dividend of 108 cents per share was delivered for the year and
an up to 10% off-market share buy-back announced.
Dear Shareholders,
On behalf of the McMillan Shakespeare (MMS) Board of
Directors, Management Team and Staff, we are pleased
to present the 2022 MMS Annual Report.
For Financial Year 2022 (FY22) MMS delivered a strong
operating performance underpinned by our ongoing
customer focus, new business wins and further simplification
of the business portfolio, whilst also focusing on initiatives
to enhance returns for shareholders. This result was
achieved amid an operating environment impacted by the
ongoing COVID-19 pandemic and global motor vehicle
supply constraints.
During the period the Group reviewed and subsequently
adopted a refreshed Purpose, Vision and Values Statement
to better reflect where we are today as an Organisation and
what we aspire to moving forward. After consultation with our
internal and external stakeholders, it was established that
our core purpose is to ‘Make a Difference to People’s Lives.’
Our purpose will help to further reinforce and enhance our
culture which has been pivotal in delivering outcomes for our
customers, our people and shareholders.
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1 Normalised refers to adjustments made for the negative earnings transitional period
for the implementation of the funding warehouse, OnBoard Finance (“Warehouse”).
It normalises for the Warehouse’s in year operating and establishment expenses and
for an adjustment for commissions that would have otherwise been received in period
had the sales been financed via a principal and agency funder rather than through
the Warehouse. Normalised financials are stated for FY22 and FY21 (for comparative
purposes) and are currently expected to be stated up to and including FY25. For FY21
normalisations only include an adjustment to remove the impact of JobKeeper.
Financial Performance Growth
Strategic Focus
Group NPAT for FY22 was $70.3m which represented
growth of 15.2% on FY21. While Group normalised UNPATA
of $83.8m represented growth of 16.5% and normalised
revenue of $594.3 million increased by 9.2%. Normalised
return on Capital Employed (ROCE) improved to 38.6%, up
from 30.5% and normalised earnings per share increased by
16.5% to 108.3 cents. We note that given the introduction of
our funding warehouse OnBoard Finance during FY22 and its
impact upon UNPATA, the Group’s financials will be presented
on a normalised UNPATA basis during this Warehouse
transition period which is currently expected to be stated
up to and including FY25.
In Group Remuneration Services (GRS), total normalised
revenue for FY22 for the segment grew by 2.0% on the
previous period to $206.6m whilst normalised UNPATA
was down 2.1% to $48.4m.
The business achieved growth of 13,500 salary packages
over the year, and off the back of strong customer demand,
novated lease orders were up 3.0% on the previous period.
However, ongoing vehicle supply constraints resulted in
lower sales, with customer orders being carried over into
FY23 rising by 90% year on year to $26.0m, causing
downward pressure on segment profit given that the cost of
these sales were largely incurred in the FY22 period.
Our newest segment, Plan and Support Services (PSS)
achieved normalised UNPATA growth in FY22 of 21.4%
to $6.6m. This performance was underpinned by organic
growth in new customer acquisitions which exceeded
market growth and the acquisition of Plan Tracker which
was completed during FY22.
Asset Management Services (AMS) performed strongly across
all three businesses (Australia and New Zealand (ANZ), the
United Kingdom (UK) and Aggregation) with normalised
UNPATA up 63.4% to $30.2m, with the result being
underpinned by the ongoing strength of used cars prices
generating a significant increase in remarketing profits.
Through FY22 our strategic focus centered on continuing
to improve and investing in our digital offering and data
analytics to enhance the customer experience and for future
productivity benefits. We also took action to simplify our
portfolio of businesses.
Digital Focus
We continued to invest in our digital offering during the
period. Through this ongoing investment we aim to provide
a more personalised and connected customer platform that
enhances our product offering and customer experience,
while generating longer-term productivity improvements.
A range of initiatives helped us towards this goal across FY22,
including a new digital identity platform leading to improved
access to self-service applications and improved functionality
and security, including a ‘live-chat’ platform which enables our
customers to communicate with us anytime and anywhere.
Portfolio Simplification
During the period we actively pursued a process to simplify
the Group and its activities to better focus the organisation
and its capital on our core capabilities, products and markets.
This activity resulted in the divestment of the CLM Fleet
Management and Davantage Warranty businesses during the
period. We will continue this process with the exploration of
exit options for our entire UK operations in FY23.
Furthermore, we implemented a new segment structure for
the Group during the period. These new segments better
reflect the Group’s capabilities, products and markets in
which they operate. Our new segments are Group
Remuneration Services, Plan and Support Services and
Asset Management Services.
Capital Management
In FY22 we made considerable progress on our capital
management strategy with the launch of our warehouse
funding initiative, OnBoard Finance, the further restructure
of our UK businesses and the continued run down of the
existing UK on-balance sheet lease portfolio, which reduced
by 55% during this period to $23.3m.
Our capital allocation strategy aims to prioritise surplus cash
flow to - invest in the business for sustainable growth, fund
strategic acquisitions, deleverage where required, return to
shareholders primarily as fully-franked dividends and then
where surplus capital remains to consider share repurchases.
In relation to the Group’s payment of dividends, MMS’s
commitment is to return between 70% to 100% of UNPATA
to shareholders via dividends. The payout ratio will depend
on the ongoing investment and cash flow required in the
business amongst other factors. During the implementation
of the Warehouse period (currently expected to be stated
up to and including FY25) the UNPATA used for the dividend
policy will exclude the impact of the warehouse facility and
to be referred to as “Normalised UNPATA”.
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Chair and Chief Executive Officer’s
Joint Report
A fully-franked dividend of 108 cents per share was delivered
for the year inclusive of the final dividend of 74 cents per
share payable on 10 November 2022. This represents 100%
of Normalised UNPATA.
On 29 August 2022 MMS announced that it intends to
undertake an off-market buy-back of up to 10% of our
shares as part of the ongoing capital management strategy
as outlined above, with a view to enhancing shareholder
returns. Subject to final Australian Taxation Office
confirmation, the buy-back consideration is expected to
be a $0.99 capital component, with the remainder via
dividend, franked to the maximum extent allowable.
The buy-back is aimed at achieving a balance between
returning capital to shareholders, while retaining flexibility
to invest capital for growth and maintaining a strong
balance sheet.
The Regulatory Environment
We continue to operate in a dynamic regulatory environment
and are committed to monitoring and responding accordingly.
From 5 October 2021, a Deferred Sales Model (DSM) was
introduced across Add-on Insurance and Warranty Products
within our GRS business as mandated by the Commonwealth
Government.
Our preparatory work enabled an effective response and
implementation of the DSM. Following the outcome of the
2022 Federal election, we continue to maintain an active and
ongoing dialogue with relevant policymakers and regulators
alike, both directly and in conjunction with key industry
advocacy bodies.
In July 2022 the Federal Government introduced legislation
to exempt non-luxury zero and low emissions vehicles from
FBT. As Australia’s largest novated lease provider, together
with our asset management business, MMS is well positioned
to assist our customers to utilise this proposed legislation in
their transition to electric vehicles.
Our Commitment to Sustainability,
Environment and Accessibility
During FY22 we made further progress on the implementation
of the Group’s Sustainability Strategy. Established in
FY21, this strategy sets out how we will respond to key
environmental, social and governance risks and opportunities
for the Group and create positive environmental and social
outcomes for our stakeholders.
There were several highlights across this period that are
particularly noteworthy.
We transitioned all our Australian controllable sites to 100%
renewable energy, which helped us offset over a quarter of
the Group’s total electricity use during the period. We also
continued to support our customers to reduce their carbon
footprint through promoting and enabling their transition to
Electric Vehicles (EV’s).
We launched our Accessibility Inclusion Plan (AIP) that
formalised our long term commitment to improving
accessibility and inclusion for people living with disability.
We also launched our Reflect Reconciliation Action Plan (RAP)
to support Aboriginal and Torres Strait Islander peoples, both
within our business and in the broader community.
Board and Management
This year saw the retirement of long-time Chief Executive
Officer and Managing Director, Mike Salisbury. On behalf of
the Board, we thank Mike for his commitment to the Group
and his instrumental role in helping to evolve the business into
its current form. Mike was pivotal in embedding our values-
based culture, increasing the engagement of our people and
investing in improvements to the customer experience. We
wish Mike all the best for his retirement from Executive life.
We also welcomed new CEO, Rob De Luca, who brings
over 20 years’ experience in the banking, financial services,
wealth management and disability sectors. Rob’s expertise
and proven track record in navigating businesses through
periods of change, delivering strategic growth and utilising
innovation to improve customer engagement were key drivers
of the Board’s decision and we are excited by our new
leadership chapter.
On the 31st August 2022, Non-Executive Director and
previous Chair, Tim Poole’s term will conclude as previously
announced. Tim’s longstanding commitment and contribution
to the Group have been exemplary and we thank him and
wish him the best for the future. Your Board continues to
undertake a diligent Board renewal and succession
planning process.
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Our Vision, Purpose
and Values
MMS’ vision, our values and our purpose
guide the Group’s activities, in both a
business sense and in our commitment
to our communities and stakeholders,
providing a framework to guide us in
our day-to-day actions and long-term
decision making.
Our Purpose
Making a difference in people’s lives.
Improving the quality of our customers’ lives is a core
element of what we do. But making a difference in
people’s lives is not just about our actions, it is about
the care and consideration that goes into them. It is
about small, everyday habits that inform and nurture our
character, culminating in success for our stakeholders.
Our Vision
To be the trusted partner, supporting customers’
financial wellbeing and lifestyle goals.
As a partner to our customers, we help them navigate
often complex and unfamiliar products and services.
We earn our customers’ trust through the integrity and
honesty of our service. Enhancing our customers financial
wellbeing and supporting them to achieve their lifestyle
goals lie at the heart of what we do.
Our Values
Better together means put people first, and work
together, to pursue better.
We strive to create tangible benefits for our customers,
people and broader stakeholders. We aim to harness
the collective efforts of our people and in doing so create
better, superior outcomes. These values underpin what
we do and help us to achieve our purpose.
Strategic Focus and Outlook
It is expected that many of the market conditions experienced
this year will flow into FY23 such as the COVID-19 pandemic
and global motor vehicle supply constraints. An environment
of labour market constraints, rising inflation and interest rates
will also present both challenges and opportunities.
GRS will benefit from continued elevated new and used car
prices on novated lease yields. While demand remains high,
a lack of available new car stock has meant that expenses
have been incurred to originate orders that were not able
to be fulfilled in FY22 resulting in a significant volume of
customer orders carried over into future periods where the
revenue is expected to recognised. We will also be on-
boarding recent customer wins and invest in enhancing the
customer experience through digital and data analytics for
future productivity benefits. Through the establishment of the
Warehouse we will continue to ramp up to 20% of novated
volume which is expected to have an ~($11m) UNPATA
impact in FY23.
AMS will continue to focus on customer needs, including
working with clients on reducing their carbon footprint as they
plan transitioning their fleets to EVs, benefit from ongoing
elevated used vehicles prices. MMS will explore exit options
for the UK business.
PSS growth will continue as the NDIS expands towards an
expected 859,000 participants by 2030. Our focus is to fully
integrate the Plan Tracker business and develop a scalable
platform to grow the business whilst actively pursuing further
acquisition opportunities.
Our balance sheet remains in a position to support organic
customer growth, diversification of our funding sources
through the Warehouse and exploring opportunities for
acquisitions.
We would like to thank our people for their dedication to
supporting our customers through the challenges of the year.
We also thank our clients, customers and shareholders for
their support. We look forward to keeping you updated on
our progress of our strategy execution into FY23 and beyond.
Helen Kurincic
Chair
Rob De Luca
Managing Director &
Chief Executive Officer
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Key Metrics
Our Customers
370,902
Salary packages
Up 3.8%
70,912
Novated leases
Orders up 3.0%
Sales down (4.0%)
17,747
Assets pool – units1
Down (47.2%)
$318m
Assets managed – WDV 2
Up 2.2%
$2,917m
Net amount financed
Up 5.3% on pcp
52
Net Promoter Score (NPS)3
Down (11.7%)
25,876
PSS Customers
Up 63.6%
1 Total decrease of 16,653 units in AM-UK, of which
12,698 units relates to the disposal of CLM UK.
2
Inclusive of on and off balance sheet funding for AM ANZ.
3 GRS customer satisfaction measured through
Net Promoter Score.
Note: Movements compared to prior corresponding period.
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Our People and Environment
1,294
Employees (FTE)
MMS Group
as at 30 June
83%
Employee Sustainable
Engagement Score
Down (3%)
84,635
Developing our people
(training & development hours)
Up 3%
1 Australian and New Zealand Operations only.
Note: Movements compared to prior corresponding period.
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3.1% Absenteeism rateUp 15%38% Women in leadership1 3,134 Greenhouse gas emissions (CO2e tonnes) 97% Total electricity sourced from renewable sources
Directors’ Report
The Directors of McMillan Shakespeare Limited (Company or
MMS) present this report on the consolidated entity, consisting of
the Company and the entities that it controlled at the end of, and
during, the financial year ended 30 June 2022 (Group or MMS).
Directors
The Directors during the whole of the financial year and
up to the date of this report (Directors) are as follows:
Ms Helen Kurincic (Independent Non-Executive Director)
Mr Bruce Akhurst (Independent Non-Executive Director)
Ms Kathy Parsons (Independent Non-Executive Director)
Mr Tim Poole (Independent Non-Executive Director)
Mr John Bennetts (Non-Executive Director)
Mr Ross Chessari (Non-Executive Director)
Mr Mike Salisbury (Managing Director and CEO)
(retired as Managing Director and CEO on 16 May 2022)
Mr Rob De Luca (appointed as Managing Director and CEO
on 16 May 2022)
Details of the qualifications, experience and special
responsibilities of the Directors are set out on pages 17
and 18.
Independent Directors, as determined in accordance
with the Company’s definition of independence, have been
independent at all times throughout the period that they
held office during the financial year ended 30 June 2022.
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Directors’ meetings
The number of meetings held and attended by the board of Directors (Board) (including meetings of committees of the Board)
during the financial year ended 30 June 2022 were as indicated in the table below.
Director
Ms H. Kurincic (Chair)
Mr M. Salisbury (Managing Director and CEO) 1
Mr R. De Luca (Managing Director and CEO) 2
Mr B. Akhurst
Mr J. Bennetts
Mr R. Chessari
Ms K. Parsons
Mr T. Poole
Director
Ms H. Kurincic (Chair)
Mr M. Salisbury (Managing Director and CEO) 1
Mr R. De Luca (Managing Director and CEO) 2
Mr B. Akhurst
Mr J. Bennetts
Mr R. Chessari
Ms K. Parsons
Mr T. Poole
Board Meetings
Audit, Risk & Compliance
Committee Meetings
Eligible to
Attend
Attended
Eligible to
Attend
Attended
15
14
1
15
15
15
15
15
15
14
1
15
15
15
15
15
9
-
-
9
-
-
9
9
9
-
-
8
-
-
9
9
People, Culture and
Remuneration Committee
Nomination
Committee
Eligible to
Attend
Attended
Eligible to
Attend
Attended
4
-
-
4
-
-
4
4
4
-
-
4
-
-
4
3
3
-
-
3
-
-
-
3
3
-
-
3
-
-
-
3
1 Mr M Salisbury retired 16 May 2022.
2 Mr R De Luca appointed 16 May 2022.
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Directors’ Report
Principal activities
The principal activities of the Company and its controlled entities were the provision of salary packaging, novated leasing,
disability plan management and support co-ordination, asset management and related financial products and services.
In the opinion of the Directors, there were no significant changes in the nature of the activities of the Company and its controlled
entities during the course of the financial year ended 30 June 2022 that are not otherwise disclosed in this Annual Report.
Results
Results for the financial year ended 30 June 2022 are as follows:
Results
2022
2021
Net profit after income tax (NPAT)
attributable to owners of the Company
Underlying Net profit after income tax (UNPATA) 1
Normalised UNPATA 2
Basic earnings per share (EPS)
Underlying earnings per share
Basic earnings per share on a diluted basis (DPS)
$70,348,376
$61,065,330
$82,071,918
$83,765,889
90.9 cents
106.1 cents
90.6 cents
$79,212,985
$71,898,226
78.9 cents
102.4 cents
78.4 cents
1 UNPATA is calculated as net profit before-tax but before the after-tax impact of acquisition related items and non-business operational items
(as outlined within Note 2.1 of the Financial Report).
2 Normalised refers to adjustments made for the negative earnings transitional period for the implementation of the funding warehouse, OnBoard Finance (“Warehouse”).
It normalises for the Warehouse’s in year operating and establishment expenses and for an adjustment for commissions that would have otherwise been received in period
had the sales been financed via a principal and agency funder rather than through the Warehouse. Normalised financials are stated for FY22 and FY21 (for comparative
purposes) and are currently expected to be stated up to and including FY25. For FY21 normalisations only include an adjustment to remove the impact of JobKeeper.
Dividends
Dividends paid by the Company during the financial year ended 30 June 2022 are as follows:
Dividends
Final dividend for the financial year ended 30 June 2021
of 31.1 cents (2020: Nil) per ordinary share (2021: fully franked
at the tax rate of 30%)
Interim dividend for the financial year ended 30 June 2022
of 34 cents (2021: 30.2 cents) per ordinary share paid on 25
March 2022 fully franked at the tax rate of 30% (2021: 30%)
2022
$24,065,527
2021
Nil
$26,309,576
$23,369,094
Total
$50,375,103
$23,369,094
Subsequent to the financial year ended 30 June 2022, the Directors declared a final dividend of 74 cents per ordinary share
(fully-franked at the tax rate of 30%) to be paid on 10 November 2022, bringing the total dividend to be paid for the financial
year ended 30 June 2022 to 108 cents per ordinary share.
Ex-dividend date
26 October 2022
Record date for determining entitlements to the dividend
27 October 2022
Dividend payment date
10 November 2022
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Review of operations – Group
Segment Review
The MMS Group delivered a strong financial performance
in FY22 and delivered on several strategic priorities amidst
a complex operating environment including continued global
motor vehicle supply constraints.
Key achievements and initiatives during FY22 included
driving organic growth in salary packaging customers and
novated lease orders, the ongoing enhancement of our digital
channels, the acquisition of Plan Tracker, diversifying our
funding sources through the establishment of our funding
warehouse, Onboard Finance (Warehouse), and expanding
and executing on our sustainability strategy.
Group Financial Performance Summary
– Statutory Net Profit After Tax (NPAT) $70.3 million
up 15.2% on FY21
– Normalised revenue of $594.3 million, up 9.2%
– Normalised earnings before interest, tax, depreciation
and amortisation (EBITDA) of $132.7 million, up 7.1%
– Normalised UNPATA of $83.8, up 16.5%
– Normalised Return on Equity of 29.4%
– Normalised Return on Capital Employed of 38.6%
which is based on underlying earnings before interest
and tax (EBIT) as the numerator
– Final dividend declared of 74 cps
Group Remuneration Services
In GRS, total normalised revenue earned for the period was
$206.6 million, up 2.0% on FY21, whilst normalised UNPATA
was $48.4 million, a 2.1% decrease on the previous period.
Salary Packaging and Novated Leasing
The Group experienced growth in our customer base of
13,500 salary packages across the period which was a
combination of new business and organic growth.
In FY22 we were re-appointed as one of two salary packing
providers on a major existing contract and secured new
business wins across the government, health, not for profit
and private sectors. In particular, MMS announced that it is
to become the sole provider of salary packaging and novated
leases to the Department of Education and Training (Victoria)
during the year which is scheduled to commence in FY23.
Ongoing global motor vehicle supply constraints continued to
impact our novated lease business, with normalised revenue
increasing 2.0% on FY21 with MMS novated lease sales
outperforming the new car sales market. While demand
remains high, a lack of available new car stock has meant that
expenses have been incurred to originate orders that were
not able to be fulfilled in FY22 resulting in a significant volume
of customer orders carried over into future periods where
the revenue is expected to recognised. The total carry over
value as at 30 June 2022 was ~$26m. Higher average yields
resulting from inflated retail pricing in the automotive market
helped to offset the impact to revenue for FY22.
During the period a principal and agent (P&A) funder to
MMS sold its motor vehicle dealer finance and novated lease
funding business and connected with the transaction MMS
executed new supply and transition agreements.
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Directors’ Report
Onboard Finance – Funding Warehouse
Plan and Support Services
Our newly created Plan and Support Services segment during
FY22 delivered plan management and support coordination
customer growth of 64% to 25,876, helping to produce a
21.4% increase in Segment UNPATA to $6.6m.
The increase in customers is consistent with our growth
strategy and has been complemented by the acquisition
in July 2021 of Plan Tracker. While growth in the support
coordination customers contributed to a 20% increase in
delivered support coordination hours.
Throughout FY22, we continued our focus on creating an
engaging customer experience through the development of
innovative digital technology. The investment made in the
digital strategy seeks to provide our customers with tools to
help navigate the NDIS and improve their outcomes. Further
initiatives were completed this period, including an NDIS
Budget Calculator, an online tool that allows participants,
carers and support coordinators to budget more effectively.
Other key digital measures introduced during FY22 include
the enhancement of our Customer Dashboards to encourage
greater self-service, the creation of an online Knowledge
Centre and a new website which provides a more accessible
user experience.
During FY22 we established our funding warehouse,
Onboard Finance, which operates as a funding option
alongside existing P&A funders.
Onboard Finance was created to enhance long term
profitability for MMS and offer a secure, flexible and
alternative funding source for our novated lease customers.
By transitioning to more annuity style revenue over the life
of a lease, Onboard Finance will deliver higher overall value
from each transaction. Following Australian Securities and
Investment Commission (ASIC) approval of our credit licence
in April 2022 and with strong support from funders, the
business commenced financing novated leases leveraging
our RemServ and Maxxia brands. Our target is for 20% of
novated lease funding to be financed via the Warehouse
and we expect to ramp up during FY23 to this level.
Digital Strategy
During the period we continued to implement and invest
in our Digital Strategy. The strategy seeks to invest in
technology that will enable us to improve efficiency,
execution and distribution, focusing on building customer
self serve capability.
A key focus of our Digital Strategy for FY22 was on building
our capability to deliver personalised and connected
customer experiences.
Initiatives during FY22 included:
– expanded roll out of a new Digital Estimate platform to
85% of clients which also enables Electric Vehicle (EV)
comparisons;
–
–
launched a new identity management solution enabling
enhanced security, improved password management
and streamlined login; and
introduced new Maxxia and RemServ LiveChat
experience, which improved customer connection and
operational efficiency through integration with core
contact centre operating systems.
These initiatives contributed to an average monthly Net
Promoter Score (NPS) for our GRS segment of 53, above
the sector benchmark and above pre-pandemic levels.
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MMS ANNUAL REPORT 2022 Asset Management Services -
Australia and New Zealand
The AMS ANZ segment achieved UNPATA of $18.0 million,
an increase of 19.6% on FY21. Through FY22 new business
volumes continued to be negatively affected by delays in new
vehicle supply, however an increase in demand for high quality
used vehicles resulted in higher yields through our wholesale
and retail remarketing channels. Remarketing profits for the
year increased by 36% on FY21.
The contraction of new vehicle supply also contributed to an
increase in contract extensions, which increased the average
duration and age of the fleet. This led to a 2.2% increase
in written down value of assets under management, which
was $318.0 million as at 30 June 2022. Our two Just Honk
retail yards in New South Wales and Victoria were strong
contributors to the segment’s performance, despite being
closed to the public in early FY22 as a result of pandemic
restrictions.
Through FY22 we continued to support our customers as
they looked to reduce their carbon footprint and increase
the number of zero emissions vehicles in their fleets, including
a pilot program that involved Interleasing providing EV’s for
the organisation to use in its national fleet.
We rebranded Maxxia Fleet New Zealand to Interleasing,
providing us with a platform to service customers across
the two countries and the ability to provide the New Zealand
market with online tools previously only available within
Australia.
Asset Management Services - UK
AM UK delivered UNPATA of $8.5 million, up from $1.4 million
in FY21.
The limited supply of new vehicles impacting our ANZ
business also was experienced in the UK, with demand for
used vehicles – and in turn elevated used car prices and
remarketing yields – increasing markedly over the period.
The strong performance was also driven by the strategic
restructuring which we undertook last year.
Off-balance sheet originations increased over the period with
Net Amount Financed (NAF) of $841 million representing
an 7.8% increase on FY21 and in part due to the lifting
of COVID-19 restrictions and the gradual improvement in
business confidence.
Through FY22 we continued to run down the existing on
balance sheet lease portfolio, which has reduced by 55% over
the period to $23.3 million. We will continue to execute on this
strategy into FY23, with much of the book expected to run off
during the first half of the year.
We made the decision to divest the CLM fleet management
business after a strategic review. The business was divested
on 31 May 2022.
Aggregation
Aggregation business NAF of $1.168 billion an increase of
15.9% on FY21. This result occurred against a backdrop
of challenging market conditions that included increased
competition and a shift in our business mix away from
Consumer to Commercial lending.
State of affairs
There were no other significant changes in the state of
affairs of the Company and its controlled entities during the
financial year ended 30 June 2022 that are not otherwise
disclosed in this Annual Report.
13
MMS ANNUAL REPORT 2022 Directors’ Report
Risks
MMS’s approach to risk management, underpinned by the
Group’s risk management policy, framework and risk appetite,
overseen by the Audit, Risk and Compliance Committee, is
embedded in our culture and decision making.
MMS bases its risk management procedures on the
Risk Management Standard AS ISO 31000:2018. As part
of normal business activities, Senior Executives identify
and/or review key risks. The results of these reviews are
recorded in the MMS risks register, which is used by the
Management Risk and Compliance Committee and the
Board Audit, Risk and Compliance Committee to monitor
risks and mitigation strategies.
Key risks include:
Key risks
Strategy
Geopolitical and macro environment:
Impacts due to geopolitical risks and/or
economic conditions such as a recession.
Maintain and regularly review appropriate capital and balance sheet position.
Asset Management portfolio concentration tolerance settings, reviews and
stress testing.
New vehicle supply chain:
Global impact due to supply chain
challenges, further exacerbated by the
Russia / Ukraine conflict.
Strengthening and broadening of relationships with supply chain partners.
Business model diversification.
Regulatory and policy change:
Changes to government regulation
and policy such as: NDIS, Fringe Benefit
Tax (“FBT”), import or luxury vehicle taxes,
FBT exemption on Electric Vehicles (“EV”).
Stakeholder engagement across Governments.
Active participation and support of peak industry bodies such as NALSPA
and Disability Intermediaries Australia.
Development of products and services to support clients and customers
as and when they transition to EV.
Business model diversification.
Labour and skills shortages and
wage inflation:
Upward labour cost pressures, shortage
of skilled staff and increased staff turnover.
Reviewing and aligning remuneration appropriate to market settings.
Investment in people including learning and development programs.
Creating an inclusive culture that supports a hybrid working model and
organisational purpose and values.
Customer contracts:
Material customer contracts and/or
multiple contracts at risk when up
for renewal.
Maintaining and strengthening client relationships.
Delivering high levels of customer service.
Different tenures of contracts
Interest rate increases and credit
spread changes:
Market interest rate increases and
increases in credit spreads may create
upward pressure on pricing.
Management Interest Committee in place to monitor interest rate changes,
outlook and MMS businesses’ pricing
Hedging policy in place designed to minimise interest rate risk.
Diversity of competitive funding channels (including MMS’s newly established
OnBoard Finance funding warehouse) to minimise credit spread risk and
pricing impact for our customers.
Benefit from increases in interest rates on cash balances.
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Key risks
Strategy
Cyber security:
Threat of cyber-attacks on MMS systems.
Technology:
The non-performance or failure of key
technology and operating systems.
Dedicated cyber security team in place.
Ongoing cyber security program to continuously review and strengthen
security controls.
Security controls cover the key functions of “identify, protect, detect,
respond, recover”, and include policies, technical controls, operating
procedures, training and awareness.
Information & Communication Technology (ICT) Risk Committee in place to
monitor and manage technology risks.
Operational monitoring and governance of technology asset life cycle and
resiliency in place.
Crisis management framework in place incorporating business continuity
plans (BCPs), disaster recovery plan (DRP) and cyber security incident
response plan (CSIRP).
Data and privacy:
Occurrence of a significant incident of
MMS’s data and privacy obligations.
Data incident policies and response plan in place.
Compliance Framework and mandatory training in place.
Incident monitoring and reporting in place.
Key suppliers:
Non-performance or failure of MMS key
suppliers.
MMS Group Procurement Policy and Supplier Code of Conduct in place.
Annual review of key suppliers, including risk assessment.
Monitoring of performance standards.
Auto financier market:
Capital market constraints and Australian
auto financier restructuring impacting the
security and ongoing commitment of funding
in the automotive segment.
MMS owned funding warehouse, Onboard Finance established.
Contracts in place with a panel of funders to have diversification of supply.
Credit risk management:
Including credit risk in the asset financing
and warehouse businesses.
Managed via business credit policies and tolerance settings.
Management Credit Committee in place to monitor credit risk and
performance against tolerance settings.
ESG risk assessment is factored in where it is relevant to a credit rating.
Commission caps on sale of add-on
insurance products: Commission caps
by ASIC may result in impact to revenue.
Product reform already undertaken to reduce the impact of future caps.
Active participation and support of peak industry bodies (such as
NALSPA) to ensure MMS is informed on potential changes to regulation.
Pricing pressure from competition
and/or impacts of disruption:
Result in loss of customers and
decreased revenue.
Delivering high standards of client service.
Maintaining and strengthening client engagement to ensure we
understand and focus on supporting client needs.
Market awareness and disciplined approach to pricing.
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Directors’ Report
Outlook and likely developments
Events subsequent to balance date
Other than the matters disclosed at Note 8.9 of the
Financial Report and below, there were no material events
subsequent to reporting date.
In August 2022 MMS entered into an agreement to obtain
new five year debt facilities totaling $60m to support working
capital requirements.
On 29 August 2022 MMS announced that it intends to
undertake an off-market buy-back of up to 10% of MMS
ordinary shares as part of its ongoing capital management
strategy.
It is expected that many of the market conditions experienced
this year will flow into FY23 such as the COVID-19 pandemic
and global motor vehicle supply constraints. An environment
of labour market constraints, rising inflation and interest rates
will also present both challenges and opportunities.
GRS will benefit from continued elevated new and used car
prices on novated lease yields. While demand remains high,
a lack of available new car stock has meant that expenses
have been incurred to originate orders that were not able
to be fulfilled in FY22 resulting in a significant volume of
customer orders carried over into future periods where the
revenue is expected to recognised. We will also be on-
boarding recent customer wins and invest in enhancing the
customer experience through digital and data analytics for
future productivity benefits. Through the establishment of the
Warehouse we will continue to ramp up to 20% of novated
volume which is expected to have an ~($11m) UNPATA
impact in FY23.
AMS will continue to focus on customer needs, including
working with clients on reducing their carbon footprint as they
plan transitioning their fleets to EVs, benefit from ongoing
elevated used vehicles prices and explore exit options for the
UK business.
PSS growth will continue as the NDIS expands towards an
expected 859,000 participants by 2030. Our focus is to fully
integrate the Plan Tracker business and develop a scalable
platform to grow the business whilst actively pursuing further
acquisition opportunities.
Our balance sheet remains in a position to support organic
customer growth, diversification of our funding sources
through the Warehouse and exploring opportunities for
acquisitions.
In terms of capital management and improved returns to
shareholders we will complete the announced up to 10%
off-market share buyback in 1HFY23 and also apply our new
dividend policy of a payout ratio of 70%-100% of UNPATA for
the warehouse transition period.
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Directors’ experience
and special responsibilities
Helen Kurincic MBA, FAICD, FGIA
Appointed: 15 September 2018 (Non-Executive Director), 20 October 2020 (Chair)
Positions: Chair of the Board, Chair of the Nomination Committee
Member of the Audit, Risk and Compliance Committee,
Member of the People, Culture and Remuneration Committee
Ms Kurincic is Non-Executive Chair of Integral Diagnostics Limited, Non-Executive Director of Estia
Health Limited, HBF Health Limited and the Victorian Clinical Genetics Service. Formerly, Ms Kurincic
was the Chief Operating Officer and Director of Genesis Care from its earliest inception, creating and
developing the first and largest radiation oncology and cardiology business across Australia. She
has also formerly held Board roles across the publicly listed, private, not-for-profit and government
sectors as well as being the former CEO of Benetas and Heart Care Victoria. Ms Kurincic is a Fellow
of the Australian Institute of Company Directors and Governance Institute of Australia. She has also
completed the Cambridge Institute for Sustainability Leadership NED Programme. Ms Kurincic is
considered an independent director under the Company’s definition of independence.
Rob De Luca B Ec, MBA
Appointed: 16 May 2022 (Chief Executive Officer and Managing Director)
Positions: Chief Executive Officer
Managing Director
Mr De Luca joined MMS in May 2022 and has over 20 years’ experience in
Financial Services, Wealth Management, Disability and Healthcare, including
roles as Managing Director of Bankwest, CEO of the National Disability Insurance
Agency (NDIA) and most recently as CEO of Zenitas Healthcare.
Bruce Akhurst B Ec (Hons), LLB, FAICD
Appointed: 1 April 2021
Positions: Non-Executive Director, Chair of the People, Culture and Remuneration
Committee, Member of the Audit, Risk and Compliance Committee
Member of the Nomination Committee
Mr Akhurst is currently the Chairman of Tabcorp Holdings Limited and a member of the Audit
Committee, Technology Committee, Nomination Committee, People and Remuneration
Committee and Interim Chair of the Risk, Compliance and Sustainability Committee. Mr
Akhurst is also Chair of the Peter McCallum Cancer Foundation and Council Member of RMIT
University chairing the Infrastructure and Information Technology Committee. Mr Akhurst
was previously the CEO of Sensis, Group MD and General Counsel of Telstra and a Partner
of Mallesons Stephen Jaques. Mr Akhurst is considered an independent director under the
Company’s definition of independence.
John Bennetts B Ec, LLB
Appointed: 1 December 2003
Positions: Non-Executive Director
Mr Bennetts is an experienced investor and has been the founder and director
of a number of successful Australian companies. He owns businesses in varied
industries including technology and finance. Mr Bennetts is a Non-Executive
Director of Sacred Heart Mission. He was a founder of Cellestis Limited and
private equity investment firm, Mooroolbark Investments Pty Limited (M-Group).
He has also provided corporate advisory services to a range of companies in
Australia and Asia. Prior to the establishment of M-Group, he was a senior
executive of pioneering Australian multinational IT company, Datacraft Limited
and also practised as a commercial lawyer.
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Directors’ experience
and special responsibilities
Ross Chessari LLB, M Tax
Appointed: 1 December 2003
Positions: Non-Executive Director
Mr Chessari is a founder and director of the investment manager, SciVentures
Investments Pty Limited (SciVentures). Prior to founding SciVentures, Mr Chessari
was the Managing Director of ANZ Asset Management and the General Manager of
ANZ Trustees.
Kathy Parsons B Comm
Appointed: 22 May 2020
Positions: Non-Executive Director
Chair of the Audit, Risk and Compliance Committee
Member of the People, Culture and Remuneration Committee
Ms Parsons is currently a Non-Executive Director of Tassal Group Limited and a Non-
Executive Director of Shape Australia Corporation Limited. Formerly, Ms Parsons was
an audit partner at Ernst & Young where she spent time as a partner in the firm’s US, UK
and Australian practices. In addition to her audit client responsibilities she was part of
the firm’s Oceania Assurance Leadership team as the Professional Practice Director with
responsibility for assurance quality and risk management in the region. Ms Parsons is
considered an independent Director under the Company’s definition of independence.
Tim Poole B Comm
Appointed: 17 December 2013 (Non-Executive Director),
28 October 2015 – 20 October 2020 (Chair)
Positions: Non-Executive Director
Member of the Audit, Risk and Compliance Committee
Member of the People, Culture and Remuneration Committee
Member of the Nomination Committee
Mr Poole is currently Chair of Aurizon Holdings Limited and a Non-Executive Director
of Reece Limited. Mr Poole was previously an executive of the unlisted infrastructure
and private equity manager, Hastings Funds Management (1995 to 2007), including
being the Managing Director from 2005. He was formerly the Non-Executive Chair of
Lifestyle Communities Limited. Mr Poole is considered an independent director under
the Company’s definition of independence.
Ashley Conn B Comm, CA, MBA
Appointed: 5 October 2020
Positions: Chief Financial Officer
Company Secretary
Mr Conn is the CFO and Company Secretary and has over 20 years of financial
services experience. Previously Mr. Conn was the CFO of CSG Ltd and prior
to that had been an investment banker working in Australia and New York
predominantly for Goldman Sachs and Morgan Stanley.
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Remuneration Report (audited)
Letter from the Chair of the People,
Culture and Remuneration Committee
Dear Shareholders,
FY22 remuneration outcomes
While Group earnings out-performed against PCP, the
Earnings per Share target for the FY20 and FY21 LTIP grants
relating to FY22 performance hurdles were not achieved and
thus did not vest. The Return on Capital Employed target for
the FY20 and FY21 LTIP grants relating to FY22 performance
hurdles were achieved and will vest.
Strategic targets accounted for 35% of FY22 LTIP (FY21 30%)
with the remaining 65% to continue to represent financial
targets. 14.0% of the plan has qualified for vesting. Further
details are provided in Section 5(b).
Remuneration framework changes in FY22 and FY23
No changes to the remuneration framework or LTIP were
implemented in FY22.
In FY23 we will be introducing a short term incentive
program (STIP) to align with market practice, incentivise
high performance that aligns with the Company’s strategy,
and attract and retain key executive talent. The FY23
framework will consist of fixed remuneration, STIP and
LTIP with a weighted scorecard comprising financial, ESG,
customer and people targets. These changes are further
detailed in Section 6.
Changes in KMP / MMSG leadership
Mike Salisbury, Chief Executive Officer and Managing Director,
retired on 16 May 2022 after nearly eight years in the role.
Mr Rob De Luca assumed the role of Chief Executive Officer
and Managing Director on 16 May 2022.
We thank you for your support.
Bruce Akhurst
Non-Executive Chair of the People,
Culture and Remuneration Committee
On behalf of the People, Culture and Remuneration
Committee (PCRC) and Board of McMillan Shakespeare
Limited (the Company), I am pleased to present the Financial
Year 2022 (FY22) Remuneration Report (Report).
At MMS, we are committed to achieving long-term, sustainable
returns for our shareholders by leveraging scale, introducing
new technology and pursuing value accretive, strategic growth
opportunities in a rapidly changing landscape. In achieving this
we operate a Long-Term Incentive Plan (LTIP) which includes
performance hurdles comprising both financial and strategic
targets. We did not provide short-term incentives in FY22.
Our people
Our people continued to adapt well to a hybrid working
rhythm, with the ongoing impacts of the COVID-19 pandemic
felt to varying degrees across our office locations as
lockdowns eased. The health and wellbeing of our people,
in particular their mental wellbeing, remained an utmost
priority for the Group, as we focused on equipping both our
managers and team members with tools, resources and
support services to help manage their connectedness and
mental health. We also welcomed the opportunity to connect
in person at leadership development programs, conferences
and other important events.
We were pleased to see that our people remained highly
engaged with the business with a Sustainable Engagement
Score of 83% in our 2022 Pulse Survey. We also achieved
the 30:30:40 gender diversity target for 2022, increasing
representation of female leaders within our leadership roles.
The Board has committed to increase its gender diversity
target to 40:40:20 by 30 June 2030 for Board, Other
Executives/General Managers and Senior Manager levels.
Closing the gender pay gap is an important part of our
commitment to gender equality and creating an equitable
and diverse workplace. We conduct a detailed annual gender
pay gap analysis, examining gender pay gaps at the overall
organisational level, by occupational category, segment and
at position level where people are performing the same work
with ten or more incumbents. This dynamic process ensures
equity and parity in remuneration for skills, experience, merit
and work performed, and findings are presented to the PCRC
annually. MMS has introduced a total remuneration pay equity
target of 95-105% on average for like for like roles. This year’s
gender pay gap analysis revealed that the pay equity in total
remuneration between men and women in like for like roles
was 97.8%.
MMS is committed to creating a workplace that attracts
and retains a diverse, inclusive, high performing and highly
engaged workforce.
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Remuneration Report (audited)
1. Contents
Section
Key Management Personnel
FY22 Remuneration Snapshot
FY22 Executive Remuneration
Framework and Policy – Overview
FY22 Outcomes and the
Link to Performance
FY23 Executive Remuneration
Framework changes
Remuneration Governance
Executive Remuneration Tables
Non-Executive Director
Remuneration
Reference
Section 2
Page 20
Section 3
Page 21
Section 4
Page 21
Section 5
Page 26
Section 6
Page 29
Section 7
Page 30
Section 8
Page 32
Section 9
Page 36
2. Key Management Personnel
This Report has been prepared in accordance with
Section 300A of the Corporations Act 2001 and outlines the
remuneration arrangements in place for the Key Management
Personnel (KMP) of the Company. This comprises all Non-
Executive Directors and those senior employees who have
authority and responsibility for planning, directing and
controlling the activities of the Company.
The table below sets out the Company’s Executive KMP
and Non-Executive Directors during FY22.
Executive KMP
Name
Position
Mr M Salisbury
Chief Executive Officer (CEO)
and Managing Director
Term as
KMP in
2022
Part year 1
Mr R. De Luca
Chief Executive Officer (CEO)
and Managing Director
Part year 2
Mr A. Conn
Group Chief Financial Officer
(CFO) and Company Secretary
Full year
Non-Executive Directors
Name
Position
Ms H. Kurincic
Non-Executive Chair
Term as
NED in
2022
Full year
Mr B. Akhurst
Non-Executive Director
Full year
Mr J. Bennetts
Non-Executive Director
Full year
Mr R. Chessari
Non-Executive Director
Full year
Ms K. Parsons
Non-Executive Director
Full year
Mr T. Poole
Non-Executive Director
Full year
1 Retired 16 May 2022
2 Appointed 16 May 2022
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3. FY22 Remuneration Snapshot
KMP Remuneration
Fixed pay
Long-term incentive
Fixed pay adjustments are made to reflect general market
conditions and remuneration offered to comparable roles
within related industries.
The Company did not pay short-term incentives to its KMP
in FY22, operating a LTIP based on financial and strategic
performance hurdles.
Reflecting the link between organisation performance and
executive reward, the earnings per share performance
hurdles in respect of the FY20 three year and FY21 two year
LTIP will not vest. However, the return on capital employed
performance hurdles will vest in respect of the FY20 three
year and FY21 two year LTIP.
In relation to the strategic targets in the FY22 LTIP, 14.0%
of the plan has qualified for vesting.
Non-Executive Director Fees
Non-Executive Director fees were increased during FY22 for the 0.5% increase in the superannuation guarantee contribution.
4. FY22 Executive Remuneration Framework and Policy – Overview
(a) FY22 Strategic pillars and design principles
Our FY22 Executive Remuneration
Strategy and Policy
Design
Principles
MMS’ executive remuneration strategy and policies support our
strategy. Our executive remuneration policy is designed to align
the interests of executives and shareholders while attracting and
retaining key executive talent who are critical to the growth and
success of the Company.
– Attraction and retention of key talent through fair and
market competitive fixed remuneration for the role.
– Aligning reward with the creation of sustainable, long-term
value for the Company’s shareholders. Our executives do
not receive short-term incentives (only LTIPs) and a minimum
shareholding requirement has been introduced.
– Incentivise high performance through stretch LTIP
performance measures aligned with the Company’s strategy.
– Retention of key talent. Vesting of our long-term incentives
are subject to executives’ continued employment with
the Company.
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Remuneration Report (audited)
(b) FY22 Remuneration framework cycle
In relation to the FY22 framework, fixed remuneration was provided in addition to a long-term incentive
granted 100% as Performance Rights, based on 65% financial measures and 35% as strategic objectives.
FY22 Executive Remuneration Framework (Snapshot)
52.5% EPS & ROCE
12.5% ROCE
Performance qualified rights
but not settled for 1 year
35% Strategic Measures
Performance qualified rights
but not settled for 2 years
Fixed remuneration
(Cash salary +
Superannuation)
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MMS ANNUAL REPORT 2022
(c) FY22 Executive remuneration framework
The below table describes each element of pay within the framework and the strategic link.
Our Executive Remuneration Framework
Element
Strategic Link
Fixed remuneration
Fixed remuneration comprises base salary and superannuation
(and, in some cases, non-cash benefits such as motor vehicle
lease payments and car parking benefits).
Fixed remuneration of the Executive KMP is set to attract and retain
the calibre of talent required to drive outcomes for the Company’s
shareholders and deliver on the Company’s strategy.
The PCRC reviews fixed remuneration annually (or on promotion)
to ensure fixed remuneration levels remain fair, appropriate and
market competitive.
Long-term incentive
Incentives are delivered through indeterminate rights in a LTIP,
with Performance Rights measured over a 3 year period and
subject to performance measures.
By delivering variable reward wholly as a long-term incentive,
our framework encourages sustainable decision making and
a focus on the long-term health of the business (including the
interests of customers), to drive long term value for shareholders.
Vesting of the LTIP is subject to the achievement of performance
hurdles to drive a high-performance culture amongst our
Executive Team.
The ROCE and EPS hurdles are aligned with our strategic pillars
and our focus on both earnings and capital optimisation.
Non-financial measures align to shorter term business objectives,
measured through a combination of better capital management,
increased productivity and growth.
Short-term incentive
MMS did not offer short term incentives in FY22, providing
fixed remuneration and long-term incentives only.
Each element of remuneration is outlined in more detail below:
Fixed annual remuneration in FY22
Fixed remuneration of the Executive KMP is reviewed by the PCRC annually (or on promotion) to determine whether
changes are appropriate in order to maintain market competitiveness and attract and retain the talent required to drive
outcomes for the Company’s shareholders. Fixed remuneration is determined on an individual basis having regard to:
– The individual’s role, duties and responsibilities and performance levels;
– General market conditions; and
– Remuneration offered to comparable roles within related industries.
In considering fixed remuneration changes, the PCRC has regard to external benchmarking and generally positions
the fixed remuneration at the market median of comparable roles within comparator companies.
LTIP awarded in FY22
In FY22, the Executive KMP were granted Performance Rights in two parts of 25% and 40% each aggregating to 65.0%
where each part was measured against financial targets and the remaining 35.0% measured against strategic targets.
Specific details on the Performance Rights granted to Executive KMP during FY22 are provided in section 7(b) of the
report, and the table below outlines the terms of the grants:
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MMS ANNUAL REPORT 2022
Remuneration Report (audited)
Detailed summary – FY22 LTIP grant
Element
Description
Opportunity levels
(% of fixed remuneration)
The opportunity levels offered to the Executive KMP in FY22 were:
− 98% of fixed remuneration for the CEO; and
− 98% of fixed remuneration for the CFO
Allocation methodology
Performance Rights: Rights were allocated on a face value basis in FY22.
Performance period
Two and three years in respect of meeting financial targets. One year in relation to strategic targets.
The vesting of any LTIP is subject to either the good leaver provisions in the incentive plan or
continued employment with the Company on the date that the Company’s financial report is
lodged with the ASX for the year ending 30 June 2024.
Performance hurdles
Subject to the Executive KMP remaining employed for the performance period, vesting
of the Performance Rights is subject to the achievement of two performance hurdles:
a) Financial targets
− The Company’s CAGR in underlying EPS which applies to 40.0% of the Performance
Rights; and
− Absolute average ROCE over the performance period which applies to 25.0%
of the Performance Rights.
The following vesting schedules apply to Performance Rights (with vesting on a straight-line
basis between each level of performance).
Underlying EPS (CAGR)
Performance
Period
Level of
performance (%)
Percentage of
awards vesting
Allocation of
total grant
3 years to FY24
<3.6%
-
3.6%-7.7%
50%-100%
-
40.0%
Average ROCE
Performance
Period
Level of
performance (%)
Percentage of
awards vesting
Allocation of
total grant
2 years to FY23
3 years to FY24
<36.0%
-
36.0%-41.0%
50%-100%
<36.0%
-
36.0%-41.0%
50%-100%
-
12.5%
-
12.5%
Calculation of Underlying EPS (CAGR) shall be based on comparing the underlying EPS results
in the final year of the performance period to the Underlying EPS results for FY21 as the base
year (excluding any impairment losses recognised in the base year).
The ROCE performance condition is based on the Company’s average ROCE over the
performance period.
b) Strategic objectives
Strategic objectives are set by the Board across key strategic areas in FY22 as follows:
− Capital management (including implementation of secure and diversified funding sources
including implementing the warehouse and securing arrangement(s) with other financier(s);
− Productivity (including delivery of productivity benefits and core business growth through
sales conversion and effective response to the auto supply dynamic by implementing strategic
initiatives to improve sales outcomes); and
− Growth (including outperform market growth in novated through enhanced engagement
and improved sales execution, outperform market growth in NDIS plan management and
support services and deliver non-organic extensions in GRS and/or Plan Partners).
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
24
Element
Description
Process for assessing
performance conditions
To determine the full extent to which the performance hurdles are satisfied, the PCRC relies
on the audited financial results and vesting is determined in accordance with the LTIP Rules.
The PCRC believes this method of assessment provides an appropriate and objective assessment
of performance. The PCRC considers adjustments for one off material items to ensure metrics are
correctly adjusted to take into account these changes.
In the event that the Executive KMP takes approved unpaid leave for a period exceeding three
months during FY22, FY23 or FY24, the vesting criteria outlined above with respect to the
performance hurdles and the executive’s continued employment will be deemed on a pro-rata
basis to reflect the period of continuous service during the relevant financial year, unless the
Board determines otherwise.
Voting and dividend entitlements
No voting rights or dividend entitlements attach to the Performance Rights.
Malus (i.e. forfeiture of awards)
If the Board determines that an act of fraud, defalcation, gross misconduct, or that any other
circumstance has occurred in relation to the affairs of the Group and the Board determines an
inappropriate benefit has been obtained by the Participant, the Participant will forfeit any right or
interest in the Shares, Rights or Options or other entitlements under the Plan.
Treatment upon cessation
of employment
If the Executive KMP leaves employment with the Company prior to the date specified in the
Invitation Letter, the Rights will lapse without any payment to the employee (subject to the
discretion of the Board).
Change of control
On a change of control, the Board has discretion to waive the performance conditions attached
to the Performance Rights.
Hedging
No Executive KMP can enter a transaction that is designed or intended to hedge the executive’s
exposure to any unvested option or right. Executive KMPs are required to provide declarations
to the Board on their compliance with this policy from time to time.
(e) Pay mix
FY22 Reward Mix
We set out below the mix between fixed remuneration and LTIP at maximum for current Executive KMP.
KEY
Fixed remuneration
Long-term incentive
Chief Executive Officer
Chief Financial Officer
57.1%
42.9%
57.1%
42.9%
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
25
Remuneration Report (audited)
5. FY22 Outcomes and the Link to Performance
(a) MMS financial performance FY20 to FY22
The table below sets out the Company’s performance over the past three years in respect of key financial and
non-financial indicators.
Indices
FY22
FY21
FY20
Net profit attributable to Company members
$70,348,376
$61,065,330
$1,269,264
Underlying net profit after income tax (UNPATA)1
$82,071,918
$79,212,985
$69,028,191
Normalised UNPATA2
$83,765,889
$71,898,226
NPAT growth
UNPATA growth
Dividends paid
Dividend payout ratio3
Share price as at 30 June
Market capitalisation (A$m)
Earnings per share (cents)
Underlying earnings per share (cents)4
ROCE5
15.2%
3.6%
>100%
14.8%
N/A
(98.0%)
(22.2%)
$50,375,103
$23,369,094
$59,591,464
100%
$9.74
$753.7
90.9
106.1
39%
66%
$12.95
$1,002.1
78.9
102.4
33%
42%
$9.08
$702.6
1.6
87.4
20%
1 UNPATA is calculated as net profit before-tax but before the after-tax impact of acquisition related items and non-business operational items
(as outlined within Note 2.1 of the Financial Report).
2 Normalised refers to adjustments made for the negative earnings transitional period for the implementation of the funding warehouse, OnBoard Finance
(“Warehouse”). It normalises for the Warehouse’s in year operating and establishment expenses and for an adjustment for commissions that would have
otherwise been received in period had the sales been financed via a principal and agency funder rather than through the Warehouse. Normalised financials
are stated for FY22 and FY21 (for comparative purposes) and are currently expected to be stated up to and including FY25. For FY21 normalisations only
include an adjustment to remove the impact of JobKeeper.
3 Dividend payout ratio is calculated as total dividends declared for the financial year divided by Normalised UNPATA for the financial year and
issued shares at 30 June 2022.
4 Underlying earnings per share is based on UNPATA.
5 Return on capital employed (ROCE) is adjusted to reflect twelve months’ trading for acquisitions made in the financial year based on underlying
earnings before interest and tax (EBIT). Underlying EBIT is before the pre-tax impact of acquisition related and non-business operational items
(as outlined within Note 2.1 of the Financial Report). Capital employed (excluding lease liabilities) used in the calculations includes the add back of
impairment of acquired intangible asset charges incurred in the respective financial period..
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
26
(b) Company performance outcomes linked to the LTIP
The following table outlines the performance against the LTIP financial performance measures that have been
used across the KMP in FY22.
Alignment between Performance and Remuneration
FY20 Grants – 3 Year
Performance LTIP Metric
FY191
FY20
FY21
FY22
Metric
Achieved
ROCE 2,3
N/A
10.4%
29.5%
35.5%
25.1%
Underlying EPS growth (cps) 2
107.3
24.8
81.0
98.9
(2.7%)
Vesting
Target
Range
21.5% -
24.0%
6.0% -
10.5%
Vesting
Target Met
Yes
No
FY21 Grant – 2 & 3 Year
Performance LTIP Metrics
FY20 1
FY21
FY22
Metric
Achieved
Period
Achieved
Vesting Target
Range
Vesting
Target Met
ROCE 2,3
N/A
29.5% 35.5%
32.5%
Underlying EPS growth (cps) 2
87.4
81.0
98.9
6.3%
2 year
29.5% - 32.5%
Yes
3 year
31.5% -34.5% To be tested
2 year
11.5% - 15.5%
No
3 year
9.5% - 13.5%
To be tested
FY22 Grant – 2 & 3 Year
Performance LTIP Metrics
FY211,2
FY22
Metric
Achieved
Period
Vesting Target
Range
Vesting
Target Met
ROCE 2,3
N/A
34.8%
34.8%
2 year
36.0% - 41.0% To be tested
3 year
36.0% - 41.0% To be tested
Underlying EPS growth (cps) 2
81.0
96.7
19.4%
3 year
3.6% - 7.7%
To be tested
FY22 Grant –
Tranches for strategic targets
Allocation
of Grant
Vesting
Target Met
Vesting
Allocation
Successful execution of sales initiatives to respond to
the auto supply dynamic
NL sales conversion rate/unit sales
Successfully develop and implement a funding warehouse
Successful execution of Westpac Auto sale negotiations and transition to
new funder
Deliver strong organic customer growth in plan management
Successful completion of acquisitions in Plan Management and/or GRS
7.0%
7.0%
3.5%
3.5%
7.0%
7.0%
Yes
No
Yes
Yes
No
No
7.0%
-
3.5%
3.5%
-
-
Total
35.0%
14.0%
1 Base year for underlying EPS.
2 ROCE and EPS metrics exclude the impact of Warehouse in FY20 and FY21.
3 ROCE is based on the average in the performance period.
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
27
Remuneration Report (audited)
(c)
Incentive outcomes
The table below outlines the LTI that qualified for vesting based on the performance against the metrics in FY22.
The vesting entitlement is subject to KMP’s meeting the employment condition or good leaver provisions.
Proportion vesting
FY20 Grant 1
FY21 Grant 2
FY22 Grant 3
Mr M. Salisbury
Mr A. Conn
17.5%
-
17.5%
17.5%
14.0%
14.0%
1 The achievement of the FY20 grants by Mr M. Salisbury was based on having met the ROCE objectives in tranche 4 which makes up 17.5% of the total grant
2 The achievement of the FY21 grants by Mr M. Salisbury and Mr A. Conn was based on having met the ROCE objectives in tranche 2 which makes up 17.5%
of the total grant.
3 The achievement of the FY22 grants by Mr M. Salisbury and Mr A. Conn was based on having met a portion of the strategic objectives in tranche 1 which
makes up 35.0% of the total grant.
The Rights that have qualified and are subject to meeting the relevant employment conditions in the table above will result
in 55,395 ordinary MMS shares being provided to the Executive KMPs detailed above and will be issued by the MMS
Employee Share Trust. Mr M. Salisbury has met the employment condition requirement under the good leaver provision in
LTIP rules.
28
MMS ANNUAL REPORT 2022
6. FY23 Executive Remuneration Framework changes
The PCRC and Board of the Company are committed to ensuring our executive remuneration framework remains
fit-for-purpose going forward. A review of the remuneration framework has been completed and a decision made to
introduce a short term incentive program (STIP). The FY23 remuneration structure is summarised as follows:
– Fixed annual remuneration (base salary plus super plus allowances)
– A STIP will be part delivered in cash following a one year performance period and part delivered in rights
following a one year service based deferral. An annual scorecard will apply an appropriate mix of financial
and non financial metrics.
– LTIP will be an annual grant of performance rights with a single three year performance window set at the
beginning of year one and measured at the end of year three.
Grant / Payment
Vest
FY23 Executive Remuneration Framework
n
o
i
t
r
o
p
d
r
a
w
a
d
n
a
t
n
e
m
e
E
l
y
r
a
a
S
l
I
P
T
S
I
P
T
L
Fixed Annual
Remuneration
Cash
Share Rights
One year deferral
Performance Rights
Years
1
2
3
4
The Board believes this is an appropriate mix to ensure that Executives are focussed on generating value for
shareholders over the short and long term (based on targeted metrics).
29
MMS ANNUAL REPORT 2022
Remuneration Report (audited)
7. Remuneration Governance
(a) Responsibility for setting remuneration
Responsibility for setting a remuneration policy and determining Executive and Non-Executive Director remuneration
rests with the Board.
The Board has established the PCRC and its objectives are to oversee the formulation and implementation of remuneration
policy and make recommendations to the Board on remuneration policies and packages applicable to the Directors and
Executive KMP. For further details on the composition and responsibilities of the PCRC, please refer to the Corporate
Governance Statement on our website www.mmsg.com.au/overview/#governance.
The following chart outlines key stakeholders in the governance of remuneration at MMS.
Remuneration
Consultants
Board
Provide independent advice
information and recommendations
relevant to remuneration decisions.
Responsibility for setting
a remuneration policy and
determining Executive and Non-
Executive Director remuneration
rests with the Board.
Shareholder
and Advisory Bodies
Includes consultation, investor and
proxy meetings and engagement
at the Annual General Meeting.
People, Culture
and Remuneration
Committee and
Nomination Committee
Assist the Board to achieve
its objective by making
recommendations to the Board
in relation to its composition and
recruitment, retention, remuneration
and succession planning for
Directors and Senior Executives.
Audit, Risk and
Compliance Committee
Support the People, Culture and
Remuneration Committee by
providing relevant information as
required for incentive awards.
(b) Use of independent remuneration consultant
The PCRC obtains external independent advice from remuneration consultants when required, and will use it to guide
and inform their decision-making. During FY22, no remuneration recommendations (as defined in the Corporations
Act 2001 (Cth)) were received.
(c) Board discretion
The Board has adopted a set of guiding principles when it considers adjustments to performance outcomes under
the LTIP. The process for adjustments and principles applied are:
1. Transparency: for any adjustments made, MMS will provide clear disclosure and rationale. Where possible, disclosures
will be made in advance that may result in necessary adjustments ensuring early communication to shareholders.
2. Timing of adjustments: adjustments will be made only to reward outcomes at the time of vesting, applying to both
positive and negative adjustments.
3. Shareholders and management alignment: adjustments will be made in the interests of balancing the shareholder
and management alignment ensuring consistency in Company objectives.
30
MMS ANNUAL REPORT 2022
(d) Details of executive service agreements
The table below sets out key information in respect of the service agreements of the CEO and other Executive KMP.
Element
Duration
Notice period
Description
Ongoing
− CEO: 9 months’ written notice by the Company or CEO. The agreement may,
however, be terminated by the Company for cause without notice or any payment.
− Executive KMP: 6 month’s written notice by the Company or the Executive KMP.
The agreement may, however, be terminated by the Company for cause without
notice or any payment.
Termination payments
The Company has discretion to make a payment in lieu of notice in respect of the above
notice periods.
No contracted retirement benefits are in place with any of the Company’s Executives.
Restraint of trade
A restraint period not exceeding 12 months.
(e) Minimum shareholding requirements
The Company has minimum shareholding requirements for its Executive KMP and Non-Executive Directors to facilitate
share ownership and encourage an ‘ownership’ mindset. Refer section 7(f) for further details on current senior executive
KMP and director share ownership.
The table below sets out key information in respect of this Policy. Please refer to the ‘Share Ownership and Retention
Policy’ on the Company’s website for further detail www.mmsg.com.au/overview/#governance.
Directors and officers
Description
Requirement
Executive KMP
50% of one year’s
fixed remuneration
The later of:
− 5 years from September 2017; or
− 5 years from date of commencement as Executive KMP
Non-Executive Directors 1
100% of one
year’s base
director fees
The later of:
− 5 years from September 2017; or
− 5 years from date of commencement as Non-Executive Director
1 Share Ownership and Retention Policy reviewed and updated 26 June 2020.
31
MMS ANNUAL REPORT 2022
Remuneration Report (audited)
8. Executive Remuneration Tables
(a) Executive remuneration
The following table sets out the executive remuneration for FY22 in accordance with the requirements of the
Accounting Standards and Corporations Act 2001 (Cth). No options or rights were exercised or sold during FY22.
Executive KMP
Mr M. Salisbury 4
(CEO and
Managing Director)
Mr R. De Luca4
(CEO and
Managing Director)
Mr A. Conn5
(Group CFO and
Company Secretary)
Total
Remuneration
Cash
salary/
fees
$
Annual
Leave
Entitlements
Other
Benefits 1
Superannuation
Long
Service
Leave
Rights 2,3
Total
remuneration
Percentage of
remuneration
as rights
Value of
remuneration
received 4,5
$
$
$
$
$
$
%
$
FY22
817,692
12,086
11,645
21,755
13,314
402,368
1,278,860
31%
851,092
FY21
876,309
21,175
30,892
25,000
15,282
300,294
1,268,952
24%
932,201
FY22
74,657
7,527
FY21
-
-
-
-
2,719
1,628
-
-
-
-
86,531
-
n/a
n/a
77,376
-
FY22
587,046
12,159
9,490
23,568
10,277
170,830
813,370
21%
620,104
FY21
407,218
12,514
-
15,853
6,996
60,222
502,803
12%
423,071
FY22
1,479,395
31,772
21,135
48,042
25,219
573,198
2,178,761
26%
1,548,572
FY21
1,283,527
33,689
30,892
40,853
22,278
360,516
1,771,755
-
1,355,272
1 Other benefits reflect motor vehicle packaging payments, travel benefits, housing allowance and car parking benefits.
2 The equity value comprises the value of Performance Rights issued. No shares were issued to any Non-Executive Director (and no Performance Rights
were granted to any Non-Executive Director) during the financial years ended 30 June 2021 and 30 June 2022. The value of Performance Rights issued
to Executive KMP (as disclosed above) are the assessed fair values at the date that the Performance Rights were granted to the Executives, allocated equally
over the period from when the services are provided to vesting date. Fair values at grant date are determined using a binomial pricing model that takes into
account the exercise price, the expected term of the option or right, the share price at grant date, the expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the option or right.
3 The expense in FY22 comprises the fair value expense of Performance Rights granted in FY20, FY21 and FY22 based on the number of Rights estimated to
vest based on the Company’s performance against the EPS and ROCE performance targets (subject to continuing employment) with vesting periods in FY22,
FY23 and FY24.
4 Mr R. Salisbury retired on 16 May 2022 and Mr R. De Luca commenced on 16 May 2022. Mr M. Salisbury was paid out Annual Leave and Long Service
Leave entitlements on 16 May 2022.
5 Value of remuneration received comprises salary, benefits and superannuation salary packaged, annual and long service leave used and bonuses paid in
the year (excludes the value of Rights).
32
MMS ANNUAL REPORT 2022
(b) Detail of LTIP securities
The terms and conditions of each grant of Performance Options and Performance Rights to Executive KMP
affecting their remuneration in FY22 and each relevant future financial year are set out below.
Grant Date
Type of LTI securities
Expiry Date
Share price at
valuation date
Exercise
Price
Value per option
at grant date 1
Date Exercisable
1/07/2019
3 Year Performance Right
22/10/19 2
3 Year Performance Right
20/10/20 3
3 Year Performance Right
30/10/20
3 Year Performance Right
15/10/21
3 Year Performance Right
22/11/21 4
3 Year Performance Right
Date that the FY22
financial statements
are lodged
Date that the FY22
financial statements
are lodged
Date that the FY23
financial statements
are lodged
Date that the FY23
financial statements
are lodged
Date that the FY24
financial statements
are lodged
Date that the FY24
financial statements
are lodged
$12.37
$14.85
$9.46
$9.34
$14.52
$13.18
-
-
-
-
-
-
$10.18
3 Year Lodgement Date
(expected to be September 2022)
$12.83
3 Year Lodgement Date
(expected to be September 2022)
$8.51
3 Year Lodgement Date
(expected to be September 2023)
$8.40
3 Year Lodgement Date
(expected to be September 2023)
$12.82
3 Year Lodgement Date
(expected to be September 2024)
$11.54
3 Year Lodgement Date
(expected to be September 2024)
1 Reflects the fair value at grant date for options or rights granted as part of remuneration, calculated in accordance with AASB2 Share-based Payment.
2 The issue to Mr Mike Salisbury occurred on 22 October 2019, after shareholder approval at the Company’s AGM.
3 The issue to Mr Mike Salisbury occurred on 20 October 2020, after shareholder approval at the Company’s AGM.
4 The issue to Mr Mike Salisbury occurred on 22 November 2021, after shareholder approval at the Company’s AGM.
33
MMS ANNUAL REPORT 2022 Remuneration Report (audited)
Details of the LTIP securities over ordinary shares in the Company provided as remuneration to each
Executive KMP are set out below.
Executive
KMP
(Name)
Date of grant
Type of LTIP securities
Value of
securities
granted
during the
year $
Number of
securities
vested
during year
Number of
securities
granted
Number of
securities
forfeited /
lapsed
Forfeited
or lapsed
%
Year in
which
securities
may vest
Maximum value
of securities yet
to vest 1
Vested %
M
r
M
.
S
a
l
i
s
b
u
r
y
M
r
A
C
o
n
n
22/10/2019
3 Year Performance Rights
69,178
20/10/2020
3 Year Performance Rights
103,763
-
-
22/11/2021
3 Year Performance Rights
71,731
$11.54
30/10/2020
3 Year Performance Rights
48,362
-
15/10/2021
3 Year Performance Rights
47,322
$12.82
-
-
-
-
-
-
-
-
-
-
(31,131)
45%
FY23
$17,829
(22,491)
22%
FY24
$99,236
(52,223)
73%
FY25
$122,111
(4,836)
10%
FY24
$94,429
(14,906)
31%
FY25
$230,042
1 There is no minimum value attached to the securities at the vesting date. Maximum value is defined as the fair value at grant less amount expensed.
(c) Movement of LTIP securities granted
The table below reconciles the Performance Rights held by each Executive KMP from the beginning to the end of FY22.
Executive KMP
LTI Securities
Balance at
the start of
the year
Number
Granted
during
year 1
Vested
during the
year
Exercised
during the
year
Forfeited
during
year
Other
changes
during the
year
Vested and
exercisable
at the end
of the year
Unvested
at the end
of the year
Mr M Salisbury
Performance Rights
131,434
71,731
Mr A Conn
Performance Rights
43,526
47,322
-
-
-
-
(41,743)
-
-
-
-
-
161,422
90,848
1 Granted pursuant the Company’s LTIP.
(d) Shares issued on Performance Options
No ordinary shares in the Company were issued following the exercise of Performance Options by Executive KMP
during FY22.
(e) Other transactions and balances with KMP
There were no loans made during the year, or remaining unsettled at 30 June 2022, between the Company and its
KMP and/or their related parties.
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
34
(f) Executive KMP and Director share ownership
The following table sets out the number of shares held directly, indirectly or beneficially by Directors and Executive
KMP (including their related parties).
Balance
at the start
of the year
Shares
acquired
through
option
exercise
Other
changes
during
the year
Balance
at the end
of the year
Value of
Shares 1
$
Minimum
Shareholding
Requirement 2
$
Non-Executive Directors
Ms H. Kurincic
Mr B. Akhurst
20,000
25,000
Mr J. Bennetts
3,068,025
Mr R. Chessari
6,050,941
Ms K. Parsons
Mr T. Poole
Executive KMP
8,000
30,000
Mr M. Salisbury
16,526
Mr R. De Luca
Mr A. Conn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
25,000
194,800
211,085
243,500
148,174
3,068,025
29,882,564
115,525
6,050,941
58,936,165
115,525
8,000
77,920
150,685
30,000
292,200
138,128
16,526
160,963
N/A 3
-
-
-
-
400,000
310,052
1 Calculated as the number of shares multiplied by the share price as at 30 June 2022 of $9.74.
2 Minimum shareholding required as outlined under section 6(e) based on the FY22 fixed remuneration.
3 Mr M. Salisbury retired on 16 May 2022 as Managing Director & CEO.
M
M
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
35
Remuneration Report (audited)
9. Non-Executive Director Remuneration
(a) Remuneration policy and arrangements
The Board sets the fees for the Chair and the other Non-Executive Directors. The Board’s policy is to remunerate
the Chair and Non-Executive Directors:
− at market competitive rates, having regard to the fees paid for comparable companies, the need to attract
Directors of the requisite calibre and expertise and their workloads (taking into account the size and complexity
of the Company’s operations and their responsibility for the stewardship of the Company); and
− in a matter which preserves and safeguards their independence. Neither the Chair nor the other Non-Executive
Directors are entitled to any performance-related pay. The primary focus of the Board is on the long-term strategic
direction of the Company.
The Non-Executive Directors are remunerated for their services from the maximum annual aggregate amount
approved by the shareholders of the Company on 22 November 2021 (currently $1,200,000 per annum).
(b) Fees and other benefits
The table below sets out the annual fees payable (inclusive of superannuation) to the directors of MMS.
The fee schedule has been determined having regard to fees paid to comparable roles within MMS’ peers.
Fees are inclusive of superannuation, contributions required under legislation are made by the Company on behalf of
Non-Executive Directors. There is no scheme for the payment of retirement benefits or termination payments (other
than payments relating to accrued superannuation entitlements).
Role
Chair
Non-executive Directors
Audit, Risk and Compliance
Committee
People, Culture and Remuneration
Committee
Nomination Committee
Chair
Membership
Chair
Membership
Chair
Membership
FY22 Fee
$211,085
$115,525
$25,114
$12,557
$20,091
$10,046
$Nil
$Nil
36
MMS ANNUAL REPORT 2022 (c) Non-Executive Director remuneration – statutory disclosure
The fees paid or payable to the directors of the Company in respect of the 2022 financial year are set out below.
Cash
salary/fees
Other
Benefits 1
Superannuation
Total value of
remuneration
received
Total
remuneration
Non-Executive Directors
Ms H. Kurincic
(Non-Executive Chair)
Mr B. Akhurst 2
(Non-Executive Director)
Mr J. Bennetts 3
(Non-Executive Director)
Mr R. Chessari 4
(Non-Executive Director)
Mr I. Elliot 5
(Non-Executive Director)
Ms K. Parsons 6
(Non-Executive Director)
Mr T. Poole
(Non-Executive Director)
Total Remuneration
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
$
191,895
171,797
134,703
33,676
105,023
116,438
105,023
114,155
-
92,466
131,243
133,630
125,571
145,669
793,458
807,831
$
-
-
-
-
-
-
-
-
-
-
5,743
1,454
-
-
5,743
1,454
$
19,190
16,321
13,470
3,199
10,502
11,062
10,502
10,845
-
8,784
13,699
12,833
12,557
13,839
79,920
76,883
$
211,085
188,118
148,173
36,875
115,525
127,500
115,525
125,000
-
101,250
150,685
147,917
138,128
159,508
879,121
886,168
$
211,085
188,118
148,173
36,875
115,525
127,500
115,525
125,000
-
101,250
150,685
147,917
138,128
159,508
879,121
886,168
1 Other benefits comprise salary packaging.
2 Mr B. Akhurst was appointed as a Non-Executive Director of the Company with effect from 1 April 2021.
3 Mr J. Bennetts ceased being a member of the Audit, Risk and Compliance Committee effective 1 April 2021.
4 Mr R. Chessari ceased being a member of the Remuneration and Nomination Committee effective 1 April 2021.
5 Mr I. Elliot resigned as a Non-Executive Director of the Company with effect from 1 April 2021.
6 Ms K. Parsons was appointed as a Non-Executive Director of the Company with effect from 22 May 2020 and Chair of the ARCC from 1 September 2020.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors.
Bruce Akhurst
Non-Executive Chair of the PCRC
Helen Kurincic
Non-Executive Chair of the Board
End of the audited Remuneration Report
37
MMS ANNUAL REPORT 2022
Directors’ Report
Unissued shares
At the date of this Annual Report, there were no unissued ordinary shares of the Company under option. No options were
granted to the Directors or any of the five highest remunerated officers of the Company since the end of the financial year.
Directors’ interests
At the date of this Annual Report, the relevant interest of each Director in the securities issued by the Company and its
controlled entities, as notified by the Directors to the Australian Securities Exchange Limited (ASX) in accordance with section
205G(1) of the Corporations Act 2001 (Cth), is as follows:
Director
Ms H. Kurincic (Chair)
Mr R. De Luca
Mr B. Akhurst
Mr J. Bennetts
Mr R. Chessari
Ms K. Parsons
Mr. T. Poole
Rights
Options
Ordinary shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
-
25,000
3,068,025
6,050,941
8,000
30,000
No Director during FY22, became entitled to receive any benefit (other than a benefit included in the aggregate amount of
remuneration received or due and receivable by the Directors shown in the Remuneration Report or the fixed salary of a full time
employee of the Company) by reason of a contract made by the Company or a controlled entity with the Director or an entity in
which the Director has a substantial financial interest or a firm in which the Director is a member.
Environmental regulations
The Directors believe that the Company and its controlled entities have adequate systems in place for the management of
relevant environmental requirements and are not aware of any breach of those environmental requirements as they apply to the
Company and its controlled entities.
Indemnification and insurance
Under the Company’s Constitution, the Company indemnifies the Directors and officers of the Company and its wholly-owned
subsidiaries to the extent permitted by law against any liability and all legal costs in connection with proceedings incurred by
them in their respective capacities.
The Company has also entered into a Deed of Access, Indemnity and Insurance (Deed) with each Director and each Company
Secretary which protects individuals acting as officeholders during their term of office and after their resignation. Under the
Deed, the Company also indemnifies each officeholder to the full extent permitted by law.
The Company has a Directors & Officers Liability Insurance policy in place for all current and former officers of the Company
and its controlled entities. The policy affords cover for loss in respect of liabilities incurred by Directors and officers where the
Company is unable to indemnify them and covers the Company for indemnities provided to its Directors and officers. This does
not include liabilities that arise from conduct involving dishonesty. The Directors have not included the details of the premium
paid with respect to this policy as this information is confidential under the terms of the policy.
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2
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Non-audit services
Details of the amounts paid or payable to the auditor of the Company, Grant Thornton Audit Pty Ltd and its related practices,
for non-audit services provided, during FY22, are disclosed in Note 8.6 to the Financial Statements.
The ARCC has reviewed the services other than the statutory audit provided by Grant Thornton Audit Pty Ltd during the
financial year ended 30 June 2022. The other services related to non-statutory audit services and other assurance services
which are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 (Cth).
This has been formally advised to the Board. Consequently, the Directors are satisfied that the provision of non-audit services
during the year by the auditor and its related practices did not compromise the auditor independence requirements of the
Corporations Act 2001 (Cth).
Corporate governance practices
Our full corporate governance statement is available on our website at www.mmsg.com.au/overview/#governance
Auditor’s independence declaration
A copy of the auditor’s independence declaration, as required under section 307C of the Corporations Act 2001 (Cth),
is set out on page 103 of this Annual Report.
Directors’ declaration
The Directors have received and considered written representations from the Chief Executive Officer and the Chief Financial
Officer in accordance with the ASX Principles. The written representations confirmed that:
– the financial reports are complete and present a true and fair view, in all material respects, of the financial condition
and operating results of the Company and its controlled entities and are in accordance with all relevant accounting
standards; and
− the above statement is founded on a sound system of risk management and internal compliance and control that
implements the policies adopted by the Board and that compliance and control is operating efficiently and effectively
in all material respects.
Signed in accordance with a resolution of the Directors.
Helen Kurincic
Chair
16 September 2022
Melbourne, Australia
Rob De Luca
Managing Director &
Chief Executive Officer
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2
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39
Directors’ Report
Five year summary
Financial Performance
Group
Revenue ($m)
NPAT ($m) 8
UNPATA ($m) 1,8
Normalised UNPATA ($m) 2
Group Remuneration Services segment
Segment revenue ($m)
Segment NPAT ($m) 8
Segment UNPATA ($m) 3,8
Normalised segment UNPATA ($m) 2
Plan and Support Services segment
Segment revenue ($m)
Segment NPAT ($m) 8
Segment UNPATA ($m) 3,8
Normalised segment UNPATA ($m) 2
Asset Management Services segment
Segment revenue ($m)
Segment NPAT ($m) 8
Segment UNPATA ($m) 3,8
Normalised segment UNPATA ($m) 2
Retail Financial Services segment
Segment revenue ($m)
Segment NPAT ($m) 8
Segment UNPATA ($m) 3,8
Shareholder Value
Dividends per share (cps)
Dividend payout ratio (%) 4
Basic earnings per share (cps)
Return on Equity (%)
Underlying earnings per share (cps) 5
Return on capital employed (%)
Other
Employees (FTE) 6
Employee engagement score (%) 7
2022 9
2021
2020
2019
2018
594.1
70.3
82.1
83.8
206.5
46.7
46.7
48.4
41.2
5.3
6.6
6.6
346.1
21.1
30.3
30.3
-
-
-
108
100
90.9
29
106.1
39
1,294
83
544.5
61.1
79.2
71.9
202.6
55.8
55.8
49.4
26.2
5.4
5.4
5.4
315.5
1.4
19.6
18.5
-
-
-
61.3
66
78.9
31
102.4
31
1,286
85
494.0
1.3
69.0
N/A
214.8
60.9
60.9
N/A
-
-
-
549.7
63.7
88.7
N/A
221.9
66.1
66.1
N/A
-
-
-
545.4
50.3
93.5
N/A
207.7
64.1
64.1
N/A
-
-
-
N/A
N/A
N/A
229.3
(9.9)
6.0
N/A
49.5
(47.3)
3.0
34.0
42
1.6
21
87.4
20
1,295
87 8
245.8
12.4
17.2
N/A
80.7
(14.0)
6.4
74.0
69
77.0
23
107.3
21
1,334
79
243.7
25.5
21.6
N/A
92.5
(38.5)
8.6
73.0
65
60.9
4
113.2
20
1,283
No survey
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2
0
2
2
40
1 FY22 UNPATA excludes impairment of CLM goodwill of $6.0m, acquisition and disposal related costs of $3.3m and adjustments related to new accounting standards
of $0.4m. FY21 UNPATA excludes UK restructuring costs of $14.6m and impairment of CLM goodwill for $2.0m. FY20 UNPATA excludes one-off adjustments for
Deferred Income and DAC of $9.8m (post tax), class action settlement and legal costs of $5.1m (post tax) and share buyback costs $0.4m (post tax).
2 Normalised UNPATA is UNPATA adjusted for the Warehouse in FY22 and JobKeeper in FY21
3 Segment UNPATA does not include unallocated public company costs and interest from Group treasury funds.
4
In FY22, dividend payout ratio is calculated as total dividend declared for the financial year divided by normalised UNPATA.
5 Underlying earnings per share is based on UNPATA.
6 As at 30 June.
7 Employee engagement survey conducted biennially with regular Pulse Survey’s conducted in intervening periods; the 2022 result represents the May 2022 Pulse
Survey Sustainability Engagement score.
8
9
In FY20 and FY21 NPAT and UNPATA includes JobKeeper of $7.3m (net of tax) for FY21 and $7.0m (net of tax) for FY20 which has been recognised as an offset
against employee benefit expenses.
In FY22 the reportable segments of the Group changed. Plan and Support Services is now reported as a separate segment (previously included in Group Remuneration
Services) and Retail Financial Services is now included as part of Asset Management Services. The FY21 comparatives have been restated on this basis.
Financial
Report
FOR THE YEAR ENDED
30 JUNE 2022
Statements of Profit or Loss and
Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated Group
Parent Entity
Note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Revenue
Revenue from contracts with customers
2.2
593,773
544,222
Interest income
Dividends received
Revenue from continuing operations
Fair value on previously held equity interest
Expenses
Employee benefit expenses
Leasing and vehicle management expenses
Brokerage commissions and incentives
Depreciation and amortisation expenses
Net claims incurred
Other operating expenses
Finance costs
2.3
6.1
2.4
2.4
365
-
594,138
-
(154,824)
(177,393)
(25,004)
(69,036)
(3,305)
(54,538)
(5,022)
229
-
544,451
1,805
(130,690)
(141,189)
(27,489)
(67,113)
(12,264)
(46,473)
(8,386)
Operational expenses excluding impairment & other non-operational items
(489,122)
(433,604)
Impairment of intangible assets
Impairment of financial assets
Gain/(loss) on loss of control of subsidiary
Related party loan forgiveness
Impairment & other non-operational items
Total expenses
Profit / (loss) before income tax
Income tax (expense) / benefit
Net profit / (loss) for the year
Net profit / (loss) attributable to:
Owners of the Company
2.4
2.4
2.5
(6,028)
-
(1,221)
-
(13,541)
(2,270)
305
-
(7,249)
(15,506)
(496,371)
(449,110)
97,767
(27,418)
70,349
97,146
(36,081)
61,065
-
-
50,375
50,375
-
-
106
128,109
128,215
-
(1,202)
(1,006)
-
-
-
-
(2,877)
(21)
(4,100)
-
-
-
-
-
(4,100)
46,275
1,165
47,440
-
-
-
-
(1,196)
(161)
(2,363)
(5,541)
-
52,640
47,099
44,736
172,951
687
173,638
70,349
61,065
47,440
173,638
Net profit / (loss) attributable to Owners of the Company
70,349
61,065
47,440
173,638
Other comprehensive income
Items that may be re-classified subsequently to profit or loss:
Changes in fair value of cash flow hedges
Exchange differences on translating foreign operations
Reclassification of exchange differences on disposal of foreign operation
Income tax on other comprehensive income
Other comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year is attributable to:
Owners of the Company
Non-controlling interest
3,216
(1,862)
266
(965)
655
71,004
1,514
652
34
(454)
1,746
62,811
-
-
-
-
-
-
-
-
-
-
47,440
173,638
71,004
62,811
47,440
173,638
-
-
-
-
Total comprehensive income / (loss) for the year
71,004
62,811
47,440
173,638
Basic earnings per share (cents)
Diluted earnings per share (cents)
2.6
2.6
90.9
90.6
78.9
78.4
The above Statements of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
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2
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Statements of Financial Position
AS AT 30 JUNE 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Finance lease receivables
Assets under operating lease
Inventories
Prepayments
Deferred acquisition costs
Derivative financial instruments
Total current assets
Non-current assets
Finance lease receivables
Assets under operating lease
Right-of-use assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Deferred acquisition costs
Other financial assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Contract liabilities
Other liabilities
Provisions
Unearned premium liability
Current tax liability
Borrowings
Lease liabilities
Derivative financial instruments
Total current liabilities
Non-current liabilities
Unearned premium liability
Provisions
Borrowings
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Consolidated Group
Parent Entity
Note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
4.1
3.2
3.3
3.4
3.6
3.7
3.3
3.4
3.5
3.1
2.5
3.7
6.2
3.8
3.9
3.9
3.10
3.7
4.2
3.5
3.7
3.10
4.2
3.5
2.5
4.5
160,796
35,267
14,609
73,945
15,574
5,525
-
2,931
308,647
13,531
149,722
35,982
11,322
135,548
25,145
-
-
371,250
679,897
83,819
7,823
18,842
13,383
-
1,158
15,851
4,212
-
145,088
-
1,195
151,933
46,852
43,398
243,378
388,466
291,431
76,257
(7,248)
222,422
291,431
157,997
40,975
21,478
62,877
15,312
4,660
5,218
-
308,517
29,770
147,441
40,511
4,174
134,852
13,753
6,912
-
377,413
685,930
102,085
7,181
8,090
13,722
19,142
4,148
23,886
1,602
213
180,069
22,748
1,484
152,444
47,273
12,717
236,666
416,735
269,195
76,257
(9,510)
202,448
269,195
580
496
-
-
-
-
-
-
1,076
-
-
-
-
-
-
-
254,822
254,822
255,898
25,942
-
-
-
-
2,906
-
-
-
28,848
-
-
-
-
391
391
29,239
226,659
76,257
2,861
147,541
226,659
74
481
-
-
-
19
-
-
574
-
-
-
-
-
-
-
253,303
253,303
253,877
12,372
-
-
-
-
2,824
5,761
-
-
20,957
-
-
3,991
-
942
4,933
25,890
227,987
76,257
1,254
150,476
227,987
The above Statements of Financial Position should be read in conjunction with the accompanying notes.
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2
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43
Statements of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
2022
Equity as at beginning of year
Net profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share-based expense
Dividends paid
Note
4.5
5.1
4.6
Consolidated Group
Issued
capital
$’000
Retained
earnings
$’000
Share-based
payment
reserve
$’000
Cash
flow hedge
reserve
$’000
Foreign
currency
translation
reserve
$’000
Acquisition
reserve
$’000
Total
$’000
76,257
202,448
1,254
(228)
(3,332)
(7,204)
269,195
-
-
-
-
-
70,349
-
70,349
-
(50,375)
-
-
-
-
-
2,251
(1,596)
2,251
(1,596)
1,607
-
2,861
-
-
-
-
-
-
-
-
-
70,349
655
71,004
1,607
(50,375)
Equity as at 30 June 2022
76,257
222,422
2,023
(4,928)
(7,204)
291,431
2021
Equity as at beginning of year
Net profit for the year
Other comprehensive income
for the year
Total comprehensive income /
(loss) for the year
Transactions with owners in
their capacity as owners:
Share-based expense
Treasury shares
Reclassification of share-based
payment reserve
Adjustment to acquisition reserve
Dividends paid
Note
4.5
5.1
4.5
4.6
Consolidated Group
Share-based
payment
reserve
$’000
Cash flow
hedge
reserve
$’000
Foreign
currency
translation
reserve
$’000
Issued
capital
$’000
Retained
earnings
$’000
Acquisition
reserve
$’000
Total
$’000
76,419
164,545
360
(1,288)
(4,018)
(7,132)
228,886
-
-
-
-
(162)
-
-
-
61,065
-
61,065
-
-
207
-
(23,369)
-
-
-
1,101
-
(207)
-
-
-
1,060
1,060
-
-
-
-
-
-
686
686
-
-
-
-
-
-
-
-
-
-
-
61,065
1,746
62,811
1,101
(162)
-
(72)
-
(72)
(23,369)
Equity as at 30 June 2021
76,257
202,448
1,254
(228)
(3,332)
(7,204)
269,195
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N
N
U
A
L
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P
O
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2
0
2
2
44
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Statements of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
2022
Equity as at beginning of year
Profit attributable to owners
of the Company
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share-based expense
Dividends paid
Note
4.5
5.1
4.6
Issued
capital
$’000
76,257
-
-
-
-
-
Equity as at 30 June 2022
76,257
Retained
earnings
$’000
150,476
47,440
-
47,440
-
(50,375)
147,541
Parent
Share-based
payment reserve
$’000
Cash flow
hedge reserve
$’000
1,254
-
-
-
1,607
-
2,861
-
-
-
-
-
-
-
2021
Equity as at beginning of year
Profit attributable to owners
of the Company
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Share-based expense
Treasury shares
Reclassification of share-based
payment reserve
Dividends paid
Equity as at 30 June 2021
Note
4.5
5.1
4.6
Issued
capital
$’000
76,419
-
-
-
-
(162)
-
-
76,257
Parent
Retained
earnings
$’000
Share-based
payment reserve
$’000
Cash flow
hedge reserve
$’000
-
360
173,638
-
173,638
-
-
207
(23,369)
150,476
-
-
-
1,101
-
(207)
-
1,254
-
-
-
-
-
-
-
-
-
Total
$’000
227,987
47,440
-
47,440
1,607
(50,375)
226,659
Total
$’000
76,779
173,638
-
173,638
1,101
(162)
-
(23,369)
227,987
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
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45
Statements of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated Group
Parent Entity
Note
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Proceeds from sale of assets previously under lease
Proceeds from sale of lease portfolio
Payments for assets under lease
Government subsidies
Interest received
Interest paid
Dividends received
Income taxes paid
584,831
(425,591)
99,468
-
(117,091)
-
365
(8,223)
-
(13,814)
551,400
(371,002)
81,758
34,909
(76,942)
14,809
229
(9,938)
-
(30,258)
Net cash from / (used) in operating activities
4.1
119,945
194,965
(8,188)
(1,066)
-
(22,401)
(10,736)
(7,572)
(2,367)
(3,520)
(565)
5,963
(42,391)
(8,061)
Cash flows from investing activities
Payments for capitalised software
Payments for plant and equipment
Payments for joint venture subordinated loans
Cash transferred on disposal of subsidiaries,
net of cash consideration received
Acquisition of subsidiary, net of cash consideration paid
Net cash used in investing activities
Cash flows from financing activities
Dividends paid by parent entity
Proceeds from borrowings
Repayments of borrowings
Payments for lease liabilities
Payment for treasury shares
Proceeds from loans from controlled entities
3.1
6.2
6.1
4.6
4.1
4.1
4.5
-
(2,582)
-
-
-
-
331
(21)
50,375
-
48,103
-
-
-
-
-
-
-
(514)
-
-
-
-
106
(161)
23,369
-
22,800
-
-
-
-
-
-
(50,375)
73,707
(89,910)
(7,486)
-
-
(23,369)
124,792
(215,070)
(6,726)
(162)
-
(50,375)
-
(9,752)
-
-
12,530
(23,369)
-
(5,124)
-
(162)
5,709
Net cash from financing activities
(74,064)
(120,535)
(47,597)
(22,946)
Net increase / (decrease) in cash and cash equivalents
Effect of exchange changes on cash and cash equivalents
3,490
(691)
66,589
220
Cash and cash equivalents at beginning of year
157,997
91,408
Cash and cash equivalents at end of year
4.1
160,796
157,997
506
-
74
580
(146)
-
220
74
M
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2
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46
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
1
Introduction to the Report
5
Employee Remuneration and Benefits
2 Performance
2.1 Segment reporting
2.2 Revenue from contracts with customers
5.1 Share-based Payments
5.2 Key Management Personnel Compensation
5.3 Other Employee Benefits
2.3 Dividends received
2.4 Profit and Loss Information
2.5 Income tax
2.6 Earnings Per Share
3
Assets and Liabilities
3.1 Intangible Assets
3.2 Trade and Other Receivables
3.3 Finance Lease Receivables
3.4 Assets under Operating Lease
3.5 Right-of-use Assets and Lease Liabilities
3.6 Inventories
3.7 Unearned Premium Liability, Deferred
Acquisition Costs (DAC) and
Outstanding Claims Liability
3.8 Trade and Other Payables
3.9 Customer receipts in advance
3.10 Provisions
4 Capital Management
4.1 Cash and Cash Equivalents
4.2 Borrowings
4.3 Financial Risk Management
4.4 Financial Instruments
4.5 Issued Capital
4.6 Dividends
6 Group Structure
6.1 Business combinations
6.2 Other financial assets
6.3 Investment in Joint Venture
6.4 Deed of Cross Guarantee
7 Unrecognised Items
7.1 Commitments
7.2 Contingent liabilities
8 Other Disclosures
8.1 Reserves
8.2 Goods and Services Tax
8.3 Interest
8.4 Property Plant and Equipment
8.5 Related Party Transactions
8.6 Auditor’s remuneration
8.7 New Accounting Standards and
Interpretations Adopted during the Year
8.8 Accounting Standards Issued but not yet Effective
8.9 Events subsequent to the reporting date
M
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P
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2
2
47
1 Introduction to the Report
The financial report of McMillan Shakespeare Limited (Company
or parent entity) in respect of the Company and the entities it
controlled at the reporting date or during the year ended 30 June
2022 (Group or Consolidated Group) was authorised in accordance
with a resolution of the Directors on 16 September 2022.
Reporting entity
The Company is a for-profit company limited by shares which is
incorporated and domiciled in Australia and listed on the Australian
Securities Exchange (ASX).
Basis of preparation and accounting policies
The financial report and notes is a general purpose financial
report which has been prepared in accordance with the Australian
Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) and the Corporations
Act 2001 (Cth). The financial report also complies with the
International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.
Except for cash flow information, the financial statements have
been prepared on an accrual and historical cost basis except for
certain financial instruments measured at fair value as explained
in the notes to the financial statements (the Notes).
The accounting policies adopted are consistent with those of
the previous financial year unless stated otherwise. The financial
report presents reclassified comparative information where
required for consistency with current year’s presentation.
Key judgements, estimates and assumptions
The preparation of the financial statements requires judgement
and the use of estimates and assumptions in applying the Group’s
accounting policies, which affects amounts reported for assets,
liabilities, income and expenses.
Judgements, estimates and assumptions are continuously
evaluated and are based on:
> historical experience
> current market conditions
> reasonable expectations of future events
Actual results may differ and uncertainty about these judgements,
estimates and assumptions could result in a material adjustment
to the carrying amount of assets or liabilities in future periods.
Significant judgement was required to derive reasonable estimates
of the significant uncertainties including COVID-19 on future
business plans, operating capability and cash flow projections.
The key areas involving judgement or significant estimates and
assumptions are set out below:
Note
Item
3.1
Intangible assets
Judgements, Estimates
and Assumptions
Assessment of
recoverable amount
3.4
Assets under
operating lease
4.3(b)
Trade and other
receivables and finance
lease receivables
Lease assets
residual value
Impairment of
financial assets
Detailed information about each of these judgements,
estimates and assumptions are included in the Notes together
with information about the basis of calculation for each affected
line item in the financial statements.
48
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 The Notes
The Notes include information which is required to understand the
financial statements and is material and relevant to the operations,
financial performance and position of the Group. Information is
considered material and relevant where:
> the amount in question is significant because of its
size or nature;
> it is important for understanding the results of the Group; or
> it helps explain the impact of significant changes in the
Group’s business.
The Notes are organised into the following sections:
2. Performance:
information on the performance of the Group, including segment
results, earnings per share (EPS) and income tax.
3 Assets and Liabilities:
details the assets used in the Group’s operations and the liabilities
incurred as a result.
4 Capital Management:
information relating to the Group’s capital structure and financing
as well as the Group’s exposure to various financial risks.
5 Employee Remuneration and Benefits:
information relating to remuneration and benefits provided to
employees and key management personnel.
6 Group Structure:
information relating to subsidiaries and other material investments
of the Group.
7 Unrecognised Items:
information about items that are not recognised in the financial
statements but could potentially have a significant impact on the
Group’s financial performance or position in the future.
8 Other Disclosures:
other disclosures required by Australian Accounting Standards that
are considered relevant to understanding the Group’s financial
performance or position.
Basis of consolidation
Subsidiaries are consolidated from the date the Group gains
control until the date on which control ceases. Control is achieved
when the Group is exposed to, or has rights to, variable returns
from its involvement in the entity and has the ability to affect those
returns through its power to direct the activities of the entity. The
Group’s share of results of its equity accounted investments is
included in the consolidated financial statements from the date
that significant influence or joint control commences until the date
that significant influence or joint control ceases. The Group’s share
of all intercompany balances, transactions and unrealised profits
are eliminated.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent entity, using consistent
accounting policies.
Foreign currency
The consolidated financial statements of the Group are presented
in Australian dollars which is the presentation currency.
The financial statements of each entity in the Group are
measured using the currency of the primary economic
environment in which the entity operates (“functional currency”).
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of
the transactions. Differences resulting at settlement of such
transactions and from the translation of monetary assets and
liabilities at reporting date are recognised in the profit or loss.
Non-monetary items are not retranslated at reporting date and are
measured at historical cost (being the exchange rates at the dates
of the initial transaction), except for non-monetary items measured
at fair value which are translated using the exchange rates at the
date when fair value was determined.
Group companies
On consolidation of the financial results and affairs of foreign
operations, assets and liabilities are translated to the presentation
currency at prevailing exchange rates at reporting date and
income and expenses for the year at average exchange rates. The
resulting exchange differences on consolidation are recognised in
other comprehensive income (OCI) and accumulated in equity. On
disposal of a foreign operation, the component of OCI relating to
that particular foreign operation is recognised in profit or loss.
Accounting policies
Accounting policies that summarise the classification, recognition
and measurement basis of financial statement line items and that
are relevant to the understanding of the consolidated financial
statements are provided throughout the notes.
Current versus non-current classification
Assets and liabilities are presented in the Statements of Financial
Position based on current / non-current classification.
An asset is current when it is:
> expected to be realised or intended to be sold or consumed in
the Group’s normal operating cycle;
> held primarily for the purpose of trading;
> expected to be realised within twelve months after reporting
date; or
> cash or a cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after reporting date.
The Group classifies all other assets as non-current.
A liability is current when:
> it is expected to be settled in the Group’s normal
operating cycle;
> it is held primarily for the purpose of trading;
> it is due to be settled within twelve months after
reporting date; or
> there is no unconditional right to defer the settlement of the
liability for at least twelve months after reporting date.
The Group classifies all other liabilities as non-current.
Rounding of amounts
The amounts contained in the financial report have been
rounded to the nearest thousand dollars (unless specifically stated
to be otherwise) under the option available to the Company under
ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191.
49
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
2 Performance
2.1 SEGMENT REPORTING
Description of segments
During the period the Group changed the structure of its internal organisation and reporting lines in a manner that caused the composition
of the reportable segments to change. This was based on internal reports reviewed and used by the Group’s Chief Operating Decision Maker
(the CEO) to determine business performance and resource allocation. Operating segments have been identified after considering the nature
of the products and services, type of customer and distribution methods.
The corresponding comparative period has been restated to reflect the change in reportable segments.
Reportable Segment
Services provided
Group Remuneration Services (GRS)
Administrative services in respect of salary packaging and facilitates motor vehicle
novated leases for customers
Ancillary services associated with motor vehicle novated lease products
Asset Management Services (AMS)
Financing and ancillary management services associated with motor vehicles,
commercial vehicles and equipment with operations in AU, NZ and the UK
Retail brokerage services, aggregation of finance originations (but not the provision
of finance) and previously provided extended warranty cover prior to the disposal of the
RFS Retail business on 30 September 2021 (refer Note 6.1)
Plan and Support Services (PSS)
Plan management and support coordination services to participants in the
National Disability Insurance Scheme (NDIS)
Underlying net profit after-tax and amortisation (UNPATA), being net profit after-tax but before the after-tax impact of acquisition related
and non-business operational items (as outlined in the following tables), is the key measure by which management monitors the performance
of the segments. Segment revenue and expenses are reported as attributable to the shareholders of the Company and excludes outside
equity interests share.
Normalised UNPATA refers to adjustments made for the negative earnings transitional period for the implementation of the funding warehouse,
OnBoard Finance (“Warehouse”). It normalises for the Warehouse’s in year operating and establishment expenses and for an adjustment for
commissions that would have otherwise been received in period had the sales been financed via a principal and agency funder rather than
through the Warehouse. Normalised financials are stated for FY22 and FY21 (for comparative purposes) and are currently expected to be
stated up to and including FY25. For FY21 normalisations only include an adjustment to remove the impact of JobKeeper.
50
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 2.1 SEGMENT REPORTING (CONTINUED)
2022
GRS
$’000
AMS
$’000
PSS
$’000
Unallocated1
$’000
Consolidated
$’000
Revenue from contracts with customers
206,480
346,059
Interest revenue
Segment revenue
Timing of revenue recognition:
– At a point in time
– Over time
Segment revenue from contracts with customers
Normalised UNPATA
Warehouse
Income tax related to normalised
UNPATA adjustments
UNPATA
Reconciliation to statutory net profit after-tax
attributable to members of the parent entity
Amortisation of intangible assets
acquired on business combination
Impairment of CLM goodwill
Loss on disposal of subsidiaries
Acquisition & disposal related expenses3
Other4
Income tax related to UNPATA adjustments
UNPATA adjustments after-tax
Statutory net profit / (loss) after-tax
attributable to members of the parent entity
Assets and liabilities
Segment assets
Segment liabilities
Additions to segment non-current assets
Segment depreciation and amortisation2
-
6
206,480
346,065
240,390
105,669
346,059
41,234
27
41,261
13,683
27,551
41,234
-
332
332
-
-
-
30,257
6,605
(1,478)
-
-
-
-
-
-
30,257
6,605
(1,478)
(1,695)
(6,028)
(1,221)
(271)
(556)
564
(904)
-
-
(955)
-
558
-
-
-
(1,648)
-
433
126,932
79,548
206,480
48,382
(2,420)
726
46,688
-
-
-
-
-
-
-
593,773
365
594,138
381,005
212,768
593,773
83,766
(2,420)
726
82,072
(2,599)
(6,028)
(1,221)
(2,874)
(556)
1,555
(9,207)
(1,301)
(1,215)
(11,723)
46,688
21,050
5,304
(2,693)
70,349
176,422
136,905
16,936
13,594
379,830
241,356
2,568
59,864
11,627
8,509
13,078
1,606
112,018
1,696
107,289
-
679,897
388,466
139,871
75,064
1 Unallocated revenue and assets include cash and bank balances of segments other than AMS, maintained as part of the centralised treasury and funding
function of the Group and interest earned on those balances.
2 Depreciation and amortisation includes impairment of goodwill and other intangibles of $6.0 million (2021: $13.5 million).
3 Costs incurred in relation to the acquisition and disposal of Group subsidiaries which included the acquisition of Plan Tracker Pty Ltd which completed
on 1 July 2021, the disposal of Davantage Group Pty Ltd and Presidian Management Services Pty Ltd (the RFS Retail business) which completed on
30 September 2021 and the disposal of CLM UK which completed on 31 May 2022.
4 Impact of IFRIC and IFRS Interpretation Committee agenda decisions adopted during the period (refer Note 3.6 of the financial report).
Segment profit includes the segment’s share of centralised general management and operational support services which are shared across
segments based on the lowest unit of measurement available to allocate shared costs that reasonably measure each segment’s service level
requirements and consumption. Segment profit does not include corporate costs of the parent entity including Director’s fees and finance
costs relating to borrowings not specifically sourced for segment operations, costs directly incurred in relation to acquisitions and divestments
or interest revenue not directly attributable to a segment.
Included in Segment revenue for GRS are revenues of $61,715,952 (2021: $64,200,316) from the Group’s largest contract. This is the
only customer representing greater than 10% of total segment revenue.
51
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
2.1 SEGMENT REPORTING (CONTINUED)
2021
GRS
$’000
AMS
$’000
PSS
$’000
Unallocated1
$’000
Consolidated
$’000
Revenue from contracts with customers
202,552
315,441
26,229
-
79
-
202,552
315,520
26,229
Interest revenue
Segment revenue
Timing of revenue recognition:
– At a point in time
– Over time
Segment revenue from contracts with customers
Normalised UNPATA
JobKeeper (refer Note 2.4 e)
Income tax related to normalised
UNPATA adjustments
UNPATA
Reconciliation to statutory net profit after-tax
attributable to members of the parent entity
Amortisation of intangible assets acquired
on business combination
United Kingdom (UK) restructuring expenses – cash
UK restructuring expenses – non-cash3
Impairment of CLM goodwill
Acquisition costs
Income tax related to UNPATA adjustments
UNPATA adjustments after-tax
Statutory net profit / (loss) after-tax
attributable to members of the parent entity
Assets and liabilities
Segment assets
Segment liabilities
Additions to segment non-current assets
Segment depreciation and amortisation2
-
150
150
-
-
-
4,949
21,280
26,229
5,437
(1,491)
-
-
-
-
5,437
(1,491)
-
-
-
-
-
-
-
-
-
-
-
(69)
21
(48)
544,222
229
544,451
325,621
218,601
544,222
71,898
10,450
(3,135)
79,213
(2,049)
(1,805)
(12,755)
(1,962)
(69)
492
(18,148)
123,527
79,025
202,552
49,432
8,987
(2,696)
55,723
-
-
-
-
-
-
-
197,145
118,296
315,441
18,520
1,463
(439)
19,544
(2,049)
(1,805)
(12,755)
(1,962)
-
471
(18,100)
55,723
1,444
5,437
(1,539)
61,065
138,165
106,207
40,415
14,798
384,474
248,916
76,445
64,558
56,202
48,904
20
1,298
107,089
12,708
-
-
685,930
416,735
116,880
80,654
1 Unallocated assets include cash and bank balances of segments other than AM, maintained as part of the centralised treasury and funding function of the Group.
2 Depreciation and amortisation includes impairment of goodwill and other intangibles of $6.0 million (2021: $13.5 million).
3 Includes the impairment of Maxxia Limited, impairment of the joint venture (the JV) subordinated loan and impairment of deferred tax asset.
52
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Other segment information
Assets are allocated based on the operations of the segment. The parent entity’s borrowings are not considered to be segment liabilities.
Geographical segment information
Revenue from continuing operations by location of operations and assets are detailed below.
Australia
United Kingdom
New Zealand
Revenue from
external customers
2022
$’000
442,775
131,925
19,106
593,806
2021
$’000
425,169
102,776
16,356
544,301
Non-current assets1
2022
$’000
2021
$’000
302,023
280,415
19,024
24,403
56,303
26,942
345,450
363,660
1 Non-current assets do not include deferred tax assets.
2.2 REVENUE FROM CONTRACTS WITH CUSTOMERS
Consolidated Group
Parent Entity
Remuneration services
Sale of leased and other assets
Lease rental services
Brokerage commissions and financial services
Plan and support services
Other
2022
$’000
206,480
166,224
105,890
71,903
41,234
2,042
2021
$’000
202,552
123,394
102,131
89,518
26,229
398
Total revenue from contracts with customers
593,773
544,222
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
53
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Revenue
Description
Remuneration services
Administration fees for the provision of salary packaging and ancillary services including
novated leasing and finance procurement, motor vehicle administration and other services, but
not the provision of financing. Fees are recognised at the point in time that the services are
rendered, net of any rebates payable to the employer organisation. Fee rates are contractually
agreed with each client employer and the provision of administration services are considered
to have been satisfied for each period completed.
Interest is received for managing funds held in trust for clients pursuant to the contractual
agreement and is recognised when received (refer Note 4.1).
Fees derived from the origination of financing and insurance products are recognised at a
point in time when the customer has executed the lease finance or activated the insurance
cover and the Group has no outstanding obligations. The Group acts as an agent and does not
include the premium on policies as revenue.
Volume based rebates from providers are estimated and recognised based on the period of
entitlement.
Sale of leased and other assets
The Group assumes control of motor vehicles at the termination of lease contracts and
disposes of the asset as principal. The net proceeds are recognised when settlement is
completed and ownership of the motor vehicle passes to the purchaser.
Lease rental services
Brokerage commissions
and financial services
Rental income received for operating lease assets is recognised on a straight line basis
over the term of the lease.
Interest from finance leases is recognised over the term of the lease for a constant
periodic return on the amount invested in the lease asset.
Fees for tyre and maintenance services are recognised to the extent that services are
completed based on the percentage of costs incurred relative to total expected costs.
Fleet administration fees are recognised in the period that services are provided.
Volume based incentives (VBI) are received based on the volume of financial products
introduced by the network of dealers and brokers with financiers using contracted rates.
VBI’s are recognised in the period the financier activates the finance originations net of rebates
provided to dealers and brokers in the network.
Commission income is received from brokerage services for the procurement of lease finance
to motor vehicle fleet operators and other customers as agent under a principal and agency
arrangement (P&A) with financiers. Income is recognised when the financing arrangements
are funded free from any service deliverables net of estimated clawback of commissions from
future terminations. Under a P&A arrangement the Group acts as agent for the procurement
of lease asset financing and does not possess credit risk or carry on risks of ownership of the
underlying finance or asset with the customer.
Fees from the sale of wholesale warranty discretionary products are recognised over time
based on the risk and earning pattern analysis measured using the historical profile of claims
to estimate probable future performance obligations net of premium clawbacks. Underwriting
premium revenue is subject to clawback for policy terminations and is estimated based on a
historical profile of termination rates.
Plan and support services
Fees for the provision of set up & renewal fees and support coordination services are
recognised at the point in time of providing the service. Fees for the provision of plan
management services are recognised over time based on the individual plans.
54
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 2.3 DIVIDENDS RECEIVED
Dividends are recognised when the Company’s right to receive payment is established.
2.4 PROFIT AND LOSS INFORMATION
(a) Impairment of intangible assets
Impairment of goodwill
Impairment of other intangible assets
Consolidated Group
Parent Entity
2022
$’000
6,028
-
6,028
2021
$’000
12,537
1,004
13,541
2022
$’000
2021
$’000
-
-
-
-
-
-
Impairment of goodwill in financial year 2022 relates to the impairment of CLM Fleet Management plc (CLM) goodwill which was recognised in
the half-year ended 31 December 2021 as outlined within Note 3.1.
Impairment of goodwill and other intangible assets in financial year 2021 includes the impairment of CLM Fleet Management plc (CLM) and
Maxxia Limited (ML) goodwill which was recognised in the half-year ended 31 December 2020.
Refer Note 3.1 for the assumptions used in the assessments.
(b) Impairment of financial assets
Impairment of subordinated loan
Trade debtors specific and expected credit loss allowance / (gain)
Finance receivables specific loss allowance gain
Finance lease receivable expected credit loss allowance / (gain)
Impairment of investment in subsidiaries
Consolidated Group
Parent Entity
2022
$’000
-
53
-
(534)
-
(481)
2021
$’000
3,520
(833)
(80)
(337)
-
2,270
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
5,541
5,541
Group
The subordinated loan loss allowance in 2021 of $3,520,000 related to the net investment in ML in the UK to which the Group had a joint
venture arrangement prior to obtaining control on 31 December 2020.
Finance lease receivables Expected Credit Loss (ECL) allowance gain of $534,000 is affected largely by the reduction of the carrying value of
Finance Lease receivables of $28,140,000 from $51,248,000 in 2021. The Group uses the assessment criteria from its credit management
system and adds forward looking indicators to reflect macro-economic factors to estimate ECL including the downgrade of the credit rating
of some clients due to their industry COVID-19 risk.
Parent entity
In FY21 the carrying value of investments in controlled entities were assessed for recoverable value that resulted in an impairment of
$5,541,000 in 2021 (refer Note 6.2).
55
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 (c) Other operating expenses
Consulting and professional services
Marketing
Property and other corporate costs
Technology and communication
Other
(d) Other expense items
Depreciation and amortisation expenses
Depreciation of assets under operating lease
Amortisation of software development
Depreciation of plant and equipment
Amortisation of intangible assets
Depreciation of right-of-use (ROU) assets
Superannuation
Consolidated Group
Parent Entity
2022
$’000
8,585
10,405
10,373
19,714
5,461
54,538
2021
$’000
7,161
8,601
8,637
16,692
5,382
46,473
2022
$’000
1,914
-
348
-
615
2021
$’000
245
-
431
-
520
2,877
1,196
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
48,689
47,445
9,444
1,974
2,431
6,498
8,181
2,843
2,050
6,594
69,036
67,113
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Superannuation contribution expense
10,899
9,010
(e) Government subsidies
JobKeeper
Coronavirus Job Retention Scheme
-
10
10
10,450
700
11,150
In FY21 the Group received the Federal Government economic response subsidy, JobKeeper, for the period from July 2020 to September
2020. The UK entities received the Coronavirus Job Retention Scheme, a temporary relief to provide financial support to assist
in the retention of employees who may otherwise be laid off during the COVID-19 pandemic. The JobKeeper subsidy assisted the Group to
retain its employees and reduce stand downs. In the UK, the subsidy was a pass through for those employees that were furloughed.
The subsidies have been accounted for as a reduction to employee benefit expenses in the Consolidated Statement of Profit or Loss.
56
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
2.5
INCOME TAX
Components of tax expense / (benefit)
Current tax expense / (benefit)
Adjustments for current tax of prior years
Deferred tax expense / (benefit)
Income tax expense / (benefit)
Consolidated Group
Parent Entity
2022
$’000
10,131
(1,014)
18,301
27,418
2021
$’000
29,305
(38)
6,814
36,081
2022
$’000
(661)
46
(551)
(1,165)
2021
$’000
(781)
(34)
128
(687)
The tax expense included in the Statements of Profit or Loss consist of current and deferred income tax.
Current income tax is:
Deferred income tax is:
> the expected tax payable on the current period’s taxable income
> recognised using the liability method
> calculated using tax rates for each jurisdiction enacted or
substantively enacted at the end of the reporting period in the
countries where the entities in the Group operate and generate
taxable income
> inclusive of any adjustment to income tax payable or recoverable
of prior years
> based on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and their
respective tax bases
> calculated using the tax rates that are expected to apply when
the assets are recovered or liabilities settled, based on those
rates which are enacted or substantially enacted
> not recognised if they arise from the initial recognition of goodwill
Current and deferred income tax is recognised in the Statements of Profit or Loss. However, when it relates to items charged directly to the
Statements of Other Comprehensive Income or Statements of Changes in Equity, the tax is recognised in OCI or equity respectively.
The prima facie tax payable on profit / (loss) before income tax is reconciled to the income tax expense / (benefit) as follows:
Profit / (loss) before income tax
97,767
97,146
46,275
172,951
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Prima facie tax payable on profit before income tax
at 30% (2020: 30%)
Add tax effect of:
– Non-deductible impairment expense
– Non-deductible costs
– Non-deductible loss on business disposal
– Overseas tax rate differential of subsidiaries
– Other
– Impairment of deferred tax asset
– (Over) under provision of tax from prior year
Less tax effect of:
– Dividends received
– Non-assessable fair value on previously held equity interest
– Non-assessable loan forgiveness
Income tax expense / (benefit)
29,330
29,144
13,883
51,885
1,145
310
174
(67)
(2,460)
-
(1,014)
27,418
-
-
-
2,382
604
-
1,477
694
2,161
(38)
36,424
-
(343)
-
-
16
-
-
-
-
1,662
25
-
-
-
-
45
13,948
(34)
53,538
(15,113)
(38,433)
27,418
36,081
(1,165)
-
-
-
(15,792)
(687)
57
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Deferred tax asset / (liability)
The balance comprises temporary differences attributed for:
Amounts recognised in profit or loss
Doubtful debts
Provisions
Property, plant and equipment
Accrued expenses
Finance and other receivables / prepayments
Other
Losses
Deferred acquisition expenses
Intangible assets
Unearned income
Amounts recognised in equity
Derivatives recognised directly in equity
Share-based payments reserve
Closing balance at 30 June
Recognised as:
Deferred tax asset (DTA)
Deferred tax liability (DTL)
Movements in deferred tax asset / (liability)
Opening balance at 1 July
Charged to profit or loss
Charged to other comprehensive income
Adjustment to acquisition of Outside Equity Interest
Foreign exchange translation
Closing balance at 30 June
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
386
6,620
487
6,760
(37,359)
(13,783)
6,224
7,609
(110)
319
504
(4,657)
2,155
(18,309)
(774)
830
(18,253)
25,145
(43,398)
(18,253)
1,036
(18,301)
(965)
-
(23)
(18,253)
5,756
3,245
131
646
271
(4,386)
1,583
710
(46)
372
1,036
13,753
(12,717)
1,036
8,453
(6,814)
(454)
(72)
(77)
1,036
-
-
-
110
(855)
106
-
248
-
-
-
-
-
64
(1,051)
45
-
-
-
-
(391)
(942)
-
-
-
-
(391)
(942)
-
(391)
(391)
(942)
551
-
-
-
-
(942)
(942)
(814)
(128)
-
-
-
(391)
(942)
The carrying value of DTA’s are reduced to the extent that it is probable future taxable profits will be available to utilise these temporary
differences. DTA’s and DTL’s are offset only if certain criteria are met with respect to legal enforceability and within the same tax jurisdiction.
DTA’s and DTL’s are not recognised for temporary differences between the carrying amounts and tax bases of investments in subsidiaries
where the parent entity is able to control the timing of reversal and it is probable that the differences will not reverse in the foreseeable future.
58
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Unrecognised temporary differences
Temporary differences that have not been tax effected:
Unused tax losses and deferred tax assets
Foreign currency translation reserve for investment in subsidiaries
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
44,593
4,928
49,521
31,406
3,332
34,738
-
-
-
-
-
-
Unused tax losses relate to subsidiaries that are dormant and/or are unlikely to generate sufficient taxable income to use these losses.
Foreign exchange translation differences in overseas investments will only be realised when the investments are disposed of in the
foreseeable future.
Tax consolidation
The Company and its wholly-owned Australian resident entities are members of a tax consolidated group under Australian taxation law.
The Company is the head entity in the tax consolidated group. Entities within the tax consolidated group have entered into a tax funding
agreement and a tax-sharing agreement with the head entity. Under the terms of the tax funding arrangement, the Company and each of
the entities in the tax consolidated group have agreed to pay a tax equivalent payment to or from the head entity, based on the current tax
liability or current tax asset of the head entity.
2.6 EARNINGS PER SHARE
Basic EPS – cents per share
Diluted EPS – cents per share
Earnings used to calculate basic and diluted EPS ($’000)
Net profit after-tax ($’000)
Weighted average number of ordinary shares used in the calculation of basic EPS (‘000)
Weighted average number of options and rights on issue outstanding (’000)
Weighted average number of ordinary shares used in the calculation of diluted EPS (‘000)
Consolidated Group
2022
2021
90.9
90.6
78.9
78.4
$70,349
$61,065
77,381
232
77,613
77,381
555
77,936
Basic EPS is calculated by dividing the profit attributable to members of the Company by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted EPS is calculated from earnings and the weighted average number of shares used in calculating basic EPS adjusted for the dilutive
effect of all potential ordinary shares from the employee incentive plan.
59
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
3 Assets and Liabilities
3.1
INTANGIBLE ASSETS
The Group’s intangible assets comprise brands, dealer relationships, customer lists and relationships, software development costs,
contract rights and goodwill.
2022
Useful life (range)
Goodwill
$’000
Not
applicable
Consolidated Group
Brands –
indefinite
life
$’000
Brands –
finite life
$’000
Dealer
relationships
$’000
Customer
lists and
relationships
$’000
Software
development
costs
$’000
Contract
rights
$’000
Total
$’000
Indefinite
2-6 years
6-13 years
5-13 years
3-5 years Contract life
Cost
201,026
23,073
6,598
Accumulated depreciation
-
-
(6,598)
Accumulated impairment loss
(112,601)
(13,171)
Net carrying value
88,425
9,902
-
-
14,010
(2,399)
(6,990)
4,621
7,942
77,972
13,139
343,761
(4,024)
(49,290)
(13,139)
(75,451)
-
-
-
(132,762)
3,918
28,682
-
135,548
Reconciliation
of written down values
Balance beginning of year
87,862
9,272
-
6,106
30,647
-
134,852
965
-
4,057
-
-
-
-
-
-
-
-
8,188
377
(291)
(795)
-
(1,345)
(1,085)
(9,444)
(140)
4,621
(19)
3,918
-
28,682
-
-
-
-
-
-
-
-
8,188
12,279
(291)
(795)
(6,028)
(11,874)
(783)
135,548
Additions
-
-
Additions from business
combinations (refer Note 6.1)
7,215
630
Disposal of subsidiary
Accounting standard
adoption reclassification
(refer Note 3.6)
Impairment
Amortisation
Changes in foreign currency
Closing balance
-
-
(6,028)
-
(624)
88,425
-
-
-
-
-
9,902
-
-
-
-
-
-
-
-
60
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 2021
Useful life (range)
Goodwill
$’000
Not
applicable
Consolidated Group
Brands –
indefinite
life
$’000
Brands –
finite life
$’000
Dealer
relationships
$’000
Customer
lists and
relationships
$’000
Software
development
costs
$’000
Contract
rights
$’000
Total
$’000
Indefinite
6 years
6-13 years
5-13 years
3-5 years Contract life
Cost
208,164
22,443
6,598
26,183
6,874
71,355
13,139
354,756
Accumulated depreciation
-
-
(6,598)
(13,087)
(5,909)
(40,708)
(13,139)
(79,441)
Accumulated impairment loss
(120,302)
(13,171)
-
(6,990)
-
-
-
(140,463)
Net carrying value
87,862
9,272
Reconciliation
of written down values
Balance beginning of year
89,326
9,272
Additions
Additions from business
combinations (refer Note 6.1)
Disposal of subsidiary
Impairment
Amortisation
-
10,575
-
(12,537)
-
-
-
-
-
-
-
-
-
-
-
-
6,106
965
30,647
7,348
1,573
-
-
-
-
-
-
-
-
32,894
7,572
-
(682)
(958)
-
-
-
-
-
-
134,852
140,413
7,572
10,575
(682)
(13,495)
-
(1,384)
(666)
(8,181)
-
(10,231)
Changes in foreign currency
498
-
-
Closing balance
87,862
9,272
-
142
6,106
58
965
2
-
700
30,647
-
134,852
Goodwill
Goodwill represents the excess of the cost of the business
combination over the Group’s share of the net fair value of
the identifiable assets, liabilities and contingent liabilities of
the acquired entity. Goodwill is measured at cost less any
accumulated impairment losses and is reviewed for impairment
annually, or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Gains and
losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold. Any impairment is recognised
immediately in the Statement of Profit or Loss.
Identifiable intangible assets acquired from
business combination
Brands, dealer relationships and customer lists and relationships
acquired in a business combination are recognised at their fair
value at the date of acquisition. Following initial recognition, these
assets are carried at their initial value less any accumulated
amortisation and accumulated impairment.
Identifiable intangible assets with finite lives are amortised over
their estimated useful lives on a straight-line basis and assessed
for impairment annually. Brand names that have indefinite useful
lives are not amortised but are subject to annual impairment
assessments. Brands are assessed for impairment as part
of the relevant CGU. Brand names that have an indefinite life
are pursuant to the Group’s plan for its continued use into the
foreseeable future are expected to continue to generate cash flows
indefinitely. The useful life assessment is reviewed annually.
61
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Capitalised software development costs
Software development costs which are not acquired from a business
combination are initially measured at cost and subsequently re-
measured at cost less amortisation and impairment.
Costs are capitalised when it is probable that future economic
benefits will flow to the entity through revenue generation and/
or cost reduction. Costs include external direct costs for services,
materials and internal labour related costs directly involved in the
development of the software and are amortised from the date of
commissioning on a straight line basis over three to five years,
during which the benefits are expected to be realised.
Software-as-a-Service (SaaS) arrangements are service contracts
providing the Group with the right to access the cloud provider’s
application software over the contract period. As such the Group
does not receive a software intangible asset at the contract
commencement date. Fees for the use of the application software
and customisation costs are recognised as an operating expense
over the contract term if not distinct while other configuration, data
conversion, testing and training costs are expensed as the service is
received. Other costs which give rise to a separate intangible asset
are recognised as capitalised software development costs.
Contract rights
Contract costs not acquired from a business combination
are initially measured at cost being the amounts paid plus
any expenditure directly attributable to the transactions and
subsequently measured at cost less amortisation and impairment.
Contracts are amortised over the life of the contract and reviewed
annually for indicators of impairment.
Impairment test of goodwill
An impairment loss is recognised in profit or loss for the amount
that the asset’s carrying value exceeds the recoverable amount.
Recoverable amount is determined as the higher of the asset’s
fair value less costs to sell and value-in-use (VIU). For the purpose
of assessing fair value, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are
largely independent of cash inflows from other assets (cash-
generating units). Where the asset does not generate independent
cash flows, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
The carrying amount of goodwill is allocated to the Group’s cash-
generating units (CGUs) below based on the organisation and
management of its businesses.
Key judgement: Assessment of recoverable amount
Recoverable amounts of cash generating units have been determined using the value-in-use methodology. The variables used require
the use of assumptions that affect earnings projections and the estimation of a discount rate that uses a cost of capital and risk premium
specific to the cash generating unit amongst other factors.
Cash projections used in the financial models to assess the recoverable amount of goodwill and indefinite life intangible assets required
significant estimates in uncertain economic and business environments. These are discussed in more detail below.
Consolidated Group
Maxxia Pty Limited (Maxxia)
Remuneration Services (Qld)
Pty Limited (RemServ)
CLM Fleet Management plc (CLM)
Anglo Scottish Asset Finance Limited (ASF)
Retail Financial Services aggregation
business (RFS Aggregation)
Plan Tracker Pty Ltd (Plan Tracker)
Other
Goodwill
Intangibles
2022
$’000
2022
$’000
24,190
21,321
9,102
-
16,024
31,894
7,215
-
5,077
-
3,592
11,536
4,160
1,437
Total
2022
$’000
45,511
14,179
-
19,616
43,430
11,375
1,437
Goodwill
Intangibles
2021
$’000
2021
$’000
24,190
25,211
9,102
5,959
16,717
31,894
-
-
4,047
-
4,693
11,956
-
1,083
46,990
Total
2021
$’000
49,401
13,149
5,959
21,410
43,850
-
1,083
134,852
88,425
47,123
135,548
87,862
62
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Key assumptions used for VIU calculations
Cash flow projections
Cash flow projections are based on the financial year 2023
(FY2023) budgets. Growth assumptions used for subsequent
years reflect strategic business plans and forecast growth rates.
Financial projections take into account any risk exposures in
changes to the trading, market and regulatory environments.
The after-tax discounted cash flow (DCF) models were based on
after-tax cash flows discounted by an after-tax discount rate.
Cash flows beyond five years are extrapolated using conservative
growth rates of 2.0% (lower than long term CPI).
GRS CGUs
The Maxxia and RemServ CGUs that form the GRS segment
operate largely in the same business environment and are exposed
to similar risks. The equivalent pre-tax discount rate of 17%
(2021:16%) was applied in the VIU calculation.
Cash flow projections for GRS are substantially higher than the
carrying value of goodwill and any reasonable changes to the key
assumptions would not cause an impairment. A key assumption
in the GRS segment is that there is no significant change to
Australian tax legislation that could affect the salary packaging and
novated lease businesses.
PSS CGUs
The Plan Tracker business was acquired 1 July 2021 with goodwill
and other intangibles recognised on acquisition. Goodwill has been
allocated to the Plan Tracker CGU given that they will benefit from
the synergies of the business combination. The equivalent pre-tax
discount rate of 17% was applied in the VIU calculation.
We have reviewed actual and forecast performance and there are
no indications of impairment. The impairment analysis (via DCF)
has been conducted and no impairment is required. The FY23 draft
budget is driven by continuing the growth achieved in FY22. The
Group has considered the impact of changes in key assumptions
on the impairment testing results and the recoverable amount
exceeds the carrying amount when testing for any reasonably
possible changes in key assumptions.
AM CGUs
ASF and CAPEX
The UK consumer new car finance market reported higher new
business volumes in this market than in 2021.There is continued
strength in used vehicle values and growth in Anglo Scottish net
amount financed. Goodwill is considered to be supportable and
no impairment has been brought to account base do the VIU
model. The equivalent pre-tax discount rate of 13.5% (2021:
13.2%) was applied in the VIU calculation. The Group has
considered the impact of changes in key assumptions on the
impairment testing results and the recoverable amount exceeds
the carrying amount when testing for any reasonably possible
changes in key assumptions.
CLM
On 24 February 2022, the Group announced an $6,028,000
impairment of CLM goodwill, reducing the carrying value to $nil,
with no further impairment testing being required. CLM UK was
disposed on 31 May 2022.
RFS Aggregation
During FY22 the RFS Aggregation business experienced an
increase in the net amount financed of 15.8%. For the impairment
analysis the volume of finance originations is expected to increase
and the net yields expected to remain constant. An equivalent
pre tax discount rate of 17% (2021: 16%) was applied in
VIU calculation. From sensitivity tests applied, a 0.25% increase
to the discount rate caused a reduction in carrying value of
$0.5m and a 5% decrease in gross margin reduced the carrying
value by $4.2m.
63
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
3.2 TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Amounts receivable from wholly owned entities
Consolidated Group
Parent Entity
2022
$’000
31,781
3,486
-
2021
$’000
34,016
6,959
-
35,267
40,975
2022
$’000
-
-
496
496
2021
$’000
-
-
481
481
Trade receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of business and held with the
objective of collecting cash flows. They are generally settled within 30 days and the carrying amount includes a loss allowance
of $978,000 (FY21: $924,000) and specific doubtful debts allowance of $284,000 (2021: $284,000). The carrying amount
is generally considered to equal their fair value.
Other receivables
Other receivables include transactions accruing and customer related funds that are to be recovered.
None of the other receivables are impaired or past due.
3.3 FINANCE LEASE RECEIVABLES
Current finance lease receivables
Non-current finance lease receivables
Consolidated Group
Parent Entity
2022
$’000
14,609
13,531
28,140
2021
$’000
21,478
29,770
51,248
2022
$’000
2021
$’000
-
-
-
-
-
-
AM finance lease contracts entered into are recognised as finance lease receivables and classified as financial assets measured at
amortised cost as the contract transfers substantially all the risks and rewards of ownership of an underlying asset. The net investment
in the lease equals the net present value of the future minimum lease payments. Finance lease income is recognised as income in the
period to reflect a constant periodic rate of return.
Amounts receivable under finance lease receivables
Within one year
Later than one but not more than five years
Later than five years
Less: unearned finance income
Present value of minimum lease payments
Fair value of finance lease receivables
Consolidated Group
Minimum
lease
payments
2022
$’000
Present value
of lease
payments
2022
$’000
Minimum
lease
payments
2021
$’000
Present value
of lease
payments
2021
$’000
15,564
15,182
118
30,864
(2,724)
28,140
14,609
13,421
110
28,140
-
28,140
28,541
23,608
32,287
234
56,129
(4,881)
51,248
21,478
29,551
219
51,248
-
51,248
50,657
The fair value of finance lease receivables due within one year are considered to approximate their carrying amount. Fair values were calculated
based on cash flows discounted using an average of current lending rates appropriate for the geographical markets the leases operate of 4.81%
(2021: 4.03%). They are classified as level 3 fair values in the fair values hierarchy due to the inclusion of unobservable inputs.
64
MMS ANNUAL REPORT 2022
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
3.4 ASSETS UNDER OPERATING LEASE
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Assets under operating lease terminating within the next 12 months
– current
Assets under operating lease terminating after more than 12 months
– non-current
Assets under operating lease - total
73,945
62,877
149,722
147,441
223,667
210,318
Depreciation rate (range)
At cost
Accumulated depreciation
Movements during the year
Balance at the beginning of year
Additions
Reclassification from finance lease receivables1
Disposals / transfers to assets held for sale
Depreciation expense
Addition from business combinations (refer Note 6.1)
Residual value adjustment
Change in foreign currency
Balance at 30 June
-
-
-
-
-
-
Consolidated Group
2022
$’000
2021
$’000
20% - 33%
20% - 33%
359,901
(136,234)
339,842
(129,524)
223,667
210,318
210,318
102,488
-
(43,649)
(48,689)
-
2,901
298
215,942
64,949
13,601
(36,457)
(47,445)
(2,178)
1,840
66
223,667
210,318
1 Reclassification resulting from the acquisition of Maxxia Ltd (refer Note 6.1) where leases previously recognised as finance leases were reclassified
as substantially all the risk and rewards of ownership now remain with the Group.
Assets held under operating leases are for contracts with customers other than finance leases. The initial investment in the lease is added
as a cost to the carrying value of the leased assets and recognised as lease income on a straight line basis over the term of the lease.
Operating lease assets are depreciated as an expense on a straight line basis over the term of the lease based on the cost less residual
value of the lease.
Assets held under operating lease include an accumulated provision for impairment loss at reporting date of $3,899,000 (2021: $5,071,000).
Provision for residual value
The provision estimates the probable diminution in value of operating lease and rental assets at the end of lease contract dates.
The estimate is based on the deficit in estimated recoverable value from contracted cash flows.
A residual value provision is also recognised for the estimated loss in recoverable value of lease assets which are transferred to the Group
at the end of the lease term pursuant to some P&A arrangements with financiers and other residual value guarantees. The asset from the
financier is acquired at its residual value on termination of the lease which creates an exposure of the carrying value to the expected market
price for which the potential impact is assessed at reporting and the shortfall provided for.
65
MMS ANNUAL REPORT 2022 Key judgement: Lease assets residual value
Operating leases carry an inherent risk for the residual value of the asset. Estimates of significance are used in determining the residual
values of operating lease and rental assets at the end of the contract date. The assessment includes forecasts of the future value of the
asset lease portfolio at the time of sale and considers the potential impact of economic and vehicle market conditions and dynamics.
Under the P&A financing arrangement with external financiers, the Group acquires the lease assets on the termination of the lease contract
and is thereby exposed to the residual value of the underlying asset. A provision is recognised and this assessment similarly includes an
assessment of the future value of these P&A funded assets.
If the estimated residual values reduced by 5%, this would result in an increase in the impairment loss provision by $2.2m.
3.5 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
This note discloses the Group as lessee for operating lease arrangements for the use of property and equipment.
Consolidated Group
Parent Entity
Right-of-use assets (ROU assets)
At cost
Accumulated depreciation
Balance at beginning of year
New assets leased in the period
Depreciation included in profit or loss
Impairment included in profit or loss
Disposal of subsidiary
Change in foreign currency
Balance at 30 June
Lease liabilities
Balance at beginning of year
New assets leased in the period
Finance charge included in profit or loss
Disposal of subsidiary
Lease payments
Lease incentive
Change in foreign currency
Balance at 30 June
Carrying value of lease liabilities
Current
Non-current
66
2022
$’000
78,631
(42,649)
35,982
40,511
3,778
(6,498)
-
(1,736)
(73)
35,982
2021
$’000
2022
$’000
2021
$’000
78,770
(38,259)
40,511
15,953
31,418
(6,594)
(89)
(243)
66
40,511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated Group
Parent Entity
2022
$’000
48,875
3,778
1,769
(1,887)
(8,696)
7,300
(75)
51,064
4,212
46,852
51,064
2021
$’000
24,436
31,418
2,357
(324)
(9,083)
-
71
48,875
1,602
47,273
48,875
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Recognition and measurement of lease assets and liabilities
ROU assets and the lease liability are initially measured on a present value basis. Leases brought to account are for the value of the
property and exclude non-lease components.
Lease liabilities include the net present value of fixed rental payments less any lease incentives receivable plus any rental adjustments
where the extensions available under the lease will probably be exercised. Lease payments are discounted using the Group’s incremental
borrowing rate.
ROU asset is measured at cost comprising the amount of the initial measurement of the lease liability, any initial direct costs and any provision
for make-good or restoration. ROU asset is depreciated over the shorter of the asset’s useful life and lease term on a straight line basis.
Short-term leases of less than 12 months and low-value leases are expensed on a straight line basis to the profit or loss.
The principal portion of payments is included in financing activities in the Statements of Cash Flows and the finance charges is included
in operating activities.
3.6
INVENTORIES
Motor vehicles are stated at the lower of cost and net realisable value. Following termination of a lease or rental contract the relevant
assets are transferred from Assets under Operating Lease to Inventories at their carrying amount. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs to make the sale. AASB 102 Inventories does not define costs necessary to sell
inventories when determining net realisable value. The IFRS Interpretations Committee agenda decision on Costs necessary to sell Inventories
(issued June 2021) confirmed that an entity cannot limit the costs it includes to those that are only incremental in determining which of its
costs are necessary to sell its inventories. The Group reviewed the decision during the half-year ended 31 December 2021 which resulted
in a $0.3m (pre-tax) increase in the accumulated provision for impairment loss recognised against assets under operating lease.
3.7 UNEARNED PREMIUM LIABILITY, DEFERRED ACQUISITION COSTS (DAC) AND
OUTSTANDING CLAIMS LIABILITY
On 30 September 2021, the Group disposed of its 100% equity interest in its subsidiaries Davantage Group Pty Ltd and Presidian
Management Services Pty Ltd (refer Note 6.1). Balance sheet amounts related to unearned premium liability, DAC and outstanding
liability claims were solely related to this business.
In FY21, the Group assessed the risk attached to unexpired wholesale warranty discretionary products based on the risk and earning
pattern analysis to ascertain whether the unearned premium liability (contract liability) is sufficient to cover all expected future claims
against current warranty contracts. Underwriting premium revenue that is not recognised in the period is deferred as an unearned premium
liability. DAC incurred in deriving warranty income were deferred and recognised as contract assets where they could be reliably measured
and where it was probable that the associated warranty contract gave rise to warranty revenue in subsequent reporting periods. DAC were
amortised systematically in accordance with the expected pattern of the incidence risk under the warranty contracts to which they relate.
A liability for outstanding claims was recognised for claims authorised but unpaid and claims reported which were not authorised for payment
but were assessed for a probability of payment at reporting date.
67
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 3.8 TRADE AND OTHER PAYABLES
Unsecured liabilities
Trade payables
GST payable
Accrued expenses
Sundry creditors
Amounts payable to wholly owned entities
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
18,282
2,339
39,598
23,600
-
30,458
5,003
45,134
21,490
-
83,819
102,085
-
-
-
366
25,576
25,942
-
-
-
481
11,891
12,372
Trade and other payables from normal business activities are non-interest bearing and are short term in nature. They are recognised initially
at fair value and subsequently at amortised cost.
3.9 CUSTOMER RECEIPTS IN ADVANCE
Other liabilities
Other liabilities relate to customer receipts in advance which represent payments for future vehicles sales not yet delivered and fees
in advance for volume based rebates received upfront as part of the transition to a new funder in GRS during FY22.
Contract liabilities
Maintenance fees received in advance
Rebates and cancellations
Consolidated Group
Parent Entity
2022
$’000
5,606
2,217
7,823
2021
$’000
5,146
2,035
7,181
2022
$’000
2021
$’000
-
-
-
-
-
-
Maintenance fees received in advance
Maintenance fees received in advance is income from maintenance service contracts that are unearned based on the historical profile of costs
incurred to date over the expected total cost. Profit attributed over the life of the contract and losses that are provided in full in the period that
the loss-making contract is first determined, is adjusted in the amount of revenue recognised.
Rebates and cancellations
Brokerage commissions from the provision of financial services allow that rebates paid to its dealer/broker network and commissions received
from the origination business may be clawed back by the financial service providers. The potential for rebates and clawback are calculated
based on the historical profile of rebates and commissions.
68
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 3.10 PROVISIONS
Current
Employee benefit liabilities
Other provisions
Non-current
Employee benefit liabilities
Balance at start of the year
Employee benefits earned
and accrued in the year
Payments in the year
Provision made in the year
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
13,163
220
13,383
1,195
1,195
13,281
441
13,722
1,484
1,484
-
-
-
-
-
-
-
-
-
-
Employee benefit liabilities
Other provisions
2022
$’000
14,765
8,225
(8,632)
-
2021
$’000
13,408
8,034
(6,677)
-
2022
$’000
2021
$’000
441
721
-
(271)
50
220
-
(436)
156
441
Balance at the end of the year
14,358
14,765
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and where it is probable
that the Group is required to settle the obligation, and the obligation can be reliably estimated. Provisions are measured at the present value
of expenditure expected at settlement.
Employee benefits
Employee entitlements to annual and long service leave have been provided for based on amounts expected to be paid when the leave
entitlements are used.
Annual leave and long service leave that are not expected to be settled wholly within twelve months have been measured at the present value
of the estimated future cash outflows. Expected future payments are discounted using interest rates attaching to high quality corporate bonds
with terms to maturity that match, as closely as possible, the estimated future cash outflows.
Employee liabilities other than annual leave and long service leave are included in other payables.
69
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 4 Capital Management
This section provides information relating to the Group’s capital structure and its exposure to financial risks, how they affect the Group’s
financial position and performance, and how the risks are managed.
The Group’s capital management strategy aims to safeguard its ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group
monitors capital on the basis of the gearing ratio and key banking covenants.
The capital structure of the Group is reviewed on an ongoing basis and considers the allocation and type of capital and the associated risks
and returns.
4.1 CASH AND CASH EQUIVALENTS
Cash on hand
Bank balances
Short-term deposits
Consolidated Group
Parent Entity
2022
$’000
-
2021
$’000
5
160,543
157,750
253
242
160,796
157,997
2022
$’000
-
580
-
580
2021
$’000
-
74
-
74
Cash and cash equivalents
Includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash subject to an insignificant risk of changes in value. Cash and cash
equivalents is controlled by the Group and the contractual rights transfer to the Company substantially all of the benefits and risks of ownership.
Cash at bank and short term deposits earn interest at floating rates with the floating interest rates for the year for cash at bank at an average
interest rate of 0.60% (2021: 0.28%). Short-term deposits have an average maturity of 90 days (2021: 90 days) and are highly liquid.
Cash and cash equivalents held in trust and not recognised in the Statement of Financial Position
Pursuant to contractual arrangements with clients, GRS administers cash flows on behalf of clients as part of the remuneration benefits
administration service. Cash held in trust for clients are therefore not available for use in the Group’s operations. For some clients, cash
is held in bank accounts specified in their name and other client monies are held in bank accounts specially designated as monies in trust
for clients. All client monies are segregated from the Group’s own cash and not included in the Consolidated Statement of Financial Position.
At reporting date, the balance of monies held in bank accounts in trust for clients representing all client contributions to operate their
accounts were as follows:
Client monies in trust, accruing to the Group
Client monies in trust, accruing to clients
Consolidated Group
Consolidated Group
2022
Average
interest rate %
0.40%
0.32%
$’000
418,944
20,750
439,694
2021
Average
interest rate %
0.51%
0.49%
$’000
435,376
23,828
459,204
The parent entity does not hold any client monies.
Pursuant to contractual agreement with clients, the Group received the following interest for managing client monies and as part of the
administration service fees at an average interest rate of 0.40% (2021: 0.51%). Interest received is recognised within Remuneration Services
revenue from contracts with customers.
Interest received on client monies in trust
70
Consolidated Group
2022
$’000
1,560
2021
$’000
2,283
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Cash Flow Information
Reconciliation of cash flow from operations with
profit / (loss) from operating activities after-tax
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Profit / (loss) for the year
70,349
61,065
47,440
173,638
Non-cash flows in profit / (loss) from operating activities
Amortisation
ROU assets depreciation
Impairment
Gain on previously held equity interest
(Gain) loss on disposal of subsidiary
Depreciation
Loss allowance / (gain)
Share-based expense
Other
Changes in assets and liabilities,
net of the effects of purchase of subsidiaries
Decrease / (increase) in trade receivables and other assets
Decrease in finance lease receivables principle repayments and disposals
Increase in assets under lease
Decrease in written down value of assets sold
(Decrease) / increase in trade payables and accruals
(Decrease) / increase in income taxes payable
Decrease / (increase) in deferred taxes
(Decrease) / Increase in unearned revenue
Decrease / (increase) in provisions and accruals
Net cash from operating activities
2,431
6,498
6,028
-
1,221
60,107
1,607
(253)
766
22,393
(55,679)
40,203
(24,635)
(2,933)
19,227
(4,021)
(23,364)
119,945
10,231
6,594
16,790
(1,805)
(305)
50,289
(417)
1,101
(833)
22,165
25,668
(76,942)
70,419
(3,658)
(1,428)
7,332
9,639
(940)
-
-
-
-
-
-
-
-
-
5,541
-
-
-
-
1,607
-
1,101
(52,640)
(355)
(104,736)
-
-
-
(120)
82
(551)
-
-
-
-
-
377
(609)
128
-
-
194,965
48,103
22,800
Cash from operating activities
Cash flows other than investing or financing are classified as cash from operating activities. As the AM segment provides operating and
finance leases for motor vehicles and equipment, the cash outflows to acquire the lease assets as well as interest received and interest
paid are classified as operating cash outflows.
71
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Net debt reconciliation
A summary of the movement in borrowings (excluding capitalised borrowing costs) affecting financing cash flows during the year
is provided below:
Financing cash flow from liabilities
Borrowings (excluding capitalised borrowing costs)
Payable due to wholly owned entities
Financing liabilities
Movements during the year
Liabilities at the start of the period
Cash flows relating to borrowings
Cash flows relating to payables due to wholly owned entities
Non-cash settlement of payables due to wholly owned entities
Related party loan forgiveness
Foreign exchange adjustments
Liabilities at the end of the period
4.2 BORROWINGS
Current
Bank loans – at amortised cost
Non-current
Bank loans – at amortised cost
Other external loans payable
Total bank loans
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
167,967
176,808
-
-
167,967
176,808
176,808
(16,203)
-
9,711
-
(2,349)
265,381
(90,278)
-
-
-
1,705
2022
$’000
-
25,576
25,576
21,162
(9,752)
13,013
1,153
-
-
2021
$’000
9,752
11,410
21,162
130,234
(5,124)
7,022
(58,330)
(52,640)
-
167,967
176,808
25,576
21,162
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
15,851
23,886
142,222
9,711
152,444
-
167,784
176,330
-
-
-
-
2021
$’000
5,761
3,991
-
9,752
Borrowings are initially recorded at fair value, net of transaction costs and subsequently measured at amortised cost using the effective
interest rate method. The effective interest rate method exactly discounts the estimated cash flows through the expected life of the borrowing.
Transaction costs comprise fees paid for the establishment of loan facilities and are amortised over the term of the borrowing facilities.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial instruments. The fair value of current borrowings approximates the
carrying amount, as the impact of discounting is not significant.
Other external loans payable relates to the promissory note payable to Davantage Group Pty Ltd as a result of the conversion of the
amount payable to wholly owned entities of the Group upon disposal of the subsidiary (refer Note 6.1). The loan has been discounted
to present value based on an average interest rate of 1.86%.
72
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Security and financial covenants
The parent entity guarantees all bank loans of subsidiaries in the Group, totalling $167,601,000 (2021: $167,056,000).
Fixed and floating charges are provided by the Group in respect to financing facilities provided by its syndicate of financiers.
The assets identified in Note 3.4 form part of the security.
Loans are also secured by the
following financial undertakings
from all entities in the Group:
> Negative pledge that imposes certain covenants including a restriction to provide
other security over its assets, cap on its maximum finance debt, acquire assets
which are non-core business to the Group, not to dispose of a substantial part
of its business and reduction of its capital;
> Maintenance of certain financial thresholds for shareholders’ equity, gearing
ratio and fleet asset portfolio performance; and
> Various business parameters of the Interleasing Group and Maxxia Finance Ltd.
The Group operated with significant headroom against all of its borrowing covenants at all times.
The Groups’ gearing ratio was 17% (2021: 20%) calculated as net debt of $58,052,000 (2021: $67,208,000) divided by total debt
and equity of $347,183,000 (2021: $336,403,000).
4.3 FINANCIAL RISK MANAGEMENT
We proactively manage the risks facing the business, this includes the early identification and assessment of risks, the implementation
of controls and the active monitoring and reporting of risks. Our approach to risk management, underpinned by the Group’s risk
management policy and framework, and overseen by the Audit, Risk and Compliance Committee, is embedded in our culture and
reflected in our decision making.
Senior Executives identify and/or review key risks as part of our normal business activities, and formally at least quarterly. The results
of these reviews are recorded in the MMS risks register, which is used by the Management Risk and Compliance Committee and key
risks within the risk register are reported to the Board Audit, Risk and Compliance Committee (ARCC) for monitoring.
Financial risks of the Group are
monitored by the Board through:
> ARCC obtains management confirmation of adherence with the Risk Management
Policy and Framework;
> regular reporting of compliance with, and/or breaches of, the Risk Appetite Statement;
> monthly board meetings which include financial and operational reports from
senior management;
> regular reports from the ARCC; and
> discussions with senior management.
Other monitoring occurs through:
> dedicated Group Risk Manager responsible for overall monitoring and reporting
of financial risks;
> a risk report is presented to the ARCC at least four times per year; and
> Credit and Interest Committees which oversee Group credit risk, liquidity risk
and interest rate risk with reporting provided to the Board.
73
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
In the normal course of business, the Group is exposed to various risks as set out below:
Risk
Exposure
Response
Liquidity
risk
Risk that the Group will not
be able to meet its financial
obligations as they fall due.
Maintain continuity and flexibility of funding through the use of committed revolving
bank club facilities based on common terms, asset subordination and surplus cash
to match asset and liability requirements.
The AM businesses borrowings
exposes the Group to potential
mismatches between the
refinancing of its assets
and liabilities.
Ensure there is sufficient liquidity through access to committed available funds to
meet at least twelve months of average net asset funding requirements augmented
with uncommitted P&A facilities. This level is expected to cover any short-term financial
market constraint for funds.
The Group monitors daily operating cash flows and forecast cash flows for a twelve month
period. Significant cash deposits have been maintained which enable the Group to settle
obligations as they fall due without the need for short term financing facilities.
Credit risk
Risk of financial loss if a
customer or counter-party to
a financial instrument fails to
meet its contractual obligations.
Exposure to credit risk is
through the receivables’
balances, customer leasing
commitments, deposits with
banks and counterparty risks
associated with interest and
currency swaps.
For deposits with banks, only independently rated institutions with upper investment-grade
ratings are used, in accordance with the Board approved Investment Policy.
Leasing credit risk is managed pursuant to the Board approved Credit Policy. The policy
is reviewed annually and prescribes minimum criteria in the credit assessment process
that includes the credit risk rating of the customer, concentration risk parameters, type
and intended use of the asset and the value of the exposure.
A two-tiered Credit Committee structure is in place to stratify credit applications for
assessment; a Local Credit Committee and an Executive Credit Committee reviewing
applications based on volume, nature and value of the application.
The Board receives a monthly report from the Credit Committee and periodically reviews
concentration limits that effectively spread the risks as widely as possible across asset
classes, client base, industries, regions and asset manufacturers.
Credit risk concentration is spread through exposure to individual customers, industry
sectors, asset types, asset manufacturers or regions.
Where customers are independently rated, these ratings are taken into account. If there
is no independent official rating, the credit quality is assessed using the Group’s internal
risk rating tool, taking into account information from an independent national credit bureau,
its financial position, business segment, past experience and other factors using an
application scorecard or other risk-assessment tools.
Collateral is obtained where appropriate, to mitigate the risk of financial loss from defaults.
Debtor ageing and the provision for impairment is reviewed monthly by the Board.
Market risk
Interest
rate risk
Movements in interest
rates could directly affect
the margins from existing
contracts and the pricing
of new contracts for assets
leased and income earned
from surplus cash.
Borrowings issued at variable
rates expose the Group to
repricing interest rate risk.
Treasury and pricing policies aim to minimise mismatches between the amortised value of
lease contracts and the sources of financing to mitigate repricing and basis risk. Mismatch
and funding graphs including sensitivity analysis, are reported monthly to the Board.
The Group has entered into interest rate swaps with counterparties rated as AA- by
Standard & Poor’s to exchange, at specified periods, the difference between fixed and
variable rate interest amounts calculated on contracted notional principal amounts.
Swaps are designated to hedge underlying borrowing obligations and match the
interest-repricing profile of the lease portfolio in order to preserve the contracted
net interest margin.
74
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Risk
Exposure
Response
Translation related risks from financial and non-financial items of the UK and New Zealand
entities do not form part of the Group’s risk exposure given these entities are part of longer
term investments and consequently, their sensitivity to foreign currency movements are
not measured.
The Group’s transactions are predominantly denominated in Australian dollars which is
the predominant functional currency and the presentation currency of the Group.
Continuous review of the portfolio’s residual values via a Residual Value Committee
comprising experienced senior staff with a balance of disciplines and responsibilities,
who measure and report all matters of risk that could potentially affect residual values
and maintenance costs and matters that can mitigate the Group from these exposures.
The asset risk policy sets out a framework to measure and factor into their assessment
such critical variables as used car market dynamics, economic conditions, government
policies, the credit market and the condition of assets under lease.
Foreign
currency
risk
Asset risk
Foreign currency risk arises
from holding financial
instruments that are
denominated in a currency
other than the functional
currency in which they are
measured. This includes
the Group’s inter-company
receivables and payables
which do not form part of
the net investment in the UK
and New Zealand entities.
Asset risk is mainly from
the residual value of assets
under lease and the tyre and
maintenance obligations to
meet claims for these services
sold to customers. Residual
value is an estimate of the
value of an asset at the end
of the lease. The estimate is
formed at the inception of the
lease and any subsequent
impairment, exposes the Group
to potential loss from resale if
the market price is lower than
the value as recognised.
Risk relating to tyre and
maintenance services arises
where the costs to meet
customer claims over the
contracted period exceed
estimates made at inception.
(a) Liquidity risk
Financing arrangements
Committed borrowing facilities for the AM and GRS segments to finance their fleet management portfolio and other borrowing requirements
not used to finance the fleet management portfolio are as follows:
Borrowing facilities in local
currency (AUD ‘000)
2022
2021
Facility
Used
Unused
Facility
Used
Unused
AM borrowing facilities
204,945
158,256
46,689
251,834
160,761
91,073
Warehouse borrowing facilities
Other borrowing facilities
100,000
-
-
-
100,000
-
-
-
16,047
16,047
-
-
Total Borrowings 1
304,945
158,256
146,689
267,881
176,808
91,073
1 Borrowings do not include capitalised borrowing costs of $183,000 (2021: $478,000)
75
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Details of the fleet management portfolio facilities in local currency are as follows:
AM secured bank borrowings
(excluding borrowing costs)
Maturity
dates
2022
2021
Facility
Used
Unused
Facility
Used
Unused
AUD’000 1
AUD’000 1
AUD’000 1
AUD’000 3
NZD’000 1
NZD’000 1
NZD’000 1
GBP’000 1
GBP’000 2
31/03/2023
31/03/2024
31/03/2025
-
58,000
95,000
05/02/2026
100,000
31/03/2023
31/03/2024
31/03/2025
31/03/2023
31/03/2023
-
29,000
11,000
-
9,000
-
58,000
57,600
-
-
23,100
6,600
-
9,000
-
-
37,400
100,000
-
5,900
4,400
-
-
75,000
58,000
20,000
-
11,000
29,000
-
15,000
18,500
45,800
48,000
5,300
-
6,600
23,100
-
-
18,500
29,200
10,000
14,700
-
4,400
5,900
-
15,000
-
1 AM Revolving facility
2 AM Amortising facility
3 Onboard Warehouse Trust 2021-1 facility
Revolving facilities above have been provided by a financing club of three major Australian banks operating under common terms and
conditions. Borrowings are denominated in the local currency of the principal geographical markets to remove associated foreign currency
cash flow exposure.
The borrowing facilities are further augmented by P&A facilities of $194.0million ($90.2 million utilised) and associated residual value facilities
totalling $123.0 million ($59.7m million utilised). The Group carries a residual value exposure in relation to some P&A facilities that revert the
lease asset to the Group at the termination of the lease. The residual value was assessed at the lower of book value and estimated disposal
value resulting in a provision for loss in value of $0.7 million for assets identified to be possibly below book value.
The Group believes that the balanced arrangement of internal funded fleet assets and the use of P&A facilities improves liquidity,
provides funding diversification and helps to optimise capital management.
The other facilities are borrowed in local currency as follows:
Secured bank borrowings
(excluding borrowing costs)
Maturity
dates
2022
2021
Facility
Used
Unused
Facility
Used
Unused
AUD’000
AUD’000
GBP’000
31/12/2022
29/09/2022
30/06/2023
-
-
-
-
-
-
-
-
-
5,739
4,013
3,422
5,739
4,013
3,422
-
-
-
76
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Maturities of financial liabilities
The table below summarises the maturity profile of the Group and the parent entity’s financial liabilities based on undiscounted contractual
payments at the expected settlement dates. Contracted payments are based on amounts brought to account on the Statement of Financial
Position and property lease commitments not brought to account.
Consolidated Group –
at 30 June 2022:
Contractual maturities
of financial liabilities
Trade payables
Other creditors and liabilities
Lease liabilities
Borrowings
Consolidated Group –
at 30 June 2021:
Contractual maturities
of financial liabilities
Trade payables
Other creditors and liabilities
Lease liabilities
Borrowings
Less than
6 months
$’000
18,282
32,494
4,488
9,748
65,012
Less than
6 months
$’000
30,458
78,709
4,488
14,002
127,657
6–12
months
$’000
-
6,582
4,185
10,150
20,917
6–12
months
$’000
-
6,640
4,185
14,231
25,056
1–2 years
$’000
2–5 years
$’000
-
-
7,881
82,387
90,268
-
-
19,989
64,367
84,356
1–2 years
$’000
2–5 years
$’000
-
-
7,881
77,666
85,547
-
-
19,989
75,596
95,585
Parent – at 30 June 2022:
Contractual maturities of
financial liabilities
Less than
6 months
$’000
6–12
months
$’000
1–2 years
$’000
2–5 years
$’000
Over 5
years
$’000
-
-
32,389
-
32,389
Over 5
years
$’000
-
-
32,389
-
32,389
Total
contractual
cash flows
$’000
18,282
39,076
68,932
166,652
292,942
Total
contractual
cash flows
$’000
30,458
85,349
68,932
181,495
366,234
Over 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
amount /
liabilities
$’000
18,282
40,271
51,064
167,967
277,584
Carrying
amount /
liabilities
$’000
30,458
86,833
48,875
176,808
342,974
Carrying
amount
(assets) /
liabilities
$’000
Amounts payable to
wholly owned entities
and other payables
Financial guarantee contracts
25,942
9,748
35,690
-
-
-
10,150
10,150
82,387
82,387
64,367
64,367
-
-
-
25,942
25,942
166,652
-
192,594
25,942
Parent – at 30 June 2021:
Contractual maturities of
financial liabilities
Less than
6 months
$’000
6–12
months
$’000
1–2 years
$’000
2–5 years
$’000
Over 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets) /
liabilities
$’000
Amounts payable to
wholly owned entities
and other payables
Borrowings
Financial guarantee contracts
12,372
2,939
11,063
26,374
-
-
2,919
11,312
14,231
4,009
73,657
77,666
-
-
75,596
75,596
-
-
-
-
12,372
12,372
9,867
171,628
9,752
-
193,867
22,124
77
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
(b) Credit risk
The following carrying amount of financial assets represent the maximum credit exposure at reporting date.
Trade and other receivables
Deposits with banks
Finance lease receivables
Operating lease assets
Consolidated Group
Parent Entity
2022
$’000
35,267
160,796
28,140
223,667
447,870
2021
$’000
40,975
157,997
51,248
210,318
460,538
2022
$’000
498
580
-
-
1,078
2021
$’000
481
74
-
-
555
Operating lease assets represent future lease rentals not yet invoiced which are secured against underlying assets.
Impairment of trade receivables and finance lease receivables
Key judgement: Impairment of financial assets
Finance lease, trade and other receivables are assessed for impairment at the end of each reporting period on an expected credit loss (ECL)
basis. The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all receivables as these items do not
have a significant financing component. In measuring the expected credit losses, the trade receivables and finance lease receivables have
been grouped based on substantially shared credit risk characteristics.
ECL for finance lease receivables includes the inherent risk attached to the credit assessment of each customer, estimate of customer
default risk, environment and inventory risk and other factors affecting recoverability. COVID-19 affected the credit quality of many
customers at varying levels.
Recoverability of trade receivables is reviewed on an ongoing basis. The expected loss rate for trade receivables is based on the credit
loss history on sales over the previous 36 months and adjusted for forward looking factors.
Impairment of financial assets is most sensitive to the failure of a significant customer.
Trade receivables
The loss allowance for trade receivables have been estimated as follows:
Expected loss rate
Gross carrying amount
Loss allowance
Specific loss allowance
Total loss allowance
Consolidated Group
Parent Entity
2022
$’000
2.96%
33,042
978
284
1,262
2021
$’000
2.62%
35,224
924
284
1,208
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
78
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Ageing and expected
credit loss of trade receivables
Not past due
Past due 30 days
Past due 31-60 days
Past due 61-90 days
Past due >90 days
2022
Loss
allowance
$’000
(1,058)
(56)
(23)
(12)
(113)
(1,262)
Amount not
impaired
$’000
27,096
1,372
545
267
2,501
31,781
Total
$’000
28,154
1,428
568
279
2,614
33,043
2021
Loss
allowance
$’000
(803)
(48)
(33)
(15)
(309)
(1,208)
Amount not
impaired
$’000
28,257
2,758
1,291
388
1,322
34,016
Total
$’000
29,060
2,806
1,324
403
1,631
35,224
The Group’s maximum exposure to credit risk at reporting date by geographic region is predominantly in Australia, New Zealand and the UK
based on the location of originating transactions and economic activity.
Finance lease receivables
The finance lease receivables loss provision and movements during the year is set out below:
Consolidated Group
Parent Entity
Balance at start of year
Expected loss allowance
Loss allowance discharged
Changes in foreign currency
Balance at end of year
Expected credit loss provision
Specific provision
2022
$’000
747
(534)
-
(4)
209
209
-
209
2021
$’000
1,139
(337)
(80)
25
747
629
118
747
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The expected credit loss rate is calculated using the credit management system’s default rate assigned for each customer adjusted by the
expected recoverable rate plus deflators for duration and other economic or business environmental factors.
Expected credit loss rate
Gross carrying amount
Loss allowance
Consolidated Group
Parent Entity
2022
$’000
0.73%
28,672
209
2021
$’000
1.18%
53,323
629
2021
$’000
2021
$’000
-
-
-
-
-
-
79
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
(c) Market risk
Interest rate risk
At reporting date, the Group had the following variable rate borrowings under long-term facilities attributable to the AM business and
other loan facilities drawn on.
AUD’000
NZD’000
GBP’000
Total AUD ‘000
2022
2021
Weighted
average
interest rate
%
2.76%
3.48%
3.02%
2.91%
Weighted
average
interest rate
%
1.20%
1.57%
1.46%
1.31%
Borrowings
$’000
108,852
29,700
21,922
176,808
Borrowings
$’000
115,600
29,700
9,000
158,073
The weighted average interest rate on borrowings is used as an input to asset repricing decisions for geographical markets operated in.
Analysis of maturities is provided in Note 4.3(a).
Borrowings for the AM business of $157,440,000 (2021: $125,668,000) were covered by interest rate swaps at a fixed rate of interest
of 2.32% (2021: 1.72%).
Interest rate risk also arises from cash at bank and deposits, which are at floating interest rates.
At reporting date, the Group had the following variable rate financial assets and liabilities outstanding:
Cash and deposits
Bank loans 1
Interest rate swaps (notional amounts)
Net exposure to cash flow interest rate risk
2022
$’000
160,796
(158,073)
157,441
160,164
2021
$’000
157,997
(176,808)
125,668
106,857
1 Excluding capitalised borrowing costs of $183,000 (2021: $478,000) for AM.
Sensitivity analysis – floating interest rates:
If the Australian interest rate weakened or strengthened by 25 basis points, being the Group’s view of possible fluctuation, and all other
variables were held constant, the Group’s post-tax profit for the year would have been $721,000 (2021: $947,000) higher or lower and
the parent entity $26,000 (2021: $17,000) higher or lower, depending on which way the interest rates moved based on the balances at
reporting date.
(d) Asset risk
The portfolio of motor vehicles under operating lease and the residual value of assets under P&A and other facilities of $317,766,000 (2021:
$327,180,000) included a residual value provision of $4,239,000 (2021: $5,071,000). Refer to Note 3.4 for further details.
80
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
4.4 FINANCIAL INSTRUMENTS
Fair value measurement
The fair value of financial assets and financial liabilities is estimated for recognition and measurement for disclosure purposes.
The below table is an analysis of financial instruments that are measured at fair value on a recurring basis subsequent to initial recognition,
grouped into the following three levels based on the degree to which the fair value is observable.
Level 1
Level 2
Derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Derived from inputs other than quoted prices included in level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3
Derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Financial asset/
(financial liability)
Interest rate swaps
Fair value at
2022
$’000
2,931
2021
$’000
(213)
Fair value
hierarchy
2
Valuation technique and key input
Discounted cash flow using estimated future cash flows
based on forward interest rates (from observable yield curves
at the end of the reporting period) and contract interest rates,
discounted to reflect the credit risk of various counterparties.
Except as detailed above and in Note 3.3, the carrying amounts of financial assets and financial liabilities recognised approximate their fair
values. The fair value of borrowings is not materially different to their carrying amounts since the interest payable is close to market rates.
The carrying amount of cash, trade and other receivables, trade and other payables are assumed to be the same as their fair values, due
to their short term nature.
Derivative financial instruments
In accordance with the Group’s treasury policy, derivative interest rate products entered into include interest rate swaps, forward rate
agreements and options as cash flow hedges to mitigate both current and future interest rate volatility that may arise from changes
in the fair value of its borrowings.
Hedge accounting
Where the Group undertakes a hedge transaction it documents at inception of the transaction the type of hedge, the relationship between
the hedging instruments and hedged items and its risk management objective and strategy. The documentation also demonstrates, both
at hedge inception and on an ongoing basis that the hedge has been, and is expected to continue to be, highly effective.
The Group uses derivative financial instruments for cash flow hedging purposes and designates them as such.
Cash flow hedge
Derivatives or other financial instruments that hedge the exposure to variability in cash flows
from external borrowings that are priced using variable interest rates.
Cash flows hedges are used to manage interest rate exposure to interest rate volatility and its impact
on leasing product margins. This process seeks to have more control in balancing the spread between
interest rates charged on lease contracts and interest rates and the level of borrowings assumed in
its financing as required.
Recognition date
Measurement
Changes in fair value
Inception
Fair value
Any gains or losses arising from changes in the fair value of the hedge contracts are taken to other
comprehensive income (OCI) to the extent of the effective portion of the cash flow hedge and the
ineffective portion recognised in the Statement of Profit or Loss. These gains or losses in OCI are
accumulated in a component in equity and are re-classified to the Statement of Profit or Loss to match
the timing and relationship with the amount that the derivative instruments was intended to hedge.
81
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
4.5
ISSUED CAPITAL
Share capital – Group and Parent
There was no change to the number of shares on issue or ordinary share value during FY22.
Movements in share capital:
Number
of shares
Issue
price
Shares issued at 1 July 2021
Treasury shares acquired on-market
Shares held by external shareholders at the beginning of the year
Treasury shares distributed in the year on the exercise of employee rights
Shares held by external shareholders at 30 June 2021
Shares held by external shareholders at 30 June 2022
77,381,107
(16,899)
77,364,208
16,899
77,381,107
77,381,107
Ordinary
shares
$’000
76,419
(162)
76,257
-
76,257
76,257
Ordinary shares and premiums received on issue of options are classified as issued capital.
Costs attributable to the issue of new shares or options are deducted from the equity proceeds, net of any income tax benefit, except with
the acquisition of a business which are included as part of the business combination.
Shares purchased by the Company or any entity in the Group are classified as treasury shares and the incremental cost of acquiring those
shares are deducted from share capital.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of members’ shares
held. At members’ meetings, each fully paid ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one
vote on a show of hands.
Treasury shares
The Group maintains the McMillan Shakespeare Limited Employee Share Plan Trust (EST) to facilitate the distribution of McMillan
Shakespeare Limited shares under the Group’s Long Term Incentive Plan (LTIP). The EST is controlled by McMillan Shakespeare
Limited and forms part of the Group.
Treasury shares are shares in McMillan Shakespeare Limited that are held by the EST for the purpose of issuing shares under the
McMillan Shakespeare Limited LTIP. Treasury shares are deducted from issued shares to show the number of issued shares held by
external shareholders.
Options
At 30 June 2022, there were nil (2021: 12,500) unissued ordinary shares for which options were outstanding. In FY21 they were exercisable
at an average price of $13.45. Details relating to options issued, exercised and lapsed during the year and options outstanding at the end
of the year is set out in Note 5.1.
82
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 4.6 DIVIDENDS
Final fully-franked ordinary dividend for the year ended
30 June 2021 of $0.311 (2020: Nil) per share franked at
the tax rate of 30% (2020: Nil)
Interim fully-franked ordinary dividend for the year ended
30 June 2022 of $0.34 (2021: $0.302) per share franked at
the tax rate of 30% (2021: 30%)
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’00
-
24,065
-
24,065
26,310
50,375
23,369
23,369
26,310
50,375
23,369
23,369
Franking credits available for subsequent financial years
based on a tax rate of 30% (2020 – 30%)
111,500
112,284
111,500
112,284
Dividends are brought to account when declared and appropriately authorised before the end of the financial year but not distributed
at reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries
were paid as dividends.
83
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
5 Employee Remuneration and Benefits
5.1 SHARE-BASED PAYMENTS
The Company operates a LTIP for certain executives and employees under the McMillan Shakespeare Limited Employee Share Plan.
The Company issues Performance Rights annually with a three-year vesting period. The issuance to the previous Managing Director was
granted on 22 November 2021 following shareholder approval on that day.
No executive can enter into a transaction that is designed or intended to hedge the exposure. Executives are required to provide
declarations to the Board on their compliance with this policy regularly.
Voluntary Options
Voluntary options allow the participant to acquire a fully paid ordinary share in the Company by the payment of the exercise price at the
exercise date. Entitlement to exercise is not contingent upon continued employment with the Company nor are there performance hurdles.
Voluntary Options are offered to certain executives for an additional opportunity to invest in the Company, who can acquire for a consideration
up to a maximum of $20,000. Consideration was set at a 25% discount to the face value of the option at the date of grant. However, if the
participant leaves employment before vesting date, the participant will forfeit 25% of their entitlement for $1 (the amount forfeited being equal
to the 25% discount to the face value that applied to the consideration price of the option at the date of the conditional offer and acceptance).
Performance Rights
A Performance Right is an entitlement to acquire a fully paid ordinary share in the Company for Nil consideration at grant for conversion
to a share, subject to the achievement of performance hurdles and service conditions being satisfied. Performance Rights carry no dividend
or voting rights.
Performance hurdles and vesting entitlements
Refer page 27 for details of the terms and conditions for Performance Rights issued in the year.
Recognition and measurement
The Performance Options and Rights are accounted for as equity-settled share-based payments and recognised at the fair value at
grant date as an employee benefit expense over the period from issue date to vesting date with a corresponding increase in equity
(share-based payment reserve). Fair value is determined using a Black-Scholes pricing model and incorporates market conditions and
does not include any conditions that are not market based. The cumulative expense recognised is adjusted to reflect the Directors’ best
estimate of the number of rights that will ultimately vest based on the vesting conditions attached to the rights, such as the employees
having to remain with the Group until vesting date, or such that employees are required to meet financial targets. No expense is recognised
for rights that do not ultimately vest.
Voluntary Options
Consolidated Group and parent entity – 2022
Grant date
Expiry date
Exercise
price
Balance
at start of
the year
Granted
during the
year
Exercised or
sold during
the year
Forfeited
during the
year
Balance
at end of
the year
Exercisable
at end of
the year
3 July 2017
30 September 2021
Weighted average exercise price
$13.45
12,500
-
-
-
-
(12,500)
$13.45
-
-
-
-
$13.45
Voluntary Options
Consolidated Group and parent entity – 2021
Grant date
Expiry date
Exercise
price
Balance
at start of
the year
Granted
during the
year
Exercised or
sold during
the year
Forfeited
during the
year
Balance
at end of
the year
Exercisable
at end of
the year
3 July 2017
30 September 2020
$13.45
3 July 2017
30 September 2021
$13.45
Weighted average exercise price
8,979
12,500
21,479
$13.45
-
-
-
-
-
-
-
-
(8,979)
-
(8,979)
$13.45
-
12,500
12,500
$13.45
-
12,500
12,500
$13.45
84
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Rights
Set out below is a summary of Performance Rights granted under the Plan:
2022
Grant
Exercise date 1
Balance at
the start of
the year
Granted
during the
year
Distributed
during the
year
Forfeited
during
the year 1
Balance
at end of
the year
Exercisable
at end of
the year
1 July 2019
30 September 2022
22 October 2019
30 September 2022
20 October 2020
30 September 2023
30 October 2020
30 September 2023
15 October 2021
30 September 2024
22 November 2021
30 September 2024
135,200
38,047
93,387
386,670
-
-
-
-
-
-
71,731
297,507
653,304
369,238
-
-
-
-
-
-
-
(39,477)
-
(12,115)
(98,292)
(29,628)
(14,440)
95,723
38,047
81,272
288,378
42,103
283,067
(193,952)
828,590
-
-
-
-
-
-
-
2021
Grant
Exercise date 1
Balance at
the start of
the year
Granted
during the
year
Distributed
during the
year
Forfeited
during
the year1
Balance
at end of
the year
Exercisable
at end of
the year
3 July 2018
30 September 2021
23 October 2018
30 September 2021
1 July 2019
30 September 2022
22 October 2019
30 September 2022
18 December 2019
31 October 2020
20 October 2020
30 September 2023
30 October 2020
30 September 2023
83,978
18,937
277,513
69,178
16,899
-
-
-
-
-
-
-
103,763
429,633
-
-
-
-
(16,899)
-
-
(83,978)
(18,937)
(142,313)
(31,131)
-
(10,376)
(42,963)
-
-
135,200
38,047
-
93,387
386,670
466,505
533,396
(16,899)
(329,698)
653,304
-
-
-
-
-
-
-
-
1 The first available exercise date is the date that the Company’s financial statements for the respective years are lodged with ASX.
For the purpose of this summary it is assumed to be 30 September of that year.
Fair value of Performance Rights granted
The fair value at grant date was estimated by discounting the Company’s share price at this date by the dividend yield of the Company
as follows:
Grant
15 October 2021
22 November 2021
Share price
at grant date
Expected
life (years)
Expected
dividend yield
$14.52
$13.18
3.0
2.9
4.2%
4.6%
Fair
value
$12.82
$11.54
Expenses arising from share-based payment transactions
Voluntary Options issued under the LTIP
Performance Rights issued under the LTIP
Consolidated Group
Parent Entity
2022
$
-
2021
$
1,607
1,605,688
1,099,680
1,605,688
1,101,287
2022
$
2021
$
-
-
-
-
-
-
85
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
5.2 KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employment benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
Consolidated Group
Parent Entity
2022
$
2021
$
2022
$
2021
$
2,329,448
3,249,595
1,720,753
2,155,883
130,017
25,219
573,198
149,443
(63,529)
406,980
106,449
14,942
402,368
111,896
(81,581)
380,509
3,057,882
3,742,489
2,244,512
2,566,707
Geoffrey Kruyt, Chief Operating Officer, resigned on 10 June 2021 and ceased to be a KMP at this date.
5.3 OTHER EMPLOYEE BENEFITS
Bonuses
A liability for employee benefits in the form of bonuses is recognised in employee benefits. This liability is based upon pre-determined plans
tailored for each participating employee measured on an ongoing basis and is dependent on the outcomes for each participating employee.
86
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
6 Group Structure
6.1 BUSINESS COMBINATIONS
Business combinations are accounted for on the date on which control is transferred to the Group. Cost is measured as the fair value
of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Transaction costs, other than those associated
with the issue of debt or equity instruments that the Group incurs in connection with a business combination, are expensed as incurred.
Upon the loss of control, the Group de-recognises the assets and liabilities of the subsidiary, non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the profit or loss.
Non-controlling interests are measured at their proportionate share of the subsidiaries’ net assets.
Acquisition of Plan Tracker
On 1 July 2021, the Group acquired 100% of the equity instruments of Plan Tracker Pty Ltd (“Plan Tracker”) thereby obtaining control.
Plan Tracker is a well-established New South Wales (NSW) based national plan management provider with a footprint in NSW, Queensland,
South Australia and Western Australia.
Consideration transferred
Consideration transferred for the acquisition is summarised as follows:
Cash consideration
Total consideration transferred
Reconciliation of consideration to cash flow
Cash consideration
Cash acquired
Net cash outflow in period
2022
$’000
11,000
11,000
2022
$’000
11,000
(264)
10,736
87
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Assets acquired and liabilities assumed at the date of acquisition
Fair Value at acquisition date
Cash and cash equivalents
Trade and other receivables, and prepayments
Current tax receivable
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Assets acquired
Trade payables and accrued expenses
Provisions
Lease liabilities
Deferred tax liabilities
Liabilities assumed
Identifiable net assets acquired
Goodwill
Consideration
2022
$’000
264
175
63
77
97
5,064
55
5,795
388
117
99
1,406
2,010
3,785
7,215
11,000
Goodwill of $7,215,000 primarily represents growth expectations, future profitability, the skill and expertise of Plan Tracker’s workforce
and expected cost synergies. Goodwill has been allocated to the Plan Tracker CGU and none of the goodwill is expected to be tax deductible.
Acquisition-related expenses of $955,094 have been incurred and expensed on consolidation and included in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income for the period within ‘Other operating expenses’.
Impact of acquisition on the results of the Group
The Consolidated Statement of Profit or Loss for the period includes a full 12 months of results as the acquisition was effective 1 July 2021.
88
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Disposal of Davantage Group
On 30 September 2021, the Group disposed of its 100% equity interest in its subsidiaries Davantage Group Pty Ltd and Presidian
Management Services Pty Ltd (“RFS Retail business”). At the date of disposal, the carrying amounts of the RFS Retail business’
net assets were as follows:
Current assets
Cash and cash equivalents
Trade and other receivables
Promissory note receivable 1
Current tax receivable
Prepayments
Deferred acquisition costs
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Deferred acquisition costs
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Unearned premium liability
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Unearned premium liability
Total non-current liabilities
Total liabilities
Net assets
2022
$’000
20,140
2,074
9,576
266
26
5,156
37,238
69
51
283
231
6,933
7,567
44,805
84
833
19,349
65
20,331
112
23,141
23,253
43,584
1,221
1 Promissory note receivable represents the conversion of the amount receivable from wholly owned entities of the Group as at completion and is repayable
by the Group to Davantage Group Pty Ltd (refer Note 4.2).
89
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Disposal of CLM Group
On 31 May 2022, the Group disposed of its 100% equity interest in CLM Fleet Management plc, The Car House Milton Keynes Limited,
Corporate Vehicle Rentals Limited and Total Vehicle Mgt Limited.
At the date of disposal, the carrying amounts of the CLM business’ net assets were as follows:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Total current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
2022
$’000
2,742
3,292
33
6,067
191
1,827
170
2,188
8,255
2,965
3,190
363
6,518
1,558
1,558
8,076
179
6.2 OTHER FINANCIAL ASSETS
Investment in subsidiaries
Shares in subsidiaries at cost
Consolidated Group
Parent Entity
2022
$’000
-
2021
$’000
2022
$’000
2021
$’000
-
254,822
253,303
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in the relevant notes above.
90
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Name
Parent entity
McMillan Shakespeare Limited
Subsidiaries in Group
Maxxia Pty Limited 1
Remuneration Services (Qld) Pty Limited 1
Easilease Pty Ltd
Onboard Finance Pty Ltd
MaxxiMe Pty Ltd 2
Interleasing (Australia) Ltd 1
TVPR Pty Ltd 1
Carila Pty Ltd 1
Presidian Holdings Pty Ltd
Davantage Group Pty Ltd 2
Money Now Pty Ltd
National Finance Choice Pty Ltd
Franklin Finance Group Pty Ltd
Australian Dealer Insurance Pty Ltd
National Finance Solutions Pty Ltd
National Insurance Choice Pty Ltd
National Dealer Services Pty Ltd
Motorsure Pty Ltd
Presidian Management Services Pty Ltd 2
ADU Investments Pty Ltd
United Financial Services Pty Ltd
United Financial Services Network Pty Ltd
United Financial Services (QLD) Pty Ltd
Plan Management Partners Pty Ltd
Plan Tracker Pty Ltd 3
Maxxia (UK) Limited
Maxxia Finance Limited
CLM Fleet Management plc 4
Anglo Scottish Asset Finance Limited
Capex Asset Finance Limited
Maxxia Ltd
The Car House Milton Keynes Limited 4
Corporate Vehicle Rentals Limited 4
Total Vehicle Mgt Limited 4
Maxxia Limited
Maxxia Fleet Limited
Wuxi McMillan Software Co. Ltd
Country of
Incorporation
and principal
place of business
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
New Zealand
New Zealand
Peoples Republic
of China
% Owned
2022
% Owned
2021
Principal activities
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Remuneration services provider
Remuneration services provider
Remuneration services provider
Remuneration services provider
Remuneration services provider
Asset management and services
Asset management and services
Asset management and services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Retail financial services
Plan management services
Plan management services
Investment holding
Asset management
Fleet management services
Asset management
Asset management
Asset management
Fleet management services
Fleet management services
Fleet management services
Dormant
Asset management and services
Software development
1 These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with ASIC Corporations (Wholly-owned Companies)
Instrument 2016/785 issued by the Australian Securities and Investments Commission. For further information refer to Note 6.4.
2 On 30 September 2021, the Group disposed of 100% of the share capital of Davantage Group Pty Ltd and Presidian Management Services Pty Ltd
(the RFS Retail business).
3 On 1 July 2021, the Group acquired 100% of the share capital of Plan Tracker Pty Ltd.
4 On 31 May 2022, the Group disposed of 100% of the share capital of CLM Fleet Management plc, The Car House Milton Keynes Limited,
Corporate Vehicle Rentals Limited and Total Vehicle Mgt Limited.
91
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements of the parent entity, including
the value of options issued by the Company on behalf of its subsidiaries in relation to employee remuneration.
The parent entity recognised impairments for its investments in United Financial Services Pty Ltd, United Financial Services Network Pty
Ltd, United Financial Services (QLD) Pty Ltd and Presidian Holdings Pty Ltd of $Nil (2021: $5,541,000) based on the assessment of their
recoverable value.
Subordinated loan receivable
Consolidated Group
Parent Entity
Carrying value at start of the financial year
New loans during year
Specific credit loss allowance
Carrying value at end of the financial year
2022
$’000
-
-
-
-
2021
$’000
-
3,520
(3,520)
-
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
The loan receivable is made up of advances to the joint venture with ML (“JV”, refer Note 6.3) as part of the working capital facility
provided pursuant to the Group’s investment arrangement and formed part of the net investment in the JV. The loan was classified
as a financial asset at amortised cost prior to the Group obtaining control on 31 December 2020.
During the prior period, the subordinated loan was assessed to be impaired and $3,520,000 was expensed in the Statement of
Profit and Loss.
6.3
INVESTMENT IN JOINT VENTURE
Acquired
Share of losses after income tax
Carrying value at end of the financial year
Consolidated Group
Parent Entity
2022
$’000
-
-
-
2021
$’000
337
(337)
-
2022
$’000
2021
$’000
-
-
-
-
-
-
Until 31 December 2020, a subsidiary had a 50% interest in ML (JV), a company resident in the UK and the principal activity of which
is provider of financing solutions and associated management services on motor vehicles. Under the contractual agreement, the Group
together with the joint venture partner jointly controlled the economic activities and key decisions of the JV. The arrangement required
unanimous consent for key strategic, financial and operating policies that affected the Group’s returns. The Group had an option to
acquire the residual interest in the joint venture entity from the joint venture partner after five years from acquisition and the joint
venture partner had an option to sell its interest to the Group during the same period.
The interest in the JV was equity accounted in the financial statements. The Group’s share of losses exceeds its investment cost in the
JV and accordingly, the excess is applied to the extent of the loan receivable from the JV that forms part of the net investment until it is
reduced to zero, and thereafter the recognition of further losses is discontinued except to the extent that the Group has an obligation or
has made payments on behalf of the joint venture entity.
The Group obtained control of the JV on 31 December 2020.
92
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 6.4 DEED OF CROSS GUARANTEE
McMillan Shakespeare Limited, Maxxia Pty Ltd and Remuneration Services (Qld) Pty Ltd are parties to a deed of cross guarantee entered into
during the year ended 30 June 2009 and Interleasing (Australia) Ltd, CARILA Pty Ltd and TVPR Pty Ltd (Interleasing Group) in the year ended
30 June 2010. Under the deeds, each company guarantees the debts of the others and is relieved from the requirement to prepare a financial
report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the Deed of Cross
Guarantee that are controlled by McMillan Shakespeare Limited, they also represent the ‘Extended Closed Group’.
Set out below is the financial information of the Closed Group:
Consolidated Statement of Comprehensive Income and summary of movements in consolidated retained earnings
Statement of Comprehensive Income
Revenue and other income
Employee and director benefits expenses
Depreciation and amortisation expenses and impairment
Leasing and vehicle management expenses
Consulting cost expenses
Marketing expenses
Property and corporate expenses
Technology and communication expenses
Finance costs
Other expenses
Impairment
Profit before income tax
Income tax expense
Profit / (losses) attributable to members of the parent entity
Other comprehensive income
Other comprehensive (loss) / income for the year after-tax
Total comprehensive (loss) / income for the year
Movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit / (loss) for the year
Dividends paid
Retained earnings at the end of the financial year
Consolidated Group
2022
$’000
326,047
(111,523)
(54,545)
(36,287)
(7,095)
(7,830)
(2,565)
2021
$’000
317,695
(94,532)
(54,256)
(36,986)
(5,190)
(7,056)
(2,095)
(14,556)
(13,182)
(3,390)
(1,075)
-
87,181
(25,426)
61,755
(5,623)
(715)
(9,695)
88,365
(29,471)
58,894
-
61,755
438
59,332
183,993
61,755
(50,375)
195,373
148,468
58,894
(23,369)
183,993
93
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Finance lease receivables
Assets under operating lease
Inventory
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Finance lease receivables
Other financial assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Current tax liability
Provisions
Borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Borrowings
Lease liabilities
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
94
2022
$’000
2021
$’000
102,406
49,086
2,000
57,091
7,179
83,457
35,567
1,534
49,761
7,767
217,762
178,086
161,857
156,589
56,825
29,628
4,729
102,402
354,441
55,514
10,918
6,426
102,284
331,731
572,203
509,817
81,191
2,974
13,371
-
3,369
100,905
1,193
115,447
45,167
40,777
202,584
73,632
2,534
13,676
5,761
538
96,141
1,479
102,747
45,516
9,469
159,211
303,489
255,352
268,714
254,465
76,420
(3,077)
195,371
268,714
76,420
(5,948)
183,993
254,465
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
7 Unrecognised Items
7.1 COMMITMENTS
Operating lease commitments
All non-cancellable property leases have been recognised in the Statement of Financial Position.
7.2 CONTINGENT LIABILITIES
Financial guarantees
Guarantee provided for the performance of a contractual
obligation not supported by term deposit
Guarantees provided for obligations under P&A facilities
Guarantee provided in respect of a working capital facility
Guarantees provided in respect of property leases
Cross company guarantees
Consolidated Group
Parent Entity
2022
$’000
2021
$’000
2022
$’000
2021
$’000
11,550
13,764
10,520
4,235
438
40,507
11,550
14,862
11,359
4,256
473
42,500
-
13,589
10,520
-
-
24,109
11,550
14,862
11,359
4,256
473
42,500
95
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
8 Other Disclosures
8.1 RESERVES
(a) Share-based payment reserve
The reserve records amounts for the fair value of share-based payments granted and recognised as an employee benefits expense
but not exercised.
The balance in reserves representing share-based equity rights and options are transferred to retained earnings upon vesting.
(b) Cash flow hedge reserve
Revaluation - gross
Deferred tax
Balance at the end of the financial year
Consolidated Group
Parent Entity
2022
$’000
2,931
(908)
2,023
2021
$’000
(213)
(15)
(228)
2022
$’000
2021
$’000
-
-
-
-
-
-
The hedging reserve is used to record gains and losses on interest rate swaps that are designated and qualify as cash flow hedges.
(c) Foreign currency translation reserve
The foreign translation reserve account accumulates exchange differences arising on translation of foreign controlled entities which are
recognised in other comprehensive income. The carrying amount is reclassified to profit or loss when the net investment is disposed of.
(d) Acquisition reserve
The acquisition reserve account records amounts related to acquisition and disposal of equity interests within the Group.
8.2 GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred
is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.
8.3
INTEREST
Interest income is brought to account on an accrual basis.
8.4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation and impairment loss provision. Cost includes expenditure
directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating as intended.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. The useful lives and residual value of assets
are reviewed and adjusted for impairment, if appropriate, at the end of the reporting period.
96
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022 8.5 RELATED PARTY TRANSACTIONS
Transactions between the Company and other entities within the wholly owned group during the years ended 30 June 2022 and 2021
consisted of:
(a) loans advanced to the Company; and
(b) the payment of dividends to the Company.
Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from transactions
with entities in the wholly owned group.
Dividend revenue
Aggregate amounts payable to entities within the wholly owned group
at balance date:
Current receivables
Current payables
8.6 AUDITOR’S REMUNERATION
Statutory audit services
Remuneration of the auditor (Grant Thornton Audit Pty Ltd)
of the parent entity for statutory audit or review of the financial
report of the entity and any other entity in the Consolidated Group
Remuneration of a network firm of the parent entity auditor for
statutory audit or review of the financial statements (UK)
Other audit services related to client requirements
Remuneration of the auditor (Grant Thornton Audit Pty Ltd)
for non-statutory audit services
Other assurance services
Remuneration of the auditor (Grant Thornton Audit Pty Ltd)
of the parent entity for assurance related services
Remuneration of a network firm of the parent entity auditor
for assurance related services
No non-assurance related services were provided.
Consolidated Group
Parent Entity
2022
$
2021
$
2022
$
2021
$
-
-
-
-
-
-
50,375,000
128,109,000
498,166
481,314
25,576,234
11,891,036
Consolidated Group
Parent Entity
2022
$
2021
$
2022
$
2021
$
289,500
306,000
172,446
183,018
15,200
16,200
248,200
248,200
8,565
8,565
-
-
-
-
-
-
-
-
-
-
97
MMS ANNUAL REPORT 2022Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2022
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
8.7 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED DURING THE YEAR
The amended accounting standards and interpretations issued by the Australian Accounting Standards Board during the year that were
mandatory were adopted except as outlined below. None of these amendments or interpretations adopted materially affected any of the
amounts recognised or disclosures in the current or prior year. The following IFRS Interpretations Committee (IFRIC) and IFRS Interpretations
Committee agenda decisions were not yet adopted during the year.
IFRIC agenda decision on Software-as-a-Service arrangements
The IFRIC has issued two final agenda decisions which impact SaaS arrangements:
> Customer’s right to receive access to the supplier’s software hosted on the cloud (March 2019) – this decision considers whether
a customer receives a software asset at the contract commencement date or a service over the contract term.
> Configuration or customisation costs in a cloud computing arrangement (April 2021) – this decision discusses whether configuration
or customisation expenditure relating to SaaS arrangements can be recognised as an intangible asset and if not, over what time
period the expenditure is expensed.
The Group reviewed the IFRIC agenda decisions and expensed $0.3m (pre-tax) in the financial year relating to costs incurred to configure
and customise software under a SaaS contract. Furthermore, $0.8m was reclassified from software development costs to prepayments
as a result of the agenda decisions.
IFRS Interpretations Committee agenda decision on Costs necessary to sell Inventories (issued June 2021)
AASB 102 Inventories does not define costs necessary to sell inventories when determining net realisable value. The agenda decision
confirmed that an entity cannot limit the costs it includes to those that are only incremental in determining which of its costs are necessary
to sell its inventories.
The Group reviewed the decision which resulted in a $0.3m (pre-tax) increase in the accumulated provision for impairment loss recognised
against assets under operating lease.
8.8 ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
A new accounting standard AASB 17 Insurance Contracts has been issued but not mandatory for adoption in the year ended 30 June 2021.
This Standard is first applicable to the Group for financial periods beginning 1 July 2023. AASB 17 requires all insurance contracts to be
accounted for in a consistent manner and requires insurance obligations to be accounted for using current values.
With the Group’s disposal of the Davantage group (refer note 6.1) the Standard will not have a material impact on the transactions and
balances recognised in the financial statements when it is first adopted for the year ending 30 June 2024.
There are no other standards or interpretations that are not yet effective that are expected to have a material impact on the Group or Company.
8.9 EVENTS SUBSEQUENT TO THE REPORTING DATE
Other than the below and the matters disclosed in this report, there were no material events subsequent to the reporting date.
In August 2022 MMS entered into an agreement to obtain new five year debt facilities totalling $60m to support working capital requirements.
On 29 August 2022 MMS announced that it intends to undertake an off-market buy-back of up to 10% of MMS ordinary shares as part of its
ongoing capital management strategy.
M
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Directors’ Declaration
The Directors are of the opinion that:
1.
the financial statements and notes on pages 42 to 98 are in accordance with the Corporations Act 2001 (Cth), including:
(a) compliance with Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory professional reporting
requirements; and
(b) giving a true and fair view of the Company and Group’s financial position as at 30 June 2022 and financial performance for the financial
year ended on that date; and
2.
there are reasonable grounds to believe that the Company and Group will be able to pay its debts as and when they become due and payable.
3. at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in Note 6.4
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described
in Note 6.4.
Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as disclosed as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of
the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the Directors of McMillan Shakespeare Limited.
Helen Kurincic
Chair
16 September 2022
Melbourne, Australia
Rob De Luca
Managing Director & Chief Executive Officer
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Independent Audit Report
AS AT 30 JUNE 2022
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Independent Auditor’s Report
To the Members of McMillan Shakespeare Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of McMillan Shakespeare Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a
b
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance
for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
www.grantthornton.com.au
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‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
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MMS ANNUAL REPORT 2022
Independent Audit Report
AS AT 30 JUNE 2022
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and intangible asset balance (Note 3.1)
At 30 June 2022, the Group has $88,425,000 of
goodwill and $18,441,000 in other intangible assets
(excluding software development costs) contained
within separate cash generating units (CGUs).
During the year the Group recognised an impairment
against goodwill for the CLM Fleet Management CGU
of $6,028,000.
Our procedures included, amongst others
• Assessed management’s determination of CGUs
based on our understanding of how management
monitors the entity’s operations and makes
decisions about groups of assets that generate
independent cash flows;
Additional goodwill of $7,215,000 and other intangibles
(before amortisation) of $5,064,000 were recognised
from the acquisition of the Plan Tracker business on 1
July 2021.
• Evaluated management’s process for the
preparation and reviewed of the impairment
assessment VIU models, taking into consideration
the impacts of sector specific issues;
AASB 136 Impairment of Assets requires management
to perform an impairment test on goodwill and other
indefinite life intangibles at least annually, as well as on
intangible assets with finite useful lives if indicators of
impairment are identified.
We consider this a key audit matter due to the nature
of the balances and the judgments required in
preparing the value-in-use (VIU) models and due to the
judgement in determining CGUs, impairment indicators
and triggers. This involves consideration of the future
results of the business, growth and the discount rates
applied.
• Reviewed the impairment assessment VIU models
for compliance with AASB 136;
• Reviewed the completeness and accuracy of the
underlying data used in the impairment assessment
VIU models;
• Utilised internal valuation specialists to assess the
appropriateness of the valuation methodology;
• Evaluated the mathematical accuracy of the VIU
model calculations;
• Assessed the key growth rate assumptions by
comparing them to historical results, economic or
industry forecasts and the discount rate by reference
to the cost of capital for the relevant components
and the Group by comparing to historical results,
and considering the Group’s historical ability to
forecast accurately;
• Performed sensitivity analyses in relation to the cash
flow projections, discount and growth rate
assumptions on CGU’s with a higher risk of
impairment. The impairment analysis considered the
individual and collective impacts; and
• Assessed the adequacy of the Group’s disclosures
within the financial statements.
Grant Thornton Australia Limited
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MMS ANNUAL REPORT 2022
Independent Audit Report
AS AT 30 JUNE 2022
Acquisition of Plan Tracker (6.1)
On 1 July 2021, the Group acquired and consolidated
100% of Plan Tracker shares. The Group recognised
$7,215,000 as goodwill relating to the acquisition.
We consider this a key audit matter due to the complex
accounting treatment of AASB 3 Business
Combinations, including the recognition of material
goodwill, and the purchase price allocation of the
underlying assets and liabilities of the acquirer.
Our procedures included, amongst others
• Reviewed the purchase agreement;
• Assessed the accuracy of the fair value of assets
and liabilities recorded at acquisition date;
• Reviewed management’s independent valuation for
identifiable intangibles, which included:
− Assessed whether the intangibles meet the
definition of an intangible under AASB 138
Intangible Assets;
− Considered whether management omitted any
potential intangible assets;
− Engaged Grant Thornton valuation specialists to
review the valuation; and
− Reviewed of the proposed useful lives of the
intangible assets.
• Reviewed of the purchase consideration to ensure
employee payments were correctly allocated under
AASB 3; and
• Reviewed the financial statement disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2022 but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Grant Thornton Australia Limited
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Independent Audit Report
AS AT 30 JUNE 2022
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This
description forms part of our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 19 to 37 of the Directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of McMillan Shakespeare Limited, for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
D M Scammell
Partner – Audit & Assurance
Melbourne, 16 September 2022
Grant Thornton Australia Limited
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Auditor’s Independence Declaration
AS AT 30 JUNE 2022
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Auditor’s Independence Declaration
To the Directors of McMillan Shakespeare Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of McMillan Shakespeare Limited (the Company) and its subsidiaries (the Group) for the year ended 30 June
2022, I declare that, to the best of my knowledge and belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
DM Scammell
Partner – Audit & Assurance
Melbourne, 16 September 2022
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
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MMS ANNUAL REPORT 2022
Shareholder Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this Annual Report is set out below:
SUBSTANTIAL SHAREHOLDINGS
As at 31 July 2022 the number of shares held by substantial shareholders and their associates is as follows:
Shareholder
HSBC Custody Nominees (Aust) Ltd
JP Morgan Nominees Australia Limited
Citicorp Nominees Limited
Chessari Holdings Pty Limited 2
National Nominees Limited
Number of Ordinary Shares
Percentage of Ordinary Shares 1
30,231,652
9,596,747
7,460,000
6,050,941
3,214,381
39.07
12.40
9.64
7.82
4.15
1 As at 31 July 2022, 77,381,107 fully paid ordinary shares have been issued by the Company.
2 Chessari Holdings Pty Limited is a company associated with Mr Ross Chessari, a Non-Executive Director.
NUMBER OF SHARE & OPTION HOLDERS
As at 30 July 2022, the number of holders of ordinary shares and options in the Company was as follows:
Class of Security
Fully paid ordinary shares
VOTING RIGHTS
Number of Holders
4,891
In accordance with the Constitution of the Company and the Corporations Act 2001 (Cth), every member present in person or by proxy
at a general meeting of the members of the Company has:
> on a vote taken by a show of hands, one vote; and
> on a vote taken by a poll, one vote for every fully paid ordinary share held in the Company.
A poll may be demanded at a general meeting of the members of the Company in the manner permitted by the Corporations Act 2001 (Cth).
DISTRIBUTION OF SHARE & OPTION HOLDERS
As at 30 July 2022, the distribution of share and option holders in the Company was as follows:
Distribution of Shares & Options
Number of Holders of Ordinary Shares & Options
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000+
2,962
1,499
255
157
18
As at 31 July 2002 there were 293 shareholders who held less than a marketable parcel of 41 fully paid ordinary shares in the Company.
BUY-BACK
The Company does not have a current on-market buy-back.
On 29 August 2022 MMS announced that it intends to undertake an off-market buy-back of up to 10% of MMS ordinary shares as part
of its ongoing capital management strategy.
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MMS ANNUAL REPORT 2022
Shareholder Information
TOP 20 SHAREHOLDERS
As at 30 July 2022, the details of the top 20 shareholders in the Company are as follows:
No.
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Aust) Ltd
JP Morgan Nominees Australia Limited
Citicorp Nominees Limited
Chessari Holdings Pty Limited 1
National Nominees Limited
Asia Pac Technology Pty Ltd 2
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
Ann Leslie Ryan
Milton Corporate Limited
MOHL Invest Pty Ltd
NWC Group Pty Ltd
AFICO Pty Ltd
Citicorp Nominees Pty Limited
Mod Enterprises Pty Ltd
Wal Assets Pty Ltd
Danny Wallis Philanthropic Foundation Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
BNP Paribas Nominees Pty Ltd
J D Edwards Nominees Pty Ltd
Totals: Top 20 holders of Issued Capital
Total Remaining Holders Balance
Number of
Ordinary Shares
30,231,652
9,596,747
7,460,000
6,050,941
3,214,381
3,068,025
2,024,591
1,501,741
1,008,418
803,532
590,000
437,781
385,000
267,122
129,619
114,795
109,000
101,526
86,424
78,000
67,259,295
10,121,812
Percentage of
Ordinary Shares 1
39.07
12.40
9.64
7.82
4.15
3.96
2.62
1.94
1.30
1.04
0.76
0.57
0.50
0.35
0.17
0.15
0.14
0.13
0.11
0.10
86.92
13.08
1. Chessari Holdings Pty Limited is a company associated with Mr Ross Chessari, a Non-Executive Director.
2. Asia Pac Technology Pty Limited is a company associated with Mr John Bennetts, a Non-Executive Director.
UNQUOTED SECURITIES
As at the date of this Annual Report, there are no unquoted securities in the Company.
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MMS ANNUAL REPORT 2022 McMillan Shakespeare Limited
ABN 74 107 233 983
ASFL No. 299054
Level 21, 360 Elizabeth Street
Melbourne Victoria 3000
www.mmsg.com.au
Corporate Directory
Registered Office
Level 21, 360 Elizabeth Street
Melbourne Victoria 3000
Tel: +61 3 9097 3000
Fax: +61 3 9097 3060
www.mmsg.com.au
Company Auditor
Grant Thornton Audit Pty Ltd
Collins Square, Tower 5
727 Collins Street
Melbourne Victoria 3008
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford Victoria 3067
Tel: +61 3 9415 4000
www.mmsg.com.au
107
McMillan Shakespeare Limited
ABN 74 107 233 983
ASFL No. 299054
Level 21, 360 Elizabeth Street
Melbourne Victoria 3000
www.mmsg.com.au