MMS Half Year Results to 31 December 2023

Our Half Year Financial results to 31 December 2023 have been announced to the Australian Securities Exchange (ASX) reporting strong results, performing well across both financial and operating metrics in a challenging economic climate, punctuated by increased cost of living pressures, and the growing demand for zero emission and more fuel-efficient vehicles. 

Here you can view the Market Announcement, the Half Year Results presentation, the Consolidated Interim Financial Report, and the Dividend Distribution. 

1HFY24 ASX Market Announcement 

1HFY24 Results Presentation 20 February 2024

1HFY24 Consolidated Interim Financial Report 

Dividend Distribution

Our continuing operations normalised revenue increased by 8.1% to $261.1m, normalised EBITDA grew by 42.9% to $86.9m, and normalised UNPATA was up 48.2% to $53.2m. We also achieved margin expansion, with our normalised EBITDA margin growing 8.1% points to 33.3%. 

This strong performance is the result of all our employees’ hard work and dedication. CEO Rob De Luca said, “I want to thank every one of our amazing people who have made this result possible.”

The strong performance for the MMS Group reflects our continued customer focus and the fact that we’re delivering solutions that help during the current economic climate. With many Australians facing increased cost of living and high interest rates during the half, the value proposition of novated leasing and salary packaging resonated with more Australian workers as they looked for ways to save money.

We are seeing increasing demand and availability of electric vehicles, which contributed to our robust performance. Novated lease sales were up 25.7% for the period, with electric vehicles accounting for 36.9% of new leases.

Group Remuneration Services (GRS) – Salary Packaging and Novated Leasing

Our GRS division had a strong first half to FY24 with normalised revenue growing 29.2% to $142.7m. 
GRS’ strong performance for the period was supported by better novated lease yields, stemming from the margin expansion associated with EVs, which were up 14.9%. Salary packages grew by 4.8% and novated leases grew by 3.6%.

The higher price of EVs when compared to their internal combustion engine equivalents had long acted as a barrier to entry for many. The Electric Car Discount Bill removed that barrier and changed the landscape, resulting in increased demand and contributing to the results announced today. 

Novated lease orders for the period were up 15.5%, with EVs making up 41.5% of new novated lease orders. This same time last financial year, EVs comprised just 9.2% of new novated lease orders, highlighting the strong growth trajectory we’re observing. 

The strength of the novated leasing value proposition is evident when we compare our new novated lease sales to the Australian market. While national new car sales are up 18.7% on the first half of FY24, our novated new sales have increased by 43.1%. 

When we look at the proportion of those sales that are EVs, the novated lease value proposition becomes more apparent. Whereas EVs as a percentage of Australian new car sales increased from 6.8% to 11.1% between 1HFY23 and 1HFY24, they rose from 5.4% to 36.9% of our new novated lease sales. 

We are pleased to be playing our part in helping more Australians save money, minimise pollution in communities, and reduce Australia’s carbon emissions by making the transition to an EV. 

MMS achieved strong customer growth during the period, reflecting our ongoing commitment to excel in customer experience – as evidenced by our Net Promoter Score of +48 – and the strength of our offering, which is serving to help our customers maximise their take home salary at a time when they need it most. 

During the first half we continued to progress the implementation of OnBoard Finance. We aim to fund approximately 20% of our novated lease volume through OnBoard Finance which was achieved during the period. We have now funded $224.2m worth of leases. 

Asset Management Services (AMS)

Our AMS EBITDA of $15.1m was down 3.6% but the first half of FY23 included a $1.6m EBITDA one-off benefit from the expiration of larger customer contracts. If we exclude this, AMS EBITDA would have been up 7.3%.
AMS saw a rise in net amount financed (NAF), up 10.5% to $79.8m and AWD of $339m was up 9.4%, reflecting new business and improvements in vehicle supply. 

We saw more new cars being released by OEMs to business buyers as post COVID supply continued to improve. By the end of the period, supply for business buyers was in line with 2019. This improvement in vehicle supply, combined with new business, contributed to an increase of 10.5% in NAF to $79.8m and an increase of 9.4% in written down value to $338.6m. 

While EV demand is not yet as strong in the business market as in the consumer and novated market, AMS saw petrol hybrids and battery electric vehicle deliveries as a percentage of all deliveries increase from 1.8% in 1HFY23 to 5.7% in 1HFY24. 

In line with our strategic objective of streamlining our business portfolio, we completed the sale of our Australian Asset Finance Aggregation business and Asset Management Services UK business. 

Plan Support Services (PSS)

PSS performed well, with revenue growing by 11.9% to $26.2m, reflecting an 16.1% growth in customers. Our commitment to excelling in customer experience and supporting participants of the National Disability Insurance Scheme (NDIS) to achieve their goals is reflected in our strong Net Promoter Score of +53.  
Our investment in building a scalable platform with digital tools to enhance the customer experience has resulted in margin growth, with EBITDA of $6.8m up 37.6% and UNPATA of $4.4m up 40.1%. 

We continued our investment in a scalable technology platform and during the period improved our integration with the National Disability Insurance Agency (NDIA) via APIs streamlining access to participant information and payment details, resulting in operational efficiencies. As a result of this scalability, we improved EBITDA margins from 21.0% in the first half of FY23 to 25.8% in this period. 

PSS is committed to ensuring the integrity and sustainability of the NDIS. Our investment in integrity checks is supporting the NDIA’s focus on fraud prevention and delivering value for money. During the period, our robust integrity checks detected $21m of invoices that were deemed fraudulent and as such were not paid. Additionally, we helped customers access better value for their services with $43.4m in Scheme savings achieved by PSS customers paying under the price guide limit.

As MMS enters the second half of FY24 we do so as a trusted partner with an established position in large and growing markets. We remain focused on pursuing our strategic priorities to deliver sustainable growth.
MMS shareholders will enjoy an interim fully franked dividend of 76.4 cents per share. That’s up 59% on first half last year.

CEO Rob De Luca says to staff, “Thank you again for your ongoing commitment and dedication to MMS. Our performance is only possible due to the hard work of our people. I’d like to thank all of you for going above and beyond and embodying our purpose of making a difference in people’s lives.”