McMillan Shakespeare (ASX:MMS) executives said the company delivered a stronger first-half performance as strategic investments in technology and automation supported productivity gains, while the integration and scaling of Onboard Finance moved into a “normalized” reporting footing.
Managing Director and CEO Rob De Luca, joined by CFO Paul Varro, told investors the period reflected “clear benefits” from prior investments, including higher digital self-service levels and the use of AI tools in customer operations. Management also highlighted ongoing capital returns to shareholders through a fully franked interim dividend and a new on-market buyback.
First-half financial performance and shareholder returns
He added earnings per share rose 1.4% to 72 cents, and return on capital employed was 62.8%, up 110 basis points. The company declared a fully franked dividend of AUD 0.62 per share, which Varro described as 85% of UNPATA, and announced an on-market share buyback of up to AUD 10 million over the next 12 months. Management said the dividend and buyback represented total returns to shareholders of AUD 53.2 million, up 7.6% versus the prior comparable half.
Varro said that on a like-for-like basis, operating expenses rose 1.3% once accounting for AUD 3.4 million in Onboard Finance operating expenses, despite wage and vendor inflation. He attributed the containment to productivity benefits from technology, automation, and process improvements.
Technology and automation a key driver
Management framed the period’s performance around three strategic priorities: improving customer experience, enabling technology, and delivering valued solutions for customers and partners.
De Luca said the company’s GRS digital apps lifted digital completion of service interactions to 83%, a 10-basis-point improvement, helping improve customer experience and reduce cost to serve. He also pointed to an AI capability integrated into the telephony platform that analyzes customer calls and supports agents in real time. According to De Luca, the tool reduced after-call work time by 16% by automating call reasoning and customer notes.
Across the business, management also cited increased digital invoice processing, enhancements to fraud detection, and improvements to trade-in processes through access to multiple data sources that supported valuations. De Luca said these initiatives contributed to a 23% increase in sales in the trade-in process.
Segment results: GRS, AMS, and PSS
Group Remuneration Services (GRS) delivered what management described as a strong half, supported by customer growth, productivity improvements, and the inclusion of Onboard Finance. On a normalized basis, GRS revenue increased 16.6% to AUD 167.6 million. EBITDA rose 12.8% to AUD 62.5 million and UNPATA increased 7.7% to AUD 36 million, reflecting the inclusion of Onboard Finance and higher amortization following the conclusion of the “Simply Stronger” program in the second half of FY2025.
Operationally, De Luca said salary packages rose to 387,500 and novated leases increased 7% to 82,100, while Onboard Finance receivables scaled to AUD 539 million. He also noted customers per full-time equivalent increased 17.8% to 600, reflecting productivity improvements. Within GRS, the company removed AUD 4.4 million in non-recurring costs, achieved AUD 2.9 million in cost reductions, and invested AUD 2.7 million to scale the Oly platform for SME growth.
Novated leasing trends were discussed as a key opportunity. De Luca said the addressable market comprised about 7.9 million employees, with an emerging opportunity of 3.8 million SME corporate employees. The company’s accessible employee reach increased to about 546,100, which management said represented approximately 9% of the market. Management also highlighted a shift in mix, with corporate and SME novated sales reaching 26% of total sales, up from 21% in the prior comparable half. De Luca said penetration increased to 21% of total salary packages.
Asset Management Services (AMS) grew revenue by AUD 6.9 million. Operating income rose 4.3% after cost of sales, and UNPATA increased 3.2% to AUD 9.9 million. Fleet units increased 4.4% to 15,400, driven by growth in financed and managed-only units, with managed-only units growing about 21% following new client wins. Management said yields benefited from a higher mix of early terminations that generated exit fees, while average term lengths extended as clients held assets longer. AMS secured 20 net new clients and invested AUD 500,000 in outsourcing back-office functions. De Luca also highlighted the AutoGuru partnership, which he said was delivering digitized vehicle solutions for clients and creating opportunities for efficiency.
Plan and Support Services (PSS) reported revenue growth of 5.4% to AUD 29.3 million. Customers increased 16.1% to 43,000, including 3,800 from the My Plan Support acquisition. However, profitability declined as expected due to the removal of setup fees previously announced, which management said represented about AUD 2.3 million and contributed to EBITDA declining from AUD 8.7 million to AUD 6.4 million. PSS also incurred AUD 1.8 million of costs from integrating My Plan Support into MMS enterprise systems and invested about AUD 600,000 in enhanced fraud detection and verification capabilities. De Luca said productivity remained a focus, with the segment assessing and processing about AUD 2 million in ongoing productivity improvement initiatives, and customers per FTE rising 25.3% to 277.
Q&A: margins, Onboard Finance, and PSS profitability
In response to analyst questions on margin performance, De Luca and Varro cited a combination of yield improvements in novated leasing and cost reductions driven by technology, AI, and customer self-service. Varro noted that headline comparisons could appear relatively flat because of the inclusion of Onboard Finance costs, but said underlying cost management showed improvement.
Asked about the impact of the PSS setup fee removal, Varro said that adding back the AUD 2.3 million would have brought segment EBITDA back to AUD 8.7 million and implied underlying growth of roughly 6% or about AUD 600,000. He said management expected improved second-half margins as the business absorbed the change, while also pointing to benefits from technology and fraud detection investments.
On Onboard Finance, management said it would not disclose further normalization adjustments. However, in response to a question about whether Onboard Finance remained an EBITDA drag, management said it was “fairly marginal,” describing the impact as neutral over the course of the year, with expectations it would become slightly accretive as originations scale.
Outlook and external factors to watch
Looking ahead, De Luca said the company expected continued customer growth across all segments supported by business momentum, growth in finance receivables, and ongoing realization of strategic investments. He added that MMS was monitoring external developments, including the government’s review of the Electric Car Discount scheme and the annual NDIS price review affecting the PSS segment.
Management reiterated a disciplined approach to investment and capital allocation, citing the company’s “strong and flexible” balance sheet and the planned execution of the AUD 10 million buyback over the next 12 months.
About McMillan Shakespeare (ASX:MMS)
McMillan Shakespeare Limited provides salary packaging, novated leasing, disability plan management and support co-ordination, asset management, and related financial products and services in Australia, the United Kingdom, and New Zealand. It operates through Group Remuneration Services, Asset Management Services, and Plan and Support Services segments. The Group Remuneration Services segment offers salary packaging and ancillary services, including novated leasing asset and finance procurement, motor vehicle administration, and other services.
