Rising Costs and Regulatory Shifts Test McMillan Shakespeare’s Growth Strategy

Strong Financial Performance Amid Strategic Growth

McMillan Shakespeare Limited (ASX, MMS) has reported a robust financial performance for the year ended 30 June 2025, posting a statutory net profit after tax (NPAT) of $95.3 million, a 14.1% increase over the prior year. Normalised revenue rose 3.0% to $541.6 million, reflecting growth across all business segments.

The company declared a fully franked final dividend of 77 cents per share, bringing the total dividend for FY25 to 148 cents per share. This payout represents 100% of normalised underlying net profit after tax and amortisation (UNPATA), underscoring MMS’s commitment to delivering consistent shareholder returns.

Operational Highlights and Strategic Initiatives

FY25 saw MMS complete its multi-year Simply Stronger transformation program, which focused on enhancing customer experience, digital innovation, and operational productivity. Key digital rollouts included the MyMaxxia and MyRemServ apps, which have been well received with strong adoption and high app store ratings.

The Group Remuneration Services segment recorded a 4.1% increase in novated lease sales, supported by new client wins and the expansion of the Oly platform targeting small and medium enterprises. Meanwhile, the Plan and Support Services segment grew revenue by 11.5%, bolstered by the strategic acquisition of Plan Support Agency Pty Ltd, which added approximately 3,800 NDIS participants and strengthened MMS’s regional presence in New South Wales.

Financial Position and Capital Management

MMS maintains a strong balance sheet with net assets of $112.8 million and a stable debt to EBITDA ratio of 0.5x. The company executed a successful $300 million private placement of debt facilities for its Onboard Finance funding model, which saw customer receivables grow by 54.7% year-on-year to $503.4 million.

The Group’s disciplined capital allocation strategy balances reinvestment for growth, strategic acquisitions, and shareholder returns. The Board’s dividend policy targets a payout ratio between 70% and 100% of UNPATA, reflecting confidence in sustainable earnings.

Navigating Market and Regulatory Dynamics

MMS operates in a complex regulatory environment, with ongoing changes to the National Disability Insurance Scheme (NDIS) and Fringe Benefits Tax (FBT) impacting its business. The expiry of the FBT exemption for plug-in hybrid electric vehicles (PHEVs) in April 2025 was offset by continued incentives for battery electric vehicles (BEVs), supporting the Group’s novated leasing growth.

The company actively engages with government stakeholders to align its services with reform objectives and has invested in artificial intelligence and automation to improve fraud detection and invoice processing in the NDIS segment, contributing to significant scheme savings.

Governance and Executive Remuneration

The Board comprises experienced independent directors with diverse expertise across finance, strategy, risk management, and sustainability. Executive remuneration is closely linked to performance, with FY25 outcomes reflecting a balanced scorecard approach encompassing financial results, sustainability, strategy execution, customer outcomes, and people management.

CEO Rob De Luca’s long-term incentive vesting was 96.7%, aligned with strong earnings growth and capital efficiency metrics. The company continues to refine its remuneration framework to support sustainable growth and shareholder alignment.