Results

McMillan Shakespeare Limited

11/08/2018 | Press release | Distributed by Public on 11/07/2018 19:50

McMillan Shakespeare and Exclips merger presentation

McMillan Shakespeare Limited

McMillan Shakespeare and Eclipx merger

8 November 2018

Disclaimer

Disclaimer and important notice

This presentation has been prepared by McMillan Shakespeare Limited ABN 74 107 233 983 ("MMS"). It contains summary information about MMS and its subsidiaries and their activities current as at the date of this presentation. The presentation contains selected information and does not purport to be all inclusive or to contain information that may be relevant to a prospective investor. The information in this presentation should not be considered as advice or a recommendation to investors or potential investors and it does not take into account the investment objectives, financial situation and particular needs of any particular investor and each person is responsible for conducting its own examination of MMS and assessment of the merits and risks of investing in MMS' shares.

This presentation contains certain forward-looking statements. These statements are only predictions. Actual events or results may differ materially. Nothing in this presentation is a promise or representation as to the future. MMS does not make any representation or warranty as to the accuracy of such statements or assumptions.

The information in this presentation is for information purposes only and is not an offer of securities for subscription, purchase or sale in any jurisdiction. No representation or warranty, express or implied, is made as to the fairness, accuracy, reliability, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of MMS, its directors, employees, agents or advisers, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of MMS or its directors, employees, agents or advisers.

An investment in MMS is subject to known and unknown risks, some of which are beyond the control of MMS, including possible loss of income and principal invested. MMS does not guarantee any particular rate of return or the performance of MMS, nor does it guarantee the repayment of capital from MMS or any particular tax treatment. Each person should have regard to MMS' other periodic and continuous disclosure documents when making their investment decision and should consult such advisers as they consider necessary before making an investment decision. Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Financial data

All dollar values are in Australian dollars ($) unless stated otherwise.

Effect of rounding

A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation.

McMillan Shakespeare Limited ("MMS", ASX: MMS) to merge with Eclipx Group Limited ("Eclipx", ASX: ECX) via Eclipx scheme of arrangement

Scrip and cash: 0.1414 MMS shares and $0.46 cash offered for each Eclipx share held, implying a total value of $2.85 per Eclipx share based on MMS' last closing price of $16.90 on Wednesday, 7 November 2018

The consideration represents a 33.2% premium to Eclipx's undisturbed price of $2.14 on Friday, 17 August 20181

Creates a leading Australian and New Zealand salary packaging and fleet management company

Approximately $50 million in EBITDA run-rate synergies per annum expected to be fully realised within three years following full integration

Expected to be EPS accretive pre synergiesThree Eclipx directors to join the MMS Board

Mike Salisbury and Mark Blackburn to continue as CEO and CFO respectively

Senior management of both MMS and Eclipx to participate as Executives of the Combined Group

The scheme is expected to be implemented in Q1 2019

The merger is unanimously recommended by the Board of Eclipx, in the absence of a superior proposal and subject to an independent expert concluding that the merger is in the best interests of the Eclipx shareholders

1. Last trading day prior to SG Fleet's unsolicited, non-binding and indicative proposal to acquire all shares in Eclipx for $2.52

Merger of two complementary businesses

Combining the best-in-breed of both organisations including Eclipx's operating lease business and MMS' salary packaging and novated business

Provides existing and new customers additional value through enhanced products and services Strengthens combined geographies across Australia, New Zealand and the United Kingdom

Significant synergies

Approximately $50 million in EBITDA run-rate synergies per annum expected to be fully realised within three years following full integration

Greater scale and stronger balance sheet position

Additional growth opportunities in the merging business units of MMS and Eclipx arising from access to the enlarged customer base

Increased liquidity and access to capital

Conservatively geared with an estimated Net Debt / EBITDA of 0.9x1

Shareholder value

Anticipated to generate shareholder value and be earnings accretive in the first full year following completion

Scrip consideration enables all shareholders to maintain investment in the Combined Group and benefit from the synergies

5

1 Net debt / EBITDA calculated on corporate net debt

McMillan Shakespeare and Eclipx merger

Creates a leading Australian and New Zealand salary packaging and fleet management company

Novated lease landscape in ANZ (units)

76,359

Combined

Smart Group

SG Fleet

LeasePlan

Sources: SIQ 1H18 results presentation (page 8), MMS FY18 results presentation (page 4), SGF FY18 results presentation (pages 14 and 15), LeasePlan management estimates and Eclipx as at 30 September 2018

Fleet management landscape in ANZ (units)

125,751 104,001

Combined

Toyota Fleet Management

CustomLeasePlanSG Fleet

FleetORIX

FleetCareSmart Group

Sources: Eclipx as at 30 September 2018, Toyota Fleet Management, Custom Fleet, ORIX and FleetCare: Under the Hood, Citi broker research, 30 November 2017 (page 9), LeasePlan management estimates, SGF total units less 12,923 UK units as reported in FY18 results presentation (pages 14 and 15) and Citi broker research (page 20), SIQ 1H18 results presentation (page 8) and MMS total units less UK units (21,000) as reported in FY18 results presentation (pages 4 and 22)