McMillan Shakespeare Limited (MMS) Earnings Call Transcript & Summary

Good morning, and welcome all. My name is Helen Kurincic, the Board Chair of McMillan Shakespeare Limited. I'm delighted to be able to extend a warm welcome to our shareholders and guests to our 2021 Annual General Meeting. Firstly, I would like to acknowledge the traditional custodians of the lands across Australia and recognize their cultures and continuing connection to land. I'm speaking from Melbourne, which is the traditional country of the people of the Kulin Nation, and I pay my respect to their elders past and present. In the interest of the health and safety of shareholders, directors, staff and other attendees and given the continuing uncertainty regarding ongoing COVID-19 restrictions as they relate to gatherings, your Board determined to hold this year's AGM as an online meeting via the Lumi platform. I truly hope we are able to hold a hybrid AGM next year to maximize in-person and online access and attendance. I'm advised that in accordance with Rule 16.4 of the company's constitution, a quorum of members is present and accordingly, I declare the Annual General meeting open. The notice of meeting was distributed to all shareholders on the 14th of October 2021, and I'll take the notice of meeting as read. All attendees can watch and listen to the live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Questions can be submitted at any time. To ask a question, press on the speech bubble icon. This will open a new screen. At the bottom of the screen is a section for you to type your question. Please be sure to note which resolution number your question relates to, to help ensured is addressed at the correct time. Once you've finished typing, press the arrow symbol to send. Please note that you can submit questions any time from now, and I'll address them at the relevant time of the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic amalgamated together. For those shareholders who wish to ask a verbal question, an audio question facility is available during this meeting. To use this service, please call, the broadcast on the Lumi platform and then click on the link under asking audio questions and a page will open, where you'll be prompted to enter your name and the topic of your question before being connected. Again, when entering a topic, please specify which resolution number your question relates to, you will listen to the meeting on this page while waiting to ask your question. If you have any issues using this system, please return to the Lumi platform. Voting today will be conducted by way of the poll on all items of business. In order to provide you with enough time to vote, I will shortly be opening the voting for all resolutions. At that time, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submission or enter button as your vote is automatically recorded, and you can change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The polling icon will still appear, please submit your votes at any time, and I'll provide you with a warning before voting will be closed. The proxies received in advance of the meeting are held by the company's share registry and are available for inspection upon receipt of the written request. I'd like to introduce you now to the directors of the company who are attending the meeting today and who are on the live webcast. We have Non-Executive Directors, Kathy Parsons, our Chair of the Audit, Risk and Compliance Committee; Bruce Akhurst, Chair of the People, Culture and Remuneration Committee; John Bennetts, Ross Chessari; and Tim Poole. Bruce has joined the MMS Board in 2021, and you'll have an opportunity to hear from Bruce, whose election is on today's agenda. We are also joined by Managing Director and CEO, Mike Salisbury; and our CFO and Company Secretary, Ashley Conn. I also note the presence of Darren Scammell, representing the audit firm of Grant Thornton, and thank Darren for his attendance today to respond to any questions. Today, I'll provide you with a brief overview of our results and strategic focus, our Board renewal process and comments on FY '22. Our Group Managing Director and CEO, Mike Salisbury, will outline more detail regarding how our business is successfully operated in this past financial year as well as our expectations for the road ahead. While 3 executives of the Group will talk to their respective businesses or area of strategic focus. In no small part, due to the ongoing efforts and commitment of our people, the Group achieved an improved profit performance in FY '21 in a highly challenging operating environment, still impacted by the ongoing COVID-19 pandemic. Importantly, the majority of the customers your company serves, includes health care, charity, government and private sector workers, many of whom are delivering essential services to communities. Group revenue achieved a $544.5 million represented growth of 10.2% on FY '20 and Group underlying net profit after tax or UNPATA, of $79.2 million represented growth of 14.8% on the previous financial year, whilst underlying earnings per share at 102.4 cents was up 17.1%. We were pleased to deliver a fully franked dividend of $0.613 per share for the year. This represented 66% of UNPATA, excluding the contribution of the Australian Government JobKeeper payment. In response to the pandemic, we instituted amongst other measures a wage freeze for the period and no bonuses relating to FY '20 were paid, whilst we extended senior debt maturities and nonessential spending was restricted. The JobKeeper payment funding received a $7.3 million after-tax in FY '21, enabled the retention of our employees despite the challenges of COVID-19 and the negative impacts on our financial performance compared to FY '19. Despite the receipt of the JobKeeper payment, UNPATA in FY '21 only returned to 89% of FY '19, pre COVID-19 levels. Our core Group Remuneration Services business achieved segment UNPATA of $61.2 million, representing a 0.4% increase on FY '20. Planned Partners largely affected -- unaffected by COVID-19, achieved strong customer organic growth and improved customer engagement, with funds under administration in FY '21 increasing by 76% and support coordination hours increasing 43%. Our results for the year reflected the baring and ongoing impacts of COVID-19 on our businesses, such as the automotive supply dynamic as well as the benefits from execution of our key strategic priorities, such as the restructure of our United Kingdom business. A strategic review of our Retail Financial Services Retail business was also undertaken during the period and on 23rd of August 2021, we agreed the sale of the business via a management buy-out. This option was the most effective and efficient option and ensure the ongoing service and support for customers. The disposal transaction was completed on 30th of September 2021. During the financial year, the Board approved our inaugural Sustainability Strategy for the Group, which sets our focus and future direction on how we aim to create positive environmental and social outcomes and value for our stakeholders, including our shareholders, clients, customers, our people and broader communities. This strategy responds to key environmental, social and governance recent opportunities for the Group, including acting on climate change, supporting greater accessibility and social inclusion and our community engagement activities. These are supported by a number of targets for FY '22 and beyond. We are committed to creating a pathway to achieve net zero emissions for our own operations, completing a climate risk assessment and the development of an MMS Accessibility and Inclusion Plan and Reconciliation Action Plan. Himesha Jayasinghe, our dedicated Sustainability Manager for the Group will talk in further detail to our performance and focus in these areas in a moment. Your Board continues to undertake a diligent Board renewal and succession planning process, resulting in a new Non-Executive Director being appointed in each of the years 2018, 2020 and 2021 thus far. This commitment to renewal saw independent Non-Executive Director, Ian Elliot retiring on 1st of April 2021 after more than 6 years of committed service to the Board. Bruce Akhurst was appointed as an Independent Non-Executive Director on 1st of April 2021, a highly experienced former executive and ASX director and who is standing for election today. We are also grateful that independent Non-Executive Director and our former Chair Tim Poole, agreed to the Board's request to offer himself for re-election this year. If shareholders approve his re-election today, Tim's term will conclude in August 2022, allowing for a new Non-Executive Director recruitment and transition to occur, given Tim's corporate knowledge and contributions in an important time at MMS. On behalf of all at MMS, I would like to especially thank Tim at this AGM for his immense contribution. Now turning to FY '22. Elements of the abnormal trading conditions that characterize FY '21 are continuing in FY '22, and in particular, some impacts from the ongoing response of governments to COVID-19, and importantly, the global motor vehicle supply constraints, which have been widely documented. We continue to invest in enhancing our digital capability, our own financing capability with the implementation of our strategically beneficial funding warehouse and reducing our cost to serve as we look to improve our value proposition. This activity is aimed at ensuring that each of our business segments are well placed to continue to meet the changing needs of customers in both business as usual circumstances and in the face of disrupted and changing market conditions. Our strategic focus this year continues to pursue growth and efficiency across our businesses, including integration of Plant Tracker, which was a small acquisition completed on the 1st of July 2021 and assess further inorganic growth opportunities in that business. As always, on behalf of the Board, I thank our customers and our shareholders for their ongoing engagement and support of the Group. To Mike Salisbury, the executive leadership team, fellow directors and all our people, we thank you for your commitment and dedication to establish MMS as a trusted partner and supporting our customers' financial well-being and their lifestyle goals. I now invite our MD and CEO, Mike Salisbury, to provide his address.

Thank you, Helen, and a very good morning to everyone. Today, I'll be providing you with a brief overview of our performance across 2021 and take you through the key financial and operational highlights for the Group as well as giving an update on our current trading for the 2022 financial year-to-date. We'll also hear from 3 of our leaders who I'll introduce in a moment. As Helen just mentioned, the Group delivered an improved profit outcome in FY '21, achieved in the face of a challenging and constantly moving operating environment. This result was pleasing, whilst also reflecting the varied and ongoing impacts of COVID-19, including the way in which we engaged with our customers, the way our people perform their roles and the challenges of constrained new vehicle supply globally, challenges, which in part, still exist today. We took steps to ensure the sustainability and financial security of the Group in the face of the pandemic, while also developing new ways to connect and support our remote workforce and maintain high levels of service to our customers to enhance digital capabilities. In the year, we also executed on a number of strategic priorities, including the simplification of the Group through the restructure of our U.K. business and delivered strong organic customer growth in Novated Leasing and in Planned Partners, while also executing on our market consolidation strategy in completing our first plan management acquisition immediately post year-end on July 1 this year. This combination of factors has made for a very complex and challenging year, but one which positions the Group well as we continue to navigate challenges in our operating environment. Our results speaks to the organization's ability to anticipate, react and respond to these conditions, which is testament to the ongoing engagement and commitment of our people. I'll now turn to the presentation on Slide 6. In terms of our performance for the period, Group revenue across FY '21 of $544.5 million, was up compared with $494 million achieved in FY '20, with EBITDA up 31.4% to $130.7 million. As Helen mentioned, a fully franked dividend of $0.613 per share was delivered for the year, inclusive of the final dividend of $0.311 per share. Group cash flow remains strong, with free operating cash flow of $99.8 million or 126% of UNPATA. The Group's net cash position at the end of the year was $142 million, up from $67 million in the previous period. In the second half of the year, we refinanced our debt facilities at significantly improved pricing, meaning that Group liquidity is well positioned for our future needs and growth. Importantly, Group return on capital employed improved to 33.2% and is now up by 13.6% over the last 5 years. The year also underlined the way in which we engage with our customers and our people and the way our people perform their roles has never been more important. Accordingly, investment in our people remained a priority for the Group in FY '21, as we continue to adapt to new ways of working as the pandemic persisted, whilst we develop new ways to connect and support our remote workforce. We were delighted to see our Sustainable Engagement Score increase by 6% to 85%, a figure well above the benchmark for financial services firms and in line with global high-performing organization. This affirms that our people feel more connected to the business, our values and our culture than at any time in the past, which is increasingly important in the current market where the attraction and retention of people is under pressure. This level of engagement is reflected in the way we service our customers, and we received great customer satisfaction feedback throughout the year, averaging a Net Promoter Score of 60, up 15.4% from FY '20. Total salary packages under management declined marginally on FY '20, primarily as a result of the loss of the salary packaging arrangements within the New South Wales Public health network. Novated leases increased 2.2% against a backdrop of the limited supply of new vehicles with increased retail prices and net amount financed, and with carryover of sales orders increasing to over 5x historical levels. Plan Partners delivered another strong performance for the period, with pleasing growth in both plans under administration and support coordination hours, whilst also continuing its investment in technology. In all, I believe we managed the period extremely well and demonstrated the resilience of our business, our people and our customer base. Importantly, in the year, we also continued to execute on a number of strategic priorities: successfully completing the restructure of the U.K. business as mentioned, progressing our digital strategy designed to lower costs and improve our customers' digital experience, further development of a securitization and funding warehouse for the business and escalating our approach to sustainability across the Group. And in talking about sustainability, to enable a deeper understanding of our approach and priorities, I'll ask the Group's Sustainability Manager, Himesha Jayasinghe, to speak briefly to the Group's strategy in this regard. Himesha will be followed by the Chief Executive of Planned Partners, Sean Dempsey, who will provide further insights into our focus and priorities with regards to supporting participants in the National Disability Insurance Scheme, and Sean will then introduce Kylie Pashen, Managing Director of our Group Remuneration Services segment, incorporating the Maxxia and RemServ businesses, to provide an overview of the recent performance of our GRS business, together with our key strategic initiatives. Himesha, thank you.

Thank you, Mike, and good morning, everyone. It is a pleasure to be able to speak with you about our Group's ongoing journey towards becoming a more sustainable organization. Through recent periods, we have taken significant steps forward regarding our focus on sustainability. This is demonstrated through a number of initiatives we have initiated. We have developed an inaugural sustainability strategy for the Group, established meaningful short and long-term targets, significantly expanded reporting on sustainability matters to our stakeholders and appointed my role as the Group Sustainability Manager to drive a strategic and concerted approach to sustainability across the Group. Importantly, sustainability is viewed as a key value driver within the Group. A lens through which we look at opportunities to create value for both our business and our key stakeholders, mitigate risk and help us achieve our purpose of making a difference to people's lives. Our Board and management believe that managing our non-financial risks and opportunities helps to build a more resilient business and will support enhanced financial performance and returns for our shareholders. Our sustainability strategy defines the Group's key focus areas, targets and actions to deliver better social and environmental outcomes throughout the business. It is comprised of 3 strategic pillars: customer well-being and social inclusion, low-carbon economy and responsible business. Under this strategy, we are progressing a number of initiatives to support greater accessibility and inclusion for those who are vulnerable in our communities, minimize the environmental impact of our operations, products and services and ensure that our business operates in a responsible, ethical and transparent manner. We have set initial short and long-term targets in each of the 3 strategic areas to work towards and hold ourselves accountable. These include a commitment to be net zero carbon emissions across our direct operations and achieving a minimum of 40% female representation across MMS leadership categories by 2030. This year, we also strengthened our governance and oversight over the Sustainability Strategy and our non-financial risks. The Board holds direct responsibility for oversight of the Group's Sustainability Strategy and programs, with material non-financial matters further integrated within the Board committee governance structure. We have also established a cross-functional management level sustainability committee to drive the Group's strategy and initiatives forward, with membership of our CEO and key executive and senior leaders across the Group. Over the past 12 months, we have made a number of notable achievements in progressing our sustainability journey. These include offsetting 100% of the Group's Scope 1 and 2 emissions related to our company car fleet and electricity use during FY '21, developing our first disclosure on climate change risk management in line with the TCFD, Taskforce for Climate-related Financial Disclosures framework and issuing our Sustainability Report in line with the global reporting initiative standard for the first time, significantly expanding disclosures on our non-financial performance. In the current financial period, we are focusing on delivering a number of initiatives under our Sustainability Strategy, including assisting our customers in their transition to a low-carbon future through the adoption of low and zero-emission vehicles. We are also embedding sustainability considerations into our supply chain to better mitigate risks such as modern slavery as well as to leverage opportunities to create positive community outcomes through social procurement. Furthermore, we are developing our first Reflect Reconciliation Action Plan and our first Accessibility and Inclusion Plan, which will drive our efforts to create better opportunities for First Nations Australians and our people and customers living with disabilities. And in speaking about disability, I will now hand over to Sean Dempsey, the CEO of Plan Partners to provide an update on our progress in supporting participants in the National Disability Insurance Scheme.

Thanks, Himesha. The National Disability Insurance Scheme continues to be a life-changing development for many hundreds of thousands of Australians and their families, providing greater choice and more control over the direction of their supports. The scheme is enabling many people to take steps towards living their best lives. Our business is the provision of planned management and support coordination directly to participants of the scheme, and our focus is to assist our customers to navigate the complexities of the NDIS through education and advice and to manage their NDIS budgets through efficient payment processing and tools to track their spending. We achieved this through our leading products and services, by building easy to navigate customer-facing technology and through strong governance and financial controls that also contribute to a stronger NDIS. During FY '21 and as mentioned by Helen, I am pleased to say that business performance was largely unaffected by the impacts of COVID-19, achieving strong customer growth, with funds under administration and support coordination hours increasing markedly year-on-year. The number of NDIS participants with planned management funding included in their plans also continue to increase. And by financial year-end, represented 49% of all plans, up from 40% at the same time last year and up from just 30% at June 2019. Our value to the scheme is significant. Through our support, coordination and plan management support, we remove day-to-day operational burden from the National Disability Insurance Agency. And in FY '21, we processed in excess of 1 million invoices per annum, equating to more than $700 million in payments to disability service providers. And through our customer service teams, we provided an estimated 53,000 hours of direct customer support on an annualized basis. We continue to play an important role in the sustainability of NDIS costs through our payment controls. Across FY '21, we continue to focus on our customers' experience and the business operating efficiencies through further investment in technology, including enhancements to our online dashboards, to improve self-service functionality, through a redesign of our digital presence to improve access to information and to deliver richer educational content to customers, carriers and service providers and through the introduction of our live chat functionality as an additional communication tool, which pleasingly recorded more than 11,000 sessions in the year. In addition to maintaining very high rates of customer retention and building further upon our customer satisfaction score of 91%, we continue to progress our growth strategy in FY '22. To illustrate this opportunity, recent modeling from the federal government forecasts that there will be 859,000 participants in the scheme by the end of this decade, which is some 259,000 people more than originally forecast and another 374,000 in addition to those participating in the scheme today. Furthermore, given that the planned management sector remains greatly disaggregated, a targeted approach to further market consolidation will continue to be a strategic priority for the business. Immediately post the end of the period, we successfully completed the acquisition of Plan Tracker, a new South Wales based plan management provider that represents strong operational and cultural alignment with our business. Its integration and the sharing of knowledge and experiences across the business is progressing well and to plan. We are very pleased with the progress of the business. We're excited by the opportunities that are ahead of us and have an ever-growing Group of dedicated people within our business who are very proud of the work they do to support Australians living with disability. For all of us at Plan Partners, creating an accessible and inclusive workplace for all people and particularly for our team members that live with disability or have lived experience of disability is an important part of our employee value proposition. Thank you, everyone, and I'll now hand over to Kylie Pashen, who will talk about our salary packaging and novated leasing businesses and their progress.

Thank you, Sean, and good morning, everyone. Just briefly, by way of introduction, I have been with the Group for just on 10 years, the majority of that time, leading the RemServ business out of Queensland. I was recently appointed to the role of Managing Director for Group Remuneration Services, taking carriage of both Maxxia and RemServ. It is safe to say our sector, like many, is navigating changing and unique market conditions. But I'm proud to say that our business and our people are navigating those challenges well. Pleasingly, during FY '21, the business recorded 109 new client wins across the not-for-profit, health, government and private sectors. Significantly, Maxxia was appointed to the Commonwealth government salary packaging panel during FY '21, commencing July 1, 2021, for an initial 3-year period. In terms of performance of the Maxxia and RemServ novated leasing businesses, we spoke at the full year results announcement in August 2021, about the strength of our activity levels, despite global vehicle supply challenges, causing subdued novated lease sales through FY '21. As at the end of the FY '21 period, our carryover increased by over 500% on pre COVID '19 levels. With the impact to revenue, partially offset by an increase in average finance amounts, driven by higher retail prices being charged by dealerships. We reiterate our commentary made at the time of our most recent full year results, that our expectation is the vehicle supply challenge will continue through until at least the end of calendar year 2022. Mike will speak more to these vehicle supply issues in a moment and their relevance to the broader Group. But to emphasize, we continue to see supply volatility as a result of semiconductor shortages, shipping delays and global supply chain impacts. Now despite these external challenges, we have continued to invest in digital innovations, and I'm proud of the work that's been completed by the business to deliver meaningful functionality and change. This has enabled us to navigate regulatory change in regards to the implementation of a deferred sales model across add-on insurance products from October 5, 2021, as well as continue to drive strong activity from within our client portfolio, all of which positions us well for the remainder of the financial year. To-date, we have not experienced any discernible change to insurance penetration rates as a result of the implementation of the deferred sales model. However, we continue to closely monitor this. We started our digital journey 5 years ago. And this past 12 months, we have continued through the development and delivery of our salary packaging online sign-up process, our novated lease digital estimate and our digital education tools, all of which have assisted us in continuing to connect and support our growth, where our traditional methods of engagement have not been possible given lockdowns and necessary restrictions. Looking to our future growth. I am reassured by our ongoing strong performance in customer satisfaction metrics. In particular, our average Net Promoter Score. We operate in a highly competitive marketplace and to see that we continue to outperform on internal and external customer satisfaction metrics is a demonstration that we are successfully driving a superior level of service. Such metrics, together with the ongoing work we undertake in building deep partnerships with our clients is critical to our retention strategies and future growth opportunities, and positions us well for retention of contracts as we navigate our way through the prevailing external headwinds. Despite the vehicle supply headwind, we have repositioned much of our activity and engagement throughout the pandemic to deliver a continuity of activity generation and service outcomes that means the business remains well placed. Thank you, everyone, and I will now hand back to Mike.

Thank you, Kylie, Sean and Himesha. I'll now take a few moments to provide a brief update on our current trading conditions, our priorities and progress to date on some of our key growth initiatives and programs. As mentioned earlier, and whilst not unexpected, some of the abnormal trading conditions that we experienced in FY '21 have extended into the current period. Given the ongoing response of governments to the global pandemic and global motor vehicle supply constraints. In particular, whilst the defensive nature of our salary packaging business remains steadfast and novated lease demand and orders are strong in the financial year-to-date, ahead of the comparable prior period and in line with our expectations, lockdowns and limited vehicle supply has resulted in lower deliveries during the first quarter of FY '22 compared with the prior year. If we turn to Slide 11, we have provided some further detail on the performance of our novated business compared with historical levels to help illustrate the unique environment we're operating in. You can see that the demand for novated leases remains robust with orders ahead of PCP and up on pre-pandemic levels. Once ordered, customers current preparedness to wait for delivery of the vehicle remains unchanged. This is despite the growing pressure on the global automotive supply chain. As a result, a significant percentage of novated sales have been pushed into future periods with our carryover now at well in excess of 5x historical levels. With consumer demand continuing to outstrip vehicle supply, we are continuing to see upward pressure on retail vehicle pricing, resulting in higher novated leasing yields to the prior comparable period, but consistent with the second half of FY '21. In closing today, and I'm on Slide 12. As mentioned, we continue to see positive activity levels as expected across the business, but we do not expect to see any substantive change to the vehicle supply challenges prior to the end of the 2022 calendar year. Whilst the challenge for novated lease sales, this is somewhat offset by the higher yields we continue to receive, driven by the lift in retail pricing. This upward pressure on new vehicle pricing is also continuing to support an unprecedented second-hand vehicle market, creating ongoing benefit for our asset management businesses in both Australia and New Zealand. In recent months, we've seen similar drivers at play in the United Kingdom, where we are now seeing increased remarketing yields as the country emerges from its strict COVID-19 lockdowns. These stronger remarketing yields in the United Kingdom are expected to continue through the remainder of FY '22. We are also continuing to pursue our strategic growth priorities. In GRS, in the financial year-to-date, we're seeing positive growth in salary packaging customers through increases in participation as well as new customer wins. Likewise, activity in the trading year-to-date in novated leasing continues at levels above prior periods, with our future sales pipeline now at well in excess of 5x historical levels, as mentioned before, benefiting future periods once auto supply normalizes. We also continue to progress the securitization and funding warehouse, which will provide security and diversity in funding sources, provide competition and price benefits for our customers, increase annuity-based income, provide a new source of income and results in higher-value per transaction. As mentioned in the FY '21 results presentation, we are targeting a monthly run rate of 20% of our novated volume through the warehouse by the end of FY '22, which in this year will have a $4 million to $5 million impact to UNPATA. We have received strong interest from funders in the warehouse, and first volumes remain anticipated to be delivered in the first half of FY '22. With this timing being subject to the key next step being approval of our credit license from the Australian Securities and Investment Commission. As Sean mentioned a moment ago, we see ongoing organic growth in our Plan Partners and Plan Tracker businesses, with our focus on investing in technology, our people and products and services through a range of product and service enhancements. Given the projected growth in the number of participants in the National Disability Insurance Scheme over the next decade and the value we believe that we can bring to the scheme, we remain highly committed to our investment in this sector. Finally, and in terms of simplification of the Group, the agreement we entered on August 23, 2021 to sell the RFS Retail business via an MBO was completed on September 30, 2021. Overall, our outlook for FY '22 remains consistent with our comments from the FY '21 full year results presentation. Just in closing, I would like to reiterate the resilient nature of our businesses, despite the challenging times. The strength of our diverse customer base, the strength of our balance sheet, and most importantly, the quality of our people. Our strategic focus in FY '22 will continue to center on growth and efficiency across our businesses and enhancing our digital capability as we look to improve our value proposition and ensure that our business segments are well placed and positioned for growth as we also strive to make a meaningful impact in the area of sustainability. I sincerely thank all of our people for their amazing efforts and commitment during such challenging times and extend my thanks to the Board and our leadership team for their continuing support and advice. Thank you.

Thank you, Mike. We now come to the formal business of the meeting. Each item of business will be discussed in turn, and shareholders will have the opportunity to ask questions on that item of business. You can submit a question by clicking on the speech bubble icon. If you're having difficulties in asking a question, please refer to the user guide, which can be accessed through the platform. The first item of business listed in the notice of meetings to receive and consider the financial report, Director's report and independent audit report of the company and its controlled entities for the financial year ended June 30, 2021. In accordance with the Corporations Act, there is no vote on this item. This item of business provides shareholders with the opportunity to ask questions about the reports and management of the company generally. Are there any questions?

Thank you, Chair. Yes, there are several questions from shareholders, and I'll read them out to the meeting. So first of all, at what point will Plan Partners be reported as its own business segment and when do you expect this occurring?

Broadly, the test for segment reporting is 10% of either Group revenue, profit or assets. We don't expect to reach that level in the first half of '22, but dependent on continued performance may reach that threshold for the full year. At the appropriate time, we'll report it as a segment, and it will include all services provided as part of the Plan Partners business. Are there any further questions?

Yes, Chair. The next question relates to -- from a shareholder is, in view of the takeover offer for Smart Group, what is the company's assessment of M&A, risks and opportunities?

Board and management continually assess various options in the markets in which we operate as part of our strategic growth focus. Clearly, we assess such options in terms of their fit with our strategic intent, our vision, our values and the ability to generate long-term shareholder return. This is an ongoing process. What I'll say is that we've -- as we've already outlined today, we're taking a very targeted approach to further market consolidation in the plan management sector in particular, and this will continue to be a strategic priority. Next question?

Thank you, Chair. The next question is directed to the CEO and is in relation to staff engagement. The staff engagement levels of 85% is very high compared to the result of the [ Gallup ] engagement survey tool used by many major global businesses. If correct, your levels of engagement to very good for future prospects for the business, what survey and kinds of questions, are you using for this? And how would you explain what 85% of your staff being engaged means? Thank you, Mike.

Thanks very much for the question. And our Staff Engagement Score is something we're very proud of. We partner with the firm Willis Towers Watson to conduct our engagement survey, and we have done for many years now. What does it mean for our people? It means that they believe in the goals and objectives of the organization. They're proud to tell others that they work for the organization that and they feel inspired to do their best work. The way that it positions our organization, 85% means that our people feel engaged, they feel enabled and that they're energized to do their best work, which ultimately places the organization in a very good place.

Are there further questions?

Yes, Chair. So a couple of additional questions. The question is under the company's [ business ] policy, all complaints must be reported to the Board. Approximately how many [ business] forward complaints did the company receive in the financial year? What issues did they mainly relate to? And how did the company resolve them?

We have an external company to which whistleblowers can lodge any concerns, and all employees are made aware of the whistleblower policy and a copy is available externally as well on our website. The company did not receive any whistleblower complaints in the financial year.

Thank you, Chair. The next question is McMillan Shakespeare's remuneration framework is usually compared to the other ASX companies on which the directors fit. Could you please explain why you believe that your framework is better suited to the companies then more typical frameworks?

Thank you for the question. In regards to our framework, I think it actually provides a really nice reward framework in terms of it following EPS growth, ROCE and strategic objectives as well, which encourages earnings growth, but also capital allocation discipline. At the moment, we think that's the right alignment, but we've been continuing to review the remuneration framework and our structure and encourage feedback on our structure. Next question?

Thank you Chair. That's -- there are no other questions relating to the current item business. Thanks very much.

Thank you. If there's no further questions, I'll proceed with the resolution to be considered. I appoint David Squires of Computershare Investor Services as the returning Officer for the purposes of conducting the poll on each resolution. As I mentioned at the start of the meeting, voting on the resolution is currently open, and you can vote any time until I declare that voting close. Results will be released to the ASX after the conclusion of the meeting. Please note that only shareholders, proxy holders or authorized shareholder representatives may vote. Any directed proxies given to you by a shareholder, we will automatically be cast as directed when the poll is closed. The voting icon is available within the navigation bar. Once you click on this, the resolutions will appear on your screen, along with the for, against and abstain voting options. Simply select one of these options to cast your vote. When voting is closed, your final voting selection will be recorded. If you have any difficulties, please refer to the user guide, which can be accessed through the platform. Item 2 relates to the adoption and remuneration report of the company for the financial year ended June 30, 2021 and is set out on Page 18 to 36 of the 2021 Annual Report. The remuneration report sets out the company's remuneration policy for its executives, employees and directors. The company strives to ensure that its Remuneration Report is clear, transparent and demonstrates your Board's objective of venturing the alignments of executive reward with the creation of shareholder value and that current market practices have been duly considered in terms of both quantum and structure of the company's remuneration framework. The resolution before the meeting is that for the purposes of Section 250 R2 of the Corporations Act and for all other purposes, the remuneration report for the financial year ended June 30, 2021, as contained in the Director's Report be adopted. The Board unanimously recommends that shareholders vote in favor of adopting the Remuneration Report. I will now put the resolution to the meeting. A summary of the votes received before the meeting now appears on the screen. Are there any questions in relation to the Remuneration Report?

There are no questions. No additional questions Chair.

Thank you. The company will disregard any votes cast on Item 2 by all key management personnel and their closely related parties, except where that votings cast by them as a proxy for a person who is entitled to both. Item 3 is a re-election of Ross Chessari as a Director of the company. Details of Ross' background, qualifications and experience is set out in the notice of meeting. Are there any questions in relation to this resolution?

There are no questions in relation to re-election, Chair.

The Board, excluding Ross, as this resolution for his re-election, recommends that shareholders vote in favor of this resolution. The resolution before the meeting is that Ross Chessari, a director retiring from office in accordance with Clause 20.2 of the constitution, being eligible, is re-elected as a Director of the company. I will now put the resolution to the meeting. A summary, the proxy votes received before the meeting is on the screen. Item 4 is the re-election of Tim Poole as a Director of the company. Details of Tim's background, qualifications and experience are set out in the notice of meeting. Are there any questions in relation to this resolution?

There are no questions in relation to this resolution.

Thank you. The Board, excluding Tim as this resolution is for his re-election, recommends that shareholders vote in favor of this resolution. The resolution before the meeting is that Tim Poole, a director retiring from office in accordance with Clause 20.2 of the constitution, being eligible, is re-elected as a Director of the company. I will now put the resolution to the meeting. A summary, the proxy votes received before the meeting is on the screen.

Chair, we've received just a question in relation to Tim's resolution. And the question is from a shareholder asking if Tim could please speak to -- speak about his re-election. Tim, can I defer or -- Chair, can I defer that question to Tim please?

Sure. Actually, I'm very happy to speak to my re-election at the meeting today. I've been on the Board for about 8 years now. And it's been an absolute pleasure working with a very high-quality and committed management team and Board of Directors. As Helen outlined, a little earlier as part of her introductory remarks, if elected today, my term as a Director will conclude in August next year. But in the meantime, I look forward to working with my colleagues and the management team to try and maximize shareholder value. Thank you, Ashley.

Thanks, Tim. Are there further questions?

Yes. Thank you, Chair. There is just one other question that we might feel with it at this time as well. And the question is Ross -- in relation to Ross Chessari's re-election, and they would like Ross to speak to his re-election, similar to Tim. Chair pass it to Ross please?

Sure. Happy to comment on that. Apologies for any background noise. Yes, I've been on the Board since the company was listed in 2004, and it's -- as Tim said, it's been a pleasure to be on the journey with the company and deliver the profits and the growth in the employment that the company has provided to shareholders and to its employees and proud of the work done. Delighted to be part of the team, both executive and the Board. And I intend to continue in that -- the delivery of profit and growth and continuing to provide a great place to work. Hopefully that answers your questions.

Thank you, Ross. I'll now turn to the election of Bruce Akhurst as a Director. Item 5 is the election of Bruce Akhurst as a Director of the company. Details of Bruce's background, qualifications and experience is set out in the notice of meeting. I would now like to holdback Bruce to speak to his election as a new member of the Board.

Good morning, everyone, and thank you, Helen. I'm delighted to be able to stand for election as a new member of the McMillan Shakespeare Board. I'm a lawyer by training. In terms of my Director experience, which I bring to the company, I'm currently Chairman of the Peter MacCallum Cancer Foundation. I'm a Council Member of RMIT University and the Director of Tabcorp Holdings Limited. Most recently I was Executive Chairman of Adstream Holdings and a Director of Vocus Group Limited and Private Investment Company, Paul Ramsay Holdings. In my Executive Career, I was CEO of Sensis for a period of 7 years and for 10 years Director and Chairman of Foxtel. I also spent 7 years as Group Managing Director and Group General Counsel of Telstra. And prior to that, I was a partner at Mallesons Stephen Jaques for an extensive period of time. With my background as an experienced executive and director of [ various ] companies, with an understanding of digital, technology, consumer and regulated businesses, and through working with my fellow directors and the management team, I commit to provide my energy, experience and insight to benefit the McMillan Shakespeare Group and you as shareholders. Thank you.

Thank you, Bruce. Are there any questions in relation to this resolution?

No Chair, there are no questions.

The Board excluding Bruce as this resolution is for his election, recommends that shareholders vote in favor of this resolution. The resolution before the meeting is that Bruce Akhurst, the director appointed to fill a casual vacancy retiring from office, in accordance with Clause 19.4 of the constitution, being eligible, is elected as a Director of the company. I will now put the resolution to the meeting. A summary, the proxy votes received before the meeting is on the screen. Item 6 relates to the adoption of the long-term incentive plan. The resolution before the meeting is that for the purposes of ASX existing rule 7.2, Exception 13-B and for all other purposes, shareholders of the company approved the long-term incentive plan and the issue of securities under that plan. Are there any questions in relation to this resolution?

Yes, Chair. We have a question attached to this revolution. The question is, the company received significant JobKeeper payments in the last 2 financial years. How have you adjusted earnings to take JobKeeper into account when determining performance under the long-term incentive plan?

Thank you. Given the significant impact COVID had on our business and with the drop in our turnover at that time, we did make the qualification criteria for the payment. And subsequently, we received JobKeeper funding of $7.3 million after-tax in FY '21. In line with the government saving tension, this payment actually enabled the retention of our employees, many of whom had been either partially or fully stood down as a result of the COVID-19 pandemic. In regards to how it applied to the LTIP, there was no benefit from management in their incentive at all, so the incentive management received is through the long-term incentive plan, and there was no positive benefit for them as outlined in our Annual Report and our Remuneration Report. Are there further questions?

Thank you, Chair. There are no further questions on that resolution.

Thank you. I'll now put that resolution to the meeting. A summary of the proxy votes received before the meeting is on the screen. Item 7 relates to the issue of indeterminant rights to the Managing Director. The resolution before the meeting is that for the purposes of ASX listing Rule 10.14 and all other purposes, approval be given for the issue to the Managing Director, Mike Salisbury, a 71,731 indeterminate rights under the company's long-term incentive plan and for the issue of share subject to vesting on the exercise of those indeterminant rights. Are there any questions in relation to this resolution?

No, Chair. There are no questions in relation to this resolution.

The company will disregard any votes cast on Item 7 by Mr. Salisbury and his closely related parties, except where that vote is cast by them as a proxy for a person who is entitled to vote. I will now put the resolution to the meeting. A summary of the proxy votes received before the meeting is on the screen. Item 8 relates to the increasing maximum aggregate path of Non-Executive Directors' remuneration. The resolution before the meeting is that for the purposes of ASX listing rule 10.17 and for all other purposes, the maximum aggregate amount of remuneration that may be paid to the company's Non-Executive Directors in any financial year is increased by $300,000 from $900,000 to $1.2 million effective immediately. Are there any questions in relation to this resolution?

Yes, Chair. We have a question in relation with this resolution. So since 2015, the fees received by individual directors have increased by around 33%, which has raised aggregate fees. However, over the same period, the market capitalization of the company has fallen by 12%. Can you please justify the increase in directors fees under these circumstances?

Thank you for the question. Face Director fees. And in fact, all Non-Executive fees have not changed since, when the last set in 2000 -- sorry, in FY '19. In terms of COVID impacts as well, Non-Executive Directors had a reduction and took a voluntary reduction in their fees as a result of COVID. If you look at our Non-Executive Director fees, they're actually below medium when you look at sort of market comps, and the aggregate fee level as well is below market. Are there any further questions?

There are no further questions in relation to that resolution Chair.

Thank you. That concludes the business of the meeting. I would like to advise that shortly, the voting on all resolutions will close. Can all shareholders voting online, please now ensure that they have submitted their votes? We'll take a few moments now to allow you to finish voting. There being no other questions, I declare the poll closed.

No further questions.

The start of Computershare will now process the poll, and the final results will be notified to the ASX in accordance with the Corporations Act and will also be placed on the company's website as soon as they become available. As there is no further business, I warmly thank you all for your attendance and declare the meeting closed. Take care and stay safe. Thank you.