H1 RESULTS PRESENTATION 19 FEBRUARY 2018 Scott Baldwin Managing Director Ray Malone Chairman Brett Coventry Chief Financial Officer
About Money3 Money3 is a national credit provider committed to servicing the needs of customers who cannot access funding from traditional lenders 2 H1 FY18 RESULTS PRESENTATION
H1 FY18 Financial Performance Secured automotive loan revenue of $36.0m, increase of 32.8% H1 FY18 H1 FY17 H1 FY16 $m $m $m ( H1 FY17: $27.1 million ) Revenue 60.4 51.7 47.4 16.8% 9.1% Net profit after tax of $15.5 million, Expenses 32.9 28.3 30.3 16.3% -6.6% increase of EBITDA 27.5 23.3 17.1 18.0% 36.3% 12.3% EBITDA as % of revenue 45.6% 45.2% 36.0% (H1 FY17: $13.7 million) NPAT 15.5 13.8 10.0 12.3% 38.0% EBITDA margin NPAT as % of revenue 25.7% 26.7% 21.0% improved to EPS (Basic) 45.6% cents per share 9.80 cps 8.96 cps 7.60 cps 9.9% 17.9% (H1 FY17: 45.2%) (H1 FY16: 36.1%) 3 H1 FY18 RESULTS PRESENTATION
H1 FY18 Key Highlights ▪ New debt facility, $150m providing significant headroom for growth ▪ Record half year Revenue of $60.4m, up 16.8% y-y ▪ Record half year NPAT of $15.5m, up 12.3% y-y ▪ Record half year Dividend of 4.5c up 80% y-y ▪ Gross loan book increased to $292.8m, up 18.5% y-y ▪ New accounting standards AASB9 and AASB15 have been adopted for revenue recognition and provisioning, with a total adjustment to retained earnings of $6.4m ▪ Bad debts of 2.7% of gross loan book slightly up from 2.5% in H1 FY17, within forecast range of 5-6% annually ▪ Closed a further 3 branches during H1 FY18 ▪ Increase in net tangible assets of 11.5% y-y to $1.07 per share 4 H1 FY18 RESULTS PRESENTATION
Sustainable Cashflow H1 FY18 H1 FY17 $ Change % Change $m $m $m Receipts from customers 167.0 148.9 + 18.1 + 12% Payments to suppliers & employees - 21.1 - 22.6 + 1.5 - 7% Net interest and finance expense - 5.7 - 2.2 - 3.5 + 165% Income tax paid - 11.1 - 8.6 - 2.5 + 28% Cashflow from operating activities 129.1 115.5 + 13.6 + 12% Funds advanced for new loans - 136.9 - 142.8 - 5.9 - 4% Net Cash used in operating activities - 7.8 - 27.3 - 19.5 - 71% 5 H1 FY18 RESULTS PRESENTATION
H1 FY18 – Continued Growth in Secured Lending Gross Loan Book $m 350.0 350.0 292.8 300.0 300.0 273.1 245.1 250.0 250.0 198.8 200.0 200.0 182.1 234.6 156.4 213.9 150.0 188.0 150.0 126.2 151.8 127.4 106.8 100.0 100.0 78.8 50.0 50.0 23.6 21.1 24.1 26.7 23.0 18.3 22.4 35.6 33.6 33.0 31.5 28.7 25.0 26.6 0.0 0.0 H1 FY15 H2 FY15 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 Small Amount Credit Contract Larger Amount Longer Term Auto Loans 6 H1 FY18 RESULTS PRESENTATION
Segment Revenue Segment Revenue ($m) 70 60 50 28.9 36.0 40 27.2 24.5 21.6 30 10.8 8.6 7.9 7.6 20 8.7 10 18.4 17.1 16.7 16.7 16 0 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 Branch Revenue Online Revenue Broker Revenue Secured Automotive Lending revenue continues to grow with further growth expected in H2 7 H1 FY18 RESULTS PRESENTATION
Segment PBIT Segment PBIT ($m) 35 30 25 17.5 20 22.4 17 17.8 15 13.6 10 4.2 0.5 2.9 1.3 1.5 5 7.6 6.9 5.3 5.2 4.8 0 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 Branch PBIT Online PBIT Broker PBIT Secured Automotive lending contribution trending toward 75% of total contribution in H2 8 H1 FY18 RESULTS PRESENTATION
H1 FY18 – Continued Growth in Secured Lending ▪ Strong secured automotive revenue of $36m up 32.7% y-y ▪ Gross receivable grew by $46.6m to $234.6, up 24.7% y-y ▪ Strong demand continues for secured automotive receivables with significant growth planned for FY19 ▪ Cash receipts from secured automotive lending of $75m up 24.8% y-y ▪ Secured automotive loans now represents 80.1% of the gross loan book up from 76.7% y-y ▪ New $150m debt facility settled in December 2017 provides significant funds available to increase loan growth in 2018, via progressive drawdown 9 H1 FY18 RESULTS PRESENTATION
Increased Dividend Yield EPS to Dividend Payout Cents / Share 12 10 8 6 4 2 0 H2 FY16 H1 FY17 H2 FY17 H1 FY18 EPS Dividend ▪ Earnings Per Share of 9.8 cents ▪ The Directors declared an increased Interim Dividend of 4.5c per share, up 80% y-y ▪ Increased cashflows combined with new finance facilities will allow dividends to continue to be paid at the higher end of the stated payout range of 30 – 50% ▪ The company continues to explore ways of releasing excess franking credits held by the company, to the shareholders 10 H1 FY18 RESULTS PRESENTATION
Regulations ▪ The National Consumer Credit Protection Act of 2009 review, conducted after 1 July 2015, handed down 24 recommendations for changes to existing regulations. After review of these recommendations, Money3 has concluded there is no material financial impact should all of the recommendations be adopted into legislation ▪ On 5 September ASIC banned flex-commissions in the car finance market. This legislative change will not affect Money3, as Money3 does not provide flex commissions on its products ▪ Money3 puts particular emphasis on responsible lending conducting an enquiry into every applicants ability to repay a loan, accessing their source of income, residential status, number of dependants and any other financial commitments they have at the time of application. 11 H1 FY18 RESULTS PRESENTATION
Outlook ▪ Money3 estimates its target market in Australia for automotive loans is approximately 700,000 loans per annum with Money3’s prior year run rate of approximately 14,000, representing approximately 2% penetration ▪ There is significant scope to grow market share of the second hand automotive finance market and with larger lenders taking a more conservative approach to lending an opportunity exists for Money3 to assist consumers to buy a car ▪ Full year results will continue to benefit from expense control and strong margins ▪ Progress continues to be made towards the exit of SACC lending, still anticipated in FY19 ▪ Money3 secured funding of $150m, which will repay bond debts and provide continued growth opportunities ▪ Full year guidance has increased to $30-31m NPAT ▪ Commenced marketing to our database and expect to take 3% of market share over the coming 12 months 12 H1 FY18 RESULTS PRESENTATION
Disclaimer The content of this presentation has been prepared by Money3 Corporation Limited (the Company) for general information purposes only. Any recommendations given are general and do not take into account your personal circumstances and therefore are not to be taken as a recommendation or advice to you. You should decide whether to contact your financial adviser so a full and complete analysis can be made in respect to your personal situation. Whilst all care has been taken compiling this presentation neither the Company nor any of its related parties, employees or directors give any warranty with respect to the information provided or accept any liability to any person who relies on it. 13
Money3 Corporation Limited Enquiries to: Scott Baldwin Managing Director e. S.Baldwin@money3.com.au Head Office Level 1 / 40 Graduate Road, Bundoora, VIC 3083 p. 03 9093 8255 14 H1 FY18 RESULTS PRESENTATION
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