Australian Finance Group Ltd. · ASX:AFG
Australian Finance — Investor Presentation (August 2021)
37 slides from Australian Finance's investor presentation, Aug 27, 2021
Slide 1: Full year results presentation
Full year results presentation
Slide 2: FY21 results highlights
HIGHLI GHTS FY21 results Continuing to build a robust and diversified financial services company generating excellent returns for shareholders 2 * Based on share price of $2.85
Slide 3: FY21 results highlights
HIGHLI GHTS FY21 results 3 Compared to FY20
Slide 4: Settlements & Loan Book
Settlements & Loan Book Settlements FY2021 FY2020 $000's $000's Residential 43,632,251 34,065,322 28% AFGHL 3,450,481 3,141,246 10% White Label 2,104,947 1,786,747 18% • Residential settlements up 28% to $43.6 billion. Growth supported AFG Securities 1,345,534 1,354,499 (1%) by Government stimulus,
Slide 5: Financial Results
Financial Results FY2021 FY2020 $000's $000's Total Revenue 767,138 692,751 11% • Revenue up 11% in FY21 on the back of settlement and Gross Profit 102,415 90,585 13% loan book growth across the business NPAT reported 51,304 38,078 35% NPAT underlying 49,586 36,266 37% • Net interest is 35% higher i
Slide 6: Financial Strength
Financial Strength • Well positioned to continue to grow through our earnings diversification strategy. Cash and other financial assets of $282 million provide core balance sheet strength • Net securitisation interest plus net cash flow from aggregation and white label trail books of $82.9 million u
Slide 7: Strategic and Market Outlook
Strategic and Market Outlook Market Outlook Strategic Outlook Market continues to grow at record levels Brokers remain important • Residential settlement volumes were at record levels in FY21 • Brokers market share of the mortgage industry continues to increase. • Initial increase in First Home Buye
Slide 8: AFG Home Loans
AFG Home Loans • Settlements increased 10% to a record of $3.45 billion. • Loan book grew 7% to $11.2 billion • During H1 FY21, mix changed to white label funders as AFG Securities reduced credit appetite due to changes in market conditions • Following stabilization in the Funded directly by AFG fun
Slide 9: AFG Securities
AFG Securities • Settlements of $1.35 billion, in line with FY20. Volumes in H2 FY21 up 35% on H2 FY20 • Loan book grew 17% to $3.39 billion compared to June 2020 and 15% higher than December 2020 • Higher margin near-prime products refreshed and an SMSF product launching in Q1 FY22 to broaden the p
Slide 10: AFG Securities
AFG Securities • FY21 net interest margin includes the impact of ongoing inverted BBSW resulting in lower cost of funds compared to FY20 • AFG Securities lodgement volumes decreased in April 2020 following considered reduction in credit appetite with uncertain market conditions • H2 FY21 lodgement v
Slide 11: AFG Securities
AFG Securities Growth has been achieved without sacrificing credit quality 11
Slide 12: AFG Securities arrears performance
OPER AT I O N AL AFG Securities Arrears performance remains excellent • At 30 June 2021 there were only 27 loans in arrears greater than 30 days out of 8,829 loans in the book. Strong position demonstrates the quality of the book and underlying credit assessment • No losses incurred on non-LMI insur
Slide 13: Thinktank
Thinktank White label - AFG Commercial powered by Thinktank • Settlements decreased 19% to $130 million in FY21 with commercial market credit appetite impacted by the pandemic • The overall commercial market in H2 FY21 is improving and as such beginning to flow through to AFG Commercial volumes Equi
Slide 14: Continued Investment in Technology
Continued Investment in Technology • CRM is a key pillar of AFG’s wider technology tool kit for brokers built on an enterprise grade technology platform that will enhance AFG’s broker and customer proposition • The migration of each broker to the CRM platform will be managed by AFG support staff, in
Slide 15: AFG Business
AFG Business • Settlements across the platform down 42% to $200 million in FY21 • Overall commercial market impacted during the pandemic, H2 FY21 has shown growth beginning to resume with settlements 17% higher than H1 FY21 • AFG Business targets brokers who are predominately residential mortgage br
Slide 16: Summary Cash Flow
A capital light business model with strong cash flow generation Summary Cash Flow Well positioned for organic or inorganic strategic opportunities • Net cash flows from operating activities are up 45% on FY20 including annuity style cash flows from trail books and positively FY2021 FY2020 impacted b
Slide 17: Summary Balance Sheet
Summary Balance Sheet Jun 2021 Jun 2020 $000's $000's Assets Note AFG maintains a well capitalised, debt-free balance Unrestricted Cash 106,930 108,147 sheet with unrestricted cash, trail book assets, financial Restricted Cash 119,118 53,381 assets and sub-ordinated capital totaling $282 million Rec
Slide 18: Impact of Trail Book Accounting
Impact of Trail Book Accounting FY2021 FY2020 $000's $000's Operating Profit After Operating Profit After Underlying profit 37% above FY20 Statutory Income Tax Income Tax excluding change in value of future Underlying results from trailing commissions 671,029 49,586 600,137 36,266 continuing operati
Slide 19: Other Income
Other Income • Service fees are 13% higher in FY21 from growth in broker numbers as well as take- up of additional services. Service fees include compliance, PI and marketing services • Sponsorship and conferencing activity was lower in FY21 as large scale conferences were unable to be held during t
Slide 20: July 2021 Trading
Comparison of July Lodgements July 2021 Trading • Residential lodgements up 21% to $7.6 billion with record settlements in the month • AFG Home Loans lodgements up 43% 18% • AFG Securities lodgements were 163% higher than July 2020 while settlements were 1% 226% above July 2020 32% 13% • Positive gr
Slide 21: In Conclusion
In Conclusion Record financial performance in FY21 with AFG is rolling out new market leading technology 35% growth in NPAT and 45% growth in platforms to enable brokers to efficiently service operating cash flows. The success of AFG’s customers needs. We remain committed to further ongoing earnings
Slide 22: Q&A Thank you
F U L L Y E AR R E S U LT S Q&A Thank you
Slide 23: Appendices
F U L L Y E AR R E S U LT S Appendices
Slide 24: Residential Settlements
24 Billions Residential Settlements $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 Residential Settlements FY17 FY18 Fy19 Fy20 Fy21 $16 Billions Residential Settlements by State SA WA QLD vic NSW @ v9 ) Fv20 @rvz
Slide 25: Residential Portfolio – June 2021
Residential Portfolio – June 2021 25
Slide 26: Commercial and Asset Finance Aggregation Settlements
Commercial and Asset Finance Aggregation Settlements 26
Slide 27: Commercial Portfolio – June 2021
Commercial Portfolio – June 2021 27
Slide 28: Types of Lodgements
28 Types of Lodgements 50% 45% 40% 35% 30% 25% 20% 15% 5% 1 02 G3 G4 Q1 G2 G3 O4 G1 G2 03 44 01 G2 G3 O4 G1 02 G3 44 G1 G203.04 Jul FY16 FY17 FY18, FY19 FY20 FY21 FY22 —Inv% ——First Home Buyers % Refinance % |©——Upgrader % AFG
Slide 29: Lending Activity
Thousands Lending Activity oan Nations UA orad Boanisice National Loan to Value Ratio 78% 3700 8 76% $600 Ta% 72% $500 70% 68% $400 66% $300 64% 62% $200 60% 58% 100 $ 56% 54% GAGE GS OSG GE US GUN GO CS OUCIIGD GS GHGNGD GS GTOTN GS ON CTGUGS OS GTN SOUT 01020304 41620304 01 020304 01020304 6102030
Slide 30: Investor Loans
60% 50% 40% 30% 20% 10% 30 Investor Loans Investor Loans % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 QI Q2 Q3 Q4 QI Q2 Q3 Q4 Qi Q2 Q3 Q4 Jl FY17 FY18 FY19 FY20 Fy21. FY22 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Investor Loans % per State Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 G3 Q4 QI Q2 Q3 Q4 Qi Q2 3 Q4 Jul FY17 FY18 FY19
Slide 31: Lending Activity
Lending Activity Major vs Non-Major Non-Major market share 100% 50% 90% 45% 80% 40% 70% 35% 60% 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% . Q1 Q2 G3 G4 G1 G2 G3 G4 G1 G2 G3 G4 Q1 G2 G3 G4 G1 G2 G3 G4 Jul . Q1 Q2 Q3 G4 Q1 G2 Q3 Q4 G1 G2 G3 G4 Q1 G2 G3 O24 G1 Q2 G3 O4 Jul FY17 FY18, FY19 FY20 Fy21 FY
Slide 32: AFG’s earnings diversification strategy
AFG’s earnings diversification strategy delivering strong financial results Majority of profit now generated from diversified products Strengths of the business model Strong flexible platform for continued growth • Strong distribution network of 3,050+ brokers across Australia offering more than 5,5
Slide 33: Summary P&L
FY2021 FY2020 $000's $000's Commissions 585,758 530,654 Interest on trail commission income receivable 67,491 55,785 Mortgage management services 254 268 Customer transaction fees 3,298 2,635 Securitisation interest income 90,242 85,667 Total Revenue 747,043 675,009 Summary P&L Securitisation intere
Slide 34: Consolidated Income Statement
Consolidated Income Statement FY2021 FY2020 FY2021 FY2020 $000's $000's $000's $000's Continuing Operations Profit attributable to: Commission and other income 656,801 589,342 Owners of the Company 51,304 38,078 Securitisation interest income 90,242 85,667 Operating income 747,043 675,009 Other comp
Slide 35: Cash Flows
FY2021 FY2020 $000's $000's Cash flows from operating activities Cash receipts from customers 597,068 521,491 Cash Flows Cash paid to suppliers and employees Interest received Interest paid (558,825) 90,242 (46,520) (499,226) 85,666 (53,317) Income taxes paid (23,363) (14,298) Net cash from operatin
Slide 36: Impact of Securitisation on SPVs on Balance Sheet
Impact of Securitisation on SPVs on Balance Sheet Assets AFG SPV's AFG ex SPV's Re-classification AFG Limited Cash 116,035 110,013 - 226,048 Receivables - 5,645 - 5,645 Other asset - 15,000 - 15,000 The proforma balance sheet shows the Group’s balance Contract assets - 1,050,613 - 1,050,613 sheet wi
Slide 37: Important Disclaimer
Important Disclaimer This presentation contains general information which is current as at 26 August 2021. The information is intended to be a summary of Australian Finance Group Ltd (AFG) and it its activities as at 30 June 2021, and does not purport to be complete in any respect. The information i
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