Cog Financial Services Limited · ASX:COG

Cog Financial Services — Consolidated Operations Group — FY2020 Earnings Presentation

30 slides from Cog Financial Services's earnings presentation, Sep 25, 2020

  1. Slide 1: Year End Results 30 June 2020

    INVESTOR For personal use only PRESENTATION YEAR END RESULTS 30 JUNE 2020 CONSOLIDATED OPERATIONS GROUP LIMITED 25 September 2020 - Updated for Analysts’ Q&A Authorised by Andrew Bennett, Chief Executive Officer

  2. Slide 2: Financial Year 2020 Highlights

    For personal use only Financial Year 2020 Highlights

  3. Slide 3: FY20 Highlights

    FY20 HIGHLIGHTS Page 3 For personal use only CONSOLIDATED OPERATIONS GROUP LIMITED (COG) Solid financial performance amid COVID-19 crisis • Revenue up $5.0m on pcp – $3.5m organic growth • Underlying EBITDA to shareholders of $21.3m Revenue* • Underlying NPATA attributable to shareholders up 6% 2% $

  4. Slide 4: Summary Group Financial Results

    SUMMARY GROUP FINANCIAL RESULTS Page 4 For personal use only Year ended 30 June 2020 1 2019 1 Change Commentary ($m) Revenue growth of $5.0m primarily comprised Revenue2 222.2 217.2 +2% organic growth (+$3.5m) in commission and fee income in the FB&A segment. EBITDA 31.2 29.9 +4% EBITDA margin up to

  5. Slide 5: COG is Australia's largest asset finance broking and aggregation group

    COG is Australia’s largest asset finance broking and aggregation group, and Page 5 a trusted leader in SME and auto finance solutions. For personal use only Estimated 17% market share of broker intermediated finance Small Medium Enterprises (SMEs) Banks/Non-banks • asset/equipment/auto finance • ins

  6. Slide 6: Business Performance

    For personal use only Business Performance

  7. Slide 7: Finance Broking & Aggregation Segment: Financial Performance

    1. FINANCE BROKING & AGGREGATION SEGMENT Page 7 Financial Performance For personal use only Year ended 30 June ($m) 2020 1, 2 2019 1, 2 Change Commentary Revenue 194.0 184.4 +5% Revenue growth of $9.6m (up 5%) reflects: • Increase in commission and fee income due to growth in equipment finance volum

  8. Slide 8: Finance Broking & Aggregation Segment: Broker Services and Group NAF

    1. FINANCE BROKING & AGGREGATION SEGMENT Page 8 Broker Services and Group NAF For personal use only Australia’s largest asset finance broking and aggregation group COG provides aggregation services to: Group Net Asset Financed • independent network member finance brokers #039;m • COG equity owned finan

  9. Slide 9: Commercial Equipment Financing Segment: Financial Performance

    2. COMMERCIAL EQUIPMENT FINANCING SEGMENT Page 9 Financial Performance For personal use only Year ended 30 June 20201 20191 Change Commentary ($m) Revenue 21.1 23.9 -12% Revenue contraction of $2.8m (-12% on pcp) reflects lower: EBITDA 12.1 13.6 -11% • originations in the 2H20 due to the impact of t

  10. Slide 10: Commercial Equipment Financing: Lease and Loan Origination

    2. COMMERCIAL EQUIPMENT FINANCING SEGMENT Page 10 Lease and Loan Origination For personal use only Lease and Loan Origination Total OEC of $31.4 written in FY20 is 39% lower on pcp (FY19: $51.8m) due to the scale back of operations in response to the challenging trading conditions during the COVID-1

  11. Slide 11: Commercial Equipment Financing: Book Features

    2. COMMERCIAL EQUIPMENT FINANCING SEGMENT Page 11 Book Features For personal use only Key Statistics 30 Jun 2020 30 Jun 2019 Funding 99% of total lease book has been externally funded through various funders and 1% remains internally funded OEC of lending book 1 $141m $142m Self funded leases at 30

  12. Slide 12: Other

    3. OTHER Page 12 For personal use only Year ended 30 June ($m) 2020 1 2019 1 Change Commentary Revenue 7.1 8.9 -20% Segment includes COG head office expenses and Hal IT business EBITDA -1.9 -3.1 +39% Revenue down on lower HAL Group sales, although Net Interest -0.2 -0.4 +50% profitability of the IT

  13. Slide 13: Consolidated Statement of Financial Position

    CONSOLIDATED STATEMENT OF FINANCIAL POSITION Page 13 For personal use only As at 30 June 2020 30 June 2019 Commentary ($m) Cash and cash equivalents 34.7 26.0 Trade and other receivables 12.7 12.4 Cash and cash equivalents increase is reflective of lower Financial assets - lease receivables 34.1 36.

  14. Slide 14: Consolidated Cash Flow Statement

    CONSOLIDATED CASH FLOW STATEMENT Page 14 For personal use only For the year ended 30 June 2019 2019 ($m) Commentary Receipts from customers 284.6 278.2 Payments to suppliers and employees (209.8) (210.9) Net cash inflow from operating activities Finance costs paid (8.7) (9.2) includes $49.1m (FY19:

  15. Slide 15: Capital Management

    CAPITAL MANAGEMENT Page 15 For personal use only Corporate debt facility Dividend The Group has a corporate debt facility with Bendigo Bank Limited. During On 15 October 2019, the Company adopted a dividend policy, targeting the financial year ending 30 June 2020, the Group obtained a 3 months a div

  16. Slide 16: FY21 Priorities & Summary

    For personal use only FY21 Priorities & Summary

  17. Slide 17: FY21 Priorities

    FY21 PRIORITIES Page 17 For personal use only 1. Continue with finance broker acquisitions – COVID has demonstrated that these are resilient and robust businesses with low fixed costs and can shrink variable costs quickly in times of stress 2. Expand the managed investment scheme offering to increas

  18. Slide 18: FY21 Outlook

    FY21 OUTLOOK Page 18 For personal use only 1. COVID -19 will continue to impact SMEs until at least mid 2021 2. FB & A businesses are very resilient – mainly variable costs 3. July 2020 performance has been very strong – 10% greater PBT than pcp 4. Not providing full year guidance

  19. Slide 19: Disclaimer

    DISCLAIMER Page 19 For personal use only Consolidated Operations Group Limited ('COG’) has not considered COG will not undertake any obligation to release publicly any the financial position or needs of the recipient in providing this revisions or updates to these forward-looking statements to prese

  20. Slide 20: Appendices

    For personal use only Appendices

  21. Slide 21: Platform Finance/CFG Membership

    PLATFORM FINANCE/CFG MEMBERSHIP Page 21 For personal use only Number of New Members  Members have increased by 113% since 2016  Members have increased by 14% in FY20  Industry dynamics and IT continued to encourage increased membership

  22. Slide 22: Platform Finance/CFG Membership (continued)

    PLATFORM FINANCE/CFG MEMBERSHIP (continued) Page 22 For personal use only Growth and New Members – Volumes ($’m)  Growth of 70% since June 2016  Growth of 5% during FY20

  23. Slide 23: Change in Accounting Policies

    CHANGE IN ACCOUNTING POLICIES Page 23 For personal use only The Group has applied the following mandatory changes in accounting policies in FY20: AASB 16 - Leases (effective 1 July 2019) The Group has adopted AASB 16 Leases in the current financial period, consistent with the mandatory adoption date

  24. Slide 24: Statutory Income Statement

    STATUTORY INCOME STATEMENT Page 24 For personal use only For the year ended 30 June ($m) 2020 2019 $ Change Commentary Net interest expense in FY20 includes the impact of $0.4m Revenue 1 222.2 217.2 +5.0 related to AASB16 Leases first year adoption. EBITDA 31.2 29.9 +1.3 Impairment includes $10.8m o

  25. Slide 25: Reconciliation Between Statutory NPAT and Underlying NPATA

    RECONCILIATION BETWEEN STATUTORY NPAT AND UNDERLYING NPATA Page 25 For personal use only For the year ended 30 June 2020 2019 Variance 2020 2019 Variance ($m) ex NCI ex NCI NPAT -5.4 8.5 -13.9 -10.0 4.3 -14.3 Acquisition related expenses after tax 0.5 0.6 -0.1 0.4 0.5 -0.1 Redundancy and restructuri

  26. Slide 26: Acquisition History

    ACQUISITION HISTORY Page 26 For personal use only Date Company Activity Acquirer Interest Price Consideration Dec 15 Platform Consolidated Aggregation platform + ownership of finance COG 60% $22.9m 76% cash/ 24% equity Group (PCG) brokers Oct 16 Consolidated Finance Group Largest independent special

  27. Slide 27: Acquisition History cont.

    ACQUISITION HISTORY cont. Page 27 For personal use only Date Company Activity Acquirer Interest Price Consideration Jul 19 QPF Holdings Acq of outstanding minority interests COG Outst. 5.6%1 $1.7m 100% cash 4 Oct 19 Platform Consolidated Group Acq of outstanding minority interests COG Outst. 3.6%2 $

  28. Slide 28: Analysts' Q&A: FY20 and FY19 EBITDA Reconciliation

    ANALYSTS’ Q & A Page 28 For personal use only Reconciliation between FY20 and FY19 EBITDA showing respective AASB 16 adjustments and like-for-like comparison AASB16 FY20 YoY $m FY20 Adjustments (Like for like) FY19 Variance Finance Broking & Aggregation 21.1 (1.9) 19.2 19.4 (0.2) Commercial Equipmen

  29. Slide 29: Analysts' Q&A: Underlying EBITDA to Underlying NPATA

    ANALYSTS’ Q & A Page 29 For personal use only Reconciliation of Group underlying EBITDA to underlying NPATA YoY $m FY20 FY19 Variance Underlying EBITDA 31.2 29.9 1.3 Interest income 0.2 0.2 0.0 Finance costs (8.6) (9.5) 1.0 Depreciation and amortisation (3.3) (1.6) (1.7) Share of results from associ

  30. Slide 30: Analysts' Q&A: COG Proportionate Share of Cash

    ANALYSTS’ Q & A Page 30 For personal use only COG proportionate share of cash on balance sheet $m Cash at 30 June 2020 COG Attrib. to Full Ownership Members PCG 6.2 69.7% 4.3 Fleet Avenue 0.3 34.9% 0.1 Fleet Network 3.4 66.8% 2.3 V&F 0.8 34.9% 0.3 PCG Group Sub-total 10.7 7.0 QPF 3.1 56.7% 1.8 DLV 0

Consolidated Operations Group — FY2020 Earnings Presentation on 6ix