Australian Finance Group Ltd. · ASX:AFG
Australian Finance — Investor Presentation (February 2025)
36 slides from Australian Finance's investor presentation, Feb 28, 2025
Slide 1: Half Year Results Presentation
Half Year Results Presentation 6 months to 31 December 2024
Slide 2: Presentation Outline
Presentation Outline Item Presenter Pages HY25 Highlights David Bailey 4–7 Market & operations update David Bailey 8 – 15 Financial update Luca Pietropiccolo 16 – 21 Outlook David Bailey 22 – 25 Q&A Appendices 2
Slide 3: AFG 30 years delivering innovative solutions in the finance industry
AFG 30 years delivering innovative solutions in the finance industry Scale in the finance industry $863B 75% 4,100 1 in 10 550k Settlements p.a. in the of Residential mortgages now AFG Brokers Residential mortgages in Australia Borrowers supported Australian Finance market1 through the broker channe
Slide 4: HY25 Highlights
HY25 RESULTS HY25 Highlights
Slide 5: AFG highlights – HY25
Investments & Dividend yield Underlying ROE liquid assets AFG highlights – HY25 5% 16% $185m A broader platform for earnings growth – recent investments add up to $7m annualised EBITDA from H2 FY25 • Record settlements & lodgements in Residential and AFG Securities – a strong start to 2025 Record nu
Slide 6: Delivering on our strategic pillars
Delivering on our strategic pillars Strengthening the business through purposeful capital allocation 1 2 3 Provide market leading Deliver higher margin through Grow our broker network broker technology proposition our distribution network +7% +1.5 hours +$1b Net increase in broker numbers, BrokerEng
Slide 7: AFG financial highlights – HY25
AFG financial highlights – HY25 Distribution earnings up 8% - our largest and highest returning segment Manufacturing earnings set for growth, with improving NIM and record book size Revenue Annuity style earnings Gross profit1 EBITDA NPAT $626m 70% $69m $24.6m $15.3m +11% +5% +4% +3% +6% Investment
Slide 8: Market & Operations update
HY25 RESULTS Market & Operations update
Slide 9: Industry trends supporting AFG broker growth
Industry trends supporting AFG broker growth Brokers are the preferred channel1 …with consolidation towards …underpinning AFG’s growth to record high growing towards 80%... large broker groups3… +3% +7% 72% 75% 4.1k 67% 69% 3.9k 3.7k 59% 3.4k 3.1k 61% 55% 18% 3.1k 3.1k 3.2k 3.2k 3.3k 19% 27% 20% +7%
Slide 10: Residential mortgage activity at record level
Distribution Residential mortgage activity at record level Backed by sustained growth in customer demand for broker, with our technology enabling more efficient brokers Record settlements in H1 FY25 20+ years of consistent book growth Total settlement volume up 13% to $32 billion • Growth in broker
Slide 11: Business model delivering higher earnings
Distribution Business model delivering higher earnings Product diversification provides value to brokers, and generates annuity style Distribution earnings AFG Underlying Gross Profit ($k per broker p.a.) Distribution earnings1 up 5% Continued growth through services & diversified products 42 +4% •
Slide 12: With growing demand for diversified products
Distribution With growing demand for diversified products AFG provides platform & services for brokers to diversify into new products to meet customer needs, driving gross profit up 9% Higher margin white label proposition… …as well as a wide range of products… …resulting in increasing broker utilis
Slide 13: Increasing adoption of our value add broker services
Distribution Increasing adoption of our value add broker services 78% of brokers take up an additional service along with an increasing take up of our BrokerEngine Plus platform BrokerEngine Subscribers Subscription income1 per broker up 9% to $6k p.a. 3.3k Driven by increased take-up of services 2.
Slide 14: AFG Securities record settlement growth
Manufacturing AFG Securities record settlement growth AFGS Settlements Volume growth as non-bank market conditions improve 2.0 • Non-bank market share1 increased to 10.5% up from 8.2% at Dec 2022 Billions ($) 2.5x 1.5 • Lodgements in Q2 and early CY25 creates a strong H2 settlement pipeline 4% marke
Slide 15: Growing book, while maintaining credit quality
Manufacturing Growing book, while maintaining credit quality AFGS Closing Book Our deep experience, processes and policies deliver sustained +23% industry leading credit quality 5.1 4.9 4.0 4.1 3.0 Record book growth while maintaining strong portfolio mix • Runoff in H1 FY25 of 36.6%, well below pea
Slide 16: Financial update
HY25 RESULTS Financial update
Slide 17: Financial results
Financial results $m HY25 HY24 Variance • Reported NPAT of $15.3m, up 6% Gross profit 1 69.2 66.2 4% • Gross profit1 up $3m or 4%: Change in trail book future value (1.1) (2.0) (46)% • Manufacturing +$1.1m through record book growth Operating expenses (48.5) (45.2) 7% • Distribution +$2.6m, services
Slide 18: Investments underpin Distribution growth, with AFG Securities book growth and improving NIM
Investments underpin Distribution growth, with AFG Securities book growth and improving NIM Distribution Manufacturing Central services Profit before tax (PBT) HY25 $29 M +8% on HY24 $8 M -3% on HY24 -$15 M -18% on HY24 Underlying ROE Underlying ROE 39% 12% • Represents 78%1 of PBT – in line with FY
Slide 19: Distribution represents 82% of gross profit
Distribution represents 82% of gross profit Subscription income delivered 12% growth $m (unless otherwise stated) HY25 HY24 Var $ Var % Gross profit1 69.2 66.2 2.9 4% Distribution: up 5% with growth in volumes and subscriptions • Residential margin down $0.2m overall with higher Distribution 56.5 53
Slide 20: Purposefully allocating capital to progress strategic priorities
Purposefully allocating capital to progress strategic priorities Recent investments and industry outlook support new earnings from H2 FY25 up to $7m annualised EBITDA Current investment Annualised EBITDA • $11m invested - increased ownership to 100% from December 2024 +$1.0 - 1.5m Fintelligence • Co
Slide 21: Strong financial position to grow shareholder returns
Strong financial position to grow shareholder returns Well capitalised balance sheet and high cash generating assets create the capacity to fund growth History of consistent Delivering returns on equity Preserving liquidity cash generation and long term value Cash & restricted cash Strong cash flow
Slide 22: Outlook
HY25 RESULTS Outlook
Slide 23: Market conditions supporting our strategy
Market conditions supporting our strategy Change in the cash rate cycle has historically supported both Distribution volumes and Manufacturing margin Importance of the broker channel Mortgage volumes are increasing and Funding used by non-banks historically to banks continues to increase benefit fro
Slide 24: Competition & choice for brokers, customers & lenders
Medium term outlook Competition & choice for brokers, customers & lenders Our strong history of innovation and effective capital allocation positions us to deliver earnings growth and shareholder returns Strategic Pillar Measure Current FY29 Aspiration Residential settlement growth 13% 8% CAGR Grow
Slide 25: Strategically positioned to deliver earnings growth
Strategically positioned to deliver earnings growth Growth strategy based on 3 strategic pillars Delivering earnings growth, with improving market conditions Credit market conditions improving Expected sustained growth in credit activity supporting all segments Broker is a critical channel, 75% shar
Slide 26: Appendices
HY25 RESULTS Appendices
Slide 27: A fairer financial future being delivered by an experienced executive team
A fairer financial future being delivered by an experienced executive team David Bailey, CEO Lisa Bevan, COO Luca Pietropiccolo, CFO 21 years 26 years 2 years Sam McCready, CDO Damian Percy, Them Lam, 19 years GM Securitisation Head of Sales & Distribution 22 years 23 years Finance industry experien
Slide 28: Continuing momentum in H2 FY25
Continuing momentum in H2 FY25 Strong growth in volumes across Residential mortgages, as well as for AFG Securities through growing broker numbers and market conditions Comparison of January lodgements January 2025 change on January 2024 Distribution • Residential lodgements up 26% on January 2024 w
Slide 29: Settlements and Loan Book
Settlements and Loan Book Settlements ($m) 1H25 2H24 1H24 1H25 v 2H24 1H25 v 1H24 Residential 31,840 26,981 28,200 18% 13% AFGHL 2,388 2,102 1,462 14% 63% White Label 1 950 1,046 881 (9%) 8% AFG Securities 1 1,437 1,055 582 36% 147% Commercial 2,568 2,064 2,389 24% 7% Thinktank 96 72 61 34% 57% Leas
Slide 30: Key metrics
Key metrics $m (unless otherwise stated) Units 1H25 2H24 1H24 1H25 v 1H25 v 2H24 1H24 Operating income Distribution 479.6 383.7 429.5 25% 12% Key movements Manufacturing 161.3 142.2 141.6 13% 14% • Distribution operating income up 25% on H2 Central (15.3) (11.7) (8.7) 30% 76% FY24, driven by increas
Slide 31: Reported NPAT to Underlying NPATA reconciliation
Reported NPAT to Underlying NPATA reconciliation Key movements $m HY25 HY24 HY25 v HY24 • The trail commission adjustment represents the Reported NPAT 15.3 14.4 0.9 non-cash change in the carrying value of the Amortisation of acquired intangible assets 1.2 1.2 - trailing commissions contract assets
Slide 32: AFG holds $185m in liquid assets and high performing investments
AFG holds $185m in liquid assets and high performing investments Key movements $m Dec 2024 Dec 2023 Variance • Net unrestricted cash of $11m, down from $17m Unrestricted cash 54.8 65.9 (11.1) at December 2023 Debt facility (44.3) (49.2) 5.9 • Trail book net asset at $89.5m with the reduction Net unr
Slide 33: Trail book asset
Trail book asset The table below outlines key assumptions used to value trail commissions Key movements Key Assumptions Dec 2024 Dec 2023 • Trailing commissions are received from lenders on Average loan life Between 3.6 and 4.2 years Between 3.5 and 4.4 years settled loans over the life of the loan
Slide 34: Summary Balance Sheet
Summary Balance Sheet $m Assets Dec 2024 Dec 2023 Variance Unrestricted cash 54.8 65.9 (11.1) Restricted cash 115.7 144.7 (29.0) Key movements Trade and other receivables 13.8 12.9 0.9 Other assets 5.5 9.5 (4.0) • Unrestricted cash, which consists of cash at bank Contract assets 1,170.9 1,158.7 12.2
Slide 35: AFG Securities – Loan quality
AFG Securities – Loan quality LVR Loan Balance Geographic distribution 0.3% 3% 6% 11% 19% 10% 26% 10% 32% 15% 53% 35% 26% 25% 28% VIC NSW LVR <70% LVR 70%-80% <$250k $250k - $500k QLD WA LVR 80%-90% LVR >90% $500k - $750k $750k - $1m SA ACT/TAS/NT >$1m 35
Slide 36: Important Disclaimer
Important Disclaimer This presentation contains general information which is current as at 27 February 2025. The information is intended to be a summary of Australian Finance Group Ltd (AFG) and its activities as at 31 December 2024 and does not purport to be complete in any respect. The information
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