Cog Financial Services Limited · ASX:COG
Cog Financial Services — Consolidated Operations Group — FY2019 Earnings Presentation
28 slides from Cog Financial Services's earnings presentation, Aug 20, 2019
Slide 1: Investor Presentation: Results for the Year Ended 30 June 2019
For personal use only INVESTOR PRESENTATION CONSOLIDATED OPERATIONS GROUP LIMITED RESULTS FOR THE YEAR ENDED 30 JUNE 2019 20 August 2019
Slide 2: FY19 Highlights
FY19 HIGHLIGHTS Page 2 For personal use only CONSOLIDATED OPERATIONS GROUP LIMITED (COG) Solid financial performance in softer market • Revenue up $52.7m on pcp – $35.7m organic growth Revenue* 32% • Organic EBITDA growth is up $3.0m $217.2m • Underlying NPATA attributable to shareholders up 32% • S
Slide 3: Summary Group Financial Results
SUMMARY GROUP FINANCIAL RESULTS Page 3 For personal use only Year ended 30 June 2019 1 2018 1,2 Change Commentary ($m) Revenue growth of $52.7m primarily comprised Revenue3 217.2 164.5 +32% organic growth (+$35.7m) in commission and fee income, higher car fleet buying sales and higher EBITDA 29.9 24
Slide 4: Strategic Objectives
STRATEGIC OBJECTIVES Page 4 For personal use only Building the leading Australian SME business equipment finance advisor Grow origination of ✓ Current Position company owned products and shareholder returns Value Critical mass Expand in-house leasing established Leveraging company’s products capabil
Slide 5: Trusted SME Finance Advisor
TRUSTED SME FINANCE ADVISOR Page 5 For personal use only Leading SME finance advisor Estimated 16% market share1 of broker intermediated finance for SMEs Finance Broker Synergies Finance Product • Aggregation platforms • Prime equipment • IT • Prime auto • Compliance Owned Finance Product • Non-prim
Slide 6: Business Performance
For personal use only BUSINESS PERFORMANCE
Slide 7: Finance Broking & Aggregation Segment: Financial Performance
1. FINANCE BROKING & AGGREGATION SEGMENT Page 7 Financial Performance For personal use only Year ended 30 June ($m) 2019 1, 2 2018 Change Commentary Revenue 184.4 139.4 +32% Revenue growth of $45.0m (up 32%) reflects: • Increase in commission and fee income due to increase in equipment finance volum
Slide 8: Broker Services and Group NAF
1. FINANCE BROKING & AGGREGATION Page 8 Broker Services and Group NAF For personal use only Australia’s largest equipment finance broking and aggregation group Group NAF $'m COG provides aggregation services to: 4,500 4,000 • independent network member finance brokers 3,500 • COG equity owned financ
Slide 9: Commercial Equipment Leasing Segment: Financial Performance
2. COMMERCIAL EQUIPMENT LEASING SEGMENT Page 9 Financial Performance For personal use only Year ended 30 June 20191 20182 Change Commentary ($m) Revenue 23.9 17.7 +35% Revenue growth of $6.2m (up 35%) reflects: • growth in the loan book and resulting increase in interest income and residual value in
Slide 10: Lease Origination
2. COMMERCIAL EQUIPMENT LEASING Page 10 Lease Origination For personal use only Lease Origination Lease referrals from COG Broker network Original Equipment Cost (OEC) OEC Written COG Broker Referrals FY16 $33.4m $1.3m FY17 $42.5m $5.6m FY18 $58.7m $9.9m FY19 $51.8m $6.9m New leases written in FY19
Slide 11: Commercial Equipment Leasing: Book Features
2. COMMERCIAL EQUIPMENT LEASING Page 11 Book Features For personal use only Key Statistics 30 Jun 2019 30 Jun 2018 Funding 97% of total lease book has been externally funded through various funders and 3% remains internally OEC of lease book $142m $128m funded Number of leases 2,890 2,748 Self funde
Slide 12: Other
3. OTHER Page 12 For personal use only Year ended 30 June ($m) 20191 20181 Change Commentary Revenue 8.9 7.4 +20% Segment includes COG head office expenses and Hal IT business EBITDA -3.1 -2.2 -41% Revenue up 20% largely due to the acquisition of Net Interest -0.4 -0.3 -33% BusinessWorks (Feb 18), a
Slide 13: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET Page 13 For personal use only As at 30 June 2019 30 June 20181 Commentary ($m) Cash and cash equivalents 26.0 36.2 Trade and other receivables 12.4 14.0 Financial assets - lease receivables 36.1 35.6 Cash decreased due to investments in Centrepoint Other assets 4.9 3.1 Fin
Slide 14: Consolidated Cash Flow Statement
CONSOLIDATED CASH FLOW STATEMENT Page 14 For personal use only For the year ended 30 June 2019 2018 ($m) Commentary Receipts from customers 278.2 203.2 Payments to suppliers and employees (210.9) (155.4) Finance costs paid (9.2) (8.3) Income taxes paid (4.5) (5.1) Net cash inflow from operating acti
Slide 15: Capital Management
CAPITAL MANAGEMENT Page 15 For personal use only Investments Surplus funds now largely invested with the following investments during the year: • Westlawn Finance $14.3m • Heritage Group $4.9m • CFG (20%) $4.2m • Centrepoint Finance $8.3m • Geelong Financial Group $0.3m • Sovereign Tasmania $2.2m Th
Slide 16: FY20 Priorities & Summary
For personal use only FY20 PRIORITIES & SUMMARY
Slide 17: FY20 Priorities
FY20 PRIORITIES Page 17 For personal use only 1. Enhance underlying performance of businesses 2. Expand COG’s in-house financial product portfolio 3. Establish external funding sources (bank senior warehouse facilities and subordinated mezzanine debt) 4. Invest in infrastructure and IT systems to su
Slide 18: Summary
SUMMARY Page 18 For personal use only Solid financial performance • Revenue up $52.7m on pcp - $35.7m organic growth • Underlying NPATA attributable to shareholders up 32% • Earnings guidance for FY20 is not being provided Completed investment of surplus funds into establishing Australia’s largest c
Slide 19: Disclaimer
DISCLAIMER Page 19 For personal use only Consolidated Operations Group Limited ('COG’) has not considered COG will not undertake any obligation to release publicly any the financial position or needs of the recipient in providing this revisions or updates to these forward-looking statements to prese
Slide 20: Appendices
For personal use only APPENDICES
Slide 21: Platform Finance/CFG Membership
PLATFORM FINANCE/CFG MEMBERSHIP Page 21 For personal use only Number of New Members • Members have increased by 87% since 2016 • Members have increased by 45% in 2019 • Industry dynamics and IT are encouraging increased membership
Slide 22: Platform Finance/CFG Membership (continued)
PLATFORM FINANCE/CFG MEMBERSHIP (continued) Page 22 For personal use only Growth and New Members – Volumes ($’m) • Growth of 61% since June 2016 • Growth of 16% during FY 2019
Slide 23: Change in Accounting Policies
CHANGE IN ACCOUNTING POLICIES Page 23 For personal use only The group has applied a number of changes in accounting policies in FY19: 1. Treatment of Sale of Receivables (CEL segment) Derecognition: Some of COG’s finance leases were previously derecognised upon funding with certain counterparties an
Slide 24: Restatement of Comparatives: Financial Results
RESTATEMENT OF COMPARATIVES: FINANCIAL RESULTS Page 24 For personal use only For the year ended 30 June 2018 Expected 2018 Derecognition 1 2 ($m) Reported Credit Loss Restated Revenue 160.6 3.9 - 164.5 EBITDA 21.4 3.9 -0.9 24.4 Net Finance costs -3.5 -4.4 - -7.9 Depreciation & amortisation -5.6 - -
Slide 25: Restatement of Comparatives: Balance Sheet
RESTATEMENT OF COMPARATIVES: BALANCE SHEET Page 25 For personal use only As at 30 Jun 2018 Expected Credit 30 Jun 2018 Notes: Derecognition 1 ($m) Reported Loss 2 Restated 1 Derecognition - refer to change in accounting policies slide Cash and cash equivalents 36.2 36.2 2 Expected Credit Loss - refe
Slide 26: Statutory Income Statement
STATUTORY INCOME STATEMENT Page 26 For personal use only For the year ended 30 June Commentary 2019 2018 1 $ Change ($m) Revenue 217.2 164.5 +52.7 EBITDA 29.9 24.4 +5.5 Net Finance costs -9.3 -7.9 +1.4 Share of profits of associates -0.0 0.1 -0.1 Acquisition related expenses -0.9 -0.6 +0.3 Depreciat
Slide 27: Reconciliation Between Statutory NPAT and Underlying NPATA
RECONCILIATION BETWEEN STATUTORY NPAT AND UNDERLYING NPATA Page 27 For personal use only For the year ended 30 June 2019 2018 Variance 2019 2018 Variance ($m) ex NCI ex NCI NPAT 8.5 7.5 1.0 4.3 3.8 0.5 Acquisition related expenses after tax 0.6 0.4 0.2 0.5 0.4 0.1 Redundancy costs after tax - 0.1 -0
Slide 28: Acquisition History
Page 28 ACQUISITION HISTORY 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 specia
Consolidated Operations Group — FY2019 Earnings Presentation on 6ix