Cog Financial Services Limited · ASX:COG
Cog Financial Services — Consolidated Operations Group — H1 2020 Earnings Presentation
28 slides from Cog Financial Services's earnings presentation, Feb 26, 2020
Slide 1: Investor Presentation 1H20 Results
For personal use only INVESTOR PRESENTATION CONSOLIDATED OPERATIONS GROUP LIMITED 1H20 RESULTS 6 months ending 31 December 2019 26 February 2020
Slide 2: 1H20 Highlights
1H20 HIGHLIGHTS Page 2 For personal use only CONSOLIDATED OPERATIONS GROUP LIMITED (COG) Solid financial performance in softer market • Revenue up $7.8m on pcp – $5.7m organic growth in the FB&A Revenue* 7% segment $112.7m • EBITDA to shareholders of $10.9m • Underlying NPATA attributable to shareho
Slide 3: Summary Group Financial Results
SUMMARY GROUP FINANCIAL RESULTS Page 3 For personal use only Half Year ended 31 December 2019 1 2018 1 Change Commentary ($m) Revenue growth of $7.8m primarily comprised of Revenue2 112.7 104.9 +7% organic growth (+$5.7m) in commission and fee income in the FB&A segment EBITDA 15.9 14.4 +10% Net Int
Slide 4: Strategic Objectives
STRATEGIC OBJECTIVES Page 4 For personal use only Building the leading Australian SME business equipment finance advisor Grow origination of ✓ Current Position company owned products and shareholder returns Value Critical mass Expand in-house leasing established Leveraging company’s products capabil
Slide 5: Trusted SME Finance Advisor
TRUSTED SME FINANCE ADVISOR Page 5 For personal use only Leading SME finance advisor Estimated 17% market share1 of broker intermediated finance for SMEs Finance Broker Synergies Finance Product • Aggregation platforms • Prime equipment • IT • Prime auto • Compliance Owned Finance Product • Non-prim
Slide 6: Business Performance
For personal use only BUSINESS PERFORMANCE
Slide 7: Finance Broking & Aggregation Segment: Financial Performance
1. FINANCE BROKING & AGGREGATION SEGMENT Page 7 Financial Performance For personal use only Half Year ended 31 December ($m) 2019 1 2018 2 Change Commentary Revenue 97.6 86.9 +12% Revenue growth of $10.7m (up 12%) reflects: • Increase in commission and fee income due to increase in equipment finance
Slide 8: Finance Broking & Aggregation: 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 $'m COG provides aggregation services to: 4,500 • independent network member finance brokers 4,000 • COG equity owned finance brok
Slide 9: Commercial Equipment Leasing Segment: Financial Performance
2. COMMERCIAL EQUIPMENT LEASING SEGMENT Page 9 Financial Performance For personal use only Half Year ended 31 December 20191 2018 Change Commentary ($m) Revenue 11.5 13.4 -14% Revenue contraction of $1.9m (down 14%) reflects: • a lower volume of terminations in 1H20 (on termination all future rental
Slide 10: Commercial Equipment Leasing: 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 Leases Written (OEC) $'m Referrals 70 60 FY16 $33.4m $1.3m 50 FY17 $42.5m $5.6m 40 32.4 27.0 FY18 $58.7m $9.9
Slide 11: Commercial Equipment Leasing: Book Features
2. COMMERCIAL EQUIPMENT LEASING Page 11 Book Features For personal use only Key Statistics 31 Dec 2019 30 Jun 2019 Funding 98% of total lease book has been externally funded through various funders and 2% remains internally OEC of lease book $149m $142m funded Number of leases 2,868 2,890 Self funde
Slide 12: Other Segment
3. OTHER Page 12 For personal use only Half Year ended 31 December 20191 20181 Change Commentary ($m) Revenue 3.6 4.6 -20% Segment includes COG corporate overhead and Hal IT business Revenue down on lower Hal Group sales, although EBITDA -1.3 -1.5 +17% profitability of the IT business improved Net I
Slide 13: Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Page 13 For personal use only As at ($m) 31 Dec 2019 30 June 2019 Commentary Cash and cash equivalents 46.4 26.0 Trade and other receivables 12.0 12.4 Financial assets - lease receivables 35.9 36.1 Cash increased due to $20.2m of capital raised under a Ot
Slide 14: Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS Page 14 For personal use only For the half ended 31 December 2019 2018 ($m) Commentary Receipts from customers 144.9 132.9 Payments to suppliers and employees (111.6) (108.7) Net cash inflow from operating activities includes Finance costs paid (4.6) (4.7) $37.0m
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 6 months ended 31 December 2019, the Group met its contractual a divide
Slide 16: CML Merger
For personal use only CML Merger
Slide 17: Executive Summary - CML Merger
EXECUTIVE SUMMARY - CML MERGER Page 17 For personal use only On 13 November 2019, CML & COG entered into a Scheme Implementation Agreement (“SIA”) to effect a merger • CML shareholders will have the option to elect to receive 100% of the Scheme consideration in COG shares or to receive a mixture of
Slide 18: Strategic Rationale for Merger
STRATEGIC RATIONALE FOR MERGER Page 18 For personal use only 1 Leverages key strengths of both groups (broking distribution & finance products) driving revenue synergies • COG is Australia’s largest asset finance broker and an aggregator with ~17% market share of the intermediated asset finance mark
Slide 19: CML Merger Status
CML MERGER STATUS Page 19 For personal use only Merged Group Board & Management Latest developments • Merged Group to be led by highly experienced Board & senior management teams, drawing • On 19 December 2019, CML announced that it has received a conditional non- on the strengths of both groups bin
Slide 20: FY20 Priorities & Summary
For personal use only FY20 PRIORITIES & SUMMARY
Slide 21: 2H20 Priorities
2H20 PRIORITIES Page 21 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 22: Disclaimer
DISCLAIMER Page 22 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 23: Appendices
For personal use only APPENDICES
Slide 24: Change in Accounting Policies
CHANGE IN ACCOUNTING POLICIES Page 24 For personal use only The Group has applied the following mandatory changes in accounting policies in 1H20: 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
Slide 25: Statutory Income Statement
STATUTORY INCOME STATEMENT Page 25 For personal use only For the half year ended 31 December 2019 2018 $ Change ($m) Revenue 112.8 105.1 +7.7 EBITDA 15.9 14.4 +1.5 Net Finance costs -4.5 -4.8 +0.3 Share of associates results 0.5 -0.4 +0.9 Acquisition related expenses -0.6 -0.4 -0.2 Depreciation & am
Slide 26: Reconciliation Between Statutory NPAT and Underlying NPATA
RECONCILIATION BETWEEN STATUTORY NPAT AND UNDERLYING NPATA Page 26 For personal use only For the half year ended 31 December 2019 2018 Variance 2019 2018 Variance ($m) ex NCI ex NCI NPAT 4.6 4.5 0.1 2.2 2.8 -0.6 Acquisition related expenses after tax 0.4 0.3 0.1 0.4 0.2 0.2 Redundancy costs after ta
Slide 27: Acquisition History
ACQUISITION HISTORY Page 27 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
Slide 28: Acquisition History cont.
ACQUISITION HISTORY cont. Page 28 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 $
Consolidated Operations Group — H1 2020 Earnings Presentation on 6ix