Cog Financial Services Limited · ASX:COG
Cog Financial Services — H1 2021 Earnings Presentation
25 slides from Cog Financial Services's earnings presentation, Feb 26, 2021
Slide 1: 1H 2021 Results
1H 2021 Results 26 February 2021 Authorised by Andrew Bennett Group Chief Executive Officer
Slide 2: About COG
About COG COG is an ASX listed provider of asset finance broking and aggregation services & non- prime commercial financing Finance Broking & Aggregation Lending • Australia’s largest equipment finance broking • Provider of non-prime commercial financing and aggregation group, with an estimated to S
Slide 3: Australia's biggest asset finance broker and aggregator
About COG Australia’s biggest asset finance broker and aggregator & trusted leader in SME and auto finance 17% Estimated market share 3
Slide 4: Our business model
About COG Our business model (51% owned) Debentures and Managed Banks, Non-Banks, Investment Scheme Insurance Companies FINANCE1 FINANCE & INSURANCE Management Fees and Brokerage Fees Net Interest Margin ASX: COG BORROWERS / ASSETS FINANCED 1 Finance and operating leases, chattel mortgages, invoice
Slide 5: 1H 2021 Highlights
1H 2021 Highlights Strong performance across all business units Revenue1 EBITDA to shareholders2 • Continued to invest surplus funds into consolidating COG as Australia’s largest asset $128.4m $18.7m finance broker distribution network +14% on pcp +72% on pcp • Acquisitions completed for a controlli
Slide 6: Priorities
Priorities 1. Continue with finance broker acquisitions – COVID-19 has 2. Expand the Managed Investment Scheme offering to demonstrated that these are resilient increase Westlawn’s funds under and robust businesses with low fixed management and deploy proceeds costs and can shrink variable costs thr
Slide 7: Our results
Summary of Group financial results Revenue growth of $15.7m includes organic growth Our results (+0.8m), consolidation of Westlawn and Access Capital (+$11.2m) and government subsidies 1H21 1 1H20 1 Pcp received 4 $m $m Change 1H21 EBITDA margin rises to 20.6% (1H20: 14.1%) Revenue2 128.4 112.7 14%
Slide 8: Segment performance
Segment performance The Finance Broking & Aggregation and Lending segments both reported strong pcp underlying profit gains in 1H21 8
Slide 9: Finance Broking & Aggregation: strong bottom line despite challenging conditions
Finance Broking & Aggregation Strong bottom line despite Revenue growth of $9.7m includes organic growth (+6.5m), consolidation of Access Capital (+$0.5m) challenging trading and government subsidies received 3 EBITDA margin rises to 14.5% (1H20: 10.7%), conditions largely due to the consolidation o
Slide 10: Finance Broking & Aggregation: Net assets financed
Finance Broking & Aggregation Net assets financed (NAF) $2.24bn net assets financed in 1H 2021 $m 2HY 1,403 1,604 1,720 2,198 2,154 -5% vs PCP 2,041 2,365 2,242 1HY 1,344 1,524 1,631 2016 2017 2018 2019 2020 2021 10
Slide 11: Our Aggregation & Broker Brands
Finance Broking & Aggregation Our Aggregation & Broker Brands 100% OWNED COG provides aggregation services to 100% OWNED • Independent network member finance brokers • COG equity owned finance brokers 70% COG offers finance brokers OWNED • Access to wider panel of financiers and volume-based incenti
Slide 12: Increasing COG's ownership in Westlawn to 51% has paved the way for growth in Lending
Lending Increasing COG’s ownership Revenue growth of $6.7m primarily comprised of Westlawn contribution net of intercompany in Westlawn to 51% has paved eliminations of $8.7m, government subsidies of $0.5m, partially offset by $2.5m in lower originations the way for growth in Lending due to the impa
Slide 13: The book is largely concentrated on asset backed contracts
Lending The book is largely Book features • The present value of the total lending book ($208.0m1) includes concentrated on asset the COG’s 100% owned subsidiary TL Commercial legacy portfolio of $80.6m ($72.1m of lease receivables, including backed contracts unguaranteed residuals and $8.5m of chat
Slide 14: Efficient cost management during COVID-19 improves performance
Other Efficient cost management Segment includes COG head office expenses and Hal Group IT business during COVID-19 improves Revenue contraction of $0.7m reflects lower Hal Group sales, although profitability of the IT business performance improved COG corporate overhead $1.7m compared to 1H21 1 1H2
Slide 15: Consolidated statement of financial position
Consolidated statement of financial position As at 31 Dec 30 Jun $m 2020 2020 Cash and cash equivalents increased by $37.0m largely due to the Cash and cash equivalents 71.7 34.7 consolidation of Westlawn Trade and other receivables 16.1 12.7 Contract assets 2.7 2.6 Financial assets – lease and loan
Slide 16: Consolidated statement of cash flows
Consolidated statement of cash flows 1H21 1H20 Half Year ended 31 December $m $m Net cash inflow from operating activities includes Receipts from customers 172.9 144.9 $53.4m (1H20: $37.0m) relating to the lease and loan Payments to suppliers and employees (130.4) (111.6) products offered through th
Slide 17: Capital management
Capital management Cash and cash equivalents Efficient capital The Group has generated significant cash over the half and the proportionate share of unrestricted cash and term deposits attributable to members at 31 December 2020 was $51.5m (see Appendices). management resulted in a Dividend On 15 Oc
Slide 18: Capital management
Capital management Investments Corporate debt facility COG made the following investments during the period, in line with its acquisition growth The Group has a corporate debt facility with Bendigo Bank Limited. During the 6 months strategy: ended 31 December 2020. The Group met its contractual repa
Slide 19: Disclaimer
Disclaimer COG Financial services Limited ('COG’) has not considered the financial position Investors should also note that COG’s past performance, including past share or needs of the recipient in providing this presentation ('Presentation'). Persons price performance, cannot be relied upon as an i
Slide 20: Appendices
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Slide 21: Statutory income statement
Appendices Statutory income statement Impairment relates to the write off of goodwill and other intangibles in the Lending segment, in connection with the restructuring of the business, following taking a 51% controlling interest in 1H21 1H20 Pcp Westlawn. The goodwill was originally recognised on $
Slide 22: Reconciliation between statutory NPAT and underlying NPATA
Appendices Reconciliation between statutory NPAT and underlying NPATA Members and NCI 1 Members 1H21 1H20 Variance 1H21 1H20 Variance $m $m $m $m $m $m NPAT (27.0) 4.6 (31.6) (31.2) 2.2 (33.4) Adjustments (after tax): Impairment 37.2 - 37.2 37.2 - 37.2 Gain from a bargain purchase (2.8) - (2.8) (2.8
Slide 23: Acquisition history
Appendices Acquisition history Interest Date Company Activity Acquirer acquired Price Consideration Platform Consolidated Dec-15 Aggregation platform + ownership of finance brokers COG 60% $22.9m 76% cash/ 24% equity Group (PCG) Largest independent specialist equipment finance Oct-16 Consolidated Fi
Slide 24: Acquisition history (continued)
Appendices Acquisition history (continued) Interest Date Company Activity Acquirer acquired Price Consideration Jul-19 QPF Holdings Acq of outstanding minority interests COG Outst. 5.6% $1.7m 100% cash 1 Oct-19 Platform Consolidated Group Acq of outstanding minority interests COG Outst. 3.6% $1.1m 5
Slide 25: Proportionate share of unrestricted cash attributable to members
Appendices Proportionate share of unrestricted cash attributable to members Total Restricted Unrestricted Proportionate share attributable to Cash cash1 cash COG Members $m $m $m Ownership $m Platform 7.5 (4.3) 3.2 69.9% 2.2 Fleet Avenue 0.4 - 0.4 34.9% 0.1 Fleet Network 3.4 (2.8) 0.6 67.0% 0.4 VEF
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