Australian Finance Group Ltd. · ASX:AFG
Australian Finance — Investor Presentation (February 2021)
36 slides from Australian Finance's investor presentation, Feb 26, 2021
Slide 1: Half year results presentation
Half year results presentation
Slide 2: HY21 results highlights
HIGHLIGHTS HY21 results Reported NPAT up 36% to $24.97M Underlying NPAT up 41% to $24.88M _ Interim dividend up 9% to 5.9 cents per share H1FY21 $24.97M H1FY21 $24.88M FY21 FYI9 5
Slide 3: HY21 results highlights
HIGHLI GHTS HY21 results 3 Compared to H1 FY20
Slide 4: Financial Results
Financial Results 1H21 1H20 $000's $000's Total Revenue 371,065 335,423 11% Gross Profit 49,686 42,816 16% NPAT reported 24,967 18,348 36% NPAT underlying 24,880 17,670 41% Net cash from operating activities 25,788 16,866 53% Key take outs for the year Net Interest 26,096 17,218 52% Net Interest Mar
Slide 5: Settlements & Loan Book
Settlements & Loan Book 1H21 1H20 $000's $000's Residential 20,915,896 16,853,147 24% AFGHL 1,474,237 1,566,962 (6%) White Label 1,028,183 876,527 17% • Residential settlements up 24% compared to H1 FY20. AFG Securities 446,053 690,435 (35%) Government stimulus supporting increases in first home buy
Slide 6: Strategic and Market Outlook
Strategic and Market Outlook Market Outlook Strategic Outlook Market has adapted but uncertainty remains Brokers adapting to changing industry • Record residential volumes during H1 FY21 and into H2 FY21 • During the pandemic brokers have grown their market share of the mortgage supported by Governm
Slide 7: AFG Home Loans
AFG Home Loans • Trail book increased 9% to $10.7 billion • Settlement volumes were down 6% to $1.47 billion. Changing mix towards White Label funders as AFG Securities reduced its credit appetite during the initial stages of COVID-19 Funding obtained directly by AFG • Since the funding market has s
Slide 8: AFG Securities
AFG Securities • Settlements of $446 million, a decrease of 35% with the loan book increasing 18% to $2.96 billion compared to December 2019 and 2% higher than June 2020 • Following measured slow down of activity in April 2020 during COVID-19 pandemic, a re-establishment of credit appetites have bee
Slide 9: AFG Securities
• In H1 FY21 the net interest margin included the benefit of an inverted BBSW rate lowering cost of funds compared to H1 FY20 AFG Securities • Successfully completed $700 million term transaction in July 2020 as well as our first non-conforming transaction of $500 million in October 2020 • AFG Secur
Slide 10: AFG Securities
AFG Securities LVR Loan Balance ay 1% \ 44% @ Wvr<70% | ivr 70-80% © «s250K @s250-s00x @ wr 80-90% LVR >90% © $500-750K @ $750-1m 10 >$IM Geographic Distribution @vc Qnsw @ao WA () sa e Other
Slide 11: AFG Securities
OPER AT I O N AL AFG Securities • At 31 December 2020 in a book of 7,833 loans, there were only 26 loans in arrears greater than 30 days. The low number continues to demonstrate the quality of the book • No losses incurred on non-LMI insured loans • Majority of the loans in COVID-19 % loan portfolio
Slide 12: Thinktank
Thinktank White label - AFG Commercial powered by Thinktank • Settlements have decreased 25% to $65 million in H1 FY21 on a softer broader commercial market • Lending to the SME segment has been impacted by COVID-19 lockdown periods. While there are signs of improvement, some continued short term im
Slide 13: Continued Investment in Technology
Continued Investment in Technology • AFG has completed our underlying customer facing technology refresh and launched Customer360 in Q2 FY21. Customer360 is an industry-leading customer fact-find tool for brokers and customers • CRM, our new broker portal will be launched as part of the new look Sui
Slide 14: AFG Business
AFG Business • Investment and lending to the SME segment has softened during the pandemic and likely to continue to be impacted in the short term • Settlements across the platform down 52% to $92 million in H1 FY21 • AFG Business targets brokers that focus on residential mortgages, who are currently
Slide 15: Summary Cash Flow
• Net cash flows from operating activities are up 53% on H1 FY20 on the back of annuity style cash flows from historical Summary Cash Flow trail books and positive working capital movement • AFG Securities loan book of $2.9 billion, growing 18% and AFG maintains a capital light business model with g
Slide 16: Summary Balance Sheet
AFG maintains a strong, debt-free balance sheet with unrestricted cash, trail book assets, financial assets and sub-ordinated capital totaling $267 million Summary Balance Sheet Well positioned to undertake future strategic growth investment for both organic and inorganic opportunities Dec 2020 Dec
Slide 17: Impact of Trail Book Accounting
Impact of Trail Book Accounting 1H21 1H20 $000's $000's Statutory Operating Profit After Operating Profit After Underlying profit 41% above H1 FY20 Income Tax Income Tax Underlying results from excluding change in value of future 330,703 24,880 296,988 17,670 continuing operations trailing commissio
Slide 18: Other Income
Other Income • Service fees have increased 8% in H1 FY21 including broker services such as compliance, PI and marketing services • Sponsorship and conferencing activity was particularly high in H1 FY19 and H1 FY20 due to timing • H1 FY17 included Volume Bonus Income of $1.6 million which have since
Slide 19: January 2021 Trading
January 2021 Trading • Residential lodgements up 28% on January 2020 overall to $4.8 billion with settlements of $3.7 billion • AFG Home Loans lodgements up 4% on January 2020 • AFG Securities lodgements were 3% higher than January 2020 while settlements were 34% below on a comparatively softer pipe
Slide 20: In Conclusion
In Conclusion Positive result in H1 FY21 with 41% growth in Following initial uncertainty in the funding market, Underlying NPAT demonstrating the ongoing AFG is now well positioned to continue to expand. success of the earnings diversification strategy AFG Securities continues to grow the loan book
Slide 21: Q&A Thank you
H AL F Y E AR R E S U LT S Q&A Thank you
Slide 22: Appendices
H AL F Y E AR R E S U LT S Appendices
Slide 23: Residential Settlements
Billions Residential Settlements 25 Residential Settlements Residential Settlements by State $8 20 $7 5 8° & $5 10 mB $4 $3 5 $2 * gol 1HI7, 1HI8S: 1HI9. 1H20 1H21 . SA WA QLD vic NSW @ v9 OD av20 @ ay
Slide 24: Residential Portfolio – December 2020
Residential Portfolio – December 2020 24 As at 31 December 2020
Slide 25: Commercial and Asset Finance Aggregation Settlements
Commercial and Asset Finance Aggregation Settlements 25
Slide 26: Commercial Portfolio – December 2020
Commercial Portfolio – December 2020 26 As at 31 December 2020
Slide 27: Types of Lodgements
27 Types of Lodgements 50% QI Q2 QZ _Q4 QI Q2 QZ _Q4 QI Q2 QZ _Q4 QI Q2 QZ _Q4 QI Q2 FYI7 Inv % FYI8 First Home Buyers % FYI9 FY20 Refinance % FY21 Upgrader % AFG
Slide 28: Lending Activity
Thousands Lending Activity National Average Loan Size $800 $700 coma oe aan $500 $400 $300 $200 $100 Ql Q2 Q3 Q4 QI Q2 Q3 Q4 QI Q2 Q3 Q4 QI Q2 Q3 Q4 Ql Q2 FYI7 FYI8 FyI9 FY20 FY21 @ Nationa Nsw NT Qu SA vic wa 28 76% TA 12% 70% 68% 66% 64% 62% 60% 58% 56% 54% ql National Loan to Value Ratio Q2 Q3 Q4
Slide 29: Investor Loans
Investor Loans 60% Investor Loans % Investor Loans % per State 50% 50% 45% 40% 40% 35% lan N\ 30% le, oer 30% =~ SPS) 25% 20% 20% 15% 10% 10% 5% 0% Ql Q2_Q3_Q4 Ql Q2 QB Qs QI Q Qs a4 A _Q2 Bas Ql QW Ql Q2 QB _Q4 QI QZ QI _Q4 Ql Q2 QB _Q4 QI QZ QB Q4 Ql QZ FYI7 FYI8 FYIS FY20 FY21 FYI7 FYI8 FYI9 FY20
Slide 30: Lending Activity
Lending Activity Four Major Banks & their Non-Mgjor market share Associated Brands vs Non-Major 100% 90% 50% ema 45% 40% 70% 35% 80% 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 8% QI] Q2 Q3 Q4 QI Q2 Q3 Q4 QI Q2 Q3 24 QI Q2 Q3 Q4 QI Q2 QI Q2 Q3 Q4 QI Q2 Q3 Q4 QI Q2 Q3 _Q4 QI Q2 Q3 Q4 QI Q2 FYI7 FYI8 FYI9
Slide 31: Diverse platform continues to support AFG's earnings growth
Diverse platform continues to support AFG’s earnings growth Majority of profit now generated from outside traditional aggregation Strengths of the business model: Diverse, stable platform for future growth • Strong distribution network: 2,975+ brokers across Australia offering 4,750+ products • Prod
Slide 32: Summary P&L
1H21 1H20 $000's $000's Commissions 281,585 250,971 Interest on trail commission income receivable 29,157 28,156 Mortgage management services 90 140 Customer transaction fees 1,338 1,270 Securitisation interest income 49,758 44,368 Total Revenue 361,928 324,905 Securitisation interest expense (23,66
Slide 33: Consolidated Income Statement
Consolidated Income Statement 1H21 1H20 1H21 1H20 $000's $000's $000's $000's Continuing Operations Profit attributable to: Commission and other income 312,170 280,537 Equity holders of the Company 24,967 18,348 Securitisation interest income 49,758 44,368 Non-controlling interests - - Operating inc
Slide 34: Cash Flows
1H21 1H20 $000's $000's Cash flows from operating activities Cash receipts from customers 288,911 253,629 Cash Flows Cash paid to suppliers and employees Interest received (277,324) 49,757 (246,794) 44,368 Interest paid (23,661) (27,150) Income taxes paid (11,895) (7,187) Net cash from operating act
Slide 35: Impact of Securitisation on SPVs on Balance Sheet
Impact of Securitisation on SPVs on Balance Sheet AFG SPV's AFG ex SPV's Re-classification AFG Limited Assets Cash 72,412 118,713 - 191,125 Receivables - 4,692 - 4,692 The proforma balance sheet shows the Group’s Contract assets - 1,005,824 - 1,005,824 balance sheet with the ‘non-recourse’ special L
Slide 36: Important Disclaimer
Important Disclaimer This presentation contains general information which is current as at 25 February 2021. The information is intended to be a summary of Australian Finance Group Ltd (AFG) and it its activities as at 31 December 2020, and does not purport to be complete in any respect. The informa
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