Cog Financial Services Limited · ASX:COG
Cog Financial Services — H1 2023 Earnings Presentation
30 slides from Cog Financial Services's earnings presentation, Feb 27, 2023
Slide 1: 1H 2023 Results
For personal use only 1H 2023 Results 27 February 2023 Authorised by Andrew Bennett Group Chief Executive Officer
Slide 2: COG is a distribution business & Fund manager
COG is a distribution business & Fund manager For personal use only We have a sales force of Funds Management Businesses that manage Distribution Businesses an ever-growing pool of investible capital 2
Slide 3: COG's business ecosystem
For personal use only COG’s business ecosystem 21% 3
Slide 4: Strategy - growing a truly diversified business
About COG Strategy - growing a truly diversified business For personal use only Leveraging a strong & significant broker market share in the Asset Finance space, to expand cross selling opportunities, grow our direct lending activities and associated margins • Organic growth in Westlawn is being ach
Slide 5: The linkage, why COG owns the businesses it does
About COG The linkage, why COG owns the businesses it does For personal use only COG sees huge value in distribution being leveraged across a broader range of financial products: • SME broking is the core of COG’s distribution business and is the base to building quality relationships to provide a r
Slide 6: 1H 2023 Highlights
1H 2023 Highlights Strong performance continues across all business units For personal use only • Acquisition of a 70% interest in Chevron Equipment Finance through COG’s subsidiary QPF, effective 1 July Revenue1 EBITDA to shareholders2 20223 • Acquisition of the novated lease business known as Aust
Slide 7: Growth in EPSA and dividends per share
1H 2023 Highlights Growth in EPSA and dividends per share For personal use only Cents per share 13.94 Interim dividend declared of 12.01 13.87 3.7 cps (1H22: 3.5 cps ) 1 1 10.87 Payout ratio of 62% maintained (1H22: 62% ) 2 8.30 2 7.22 EPSA 5.95 5.72 6.01 +14% 6.37 4.80 5.95 5.91 5.72 5.59 EPSA -1.6
Slide 8: Summary of Group financial results
Summary of Group financial results Revenue growth of $9.1m includes organic growth (+$6.8m) and Our results For personal use only contribution from acquisitions (+$11.0m), partially offset by the pass-through of brokerage revenue (at 100%) to some COG 1H23 1 1H22 1 Pcp Aggregation members which from
Slide 9: Underlying NPATA to Shareholders
Summary of Group financial results Underlying NPATA to Shareholders For personal use only In $ millions Government subsidies +12.4% +6% $0.1 +14.3% +3.8% 9
Slide 10: Underlying NPATA to Shareholders by segment
Summary of Group financial results Underlying NPATA to Shareholders by segment For personal use only In $ millions 1H23 1H22 NPATA to NPATA to shareholders shareholders (-) Less before (-) Less before NPATA to government government NPATA to government government Segment shareholders subsidies 1 subs
Slide 11: Segment performance
For personal use only Segment performance Finance Broking & Aggregation and Funds Management & Lending segments continued to report strong profit growth in the 1H23 11
Slide 12: Finance Broking & Aggregation
Australia’s largest asset Finance Broking & Aggregation For personal use only finance broker and aggregator & a growing retail fixed interest funds manager 1 Derived from information contained in the Commercial & Asset Finance Brokers Association of Australia (CAFBA) Aggregator Benchmark Report 2020
Slide 13: Record volumes in the face of tight supply and higher rates
Finance Broking & Aggregation Record volumes in the face of +4% For personal use only tight supply and a higher interest rate environment vs PCP $ millions $3.4bn net assets financed 3,405 in 1H 2023 2,917 2,198 2,154 1,604 1,720 2H 1,403 3,284 3,404 2,041 2,365 2,242 1H 1,344 1,524 1,631 2016 2017
Slide 14: Organic growth continues despite a higher interest rate environment
Finance Broking & Aggregation Revenue growth of $3.6m includes organic growth (+$3.7m) with strong performance from the novated Organic growth continues For personal use only lease business and contribution from acquisitions (+$3.8m), partially offset by the pass-through of despite a higher interest
Slide 15: Our Aggregation & Broker brands
Finance Broking & Aggregation Our Aggregation & Broker brands For personal use only 100% OWNED COG provides aggregation services to 100% OWNED • Independent network member finance brokers • COG equity owned finance brokers 75% COG offers finance brokers OWNED • Access to wider panel of financiers an
Slide 16: Equity-One delivers significant contribution from funds management
Funds Management & Lending Equity-One delivers significant contribution from its For personal use only funds management business1 1H23 2 1H22 2 Pcp Revenue growth of $8.8m includes organic growth in Westlawn $m $m Change of $3.1m and contribution from Equity-One acquisition of $7.2m. This growth was
Slide 17: EBITDA to shareholders
Funds Management & Lending For personal use only EBITDA to shareholders Funds management Equity-One Mortgage Fund Limited has provided significant $ millions contribution in the half (+$1.6m EBITDA to shareholders). 8.9 Funds under management & Lending of $700.7m are up 191% on this time last year,
Slide 18: Lending book concentrated on asset backed contracts
Funds Management & Lending Lending book concentrated Lending book For personal use only • The present value (PV) of the total lending book ($225.8m1) on asset backed contracts includes COG’s 100% owned subsidiary TL Commercial Finance’s legacy portfolio of $19.8m ($15.8m of lease receivables, includ
Slide 19: Divestment of non-core HAL Group IT business
Other Divestment of non-core HAL Group IT For personal use only business executed in the 1H23 Segment includes COG head office expenses, Hal 1 1 1H23 1H22 Pcp Group IT business (now divested) and the $m $m Change investment in Earlypay Limited (ASX: EPY) Revenue 2 0.3 3.6 -92% Revenue contraction of
Slide 20: Consolidated statement of financial position
Consolidated statement of financial position As at 31 Dec 30 Jun For personal use only $m 2022 2022 Cash and cash equivalents decreased by $15.4m mainly due to loan Cash and cash equivalents 60.7 76.1 originations in Westlawn during the period. Trade and other receivables 15.8 18.9 Contract assets 2
Slide 21: Consolidated statement of cash flows
Consolidated statement of cash flows For the half year ended 31 December 1H23 1H22 1 For personal use only $m $m Net cash inflow from operating activities includes Receipts from customers 232.5 231.8 Payments to suppliers and employees (162.8) (148.9) $105.2m (1H22: $89.0m) relating to the lease and
Slide 22: Efficient capital management and strong cash position
Capital management Efficient capital management Dividend (continued) For personal use only For the half-year ended 31 December 2022, the Board declared a fully franked interim and strong cash position dividend of 3.7 cents per fully paid ordinary share (2021: 3.5 cents per fully paid ordinary share)
Slide 23: Capital raising and investments
Capital management For personal use only Capital raising Investments (continued) On 21 October 2022 the Company issued 1,340,099 fully paid ordinary shares totalling • On 1 January 2023, Linx Group Holdings Pty Ltd (Linx) (a 59.8% owned subsidiary of $2.1m as part of the COG’s Dividend Reinvestment
Slide 24: Disclaimer
Disclaimer For personal use only 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
Slide 25: Appendices
For personal use only Appendices 25
Slide 26: Statutory income statement
Appendices Statutory income statement For personal use only Impairment in the 1H22 relates to the write down of $0.2m in corporate bonds and write off of $0.5m in trail 1H23 1H22 Pcp commission receivables due to a financier contract $m $m Change renegotiation (where, going forward, volume-based Rev
Slide 27: Reconciliation between statutory NPAT and underlying NPATA
Appendices Reconciliation between statutory NPAT For personal use only and underlying NPATA Members and NCI 1 Members 1H23 1H22 Variance 1H23 1H22 Variance $m $m $m $m $m $m NPAT 12.8 12.2 0.6 8.3 8.0 0.3 Adjustments (after tax): Impairment - 0.6 (0.6) - 0.6 (0.6) One-off unguaranteed residual right
Slide 28: Acquisition history
Appendices Acquisition history For personal use only Interest Date Company Activity Acquirer acquired Price Consideration Dec-15 Platform Consolidated Group (PCG) Aggregation platform and finance broker COG 60.0% $22.9m 76% cash / 24% equity Oct-16 Consolidated Finance Group Independent equipment fi
Slide 29: Acquisition history (continued)
Appendices Acquisition history (continued) For personal use only Interest Date Company Activity Acquirer acquired Price Consideration Jul-20 Westlawn Finance SME finance provider, insurance broking and funds management COG 19.0% $7.5m 100% cash Jul-20 PCG Acquisition of minority interests COG 0.2% $
Slide 30: Proportionate share of unrestricted cash attributable to members
Appendices Proportionate share of unrestricted cash attributable For personal use only to members $ millions Proportionate share of unrestricted cash Total Restricted Unrestricted attributable to Cash cash1 cash Members2 PCG Group 13.2 (6.8) 6.4 5.6 QPF Group 4.3 - 4.3 2.2 Linx Group 2.8 - 2.8 1.5 W
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