Australian Finance Group Ltd. · ASX:AFG
Australian Finance — H1 FY20 Earnings Presentation
34 slides from Australian Finance's earnings presentation, Feb 21, 2020
Slide 1: 2020 Half Year Results Presentation
For personal use only 2020 HALF YEAR RESULTS PRESENTATION
Slide 2: H1 FY20 results - Highlights
H1 FY20 results - Highlights For personal use only H1 FY20 Residential Settlements flat with AFG Home Loans now $17.7M $18.3M $14.7M $16.9B services over 25,000 $16.7M $16.7M $14.4M Q2 lodgements and retail customers settlements are up 19% H1 FY18 H1 FY19 H1 FY20 H1 FY18 H1 FY19 H1 FY20 and 6% on la
Slide 3: Key take outs for the half: Financial results
Key take outs for the half: Financial results For personal use only ⊲ Total Revenue increased 3% to $334M driven by growth in the AFG Securities book ⊲ Underlying profit increased by 20% with full impact of historical 1H20 1H19 $000’s $000’s AFG Home Loans settlements now translating into cash Total
Slide 4: Earnings diversification strategy underpinning AFG's continued growth
Earnings diversification strategy underpinning AFG’s For personal use only continued growth Over half of overall profit now generated outside traditional aggregation. Providing a stable platform for future growth Highlights and upcoming focus of AFG’s earnings Asset diversification strategy: AFG AFG
Slide 5: Strategic & market outlook
Strategic & market outlook For personal use only Well positioned for future Market outlook growth opportunities ⊲ Capital light, strong balance sheet with no debt Changing market dynamics driving positive outlook for the broker proposition ⊲ Established distribution network ⊲ RBA implemented 3 inter
Slide 6: Settlements & Loan Book
2% lower than H1 FY19, although ⊲ Residential settlements are Q2 lodgements and settlements have increased 19% and 6% Settlements & Loan Book For personal use only respectively compared to last year ⊲ Continued shift in mix towards AFG Securities as a result of considered product improvements and co
Slide 7: AFG Home Loans: AFGHL Settlements
For personal use only AFGHL Settlements AFG Home Loans $2.0 ⊲ AFG Home Loans trail book up 17% to $9.8 billion ⊲ Mix continues to shift towards AFG funded Retro and Link products $1.5 ⊲ Changing mix impacts earning profile. White label income is $1.0 recognised at settlement, while RMBS funded loans
Slide 8: AFG Securities
For personal use only AFG Securities Settlements Loan Book ⊲ AFG Securities continues to deliver greater $3.0 choice to customers in a complex market $0.8 $2.5 ⊲ AFG Securities settlements were $690 million, $0.6 with lodgements of $1.19 billion which were up $2.0 46% and 50% on H1 FY19 $0.4 $1.5 ⊲
Slide 9: AFGS Loan Book and Operational performance
For personal use only AFGS Loan Book LVR AFG Securities - Operational 4.0% 3,000 1% 3.5% 2,500 3.0% 13% 2,000 2.5% ⊲ Continued growth achieved whilst 2.0% 1,500 maintaining the quality of the book 1.5% ⊲ 50% of the book has an LVR <70%, with loans 1,000 50% 1.0% 36% 0.5% 500 greater than 80% LVR cov
Slide 10: AFG Business
For personal use only 24 lenders on the panel AFG Business Mortgages, Short term, Debtor ⊲ Settlements across the platform increased from and Asset Finance products $56 million in H1 FY19 to $192 million in H1 FY20 ⊲ AFG Business lender panel now includes all 4 Majors – with CBA and Westpac recently
Slide 11: Thinktank
Thinktank For personal use only White label - AFG Commercial powered by Thinktank ⊲ Settlements have increased to $87 million from AFG Commercial powered by Equity investment $39 million in H1 FY19 Thinktank Settlements contribution to Earnings ⊲ Number of brokers lodging AFG Commercial deals has gr
Slide 12: Continued investment in technology
For personal use only Continued investment in technology ⊲ Supporting the execution of our strategy to attract & retain brokers - upgrading AFG’s core broker platform with the latest technology for growth, efficiency and customer management ⊲ Allows the option of online interaction between broker an
Slide 13: Summary cash flow
Summary cash flow ⊲ Net cash flow from operating activities $16.9 million in H1 For personal use only FY20, 35% above H1 FY19. Benefit of historical trail book Dec 2019 Dec 2018 growth flowing through as increased cash flow $000’s $000’s ⊲ AFG Securities loan book grew by 51% to $2.5 billion, Cashfl
Slide 14: Summary balance sheet
Dec 2019 Jun 2019 $000’s $000’s Summary balance sheet Assets Note Cash 1 116,636 96,818 For personal use only AFG maintains a strong, debt-free balance sheet which provides the platform Receivables 6,668 5,415 for future investment in both organic and inorganic growth opportunities Contract Assets 2
Slide 15: Impact of trail book accounting
For personal use only Impact of trail Dec 2019 $000’s Dec 2018 $000’s book accounting Operating Profit After Operating Profit After Statutory Income Tax Income Tax Underlying results from Underlying profit 20% above H1 FY19 continuing operations 296,988 17,670 279,374 14,715 excluding change in valu
Slide 16: Other Income
For personal use only 10 Other Income Other income 9 8 ⊲ Service fees have increased 2% in H1 FY20, driven by an increase in broker services, including compliance and 7 marketing services. Other income has decreased with H1 6 FY19 including one-off items 5 ⊲ Sponsorship income decreased slightly in
Slide 17: January 2020 trading
For personal use only Comparison of January lodgements January 2020 trading ⊲ Total residential lodgements $3.75 billion, up 25% on 26% 25% January 2019 15% ⊲ AFG Home Loans lodgements up 25% on January 2019 25% 27% ⊲ AFG Securities lodgements up 37% 37% ⊲ Residential lodgement growth across all sta
Slide 18: In conclusion
In conclusion For personal use only H1 FY20 result demonstrates the robust nature of the Investment in Thinktank continues strong contribution business driven by AFG’s earnings diversification strategy. to earnings in H1 FY20. Growth underpinned by strong relationships with multiple aggregators. Con
Slide 19: Q&A Thank you
For personal use only Q&A Thank you
Slide 20: Appendices
For personal use only Appendices
Slide 21: Residential settlements
Residential settlements For personal use only Residential Settlements Residential Settlements by State $7 $20 $6 $16 $5 $12 $4 $3 $8 $2 $4 $1 1H16 1H17 1H18 1H19 1H20 SA WA QLD VIC NSW 1H18 1H19 1H20 21
Slide 22: Residential portfolio - December 2019
Residential portolio - December 2019 For personal use only Residential Portfolio by State Residential Loan Book Location $50 17% $45 (18%) $40 30% (30%) $35 6% (6%) $30 $25 $20 21% $15 (22%) $10 26% $5 (24%) SA WA QLD VIC NSW 1H18 1H19 1H20 NSW VIC QLD SA WA 22
Slide 23: Commercial and Asset Finance aggregation settlements
Commercial and Asset Finance aggregation settlements For personal use only Commercial and EF Settlements Commercial Settlements by State $1.6 $0.6 $1.4 $0.5 $1.2 $1.0 $0.4 $0.8 $0.3 $0.6 $0.2 $0.4 $0.1 $0.2 1H16 1H17 1H18 1H19 1H20 SA WA QLD VIC NSW Equipment finance Commercial mortgages 1H18 1H19 1
Slide 24: Commercial portfolio - December 2019
Commercial portolio - December 2019 For personal use only Commercial Portfolio by State Commercial Loan Book Location $3.0 14% 4% (15%) (4%) 28% $2.5 (27%) $2.0 22% $1.5 (22%) $1.0 32% $0.5 (32%) SA WA QLD VIC NSW NSW VIC QLD SA WA 1H18 1H19 1H20 24
Slide 25: Types of lodgements
Types of lodgements For personal use only 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Inv % First Home Buyers % Refinance % Upgrader % 25
Slide 26: Lending activity
Lending activity For personal use only $800 National Average Loan Size National Loan to Value Ratio 74% $700 72% $600 70% $500 68% 66% $400 64% $300 62% $200 60% $100 58% 56% 54% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 27: Investor loans
Investor loans For personal use only Investor Loans % Investor Loans % per State 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY15 FY16
Slide 28: Lending activity: Major vs Non-Major
Lending activity For personal use only Major vs Non-Major Non-Major Market Share 100% 90% 80% 50% 70% 45% 40% 60% 35% 50% 30% 40% 25% 20% 30% 15% 20% 10% 10% 5% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY16 FY17 FY18 FY19 FY20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 29: Summary P&L
For personal use only 1H20 1H19 Commissions 250,971 253,647 Interest on trail commission income receivable 28,156 26,741 Mortgage management services 140 103 Securitisation transaction fees 1,270 687 Securitisation interest income 44,368 33,395 Total Revenue 324,905 314,573 Securitisation interest e
Slide 30: Consolidated income statement
Consolidated income statement For personal use only Dec 2019 Dec 2018 Dec 2019 Dec 2018 $000’s $000’s $000’s $000’s Continuing Operations Profit attributable to: Commission and other income 280,537 281,178 Equity holders of the Company 18,348 16,686 Securitisation interest income 44,368 33,395 Non-c
Slide 31: Balance sheet
Balance sheet For personal use only Dec 2019 Jun 2019 Dec 2019 Jun 2019 $000’s $000’s $000’s $000’s Assets Liabilities Cash and cash equivalents 116,636 96,818 Interest-bearing liabilities 2,531,745 2,073,772 Trade and other receivables 6,668 5,415 Trade and other payables 904,749 874,076 Contract a
Slide 32: Cash flows
Dec 2019 Dec 2018 $000’s $000’s Cash flows For personal use only Cash flows of operating activities Cash receipts from customers 253,629 246,824 Cash paid to suppliers and employees (246,794) (235,703) Interest received 44,368 33,395 Interest paid (27,150) (24,859) Cash reconciliations Dec 2019 Dec
Slide 33: Impact of securitisation SPVs on balance sheet
Impact of securitisation SPVs For personal use only on balance sheet AFG SPV’s AFG exSPV’s Re-classification AFG Limited Cash and cash equivalents 64,299 52,337 - 116,636 Trade and other receivables - 6,668 - 6,668 Contract assets - 927,644 - 927,644 The proforma balance sheet shows the Loans and ad
Slide 34: Important disclaimer
Important disclaimer For personal use only This presentation contains general information which is current as at 20 February 2020. The information is intended to be a summary of Australian Finance Group Limited (AFG) and it its activities as at 31 December 2019, and does not purport to be complete i
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