Australian Finance Group Ltd. · ASX:AFG
Australian Finance — H1 FY18 Earnings Presentation
36 slides from Australian Finance's earnings presentation, Feb 23, 2018
Slide 1: For personal use only
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Slide 2: H1 FY18 full-year financial results – Highlights
HALF YEAR FINANCIAL RESULTS 2018 2 H1 FY18 full-year financial results – Highlights For personal use only Continuing to deliver strong returns to shareholders through core growth and earnings diversification
Slide 3: AFG announces special dividend
HALF YEAR FINANCIAL RESULTS 2018 3 AFG announces special dividend For personal use only Special dividend of 12 cents per share Dividends (cents per share) • AFG maintains a capital light structure and generates strong 18 ongoing cash flow 16 • This organic growth has delivered year on year increased
Slide 4: AFG: Providing increased choice and competition to borrowers
HALF YEAR FINANCIAL RESULTS 2018 4 AFG: Providing increased choice and competition to For personal use only borrowers
Slide 5: H1 FY18 results – actual
HALF YEAR FINANCIAL RESULTS 2018 5 H1 FY18 results – actual For personal use only 1H18 1H17 1H18 1H17 $000’s $000’s $000’s $000’s Loan Book 140,846,019 127,102,771 11% NPAT 16,738 13,371 25% Residential 133,609,138 120,768,449 11% NPAT underlying 14,394 12,993 11% Commercial 7,236,880 6,334,322 14%
Slide 6: AFG’s growth strategy
HALF YEAR FINANCIAL RESULTS 2018 6 AFG’s growth strategy For personal use only Strong culture, delivering our long term strategy, focused on great customer outcomes
Slide 7: Strategic & market outlook
HALF YEAR FINANCIAL RESULTS 2018 7 Strategic & market outlook For personal use only Increased volume in the residential business together with AFGHL growth strategies continue to deliver strong shareholder returns. A special dividend of 12 cents per share to shareholders is reflective of AFG’s stron
Slide 8: AFG Business
HALF YEAR FINANCIAL RESULTS 2018 8 AFG Business For personal use only The AFG Business commercial broking platform launched to brokers • Soft launch during H1. We continue to work closely with brokers to roll out the platform. The first settlements through the platform have occurred subsequent to ha
Slide 9: Operational update
AFG Operational update
Slide 10: AFG Home Loans
HALF YEAR FINANCIAL RESULTS 2018 10 AFG Home Loans For personal use only • Our diversified funding partners continue to deliver choice AFGHL Settlements to consumers and we have achieved strong settlement 1.8 volumes Billions 1.6 • Four core prime mortgage funders continue to protect 1.4 against ind
Slide 11: AFG Home Loans
HALF YEAR FINANCIAL RESULTS 2018 11 AFG Home Loans For personal use only • AFGHL settlements grew 31% to $1.62 billion in H1 FY18 AFGHL Portfolio while the loan book reached $6.5 billion (up 40% compared 7.0 to H1 FY17). Billions 6.0 • AFGHL continues to deliver positive financial growth. Profit bef
Slide 12: Residential settlements
HALF YEAR FINANCIAL RESULTS 2018 12 Residential settlements For personal use only Residential settlements up 6% against H1 FY17 overall, Residential loan book increased 11% to $133.6 billion. Victoria continued to perform strongly, with New South Wales returning to growth in H1 FY18. Economic condit
Slide 13: Residential portfolio – December 2017
HALF YEAR FINANCIAL RESULTS 2018 13 Residential portfolio – December 2017 For personal use only Strong growth in Victoria and New South Wales in particular underpin the overall Residential portfolio growing from $120.8 billion at December 2016 to $133.6 billion at December 2017. Despite lower settle
Slide 14: Commercial settlements
HALF YEAR FINANCIAL RESULTS 2018 14 Commercial settlements For personal use only Commercial settlements down by 5% compared to H1 FY17, driven by the tightening of development lending particularly impacting NSW. Individual commercial mortgage settlements (≤$5m) increased 6% on prior year while asset
Slide 15: Commercial portfolio – December 2017
HALF YEAR FINANCIAL RESULTS 2018 15 Commercial portfolio – December 2017 For personal use only Commercial portfolio experienced positive growth in all states despite decreased settlements. The overall book grew by 14% to $7.2 billion and continues to generate ongoing trail commission Commercial Port
Slide 16: Distribution network
HALF YEAR FINANCIAL RESULTS 2018 16 Distribution network For personal use only Over 2,900 active brokers at 31 December 2017, further extending AFG’s national distribution network providing quality lending solutions and service to consumers. Growth continues to be strong in NSW and Victoria, offset
Slide 17: January trading
HALF YEAR FINANCIAL RESULTS 2018 17 January trading For personal use only Comparison of January lodgements • Total Residential lodgements $3.43 billion, up 5.5% Change on January 2017 on January 2017 NSW 5% • AFGHL continued its strong positive growth QLD (8%) SA 12% • Growth in Victoria remains str
Slide 18: Financial information
AFG Financial information
Slide 19: Summary P&L
HALF YEAR FINANCIAL RESULTS 2018 19 Summary P&L For personal use only 1H18 1H17 $000's $000's $000's Commissions 254,073 232,454 • Profit after tax for H1 FY18 $16.7 million, up 25% from $13.4 Interest on trail commission income receivable 24,557 23,630 million in H1 FY17 Mortgage management service
Slide 20: Summary cash flow
HALF YEAR FINANCIAL RESULTS 2018 20 Summary cash flow For personal use only • Net cash flows from operating activities increased by 34% to Dec 2017 Dec 2016 $000's $000's $15.5 million in H1 FY18 compared to H1 FY17. This is largely Cash receipts from customers 251,060 230,628 attributable to the gr
Slide 21: Summary balance sheet
HALF YEAR FINANCIAL RESULTS 2018 21 Summary balance sheet For personal use only Dec 2017 Dec 2016 $000's $000's Assets Points to note: Cash1 126,402 124,801 Receivables 2 773,510 737,611 1. Includes restricted cash of $36.7 million ($36.8 million at 31 December 2016) Loans and advances 3 1,186,086 1
Slide 22: Other income
HALF YEAR FINANCIAL RESULTS 2018 22 Other income For personal use only Other Income $10 Millions • 10% growth in service fees in H1 FY18 compared to $9 H1 FY17 driven by increasing broker numbers and increased take-up of services offered by AFG $8 $7 • Sponsorship and incentive income in H1 FY18 bel
Slide 23: In conclusion
HALF YEAR FINANCIAL RESULTS 2018 23 In conclusion For personal use only H1 FY18 continues to deliver growth in shareholders returns. Importantly we are maintaining capital for further future growth initiatives Strong organic growth and cash flow generation capabilities of the business has allowed a
Slide 24: Appendices
AFG Appendices Ajuo osn feuosied 10-}
Slide 25: Complexity continues to increase in the market
HALF YEAR FINANCIAL RESULTS 2018 25 Complexity continues to increase in the market For personal use only Residential Products Market complexity continues to grow – driven by regulatory 4,500 changes. This only increases the need for brokers to assist consumers 4,000 • In April 2015 over 1,450 indivi
Slide 26: Types of lodgements
HALF YEAR FINANCIAL RESULTS 2018 26 Types of lodgements For personal use only Regulatory activity continues to impact product mix with investor and refinance volumes falling, offset by first home buyers and upgraders increasing in H1 FY18. These trends have been maintained in January 2018. Types of
Slide 27: Market share
HALF YEAR FINANCIAL RESULTS 2018 27 Market share For personal use only Non-majors market share continues to increase in H1 FY18, a demonstration of the choice and competition provided by brokers including an increase in the Non-bank lender market share in both FY17 and FY18 Major v Non-Major Non-Maj
Slide 28: Lending activity
HALF YEAR FINANCIAL RESULTS 2018 28 Lending activity For personal use only National average loan size has increased in FY18, following a decrease in Q4 FY17 predominantly driven by NSW and VIC National average loan size National loan to value ratio $700 74% Thousands $600 72% 70% $500 68% $400 LVR 6
Slide 29: Investor loans
HALF YEAR FINANCIAL RESULTS 2018 29 Investor loans For personal use only Further regulatory intervention has again impacted investor volumes with NSW now trending towards levels similar to other states Investor Loans % Investor Loans % per State 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% - - Q1
Slide 30: Balance sheet
HALF YEAR FINANCIAL RESULTS 2018 30 Balance sheet For personal use only Dec 2017 Dec 2016 Dec 2017 Dec 2016 $000's $000's $000's $000's Assets Liabilities Cash and cash equivalents 126,402 124,801 Interest-bearing liabilities 1,195,715 1,164,478 Trade and other receivables 772,508 737,580 Trade and
Slide 31: Consolidated income statement
HALF YEAR FINANCIAL RESULTS 2018 31 Consolidated income statement For personal use only Dec 2017 Dec 2016 Dec 2017 Dec 2016 $000's $000's $000's $000's Continuing Operations Commission and other income 279,106 256,742 Other comprehensive income Securitisation interest income 25,595 22,628 Items that
Slide 32: Cash flows
HALF YEAR FINANCIAL RESULTS 2018 32 Cash flows Dec 2017 Dec 2016 For personal use only $000's $000's Cashflows from Operating activities Cash receipts from customers 251,060 230,628 Cash paid to suppliers and employees (235,800) (220,201) Interest received 25,595 22,628 Cash reconciliation Dec 2017
Slide 33: Impact of securitisation SPVs on balance sheet
HALF YEAR FINANCIAL RESULTS 2018 33 Impact of securitisation SPVs on balance sheet For personal use only The proforma balance sheet below shows the Group’s balance sheet with the ‘non-recourse’ special purpose vehicles (SPVs) relating to the securitisation business and the balance sheet of the Group
Slide 34: Impact of trail book accounting
HALF YEAR FINANCIAL RESULTS 2018 34 Impact of trail book accounting For personal use only Dec 2017 Jun 2017 $000’s $000’s Operating Profit Operating Profit Statutory income After Tax income After Tax Underlying results from continuing operations 271,071 14,394 248,227 12,993 Change in the carrying v
Slide 35: For personal use only
For personal use only
Slide 36: Important disclaimer
HALF YEAR FINANCIAL RESULTS 2018 36 Important disclaimer For personal use only This presentation contains general information which is current as at 23 February 2018. The information is intended to be a summary of Australian Finance Group Limited (AFG) and it its activities as at 31 December 2017, a
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