Australian Finance Group Ltd. · ASX:AFG
Australian Finance — H1 FY2017 Earnings Presentation
30 slides from Australian Finance's earnings presentation, Feb 24, 2017
Slide 1: 2017 Half-Year Financial Results
For personal use only 2017 HALF-YEAR FINANCIAL RESULTS FEBRUARY 2017 1
Slide 2: 2017 Half-Year Financial Results - Highlights
2017 HALF-YEAR FINANCIAL For personal use only RESULTS - HIGHLIGHTS • H1 FY17 NPAT - $13.4 million up 14.2% on H1 FY16 • AFG Home Loans settlements up 34% to $1.24 billion and now representing 7.2% of settlements (compared to 5.2% in H1 FY16) with the trail book increasing 42% to $4.6 billion Title
Slide 3: H1 FY17 Results - Actual
For personal use only 1H17 1H16 $000’s $000’s Statutory NPAT 13,371 11,713 14% H1 FY17 RESULTS - Loan Book 127,102,771 114,499,417 11% ACTUAL Settlements Residential 17,608,127 17,774,781 (1%) The H1 FY17 result was reflective of Commercial 1,513,314 1,435,772 5% the Group’s earnings diversification
Slide 4: Residential Settlements
RESIDENTIAL SETTLEMENTS For personal use only The Residential portfolio showed particularly strong growth in Victoria and Queensland, offset by weaker economic conditions in Western Australia and changes to lending criteria impacting New South Wales. Residential loan book of $120.7 billion generatin
Slide 5: Residential Portfolio December 2016
RESIDENTIAL PORTFOLIO DECEMBER 2016 For personal use only The Residential portfolio grew from $114.7 billion to $120.7 billion during the period with growth in all States. Re-weighting of the loan book continues. Residential Portfolio by State Residential Loan Book Location $40 Billions $35 $30 WA 2
Slide 6: Residential Portfolio December 2016
RESIDENTIAL PORTFOLIO DECEMBER 2016 For personal use only AFG’s residential loan book continues to grow at a faster rate than the total Australian residential mortgage market. Since 2010 AFG’s CAGR of 11.3% compares very favourably against market growth of 6.0%. 40 1,800 35 1,600 Total monthly lendi
Slide 7: AFG Home Loans
AFG HOME LOANS AFGHL Portfolio For personal use only $5.0 Billions $4.5 • Strategy continues to deliver positive results with profit before $4.0 tax 97% above 1H FY16 $3.5 • Total settlements were $1.24 billion in 1H FY17 up 34% from $3.0 $0.93 billion in 1H FY16 $2.5 • Increased level of penetratio
Slide 8: AFG Home Loans Settlements
AFG HOME LOANS AFGHL Settlements For personal use only $1,500 10% Millions • Successful launch of new funder in Q2 FY17 of the Alpha product $1,200 8% delivering more than $350m of lodgments in the half • Four core prime mortgage funders provide diversification around $900 6% our growth strategy in
Slide 9: Commercial Settlements
COMMERCIAL SETTLEMENTS For personal use only Commercial settlements up 5% with strong growth in New South Wales offset, by head winds in property development lending particularly in Victoria and Queensland. Equipment finance settlements are up 23% in H1 FY17 Commercial and EF Settlements Commercial
Slide 10: Commercial Portfolio December 2016
COMMERCIAL PORTFOLIO DECEMBER 2016 For personal use only The Commercial portfolio grew to $6.3 billion generating ongoing trail commission Commercial Portfolio by State Commercial Loan Book Location $3 Billions $2 WA 17% NSW (19%) 24% $2 (21%) $1 VIC QLD $1 33% 22% (34%) SA (22%) 4% - (4%) NSW QLD S
Slide 11: Distribution Network
For personal use only DISTRIBUTION Broker Numbers Broker Location NETWORK 900 800 700 WA Net recruitment of contracted brokers 18% NSW continued strongly with 2,800+ 600 (20%) 26% contracted brokers at 31 December 500 (25%) 2016 providing a powerful national 400 distribution network 300 VIC 200 29%
Slide 12: Financial Information
For personal use only FINANCIAL INFORMATION 12
Slide 13: Summary Cash Flow
Dec 2016 Dec 2015 $000’s $000’s For personal use only SUMMARY CASH Cash flows from operating activities Cash receipts from customers 230,628 221,316 FLOW Cash paid to suppliers and employees Interest received (220,201) 22,628 (204,440) 23,056 Interest paid (15,565) (16,650) Cash flow prior to securi
Slide 14: Summary Balance Sheet
SUMMARY BALANCE SHEET For personal use only Dec 2016 Jun 2016 $000’s $000’s Assets Cash1 123,103 130,665 Receivables2 679,566 650,108 Points to note: Loans and advances3 1,082,163 1,046,412 2,179 2,379 1. Cash and liquidity levels remain within Property, plant and equipment4 Intangible assets 1,199
Slide 15: Other Income
OTHER For personal use only INCOME Other Income $10 Millions $9 • 18% growth in service fees in H1 FY17 $8 continues to show the value of the AFG $7 brand and technology proposition to brokers $6 following growth of 20% in 1H FY16 $5 • Sponsorship and incentive income received $4 in H1 FY17 was down
Slide 16: Strategic & Market Outlook
For personal use only STRATEGIC & MARKET OUTLOOK 16
Slide 17: Strategic & Market Outlook
Strategic & Market Outlook For personal use only Combination of continued customer demand for mortgage brokers, improved credit growth in Q2 FY17, new AFG branded products, a complicated investment lending environment and recruitment continue to leave us optimistic about the sector The Group’s resid
Slide 18: AFG's Growth Strategy
AFG’S GROWTH STRATEGY For personal use only Protect and grow Grow commercial Increase penetration of Provide additional Pursue initiatives for residential mortgage mortgage broking AFG Home Loans products to mortgage growth via the online broking business business product broker network channel • On
Slide 19: Investor Loans
INVESTOR LOANS For personal use only Investor loans have stabilised in a tighter band of variability as a percentage of overall flows following APRA actions to reduce investor activity in 2015 Investor Loans % past 12 months Investor Loans % per State 50% 50% 45% 45% 40% 40% 35% 35% 30% 30% 25% 25%
Slide 20: Lending Activity
LENDING ACTIVITY For personal use only Non-majors increased market share in the last quarter of the calendar year, average loan size remains steady Major v Non-Major National Average Loan Size 100% $600 Thousands $500 80% $400 60% $300 40% $200 20% $100 - - Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15
Slide 21: January Trading
JANUARY TRADING For personal use only Comparison of January Lodgments Change on January 2016 Total Residential lodgements were $3.25 billion NSW 4% On a like for like basis lodgements were up 8% QLD 24% on January 2016 Victoria and Queensland continue their strong SA 0% lodgement growth, parti
Slide 22: In Conclusion
For personal use only We have a positive outlook on future growth for the Group: • We expect the long term trend of consumers choosing brokers to IN CONCLUSION provide them with choice to continue • Brokers continue to build market share reflecting customer The first half of FY17 delivered strong pr
Slide 23: Appendices
For personal use only APPENDICES 23
Slide 24: Balance Sheet
BALANCE SHEET For personal use only Dec 2016 Jun 2016 Dec 2016 Jun 2016 $000’s $000’s $000’s $000’s Assets Liabilities Cash and cash equivalents 123,103 130,665 Interest-bearing liabilities 1,099,935 1,072,215 Trade and other receivables 679,519 650,059 Trade and other payables 676,835 646,113 Curre
Slide 25: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT For personal use only Dec 2016 Dec 2015 Dec 2016 Dec 2015 $000's $000's $000's $000's Continuing Operations Commission and other income 256,742 258,380 Other comprehensive income Securitisation interest income 22,628 23,056 Items that may be reclassified subsequently Op
Slide 26: Cash Flows
CASH FLOWS For personal use only Dec 2016 Dec 2015 $000's $000's Cash flows from operating activities Cash receipts from customers 230,628 221,316 Cash paid to suppliers and employees (220,201) (204,440) Interest received 22,628 23,056 Interest paid (15,565) (16,650) Advances of customer borrowings
Slide 27: Impact of Securitisation SPVs on Balance Sheet
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 separately AFG SPVs AFG excl SPVs R
Slide 28: Impact of Trail Book Accounting
IMPACT OF TRAIL BOOK ACCOUNTING For personal use only Dec 2016 Dec 2015 $000’s $000’s Operating Profit Operating Profit Statutory income After Tax income After Tax Underlying results from continuing operations 248,227 12,993 238,988 11,236 Change in the present value of trailing commission 31,143 37
Slide 29: Q&A Thank you
For personal use only Q&A Thank you Title here 29
Slide 30: Important Disclaimer
Important Disclaimer For personal use only This presentation contains general information which is current as at 23 February 2017. The information is intended to be a summary of Australian Finance Group Limited (AFG) and it its activities as at 31 December 2016, and does not purport to be complete i
Australian Finance Group — H1 FY2017 Earnings Presentation on 6ix