Cog Financial Services Limited · ASX:COG
Cog Financial Services — Merger or Acquisition (October 2021)
31 slides from Cog Financial Services's merger presentation, Oct 14, 2021
Slide 1: Acquisitions & Capital Raising
Acquisitions & Capital Raising Group CEO – Andrew Bennett 14 October 2021 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Notice & Disclaimer
Important Notice & Disclaimer Page 2 This presentation (”this Presentation”) has been prepared by COG Financial Services Limited (ABN 58 100 854 788) (“COG” or the “Company”) and is dated 14 October 2021. The release of the Presentation to the ASX has been authorised by COG CEO, Andrew Bennett. Summ
Slide 3: Executive Summary
Executive Summary Page 3 COG to purchase an additional 24% interest in Westlawn Finance Limited (Westlawn) and the remaining 30% of Platform Consolidated Group Pty Limited (PCG) Acquisitions Overview Funding & Impact Outlook ▪ COG to acquire additional interests in two ▪ Total consideration of ~$24.
Slide 4: Overview
01 Overview
Slide 5: Broker and Aggregator
Broker and Aggregator Page 5 The structure of the broking segment COG Operations BORROWERS BROKERS BANK/FINANCE BORROWERS C O M PA N I E S BORROWERS BROKERS A G G R E G AT O R BORROWERS BANK/FINANCE BORROWERS BROKERS C O M PA N I E S BORROWERS SME customers: transport, Brokers own the relationship A
Slide 6: COG Overview
COG Overview Page 6 COG is an ASX listed provider of asset finance broking and aggregation services & near-prime commercial & consumer lending Finance Broking & Aggregation Lending ▪ Australia’s largest equipment finance broking ▪ Provider of near-prime commercial & consumer and aggregation group, w
Slide 7: COG is Australia's Biggest Asset Finance Broking Group
COG is Australia’s Biggest Asset Finance Broking Group and delivers its own product via Westlawn Page 7 Australia’s biggest asset finance broker and aggregator and trusted leader in SME and auto finance Westlawn Finance Ltd (75% owned)1 Banks, Non-Banks, Debentures and Managed Investment Schemes Ins
Slide 8: The evolution of broking
The evolution of broking Page 8 PRE-1990 NOW Banks are replacing Banks had branch networks. branches with ATMs. 100% of bank loans assets 30% of bank loans assets generated by branches. generated by branches. 70% Brokers 25% Brokers 2004 1 2020 According to East & Partners, this megatrend is the sam
Slide 9: Brokers are small businesses
Brokers are small businesses Page 9 Lots of small businesses, COG buys >50%. We add our own finance Same model as the Big each lacking scale and We give them access to product to increase Players in insurance efficient back office. systems and back office funding options available broking sector. su
Slide 10: COG Group Structure
COG Group Structure Page 10 COG has acquired full ownership or majority stakes in a number of asset finance broking businesses over the last 6 years built around high turnover geographic clusters Group structure diagram including key subsidiaries COG1 100%3 100% 55% 57% 100% 75%3 100% 33% Platform C
Slide 11: COG has a successful track record of acquiring and integrating brokers and aggregators
COG has a successful track record of acquiring and integrating brokers and aggregators Page 11 Platform Investment entity Consolidated COG (then known Group Acquisition of Consolidated Acquisition of as Armidale Acquisition of 60% Consolidated accounting Westlawn – Investment of Platform (asset Fina
Slide 12: Asset Finance Broking Overview
02 Asset Finance Broking Overview
Slide 13: A Strong Proprietary Platform
A Strong Proprietary Platform Page 13 COG has developed its own proprietary software system to assist asset finance brokers: COG’s proprietary system has been built with the Manage their clients latest technology ensuring its foundational build was developed to allow for future growth and expansion.
Slide 14: COG Exposed to the coming Infrastructure COVID Stimulus
COG Exposed to the coming Infrastructure COVID Stimulus Page 14 Major Transport Infrastructure Projects in Australia 18 Infrastructure spend to increase due to COVID-19 stimulus 16 Federal Government spending increase 14 from COVID-19 (excluding State Government 12 projects) 10 $billion Increased po
Slide 15: National Asset Finance Broking Network - Broker Footprint
National Asset Finance Broking Network - Broker Footprint Page 15 Growth in Aggregation Brokers NT 2,791 3,064 2,454 2 equity 1,463 1,691 QLD 1,312 7 aggregation QLD brokers NT 80 equity brokers 32 equity brokers 2016 2017 2018 2019 2020 2021 8 equity 992 aggregation brokers 628 aggregation 13 aggre
Slide 16: Broker Services and Group NAF
Broker Services and Group NAF Page 16 Australia’s largest asset finance broking and aggregation group Aggregation & Broker Brands COG PROVIDES AGGREGATION COG OFFERS FINANCE BROKERS SERVICES TO: 100% ▪ Independent network member finance brokers ▪ Access to wider panel of financiers and volume- OWNED
Slide 17: Lending
03 Lending
Slide 18: Outlook: Lending
Outlook: Lending Page 18 COG lending is undertaken via its 75% owned finance company – Westlawn Finance Ltd. Westlawn has operated a retail debenture program since 1960’s but it requires capital to support and in 2021 Westlawn established a registered retail Managed Investment Scheme (the Westlawn I
Slide 19: Westlawn Summary Financials
Westlawn Summary Financials Page 19 Westlawn Limited FY17 FY18 FY19 FY20 FY21 Interest Income $m 12.1 13.3 13.5 14.0 13.5 Non-Interest Income $m 6.1 5.5 6.1 7.1 6.8 Gross Income $m 18.3 18.8 19.5 21.1 22.2 Interest expense $m (5.8) (5.5) (5.3) (5.5) (4.8) Net Interest Income $m 6.4 7.8 8.1 8.5 8.7 b
Slide 20: Outlook: Lending
Outlook: Lending Page 20 The book is largely Book features ▪ The present value of the total lending book ($200.6m1) includes concentrated on asset COG’s 100% owned subsidiary TL Commercial’s legacy portfolio of $61.2m ($52.7m of lease receivables, including unguaranteed backed contracts residuals an
Slide 21: Outlook: Lending (cont.)
Outlook: Lending (cont.) Page 21 CAPITAL RISKS ORIGINATIONS ROE LEVELS Trend lower as funding To increase as the Sufficient to significantly To increase, off lower model transitions to economy recovers from grow originations because relative capital Managed Investment COVID – 19. Managed Investment
Slide 22: Financial Information
04Financial Information
Slide 23: FY21 Highlights – Strong performance across all business units
FY21 Highlights – Strong performance across all business units Page 23 Final dividend declared of 6.0 Revenue1 EBITDA2 (FY20: 1.53,4) cents per share, an increase of 295% from FY20, $269.8m $33.5m reflecting a payout ratio of 62% (FY20: 28%5) +21% on pcp +57% on pcp ▪ Continued to invest surplus fun
Slide 24: Finance Broking & Aggregation – Strong bottom line despite challenging trade conditions
Finance Broking & Aggregation – Strong bottom line despite challenging trade conditions (Covid & supply constraints) Page 24 For the year ended 30 June 20211, 2 20201 Pcp Revenue growth of $35.6m includes organic growth of 15% (+30.0m), consolidation of Access Capital (+$2.8m) $m $m Change and gover
Slide 25: Lending – Westlawn is paving the way for growth in Lending
Lending – Westlawn is paving the way for growth in Lending1 Page 25 Revenue growth of $13.1m primarily comprised of Westlawn For the year ended 30 June 20212, 3 20202 Pcp contribution (net of intercompany eliminations) of $16.9m, government subsidies of $0.6m, partially offset by $4.4m in $m $m Chan
Slide 26: Capital Raising
05 Capital Raising
Slide 27: Equity Raising Summary
Equity Raising Summary Page 27 ▪ Institutional Placement (Equity Raising or Placement) to professional and sophisticated investors to raise up to approximately $20.0 million (the Offer) Placement Details ▪ The Placement of up to approximately 14.8 million ordinary shares (New Shares) to be issued us
Slide 28: Use of Funds and Timetable
Use of Funds and Timetable Page 28 $m Event Date (2021) Sources Trading halt and announcement of Thursday, 14 October Acquisition and Institutional Placement Institutional Placement $20.0 Institutional Placement opens Thursday, 14 October (10:00am Sydney time) Total Sources $20.0 Institutional Place
Slide 29: International Selling Restrictions
International Selling Restrictions Page 29 This document does not constitute an offer of new ordinary shares of COG (“New Shares”) in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in a
Slide 30: Key Risks
06 Key Risks
Slide 31: Key Risks
Key Risks Page 31 Shares in COG are listed on the ASX and the price will be subject to market conditions including movements in Securities Market international share markets, local interest rates and exchange rates, domestic and international economic conditions, government taxation, market supply a
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