Friday 28 August 2015 by William Arnold Company updates

Cash Converters FY15: loss as expected, dividend suspended

Cash Converters (CCV) recorded revenue growth of 13.0% to $374.9m driven by an increase in personal loan interest of $14.6m and establishment fees of $7.8m, and an increase in corporate store revenue of $18.3m

Statutory reporting basis
 Source: Cash Converters

Overall, the company recorded a statutory loss for the year of $21.5m compared to a profit of $24.2m FY14.

The year was characterised by significant items and costs as detailed in the calculation of normalised EBITDA below. The normalised Group EBITDA of $62.7 was up 12.2% over the year.

Normalised EBITDA
Source: Cash Converters

Items of note

  • Given the loss made this year, CCV is unable to declare a dividend due to bank covenants
  • As a result legislation and other economic factors, an impairment charge of $7.6m has been recognised in relation to the UK operations
  • No update on the negotiation of new banking financing facilities
  • Review of the National Credit Code: CCV state they are not expecting any major changes
  • Personal loan book in Australia now stands at $107.4m YE15 (YE14: $109.2m)
  • Growth of the online personal loan business in Australia continues to be strong up 53% on pcp
  • Online cash advance loans in Australia is strong with value written up by 58% to $11.2m
  • Corporate store network in Australia EBITDA grew by 15% on pcp to $18.8m
  • Termination of Kentsleigh/Cliffview agency agreement: P&L impact of $29.6m however earnings and cash flow accretive
  • Settlement of NSW Class Action. Provision made in FY15 of $23m
  • Queensland proceedings. Writ lodged against the Company in relation to brokerage fees from Jul 2009 to Jun 2013

Outlook

CCV state that the Australian business is expected to see further growth in 2016 and expects “a turnaround in the UK” given the restructure.