Cash Converters International : H1 FY20 Financial Results - Investor Presentation

H1 FY20 Investor Presentation

February 2020

Our Presence

69 642

Corporate Franchise

18

Countries

711

Stores

196

UNITED KINGDOM

104

FRANCE	2
	UNITED ARAB
	EMIRATES	9
75
	MALAYSIA

SPAIN

81	84
SOUTH	AUSTRALIA
AFRICA

63

REST OF WORLD

69

AUSTRALIA

28

NEW

ZEALAND

2 Cash Converters has a 25% equity interest in Cash Converters New Zealand (CCNZ)

Our Business

Focus on meeting the cash needs	Diversified product offering:	Bespoke proprietary technology,	30+ years of operation through
of a growing and under-serviced	secured and unsecured lending,	developed inhouse, delivering	multiple economic and business
market.	second-hand goods retailing.	enhanced customer service.	cycles, across multiple
			geographies.

Data-driven decision optimising	Global, integrated multi-channel	Growth opportunities in
lending outcomes through
network.	domestic and overseas markets.
machine learning.

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Customer Satisfaction

In recent years we have facilitated millions of transactions, amassing customer data that we can then leverage to create a competitive advantage.

Our ability to find new customers and provide existing customers with what they want, is reflected in industry leading Net Promoter Score (NPS) satisfaction levels…

Category NPS

MACC		85.5
SACC (Personal Loan)	73.5			CBA 7.2
SACC (Cash Advance)	66.7		WBC -0.8	'Big Four' Australian Bank
		CCV Overall NPS	Average NPS…
Retail	59.1		NAB -2.7
Pawn Broking	55.3	60	ANZ -4.4	2.1*
Buys	53

4 Roy Morgan July 2019: www.roymorgan.com/findings/8111-bank-satisfaction-and-nps-july-2019-201908260459

Results

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H1 FY20 Milestones

Several milestones were achieved during H1 FY20 including a record-breaking December 2019 for Personal Finance outgoings, Online Applications and Speed-to-Cash.

A selection of these milestones are outlined below.

Total Loan Book

$224.2m (+1.6% on FY19)

CCPF Mobile App

9,500+ users

(since Nov'19 launch)

My Loans Portal

50,000 users

(since Nov'19 launch)

53.9% of loans originated online (+4.6%)

Speed-to-Cash (STC)

Money in account <1hr in many cases (via New Payments Platform)

36k applications

$8.8m approved loans

Total PF Applications

264k (+10.3%)

New Webshop

launched

14k payments

6 All comparisons are on the previous corresponding period (pcp) unless stated otherwise

H1 FY20 Highlights

Total Revenue

$143.9m (+4.9%)
$137.3m	$143.9m
H1 FY19	H1 FY20

Normalised EBITDA

$24.3m (+13.7%)
$21.4m	$24.3m
H1 FY19	H1 FY20

		Commentary
Normalised NPAT	• Normalised NPAT up 31.2% driven by
$11.5m (+31.2%)		improvements across all segments.
		• Strong revenue growth achieved in a
		challenging retail environment.
	$11.5m	• Improved normalised net operating cash flows
$8.8m	of $13.6m*.
		• Optimisation of customer journey and data
		analytics has led to strong application growth.
H1 FY19	H1 FY20	• Our ongoing focus on responsible lending and
		improved credit decisioning has resulted in a

Online Retail

$3.8m (+24.5%)
$3.1m	$3.8m
H1 FY19	H1 FY20

Total Loan Book

$224.2m (+1.6%)
$220.6m	$224.2m
30-Jun-19	H1 FY20

	PF Net Bad Debt Expense	more conservative conversion rate (<30%),
	$19.1m (-16.8%)					ultimately resulting in a better-quality loan
											book.
											• Deployment of improved eCommerce platform
		$23.0m									(WebShop) resulting in online retail growing
						$19.1m				by 24.5%.
		H1 FY19	H1 FY20

7	All comparisons are on the previous corresponding period (pcp) unless stated otherwise
Personal Finance (incorporates Small Amount Credit Contract [SACC] and Medium Amount Credit Contract [MACC])

*Excluding payment for class action settlement of $32.5 million in H1 FY20 and $16.4 million in H1 FY19 and AASB 16 normalisation

Group Performance

+31.2%	+4.9%
Normalised	Revenue
NPAT

• Total retail sales up 12.8% to $42.5m
• Online retail sales up 24.5% to $3.8m
• Pawnbroking revenue up 3.9% to $15.8m
• Franchise revenue up 15.5% to $11.1m
• Vehicle finance revenue up 30.3% to $10.6m

	H1 FY20	H1 FY19	Change
	($m)	($m)	(%)
Revenue	143.9	137.3	+4.9%
Expenses	(158.6)	(136.8)	-15.9%
EBITDA	(12.8)	(1.4)	-814.3%
Normalised EBITDA	24.3	21.4	+13.7%
NPAT	(19.4)	(5.2)	-270.4%
Normalised NPAT	11.5	8.8	+31.2%

8	All comparisons are to previous corresponding period, unless otherwise stated

Divisional Earnings

Personal Finance (PF)

• Strong application volumes, coupled with a 2.2% increase in loans funded and continued optimisation of credit decisioning, resulted in a 16.8% decrease in net bad debt expense to $19.1m (from $23.0m pcp), delivering a PBT of $15.9m, up 17.9% pcp.

Vehicle Finance (GLA)

• GLA delivered a 30.3% improvement in revenues to $10.6m, with profit before tax (PBT) of $1.6m, compared to $437k pcp, as it continues in its fourth year of operating in the secured auto finance market.

Franchise Operations

• New Zealand operations contributed $1.8m (half-year ended 31 December 2018: $930k). International revenues remained steady, whilst the UK contributed $1.4m of profit before tax (half-year ended 31 December 2018: $1.3m).

Store Operations

• Stores continued to see increased retail sales of 12.8% to $42.5m, with total purchases up 3.0% to $12.7m. Pawnbroking revenue was up 3.9% on the previous corresponding period.

Personal Finance PBT*

$16.0m (up 18.6%)
$13.5m	$16.0m
H1 FY19	H1 FY20

Vehicle Finance PBT

$1.6m (up 258.3%)
	$1.6m
$.4m
H1 FY19	H1 FY20

Franchise PBT*

$6.5m (up 5.7%)
$6.1m	$6.5m
H1 FY19	H1 FY20

Stores PBT*

$7.4m (up 2.6%)
$7.2m	$7.4m
H1 FY19	H1 FY20

9	All comparisons are on the previous corresponding period (pcp) unless stated otherwise
*Normalised for AASB 16

Loan Books & Funding

31 December 2019 [Compared to PCP]

31.2%

[27.7%]

40.7%

[44.3%]

20.7%

[20.0%]

5.1%

[5.4%]

2.3%

[2.6%]

Available Cash	$45.6m
Total Cash	$59.4m
Restricted Cash Deposits	($13.8m)

Securitisation	$122.5m
Facility limit	$150m
Headroom	$27.5m

Strong free cash flow improving available cash position, supportive funding partner to facilitate continued Loan Book growth…

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H2 FY20 Priorities

1

2

3

4

Business Optimisation | Continued focus on quality loan portfolio, auto lending review focus

Operational Excellence | Continued investment in core loan processing systems, collections optimisation

Continue to rebuild awareness & trust | Brand-focused campaign, strong engagement with regulator

Grow | Continue to grow and strengthen customer base and relationships by providing exceptional products & services

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Disclaimer

The material contained in this presentation is intended to be general background information on Cash Converters and its activities current at the date of the presentation. The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending on their specific investment objectives, financial situation or particular needs. No representation or warranty is made as to the accuracy, completeness or reliability of the information.

This presentation may contain statements that are, or may be deemed to be, forward-looking statements including statements regarding our intent, belief or current expectations with respect to Cash Converters' business and operations. Readers are cautioned not to place undue reliance on these forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied in such statements. Cash Converters does not undertake any obligation to update any forward-looking statement contained in this presentation to reflect any change in the assumptions, events, conditions or circumstances on which the statement is based.

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Thank You

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