Trading Update for QTR Ending 30 Sept 2014
Sydney, Oct 27, 2014 AEST (ABN Newswire) - Cash Converters International Ltd (
ASX:CCV) (CKKIF:OTCMKTS) is pleased to provide the following trading and performance update based on the first quarter unaudited management accounts for the 2015 financial year. The normalised EBITDA profit for the quarter ending 30 September 2014 was $16.6 million, up 61% on the corresponding first quarter last year (2013 first quarter: $10.3 million).
This strong result reflects the continuing upward trend in earnings reported at the full year.
Financial results summary(Statutory Reporting Basis) 3Q 2013 3Q 2014 Variance %Revenue $77,039,320 $97,230,953 +26.2EBITDA $8,923,771 $15,976,991 +79.0Depreciation and amortisation $1,885,984 $2,137,686 +13.3EBIT $7,037,787 $13,839,305 +96.6Income tax $862,810 $3,737,405 +333.2Finance costs $1,797,714 $2,381,657 +32.5Net profit after tax $4,377,263 $7,720,243 +76.4Divisional EBITDA(Statutory Reporting Basis) 3Q 2013 3Q 2014 Variance %Franchise operations $1,613,035 $1,664,586 +3.2Store operations $1,902,051 $4,731,016 +148.7Financial services - administration $2,674,316 $2,972,666 +11.2Financial services - personal loans $8,468,445 $11,755,867 +38.8Green Light Auto (after minority interest) $(193,369) $(190,266) -1.6Total before head office costs $14,464,478 $20,933,869 +44.7Corporate head office costs $(5,540,707) $(4,956,878) -10.5Total Divisional EBITDA $8,923,771 $15,976,991 +79.0Normalised EBITDA 3Q 2013 3Q 2014 Variance %EBITDA $8,923,771 $15,976,991 +79.0Stamp duty on store acquisitions $1,662,983 $384,079 -76.9Green Light Auto (after minority interest) $193,369 $190,266 -1.6EBITDA normalised $10,280,123 $16,551,336 +61.0
The above table provides a normalised EBITDA with adjustments to the respective periods to better reflect the underlying performance of the Cash Converters business.
Major highlights for the first quarter include:
- Strong revenue growth compared to the previous corresponding period up 26.2% to $97.2 million (2013 first quarter: $77.0 million). The major drivers for revenue growth over the period included an increase in personal loan income of $12.5 million and an increase in corporate store revenue of $6.1 million;
- The personal loan book in Australia grew by 23.4%, from $85.1 million as at 30 September 2013 to $105.0 million as at 30 September 2014;
- The growth of the online personal loan business in Australia continues to be very strong with the value of loans written increasing to $13.1 million for the period, up 111.5% on the previous corresponding period. (2013 first quarter: $6.2 million);
- The value of online cash advance and personal loan products approved in the period increased 112.7% to $15.4 million; and
- The corporate store network in the UK and Australia has seen revenue grow by 15.4% to $45.9 million over the corresponding period. The corporate store network EBITDA was $4.7 million for the quarter, representing an increase of 148.7% on the corresponding period. (2013 first quarter: $1.9 million).
Financial services operations
During the first quarter we have continued to experience an increase in the amount of loans advanced for the personal loan product. As at 30 September the personal loan book was $105 million, an increase of 23.4% on the same period last year ($85.1 million as at 30 September 2013).
The personal loan book traditionally falls away slightly in the first quarter from the closing loan book as at 30 June. This seasonal trend continued with the loan book down slightly from 30 June 2014 closing balance of $109.2 million, though representing a notably smaller 3.8% decrease, which is less than we have historically experienced (pcp was down 7%). Bad debt percentage levels have increased slightly to 7.2% from 6.6% as at the 30 June 2014 which is within the historical range for the business. . We expect the loan book growth momentum to continue into the Christmas period which is a seasonally strong period for Cash Converters.
The volume of cash advance loans have increased by 11.2% over the corresponding quarter last year, with the margin per loan remaining stable.
Company owned store results
The corporate store network in Australia produced a first quarter EBITDA of $4.7 million, up 148.7% on the previous period (2013 first quarter: $1.9 million). For existing stores, a number of important KPI's improved against the corresponding period - pawn broking interest (up 16%), cash advance commission (up 19%), personal loan commission (up 13% with online up 51%) and retail sales up 2%. Recently acquired stores delivered an additional $695K of EBITDA.
In the quarter ending 30 June 2014 the Company acquired three franchised stores in Queensland. These acquisitions take the number of corporate stores in Australia to 64. The acquisition price of $5.2 million for these latest three stores represents an EBIT multiple of 3.9 times on earnings and a multiple of 2.9 times excluding assets.
The corporate store network of 58 stores in the UK produced an EBITDA loss of $121,406, compared to previous corresponding profit of $301,466.
Outlook
During the first quarter we have continued to experience an increase in the amount of loans advanced for both the personal loan and cash advance products. This improving trend started in December 2013 following the transition to the new regulatory regime. The Australian personal loan book experienced a strong increase over the previous corresponding period and it is currently at $105 million. We expect the momentum to continue into the Christmas period which is a seasonally strong period for Cash Converters. The online loan advances are contributing strongly to the growth in the personal loan book with an increase on the corresponding period last year of close to 113%.
Cash Converters Managing Director Mr Peter Cumins said "The growth we are experiencing in the Australian market is very pleasing. Our financial performance has been improving strongly with our normalised EBITDA up 61% over the previous year. Our Corporate Store network continues to perform well in Australia, with the EBITDA contribution up 148%. Key store KPI's have delivered strong increases over the corresponding period last year, and recent store acquisitions have started to make a contribution. In addition, we are considering opportunities across the Cash Converters network for further acquisitions".
To view tables and charts, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-CCV-696568.pdf
About Cash Converters International Ltd
Cash Converters International (ASX:CCV) is a franchised retail network listed on the ASX. It specialises in the sale of second-hand goods. The Cash Converters group employs modern retailing practices, professional management techniques and high ethical standards to the management of its stores throughout the chain which appeal to a wide cross section of the community. As a result, Cash Converters has been able to position its outlets as credible retail merchandise stores, resulting in a profitable market for the group.
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