Media Release Full Year Result Ending June 2015
Sydney, Aug 28, 2015 AEST (ABN Newswire) - Cash Converters (
ASX:CCV)("Cash Converters" or "the Company") today announced its financial results for the financial year dated 30 June 2015.
Highlights
- Revenue growth of 13.0% to $374.9 million. The major drivers for revenue growth over the year included an increase in personal loan interest of $14.6 million and establishment fees of $7.8 million, and an increase in corporate store revenue of $18.3 million
- The normalised Group EBITDA of $62.7 was up 12.2%
- The normalised Australian divisional EBITDA of $71.3 million was up 26.4%
- The Australian personal loan book stood at $107.4 million as at 30 June 2015, down slightly on the previous year (2014: $109.2 million) after it peaked at a record $115.7 million at the half year
- The growth of the online personal loan business in Australia continues to be very strong with the value of loans written increasing 53.2% to $74.6 million (2014: $48.7 million)
- The value of online cash advance in Australia has also been strong with the value of loans written increasing by 57.7% to $11.2 million. (2014: $7.1 million)
- The Australian cash advance product produced an EBITDA result of $11.5 million, up 19.8% on last year's result of $9.6 million
- The Australian corporate store network EBITDA was $18.8 million, representing a 14.6% increase on the corresponding period (2014: $16.4 million)
- A cost cutting and restructure has been completed to more effectively manage the UK business. There have been a number of senior management changes made and staff redundancies, in addition the Company has appointment a very experienced and successful Cash Converters multi-store owner and operator to manage the corporate store network.
Financial Overview
Financial results summary(Statutory Reporting Basis) in $A 30 June 2015 30 June 2014 Variance %Revenue 374,892,639 331,668,907 +13.0EBITDA 9,323,021 51,601,406 -81.9Depreciation, amortisation & impairment* (16,625,373) (7,923,711) +109.8EBIT (7,302,352) 43,677,695 -116.7Income tax (5,109,292) (10,908,176) -53.2Finance costs (9,072,074) (8,577,184) +5.8Net profit / (loss) after tax (21,483,718) 24,192,335 -188.8
* This includes an Impairment Charge for the UK of $7,587,315 in 2015 (2014: Nil)
Geographical split
(Statutory EBITDA) 30 June 2015 30 June 2014 Variance %Australia 15,787,580 53,505,822 -70.5UK (6,893,076) (2,413,001) -185.7International 428,517 508,585 -15.7
Normalised Underlying EBITDA in $A 30 June 2015 30 June 2014 Variance %EBITDA statutory 9,323,021 51,601,406 -81.9Stamp duty on store acquisitions 388,663 1,820,093 -78.6Ausgroup provision (2,927,229) 1,358,333 -315.5GST adjustment - 1,135,883 -Kentsleigh agency termination payment 29,628,270 - -Termination fees - bank facility (GLA) 700,000 - -NSW Class action settlement provision 23,000,000 - -Class action legal fees 1,844,903 - -Redundancy costs CCUK 787,751 - -EBITDA normalised 62,745,379 55,915,715 +12.2
Divisional EBITDA (Normalised Basis) in A$ 30 June 2015 30 June 2014 Variance %Franchise operations 5,965,054 6,633,516 -10.1Store operations 15,831,313 15,615,352 +1.4Financial services - administration 12,518,594 10,410,310 +20.3Financial services - personal loans 48,544,232 40,971,153 +18.5Green Light Auto (before minority interest) (1,987,167) (4,038,694) +50.8Minority interest - Green Light Auto 201,372 3,060,046 -93.4Total before head office costs 81,073,398 72,651,683 +11.6Corporate head office costs (18,328,019) (16,735,968) -9.5Total Divisional EBITDA 62,745,379 55,915,715 +12.2
Geographical split(Normalised EBITDA) 30 June 2015 30 June 2014 Variance %Australia 71,349,416 56,461,798 +26.4UK (9,032,554) (1,051,668) -756.4International 428,517 508,585 -15.7
EBITDA = Earnings before interest, taxes, depreciation, amortisation and impairment.
The above table provides a normalised EBITDA with adjustments to the respective periods to better reflect the underlying performance of the Cash Converters business.
Comments on the UK performance
Following the introduction of the Consumer Credit (Cost Cap) 2014 in the United Kingdom in January 2015, there has been a drop in personal and cash advance loans, impacting the profitability of the UK operations. As a result of this legislation and other economic factors, an impairment charge of GBP3.8 million ($7.6 million) has been recognised in relation to the UK operations.
A review of the UK business has taken place and following this a cost cutting programme has been completed to ensure that the current cost structure better matches the size of the UK business today. A restructure has also been completed to more effectively manage the UK business. There have been a number of senior management changes made and staff redundancies.
The appointment of a very experienced and successful Cash Converter multi-store owner and operator has been made to manage the corporate store network.
Dividend
Notwithstanding that the Company has a strong underlying profit and the cash resources to pay a dividend consistent with its past dividend policy, the Company is unable to do so due to the application of the covenants under its banking facility. The Company is in the process of replacing the current bank securitisation facility - and although an alternative provider has yet to be confirmed, the Company is confident of establishing a new facility in the short term.
As a consequence, no final dividend has been declared.
Summary and outlook
The Australian business continued to perform strongly in FY 2015 with normalised, underlying EBITDA up 26.4% to $71.3 million and we expect to see further growth in FY 2016 as we enjoy the full year benefits of the Kentsleigh/Cliffview transaction, the store acquisitions in February and organic growth.
The initial negative impact that UK legislative changes had from 2 January 2015 on lending volumes has eased and volumes have returned to previous levels. We are now starting to see new customer numbers increase as a result of the closure of a significant number of competitors and look forward to growth in 2016. We also expect to see an improvement in the UK result in FY 2016.
Managing Director Peter Cumins said "The Company is now enjoying strong underlying profit growth from two profit drivers, the Australian corporate stores and the Australian financial services business. We have now made some very significant changes to our UK business and expect to enjoy the benefit of that turnaround in our group results in 2016."
In closing, we wish to thank the staff, management and franchisees for their contribution during the year.
Reginald Webb
Chairman
Peter Cumins
Managing Director
Conference Call Details
Date: Friday 28 August 2015
Time: 10.00am AWST, 12.00 pm AEST
National Toll Free Number: 1800 280 741
Overseas Toll Free Number: +61 3 8687 7788
Participants are requested to dial in 5-10 minutes prior to the start time.
To register your attendance, please email general.enquiries@cashconverters.com
For further information regarding the 2015 financial year results please refer to the Cash Converters Appendix 4E Preliminary Final Report and the Power Point Presentation both of which will be lodged with the ASX on 28 August 2015.
To view the release please visit:
http://media.abnnewswire.net/media/en/docs/ASX-CCV-731578.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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