by
Alen Golubovic | Jul 22, 2014
Summary
- Cash Converters’ first half results were impacted by the transition to the new Australian regulatory regime for consumer credit, with EBITDA for the first half of the financial year (to 31 December 2013) falling $8.4m to $21.7m versus the previous corresponding half year period of $30.4m
- However, the third quarter results for FY14 have shown a strong recovery after a slow start to the year. EBITDA for the 3Q14 to 31 March 2014 was $14.5m, which represents an increase of 38% over the previous corresponding period
- The personal loans business remains the dominant profit driver for Cash Converters, contributing 58% of the total 3Q14 EBITDA before corporate costs. Within the division, the Australian personal loan book has grown to $109.2m as at 30 June 2014, up from $91.5m as at 30 June 2013 (19.3% year on year growth).
- The growth of the online personal loan business in Australia continues to be very strong with the value of loans increasing to A$18.9m for the period, up 74.2% on the previous year. Technology enhancements now allow loan applications to be made from mobile phones and tablets
- With the increasing proportion of loan volume growth coming from its online platforms, Cash Converters expects to see continuing growth in the loan book as well as ongoing improvements in margin
- The UK personal loan book remains problematic with a further decline in the book to £14.8m at 3Q14 versus £15.2m at 1H14. CCV has stated that growth of the book is likely to be static pending the introduction of interest rate caps in the UK which are likely to be known by November 2014
- Therefore, despite the disappointing start to the financial year and the tough trading conditions in the UK, the resumption of strong loan and cash advance growth in Australia in 2014 is positive news overall for the outlook on Cash Converters’ future performance, with the Australian loan book historically being the main predictor for future profit growth.
FIIG Securities offers investment into the Cash Converters senior unsecured bonds at a yield of 6.31% p.a. Please contact your FIIG representative if you are interested in investing in the Cash Converters senior unsecured bonds.
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