26/08/2009 - 14:10

Cash Converters posts record profit

26/08/2009 - 14:10

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Cash Converters has posted a record profit of $16.2 million for the year to June 30, a gain of 6.5 per cent, on the back of healthy revenue growth driven by increased personal loans, financial services commission and corporate store revenue.

Cash Converters posts record profit

Cash Converters has posted a record profit of $16.2 million for the year to June 30, a gain of 6.5 per cent, on the back of healthy revenue growth driven by increased personal loans, financial services commission and corporate store revenue.

The second-hands goods retailer and financial services company grew its revenue by 27 per cent to $94.4 million.

Personal loan interest and establishment fees ballooned to $5.2 million, financial services commission reached approximately $600,000 and corporate store revenue topped $14.9 million.

The company has declared a fully franked final dividend of 1.5 cents per share.

However, it expects earnings growth in 2010 from the full year impact of store acquisitions in 2009 and the impact
from the significant growth in the Safrock loan book in the last quarter of this financial year.

 

 

Full announcement below:

 

Cash Converters Announces Record Profit Result
The Directors of Cash Converters International Limited ('Cash Converters') are pleased to report a record profit result of $16.2 million for the 2009 financial year.

The table below provides a summary of the financial performance.
Financial Results Summary
30 June 2009 30 June 2008 Variance %
Revenue $94,397,900 $74,405,882 +26.9
EBITDA $25,604,525 $23,443,909 +9.2
Depreciation and amortisation $1,162,068 $882,312 +31.7
EBIT $24,442,457 $22,561,597 +7.4
Income tax $7,152,524 $6,423,983 +11.3
Borrowing costs $1,135,225 $963,028 +17.9
Net profit before minority interest $16,154,708 $15,174,586 +6.5
Less minority interests $(10,153) $31,183 +132.6
Net profit after minority interests $16,164,861 $15,143,403 +6.7
Basic earnings per share 6.77 6.28 +7.8
Divisional Operating Profit 30 June 2009 30 June 2008 Variance %
Store operations $7,234,263 $4,348,261 +66.4
Finance operations $16,122,541 $17,299,880 ‐6.8
Total Divisional Operating profit * $23,356,804 $21,648,141 +7.9
* see segment note with Appendix 4E

Highlights

- The 2009 financial year has been the most successful in the Company's history, with a record net profit of $16.2
million, up 6.5% on the previous year.

- Revenue growth of 27% to $94.4 million. The major drivers for revenue growth over the year included an increase in
personal loan interest and establishment fees of $5.2 million, an increase in corporate store revenue of $14.9
million and an increase in financial services commission of approximately $600,000.

- The UK has continued its improved performance over recent years and contributed an EBIT of $2.7 million, up
174.6% on the previous year. Store numbers (company owned and franchised) grew by 6 to 136.

- The Australian business continued to be a solid contributor with EBIT from franchising operations of $2.5 million
(incorporating the absorption of 75% of all head office costs). The total EBIT from Australian franchising and store
operations was $5.6 million. Store numbers (company owned and franchised) grew by 2 to 136.

- The Company owned store strategy has gained momentum with the acquisition this year of 15 franchised stores,
7 in the UK and 8 in Australia, taking total corporate store numbers to 37.

- The corporate store network has seen revenues grow by 76% to $34.5 million producing a combined EBIT of $4.4
million (up 187% on 2008FY) for the UK and Australian owned stores, with only a part year contribution from the 15
staggered store acquisitions.

- Safrock loan book growth of 55% to $21.4 million. The Safrock personal loans business and the MON-E cash advance administration platform generated an EBIT of $16.1 million (2008 $17.3 million) which is down 7.3% on the previous year. This reduction was the result of the Company renegotiating the terms of its franchise agreement with
franchisees and granting franchisees a reduction in the process charges levied by MON-E. The reduced fee arrangement had a negative impact on MON‐E in 2009 of approximately $2 million.

Dividend

The Directors have declared a fully franked final dividend of 1.5 cents per share. The dividend will be paid on 30
September 2009 to those shareholders on the register at the close of business on 16 September 2009. This will take the total dividend payment for the year to 3.0 cents per share, fully franked. This represents a payout ratio of
approximately 45%.

Guidance for the 2010 Financial Year

The Company expects earnings growth in 2010 from the full year impact of store acquisitions in 2009 and the impact
from the significant growth in the Safrock loan book in the last quarter of this financial year.

In the absence of new capital from the proposed EzCorp transaction, the expected NPAT for 2010 is in the range of $18-$18.5 million. With the deployment of the additional capital, should the EZCORP transaction proceed, earnings are expected to exceed this guidance.

Outlook

The announcement in August of the introduction (subject to shareholder approval and due diligence) of EzCorp as a
strategic shareholder representing a fully diluted interest of 30% of the Company will result in a cash injection of $54
million. Following the completion of this transaction Cash Converters will be very well positioned to fast-track the
execution of its stated strategy of opening new company stores in the UK and Australia, as well as further acquisitions of franchised stores in 2010. The Company sees the acquisition of franchised stores and increasing the funding capacity of the Cash Advance and Personal loan products as a real opportunity to transform the Group into a significant store operating entity.

The year has been a busy and challenging one with the successful acquisition and integration of 15 franchised stores into our corporate store division. During one of the worst global economic downturns Cash Converters has reported a record profit result and with the growth opportunities we have identified we are optimistic that further growth will be achieved in the 2010 financial year. The staff, management and franchisees are to be congratulated for their contributions to the strong financial result this year.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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