29/07/2019 - 10:52

Cashies forecasts FY19 loss

29/07/2019 - 10:52

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Cash Converters International says it expects a loss of between $2 million and $4 million for the 2019 financial year, largely due to a class action settlement in Queensland.

Brendan White started as Cash Converters' chief executive in March.

Cash Converters International says it expects a loss of between $2 million and $4 million for the 2019 financial year, largely due to a class action settlement in Queensland.

The company anticipates revenue of around $283 million for the fiscal year, with earnings before interest, tax, amortisation and depreciation after tax of between $45 million and $47 million, prior to a series of adjustments.

The most significant of those adjustments was due to a $16.4 million class action settlement and $3.2 million in related legal fees.

It recorded a net profit of $9.3 million for the 2018 financial year.

In October last year, Cash Converters settled a class action launched by around 30,000 borrowers in Queensland, after it was alleged that the company effectively charged an annual interest rate of more than 400 per cent interest for one-month loans between April 2010 and June 2013.

Maurice Blackburn, the lawyers representing the borrowers, claimed Cash Converters attempted to circumvent the law by charging excessive brokerage fees.

Additionally, today Cash Converters said it had written-off $5 million of bad loans, a $1.6 million investment in a loan management platform for its UK business, $3.5 million of outdated software and technology assets, and $1.4 million in overall restructuring costs.

The company said it delivered revenue growth in the financial year of 8 per cent, with its retail sales, pawnbroking, and financial services businesses performing well.

However, its auto lending and personal books divisions caused write-offs.

In March, former Bank of Queensland executive Brendan White started as its chief executive.

Shares in Cash Converters fell 3.3 per cent to trade at 14 cents each at 11.40am AEST.

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