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Money3 Corporation Limited (ASX:MNY) has published its H1 FY2019 Presentation ending 31 December 2018. It is an Automotive Loans Specialist and nonbank credit provider of pre-owned automotive finance to millions of Australians excluded by banks and other non-bank lenders. Since its inception, the business has serviced 800,000 customers with over $1b in loans. With $100m+ available in deployable capital, MNY would continue to grow its loan book and market share.
Financial results
Gross secured Automotive Loan Book grew to over $280m and, with the sale of Money3âs Branch and Online Small Amount Credit Contracts (SACC) business (as announced separately to the ASX today), the Company is now focused on auto loan activities. Money3 continues to grow its share of the secured Automotive Loan market and, with an additional ~$46m in capital redeployed to auto loans following the SACC sale, it expects to continue to grow its market share into H2 2019. Larger amount longer-term loans represented 10.8% of the total gross loan book (FY18: 10.4%) and SACC (now sold) represented 9.4% of overall gross loan book (FY18: 9.1%).
There was a 24.4% increase in Broker Division Cash Collected to $92.8m. A 30 % increase in Broker division loans advanced ($87.1m) on H1 pcp. Revenue is highly correlated with cash receipts. The One-off tax refund was a result of new accounting standards. MNY noted a 9.3% increase in Group Revenue to $66.0m, a 13.2% increase in Group EBITDA to $31.1m and 13.3% increase in Group NPAT to $17.5m. The 14.3% increase in Gross Loan Book resulted in $351.9m. Due to the sale of the SACC lending operations, Money3 is expected to meet the lower end range of its full-year net profit after tax guidance of $35-$36 million.
Dividend
The Board of Money3 has declared an interim, fully franked dividend of 5.00 cents per share. The Board has measured the requirement to balance consistent shareholder returns and the desire to maintain its dividend and reinvestment policy and advises that a Dividend Reinvestment Plan discount of 2.5% will apply. The company has declared Ex-Date as March 5, 2019, and the record date as March 6, 2019. The dividend payment is due on May 23, 2019.
Business Performance
Money3 had sold its residual Small Amount Credit Contract (SACC) business through a management buyout (MBO) for ~$46m, including $35m upfront and the balance in six months post completion. This sale will result in the transferring of the Branch and Online division, which will release ~$46m of cash into the business, that will be used to further accelerate the growth of the Automotive Loan book.
On 17 January 2019, MNY gave a response to media article concerning Australian Credit Licences and flex commissions. MNY knew about the news article circulating in the press regarding sales people in the car finance industry operating under the point of sale exemption.
On 22 February 2019, Money3 has entered into an agreement with Commit Co Pty Ltd to sell Money3 Branches Pty Ltd and Money3 Services Pty Ltd. The sale would result in the disposal of the Branch and Online divisions and will enable a complete exit from SACC lending. The sale is expected to be completed in May 2019, and the consideration is based on 76% of the gross loan book at completion.
On the same day, Money3 has also entered into a Share Purchase Agreement (SPA) to purchase Finance Investment Group Limited (Go Car Finance) for an initial consideration of NZ$16m. Go Car Finance is an established brand in automotive finance in New Zealand. The founders and management team will remain with the business for the next three years, where they will have the ability to earn additional payments (earnout) up to NZ$8m should performance hurdles be met.
Outlook
As a specialist auto lender, the management is focused on Automotive Loans, pursuing strong growth and maintaining the exceptional quality of the loan book while boosting its exceptional cash collections capability. Considering recent changes to the business, Money3 now guides to the lower end of $35-$36m NPAT guidance.
On the funding front, there is a $100m+ of total available headroom, $50m of undrawn finance facility for growth and $24m cash at the bank and has ~$35m from the sale of SACC. There is no requirement for additional equity in the foreseeable future.
The stock of the company closed the trading session at A$2.050 (as on 25 February 2019), up by 5.67% from its previous close.
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