FINANCIAL RESULTS FOR THE TWELVE MONTHS TO 31 MARCH 2017
31 MARCH 2017 Disclaimer This presentation has been prepared by - - PowerPoint PPT Presentation
31 MARCH 2017 Disclaimer This presentation has been prepared by - - PowerPoint PPT Presentation
FINANCIAL RESULTS FOR THE TWELVE MONTHS TO 31 MARCH 2017 Disclaimer This presentation has been prepared by Amigo Loans Group Ltd (the Company) solely for informational purposes. For the purposes of this disclaimer, the presentation shall
Disclaimer
This presentation has been prepared by Amigo Loans Group Ltd (the “Company”) solely for informational purposes. For the purposes of this disclaimer, the presentation shall mean and include the slides that follow, the oral presentation of the slides by the Company or any person on their behalf, any question-and-answer session that follows the oral presentation, hard copies of this document and any materials distributed in connection with the presentation. By attending the meeting at which the presentation is made, dialing into the teleconference during which the presentation is made or reading the presentation, you will be deemed to have agreed to all of the restrictions that apply with regard to the presentation and acknowledged that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation. The Company has included non-GAAP financial measures in this presentation. These measurements may not be comparable to those of other companies. Reference to these non-GAAP financial measures should be considered in addition to GAAP financial measures, but should not be considered a substitute for results that are presented in accordance with GAAP. The information contained in this presentation has not been subject to any independent audit or review. Certain of the information contained in this document is based on estimates or expectations of the Company, and there can be no assurance that these estimates or expectations are or will prove to be accurate. The Company has not verified the accuracy of such information, data or predictions contained in this report. In addition, past performance of the Company is not indicative of future performance. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this presentation or the opinions contained herein. The future performance of the Company will depend on numerous factors which are subject to uncertainty. Certain statements contained in this document are forward-looking statements, including, without limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “expects,” “aims,” “intends,” “may,” “anticipates,” “would,” “could” or similar expressions or the negative thereof, notwithstanding that such statements are not specifically identified. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and outside of the control of the management of the Company. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The Company has based these assumptions on information currently available, if any one or more of these assumptions turn
- ut to be incorrect, actual market results may differ from those predicted. While the Company does not know what impact any such differences may have on its business, if there are such
differences, the Company’s future results of operations and financial condition, and the market price of the notes, could be materially adversely affected. You should not place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above. Forward-looking statements speak only as of the date on which such statements are made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any of the information in this presentation to reflect events or circumstances after the date on which this presentation was made, or to reflect the occurrence of unanticipated events. The presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire the Company or the Company’s securities, or an inducement to enter into investment activity in any jurisdiction in which such offer, solicitation, inducement or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of such jurisdiction. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation is not for publication, release or distribution in any jurisdiction where to do so would constitute a violation
- f the relevant laws of such jurisdiction nor should it be taken or transmitted into such jurisdiction.
The Company is currently a holding company with limited revenue generating operations of its own and substantially no assets other than its share ownership in its subsidiaries, and has substantially no debt or other liabilities other than certain shareholder loans. For the periods discussed in this presentation, the financial results of Amigo Loans Ltd, the primary operating subsidiary of the Company, give the most accurate description of the historic trading performance of the Company and its subsidiaries.
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Today’s presenters
Glen Crawford CEO Rob Kienlen Finance Director Nick Beal Director of Legal and Compliance
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Agenda
- Key Highlights
- Financial Review
- Regulatory Update
- Outlook
- Appendix
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Key Highlights
Note: Financials as at and for the twelve month periods to 31 March 2017 and 2016 are for Amigo Loans Ltd. In the financial statements for the year ending 31 March 2017 we have changed the accounting policy for commissions paid to third party brokers to spread the commission cost over the life of the agreement. Slide 9 summarises the impact of this change. 1 Live Accounts represent customer accounts with a balance greater than zero as at the date indicated. ² Net Loan Originations represent total loan originations for the period. For loans made to existing borrowers where they are increasing the loan only the incremental amount is included. 3 Net Loan Book represents total outstanding loan value less provision for impairment. 4 EBITDA means operating profit before amortisation, depreciation, provisions and write downs other than for impairment of Loan Book. For the twelve months ended 31 March 2017 EBITDA includes £2m of turnover related to the sale of some charged off loans that had been written off of Amigo Loans Ltd’s statement of financial position. Although we plan to continue to sell charged off loans from time to time in the future, this represents the first such sale. 5 Impairment Charge as a Percentage of Loan Book represents the impairment charge for the period divided by the average month end value of our Loan Book from the start of the period to the end of the period. Impairment Charge as a percentage of Loan Book has been annualised in order to provide a meaningful comparison to previous periods.5
Net Loan Originations continue to show strong growth
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Net Loan Book at £402m supported by strong growth in live accounts1 totaling 127,000, up by 30% y-o-y
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Sustained EBITDA growth benefiting from strong top line growth and operating leverage
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Continued focus on credit quality
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£50m bond tap completed in May at effective YTM of 6.77%, proceeds used to support continued growth
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Net loan originations2 (£m)
143 277 LTM Mar'16 LTM Mar'17
Loan Book3 (£m)
266 402 LTM Mar'16 LTM Mar'17
EBITDA4 (£m)
60.3 81.8 LTM Mar'16 LTM Mar'17
Impairments as a % of loan book5
3.7% 3.2% LTM Mar'16 LTM Mar'17
Agenda
- Key Highlights
- Financial Review
- Regulatory Update
- Outlook
- Appendix
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Financial Review Significant increases in turnover and EBITDA reflect increased interest income driven by a 51% growth in the Net Loan Book during the period
Note: Financials as at and for the twelve month periods to 31 March 2017 and 2016 are for Amigo Loans Ltd
1 For the twelve months ended 31 March 2017 turnover and EBITDA include £2m of turnover related to the sale of some charged off loans that had been written off to Amigo Loans Ltd’s statement of financial- position. Although we plan to continue to sell charged off loans from time to time in the future, this represents the first such sale. For the twelve months ended 31 March 2017 and 31 March 2016 turnover is
shown net of the broker fee amortisation as described further on slide 9, the impact being £6.2m for the year ended 31 March 2017 and £3.1m for the year ended 31 March 2016.
2 EBITDA means operating profit before amortisation, depreciation, provisions and write downs other than for impairment of Loan Book. EBITDA has been restated to reflect broker fees being amortised over thelife of the loan rather than recognised in full at time of sale
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TURNOVER1: 27.8% increase y-o-y significantly higher than last 3 financial years driven by current year origination growth (£m) EBITDA1,2: 35.6% increase reflecting increased loan book and
- perating leverage (£m)
80.7 95.1 102.0 130.4 2014 2015 2016 2017 45.7 53.5 60.3 81.8 2014 2015 2016 2017
Financial Review – Change of accounting policy for broker commissions
- We pay third party brokers a % commission for the loans we originate through them
- The commission is applied to the value of the loan originated and is paid up front
- Historically, we have accounted for these costs by expensing the full cost immediately
- The value of loans originated through this channel has grown significantly
- Spreading the cost of the commission over the life of the loan aligns the expense with the income generated
- The following table shows the impact on EBITDA of this change:
12 months to 31- Mar-17 (£m) 12 months to 31- Mar-16 (£m) Historical EBITDA calculation 75.4 57.5 Impact of policy change 6.4 2.8 EBITDA reflecting change of policy 81.8 60.3
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Financial Review
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ORIGINATION: Significant growth across all 3 origination channels (£m)
129.9 126.5 142.5 276.8 65.8 64.1 61.8 104.0 27.1 23.9 35.4 70.3 37.0 38.6 45.4 102.5 2014 2015 2016 2017 Direct Third party introducers Repeat
ORIGINATION: Up 94% on prior financial year with managed increase in underlying risk (£m)
37.4 51.9 68.6 75.4 80.9 17.0 20.6 21.3 21.5 22.4 7.8 13.8 19.3 17.6 17.9 2.3 3.8 8.0 8.6 8.7 10.3 13.4 15.5 16.1 17.9 0.3 4.6 11.5 13.9 Q4 FY 15/17 Q1 FY 16/17 Q2 FY 16/17 Q3 FY 16/17 Q4 FY 16/17 New origination Homeowner Homeowner guarantor Non-homeowner guarantor New origination with non-homeowner guarantor Credit Trials
Commentary
- Accelerated growth across all
channels
- Significant contribution from
repeat customers whilst also growing the customer base
- Partially driven by increase in
maximum loan value up to £10,000
- In recent month, origination of
non-homeowner guarantor loans as well as credit trials has increased meaningfully
- Expectation is that this will lead
to an increase in the level of impairment charges in coming quarters but performance to date on these loans is in line with our expectations
Note: Financials as at and for the twelve month periods to 31 March 2017 and 2016 are for Amigo Loans Ltd
Financial Review
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- Income statement expense
from charged off accounts as %
- f loan book value remains
consistent
Note: Financials are for Amigo Loans Ltd
Monthly amount charge off expense as % of loan book
0.0% 0.2% 0.4% 0.6% 0.8% 1.0% Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17
Direct costs as % of loan origination (years ending 31 March)
- Direct cost efficiency improved
by growth in loan origination and leveraging of advertising expenditure
Commentary
12.4% 13.2% 15.8% 11.7% 2014 2015 2016 2017
Financial Review
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Operating cash flow excluding loan originations1: 24.5% increase in underlying cash flow prior to new loan originations (£m)
Note: Financials as at and for the twelve month periods to 31 March 2017 and 2016 are for Amigo Loans Ltd
1 Operating cash flow excluding loan originations is calculated as EBITDA (excluding the EIR adjustment re broker fees) less turnover from interest on customer loans plus the Loan Book impairment charge pluscash collections
133.3 155.4 175.0 218.1 2014 2015 2016 2017
- Monthly cash collected reached £27m in March 2017, up from £19m in March 2016
Agenda
- Key Highlights
- Financial Review
- Regulatory
- Outlook
- Appendix
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Regulatory
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- FCA spent three days at our offices in May as part of the
- ngoing supervision regime and see no crystallised risks in the
business
- Continuing program of maintaining our established
relationships with Members of Parliament, governmental bodies and other stakeholders Amigo Industry
- Affordability review from FCA expected shortly
- FCA review of high cost credit, including high-cost short term
credit and guarantor lending, is expected to be published in the summer
- FCA Business Plan for 2017/18, and Mission were published in
May
- The Business Plan highlighted Motor Finance as a focus for the
coming year
Agenda
- Key Highlights
- Financial Review
- Regulatory
- Outlook
- Appendix
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Outlook
Continually testing enhancements to our scorecards to leverage the 12 years of data we have on our borrowers and guarantors
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1 2 3 4
Continued focus on conversion through key stages of the applications process including ongoing reduction in time to payout while maintaining our rigorous and disciplined application and underwriting process Key project to deliver enhanced efficiency within the collections function while retaining our focus on customer service and compliance Review of opportunities to apply Amigo’s unique guarantor model in adjacent markets, eg motor finance
Q&A
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Agenda
- Key Highlights
- Financial Review
- Regulatory
- Outlook
- Appendix
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Revised Group Structure
Amigo Loans Ltd (Guarantor) RG Catering Limited (Guarantor)
Bonds £325m RCF £16m
Richmond / Management Restricted Group
- n-loan
Amigo Luxembourg S.A. Amigo Management Services Ltd (Guarantor)
Guarantors of the loans notes
Amigo Holdings Limited Amigo Loans Holdings Ltd Amigo Loans Group Ltd
Source: Company
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Key Contacts and Calendar
Key Contacts
Rob Kienlen – Chief Finance Officer Email: robert.kienlen@amigo.me Telephone: 07841806454 Harriet Shaw – Executive PA Email: harriet.shaw@amigo.me Telephone: 07734778862
Calendar
Thursday 31 August 2017 – Results for 3 months to 30 June 2017 – PROVISIONAL DATE Thursday 23 November 2017 - Results for 6 months to 30 September 2017 – PROVISIONAL DATE
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