Cash Converters International Limited (CCV.AX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It gives me great pleasure to welcome you to the 2025 Annual General Meeting of the company. My name is Sam Budiselik, and I'm CEO and Managing Director of CCV. I'm advised that the necessary quorum of shareholders is present, and I declare the Annual General Meeting of the company open. Before I commence with the formal parts of the meeting, today's AGM is a virtual meeting being held online via the Computershare meeting platform. This allows shareholders, proxies and guests to attend the meeting virtually. In addition, shareholders and proxies can ask questions and submit votes. If you experience any difficulties during the meeting, we have published a virtual meeting guide on the ASX and our website, which includes how to seek assistance. I will explain the virtual voting process when we get to the formal items of business. I declare the poll open now, and shareholders can vote on all items of business at any time up until the poll closes at the end of the meeting. The Board recommends that shareholders vote in favor of all items of business. If you are eligible to vote, a new polling icon will now appear on your screen. Shareholders can also submit questions online now any time up until the close of the meeting. Questions will be addressed at the relevant item of business. So please state the item number at the beginning of your question. Finally, in the event of any technical difficulties, we ask for your patience while we work to address the issue as quickly as we can. I would now like to introduce to you my fellow Directors, Company Secretary and Auditors joining us today. Joining us is Timothy Jugmans, Non-Executive Chairman; Peter Cumins, Executive Deputy Chairman; Lachlan Given, Director; Andrew Spicer, Independent Director; Henry Shiner, Independent Director; Robert Hines, Independent Director; Mark Ashby, Independent Director; David Rose, Chief Financial Officer; Andrew Kamp, Chief Commercial Officer; Meagan Hamblin, Joint Company Secretary. I also welcome the company's auditors, Nick Gordon and Shamiso Charamba from Deloitte, who have joined the meeting. I will now start the joint Chairman and MD formal address of the 2025 AGM presentation. The Board and I remain excited and optimistic about the opportunities and prospects of the company. Both Board and management are focused on deploying capital prudently to drive long-term growth via store acquisitions in Australia and the U.K, growing repurposed luxury product sales and new loan product growth. This disciplined approach to store acquisitions and network expansion has been a key driver of our recent growth. This financial year, we further strengthened our presence through selective acquisitions of 20 stores acquired in the U.K. and Australia. We continue to assess acquisition opportunities that align with our long-term strategy and valuation metrics, recently announcing a capital raise and acquisition of a 29-store network in Australia following the 2025 financial year end. Cash Converters delivered strong FY 2025 operating and financial results with operating EBITDA of $74.5 million, up 8% on the prior year, and operating net profit after tax of $25.1 million, up 20% on the prior year. With $73.2 million of cash at the financial year end and undrawn funding capacity available, we remain well positioned to capitalize on opportunities as they present and to fund our future growth ambitions. The store segment also traded strongly in FY 2025 with operating EBITDA up 29% to $31.3 million. Our inventory mix continues to evolve with the growth in high value, higher margin items such as prestige jewelery, watches, designer bags and high-end electronics, supported by the opening of a luxury concept store in Bondi Junction. This initiative is extending the appeal of the Cash Converters concept to a broader range of customers and serving them from a lower cost store operating model. On the lending side of our business, we have altered our product suite to meet the needs of a changing customer cohort, exiting payday lending in September 2025 and continuing to grow our new line of credit offering. This helps us focus on delivering more flexible, lower cost solutions for our customers. As this reshaping of our loan book continues and the auto and payday loan exits progress, auto lending ceased in June 2024, our overall loan book fell 15% to $245 million as did our associated loss rates and loan book provisions. We are proud that this approach allows us to access a larger part of the population and position Cash Converters to responsibly meet their credit needs. The strength of our business and balance sheet enabled the Board to declare the payment of a fully franked $0.01 final dividend. When coupled with a similar payment at the half year, demonstrates the Board's confidence in our earnings and balance sheet position. The final dividend declaration represents our tenth straight half year dividend. I would like to take this opportunity to thank our fellow Board members, management and their teams for their contributions and commitment to the company and executing our growth strategy and for their continued focus on providing an excellent experience to our customers. Finally, we would like to thank our shareholders for their ongoing support and look forward to an exciting future for Cash Converters. Moving on to a trading update for Q1 FY 2026. As we continue to transform our lending business, our product mix and loan book composition continues to evolve. The nationwide launch of our new Cashies Loan Line of Credit products in October 2025 has been well received, with strong early demand. The Cashies Loan book increased to $32.5 million as at 31 October 2025. Personal Finance segment revenue decreased 23% to $17.7 million versus pcp, reflecting the strategic product transition. Improved credit quality and provision releases are expected to partial offset this decline and the first half Personal Finance segment result is expected to be below the prior year given the timing of this loan book transition. Store trading remains strong and continues to balance the personal lending transition. The Australian store segment delivered revenue growth of 10% to $43.8 million on pcp, and the U.K. segment revenue grew 32% to $27.6 million on pcp. Overall group revenue rose 4% to $100 million, supported by the contribution from recent acquisitions. As we turn to our outlook, looking further forward, we're excited by the opportunities that lie ahead for the company. Several of our strategic initiatives have begun delivering revenue growth across the global group. Our store network continues to expand and evolve a luxury inventory model, and our digital platforms are performing strongly and reaching new customers. In summary, the strategic growth focus for the company remains: Driving loan book growth with an increasing focus on the new Cashies Loan product and deploying capital to the ongoing acquisitions of franchised stores, primarily in Australia and the U.K. In closing, I am proud to lead a team of passionate and committed professionals who are consistently focused on putting our customers first and delivering results across our stores, personal lending, our online operations and our back office functions. This commitment has been a key component in our strong financial performance in FY 2025 and creates a solid foundation for growth both domestically and abroad. I would like to thank everyone across our global business for their hard work and dedication in achieving these results and to our Board for supporting the leadership team in shaping and executing the strategy. I look forward to providing another update on our progress at the conclusion of the half-year period in February. Once again, thank you for your at attendance at this Annual General Meeting. Before proceeding to the formal business of the meeting, as described in the Notice of Meeting, I will outline the process for voting and asking questions. Voting on all resolutions will be conducted by way of a poll. The proxy votes submitted for each resolution will be shown on your screen at the relevant time. If you are eligible to vote, a polling icon will have appeared on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. Select one of the options to cast your vote. There is no need to click a submit or enter button as the vote is automatically recorded. You can change your vote up until the time that the poll closes at the end of the meeting. Rachel Crane from Computershare has agreed to be returning office today. And following confirmation by Computershare, final results will be announced to the ASX later today. This release will also be available on the company's website. You can submit questions at any time, and you do not need to wait until the relevant item of business. We encourage you to submit your questions as soon as possible so they can be reviewed by our moderators. We will seek to address your questions during the relevant item of business. If we are unable to provide an answer during the meeting, we will endeavor to provide an answer once the meeting is closed. Online attendees can submit questions at any time. [Operator Instructions] Please note that while you can submit questions from now on, we will address them at the relevant time in the meeting. Please also note that your questions may be moderated or, if we receive multiple questions on one topic, amalgamated together. You will receive a confirmation when your question has been sent. In the interest of orderly discussion, shareholders should limit themselves to submitting one question at a time, ensure that each question is succinct as possible and ensure your questions are relevant to the business of the meeting. Questions sent via the online meeting platform may be moderated to avoid repetition. And if questions are particularly lengthy, we may need to summarize them in the interest of time. To ask a verbal question, please follow the instructions written below the broadcast. The purpose of today's meeting is to present the accounts of the company together with the directors' report for the year ended 30 June 2025 and to deal with the ordinary business and special business set out in the Notice of Meeting. Shareholders will be asked to vote on formal resolutions for the reelection of two directors, the adoption of the remuneration report and the approval of grant of performance rights to the CEO and Managing Director. The first item of business deals with the financial statements and reports. These financial statements and reports are for the financial year ended 30 June 2025 and are taken as laid before the meeting. Please note, there is no resolution for this item of business. I now invite shareholders to comment and ask any questions. Please limit your questions at this time to matters related to this agenda item. As I have advised, Mr. Nick Gordon representing the company's auditors, Deloitte, is in attendance to answer any questions shareholders may wish to direct to him in relation to the conduct of their audit or in relation to the preparation of the financial statements. We have one question on this item being when was the external audit last tendered and when will it likely next be tendered? I understand the audit was informally tendered 3 years ago and that Deloitte retained on a reduced fee with the audit engagement reviewed annually by the Audit and Risk Committee. Thank you for the question. That's the only question for this item. There being no more questions, we will now move on to the second item of business and the formal resolutions. The first resolution is ordinary business and relates to the reelection of Mr. Timothy Jugmans as a Director. The full text of Resolution 1 and the proxy votes received in relation to that resolution are set out on the screen. I can confirm that the company has received valid proxy votes in relation to Resolution 1 as displayed on the screen. All discretionary votes in favor of the Chair will be voted in favor of the resolution. Mr. Jugmans' biography and experience is set out in the explanatory memorandum accompanying the Notice of Meeting. The directors recommend that shareholders vote in favor of this resolution. I move Resolution 1 as displayed on the screen. I now invite shareholders to comment and ask any questions. Please limit your questions at this time to matters related to this agenda item. There being no questions, I put the resolution to the meeting. If you haven't already done so, please now cast your vote on this item. I will now move to the next order of business. The second resolution is ordinary business and relates to the reelection of Mr. Robert Hines as a Director. The full text of resolution and the proxy votes received in relation to that resolution are set out on the screen. I confirm that the company has received valid proxy votes in relation to Resolution 2 as displayed on the screen. All discretionary votes in favor of the Chair will be voted in favor of the resolution. Mr. Hines' biography and experience is set out in the explanatory memorandum accompanying the Notice of Meeting. The directors recommend that shareholders vote in favor of this resolution. I move Resolution 2 as displayed on the screen. I now invite shareholders to comment and to ask any questions. Please limit your questions at this time to matters related to this agenda item. There being no more questions, I put the resolution to the meeting. If you haven't already done so, please now cast your vote on this item. I will now move to the next order of business. The next item of business are shareholders to adopt the company's remuneration report for the year ended 30 June 2025. The full text of Resolution 3 and the proxy votes received in relation to that resolution are set out on the screen. I confirm that the company has received valid proxy votes in relation to Resolution 3 as displayed on the screen. All discretionary votes in favor of the Chair will be voted in favor of the resolution. The directors recommend that shareholders vote in favor of this resolution. I move Resolution 3 as displayed on the screen. I now invite shareholders to comment and ask any questions. Please limit your questions at this time to matters related to this agenda item. There being no questions, I put the resolution to the meeting. If you haven't already done so, please now cast your vote on this item. I will now hand over to the Chairman for the next order of business.

Thank you, Sam. The next item of business asks shareholders to approve the grant of performance rights to the CEO and Managing Director. The full text of Resolution 4 and the proxy votes received in relation to the resolution are set out on the screen. I confirm that the company has received valid proxy votes in relation to Resolution 4 as displayed on the screen. All discretionary votes in favor of the Chair will be voted in favor of the resolution. The directors recommend that shareholders vote in favor of this resolution. I move Resolution 4 as displayed on the screen. I now invite shareholders to comment and ask any questions. Please limit your questions at this time to matters related to this agenda item.

No questions, Chair.

There being no questions, I put the resolution to the meeting. If you haven't already done so, please now cast your vote on this item. I will now hand back to the Managing Director to conclude the meeting.

Thank you, Tim. Ladies and gentlemen, that concludes the resolutions to be presented to the meeting. The poll on all items will close in 30 seconds. I now ask all shareholders to complete their voting before the poll closes. [Voting]

I now declare the poll closed. As noted earlier, these results will be posted on the company's website and on the ASX later today. Just prior to closing the meeting, I thank shareholders for two more questions. We have a question or comment. Well done for offering retail shareholders unlimited offers in the recent capital raising. Most companies impose unfair limits on offers when the policy should be to maximize opportunity and then scale back if necessary. Thank you for the comment. We appreciate the sentiment. We believe offering the ability to subscribe for additional shares represent the best outcome for all shareholders and this is a central part of the capital raising from inception. And this combination delivered high [indiscernible] of proceeds for the company while giving existing shareholders the opportunity to participate by taking up their [indiscernible]. So thank you for that comment and question. Well, for a bit of humor, I think, there's another comment. For Adelaide Metals and Brisbane Lions, [indiscernible] has been a great ambassador for us. Did we pay him in cash or shares or how long is he contracted with us for? Thank you for that. I think our advertising talent has been very successful in the year [indiscernible] campaign [indiscernible] are doing very well. We do engage a film production company to create the ads and that's how the commercials are handled by the production company, but thank you for the comment and it's certainly resonating with customers. With the formal proceedings over, I now formally declare the meeting closed. Thank you for your attendance.