Group's broker network helps boost aggregation volumes
Asset finance services firm COG Financial Services has delivered a strong performance for the first half of the fiscal year 2024, despite challenges posed by rising interest rates affecting margins.
Net profit after tax and amortisation (NPATA) attributable to shareholders rose by 14% to $12.6 million compared to the previous year. This growth is part of a broader trend of positive financial outcomes for the company, including a 45% increase in revenue, reaching $237.8 million.
The firm’s Novated Leasing segment also experienced significant growth, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) to shareholders surging by 186% from the prior year. Earnings per share adjusted (EPSA) had a 12% increase to 6.61 cents per share.
Reflecting confidence in its financial health and commitment to shareholder returns, COG declared an interim dividend for FY24 of four cents per share, fully franked, marking an 8% increase on the previous period.
The company announced that its net assets financed (NAF) grew by 27% to $4.3 billion, and assets under management (AUM) expanded by 22% to $854.8 million.
COG credits its expansive broker network for its pivotal role in achieving a 20% increase in the net amount financed during the period.
“Along with our broker partners, we’ve seen some pressure on margins, driven by interest rate rises,” said Ryan Young (pictured left), chief executive at COG Broking and Aggregation. “The commercial segment continues to perform well, while activity in consumer transactions has been more erratic month to month.
“We’re also seeing a flight to scale, driven either by superior economics or increased certainty. This is the case with both lenders, with the banks clawing back some market share from finance companies and with aggregators, as brokers seek certainty and the marginal benefits of scale. In a high-rate environment, every dollar and every percentage point is crucial.”
Young said that the broker network was instrumental in increasing the firm’s aggregation volumes – a growth that includes both organic expansion and acquisitions. The company acquired NFC and UFS Aggregation in August 2023, which contributed to this growth.
Across the wider COG group, which encompasses Westlawn Finance and a Novated division, there was a 27% increase in the net amount financed to $4.3 billion for the first half of the year. Assets under management also saw a significant rise, growing 22% to $854.8 million.
Platform Finance, a division within COG focusing on strategic partnerships, reported a 7.7% increase in settlements, benefiting from both heightened participation from existing partners and the addition of new ones seeking specialized asset finance and personal loan solutions.
“We saw even greater participation from existing partners and the addition of some new partners, who have recognised the value of using a specialist for their asset finance and personal loan needs,” said Damian Mantini (pictured right), Platform Finance’s head of strategic partnerships.
COG’s in-house support and processing service, COG Broker Services,was identified by Young as a critical component of the firm's success in the first half of the year, with usage matching the entire previous fiscal year within just six months.
Furthermore, COG CarSelect, the group’s car buying service, saw a 67% increase in originations through COG’s broker network.
Looking ahead, Young remained optimistic about the second half of the fiscal year, anticipating continued solid performance and potential benefits from a gradual easing of interest rates.
“The overall picture for our market segment is one of continued solid progress, but where participants are having to work harder and smarter to make it happen,” he said.
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