Slovar Limited — Annual Report 2013

Aug 28, 2013

MONEY3 CORPORATION LIMITED
(ABN: 63 117 296 143)

PRELIMINARY FINAL REPORT

30 June 2013

APPENDIX 4E

Head Office:
Level 1, Graduate Road
Bundoora VIC 3083

Registered Office:
Level 1, 48 High Street
Northcote VIC 3070

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MONEY3 Corporation Limited
year ended 30 June 2013

COMMENTARY ON PRELIMINARY RESULTS FOR THE YEAR ENDED JUNE 2013

CEO AND CHAIRMAN'S REPORT

On behalf of the board of directors of MONEY3 Corporation Ltd (Money3), it is our pleasure to present the Annual Report for end of financial year 2013(FY 2013).

Building on the strong first half Money3 has generated a full year profit after tax of $3,647,867, an increase of 44.46% on the previous year.

This result is a product of our continued development of our customer base, both by acquisition and organic growth, as well as the introduction of new products that fit our customer base.

2013 Financial Highlights:

• Net profit before tax up 44.4% to $5.2M (2012: $3.6M)
• EPS up 4.9% to 6.16 (2012: 5.87) cents per share
• Earned income up 47.0% to $22.8M (2012:$15.5)
• Branch written income up 40.6% to $16.6M (2012:$11.8M)
• Branch earned income up 26.0% to $14.5M (2012:$11.5M)
• Secured written income up 177.7% to $15.0M (2012:$5.4M)
• Secured earned income up 77.1% to $6.2M (2012:$3.5M)
• Raised $15.9M in capital during the year
• Loan book increased by 88.8% to $32.1M (2012:$17.0M)

Branch Network

The Branch network continued its growth with the expansion into the Sydney and Brisbane markets following the introduction of national regulations applying to consumer credit. Consumers in NSW particularly have benefited from the competition Money3 has provided in the small amount credit contracts and it appears the market place is growing.

Branch written income increased by 40.6% to $16.6M, and earned income increased by 26% to 14.5M.

Money3 plans to continue its expansion into NSW and Queensland, these branch expansions are expected to generate positive earnings in FY14. Money3 currently has 39 branches.

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MONEY3 Corporation Limited
year ended 30 June 2013

Web Centre

Providing referrals to Branches and the Auto Division and managing its own Loan portfolio the Web Centre continues to grow. Integrated into the Loans Management system this division provides an extra front door to the business.

The Auto Division

The Auto Division of Money3 has continued the exceptional growth over the past 12 months with written sales up over 184% to $16.5M and earned income up 102% to 8M.

The Auto Division is broken into 3 focused areas:

Secured Loan Centre

Secured lending commenced soon after Money3 listed in 2006 and has become two thirds of the Loan Book of Money3. As loans are paid back over a two to three year period the explosive growth in written income is locked away to be earned in the future. Loan size averages $12,500 and is secured most commonly by a car.

Micro Motors

This division providing loans on average of $4,500 commenced in August 2012 and has provided over 500 loans by end of FY2013. With low bad debt levels this department fits well with branch customers purchasing a cheaper second hand vehicle.

Car Rentals

The car rentals division allows customer to have access to a car even if they don't qualify for a car loan. Once a customer has proven themselves in this product Money3 can then offer the customer a loan to either purchase the rental car or a car of their choice.

Collections

The success of Money3's business is contingent on how effective money is repaid by customers. In line with the growth of lending the implementation of the Loans management system and associated reporting was integral to this process. Focus is now on initial collections within each portfolio within each division as a result. It is pleasing to report that collections are within desirable parameters. It is prudent for Money3 to maintain bad debt levels at between 10% and 15% of revenue. We are currently in that range and provisioning accordingly.

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MONEY3 Corporation Limited
year ended 30 June 2013

Debt Funding

The $20 million credit facility from Westpac Banking Corporation (Westpac) is still undergoing Westpac internal process. While disappointed at the time taken to settle this facility Money3 is confident of a successful outcome.

As announced previously completion of the facility is subject to Westpac’s conditions precedent and execution of all relevant legal documentation. Money3 will keep the market informed of any further developments.

As shareholders would expect other debt funding alternatives are also being considered.

Equity Funding

Due to expanding demand in the secured loan division, capital raisings and a share purchase plan raised $15.9 million for issuance of 27.7 million shares were conducted in during the financial year. Support for this raising was strong and is a good indicator of how Money3 is regarded in the investment community.

It is anticipated that further equity raisings will be used in conjunction with debt funding.

Relocation of Head Office

The relocation of Head Office to Bundoora in March 2013 has provided an excellent environment for the growing secured, web and collections divisions to operate. Being together with accounts and management ensures issues and opportunities are picked up quickly.

Regulations

All consumer credit is now regulated federally under the National Consumer Credit Protection Act. Money3 is pleased to operate under one set of laws across the nation allowing consistency in both managing compliance and expansion.

Money3 is confident that the new regulations have provided certainty and opportunity in a relatively new and growing credit sector.

Dividends

The Directors of the Company recommend that a final dividend of 2.25 cents per share is to be paid on the 28 October 2013 to those shareholders on the register at the close of business on the 11 October 2013.

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MONEY3 Corporation Limited
year ended 30 June 2013

Outlook

With almost two months trading in FY2014 revenues from recently acquired branches has exceeded expectation and will contribute to the bottom line this year while existing branches are well ahead of July and August 2013 budget.

The secured lending divisions have seen written revenue increase significantly in July to August 2013 and we expect that growth to continue.

Money3 remains focused on providing sustainable credit products to the millions of Australians unable to access traditional credit products. It is estimated that 4.5 million Australians have less than one weeks wages in their bank accounts, 2.65 million are financially excluded and of them 54% are unable to source $3,000 for an emergency. We understand these consumers and their needs and will remain focused on this niche.

We now have certainty from the regulators, access to funding and committed well trained staff; we have the company well positioned to capitalise on expanding the operations via acquisitions and organic growth.

The commitment of Directors, Management and Staff are evidenced by the Company's impressive results. We take this opportunity to thank them for their collective efforts and would also like to thank our valued shareholders for your support.

Yours sincerely

Geoff Sam OAM
Chairman
29 August 2013

Robert Bryant
Chief Executive Officer
29 August 2013

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MONEY3 Corporation Limited
year ended 30 June 2013

APPENDIX 4E

Preliminary Final Report to the Australian Stock Exchange

Name of Entity	Money3 Corporation Limited
ABN	63 117 296 143
Year Ended	30 June 2013
Previous Corresponding Reporting Period	Year ended 30 June 2012

Results for Announcement to the Market

		$	Percentage increase /(decrease) over previous corresponding period
Revenue from ordinary activities		22,787,126	47.06%
Profit for the period from continuing operations		3,647,867	44.42%
Total comprehensive income for the year		3,647,609	44.16%
Profit from ordinary activities after tax attributable to members		3,647,867	44.42%
Total comprehensive income for the period attributable to members		3,647,609	44.16%
Dividends (distributions)	Amount per security		Franked amount per security
Final Dividend	2.25 cents		2.25 cents
Interim Dividend	1.75 cents		1.75 cents
Record date for determining entitlements to the dividends (if any)		11 October 2013
Brief explanation of any of the figures reported above necessary to enable the figures to be understood:For an explanation of revenue and profit from continuing operations, see commentary on results included in the accompanying preliminary final report.

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MONEY3 Corporation Limited
year ended 30 June 2013

Dividends

Date the dividend is payable	28 October 2013
Record date to determine entitlement to the dividend	11 October 2013
Amount per security	2.25 cents
Total dividend	$1,760,005
Amount per security of foreign sourced dividend or distribution	N/A
Details of any dividend reinvestment plans in operation	TBA
The last date for receipt of an election notice for participation in any dividend reinvestment plans	11 October 2013

NTA Backing

	Current Period	Previous corresponding period
Net tangible asset backing per ordinary security (cents per share)	45.8	37.0

Control Gained Over Entities Having Material Effect

Name of entity (or group of entities)	N/A
Date control gained	N/A
Profit / (loss) from ordinary activities after tax of the controlled entity since the date in the current period on which control was acquired.	N/A
Profit / (loss) from ordinary activities after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period.	N/A

Loss of Control Gained Over Entities Having Material Effect

Name of entity (or group of entities)	N/A

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MONEY3 Corporation Limited
year ended 30 June 2013

Details of Associates and Joint Venture Entities

Name of Entity (or group of entities)	N/A

Foreign Entities Accounting Framework

| For foreign entities provide details of which accounting standards have been adopted (e.g. International Accounting Standards)
N/A |
| --- |

Audit/Review Status

| This report is based on accounts to which one of the following applies:
(Tick one) | | | |
| --- | --- | --- | --- |
| The accounts have been audited | ☑ | The accounts are in the process of being audited | |
| If the accounts are subject to audit dispute or qualification, a description of the dispute or qualification: N/A | | | |

Attachments Forming Part of Appendix 4E

Attachment #	Details
1	Statement of Comprehensive Income
2	Statement of Financial Position
3	Statement of Changes in Equity
4	Statement of Cash Flow
5	Notes to the Preliminary Final Report
Signed By (Director/Company Secretary)
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Print Name	Craig Harris
Date	29 August 2013

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MONEY3 Corporation Limited

year ended 30 June 2013

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013

	Notes	Consolidated 2013 $	Consolidated 2012 $
Revenue from continuing operations	2	22,787,126	15,494,893
Other Income	3	86,987	100,350
Expenses from operating activities:
Employment	3	8,389,479	6,055,981
Advertising		575,464	637,620
Occupancy costs		2,199,421	1,409,533
Bad debts		2,451,975	1,525,728
Depreciation & amortisation	3	1,307,550	543,535
Communication		458,211	338,130
Legal and professional		829,357	520,642
Other		1,057,287	784,576
Finance Costs	3	358,058	166,736
Loss on sale of property, plant and equipment		18,837	-
Profit before income tax from continuing operations		5,228,474	3,612,762
Income tax expense		(1,580,607)	(1,086,922)
Profit after income tax for the year from continuing operations		3,647,867	2,525,840
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss		(258)	4,383
Exchange gain/(loss) on translation of foreign operation
Other comprehensive income/(loss) for the year net of tax		(258)	4,383
Total comprehensive income for the year net of tax		3,647,609	2,530,223
Profit attributable to:
Owners of Money3 Corporation Limited		3,647,867	2,575,091
Non-controlling interest		-	(49,251)
		3,647,867	2,525,840
Total comprehensive income attributable to:
Owners of Money3 Corporation Limited		3,647,609	2,579,474
Non-controlling interest		-	(49,251)
		3,647,609	2,530,223
Earnings per share for the year attributable to the members of Money3 Corporation Limited
Basic earnings per share (cents)		6.16	5.87
Diluted earnings per share (cents)		5.87	5.76

The statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes.

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MONEY3 Corporation Limited
year ended 30 June 2013

STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013

	Consolidated 2013 $	Consolidated 2012 $
ASSETS
Current assets
Cash and cash equivalents	4,564,100	1,256,406
Loans and other receivables	17,650,848	9,880,749
Other	816,715	430,011
Total current assets	23,031,663	11,567,166
Non current assets
Loans and other receivables	14,510,052	7,127,634
Other	235,088	186,203
Property, plant & equipment	3,281,566	2,714,595
Intangibles	15,363,487	15,363,487
Deferred tax assets	823,799	496,198
Total non current assets	34,213,992	25,888,117
Total assets	57,245,655	37,455,283
LIABILITIES
Current liabilities
Trade and other payables	1,207,901	1,105,409
Borrowings	3,052,181	1,590,469
Current tax payables	1,104,140	791,027
Provisions	611,762	379,409
Total current liabilities	5,975,984	3,866,314
Non current liabilities
Trade and other payables	-	82,500
Provisions	53,915	69,738
Total non current liabilities	53,915	152,238
Total liabilities	6,029,899	4,018,552
Net assets	51,215,756	33,436,731
EQUITY
Issued capital	45,097,588	28,902,114
Reserves	55,769	26,463
Non-controlling interest	-	(66,190)
Retained earnings	6,062,399	4,574,344
Total equity	51,215,756	33,436,731

The condensed balance sheet should be read in conjunction with the attached notes.

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MONEY3 Corporation Limited
year ended 30 June 2013

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013

CONSOLIDATED
	Issued Capital
$	Retained Earnings
$	Reserves
$	Non-controlling interest
$	Total
$
At 1 July 2011	26,701,073	3,816,202	24,140	(16,939)	30,524,476
Profit after income tax expense for the year	-	2,575,091	-	(49,251)	2,525,840
Other comprehensive income for the year, net of tax	-	-	4,383	-	4,383
Total comprehensive income for the year	-	2,575,091	4,383	(49,251)	2,530,223
Transactions with owners in their capacity as owners:
Issue of shares	2,013,002	-	-	-	2,013,002
Transaction costs arising for share issue	(117,679)	-	-	-	(117,679)
Deferred tax asset due to transaction costs arising for share issue	35,304	-	-	-	35,304
Employee share options -value of employees service	-	-	8,920	-	8,920
Transfer of lapsed options	-	10,980	(10,980)	-	-
Dividend paid	270,414*	(1,827,929)	-	-	(1,557,515)
Closing balance as at 30 June 2012	28,902,114	4,574,344	26,463	(66,190)	33,436,731
At 1 July 2012	28,902,114	4,574,344	26,463	(66,190)	33,436,731
Profit after income tax expense for the year	-	3,647,867	-	-	3,647,867
Other comprehensive income for the year, net of tax	-	-	(258)	-	(258)
Total comprehensive income for the year	-	3,647,867	(258)	-	3,647,609
Transactions with owners in their capacity as owners:
Issue of shares	15,893,202	-	-	-	15,893,202
Transaction costs arising for share issue	(662,498)	-	-	-	(662,498)
Deferred tax asset due to transaction costs arising for share issue	198,749	-	-	-	198,749
Sale of controlled entity	-	-	-	66,190	66,190
Employee share options -value of employees service	-	-	39,344	-	39,344
Transfer of lapsed options	-	9,780	(9,780)	-	-
Dividend paid	766,021*	(2,169,592)	-	-	(1,403,571)
Closing balance as at 30 June 2013	45,097,588	6,062,399	55,769	-	51,215,756

*Shares issued to shareholders that elect to participate in the Dividend Reinvestment Plan.

The statement of changes in equity is to be read in conjunction with the attached notes.

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MONEY3 Corporation Limited
year ended 30 June 2013

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2013

| | Consolidated
2013
$ | Consolidated
2012
$ |
| --- | --- | --- |
| Cash flows from operating activities | | |
| Net fees and charges from customers | 19,629,330 | 13,819,298 |
| Payments to suppliers and employees | (14,753,148) | (10,242,851) |
| Interest received | 41,683 | 91,643 |
| Interest paid | (358,058) | (166,736) |
| Income tax paid | (1,396,346) | (1,155,741) |
| Net cash provided by operating activities | 3,163,461 | 2,345,613 |
| Cash flows from investing activities | | |
| Payment for property, plant and equipment | (2,058,338) | (1,580,691) |
| Proceeds from property, plant and equipment | 136,582 | - |
| Net funds advanced to customers for loans | (12,767,855) | (4,750,176) |
| Proceeds from purchase of business | - | 98,662 |
| Payments for purchase of business | (235,000) | (12,000) |
| Net cash used in investing activities | (14,924,611) | (6,244,205) |
| Cash flows from financing activities | | |
| Proceeds from share issue | 15,010,703 | 1,895,325 |
| Repayment of hire purchase borrowings | (45,914) | (6,435) |
| Proceeds from borrowings | 3,130,445 | 32,901 |
| Repayment of borrowings | (1,745,000) | - |
| Dividend paid | (1,403,571) | (1,557,508) |
| Net cash provided by financing activities | 14,946,663 | (364,283) |
| Net increase/(decrease) in cash held | 3,185,513 | (3,534,309) |
| Cash and cash equivalents at the beginning of the year | 1,256,406 | 4,790,715 |
| Cash and cash equivalents at end of the year | 4,441,919 | 1,256,406 |

The statement of cash flows is to be read in conjunction with the attached notes.

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MONEY3 Corporation Limited
year ended 30 June 2013

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

INTRODUCTION

The preliminary final report covers Money3 Corporation Limited and its controlled entities. This report is based on financial statements that are in the process of being audited.

NOTE 1. Basis of preparation of preliminary final report

This preliminary financial report does not include all of the notes of the type normally included in an annual financial report. This preliminary final report has been prepared in accordance with the measurement and recognition requirements of Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Accounting Interpretation and the Corporations Act 2001.

The accounting policies and methods of computation adopted in the preparation of the preliminary financial report are consistent with those adopted and disclosed in the company's annual financial report for the year ended 30 June 2012 and the half year ended 31 December 2012.

NOTE 2. Revenue

	Consolidated 2013 $	Consolidated 2012 $
Continuing operations:
Revenue from operating activities
Loan fees and charges	20,182,569	14,019,376
Cheque cashing fees	800,571	797,538
Rental services	1,525,896	404,393
Other	236,407	181,943
	22,745,443	15,403,250
Revenue from non-operating activities
Interest income from financial institutions	41,683	91,643
	22,787,126	15,494,893

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MONEY3 Corporation Limited
year ended 30 June 2013

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 3. Expenses included in net profit/(loss) from continuing operations

Profit before income tax has been determined after:

Other Income

Discount on acquisition - 100,350
Profit on sale of controlled entity 20 86,987 -

Employment

Salary and employee benefits expense 6,904,705 5,132,993
Share based payments 39,344 8,920
Defined contributed superannuation 595,561 478,708
Other employment costs 849,869 435,360
Total Employment costs 8,389,479 6,055,981

Depreciation and amortisation

Leasehold improvements 163,815 113,965
Motor vehicles 18,055 15,856
Furniture, equipment and fittings 288,982 225,647
Rental assets 836,698 188,067
Total depreciation and amortisation 1,307,550 543,535

Operating lease

Minimum rent payments 1,347,328 968,172

Finance costs (a)

Interest on bank overdrafts and loans 354,262 157,904
Interest on obligations under finance lease 3,796 8,832
Total finance costs 358,058 166,736

(a) The weighted average interest rate on funds borrowed generally is 11.7% p.a. (2012: 11.3% p.a.)

NOTE 4. Contributed equity

	Consolidated 2013		Consolidated 2012
	Number of ordinary shares	Value $	Number of ordinary shares	Value $
Balance at the beginning of the financial year	48,833,201	28,902,114	42,849,811	26,701,073
Issued during the year:
Issue of shares to public at $0.40 each	11,800,000	4,720,000	-	-
Issue of shares to public at $0.38 each	-	-	5,263,158	2,000,000
Issue of shares to public at $0.70 each	10,000,000	7,000,000	-	-
Issue of shares to shareholders under the Share Purchase Plan at $0.70 each	5,941,712	4,159,100	-	-
Share issue costs	-	(662,498)	-	(117,679)
Deferred tax credit	-	198,749	-	35,304
Issue of shares to employees at $0.405 each	-	-	2,469	1,000
Issue of shares to employees at $0.38 each	-	-	31,584	12,002
Issue of shares to employees at $0.68 each	20,888	14,102	-	-
Issue of shares on DRP	1,626,631	766,021	686,179	270,414
Balance at end of financial year 30 June	78,222,432	45,097,588	48,833,201	28,902,114

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MONEY3 Corporation Limited
year ended 30 June 2013

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 5. Loans and other receivables

	Consolidated 2013 $	Consolidated 2012 $
Loans and other receivables	33,149,636	17,842,969
Allowance for doubtful debts	(988,736)	(834,586)
	32,160,900	17,008,383
Current receivables	17,650,848	9,880,749
Non-current receivables	14,510,052	7,127,634
Total receivables	32,160,900	17,008,383

Loans and other receivables have been aged according to their original due date in the below ageing analysis, including where repayment terms for certain long outstanding trade receivables have been renegotiated. The carrying value of trade receivables after allowance for doubtful debts is considered a reasonable approximation of fair value.

NOTE 6. Segment information

A segment is a component of the consolidated entity that engages in business activities to provide products or services within a particular economic environment. Management has identified two distinct operating segments that are used to make decisions on the allocation of resources and assess their performance. The two segments are as follows:

Secured operations

This segment provides lending facilities based on the provision of an underlying asset as security.

Unsecured operations

This segment provides services and lending facilities without the provision of an underlying asset as security.

Segment profit earned by each segment without the allocation of central administration costs and directors' salaries, interest income and expense in relation to corporate facilities, bad debt collection and tax expense. This is the measure reported to the chief executive officer for the purpose of resource allocation and assessment of segment performance.

The unallocated assets include various corporate assets held at a corporate level that have not been allocated to the underlying segments.

The unallocated liabilities include various corporate liabilities held at a corporate level that have not been allocated to the underlying segments.

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MONEY3 Corporation Limited

year ended 30 June 2013

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013

NOTE 6. Segment information(continued)

Consolidated - 2013	Secured	Unsecured	Eliminations /Unallocated	Total
	$	$	$	$
Revenue
Revenue from continuing operations	6,207,998	16,537,445	-	22,745,443
Interest revenue			41,683	41,683
Other revenue			86,987	86,987
Total Revenue	6,207,998	16,537,445	128,670	22,874,113
EBITDA	1,715,458	2,618,833	2,518,108	6,852,399
Depreciation and amortisation				(1,307,550)
Finance costs				(358,058)
Interest revenue				41,683
Profit before income tax				5,228,474
Income Tax				(1,580,607)
Profit after income tax				3,647,867
Assets
Segment assets	33,068,643	20,955,667	(2,335,481)	51,688,829
Unallocated assets:
Cash and cash equivalents				3,393,843
Property, plant and equipment				990,890
Other receivables				37,503
Other assets				310,791
Deferred tax assets				823,799
Total assets				57,245,655
Liabilities
Segment liabilities	16,869,686	8,855,166	(25,448,992)	275,860
Unallocated assets:
Trade and other payables				932,041
Current tax payables				1,104,140
Provisions				665,677
Borrowings				3,052,181
Total liabilities				6,029,899

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MONEY3 Corporation Limited

year ended 30 June 2013

NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013

NOTE 6. Segment information(continued)

Consolidated - 2012	Secured	Unsecured	Eliminations /Unallocated	Total
	$	$	$	$
Revenue
Revenue from continuing operations	3,522,858	12,188,357	(307,965)	15,403,250
Interest revenue			91,643	91,643
Other revenue			100,350	100,350
Total Revenue	3,522,858	12,188,357	(115,972)	15,595,243
EBITDA	2,180,670	4,490,122	(2,439,402)	4,231,390
Depreciation and amortisation				(543,535)
Finance costs				(166,736)
Interest revenue				91,643
Profit before income tax				3,612,762
Income Tax				(1,086,922)
Profit after income tax				2,525,840
Assets
Segment assets	10,550,074	10,522,186	(930,725)	20,141,535
Unallocated assets:
Cash and cash equivalents				252,675
Property, plant and equipment				1,021,161
Goodwill				15,363,487
Other receivables				6,420
Other assets				173,807
Deferred tax assets				496,198
Total assets				37,455,283
Liabilities
Segment liabilities	8,369,335	3,222,260	(11,134,388)	457,208
Unallocated assets:
Trade and other payables				730,701
Current tax payables				791,027
Provisions				449,147
Borrowings				1,590,469
Total liabilities				4,018,552

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