Australia's largest independently-operated mortgage broker, Mortgage Choice Limited (MOC) today announced another solid financial result for the year ended 30 June 2012.
The outcome shows the Group's ongoing commitment to building its core business and a measured approach to its diversified businesses.
Financial highlights for the 12 months to 30 June 2012
- Net profit after tax (NPAT) on a cash basis was $15 million, a fall of 5.7% on FY11. However, Mortgage Choice's core business NPAT on a cash basis was $16.8 million, up 0.6%.
- Total loan book, ie. loans written by brokers in its franchise network and its aggregation arm, LoanKit, reached $45.1 billion. This was up 6.4% on $42.4 billion at 30 June 2012.
- $11.2 billion worth of housing loan approvals were written by the Group during the financial year, up from $9.9 billion in FY11, while Mortgage Choice's core business loan approvals amounted to $10.1 billion, up from $9.5 billion in FY11.
- Annual share of new home loans rose to 4.6%, which is the highest since FY06.
- A fully franked dividend of 7 cents per share was declared by the Board, which takes the total dividends for the year to 13 cents per share, representing an industry leading yield of 10.1% (based on the 30 June 2012 close price of $1.28).
- Total group revenue on a cash basis was $143.9 million, up 3.6% on FY11 and the business experienced a rise of 6.1% in its cash gross profit to $54.0 million.
- On an IFRS basis:
- NPAT was $18.5 million, including a positive after tax adjustment of $4.1 million to the valuation of the trail book. This is down 32.7% on the NPAT of $27.5 million in FY11, as a result of last year's positive after tax adjustment of $12.3 million.
- Earnings per share stood at 15.4 cents compared to 22.9 cents in FY11.
- Total group revenue was $157.0 million, down 7.3% on FY11.
Mortgage Choice CEO Michael Russell said, “The Mortgage Choice Group has delivered, as promised, a strong result in the second half of this financial year across virtually all operating metrics.”
“We are once again pleased to provide our shareholders with a dividend result equal to that received in FY11 – a final fully franked dividend of 7 cents per share, taking the annual dividend to 13 cents per share.”
Financial and operational performance
The company's revenue and productivity both showed an improvement year on year with the group loan book growing 6.4% to reach $45.1 billion, home loan approvals increasing by 13.1% to $11.2 billion, and group market share growing to 4.6% of all new home loans, its highest level in six years.
Mortgage Choice brokers achieved near-record highs in productivity, with the number of settlements per loan consultant increasing to 64 in FY12 from 59 in FY11. At the same time, it expanded its geographical spread by welcoming 20 greenfield franchisees to the network in FY12, compared to 19 in FY11.
Mr Russell said, “In a market of consumer conservatism and subdued credit growth, we are very pleased to report healthy revenue, lower operating expenses and improved broker productivity.”
“The solid result shows the company's DREAM strategy, an acronym for diversification, recruitment, existing broker support, acquisitions and managing costs, has delivered the transformation we were seeking. The team has successfully moved the business in the right direction.”
“The decision to reinvigorate our recruitment strategy and to place greater emphasis on broker reward and recognition has helped us grow Mortgage Choice's core business. Mortgage Choice franchise numbers have grown from 368 to 380.”
“To support our expanding network, Mortgage Choice introduced a range of training initiatives designed to assist our network to capitalise on growth opportunities. The training focuses on Self Managed Super Fund lending, investment lending and cross-selling our diversified product offerings.”
The Group continued to invest in our acquired businesses, comparison website HelpMeChoose.com.au and aggregator LoanKit, with improved results achieved.
“HelpMeChoose.com.au restored faith in the blue ocean opportunities it can deliver to the Group by posting a net profit after tax of $70,000 in the final quarter of the financial year,” said Mr Russell.
“In the twelve months to 30 June 2012, LoanKit broker numbers increased by 31% to 256 and settlements increased by 188%, with monthly settlements now in excess of $110 million.”
State of the housing finance market
According to the Australian Bureau of Statistics data, new housing finance commitments during the financial year were up 2.9% on FY11 ($244.8 billion compared to $237.9 billion).
The number of first homebuyers as a percentage of owner-occupied housing finance commitments increased to 18.1% in FY12, from 16.7% in FY11. This rise in activity had a positive effect on finance demand from other homebuyers, as many sold their properties to first timers.
Refinancers were the most active borrower group in FY12. The bout of cash rate cuts in mid FY12 and subsequent interest rate moves by many lenders encouraged a large portion of borrowers to shop around, as did increased media coverage of the benefits of switching loans, and heated competition between lenders who were offering rate discounts in a grab for market share.
“Consumers remained cautious in FY12 as they adjusted to the global unease surrounding the European debt crisis, increased lender funding costs and a new out-of-cycle interest rate environment, plus falling house prices and a penchant toward deleveraging and saving more,” Mr Russell said.
FY13 is time to ACT
Over the past three years Mortgage Choice has focused on broadening its customer offering, attracting new brokers, encouraging professional development through reward and recognition and adding value for existing brokers by introducing new revenue streams.
While the above mentioned initiatives remain important to Mortgage Choice, it is now looking for additional growth opportunities to bolster core business and transition the brand into a fully fledged financial services provider.
The Group has developed a number of clear and measurable goals and, most importantly, a strategic three year plan to deliver them. The plan is known as ACT, an acronym for:
- Acquire greater market share in our core mortgage business
- Cross-sell our mortgage customers into our financial planning business
- Transition the Group into a diversified financial services and wealth solutions business
“Heading into our third decade in business, we will be focusing on attracting more customers and driving growth. The aim is to introduce our mortgage customers to an irresistible consumer proposition offered by our new financial planning business,” said Mr Russell.
“We intend to revolutionise the way customers access quality financial planning advice in the same way we did with home loans 20 years ago.”
“During this transition the company's vision is: indelibly stamp in the minds of consumers Mortgage Choice's role as a home loan specialist that offers broader financial services to better meet the growing needs of its customers.”
“Today's financial results announcement shows that the company can provide its shareholders and other stakeholders with a steady performance on the back of integrated business opportunities and despite subdued market conditions. Mortgage Choice has an ongoing commitment to build better businesses and will seek to leverage further growth opportunities.”
“I'm pleased to report we expect to achieve a similar cash NPAT result in FY13 and maintain our current dividend.”
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
02 8907 0472 / 0407 416 124
02 9018 8608 / 0404 381 886