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Mortgage Choice delivers 10.2% growth in cash profit

Mortgage Choice Limited (MOC) has today announced its annual results for the financial year ended 30 June 2017.


August 24, 2017

Mortgage Choice Limited (MOC) has today announced its annual results for the financial year ended 30 June 2017.

For the second consecutive year, the Group has grown its cash profit by more than 10% and delivered strong results across all of its key business units.

Financial highlights for the 12 months to 30 June 2017

• NPAT on a cash basis was $22.6 million - up 10.2% on FY16;
• NPAT on a statutory basis was $22.2 million - up 13.5% on FY16;
• Mortgage Choice's core broking business recorded its best ever settlement result, with settlements totalling $12.3 billion;
• Mortgage Choice's loan book reached a record $53.4 billion - up 3.2% on FY16;
• Financial Planning gross revenue surpassed $10 million in FY17 while Gross Profit grew 26% from FY16;
• Funds Under Advice and Premiums In Force both rose significantly, up 60.3% and 26.0% respectively to $532.4 million and $24.2 million;
• A fully franked final dividend of 9 cents per share was declared by the Board. Total dividend for the year was 17.5 cents per share - an increase of 1 cent on FY16.

Other highlights for the 12 months to 30 June 2017

• 46 new Greenfield Franchises added to the network, the highest number recruited in one year;
• 11.5% of total cash gross revenue derived through diversified services.

“Throughout FY17, the Group performed very well, with settlements volumes, total loan book and financial planning revenue all growing to record levels,” Mortgage Choice chief executive officer John Flavell said.

“Cash Net Profit After Tax grew by more than 10% for the second consecutive year, highlighting the ongoing strength of the business.

“FY17 was a year that saw increased complexity across all areas of retail financial services. The volume and velocity of policy and pricing changes for lending products, as well as wealth and insurance solutions, was unprecedented. This complexity drove more consumers to Mortgage Choice than ever before.

“Mortgage Choice delivered increased value to our customers by addressing more of their financial needs and creating simplicity in a complex environment.

“Our core broking business performed very well, with home loan settlements reaching $12.3 billion for the first time and our loan book grew 3.2%, reaching a new high of $53.4 billion at 30 June 2017.”

Mr Flavell said it wasn't just the core broking business that performed well throughout FY17, with the Company's diversified services also delivering impressive results.

“Throughout FY17, the gross revenue generated from our diversified services continued to grow,” he said.

“For the year, 11.5% of the Company's cash gross revenue came from our diversified offering – up from 10.5% in FY16.

“Our Financial Planning division delivered its first full year profit, with Funds Under Advice and Premiums In Force rising 60.3% and 26.0% respectively to $532.4 million and $24.2 million.

“As this business matures and our advisers spend more time building relationships with our network of mortgage brokers, referrals naturally grow. Throughout FY17, the number of referrals from the core broking business increased by 13%.

“At Mortgage Choice, we want to be Australia's leading provider of financial choices and advice, delivering exceptional customer value. To achieve this, we understand that we have to be able to cater to our customers' growing financial needs and deliver expert advice across a full suite of services.

“To this end, at the beginning of FY17, the Company launched a new branded asset finance offering. The new service offering was embraced by the network, with more than 1,600 vehicle, plant and equipment loans financed in the first year alone.

“As we move into FY18, our asset finance offering will continue to gather momentum and deliver growth for the Company.

“Beyond the strong financial performance, FY17 was also a record year for network growth. 46 new Greenfield Franchises were recruited over the year and the number of Credit Representatives across the country increased to 654, well up from FY16.

“As these new recruits become more skilled and increase their productivity over the coming months and years, we will see continued growth in the business.”

“In addition, our shareholders will be very pleased with the dividend result. The ongoing strength of the Mortgage Choice business means we have been able to deliver a fully franked dividend of 17.5 cents per share for the year, a 1 cent increase on FY16,” he said.

Future growth

Heading into FY18, Mr Flavell said he is confident the business can continue to deliver exceptional results in an increasingly complicated market.

“Mortgage Choice's continual investment in the business will help us to drive solid results today, tomorrow and over the longer term,” he said.

“We will focus on increasing efficiency for the current network, the continued growth of our network via targeted recruitment and a commitment to assisting new recruits run successful, profitable businesses.

“In addition, we will continue to accelerate our local area marketing activities to deepen the relationships we have with our customers. Throughout FY17, we implemented a series of grass-roots brand awareness initiatives that proved to be very successful. You may well have noticed a new Mortgage Choice retail store in your local area, seen more Mortgage Choice branded cars on the road, or heard more Mortgage Choice advertising on the radio. Heading into FY18, the momentum created will be carried forward.”

Mr Flavell said the Company had identified its four key business priorities for the year ahead. These priorities include:

• Increase and diversify franchisee revenue and asset growth;
• Distribution growth;
• Deeper customer relationships; and
• NPAT growth.

“I am confident the business can deliver to all of the aforementioned priorities whilst maintaining our focus on our 2020 vision,” he said.

“We are in a very exciting stage of the business. We are successfully transitioning Mortgage Choice into a diversified financial services company, which is providing additional value to our customers, franchisees, and our shareholders,” he said.

“Throughout FY17, we achieved a lot as a business. These achievements were realised against a backdrop of increasing complexity and various market challenges. Whilst we are expecting the market to remain complex, we are well positioned to provide expert advice to more customers for all of their financial services needs.”

Mortgage Choice's Annual Financial Results can be accessed by clicking here


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