CML has posted solid results with EBITDA of $5.9m, up 181% on the prior corresponding period
CML has reaffirmed FY17 EBITDA guidance of $10.6m, which is slightly ahead of our base forecast of $10.3m. Credit metrics are likely to improve as it benefits from a full year’s contribution and synergies from acquisitions, as well as reduced negative carry from drawn but unutilised debt.
Results summary
| 1H17 | 1H16 | Change |
| Revenue | 18.5 | 12.1 | 53% |
| EBITDA | 5.9 | 2.1 | 181% |
| NPAT | 1.5 | 0.5 | 200% |
| Cash from operations | -7.9 | -3.1 | 155% |
| Free cashflow | -6.4 | -3.1 | 105% |
| | | |
| Cash | 19.6 | 14.7 | 33% |
| Total debt | 87.9 | 77.0 | 14% |
| Net debt | 68.4 | 62.3 | 10% |
| EBITDA margin | 31.9% | 17.4% | 14.5pp |
| EBITDA interest cover | 1.5x | 1.5x | 0.0x |
Source: FIIG Securities, Company reports
Key points:
- Revenue for 1H17 has increase by 53% to $18.5m, driven by growth in the value of invoices purchased. This is reflected in full period contribution from the Cashflow Advantage and 180 Group acquisitions
- EBITDA margin for 1H17 improved to 31.9% from 17.4% in 1H16, as additional services were offered and new fee structures were introduced to acquired clients
- EBITDA interest cover remained stable at 1.5x. Credit metrics are likely to improve as the company benefits from a full year’s contribution and synergies from acquisitions. The negative carry from fully drawn but unutilised debt will also abate
- CML reaffirmed FY17 EBITDA guidance of $10.6m, up 100% from FY16
Funding
CML reaffirmed it will refinance its bonds in order to lower funding costs. Alternative funding may be more attractive, given the bond terms restrict dividend payments greater than 50% of NPAT.
CML can call its issues at first opportunity in May 2018 at 104%. Alternatively, it may seek to refinance earlier by offering a premium.
Loan book
Invoices purchased during the period rose 209% to $501m reflecting full period contributions from the CashFlow Advantage and 180 Group acquisitions which were completed in March 2016 and May 2016 respectively. The loan book was steady during the half at approximately $70m, with new sales compensating for acquisition related client churn.
