Vendor Finance can 'Make the Difference' and Make a Sale

FlexiGroup is a leading provider of vendor and retail point-of-sale finance and telecommunication services.

From its vendor finance beginnings, FXL now has essentially four business streams: lease, interest free, mobile broadband, cheque guarantee and travel loans.

These offer consumers a broad set of products and services that can be adapted to the specific needs of FXL's vendor partners from small ticket, highly transactional needs through to larger commercial transactions.

FXL supports vendors and their customers in financing the supply/purchase of products and services across a range of commercial and consumer areas including IT and electrical equipment, telecommunications, home improvement, solar systems, medical, furnishings and travel.

FXL claims a basic ethos underpins its success - to make life "Too Easy" for its customers. This approach has helped cement long standing relationships with a number of successful vendors and retailers across Australia, New Zealand and Ireland. FXL now operates through a distribution network of some 11,000 active retailers.

Innovation is a disciplined strategy underpinning FXL's growth and diversification from Retail to Consumer, Business to Consumer and Business to Business. It also permeates its approach to funding, progressively through off-balance sheet special purpose vehicles, and focus in expanding and leveraging its core competencies.

We expect plenty more from FXL and welcome its acquisition of Paymate which takes it seriously into the online payments field, where it can also leverage its long credit assessment and collection history.

The 1H12 result released on 9 February 2012 showed continuing strong performance on most metrics and underpinned its guidance for a 12-15% increase in cash NPAT for the full year FY12.

We see the acquisition of Paymate and other innovative moves as likely to provide significant growth for FXL in the years ahead.

Recent News Highlights

As at 31/12/2012 : see details at www.flexigroup.com.au   (new window? Shift+Click)

26/11/2012     2012 AGM & Addresses

01/11/2012     Annual Report 2012

23/10/2012     FXL Investor Tour October 2012

23/10/2012     New FlexiGroup CEO Appointed

20/07/2012     To join the S&P/ASX 200 Index on 30 July on removal of Spotless Group

05/06/2012     FlexiGroup Lombard Finance signs IKEA Interest Free

29/05/2012     Acquires Lombard Finance

28/03/2012     Partners with Low Carbon Australia on Green Energy

09/02/2012     1H12 Result: on track, gains on most measures; innovation continues to achieve

16/12/2011     Directors sell some shares: holdings move from 34.8% to 32.2%

05/12/2011     Purchases Paymate to capitalise on high growth; Presentation

30/11/2011     Chairman and CEO Addresses to the AGM

Half-yearly Performance & Estimates - FXL

Year-end June	FY11A	1H12A	FY12A	1H13A	FY13A	FY14E	FY15E
Sales, $m	125.5	119.2	142.3	136.2	182.7	323.0	368.0
EBITDA, $m	123.2	72.2	146.0	81.5	174.3	130.5	150.1
EBIT, $m	117.0	68.7	138.3	76.8	164.9	120.9	141.5
Report NPAT, $m	51.8	27.6	59.0	30.3	72.1
Adj. NPAT, $m					72.1	85.0	96.1
Reported EPS, ¢	19.00	10.00	21.00	11.00	25.00
Adjusted EPS, ¢					25.00	28.10	31.90
EPS %FY/Growth		48%	11%	44%	19%	12%	14%
Dividend, ¢	10.5	6.0	12.5	7.0	14.5	16.00	18.40
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	56%	0	1.03	60%	95%	40.4%	40.8%
NPAT Margin	24%	0	41%	22%	39%	26.3%	26.1%
ROE, %	22%	0	22%	10	20%
EBIT/Interest	2.5	0.0	2.5	2.28	2.59
Net Debt / Equity	2.29	0	2.62	2.75	2.38
CashFlow/Sh, ¢	33.0	14.6	40.4	12.4	33.7	31.4	34.4
Y/E Shares, m	264.4	277.3	280.2	287.0	301.2

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns, except 1H11A and 1H12A which show the first half % of full year EPS. In a handful of cases, unadjusted share splits may give strange changes in ratios.

Half-year Performance & Estimates - FXL

Year-end June	1H11A	FY11A	1H12A	FY12A	1H13A	FY13E	FY14E
Sales, $m	109.8	125.5	119.2	142.3	136.2	287.0	329.0
EBITDA, $m	61.9	123.2	72.2	146.0	81.5	107.0	126.6
EBIT, $m	59.1	117.0	68.7	138.3	76.8	98.8	117.5
Report NPAT, $m	24.5	51.8	27.6	59.0	30.3
Adj. NPAT, $m					27.5	70.8	82.9
Reported EPS, ¢	9.00	19.00	10.00	21.00	11.00
Adjusted EPS, ¢					10.00	24.75	28.30
EPS %FY/Growth	47%		48%	11%	0%	18%	14%
Dividend, ¢	5.0	10.5	6.0	12.5	7.0	14.50	16.50
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	54%	56%	0	1.03	60%	37.3%	38.5%
NPAT Margin	29%	24%	0	41%	22%	24.7%	25.2%
ROE, %	29%	22%	0	22%	10%
EBIT/Interest	2.2	2.5	0.0	2.5	2.28
Net Debt / Equity	2.28	2.29	0	2.62	2.75
CashFlow/Sh, ¢	19.6	33.0	14.6	40.4	12.4	27.9	36.0
Y/E Shares, m	264.0	264.4	277.3	280.2	287.0

Notes

EPS Growth compared with the pcp is shown in most columns, except 1H10A and 1H11A which show the first half % of full year EPS.

Half-yearly Performance & Estimates - FXL

Year-end June	FY10A	1H11A	FY11A	1H12A	FY12A	FY13E	FY14E
Sales, $m	120.4	109.8	125.5	119.2	142.3	274.0	307.0
EBITDA, $m	108.9	61.9	123.2	72.2	146.0	110.4	127.4
EBIT, $m	103.5	59.1	117.0	68.7	138.3	101.7	117.8
Report NPAT, $m	59.0	24.5	51.8	27.6	59.0
Adj. NPAT, $m					59.0	69.9	77.4
Reported EPS, ¢	24.00	9.00	19.00	10.00	21.00
Adjusted EPS, ¢					21.00	24.55	27.10
EPS %FY/Growth		47%	-21%	48%	11%	17%	10%
Dividend, ¢	7.5	5.0	10.5	6.0	12.5	13.60	15.00
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	54%	54%	56%	60.6%	1%	40.3%	41.5%
NPAT Margin	29%	29%	24%	23.2%	41%	25.5%	25.2%
ROE, %	29%	29%	22%		22%
EBIT/Interest	2.2	2.2	2.5	0.00	2.48
Net Debt / Equity	2.28	2.28	2.29	0	2.62
CashFlow/Sh, ¢	22.4	19.6	33.0	14.6	40.4	27.8	29.7
Y/E Shares, m	259.9	264.0	264.4	277.3	280.2

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns, except 1H11A and 1H12A which show the first half % of full year EPS. In a handful of cases, unadjusted share splits may give strange changes in ratios.

Company Overview

FlexiGroup is a diversified financial services group providing interest free, leasing, vendor programs, mobile broadband, lay-by and other payment solutions to consumers and businesses. Through its network of 11,000 merchant, vendor and retail partners the Group has extensive access to three key markets, Business to Consumer, Business to Business and Retail to Consumers (and small business customers).

FXL has shown solid profitable growth as it expanded and diversified with a strategy of product innovation, using both organic growth and acquisition. This has been extended to the large, high growth online market with the acquisition of online payment processing business Paymate.

FlexiGroup operates in Australia, New Zealand and Ireland across a diverse field of products and services including home improvement, solar energy, fitness, IT, electrical appliance, navigation systems, trade equipment and point of sale systems.

Services are offered through four business units: Certegy (no interest ever & lay-by), Flexirent (lease), Flexi Commercial (vendor leasing programs) and Blink mobile broadband.

John DeLano joined FXL in September 2003 as Managing Director, having been MD of Avis Australia, and in a senior role at the listed Travel Services International in the USA.

The Board is chaired by Margaret Jackson, former Chair of Qantas and previously a director of ANZ, BHP and Billabong. Other Directors are John Skippen, former Finance Director of Harvey Norman, Rajeev Dhawan, a partner of Equity Partners, and Andrew Abercrombie, a founding director and major shareholder in FXL.

Russell Research in the media

Stock Picks for Sunday Herald Sun – 24 March 2013

BUY FlexiGroup Limited, FXL, $3.98

Its strong and diversified network of purchase financing services is growing rapidly by innovation and acquisition. Expect continuing earnings and yield growth.

Stock Picks for The Bull.com.au -  11 March 2013

HOLD FlexiGroup (FXL)

This leading vendor finance, lease, interest free, point-of-sale and card credit provider almost doubled its share price last year. It has strong relationships with vendors, a proven depth of off-balance sheet funding and a ruthless focus on efficiencies, product and online innovations and acquisitions. Sound financials and a 3.5 per cent franked yield on a price/earnings ratio of about 16 times support growth plans well into double digits. Accumulate, as the game has a long way to run.

Stock Picks for Sunday Herald Sun - 3 June 2012

BUY: FlexiGroup Limited, FXL, $2.28

Careful acquisitions are fast building this diverse vendor financier.

Stock Picks for The Bull.com.au -  12 March 2012

Buy: FlexiGroup Limited, FXL

A leading provider of vendor and retail point-of-sale finance and telecommunication services. After making it easy for customers to buy, FlexiGroup has built strong relationships with vendors, expanding from retail into services and now business-to-business. It has a strong focus on systems, efficient financing and innovation. The Paymate acquisition moves it into online payments.

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