Hi Stocking, This is still work in progress so love to see if...

Hi Stocking,

This is still work in progress so love to see if anyone thinks items are too high/too low or I've missed anything.

I'm still looking for the mistake in my model, it's showing too much profit but I think it actually might be that this business is far more profitable than the market (and even I assumed). The big thing that is making it profitable is the decrease in funding costs and the core operating costs reducing (as a %), it means that most of the growth from 1HFY21 (which is a lot of growth!) has dropped to the bottom line.

To work out what what the business is currently doing (before any growth) I've just take the Q4 numbers and annualised them, so the FY22 numbers are going to be MUCH larger given the operational leverage in the business.

Q4 Exit Book Size $333m[1]

Q4 Revenue on the exit book of $333m is $22m

Less Funding cost : 5%pa of $333m of -$4.16m

Less Static loss Impairments 6% of -$4.99m

Less Fixed Costs of $25m pa is -$6.25

Annual Run Rate EBITDA is $6.75m * 4 = $27m

Less Corporate Interest -$2m (wild assumption, haven't done the work yet)

Less Tax ($25m *.3) = -$7.5m

Cash NPAT $17.5m run rate into FY22 [2] so around cash NPAT of $1.46m per MONTH.

[1] Mid Point of Q4 loan book of $283m delivered $19m revenue so Q4 Exit of $333m should deliver $22m revenue

[2] The business has tax credits so the reported cash NPAT would be more like $25m or over $2m cNPAT per month.

You could even start to see potential for a dividend from the business in FY22.