CML Group anticipates substantial EBITDA increase

CML Group ASX CGR EBITDA increase small business lender
CML Group has upgraded its previously announced anticipated EBITDA by A$1.5 million for the 2018 financial year.

Small business lender CML Group (ASX: CGR) has announced an expected underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2018 financial year of more than A$17 million.

The figure is up A$3.8 million on the 2017 financial year, and reflects an upgrade of A$1.5 million on the company’s previously-announced underlying expected EBITDA for 2018.

The underlying EBITDA excludes a one-off A$1.6 million (before tax) impact of fees in the second half of 2018 incurred on early redemption of FIIG corporate bonds as part of A$2.7 million in costs when CML transitioned to an expanded institutional funding facility.

CML said the upgraded EBITDA reflects continued growth in the company’s core Cashflow Finance division, driven in part by an increase in online applications by business clients in the small-to-medium sector. Cashflow Finance provides clients with invoice, equipment and trade funding solutions to help them improve the consistency of their cash flow.

Other EBITDA contributors were CML’s A$39 million acquisition of Thorn Group’s Trade & Debtor Finance division in February, and the early success of CML’s Equipment Finance arm established in July 2017.

“The earnings upgrade for [the 2018 financial year] reflects the success of organic growth initiatives put in place over recent times, the successful acquisition and smooth integration of the [Thorn] business and the newly-formed Equipment Finance division exceeding our own expectations,” said CML chief executive officer Daniel Riley.

“Higher top line growth and a continued focus on the use of technology and cost containment has resulted in improved margin and substantial growth in underlying earnings.”

Helping clients manage cash flow

CML specialises in factoring or receivables finance, whereby businesses are provided with an advance payment of up to 80% of client invoices to help them overcome the cash pressure of delivering goods or services in advance of payment from customers, which can often exceed 30 days.

It is a flexible line of credit utilised in conjunction with sales volume; however, CML is able to consider additional advances to client where there is adequate security to cover the position.

At mid-morning, CML shares were up 6.78% to A$0.63.

Imelda Cotton has over 20 years experience as a journalist and communications professional. She has spent the bulk of her career in the resources sector, having also worked directly with oil and gas majors and as a journalist covering a vast array of ASX listed companies within the resources, energy, science and health sectors.