Quote Originally Posted by Joshuatree View Post
Hey TJ, what figures are you using for gearing ratios being conservative?
You are probably looking at the 82% figure, as many often do, including like the market itself (extract from page 7, half year report 16)

"FlexiGroup maintains a conservative funding strategy; to retain multiple committed funding facilities for all scale businesses, combined with an active debt capital markets presence. The Group currently has revolving wholesale debt facilities in place with five Australian trading banks, plus numerous institutional investors in its Asset Backed Securities (ABS) program.

At balance sheet date the Group had $2,369.6m of wholesale debt facilities, with $492.3m undrawn and no indications that facilities will not be extended. The majority of the wholesale debt facilities ($1,978.1m) have no bullet repayment on maturity, with outstanding balances repaying in line with receivables and customer loans if availability periods were not to be extended. These facilities are secured against underlying pools of receivables and customer loans. The remaining wholesale debt facilities either have a soft bullet or have sufficient lead time for re-extension when approaching maturity.
The Group’s $187.5m of corporate debt facilities, increased to fund the acquisition of NZ Cards, were drawn to $177.0m at balance date. These facilities are secured by the assets of the Group, and with a maturity
date in 2019."

So really, Flexigroup itself only has $177mm of debt, likely to produce min 90m annual profit (apparently - will see this thursday!)... even with a 'terrible' market cap of less than 600m (more than 2x lower than a couple of years ago) gearing ratios for the group, by any metric, are really very conservative, as they have mentioned, and I believe.