Channel and product growth working for Flexi

Ahead or on track is the message from FlexiGroup management for their debut end year profit review.

There's 20 per cent growth in lease settlements to $310 million (on target); a net profit near $2 million better than forecast at $29.3 million, and "approximately 70 per cent of interest income is locked in for FY08."

FlexiGroup said in an investor presentation they drew funding from "three Australian financial institutions and two major global financial institutions" and added that it does not rely on global capital markets to source funds, and nor does it have any securitisation programs in place.

The company said "net interest margin on the existing portfolio is predominantly locked in" and that any changes in their funding margin "will mainly impact new business."

Committed undrawn facilities are said to be sufficient to cover the projected net increase in borrowings through to January 2009.

The company has funding of $796 million. Sixty-six per cent of this funds the current portfolio of $524 million, leaving $272 million for growth.

Seventy per cent of volume comes from new customers. Three quarters of customers buy credit insurance.

Arrears are a bit better in the portfolio at 4.6 per cent in 2007 from 4.8 per cent in 2006. Write-offs increased to 3.4 per cent from 3.0 per cent.

The spiel is product and channel growth. From one product, Flexirent, in one channel, computers, in 2003, the proposition now is eight products in five channels.

FlexiGroup say they want future growth from consumer credit insurance, credit limit up-sell and personal loans.

Their primary partner is Harvey Norman. FlexiGroup derived 50 per cent of its income from sales in Harvey Norman stores according to last year's prospectus.

The company's agreement with Harvey Norman runs until 2015, though FlexiGroup cannot offer the products it distributes through Harvey Norman stores to a rival of Harvey Norman.