Cash Converters International Limited (ASX: CCV) (LSE: CCVU) (Cash Converters) advises that EZCORP has elected to terminate the Transaction Implementation Agreement announced on 22nd March, 2011. Accordingly, the proposed Scheme pursuant to which EZCORP would make an offer to shareholders to acquire further shares in Cash Converters, and the associated proposal for the parties to enter into certain Joint Ventures, have been cancelled. EZCORP has taken this decision in light of the announcement by the Australian Federal Government on 24th August, 2011 that it intends to amend the National Consumer Credit Protection Act and seek to introduce strict caps on fees and charges for micro-lenders. Although the amendments have not yet been passed, as currently proposed those limitations could have a material impact on Cash Converters’ consumer loan business in Australia. Accordingly, EZCORP is not willing to proceed with the transaction.
EZCORP has indicated that, as the major shareholder in Cash Converters, it remains committed to its investment and to the strategic importance of the global brand that Cash Converters is building. Paul Rothamel, EZCORP’s President and Chief Executive Officer, stated: “We still have a significant investment in Cash Converters — we remain a 33% shareholder and we own the master franchise rights for the Cash Converters business in Canada. Consequently, we are very interested in, and committed to, Cash Converters’ long-term success and look forward to finding other ways to proactively work with the Cash Converters team to achieve that success and maximize the long-term value for all Cash Converters shareholders.”
Outlook and opportunities
The Board of Cash Converters remains confident of achieving market expectations for the year ending 30 June, 2012. The proposed reforms will have no impact on the business and earnings of the company during this financial year as they are intended to be effective from 1 July, 2012 at the earliest.
Cash Converters has a number of strategies available to mitigate the negative impact that may be caused by the reforms in Australia. To preserve the profitability of the Australian store network, Cash Converters can focus on other products and services which may provide an alternative solution for some of the financial needs of customers. Cash Converters will also consider directing additional resources into the United Kingdom where it has a 200 store chain (including 47 corporate owned stores) where its financial services products are experiencing exceptional growth and there is currently no cap on fees and charges.
Cash Converters continues to lobby the Government concerning the merits of the proposed legislative changes which, amongst other things, may leave many thousands of consumers who do not have access to credit from banks without any available credit from regulated and reputable lenders such as Cash Converters. Already within three business days of the Government’s announcement, over 14,000 customers have joined Cash Converters’ in-store campaign to send their personal protest to the Minister for Financial Services. Our customers are concerned about the possibility of restricted access to short term credit that may result from the proposed amendments causing credit providers to withdraw funds from this segment of the market.
Cash Converters International Limited (“CCV”) were advised that the Federal Government released Exposure Drafts on 25 August 2011 in relation to the National Consumer Credit Protection Amendment (Enhancements) Bill 2011.
In summary, the Exposure Drafts propose reforms to:
• cap fees and charges for consumer loans with different caps applying to “small amount credit contracts” (in summary, loans of $2,000 or less where the term is two years or less) and other loans;
• for small amount loans, the proposed cap comprises an establishment fee of 10%, a monthly fee of 2% and default fees limited to the initial loan amount; for other loans, there is a annual cost rate of 48%;
• the timing of the implementation of these reforms has yet to be decided and the exact nature of these reforms is yet to be determined; further adjustments may be made in light of industry submissions which are required to be lodged by 4th September, 2011.
Impact on CCV
CCV is studying the reforms and will participate in the industry consultation process. The impact of such caps on the business model of CCV will have to be determined once the terms have been finalised.
25 August 2011
The directors of Cash Converters International Limited (‘Cash Converters’) are pleased to report a record profit result of $27.6 million for the 2011 financial year, an increase of 27.5% over the previous year.
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- Cash Converters and EZCORP form strategic alliance to develop financial service products
- The alliance provides Cash Converters leverage to new markets
- The alliance includes EZCORP acquiring 30% of Cash Converters issued capital that it does not already own
- Offer price of A$0.91 per unit represents a premium of 16.6% to the Cash Converters
- 3 month VWAP and a premium of 9.6% to the last closing price of A$0.83 per unit
Cash Converters International Limited is pleased to report the following Half-year ended 31 December, 2010 results to the market:
- Revenues from ordinary activities up 48.3% to $87,919,206;
- Profit from ordinary activities after income tax expense up 42.2% to $14,311,248;
- Profit from ordinary activities, after tax, attributable to members, up 42.2% to $14,303,963;
- Basic earnings per share of 3.8 cents, up 8.6% on last years figure of 3.5 cents;
- The directors of the Company recommend an interim, fully franked dividend, of 1.75 (one and three quarter) cents per share to be paid on 31 March 2011 to those shareholders on the register at close of business on 17 March 2011.
Please click here to see the full announcement and Financial Report for the half-year ended 31 December, 2010.
The Australian Financial Review, Friday January 7, 2011 reported "Shares in Australia's largest pawn shop chain have more than recovered all their losses from the financial crisis as they retested a near three-year high of 73.5 cents on Wednesday."
The year to 30 June 2010 has been the most successful in the Company’s history, with a record net profit after tax of $21.6 million, up 34.2% on the previous year. Click here to read the full details in the Managing Director's address at the 2010 AGM held on Tuesday November 30th.
Cash Converters International (ASX:CCV) update
15 November 2010, Cash Converters International (ASX:CCV) MD, Peter Cumins provides an explanation of the size of the operation and its move into cash advances and personal loans.
Click on the link below to see the full interview with Clive Tompkins.
Cash Converters is pleased to announce the opening of its 600th store in the Kent Town of Sidcup in the UK.
Congratulations to franchisees Paul Saunders and Paul Brisenden on being part of such a significant
milestone for the Company. The store opened successfully despite the heavy snow and icy
conditions being experienced in the UK. This opening takes total store numbers in the UK to 173 of
which 33 are corporate owned stores.
Cash Converters UK CEO, David Patrick, said “Following the opening of this new store in the UK our
global network now comprises of 600 stores across 18 countries with a total of 72 corporate owned
stores. There is still a significant opportunity for us to continue growing the business through new
store openings and rolling out our financial services products”.