CFO resigns from loss-making Cash Converters
Martyn Jenkins on Monday resigned from his role as Cash Converters’ chief financial officer less than one week after the retailer and payday lender reported a $1.7 million loss for FY19.
Jenkins joined the company in 2013 and held roles across the UK and Australia. His resignation is effective today, September 2.
Katrina Grose, a chartered accountant and chartered secretary and Cash Converters’ group financial controller, will assume the role of CFO in an interim capacity while the company undertakes an internal and external recruitment process.
Cash Converters on Thursday last week reported a $1.7 million net loss after tax for the year ended June 30, 2019, compared to a $22.5 million profit the year before.
The company, which has more than 150 locations in Australia and more than 750 worldwide, said it delivered a solid underlying performance across all divisions, but was impacted by a series of adjustments, including a $16.4 million payout to Queensland customers who filed a class action over excessive brokerage fees, and $3.2 million in associated legal fees, which dragged its results into the red.
The company was also forced to write off $5.1 million of bad loans, following a credit risk review; $1.5 million in restructuring costs; $3.5 million from the amortisation and depreciation of old software and other assets; and $1.5 million from a software project in the UK, which was scrapped.
While Cash Converters said in a statement that it is “well positioned for future growth and profitability”, it faces another class action that is still ongoing, and greater scrutiny of the payday lending sector.
The company revealed that while its personal finance business increased 14.3 per cent in FY19, driven by an 18.3 per cent increase in loan application numbers, it also saw an increase in bad debt, leading earnings before interest, tax, depreciation and amortisation (EBITDA) to decline 17.7 per cent to $38.4 million.
Corporate stores in Australia delivered an EBITDA of $13.9 million, down 12 per cent on the prior year, and franchise operations delivered EBITDA of $11.4 million, down 8 per cent on the prior year.
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