Media Release 25 February 2015  

MOC records solid interim financial result Mortgage Choice grows settlements, loan book 

 

Mortgage Choice Limited  (MOC) has  today announced  its  financial  results  for  the  six months ending 31 

December 2014.   

Today’s  results  are  on  par with  last  year,  highlighting  the  company’s  ongoing  strength  and  ability  to 

continue to deliver strong profit results while investing in network growth and its diversified businesses.   

Financial highlights for the six months to 31 December 2014* 

On an IFRS basis: 

Group net profit after tax (NPAT) was $10.0 million, up 3.3% on $9.7 million in 1H14.  

Earnings per share at 8.0 cents for continuing business compared to 7.9 cents in 1H14. 

Total group revenue was $97.0 million, up 11.0% on 1H14.  

NPAT on a cash basis was $9.0 million and equal to the result achieved in 1H14.  

Total  loan book  reached $48.4 billion. This was up 4.5%  from $46.4 billion at 31 December 2013 and is poised to hit $50 billion by 1H16.    

$6.9 billion worth of housing  loan approvals were written  in the six months to 31 December 2014, up from $6.2 billion in 1H14.  

Annual share of new home loans remained at 3.9%, on par with 1H14.  

A fully franked interim dividend of 7.5 cents per share was declared by the Board, on par with 1H14. 

 

Mortgage Choice CEO Michael Russell said  the  results were  incredibly pleasing and  they highlighted  the 

ongoing strength of the business as it continues down the path of diversification.  

“To achieve an  interim profit result that  is on par with  last year  is very pleasing, given that  last year was 

our strongest interim profit result on record,” he said.  

“Over  the  last  six  months,  we  have  significantly  ramped  up  our  investment  in  our  personnel  and 

technology across diversified businesses HelpMeChoose.com.au and Mortgage Choice Financial Planning. 

Thanks  to  this  increased  investment,  HelpMeChoose.com.au  is  now well  placed  to  take  advantage  of 

seasonal  uplifts  in  2H15  and Mortgage  Choice  Financial  Planning  is  now  ready  and  geared  for  further 

growth, with 40 financial advisers currently on board.  

“Moving  forward, we will continue  to  focus on quality  recruitment and expect  to have 50 advisers  fully 

operational by financial year’s end.  

For

per

sona

l use

onl

y

 

  

“In  addition  to  the  increased  investment  in  our  diversified  businesses,  we  have  also  increased  the 

commission share to our franchisees, allowing them to earn more commission than ever before. To be able 

to  reward  our  franchisees  in  this way  and  still manage  a  healthy  $9 million  NPAT  on  a  cash  basis  is 

immensely satisfying.” 

Mr  Russell  said  the  ongoing  strength  of  the  company  could  be  attributed  to  the  productivity  of  the 

company’s broker network.   

“Over the last 12 months we have invested in recruitment incentive programs, enabling us to add 50 new 

loan writers to our network. Despite the fact that we now have a number of new operators working within 

the business, our network of brokers continue to achieve strong productivity levels, which has resulted in 

approvals soaring 11.4 per cent and settlements growing by 9.0 per cent in comparison to 1H14. And with 

low  interest  rates keeping heat  in  the property market, we expect our broker network  to become even 

busier in the months ahead.  

“Looking forward, our outlook for housing loan approvals for the remainder of FY15 and into FY16 remains 

positive.” 

If  you  want  to  learn  more  about  your  home  loan  options,  call  13  6678.  Or,  visit 

www.mortgagechoice.com.au, Facebook.com/MortgageChoice or Twitter.com/MortgageChoice.  

 *Prior year comparatives exclude discontinued operations   For further information, photos of the new logo, or to arrange an interview, please contact:  Lauren Booke            Amity Harrold   Mortgage Choice Corporate Affairs       PPR  (02) 8907 0502 / 0448 240 047        (02) 9818 9334 Lauren.booke@mortgagechoice.com.au       amity.harrold@ppr.com.au    

 

Important information 

This article  is  for general  information purposes only.  It has been prepared without considering your objectives, 

financial  situation  or  needs.  You  should,  before  acting  on  the  advice,  consider  its  appropriateness  to  your 

circumstances. 

 

About Mortgage Choice 

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs. 

Established  in  1992,  Mortgage  Choice  was  originally  established  to  help  Australians  improve  their  financial 

situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional. 

Since that time, the company has grown and developed into a fully fledged financial services provider. 

Today, Mortgage Choice helps customers source car  loans, personal  loans, credit cards, commercial  loans, asset 

finance, deposit bonds, and risk and general insurance. 

Further,  the  company  offers  Australians  access  to  real,  relevant  and  affordable  financial  advice  through  our 

qualified financial advisers. 

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. 

It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA). 

For

per

sona

l use

onl

y

 

  

Mortgage  Choice  holds  an  Australian  Credit  Licence:  no.  382869  and Mortgage  Choice  Financial  Planning  Pty 

Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC. 

Recent  recognition:  2014 Australian  Broking Awards  Best Diversification  Program;  2013,  2012,  2011 Australian 

Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social 

Responsibility  Program;  2012  Australian  Broking  Awards  Best  Training  and  Education;      No.1  on  The  Adviser 

magazine’s 2012, 2011, 2010  and 2009  Top 25 Brokerages  list; 2012, 2010, 2009, 2008, 2006  and 2005 MFAA 

Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise 

list; 2010 Forbes Asia‐Pacific Best Under A Billion list. 

Visit www.mortgagechoice.com.au or call customer service on 13 6678. 

 

For

per

sona

l use

onl

y

Half Year ending Dec 2014

Half Yearly Results Presentation

Presented by Michael Russell (CEO) and Susan Mitchell (CFO)

25th February 2015

For

per

sona

l use

onl

y

Contents

1. Performance highlights 2. Economy and industry 3. Operations and strategy 4. Appendices

2

For

per

sona

l use

onl

y

PERFORMANCE HIGHLIGHTS

3

For

per

sona

l use

onl

y

1H15 performance highlights

*excludes discontinued operations in 1H14 ^includes residential, commercial loans and reverse mortgages

4

1H15 1H14 1H15 vs 1H14

NPAT – cash* – continuing operations 9.0 m 9.0 m 0.0%

– IFRS* – continuing operations 10.0 m 9.7 m 3.3%

Loan book*^ 48.4 b 46.4 b 4.5%

Approvals* 6.9 b 6.2 b 11.4%

Settlements* 5.7 b 5.3 b 9.0%

Market Share (approvals)* 3.9 % 3.9 % 0.0%

Basic EPS – cash (Cps)* 7.2 c 7.3 c 1.4%

– IFRS (Cps)* 8.0 c 7.9 c 1.3%

DPS – ordinary (Cps) 7.5 c 7.5 c 0.0%

NPAT – cash (includes discontinued ops in 1H14) 9.0 m 10.3 m 13.0%

– IFRS (includes discontinued ops in 1H14) 10.0 m 11.0 m 9.4%

For

per

sona

l use

onl

y

MC settlements and loan book

• Highest 6 monthly settlements in Mortgage Choice’s history

• Loan book continues to grow at steady rate despite low rate environment encouraging borrowers to pay off mortgage sooner

5

500

600

700

800

900

1,000

1,100

1,200

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

Dec

-12

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

$m Settlements trend 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.4% 3.4%

-40.0%

-35.0%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

0

5

10

15

20

25

30

35

40

45

50

1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15

$b Residential loan book market share

For

per

sona

l use

onl

y

Highlights Summary

6

• NPAT Cash profit consistent with 1H14

• Loan book growth approaching $50b

• Settlements trend remains strong

• Dividend maintained at 7.5c

For

per

sona

l use

onl

y

FINANCIAL PERFORMANCE

7

For

per

sona

l use

onl

y

Profit and loss statement

^Cash is based on accruals accounting and excludes share based remuneration and the net present value of future trailing commissions receivable and payable. This is an extract from our audited accounts

8

$m 1H15 Cash^

1H14 Cash^

% change

1H15 IFRS

1H14 IFRS

% change

Origination commission received 35.0 31.7 10% 35.0 31.7 10% Trailing commission received 44.3 43.9 1% 50.9 48.0 6%

79.3 75.7 5% 85.9 79.7 8%

Origination commission paid 25.8 23.1 12% 25.8 23.1 12% Trailing commission paid 26.7 25.9 3% 30.9 28.1 10%

52.5 49.0 7% 56.8 51.2 11%

Net core commission 26.8 26.7 0% 29.1 28.5 2%

Diversified products net revenue 0.8 0.6 29% 0.8 0.6 29% HMC and Financial Planning net revenue 2.0 1.2 64% 2.2 1.3 70% LoanKit Revenue - 0.3 (100%) - 0.3 (100%) Other income 2.6 2.2 22% 2.6 2.2 22%

Gross profit 32.2 31.0 4% 34.7 32.8 6%

Operating expenses 19.6 18.2 7% 19.6 18.2 7% Share based remuneration - - - 0.7 0.6 23%

Net profit before tax 12.6 12.8 (1%) 14.4 14.0 3%

Net profit after tax 9.0 9.0 0% 10.0 9.7 3%

After tax gain on sale of LoanKit - 1.3 (100%) - 1.3 (100%)

NPAT including gain on sale of LoanKit 9.0 10.3 (13%) 10.0 11.0 (9%)

EPS (cps) (continuing operations) 7.2 7.3* (1%) 8.0 7.9* 1% DPS (cps) 7.5 7.5 0% 7.5 7.5 0%

*1H14 contains profit from discontinued operations which is excluded from the comparative EPS

For

per

sona

l use

onl

y

Payout

9

• Loan writer recruitment incentives pushed payout ratio up on origination payments; incentive to finish at the end of FY15

• Increased settlements triggered payment model to share more trail with franchisees, encouraging further business investment on their part

1H15 1H14 % Change Origination commission received 34,980 31,722

Origination commission paid 25,530 23,052

Net origination income 9,450 8,671

Origination Payout 73.0% 72.7% 0.3%

Loan writer recruitment incentive paid 298 33

Net origination income 9,152 8,638

Origination Payout 73.8% 72.8% 1.1%

Trailing commission received 44,273 43,942 Trailing commission paid 26,654 25,893

Net trail income 17,619 18,049

Trail Payout (inc MOC book) 60.2% 58.9% 1.3%

Trail Payout (exc MOC book) 62.4% 60.7% 1.7%

For

per

sona

l use

onl

y

10

Continue to invest in diversification and growth in broker numbers

• Increase in personnel expense for HMC and FP. FP’s additional support staff positions business for further growth; HMC positioned to take advantage of seasonal uplifts in 2H15

• Loan writer incentives estimated to be $250k in second half and finish by 30th June 2015

• Operating expenses in total expected to be lower by 8 to 10% as national and high flyer conferences are held in the first half of the financial year

$000

12,764

298

1,197 96 158

373

993

843

138 12,616

1H14 Cash NPBT MC Gross Profit (excl LoanWriter

Recruitment Incentives)

MC LoanWriter Recruitment Incentive

HMC & FP Gross Profit HMC & FP Personnel Expenses

HMC & FP Other Expenses

MC Marketing Expense MC Other Expense LoanKit 1H15 Cash NPBT

For

per

sona

l use

onl

y

Gross revenue mix

• Percentage of gross revenue from diversified sources now accounts for 11.5% of total revenue despite the strong growth in broking commission from increased settlements. These results reflect our success in growing the core business but still diversifying

• Over the past five years the percentage of gross revenue from diversification has increased from 1.4% for FY09 to 11.5% for 1H15

11

88.5%

3.5%

2.6% 2.7% 2.7%

Gross Revenue (1H15)

MC Broking

Diversified Products

HMC

Financial Planning

Others 91.1%

3.2%

2.0% 1.2% 2.5%

Gross Revenue (1H14)

MC Broking

Diversified Products

HMC

Financial Planning

Others

For

per

sona

l use

onl

y

Divisional results

• Growth of 2% in cash profits from core broking business – benefits from increased settlements have been reined in due to increase in payout ratio

• HMC cash gross profit up by 48% on PCP. Cash NPAT reflects investment in scale to capitalise on the upcoming seasonal uplift, which should push HMC into profit

• Financial Planning build complete, gross profit to grow in second half and FY16. Breakeven on a monthly basis pushed out to FY16 as adviser recruitment driven by quality

12

$000 1H15 2H14 1H14 MC HMC FP LK

(Discontinued) MC HMC FP LK

(Discontinued) MC HMC FP LK

(Discontinued)

Settlements 5.7b 5.1b 5.3b 0.5b

Gross profit (IFRS) 32,417 1,725 553 0 27,549 2,261 423 0 31,191 1,108 213 329

Gross profit (Cash) 30,095 1,559 553 0 27,864 2,264 423 0 29,398 1,055 213 329

EBITDA (Cash) 14,106 (690) (463) 0 13,996 641 (519) 0 14,244 (232) (497) (109)

NPAT (IFRS) 10,753 (422) (359) 0 8,815 391 (408) 0 10,291 (177) (365) (92)

NPAT (Cash) 9,836 (522) (342) 0 9,722 406 (390) 0 9,620 (203) (349) (98)

YOY Growth (%) 2% -157% 2% 100%

* Figures before gain on sale of LoanKit

For

per

sona

l use

onl

y

Average commission rates

* Settlements from 1 Jan09 - projection based on our best estimates for lender mix, run off and settlements growth

• Average upfront rate for 1H15 of 0.647%, up from 0.633% in FY14

• Upfront rate rise due to special offers but expected to return to 0.635% towards end of financial year

• Stabilised trail rate for new settlements has increased from 0.175% to 0.178% due to recent commission changes

13

0.450%

0.500%

0.550%

0.600%

0.650%

0.700%

Jan

13

Feb

13

Mar

13

Ap

r13

May

13

Jun

13

Jul1

3

Au

g13

Sep

13

Oct

13

No

v13

Dec

13

Jan

14

Feb

14

Mar

14

Ap

r14

May

14

Jun

14

Jul1

4

Au

g14

Sep

14

Oct

14

No

v14

Dec

14

Average upfront rate

0.100%

0.125%

0.150%

0.175%

0.200%

1H

14

2H

14

1H

15

2H

15

1H

16

2H

16

1H

17

2H

17

1H

18

2H

18

1H

19

2H

19

1H

20

2H

20

Average trail rate

Average rate total book (Actual)

Average rate total book (Estimated)

Average rate new settlements* (Estimated)

For

per

sona

l use

onl

y

Lender commissions

14

• Special short term offers available on remainder of panel

For

per

sona

l use

onl

y

Operating cash flow

15

• Increase in dividend and IT expenditure met without the need to borrow

$000 1H15 1H14

Net profit before tax (cash basis) 12,616 12,764

Depreciation and amortisation 605 990

13,221 13,754

Tax paid (4,070) (3,901)

Purchase of fixed assets and intangibles (3,538) (725)

Net Proceeds from sale of Loankit - 1,595

Other balance sheet movements (1,884) (2,108)

Cash flow before dividends 3,729 8,615

Dividends paid (9,910) (8,640)

Net cash movement (6,181) (25)

For

per

sona

l use

onl

y

ECONOMY AND INDUSTRY

16

For

per

sona

l use

onl

y

Australia’s housing finance commitments

• Housing finance commitments are at an all time high, providing Mortgage Choice with a wonderful growth opportunity

• The level of investment activity remains high by historical standards

• First Home Buyer activity remains low by historical standards

However, our data indicates up to 21% of FHBs are choosing to purchase an investment property as their first property purchase

Source: ABS 5609 Table 11 – Housing Finance, Australia, Dec14 (Seasonally adjusted series)

17

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

$b

Housing finance trend (Owner occupied + Investment)

FY12 FY13 FY14 1H15

For

per

sona

l use

onl

y

Housing market in an upward cycle and broker usage at 50%

Source: MFAA’s quarterly survey of leading mortgage brokers and aggregator – Dec14 report

Source: CBA Half Year Results presentation – Dec14

% 2014 2015(f) 2016 (f) 2017 (f)

Credit growth Total Housing Business Other personal

5.1 6.4 3.5 0.7

5-7 6-7 4-6 2-4

4.5-6.5 5.5-7.5

3-5 2.5-4.5

4-6 5-7 3-5 2-4

Cash rate 2.5 2 2 2

18

50.0% 50.0% 51.5% 50.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Mar FY14 Jun FY14 Sep FY15 Dec FY15

Broker Usage

For

per

sona

l use

onl

y

Headwinds and tailwinds

Headwinds Consumer confidence volatile

Has housing affordability reached its limit?

Unemployment on the rise

Tailwinds Interest rates at historical

lows and lenders competing hard for new mortgage customers

Broker usage at 50%

Property prices, auction clearance rates and housing finance commitments remain strong

19

For

per

sona

l use

onl

y

Mortgage Choice settlements by lender

• Four pillars continue to dominate

• Credit unions have seen an increase in market share as they continue to compete aggressively on pricing and product innovation

• Four pillars including St. George and Bankwest = 67% in 1H15 vs 68% in 2H14

Half Yearly Figures from 1H12 to 1H15 Four Pillars includes CBA, ANZ, NAB (Homeside) and Westpac (excludes St. George and Bankwest)

20

51%

37%

3%

7%

3%

54%

30%

3%

10%

3%

0%

10%

20%

30%

40%

50%

60%

70%

Four Pillars Other Banks Building Societies Credit Unions Others

For

per

sona

l use

onl

y

OPERATIONS AND STRATEGY

21

For

per

sona

l use

onl

y

Strong network growth and productivity

• Franchise numbers are up from 405 to 412

• Plus One initiative pushed loan writer count to 557

• Productivity maintained throughout this period of exciting network growth

22

321 330 329 338 337 345 340 346 350

354 368 372 380 386 395 394 405 412

0

50

100

150

200

250

300

350

400

450

500

Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14

Network

Franchise owners Franchises

515 523

490 498

504 504 507

534

557

30 28 31 32 31 31

37 35 35

470

480

490

500

510

520

530

540

550

560

570

Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14

Productivity settlements

Brokers HY Settlements # per broker

For

per

sona

l use

onl

y

Franchise recruitment strong and steady

• Consistent interim result of 8 greenfields and 4 sales of existing franchises

• Full year greenfield recruitment expected to reach 25 as approved pipeline high, demonstrating the strong commercial viability of our franchise system

23

405 405

413 412 412

8

1 2

Opening Balance

Recruitment Re-activated Terminated Closing

Franchise Movement

8 11 9 8

15

6 8 13

4

6

13

8 12

5

14 5

11

8

1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15

Sale of greenfields and existing franchises

Greenfields Sales of existing to new

For

per

sona

l use

onl

y

Mortgage Choice broking network snapshot – state performance

24

NSW / ACT 35%

VIC / TAS 21%

QLD 26%

SA / NT 8%

WA 10%

States contribution to settlements

Settlements ($m) 1H15 % 1H14 % Growth

NSW / ACT 2,017 35% 1,869 36% 8%

VIC / TAS 1,226 21% 1,116 21% 10%

QLD 1,508 26% 1,300 25% 16%

SA / NT 428 8% 438 8% (2%)

WA 557 10% 537 10% 4%

5,736 100% 5,260 100% 9%

16%

10% 8%

4%

(2%) -5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

QLD VIC / TAS NSW / ACT WA SA / NT

Settlements growth 1H15 / 1H14

For

per

sona

l use

onl

y

MCFP adviser numbers are growing

25

• We continue to search for quality advisers with target adjusted to 50 at 30 June 2015 with continued recruitment expected in FY16

39

0

5

10

15

20

25

30

35

40

45 Ju

l-1

2

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

Dec

-12

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

Dec

-14

Advisers

For

per

sona

l use

onl

y

FUA and in force premiums are climbing

26

*Includes insurance written by broking network

2

4

6

8

10

12

50

100

150

200

250

300

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

In-force Premium ($m) FUA ($m) Funds Under Advice and In force Premium

Inforce Premium Fund Under Advice For

per

sona

l use

onl

y

27

An external review gives MCFP a tick of approval Now that MCFP has completed it’s start up phase, it seemed prudent to commission an external review of our compliance obligations as an AFS Licence holder. Not only that, we are aiming for best practice in everything we do in this space - from compliance, to adviser support, to the customer experience. So in January 2015, we commissioned specialist legal firm The Fold Compliance Pty Limited to complete an external view. The results were very pleasing and are best summarised by the quotes below from the final report.

Your business model, processes and structure are a standout example of a financial planning business model that has successfully adopted the Future of Financial Advice (FOFA) approach to financial services compliance. Your compliance arrangements are robust, pragmatic and well managed. We applaud you on the support services and tools you have available to your advisers. This is often an area where many licensees fail leading to poor and inappropriate advice. It is clear…that much investment has gone into ensuring that your advisers have the systems in place to deliver appropriate advice that is in the best interests of the client. For

per

sona

l use

onl

y

Update on Project One

28

• Project One will implement an enterprise wide, trusted off-the-shelf CRM platform with an industry leading broker front end. They will combine to provide our franchisees with a web based platform rich in functionality to improve productivity and customer experience

• Phase 1 to implement new CRM will be rolled out company wide by 30th June 2015

• Phase 2 to deliver broker front end will be rolled out in 1H16 as planned

For

per

sona

l use

onl

y

Summary

• Increased broker numbers in place to capture more of the buoyant property market

• Increasing settlements trend

• Loan book poised to hit $50b

• FP model implemented and continued focus on quality recruitment

• HMC investment to put additional scale in place for 2H15 seasonal push

• Cash profit steady with 1H14 despite increased HMC and FP investment

• Interim dividend maintained at 7.5c

29

For

per

sona

l use

onl

y

QUESTIONS

30

For

per

sona

l use

onl

y

APPENDICES

31

For

per

sona

l use

onl

y

Half-Yearly Statistics – P/L

32

$m 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 Origination inc 27.99 24.16 25.51 23.59 25.98 25.08 26.03 25.94 31.72 31.29 34.98 Origination exp (20.25) (16.99) (18.14) (16.62) (18.43) (17.95) (18.78) (18.59) (23.08) (22.69) (25.83)

Cash Trail inc 41.48 41.45 42.30 41.48 42.13 42.32 43.40 43.28 43.94 43.47 44.27 Cash Trail exp (25.78) (25.55) (25.39) (25.15) (24.99) (25.08) (25.69) (25.60) (25.89) (26.30) (26.65)

Net Upfront 7.74 7.17 7.37 6.97 7.55 7.13 7.25 7.35 8.64 8.60 9.15 Net Trail 15.70 15.90 16.91 16.33 17.13 17.24 17.71 17.68 18.05 17.17 17.62

23.44 23.08 24.28 23.30 24.68 24.38 24.96 25.02 26.69 25.77 26.77

Other Income 0.89 1.51 1.36 1.95 2.45 2.50 3.45 3.64 4.31 4.79 5.43

Cash PAT 7.79 7.04 8.84 7.08 6.50 8.52 7.82 7.95 8.97 9.74 8.97 IFRS PAT 9.76 13.72 8.79 18.67 6.44 12.02 7.51 11.20 9.66 8.80 9.97

After tax gain on Loankit sale - - - - - - - - 1.34 - -

Cash PAT inclu. Gain on sale 7.79 7.04 8.84 7.08 6.50 8.52 7.82 7.95 10.31 9.74 8.97 IFRS PAT inclu. Gain on sale 9.76 13.72 8.79 18.67 6.44 12.02 7.51 11.20 11.00 8.80 9.97

Cash e.p.s. 6.5 c 5.9 c 7.3 c 6.0 c 5.4 c 7.1 c 6.4 c 6.5 c 8.3 c 7.9 c 7.2 c IFRS e.p.s. 8.2 c 11.5 c 7.3 c 15.6 c 5.4 c 10 c 6.2 c 9 c 8.9 c 7.1 c 8.0 c Div p.s. 5.5 c 6.5 c 6.0 c 7.0 c 6.0 c 7.0 c 6.0 c 7.0 c 7.5 c 8.0 c 7.5 c

Upfront Payout 72.3% 70.3% 71.1% 70.4% 70.9% 71.6% 72.2% 71.7% 72.8% 72.5% 73.8% Trail Payout 62.2% 61.6% 60.0% 60.6% 59.3% 59.3% 59.2% 59.2% 58.9% 60.5% 60.2% Total Payout 66.3% 64.8% 64.2% 64.2% 63.8% 63.8% 64.1% 63.8% 64.7% 65.5% 66.2%

Volumes MC

Settlements # (`000) 18.73 15.36 15.91 14.56 15.58 15.86 15.77 15.68 18.66 17.86 19.24

Settlements $b 4.82 4.07 4.33 3.99 4.34 4.39 4.43 4.35 5.26 5.11 5.74

Approvals $b 5.39 4.59 4.98 4.55 5.11 5.04 5.09 5.28 6.19 6.04 6.90

Market $b 142.8 124.1 126.4 116.3 124.1 119.8 128.0 133.1 157.1 157.7 177.2

Market Share 3.8% 3.7% 3.9% 3.9% 4.1% 4.2% 4.0% 4.0% 3.9% 3.8% 3.9%

Avg Residential Loan Book $b 36.97 38.40 39.73 40.68 41.68 42.76 43.80 44.55 45.56 46.48 47.65

For

per

sona

l use

onl

y

Balance Sheet

33

Dec 2014 Jun 2014 $’000 $’000

ASSETS Current assets Cash and cash equivalents 6,264 12,445 Trade and other receivables 97,936 98,876 Total current assets 104,200 111,321

Non-current assets Receivables 242,976 238,244 Property, plant and equipment 905 907 Intangible assets 5,249 2,349 Total non-current assets 249,130 241,500

Total assets 353,330 352,821

LIABILITIES Current liabilities Trade and other payables 64,112 66,702 Current tax liabilities 865 2,418 Provisions 1,143 1,103 Total current liabilities 66,120 70,223

Non-current liabilities Trade and other payables 146,090 142,900 Deferred tax liabilities 38,082 36,605 Provisions 826 762 Total non-current liabilities 184,998 180,267

Total liabilities 251,118 250,490

Net assets 102,212 102,331

EQUITY Contributed equity 5,758 4,604 Reserves 1,799 2,210 Retained profits 94,655 95,517

Total equity 102,212 102,331

For

per

sona

l use

onl

y

Cash Flow statement

34

1H15 1H14

$’000 $’000

Cash flows from operating activities

Receipts from customers (inclusive of goods and services tax) 99,332 90,352

Payments to suppliers and employees (inclusive of goods and services tax) (88,263) (78,964)

services tax) 11,069 11,388

Income taxes paid (4,070) (3,901)

Net cash inflow from operating activities 6,999 7,487

Cash flows from investing activities

Payments for property, plant, equipment and intangibles (3,538) (725)

Proceeds from sale of LoanKit net of selling costs - 1,595

Interest received 268 258

Net cash (outflow) from investing activities (3,270) 1,128

Cash flows from financing activities

Dividends paid to company’s shareholders (9,910) (8,640)

Net cash (outflow) from financing activities (9,910) (8,640)

Net decrease in cash and cash equivalents held (6,181) (25)

Cash and cash equivalents at the beginning of the half-year 12,445 10,953

Cash and cash equivalents at the end of the half-year 6,264 10,928

For

per

sona

l use

onl

y

Mortgage Choice broking network snapshot

35

National NSW&ACT VIC&TAS QLD SA&NT WA

Dec-14 Dec-13 Dec-14 Dec-13 Dec-14 Dec-13 Dec-14 Dec-13 Dec-14 Dec-13 Dec-14 Dec-13

Loan book* $48.0bn $46.0bn 35.2% 36.0% 20.0% 19.8% 25.8% 25.2% 9.0% 9.0% 10.0% 10.0%

Loan writer 557 507 197 177 127 119 132 116 41 39 60 56

Franchise 412 394 153 145 88 83 89 87 30 28 52 51

*Residential only

18%

43%

39%

Franchise owner experience

<2 years

2-10 years

>10 years

16%

28% 56%

Franchise owner share of settlements

Rank 1-10

Rank 11-50

Rank 51-342 For

per

sona

l use

onl

y

Capacity for growth in recruitment

Marketing area capacities are assessed quarterly using an external benchmarking model that takes into account geographic data, ABS data and franchise settlements

In 132 marketing areas, 118 greenfield sites are available

We have capacity to increase our franchise footprint from 412 to 586

* Information based on Dec14 Quarter Broker Resource Model

36

3 4 4 2 1

39 31

21

13 14

NSW VIC QLD SA WA

Marketing Areas

Closed Open

153

88 89

30 52

62

45 28

17

22

NSW VIC QLD SA WA

Franchises

Potential Existing

For

per

sona

l use

onl

y

Disclaimer

The information contained in this presentation is intended to be a general summary of Mortgage Choice Limited

(Mortgage Choice) and its activities as at 31 December 2014, and does not purport to be complete in any respect.

The information in this presentation is not advice about shares in Mortgage Choice (or any other financial product),

nor is it intended to influence, or be relied upon by, any person in making a decision in relation to Mortgage Choice

shares (or any other financial product). This presentation does not take into account the objectives, financial situation

or needs of any particular individual. You should consider your own objectives, financial situation and needs when

considering this presentation and seek independent investment, legal, tax, accounting or such other advice as you find

appropriate before making any financial or investment decision.

This presentation contains some forward looking statements. Such statements only reflect views held by Mortgage

Choice as at the date of this presentation and are subject to certain risks, uncertainties and assumptions. Actual events

and results may vary from the events or results expressed or implied in these statements. You should not place undue

reliance on any of these statements.

No representation or warranty is made in respect of the accuracy or completeness of any information in this

presentation, or the likelihood of any of the forward looking statements in the presentation being fulfilled.

For further information visit www.mortgagechoice.com.au

or contact Jessica Darnbrough– Head of Corporate Affairs

Ph: (02) 8907 0472 Email: jessica.darnbrough@mortgagechoice.com.au

37

For

per

sona

l use

onl

y