How Is COG Financial Services Navigating Growth and Dividend Cuts in FY25?

Steady Financial Performance in a Challenging Environment

COG Financial Services has reported its FY2025 results, showing a modest 1% increase in underlying revenue to $363.5 million and a near-flat underlying net profit after tax and amortisation (NPATA) to shareholders of $24.0 million. Earnings per share adjusted (EPSA) declined slightly to 12.00 cents, reflecting a cautious market environment and strategic investments.

The company’s EBITDA to shareholders rose 4% to $38.4 million, maintaining a stable margin of 16.1%. This performance was underpinned by strong momentum in the Novated Leasing segment, which benefited from government incentives for electric vehicles and delivered organic revenue growth of over 20% in that division.

Strategic Acquisitions and Portfolio Realignment

COG continued its acquisition strategy with $15.1 million invested in key deals, including acquiring full ownership of Community Salary Packaging through its subsidiary Paywise and a 70% controlling interest in AAA Finance and Insurance. These moves aim to deepen the company’s footprint in salary packaging and consumer lending, complementing its core finance broking and aggregation operations.

In parallel, COG divested its non-core investments in Earlypay Limited and Centrepoint Alliance Limited during the second half of FY25, reflecting a sharper focus on core operating segments. The proceeds from these disposals helped the company fully repay its corporate debt facility, strengthening its balance sheet and liquidity position.

Dividend Policy and Capital Management

The board declared a final fully franked dividend of 3.0 cents per share, down from 4.4 cents in the prior year, resulting in a payout ratio of approximately 50.6%. Notably, the Dividend Reinvestment Plan (DRP) was suspended for this final dividend, a move that supports earnings per share by avoiding dilution. The company signaled its intention to maintain a similar payout ratio going forward, balancing shareholder returns with reinvestment needs.

Capital expenditure was $6.2 million, focused primarily on IT systems enhancements and leasehold improvements, underscoring ongoing investments in operational efficiency and cybersecurity. COG also highlighted plans to increase its focus on insurance broking, an area identified for growth and operational improvements.

Looking Ahead, Focus on EBITDA and Organic Growth

COG announced a strategic shift in performance metrics, indicating future reporting will emphasize EBITDA rather than NPATA, aligning with industry trends and providing clearer insight into operational profitability. The company expects continued organic growth in Novated Leasing, supported by government incentives and expanding partnerships.

While acquisitions remain a key growth lever, COG is exercising discipline to secure targets at the right price. Investments in broker aggregation technology and cybersecurity are expected to underpin future scalability and resilience. The company’s strong cash position and debt-free status provide a solid foundation for these initiatives.