Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2016 Earnings Presentation
18 slides from Credit's earnings presentation, Jan 28, 2016
Slide 1: FY16 H1 Results Presentation
For personal use only FY16 H1 Results Presentation 28 January 2016 Thomas Beregi, CEO Michael Eadie, CFO
Slide 2: Competitive leadership in the credit-impaired consumer segment
Competitive leadership in the credit-impaired consumer segment For personal use only • PDL acquisitions and lending • Improved operating metrics growth • Strong outlook • Returns achieved • Compliance leadership • Sustainability delivers strengthened stakeholder relationships H1 FY16 Results Present
Slide 3: Record levels of investment driving earnings growth
Record levels of investment driving earnings growth For personal use only Nov 15 Expectation Jan 16 Update • PDL acquisitions $125 - $145m • Record half of purchasing $98.5m • Now on track for $185 - $195m • Includes significant increase in US purchases • Net lending volume of $30 - $40m • 1H volume
Slide 4: Strong core business growth
Strong core business growth For personal use only H1 FY16 Financial Results 1H15 1H16 $ Change % Change Debt Purchasing $78.2m $86.1m +$7.9m + 10% Lending $15.5m $26.1m +$10.6m + 68% Total Revenue $93.7m $112.2m +$18.5m + 20% Debt Purchasing $26.0m $28.4m +$2.4m + 9% Lending $2.9m $2.1m ($0.8m) (28%
Slide 5: Asset growth drives operating cash flows
Asset growth drives operating cash flows For personal use only $ million Jun 14 Dec 14 Jun 15 Dec 15 Pre-tax operating cash flow 98.9 103.6 112.0 118.7 Tax payments (5.5) (13.1) (13.4) (1.8) PDL acquisitions, lending and capex (91.7) (72.6) (118.7) (134.6) Net operating free cash flow 1.7 17.9 (20.1
Slide 6: Operational metrics maintained - pricing discipline and accuracy
Operational metrics maintained - pricing discipline and accuracy For personal use only Cumulative Collections $m 1,800 Actual cash 1,600 collections 1,400 1,200 1,000 Initial projections 800 600 400 200 - Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-
Slide 7: Operational metrics maintained - collection life-cycle
Operational metrics maintained - collection life-cycle For personal use only PDL collections by date of purchase On track for record collections (1) $m +11% 85 80 75 70 23% 30% 32% 65 24% 28% 60 25% 26% 29% 31% 32% 23% 55 23% > 3 years 13% 50 11% 12% 12% 17% 2-3 years 10% 17% 45 13% 13% 13% 14% 1-2
Slide 8: Operational metrics maintained - productivity
Operational metrics maintained - productivity For personal use only Debt purchase productivity (direct collection staff only) PDL collections per hour $350 Total Productivity $300 $250 $200 YTD avg. 1HFY16 $208 $150 FY15 $200 $100 1HFY16 FY15 H1 FY16 Results Presentation | 8
Slide 9: Operational metrics maintained - payers base
Operational metrics maintained - payers base For personal use only Total Portfolio Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Face value $4.5bn $4.7bn $4.8bn $4.9bn $5.1bn Number of accounts 759,000 744,000 698,000 703,000 687,000 Payment arrangements Face value $791m $909m $963m $1,044m $1,099m Number of a
Slide 10: Operational headcount to support asset growth
Operational headcount to support asset growth For personal use only Period end headcount (FTE) 1,300 1,200 1,100 1,000 900 Support 800 Financial Services 700 Mercantile Debt Purchase Ops 600 500 400 Jun 13 Jun 14 Jun 15 Dec 15 Function Jun 13 Jun 14 Jun 15 Dec 15 Debt Purchase Ops 831 919 1,004 1,03
Slide 11: On track for record PDL acquisitions
On track for record PDL acquisitions For personal use only – Compelling debt purchase client proposition – Operational improvements and scale reflected in strong prices – Industry-leading compliance record preserves brand / reputation – Most existing forward flows renewed and some additional volume
Slide 12: Consumer lending book has grown strongly in H1
Consumer lending book has grown strongly in H1 For personal use only Gross loan book excluding provisions $m $121m $100m $72m $63m $51m Annualised Interest revenue $m $35m $19m $11m $6m $2m Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Gross loan book excluding provisions Annualised
Slide 13: Consumer lending book growth expected to moderate in H2
Consumer lending book growth expected to moderate in H2 For personal use only – More modest book growth in H2 - Seasonality - Impact of SACC exit and transition from March 2016 - On track to achieve net lending market guidance – Segment NPAT likely to be significantly higher in H2 - Lower marketing
Slide 14: A strong platform for ongoing lending growth
A strong platform for ongoing lending growth For personal use only – Significant customer acquisition in 1H provides platform for ongoing growth - Longer duration products provide a pathway to mainstream financial inclusion - Launched reloadable debit card to enhance customer retention – SACC review
Slide 15: Improved outlook for US despite unchanged conditions
Improved outlook for US despite unchanged conditions For personal use only – Supply conditions remain constrained - Recent consent orders (enforceable undertakings) by major issuers (Chase) and debt buyers (Encore and PRA) provide a regulatory template - Proposed rules still unlikely to be released
Slide 16: Enhanced operating model drives increased purchasing
Enhanced operating model drives increased purchasing For personal use only – Current forward flow now delivering a positive contribution $ US Marginal contribution Variable cost per hour Revenue contribution per hour on current purchasing Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 – Recent decision to incre
Slide 17: Updated FY16 Guidance
Updated FY16 Guidance For personal use only Updated Nov 15 Updated Jan 16 PDL acquisitions $125 - $145m $185 - $195m Net lending $30 - $40m $30 - $40m NPAT $42 - $44m $44 - $45m EPS (basic) 91 - 95 cents 95 - 97 cents H1 FY16 Results Presentation | 17
Slide 18: Questions
For personal use only Questions H1 FY16 Results Presentation | 18