Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2017 Earnings Presentation
21 slides from Credit's earnings presentation, Jan 31, 2017
Slide 1: FY17 H1 Results Presentation
For personal use only FY17 H1 Results Presentation 31 January 2017 Thomas Beregi, CEO Michael Eadie, CFO
Slide 2: Leadership in the credit impaired consumer segment
Leadership in the credit impaired consumer segment… For personal use only OPERATIONAL • Long-term growth ANALYTICS & SUSTAINABILITY EXCELLENCE • ROE 16% - 18% DISCIPLINE & COMPLIANCE • Low gearing Core Australian / NZ debt buying • Largest database • Highest asset turnover 1 • No adverse orders or •
Slide 3: H1 FY17 financial results
…continues to produce strong earnings growth… For personal use only H1 FY17 financial results H1 FY17 H1 FY16 $ Change % Change Debt buying 1 $99.4m $86.1m + $13.3m + 15% Lending $29.7m $26.1m + $3.6m + 14% Total revenue $129.1m $112.2m + $16.9m + 15% Debt buying $22.0m $19.8m + $2.2m + 11% Lending
Slide 4: Opportunistic levels of investment to underpin future growth
…and opportunistic levels of investment to underpin future growth For personal use only $180m $120m $60m - H1 FY15 H2 FY15 H1 FY16 H2 FY16 H1 FY17 * PDL acquisitions Net lending * Includes one-off NCML acquisition H1 FY17 Results Presentation | 4
Slide 5: Investment will moderate in H2 positioning CCP for future opportunities
Investment will moderate in H2 positioning CCP for future opportunities • Return to positive net operating (free) cash flow For personal use only $ 60m $ 30m - ($ 30m) ($ 60m) ($ 90m) FY11 FY12 FY13 FY14 FY15 FY16 H1 FY17 H2 FY17 Free cash flow Projection • Reduced gearing / increased investment cap
Slide 6: PDL market remains competitive but there are some signs of easing
PDL market remains competitive but there are some signs of easing • Pricing remains strong For personal use only - Listed competitors guiding for increased purchasing in FY17 - Loss of some of Credit Corp’s forward flow volume during H1 - Reduced win-rate on one-off sales over pcp • Some signs of ea
Slide 7: Debt purchasing metrics remain strong
Debt purchasing metrics remain strong For personal use only Pricing accuracy and returns on track Productivity maintained • ) • Total cumulative collections above aggregate • H1 FY17 productivity in line with pcp expectations • Total collections up 12% over pcp • Collections life cycle on track with
Slide 8: Continued strong loan book growth
Continued strong loan book growth… For personal use only Gross loan book excl. provisions + 16% $156m $135m $121m $100m $72m $66m Yield maintained $63m $57m $35m $19m $11m $6m Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Gross loan book (excluding provisions) Annualised reve
Slide 9: Driven by strong customer acquisition and enlarged customer base
…driven by strong customer acquisition and enlarged customer base For personal use only • New customer acquisition ahead of prior calendar year • Enlarged customer base delivers increased returning customer volume Number of customer settlements 2015 2016 New customers Pre-existing customers H1 FY17
Slide 10: Loan book growth drives increasing profitability
Loan book growth drives increasing profitability • Seasonally lower book growth in H2 For personal use only ROA % NPAT • Lending NPAT higher in H2 12% $12m - Lower marketing costs - Lower upfront loss provision expense 8% $8m • FY17 returns improving towards pro-forma H2 projected - On track to achi
Slide 11: US market conditions continue to improve
US market conditions continue to improve For personal use only • Competitors report improved returns Calendar 2016 Q1 Q2 Q3 Implicit price change (Q1-Q3) 1 PRAA purchasing multiple 1.90x 2.05x 2.10x 10% • Supply conditions set to improve - Increase in credit card delinquency rates for the first time
Slide 12: Operational capacity increasing and performance improving
Operational capacity increasing and performance improving For personal use only • Credit Corp positioned to benefit as market conditions improve - Strong compliance credentials established 1 • Operational capacity on track - Current headcount 152 - Objective to grow to 170-180 by year end • Improved
Slide 13: Updated FY17 Guidance
Updated FY17 Guidance For personal use only Updated Nov 2016 Updated Jan 2017 PDL acquisitions $195 - $215m $225 - $235m Net lending $35 - $45m $35 - $45m NPAT $53 - $55m $53 - $55m EPS (basic) 112 - 116 cents 112 - 116 cents H1 FY17 Results Presentation | 13
Slide 14: Questions
For personal use only Questions H1 FY17 Results Presentation | 14
Slide 15: Appendix
For personal use only Appendix H1 FY17 Results Presentation | 15
Slide 16: Chart 1: Operating cash flows and gearing
Chart 1: Operating cash flows and gearing For personal use only Dec 16 Jun 16 Dec 15 Jun 15 Operating cash flow $133.1m $112.1m $116.9m $98.6m PDL acquisitions ($148.5m) ($135.0m) ($101.4m) ($83.4m) Net lending ($30.4m) ($23.2m) ($31.9m) ($34.8m) Capex ($1.0m) ($0.7m) ($1.3m) ($0.5m) Net operating (
Slide 17: Chart 2: Operational metrics - pricing discipline and accuracy
Chart 2: Operational metrics - pricing discipline and accuracy For personal use only Cumulative collections $2.0bn $ 2,000m Actual cash collections $1.5bn $ 1,500m $ 1,000m $1.0bn Initial projections $ $0.5bn 500m - * For all PDLs held at June 2008, initial projections represent the forecast at June
Slide 18: Chart 3: Operational metrics - collection life-cycle
Chart 3: Operational metrics - collection life-cycle For personal use only PDL collections by vintage $105m +12% 1 $90m 32% $75m 33% 31% 23% 30% 32% 32% 24% 28% $60m 25% 26% 29% 31% 32% 15% 12% 13% 15% 12% 12% 12% 17% 17% 15% 11% $45m 13% 14% 16% 15% 17% 15% 19% 19% 16% 20% 22% 15% 19% 15% 25% 23% $
Slide 19: Chart 4: Operational metrics - productivity
Chart 4: Operational metrics - productivity For personal use only Debt purchase productivity (direct collection staff only) PDL collections per hour $ 300 YTD average H1 FY17: $207 H1 FY16: $208 $ 250 2016/17 $ 200 2015/16 $ 150 $ 100 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun H1 FY17 Results P
Slide 20: Chart 5: Operational metrics - payers base
Chart 5: Operational metrics - payers base For personal use only Total portfolio Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Face value $4.8bn $4.9bn $5.1bn $5.3bn $5.7bn Number of accounts 698,000 703,000 687,000 673,000 699,000 Payment arrangements Face value $963m $1,044m $1,099m $1,171m $1,235m Number of
Slide 21: Chart 6: Operational and total headcount
Chart 6: Operational and total headcount Period end headcount (FTE) For personal use only 1,500 1,300 Support 1,100 Lending Agency 900 Debt buying ops 700 500 Jun 14 Jun 15 Jun 16 Dec 16 Function Jun 14 Jun 15 Jun 16 Dec 16 Debt buying operations 919 1,004 1,096 1,174 Agency 12 11 13 91* Lending 109