Credit Corp Group Limited · ASX:CCP
Credit — FY2008 Earnings Presentation
18 slides from Credit's earnings presentation, Aug 14, 2008
Slide 1: FY08 Results Presentation
For personal use only FY08 Results Presentation Don McLay Chairman Thomas Beregi g Interim Chief Executive Officer
Slide 2: FY08 Financials
A hi Achieved dFFeb b 08 guidance id on reduced d d purchasing h i For personal use only FY08 Financials Pre-restructuring Post- Feb 08 restructuring g Actual Guidance Actual Ledger Investment down 35% to $77.7m $85-95m $77.7m R Revenue up 11% t to $149 9 $149.9m $149 9 $149.9m EBITDA down 2% to $87
Slide 3: Significant improvement in financial position over the second half
Significant improvement in financial position over th second the dh half… lf For personal use only • Reduced R d d nett b bank kd debt bt b by $18 $18m over 6 months th • Secured 3 year refinancing Six months ended $ million 30 June 08 31 Dec 07 EBITDA 44.0* 43.8 Operating cash flow 39.1* 43.8 PDL a
Slide 4: The operating platform has been re-engineered
…and d th the operating ti platform l tf h has b been re-engineered i d For personal use only • Annualised cost savings of $6m achieved • Improved p proforma p p purchasing g returns • Increased collections from older PDLs • Restored R t d productivity d ti it 4
Slide 5: Cost savings reflect a more focused operation
Cost savings reflect a more focused operation, while hil nott compromising i i revenue generating ti ability bilit For personal use only Annualised Savings* Overhead & management positions (35 FTE) $4.0m Discretionary expenditure (travel etc) $1.5m P Premises i & equipment i t lleases $0 3 $0.3m Fit
Slide 6: Restructuring expenses are genuine one-offs
R t t i expenses are genuine Restructuring i one-offs ff For personal use only Depreciation Finance $million EBITDA NPBT NPAT /Amortisation Costs Staff terminations 1.4 1.4 1.0 Premises lease provisions 0.4 0.4 0.3 Equipment lease provisions 0.3 0.3 0.2 Goodwill write-downs 2.6 2.6 2.6 Fitout write-
Slide 7: A greater proportion of our people are at the front line
A greater t proportion ti off our people l are att the th front f t line li For personal use only Headcount by function (FTE) 600 Debt Purchase Operations 500 Process Serving / Mercantile 400 Malaysian Mercantile 300 Support 200 100 0 FY04 FY05 FY06 FY07 H1 FY08 FY08 Function FY04 FY05 FY06 FY07 H10
Slide 8: Current purchases are yielding acceptable returns
C Current t purchases h are yielding i ldi acceptable t bl returns… t For personal use only Average March 08 to June 08 purchases Cumulative percentage of purchase price collected by month 230% FY09 Guide 225%-250% 40% 38% Actual 34% Forecast 28% 30% % of 22% 27% purchase price 20% 16% 18% collected
Slide 9: We have improved the performance of older PDLs
…and d we h have iimproved d th the performance f off older ld PDLs PDL For personal use only PDL Revenue by date of purchase $m 40 35 14% 16% 25% 30 21% 37% 25 23% 26% > 2 years 20 27% 35% 1-2 years 15 37% < 1 year 63% 10 58% 52% 40% 5 26% 0 Q1 Sep 07 Q2 Dec 07 Q3 Mar 08 Q4 Jun 08 FY09 Guide Qtrly
Slide 10: We have also increased the certainty of returns
W have We h also l iincreased d th the certainty t i t off returns t For personal use only Total Portfolio December 2007* June 2008 Face value $1 9bn $1.9bn $2 2bn $2.2bn Number of accounts 388,000 370,000 Payment arrangements Face value $187m $267m Number of accounts 28,000 42,000 % of PDL collecti
Slide 11: Operational improvements have restored productivity
O Operational ti l iimprovements t hhave restored t d productivity d ti it For personal use only • Introduced focus on activity / interim milestone metrics • Reduced recruitment • Technical skills training • Experienced operational leadership Debt ebt Purchase u c ase Productivity oduct ty (d(direct
Slide 12: PDL carrying amount represents the value to be realised
PDL carrying i amountt represents t th the value l tto b be realised li d For personal use only • PDLs are held at fair value in accordance with AASB139 Discounted cash flow analysis assumptions I Input t A Assumptions ti and/or d/ b basis i ffor assumptions ti • Maximum of 6 years from the date of
Slide 13: Refinancing secures the ability to commit to purchases of up to $60m pa
Refinancing secures the ability to commit to purchases h off up tto $60m $60 pa For personal use only • $140m limit, currently drawn to $127m, stepping down to $120m by 30 June 2009 • Maximum margin of 3.35%pa over BBSY PDL value + current receivables • Asset cover ratio loan balance minimum of 1.50
Slide 14: Market conditions suggest purchases can be acquired at acceptable returns
Market conditions suggest purchases can be acquired att levels l l which hi h will ill provide id acceptable t bl returns t For personal use only • Supply conditions remain static – Personal credit growth has slowed from its 5 year average of 11% pa to 2% p p pa over the last six months (1) – 90 day
Slide 15: Sale of peripheral businesses is progressing, but will not be significant
Sale of peripheral businesses is progressing, b t will but ill nott b be significant i ifi t For personal use only • Maximum combined proceeds estimated to be $3.5m • Some businesses may be retained if acceptable terms are not achieved Business Status P Process serving i D diligence Due dili Malaysi
Slide 16: Room for further improvement in FY09
R Room ffor further f th improvement i t in i FY09 For personal use only • Improved asset management – Refined forecasting methodology for purchasing decisions – Monitoring of pools of accounts with similar characteristics – Upgraded interfacing with vendors for data transfer • Improved workflow man
Slide 17: The outlook for FY09 is stable
Th outlook The tl k ffor FY09 iis stable t bl For personal use only • NPAT of $8-$10m* • EBITDA of $85-$89m* • Key assumptions: – PDL acquisitions of $45-$55m – PDL acquisition 6 year return multiples of 2.25x 2 25x to 2.50x 2 50x – Productivity maintained at $210-$220 per hour (direct collection st
Slide 18: Questions
For personal use only FY08 Results Presentation Questions