Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2011 Earnings Presentation
17 slides from Credit's earnings presentation, Feb 15, 2011
Slide 1: H1 of FY11 Results Presentation
For personal use only H1 of FY11 Results Presentation Thomas Beregi Chief Executive Officer Michael Eadie Chief Financial Officer
Slide 2: In the first half we have delivered on two fronts
In the first half we have delivered on two fronts fronts… For personal use only • Leveraged past initiatives to accelerate growth – NPAT up 53% to $10.6m – PDL collections and fee income up 16% to $103.4m – Strong operating metrics across all areas • Implemented new initiatives to sustain performanc
Slide 3: Past initiatives have delivered growth in NPAT of 53%
Past initiatives have delivered growth in NPAT of 53% For personal use only H1 of FY11 Financials Nov 10 FY11 versus pcp H1 of FY11 Actual Guidance PDL acquisitions up 26% to $ $46.1m $ - $60m $55 $ PDL collections and fee income up 16% to $103.4m Revenue up 22% to $57.0m Adjusted EBITDA (1) up 11%
Slide 4: Net bank debt down by a further $7m
Net bank debt down by a further $7m For personal use only Six months ended $ million 31 Dec 10 30 June 10 31 Dec 09 EBITDA 65.2 58.6 58.6 Operating cash flow 57.6 50.4 53.0 PDL acquisitions and capex (49.3) (35.8) (27.0) Free cash flow 8.3 14.6 26.0 PDL carrying value 147.0 147.6 164.2 Net bank debt
Slide 5: Purchases continue to meet ingoing projections
Purchases continue to meet ingoing projections projections… For personal use only Cumulative Collections (Initial Expectations versus Actual) (July 08 – Dec 10) 500 450 400 Cumulative Actual Cash Collections 350 Collections $m 300 250 200 150 Initial 100 Projections 50 - Jun-08 Sep-08 Dec-08 Mar-09
Slide 6: …and we continue to drive collections from older PDLs
…and and we continue to drive collections from older PDLs PDLs... For personal use only PDL Collections by y date of purchase 50 45 32% 34% 40 24% 32% 25% 12% 27% 15% 22% 35 PDL Collections 20% 10% > 3 years $m 30 19% 6% 27% 15% 22% 2-3 years 28% 27% 23% 25 21% 17% 24% 1-2 years 13% < 1 year 20 41%
Slide 7: …while maintaining collection efficiency
…while while maintaining collection efficiency For personal use only Debt Purchase Productivity (direct collection staff only) $275 $255 $257 Average $250 $245 $245 YTD $238 $239 $235 $231 $231 $245 2010/11 $241 $229 $229 $224 $238 $239 PDL Collections $225 $234 2009/10 $234 $228 $229 $228 per hour
Slide 8: And our strong payers base suggests this will continue
And our strong payers base suggests this will continue For personal use only Total Portfolio Dec 2010 June 2010 Dec 2009 June 2009 Dec 2008 Face value $2.9bn $2.6bn $2.5bn $2.2bn $2.2bn Number of accounts 319 000 319,000 302 000 302,000 306 000 306,000 284 000 284,000 319 000 319,000 Payment arrange
Slide 9: To sustain performance we have expanded the volume and type of purchases
To sustain performance we have expanded the volume and type of purchases For personal use only H1 of FY11 Financials FY11 versus pcp H1 of FY11 Actual Nov 10 Guidance PDL acquisitions up 26% to $ $46.1m $ – $60m $55 $ • First half purchasing incorporates new initiatives – First significant purchases
Slide 10: Insolvency purchases will deliver an acceptable return
Insolvency purchases will deliver an acceptable return For personal use only • Lower gross return on outlay • Equivalent net return or ROE due to lower cost of collections Gross Returns Net Return or ROE 100% 40% 90% 80% 35% 70% % Purchase60% Price % ROE Collected50% 30% 40% 30% 25% 20% 10% 0% 20% Y
Slide 11: We have increased collection capacity
We have increased collection capacity capacity… For personal use only Headcount by function (FTE) 700 600 500 Support 400 Process Serving / Mercantile 300 Debt Purchase Operations 200 100 0 FY06 FY07 FY08 FY09 FY10 Dec 10 Function FY06 FY07 FY08 FY09 FY10 Dec 10 Debt Purchase Ops 182 294 405 435 516
Slide 12: …including the commencement of offshore operations
… including the commencement of offshore operations For personal use only • Commenced in November 2010 with 27 FTE • Replaced existing offshore agency • Collecting C ll ti iinto t AAustralia t li and dNNew Z Zealand l d • Achieved breakeven in third month (excluding expat costs) • Located in Manila,
Slide 13: Implemented technology-based improvement pilots
Implemented technology-based technology based improvement pilots For personal use only In-house technology Business objectives • Workflow Management tool − Automated analytically-driven software to − Reduce downtime between collection manage ledger activity actions − Presently in pilot − Enable supe
Slide 14: Solid FY11 purchasing pipeline
Solid FY11 purchasing pipeline pipeline… For personal use only 100 90 $80m 80 FY11 Purchasing 70 $65m Guide: $75 – $80m 60 Purchases 50 $m $37m Contracted 40 $75m $ as at Feb 2011 30 20 10 0 FY09 Actual FY10 Actual FY11 14
Slide 15: …and clients are benefitting from our performance
…and and clients are benefitting from our performance For personal use only • Deterioration in qqualityy of charged-off g debt continued rationing of personal credit over 2009 and 2010(1) modest increase in 90 day + card arrears reported by major banks(2) increased proportion of ‘change of cir
Slide 16: Revised guidance
Revised guidance For personal use only FY11 Updated Feb 11 Issued Nov 10 PDL acquisitions $75 - $80m $55 - $60m Adjusted EBITDA (1) $116 - $120m $112 - $116m NPAT $19 - $21m $18 - $20m EPS (basic) 41 - 46 cents 39 - 44 cents (1) Adjusted EBITDA allows for add-back of amortisation netted against coll
Slide 17: H1 of FY11 Results Presentation – Questions
For personal use only H1 of FY11 Results Presentation Questions