Pioneer Credit Ltd · ASX:PNC
Pioneer Credit — H1 2016 Earnings Presentation
31 slides from Pioneer Credit's earnings presentation, Feb 22, 2016
Slide 1: 1H16 Financial Results
For personal use only 1H16 FINANCIAL RESULTS Keith John, Managing Director Date: 22 February 2016
Slide 2: Important Notice: Disclaimer
Important Notice: Disclaimer This presentation has been prepared by Pioneer Credit Limited (Pioneer). For personal use only Summary of information: This presentation contains general and background information about Pioneer’s activities current as at the date of the presentation and should not be co
Slide 3: Contents
Contents For personal use only 1 1H16 Overview 4 Market Conditions & Outlook 2 Financial Highlights 5 Appendices 3 Key Portfolio Metrics 3
Slide 4: 1H16 Overview
For personal use only 1H16 Overview 4
Slide 5: Who is Pioneer Credit?
Who is Pioneer Credit? For personal use only Pioneer is an Australian financial services provider, specialising in acquiring and servicing unsecured retail customer portfolios. These portfolios consist of people with Corporate Summary financial obligations to Pioneer who As at 19 February 2016 are o
Slide 6: 1H16 Headlines
1H16 Headlines For personal use only Strong Revenue and Strong Cash Earnings Growth Generation • Net Revenue of $21.1m up 36% • Free Cash Flow of $13.9m up 45% • Stat. Profit after Tax of $3.3m up 152% • Funds PDP investment and evidences • Operating Profit after Tax up 105% strong PDP liquidation •
Slide 7: Financial Highlights
For personal use only Financial Highlights 7
Slide 8: Financial Highlights: Strong Cash Generation
Financial Highlights: Strong Cash Generation For personal use only (A$ millions) Actual • Strong cash generation and free cash flow Cash Flow for Year End 1H15 1H16 to enable continued disciplined investment Gross Operating Cash Flow 9.6 13.9 • Cash for PDP acquisitions Working capital changes (0.1)
Slide 9: Financial Highlights: Strong Earnings Growth
Financial Highlights: Strong Earnings Growth For personal use only (A$ millions) Actual • Net Revenue growth of 36% P&L 1H15 1H16 • EBIT Margin of 26% Net Revenue 15.5 21.1 • EBIT growth of 112% highlighting expense discipline and Operating Expenses (12.3) (14.9) strong portfolio value management EB
Slide 10: What is Change in Value?
What is Change in Value? For personal use only PNC purchases PDPs. Vendor Partner Initially recognised on balance sheet at cost of acquisition. PNC liquidates accounts. 100% of payment (cash) only is Customer recognised as Customer Payments/Liquidation of PDPs Balance Date • Valuation model utilised
Slide 11: Financial Highlights: Improved Expensing Rate
Financial Highlights: Improved Expensing Rate For personal use only • PNC classify PDPs at Fair Value through Profit and Loss (FVTPL) AASB 139 • PNC hold the last three months of acquired portfolios at investment cost (less liquidations) • PNC apply a cautious view to Total Expected Liquidations (TE
Slide 12: Portfolio Performance: Improved Expensing Rate
Portfolio Performance: Improved Expensing Rate For personal use only What’s Changing? What’s staying the same? Continued improvements in operational execution Purchasing discipline • More data sources and better analytics • Acquire best value customers available • More located customers at an increa
Slide 13: Portfolio Performance: Improved Expensing Rate
Portfolio Performance: Improved Expensing Rate For personal use only What’s good for our vendors? Surety of purchase commitment Compliance record • PNC has never walked away from a • PNC has never had a negative outcome forward flow agreement with any originator at an ombudsman level and has never •
Slide 14: Key Portfolio Metrics
For personal use only Key Portfolio Metrics 14
Slide 15: Effective Relationships: Disciplined Capital Allocation
Effective Relationships: Disciplined Capital Allocation For personal use only Historical Aggregate Portfolio Investment1,2 Pioneer purchases retail customer accounts at ~180 days overdue • Purchases Tier 1 customers (not regarded as credit impaired when originated) • Maintenance of strong pricing di
Slide 16: Portfolio Geographic Spread
Portfolio Geographic For personal use only Spread Portfolio distribution1 by location Note 16 1. Based on number of customer accounts
Slide 17: Service Excellence: Annuity Arrangement Stream
Service Excellence: Annuity Arrangement Stream For personal use only Payment Arrangement Book Current Balance ($m)2 Payment Arrangement Book1 • Annuity type book – which performs like a performing loan book with just a 3.5% default rate per annum • Payment Arrangement Book has grown to $150m • Book
Slide 18: Continued Strong and Improving Liquidations
Continued Strong and Improving Liquidations For personal use only • Customer Payments up 22% Customer payments by date of investment1 • Demonstrates performance across entire portfolio with increasing contributions from older part of portfolio • Half-on-half growth in line with expectation • Strong
Slide 19: Market Conditions & Outlook
For personal use only Market Conditions & Outlook 19
Slide 20: Australian Debt Sale Market: Overview
Australian Debt Sale Market: Overview For personal use only The Australian Debt Sale market is characterised by over 40 credit issuers who are actively engaged with approximately 20 debt buyers. Over 80% of market investment is: • Sold by 6 major credit issuers (CBA, NAB, ANZ, Westpac, GE & Telstra)
Slide 21: Market Conditions and Update
Market Conditions and Update For personal use only • Size of overall target receivables segment – estimated at ~$300m • Growth of overall target receivables segment - estimated at ~4% per annum • Key economic indicators driving the overall market o Wage Price growth – wages are growing at their lowe
Slide 22: FY16 Outlook
FY16 Outlook For personal use only • Continued focus on the demonstration and value of differentiated business strategy for vendor partners • Investment to remain focused on similar PDPs as historically acquired • Significant investment in corporate and administrative overhead starting to drive oper
Slide 23: Appendices
For personal use only Appendices 23
Slide 24: Leadership Principles
For personal use only Leadership Principles 24
Slide 25: The Leadership Principles
| THE LEADERSHIP PRINCIPLES | TECHNICAL Competence , Be consistent and relentless in exhibiting da best practice and sharpening your skills. Always act with integrity. UNWAVERING Passion fi The fire inside you and the love for what you do and for your team needs to be visible to all around you. UNLI
Slide 26: Board & Senior Management
For personal use only Board & Senior Management 26
Slide 27: Board of Directors
Board of Directors For personal use only Michael Smith Mark Dutton Keith R. John Rob Bransby Anne Templeman - Jones Chairman Non-Executive Founder and Managing Non-Executive Non-Executive Director Director Director Director
Slide 28: Board of Directors
Board of Directors For personal use only • Appointed Non-Executive Chairman of Pioneer in February 2014 Michael Smith • Managing Director of strategic marketing consultancy firm Black House Chairman • Chairman of 7-Eleven Stores Pty Ltd and the Lionel Samson Sadleir Group, Board Member of Creative P
Slide 29: Executive Team
Executive Team For personal use only Leslie Crockett Sue Symmons Keith R. John Lisa Stedman Tony Bird Chief Financial Officer General Counsel and Founder and Managing Chief Operating Officer Chief Risk Officer Company Secretary Director
Slide 30: Executive Team
Executive Team For personal use only • Founder of Pioneer and has been in the receivables management industry since 1988 Keith R. John • Formerly a Director of ACA International Inc (the US based representative body of the worldwide receivables management industry) and TCM Group Founder and Internat
Slide 31: Contacts
Contacts For personal use only Keith R. John Leslie Crockett David Ikin Managing Director Chief Financial Officer Senior Counsel P: 08 9323 5001 P: 08 9323 5008 Professional Public Relations P: 08 9388 0944 / 0408 438 772 E: krjohn@pioneercredit.com.au E: lcrockett@pioneercredit.com.au E: david.ikin