Pioneer Credit Ltd · ASX:PNC
Pioneer Credit — FY2017 Earnings Presentation
22 slides from Pioneer Credit's earnings presentation, Aug 24, 2017
Slide 1: FY17 Results Presentation
24 August 2017 For personal use only FY17 Results Presentation
Slide 2: Important notice: Disclaimer
2 Important notice: Disclaimer For personal use only This presentation has been prepared by Pioneer Credit Limited (“Pioneer”). Disclaimer: This presentation contains information about Pioneer’s activities current as at the date of the presentation and should not be considered to be comprehensive or
Slide 3: Corporate snapshot
3 Corporate snapshot For personal use only Financial services provider with meaningful levels of founder, Board and management ownership Overview Largest shareholders • Specialist acquirer and servicer of ‘Tier 1’1 retail customer accounts Keith John2,3 (Managing Director) 13.43% • Operates a unique
Slide 4: Highlights
4 Highlights For personal use only Largest PDP investment to date of $69.6m $69.6m Largest PDP investment to date Signed a new $110m senior debt facility to support continued growth underpins future earnings growth Invested in first New Zealand portfolio from subsidiary of a major Australian bank Co
Slide 5: Reclassification of FY16 liquidations
5 Reclassification of FY16 liquidations For personal use only Reclassified cash liquidations brings reporting in line with local and international competitors Abridged statement of cash flows ($’000) • Cash previously treated as recourse more appropriately classified FY16 Amendment FY16 as liquidati
Slide 6: Profit and loss
6 Profit and loss For personal use only Another year of outperforming market expectations and growing profitability FY16 FY17 • PDP liquidations up 14% to $70.7m • Change in Value (CIV) in line with reclassified prior period PDP Liquidations $61.9m $70.7m +14% o CIV expensing rate2 of 23.02% Net rev
Slide 7: PDP valuation and payment arrangement metrics
7 PDP valuation and payment arrangement metrics For personal use only Cautious and sophisticated valuation approach leads to consistently improving liquidations Pioneer’s valuation approach1 Key scheduled payment arrangement metrics as at 30 June 2017 • Continued development and improvement of measu
Slide 8: Balance sheet
8 Balance sheet For personal use only Asset growth reflects cash generation, disciplined investment and responsible cost management FY16 FY17 Cash and cash equivalents $4.9m $3.1m -36% • Increase in net assets driven by disciplined investment and Financial assets at fair value $111.1m $164.5m +48% o
Slide 9: Cash flow
9 Cash flow For personal use only Strong operational performance reflected in increased liquidations FY16 FY17 EBITDA1 $31.2m $35.0m +12% Gross operating cash flow $31.7m $36.3m +14% • Record PDP investment at sustainable price points o Includes $14m one off investment with strong forecast Gross ope
Slide 10: Customer centric service culture
10 Customer centric service culture For personal use only Pioneer’s Leadership Principles provide a values based framework, for every person in the business, that drive great outcomes for Pioneer’s customers and shareholders
Slide 11: How is Pioneer different?
11 How is Pioneer different? For personal use only Customer centric service that improves creditworthiness and likelihood of full repayment Typical debt purchasers Pioneer’s competitive advantage PDP Most classes of unsecured debt, incl. Part IX, ‘ Tier 1’1 customer portfolios with a preference for
Slide 12: How is Pioneer different? (cont.)
12 How is Pioneer different? (cont.) For personal use only A differentiated offering and higher standards drive great outcomes for our customers and vendors Key vendor selection Pioneer’s competitive advantage considerations • Employs strict investment discipline Purchase certainty for Preferred b
Slide 13: How does portfolio product mix drive expensing rate?
13 How does portfolio product mix drive expensing rate? For personal use only Pioneer’s portfolio consists of banking and finance products only and is different to any other significant purchaser in the market – which is reflected in a different expensing rate Liquidations $100m Banking only Mixed p
Slide 14: Vendor investment mix
14 Vendor investment mix For personal use only Vendor diversification illustrates Pioneer’s leading market position in Australia and New Zealand FY14 FY15 FY16 FY17 11% 15% 12% 23% 14% 11% 20% 77% 59% 53% 15% 16% 9% 32% Big 4 bank ‘A’ Big 4 bank ‘A’ Big 4 bank ‘A’ Big 4 bank ‘A’ Big 4 bank ‘B’ Big 4
Slide 15: Geographic distribution
15 Geographic distribution For personal use only Reflects distribution of the Australian population and Pioneer’s emergence into New Zealand Northern Territory 1.0% Queensland Western 21.5% Australia 12.9% South Australia 4.9% New South Wales 30.3% New Zealand 2.7% Victoria 23.8% ACT 1.2% Tasmania 1
Slide 16: Investment discipline
16 Investment discipline For personal use only FY17 weighted average investment price reflects largest forward flow1 arrangements to date with maintenance of long term investment discipline cents per $ Bank forward flow investment 0.20 $60m • Portfolio continues to be built out with only highest qua
Slide 17: Portfolio profile
17 Portfolio profile For personal use only Return multiples on track to exceed 4x investment • Pioneer liquidation performance is on track with $140m 1.8x o Target ~0.8x investment multiple within first year $120m o Target ~1.4x investment multiple within two years o Target ~4.0x investment multiple
Slide 18: Sustainable cash generation
18 Sustainable cash generation For personal use only Growing liquidations with efficient recycling of invested capital Cumulative cash from liquidations Yearly portfolio liquidations by investment date $300m $80m $250m 18% $60m 19% $200m 16% 7% 17% $40m 18% 22% 3% $150m 25% 11% 30% 1% 36% $20m 5% $1
Slide 19: Custodians of shareholder wealth
19 Custodians of shareholder wealth For personal use only Significant level of management ownership with incentives based on sustainable performance Management ownership Key aspects of EIP • Every Executive KMP3 member holds equity in Pioneer • 14 participants – diverse and committed executives acro
Slide 20: New products
20 New products For personal use only Focus on leveraging expertise into new market sectors with accelerating rollout of financial products Organic growth strategy for adjacencies Customer and product development Expanding into new market sectors Range of value based financial products • Pioneer’s c
Slide 21: FY18 outlook
21 FY18 outlook For personal use only Capitalising on opportunities Profit after taxation Operational opportunities $20m • Growing new financial products under exclusive partnerships with Rewardle (ASX:RXH) and Goldfields Money (ASX:GMY) $16.0m $16m • Continue to assess new PDPs and roll over existi
Slide 22: Contacts
22 Contacts For personal use only Keith R. John Leslie Crockett Sue Symmons Managing Director Chief Financial Officer Company Secretary & General Counsel P: 08 9323 5001 P: 08 9323 5008 P: 08 9323 5020 E: krjohn@pioneercredit.com.au E: lcrockett@pioneercredit.com.au E: ssymmons@pioneercredit.com.au