Pioneer Credit Ltd · ASX:PNC
Pioneer Credit — H1 2019 Earnings Presentation
21 slides from Pioneer Credit's earnings presentation, Feb 26, 2019
Slide 1: 1H19 Results Presentation
25 February 2019 1H19 Results Presentation
Slide 2: Important notice: Disclaimer
Important notice: Disclaimer 2 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 to comprise all the i
Slide 3: 1H19 Financials
1H19 Financials 3 FY19 1H19 Guidance $50.5m Liquidations 1H18: $46.1m >$120m ▲9.6% $31.4m PDP Investment 1H18: $44.0m $80m ▼28.6% $24.3m EBITDA 1H18: $24.3m >$65m Steady $5.5m NPAT 1H18: $8.1m >$20m ▼32.7%
Slide 4: A half of tactical realignment
A half of tactical realignment 4 We continue to challenge performance and test new strategies… Pioneer continues to develop and challenge its operational strategy • Operational strategies were tested in 1H which resulted in lower liquidations than expected • Strategies have been adjusted with early
Slide 5: A half of tactical realignment
A half of tactical realignment 5 ... and are better positioned to benefit from a changing landscape… Upfront investment in compliance enhancements • We ramped up compliance and infrastructure investment in 1H to further reinforce our reputation o Driven by early read from the Hayne Royal Commission
Slide 6: A half of tactical realignment
A half of tactical realignment 6 … with a logical path to FY19 guidance Pioneer have a track record of performance Liquidations split • Liquidations split is consistent with past performance 58% 56% Focus on operational strategy • Strategy re-alignment 44% 42% • Emphasis on core operations with lend
Slide 7: Profit & loss
Profit & loss 7 Liquidations continue to grow, but not quite to our expectations… 1H18 1H19 PDP liquidations ($m) PDP liquidations $46.1m $50.5m 10% Services & lending revenue $1.5m $1.7m 10% CAGR = 26% >120.0 Net revenue $36.8m $40.5m 10% 101.7 EBITDA $24.3m $24.3m - 70.7 EBIT margin 34.9% 26.9% -
Slide 8: Cash flow
Cash flow 8 ... though “cash is king” and cash conversion remains very strong… 1H18 1H19 EBITDA $24.3m $24.3m - EBITDA ($m) Gross operating cash flow $25.4m $24.8m (2%) CAGR = 27% >65.0 Gross operating cash flow / EBITDA 105% 102% - 54.3 Net cash inflow from operating activities $22.1m $15.3m (31%)
Slide 9: NPAT 1H18 to 1H19
NPAT 1H18 to 1H19 9 ... with an upfront investment in compliance and infrastructure… Employee/ 1H18 Infrastructure Change in Depreciation/ Interest & Income 1H19 Revenue contractor NPAT costs value of PDPs amortisation finance costs tax NPAT costs
Slide 10: Cash bridge Jul-14 to Dec-18
Cash bridge Jul-14 to Dec-18 10 … and a capital cycle that has funded wise reinvestment in growing the business... Inflow PDP Outflow Outflow $30.7m $275.5m $141.6m $156.9m $9.0m $12.6m $8.2m $24.1m Operating Change in Net interest & Capital Equity PDPs PLs Dividends cash flow net debt other expendi
Slide 11: Balance sheet
Balance sheet 11 ... with a balance sheet positioned to support growth PDPs at fair value ($m) FY18 1H19 Cash and cash equivalents $3.4m $4.1m 21% 244.0 224.6 Financial assets at fair value $224.6m $244.0m 9% 164.5 Total assets $244.8m $270.8m 11% Borrowings $129.0m $149.7m 16% 111.1 81.9 Total liab
Slide 12: Our culture is our difference
Our culture is our difference 12 Pioneer Principles drive great outcomes for all stakeholders
Slide 13: Our culture is our difference
Our culture is our difference 13 Pioneer’s competitive advantage • Inclusive and empowering Our culture Pioneer Principles • Embedded in values for all stakeholders • Strict investment discipline Analytics drives selection of lower risk portfolios PDP selection • ‘Tier 1’ portfolios Preferred
Slide 14: Investment discipline
Investment discipline 14 Discipline underpins investment at attractive price points across diverse vendors and products... cents per $ Annual PDP investment $m 0.20 90 80 70 60 50 40 30 20 10 - FY14 FY15 FY16 FY17 FY18 FY19F 1H19 Inventory and non-bank forward flow (RHS) Bank forward flow (RHS) Weig
Slide 15: Payment arrangement portfolio
Payment arrangement portfolio 15 ... which translates to a growing arrangements portfolio that is ~50% of yearly liquidations... Growth in PA book PA book metrics CAGR = 28% 22,183 customers $295m 3.7% $257m >30 days in arrears 7 bps decrease on 1H18 $215m 2.5 years average existing relationship $15
Slide 16: Sustainable cash generation
Sustainable cash generation 16 ... and steadily increasing cash from older vintages... Portfolio liquidations by investment date • Liquidations from newer vintages in FY18 influenced by 7% investment growth immediately prior and during that period 19% 18% 20% 15% 18% 18% 11% • As investment growth s
Slide 17: PDP investment
PDP investment 17 ... all of which result in increasing returns beyond investment Cumulative cash generation $500m • Cumulative liquidations are accelerating compared to cumulative $400m investment o Demonstrates the quality of the portfolio, across all vintages $300m • Balanced against low PDP inve
Slide 18: Personal loan portfolio
Personal loan portfolio 18 Lending paused while awaiting regulatory clarity # of loans disbursed 526 Average loan disbursed $19,407 Personal loan customers by state Total loans disbursed $10.2m Average term 5.1 years Average interest rate 13.7% 1% Average age of customer 38 years 23% 25% • 0.4% arre
Slide 19: FY19 outlook
FY19 outlook 19 Discipline and focus on the medium term creates value Innovation • Continue to invest in new operational strategies o Some work, some don’t... and then we pivot to continue to meet our commitments to the market o We will continue to test new strategies, in a controlled manner • InDeb
Slide 20: FY19 outlook
FY19 outlook 20 A market of increasing opportunity for a disciplined Pioneer Changing market dynamics drive relationship opportunities for Pioneer as the provider of differentiated services • Lowest 1H investment price in over 3 years – continued demonstration of ability to invest on attractive term
Slide 21: Contacts
Contacts 21 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