Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2015 Earnings Presentation
18 slides from Credit's earnings presentation, Jan 29, 2015
Slide 1: FY15 H1 Results Presentation
For personal use only FY15 H1 Results Presentation 29 January 2015 Thomas Beregi, CEO Michael Eadie, CFO
Slide 2: Leveraging our leadership in the credit-impaired consumer segment
Leveraging our leadership in the credit-impaired consumer segment For personal use only Core Australian debt buying business Credit-impaired consumer lending Leverage • Apply our experience with credit- strengths to impaired consumers • Sustainable and affordable products expand into high • Segment
Slide 3: Solid start against ingoing expectations
Solid start against ingoing expectations For personal use only Aug-14 Expectation Jan-15 Update • PDL acquisitions to reduce from $145m in • On track for $120 - $130m in FY15 FY14 to $70 - $90m in FY15 • Net lending volumes of $40 - $50m in FY15 • Presently behind pro-rata requirement • Volumes have
Slide 4: Lending drives earnings growth…
Lending drives earnings growth… For personal use only H1 FY15 Financial Results 1H15 1H14 % Change Revenue $93.7m $84.1m + 11% NPAT $20.1m $17.2m + 17% EPS (basic) 43.6cps 37.4cps + 17% Dividend 22.0cps 20.0cps + 10% H1 FY15 Results Presentation | 4
Slide 5: … at a time when PDL acquisitions have fallen
… at a time when PDL acquisitions have fallen For personal use only • PDL acquisitions down 35% over prior corresponding period • Modest net lending has reduced loan provisioning and delivered an inaugural profit • Increased net lending in H2 will reduce lending NPAT $ million FY15 FY14 H1 H2 H1 PDL
Slide 6: Strong cash flow metrics
Strong cash flow metrics For personal use only $ million Dec-14 Jun-14 Dec-13 Pre-tax operating cash flow 103.6 98.9 101.6 Tax payments (13.1) (5.5) (10.7) PDL acquisitions, lending and capex (72.6) (91.7) (105.6) Net operating (free) cash flow 17.9 1.7 (14.7) PDL and consumer loan carrying value 20
Slide 7: Operational metrics maintained – pricing discipline and accuracy
Operational metrics maintained – pricing discipline and accuracy For personal use only Cumulative Collections $m 1,400 Actual cash collections 1,200 1,000 800 Initial Projections 600 400 200 - Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Note: For
Slide 8: Operational metrics maintained - collection life-cycle
Operational metrics maintained - collection life-cycle PDL collections by date of purchase For personal use only $m 75 70 24% 65 24% 27% 25% 28% 60 25% 55 25% 25% 13% 12% 28% 23% 24% 12% 12% 50 27% 27% > 3 years 31% 13% 26% 12% 45 32% 34% 2-3 years 34% 17% 13% 13% 14% 16% 40 13% 1-2 years 9% 10% 12%
Slide 9: Operational metrics maintained - productivity
Operational metrics maintained - productivity For personal use only Debt purchase productivity (direct collection staff only) PDL collections per hour $350 $300 YTD avg. FY14/15 $202 $250 FY13/14 $196 $200 $150 $100 FY 2014/2015 FY 2013/2014 H1 FY15 Results Presentation | 9
Slide 10: Operational metrics maintained – payers base
Operational metrics maintained – payers base For personal use only Total Portfolio Dec 14 Jun 14 Dec 13 Jun 13 Dec 12 Jun 12 Face value $4.8bn $4.7bn $4.5bn $4.0bn $3.8bn $3.6bn Number of accounts 698,000 744,000 759,000 711,000 650,000 598,000 Payment arrangements Face value $963m $909m $791m $742m
Slide 11: Operational headcount to drive H2 collections
Operational headcount to drive H2 collections Period end headcount (FTE) For personal use only 1,100 1,000 900 Support 800 Financial Services 700 Mercantile 600 Debt Purchase Ops 500 400 300 200 100 0 FY10 FY11 FY12 FY13 FY14 H1 FY15 Function FY10 FY11 FY12 FY13 FY14 H1 FY15 Debt Purchase Ops 516 61
Slide 12: PDL Purchasing outlook improved during H1
PDL Purchasing outlook improved during H1 For personal use only • Price growth moderated during H1 • Expiring forward flows renewed and additional volumes secured • Purchases projected to achieve hurdle return $145m Revised FY15 Purchases $137m Purchasing $m $130m $120 -$130m $93m $92m Contracted as
Slide 13: Continued leadership in compliance and respectful practice
Continued leadership in compliance and respectful practice For personal use only • EDR complaints / $ million collected (1) FY14 FY13 General 0.6 0.6 Credit reporting (2) 0.6 0.5 Total 1.2 1.1 • Recognised leader in responding to consumer hardship: - consulted directly by Treasury and ASIC - engaged
Slide 14: Consumer lending book poised for more rapid growth
Consumer lending book poised for more rapid growth For personal use only • Growth during H1 impacted by development of infrastructure for the next phase of expansion • Momentum re-established in November and December • Annualised revenue of $33m shows the significance of this business Gross loan Hal
Slide 15: Newest products making a strong revenue contribution
Newest products making a strong revenue contribution For personal use only Credit impaired consumer lending products % of loan % of book (1) revenue (2) Secured Term: 3 - 4 Years 10% 10% Principal: Up to $20K (avg. $16K) Term: 1 - 3 Years Principal: Up to $5K 76% 70% Unsecured (avg. $3K) Term: 4 - 1
Slide 16: US debt buying market remains in disequilibrium
US debt buying market remains in disequilibrium For personal use only • Market conditions remain unchanged - Credit issuers who temporarily withdrew have not yet returned - Federal regulator has deferred ‘rule-making’ process • Operation being managed to minimise losses whilst positioning for growth
Slide 17: FY15 Guidance confirmed
FY15 Guidance confirmed For personal use only Updated Dec-14 Confirmed Jan-15 PDL acquisitions $120 - $130m $120 - $130m Net lending $40 - $50m $40 - $50m NPAT $36 - $38m $36 - $38m EPS (basic) 78 - 83 cents 78 - 83 cents H1 FY15 Results Presentation | 17
Slide 18: Questions
For personal use only Questions H1 FY15 Results Presentation | 18