Credit Corp Group Limited · ASX:CCP
Credit — Corporate Update (May 2011)
16 slides from Credit's corporate update, May 19, 2011
Slide 1: Market Update – 19 May 2011
For personal use only Market Update – 19 May 2011 Thomas Beregi Chief Executive Officer Michael Eadie Chief Financial Officer
Slide 2: Continued earnings growth
Continued earnings growth For personal use only Financials to April 2011 YTD Actual (1) Feb 11 versus pcp(1) 10 Months to Apr 11 FY11 Guidance PDL acquisitions up 40% to $75.4m $75 - $80m PDL collections and fee income up 14% to $169.8m Revenue up 20% to $94.0m Adjusted EBITDA (2) up 11% to $106.9m
Slide 3: Cash flow and balance sheet strength
Cash flow and balance sheet strength For personal use only Ten months ended $ million 30 Apr 11 30 Apr 10 EBITDA 106.9 96.1 Operating cash flow 96.3 84.0 PDL acquisitions and capex (78.2) (54.1) Free cash flow 18.1 29.9 PDL carrying value 147.0 152.6 Net bank debt 29.5 52.8 Net debt / carrying value
Slide 4: Purchases meet ingoing projections…
Purchases meet ingoing projections… For personal use only Cumulative Collections (Initial Expectations versus Actual) (July 08 – Apr 11) 500 450 400 Actual Cash Cumulative 350 Collections Collections $m 300 250 200 150 Initial 100 Projections 50 - Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar
Slide 5: …and we continue to drive collections from older PDLs...
…and we continue to drive collections from older PDLs... For personal use only PDL Collections by date of purchase 50 45 32% 32% 40 34% 39% 24% 25% 12% 27% 35 15% 22% PDL Collections 20% > 3 years $m 19% 10% 6% 30 5% 15% 2-3 years 22% 27% 28% 27% 23% 25 17% 1-2 years 21% 20% 24% 13% < 1 year 20 41%
Slide 6: …while maintaining collection efficiency
…while maintaining collection efficiency For personal use only Debt Purchase Productivity (direct collection staff only) $275 $257 $256 Average $245 $245 $250 $241 $243 YTD $238 $235 $239 $255 $231 $231 $245 2010/11 $240 $239 $224 2009/10 $232 $225 $234 $229 $228 PDL Collections $224 $224 $224 $228
Slide 7: And our strong payers base suggests this will continue
And our strong payers base suggests this will continue For personal use only Total Portfolio Apr 2011 Dec 2010 June 2010 Dec 2009 June 2009 Dec 2008 Face value $3.2bn $2.9bn $2.6bn $2.5bn $2.2bn $2.2bn Number of accounts 354,000 319,000 302,000 306,000 284,000 319,000 Payment arrangements Face value
Slide 8: 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 Financials to April 2011 YTD Actual 10 Months to FY11 versus pcp Apr 11 Feb 11 Guidance PDL acquisitions up 40% to $75.4m $75 – $80m • Purchasing to date incorporates new initiatives – First significant pu
Slide 9: 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 10: We have increased collection capacity…
We have increased collection 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 Apr 11 Function FY06 FY07 FY08 FY09 FY10 Dec 10 Apr 11 Debt Purchase Ops 182 294 405 43
Slide 11: … including the commencement of offshore operations
… including the commencement of offshore operations For personal use only • Commenced in November 2010, growing to 45 FTE in April 2011 • Replaced existing offshore agency • Collecting into Australia and New Zealand • Profitable in 5th month of operation • Located in Manila, the Philippines • Plans
Slide 12: Implemented technology-based improvement rollouts
Implemented technology-based improvement rollouts 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 − Rollout in February 2011 − Enable supervisors t
Slide 13: Expanded FY11 purchasing will contribute to strong profits in FY12…
Expanded FY11 purchasing will contribute to strong profits in FY12… For personal use only 100 FY11 Purchasing $89m 90 Guide: $87 – $89m 80 70 $65m 60 50 Contracted Purchases $37m $87m 40 as at Apr 2011 $m 30 20 10 0 FY09 Actual FY10 Actual FY11 13
Slide 14: …and we will maintain our purchasing discipline in FY12
…and we will maintain our purchasing discipline in FY12 For personal use only • Deterioration in the quality of charged-off debt over the last 18 months(1) • Credit Corp has leveraged improved operational execution to maintain attractive PDL prices • Recent evidence that competitor pricing has now e
Slide 15: Refined guidance
Refined guidance For personal use only FY11 Updated May 11 Issued Feb 11 PDL acquisitions $87 - $89m $75 - $80m Adjusted EBITDA (1) $122 - $124m $116 - $120m NPAT $20 - $21m $19 - $21m EPS (basic) 44 - 46 cents 41 - 46 cents (1) Adjusted EBITDA allows for add-back of amortisation netted against coll
Slide 16: Questions
For personal use only Market Update – 19 May 2011 Questions