Credit Corp Group Limited · ASX:CCP
Credit — FY2010 Earnings Presentation
18 slides from Credit's earnings presentation, Aug 17, 2010
Slide 1: FY10 Results Presentation
For personal use only FY10 Results Presentation Thomas Beregi Chief Executive Officer Todd Vogel Chief Financial Officer
Slide 2: NPAT growth accelerates to 25%
NPAT growth accelerates to 25% For personal use only FY10 Financials versus prior year(1) Actual May 10 Guidance PDL collections and fee income up 16% to $181.0m Revenue up 9% to $93.4m EBITDA* up 20% to $117.2m $110-115m NPAT up 25% to $13.5m $13-14m EPS (basic) up 24% to 30.5 cents 28-31 cents * E
Slide 3: Increased returns while investing for further growth
Increased returns while investing for further growth For personal use only FY10 Financials (continued) versus prior year Actual May 10 Guidance PDL acquisitions up 75% to $65.1m $64-66m (1) ROE up 2pts to 17% Dividend per share up 100% to 8.0 cents(2) (1) Prior year comparative from continuing opera
Slide 4: Superior financial position
Superior financial position For personal use only • Now insulated from credit market conditions $ million FY10 FY09 FY08(1) FY07 EBITDA*(2) 117.2 97.4 87.3 89.3 Operating cash flow 103.2 82.0 82.9 76.4 PDL acquisitions and capex 62.7 37.7 81.6 128.8 Free cash flow 40.5 44.3 1.3 (52.4) PDL carrying v
Slide 5: Recent purchases are yielding acceptable returns
Recent purchases are yielding acceptable returns… For personal use only Average FY10 purchases Cumulative percentage of purchase price collected by month 230% Month 72 (6 years) 5 * Part month depending on timing
Slide 6: We continue to drive collections from older PDLs
…and we continue to drive collections from older PDLs… For personal use only PDL Revenue by date of purchase 27% 7% 7% 9% 16% 13% 19% 22% 22% 26% 27% 35% 41% 41% 63% 58% 51% 40% 28% 22% 6
Slide 7: Maintaining our focus on the certainty of returns
…while maintaining our focus on the certainty of returns For personal use only Total Portfolio Jun 10 Dec 09 Jun 09 Dec 08 Jun 08 Dec 07 Face value $2.6bn $2.5bn $2.2bn $2.2bn $2.2bn $1.9bn Number of accounts 302,000 306,000 284,000 319,000 370,000 388,000 Payment arrangements Face value $476m $392m
Slide 8: We have grown our collection capacity
We have grown our collection capacity… For personal use only Headcount by function (FTE) Function FY06 FY07 FY08 FY09 FY10 Debt Purchase Ops 182 294 405 435 516 Process Serving /Mercantile 30 86 95 4(2) 4 Support 51 68 52(1) 50 55 Total 263 448 552 489 575 Support % 19% 15% 9% 10% 10% (1) Includes e
Slide 9: While maintaining collection efficiency
…while maintaining collection efficiency For personal use only Debt Purchase Productivity (direct collection staff only) 2010/09 2009/08 9
Slide 10: Solid FY11 purchasing pipeline
Solid FY11 purchasing pipeline… For personal use only PDL Purchases 70 65 $60m 60$70 $65 $65m FY11 Purchasing $60 $57 50 Guide: $45-60m $50 40 40 37 $40 $40 $millions 30 $40m $30 $37m Contracted 20$20 as at Aug 2010 10$10 $0 0 FY09 FY10 FY11 FY09 Actual FY10 Actual FY11 10
Slide 11: Clients are benefitting from our operational improvement
…and clients are benefitting from our operational improvement For personal use only • Deterioration in quality of charged-off debt - rationing of personal credit over calendar 2009(1) - modest increase in 90 day+ card arrears reported by major banks(2) - increased proportion of ‘change of circumstan
Slide 12: We have adopted a new accounting standard in advance
We have adopted a new accounting standard in (1) advance of its mandatory application… For personal use only From To PDL Fair value Amortised cost Measurement Effective interest method Revenue Cash collections Notional interest component only Revenue = Cash collections - Amortisation (1) AASB 9 – Fi
Slide 13: To remove speculation on the impact of its application
…to remove speculation on the impact of its application For personal use only Impact of new accounting standard on NPAT FY10 • No change FY11 • Still anticipating lower amortisation(1) (1) Initial indication provided in Feb 2010 13
Slide 14: In FY11 we will drive financial performance while investing for growth
In FY11 we will drive financial performance while continuing to invest for growth For personal use only • Expand collections capacity to drive returns from PDLs • Combine disciplined operating approach with in-house technological innovation to improve collection effectiveness and efficiency • Contin
Slide 15: More NPAT and dividend growth for FY11
More NPAT and dividend growth for FY11 For personal use only • EBITDA* of $108–112m • NPAT of $16-18m • EPS of 35-40 cents • Dividend per share of 17-20 cents Key assumptions: - PDL acquisitions of $45-60m - PDL acquisition 6 year return multiples of 2.25x to 2.50x - Productivity of $210-220 per hou
Slide 16: Questions
For personal use only FY10 Results Presentation Questions
Slide 17: Appendix – Rationing of personal credit over calendar 2009
Appendix 1 – Rationing of personal credit over calendar 2009 For personal use only Non-housing personal credit (ex margin loans) Source: RBA Statistics 17
Slide 18: Appendix – Revenue and EBITDA reconciliations
Appendix 2 – Revenue and EBITDA reconciliations For personal use only $ ‘000s Revenue FY10 FY09 PDL Collections 178,806 152,950 Less: PDL Amortisation 87,609 70,181 PDL Revenue 91,197 82,769 EBITDA*(1) NPAT 13,543 10,862 Plus: Tax 6,215 4,825 Interest 7,848 10,004 Depreciation and Impairment 1,989 1