Pioneer Credit Ltd · ASX:PNC
Pioneer Credit — H1 2018 Earnings Presentation
17 slides from Pioneer Credit's earnings presentation, Feb 27, 2018
Slide 1: 1H18 Results Presentation
27 February 2018 1H18 Results Presentation
Slide 2: Important notice: Disclaimer
2 Important notice: Disclaimer 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: Highlights
3 Highlights Increased senior debt facility to $130m to underpin growth $44.0m 1H18 PDP investment FY18 now contracted at $80m Finalised personal loan product for existing and external customers Launched Pioneer Path personal finance mobile app Westpac Institutional Bank and Acacia Partners appointe
Slide 4: Profit and loss
4 Profit and loss Another half of outperforming expectations and growing profitability Now upgraded 6% above initial guidance 1H17 1H18 Profit after tax ($m) PDP liquidations $31.3m $46.1m +47% >17.0 +57% Net revenue $24.6m $36.8m +50% EBITDA $15.2m $24.3m +60% 10.8 EBIT $7.0m $12.8m +83% 9.5 7.8 NP
Slide 5: Cash flow
5 Cash flow Disciplined investment, scale and quality recruitment are driving strong cash generation 1H17 1H18 EBITDA ($m) EBITDA $15.2m $24.3m +60% Gross operating cash flow $15.8m $25.4m +61% +51% >53.0 Net cash inflow from operating activities $9.6m $22.1m +130% PDP investments +48% 35.0 ($25.6m)
Slide 6: Balance sheet
6 Balance sheet Asset growth reflects disciplined investment and cautious approach to PDP valuation 1H17 1H18 PDPs at fair value ($m) Cash and cash equivalents $2.4m $5.5m +129% +34% ~220.0 PDPs at fair value $128.1m $197.6m +54% Total assets $143.3m $214.8m +50% 164.5 Borrowings $70.0m $101.5m +45%
Slide 7: Investment discipline
7 Investment discipline Price certainty underpinned by strong vendor relationships cents per $ Annual PDP investment $m 0.20 90 80 • Portfolio continues to be built with only highest quality 70 customers, critical when considering a return multiple 60 o Includes only ‘Tier 1’ customers – mostly bank
Slide 8: New PDP type – LMI residuals
8 New PDP type – Lenders Mortgage Insurance residuals Commenced ‘industry first’ forward flow agreement for LMI, a new growth opportunity • Agreement in November 2017 after extensive due diligence by 603 both Pioneer and LMI partner customer accounts acquired to date • Pioneer chosen because of thei
Slide 9: PDP customer portfolio
9 PDP customer portfolio Diversified vendor mix with geographic distribution reflective of the Australian population PDP investment by region PDP face value by vendor segment 0.9% 22% 19 vendor partners 21.4% Aust. big 4 banks Regional 14.0% 14% 64% Other 4.6% 31.2% 1.0% 24.3% 1.1% 1.5%
Slide 10: Payment arrangement growth
10 Payment arrangement growth PA book discipline continues to underpin a sustainable source of liquidations Growth in scheduled payment arrangements 22,000 $12,918 $260m average balance • Data analytics better identifying customers most likely to 21,000 $250m $250m benefit from a sustainable PA – im
Slide 11: Growing liquidations with efficient recycling of capital
11 Growing liquidations with efficient recycling of capital Strongest year one liquidations reflect quality analytics to realise prior period investment… Cumulative cash generation Portfolio liquidations by investment date $350m 100% 7% 11% 19% 18% 14% 19% $300m 18% 80% 12% 18% 16% 14% $250m 36% 18%
Slide 12: Return multiples on track
12 Return multiples on track ...with growth in liquidations increasing across all age brackets Committed return by year of investment • Pioneer long term liquidation performance is on track $140m 1.8x • Long term pricing discipline continues $120m • Service offering focused on sustainable payment $1
Slide 13: We have commenced personal lending
13 We have commenced personal lending • Commenced ‘on balance sheet’ lending in February o Digital application and approval process o Data on over 200,000 financial consumers used during assessment and risk-based pricing process Expected average interest rate 15.8% o Senior product team all with ext
Slide 14: Custodians of shareholder wealth
14 Custodians of shareholder wealth Significant level of management ownership with incentives rewarding sustainable performance Management ownership Vesting profile of EIP • Every Executive has equity and participates with 2018 2019 2020 2021 senior management in the Equity Incentive Plan (EIP) Exec
Slide 15: FY18 outlook
15 FY18 outlook Changing competitive landscape as market opportunity continues to expand Profit after tax ($m) On-balance sheet lending portfolio • Up to $40m OTC bond in the market and expected to close during March +57% • Lending commenced during February - targeting $30m book by December 2018 >17
Slide 16: Glossary
16 Glossary Tier 1 Customers not regarded as credit impaired when originated MACC Medium Amount Credit Contract SACC Small Amount Credit Contract Liquidations Liquidations comprise the flow of economic benefits from the acquiring and servicing of PDPs including all cash-flow sources from each portfo
Slide 17: Contacts
17 Contacts 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