Credit Corp Group Limited · ASX:CCP
Credit — FY2009 Earnings Presentation
17 slides from Credit's earnings presentation, Aug 18, 2009
Slide 1: FY09 Results Presentation
For personal use only FY09 Results Presentation Thomas Beregi Chi f E Chief Executive ti Offi Officer Todd Vogel Chief Financial Officer
Slide 2: FY09 Financials
R Record d EBITDA on hi historically t i ll llow purchasing h i For personal use only FY09 Financials versus prior year Actual May 09 Guidance PDL acquisitions down 52% to $37.2m $35-40m Revenue(3) up 8% to $155 8m $155.8m EBITDA(2),(3) up 12% to $97.4m $93-95m NPAT(1),(2) up 3% to $10.7m $10-11m EP
Slide 3: Strong financial position
St Strong financial fi i l position iti For personal use only • $43m $43 iimprovementt iin ffree cash h flflow ffrom FY08 • Gearing at lowest level since during FY04 (1) $ million FY09 FY08(2) FY07 EBITDA(3) 97.4 87.3 89.3 Operating cash flow 82 0 82.0 82 9 82.9 76 4 76.4 PDL acquisitions and capex
Slide 4: Purchases continue to yield acceptable returns
P h Purchases continue ti tto yield i ld acceptable t bl returns… t For personal use only Average FY09 purchases Cumulative percentage of purchase price collected by month 230% FY10 Guide 225%-250% 50% 46% Actual Forecast 43% 40% 36% % of 34% 30% purchase 25% price collected 23% 20% 10% 10% 9% 0% Mo
Slide 5: We have improved the performance of older PDLs
…and d we h have iimproved d th the performance f off older ld PDLs PDL For personal use only PDL Revenue by date of purchase $m 40 35 14% 16% 25% 31% 30 21% 38% 50% 41% 53% 23% 2 25 26% > 2 years 20 27% 35% 1-2 years 41% 40% 23% < 1 year 15 36% 15% 63% 58% 10 52% 40% 28% 32% 5 22% 23% 27% 0 Q1 Q2 Q
Slide 6: Operational improvement initiatives are on track
O Operational ti l improvement i t initiatives i iti ti are on ttrack k For personal use only Debt Purchase Productivity (direct collection staff only) $250 $239 $238 2007/08 $234 $231 $227 $229 $227 $229 2008/09 $231 $225 $229 Revenue FY10 Guide per hour $214 $212 $209 $205-$215 $204 $200 $197 $194
Slide 7: The business is now positioned for growth
…and d th the b business i iis now positioned iti d ffor growth th For personal use only • Existing portfolio positioned to deliver consistent returns • Financial capacity expanded • Purchasing set to increase • Productive capacity growing • Relationships developing 7
Slide 8: Existing portfolio returns underwritten by payment arrangement growth
Existing portfolio returns underwritten by payment arrangementt growth th For personal use only Total Portfolio June 2009 Dec 2008 June 2008 Dec 2007 Face value $2 2bn $2.2bn $2 2bn $2.2bn $2 2bn $2.2bn $1 9bn $1.9bn Number of accounts 284,000 319,000 370,000 388,000 Payment arrangements Face value
Slide 9: Extended bank facility secures ability to purchase $60m+ pa
Extended bank facility secures the ability to purchase h $60 $60m++ pa over ththe nextt 2 years For personal use only • Considerable unutilised headroom Actual ratio at June 09: 2.1x Facility min 2.00x Asset Cover 1.75x R ti * Ratio* 1.70x (x multiple) 1.55x Facility limit $120m $m Amount $ $45m dra
Slide 10: Purchasing growth will drive future earnings
P h i growth Purchasing th will ill d drive i ffuture t earnings i For personal use only Purchases by half year FY09 Actual FY10 Committed FY10 Guide $ $37m $42m $45-$60m 30 25 24 24 $m 20 18 18 15 13 10 5 0 H208 H109 H209 H110 H210 Committed/optioned as Actual att Aug A 09 10
Slide 11: Collection capacity is growing in line with purchasing
C ll ti capacity Collection it iis growing i iin liline with ith purchasing h i For personal use only Headcount by function (FTE) 600 Debt Purchase Operations 500 Process Serving / Mercantile 400 300 Support 200 100 0 FY04 FY05 FY06 FY07 FY08 FY09 Function FY04 FY05 FY06 FY07 FY08 FY09 FY10 Guide De
Slide 12: Relationships will be critical to sustainable growth
R l ti Relationships hi will ill b be critical iti l tto sustainable t i bl growth th For personal use only • Currently part of the debt sale program of 3 of the 4 major banks • Increased share secured over the last quarter • Trusted service partner 12
Slide 13: Approach to PDL carrying value is unchanged
A Approach h tto PDL carrying i value l iis unchanged h d For personal use only • PDLs are held at fair value in accordance with AASB139 Discounted cash flow analysis assumptions I Input t A Assumptions ti and/or d/ b basis i ffor assumptions ti • Maximum of 6 years from the date of acquisition Usef
Slide 14: Accelerated impairment of PDLs in FY09
A Accelerated l t d iimpairment i t off PDLs PDL in i FY09 For personal use only Drivers of additional impairment: • Above forecast collection revenue • Modest FY09 purchasing • Allowance for impact of rising unemployment* FY09 FY08 Impairment charge $70.2m $59.6m Percentage of PDL revenue 46% 42% P
Slide 15: Some risks remain
S Some risks i k remain i For personal use only Ri k Risk Miti ti Mitigation • Impact of increased unemployment on • Limit the duration of purchasing commitments future collections • Allow for projected increases in the proportion of unemployed debtors in purchasing and productivity forecasts • D i
Slide 16: NPAT growth for FY10
NPAT growth th ffor FY10 For personal use only • EBITDA of $88-$92m* • NPAT of $11-$13m* • EPS of 25-29 cents • Dividend of 5-6 cents/share (policy of 20% payout ratio) • Key assumptions: – PDL acquisitions of $45-$60m – PDL acquisition 6 year return multiples of 2 2.25x 25x to 2 2.50x 50x – Product
Slide 17: Questions
For personal use only FY09 Results Presentation Questions