Pioneer Credit Ltd · ASX:PNC
Pioneer Credit — FY2016 Earnings Presentation
32 slides from Pioneer Credit's earnings presentation, Aug 19, 2016
Slide 1: FY2016 Financial Results
For personal use only FY2016 FINANCIAL RESULTS 19 August 2016
Slide 2: Contents
Contents For personal use only 3 Company and strategy overview 11 FY2016 results overview 21 The investment case 27 Appendix 22
Slide 3: Company and strategy overview
For personal use only Company and strategy overview 33
Slide 4: Corporate snapshot
Corporate snapshot For personal use only Strong, growing balance sheet and supportive register with high levels of founder, Board and management ownership Top shareholders • Pioneer specialises in acquiring and servicing ‘Tier 1’1 retail Keith John and associates Pioneer Managing Director 17.1% debt
Slide 5: Australian retail debt sale market overview
Australian retail debt sale market overview For personal use only Growing industry with macro tailwinds accessible to only a small number of participants • Concentrated industry, c. 80% of investment sold by 6 Make-up of Australian retail debt sale market in FY2015 issuers (big 4 Banks, GE and Telst
Slide 6: How is Pioneer different?
How is Pioneer different? For personal use only Competitive advantage through customer-centric strategy that improves the credit standing of customers while maximising likelihood of full repayment Typical debt purchasers Pioneer’s competitive advantages PDP Most classes of unsecured debt, including
Slide 7: PDP agreements
PDP agreements For personal use only Pioneer predominantly purchases portfolios via Forward Flow Agreements, providing predictable and repeatable revenue streams • A Forward Flow Agreement occurs when Pioneer agrees to purchase and a vendor agrees to sell a proportion of a loan portfolio meeting agr
Slide 8: PDP agreements (cont.)
PDP agreements (cont.) For personal use only Pioneer takes particular care in ensuring that vendor relationships are nurtured and a reputation of rigour, cautiousness, reliability and quality is maintained 1 Purchase certainty 3 Transparency • Pioneer employs strict pricing discipline • Pioneer prov
Slide 9: Change in Value – PDPs
Change in Value – PDPs For personal use only Pioneer’s cautious and sophisticated valuation approach is leading to consistently improving asset values PDP Institution sells portfolio at a Financial institution investment discount to face value Balance Recognised at cost on PDPs valued to fair value
Slide 10: Change in Value – PDPs (cont.)
Change in Value – PDPs (cont.) For personal use only Pioneer’s disciplined investment and stable, optimised operating platform is leading to consistently improving asset values • 12% increase in number of located customers in FY2016 Carrying value (A$m) 120 • 9% or $5.2m contribution to FY2016 liqui
Slide 11: FY2016 results overview
For personal use only FY2016 results overview 11 11
Slide 12: FY2016 operational highlights
FY2016 operational highlights For personal use only High degree of operational success throughout FY2016…. Introduction of a dividend reinvestment plan Pioneer’s customer distribution • Facilitates raising of incremental capital • Effective and cost efficient way for shareholders to increase their i
Slide 13: FY2016 financial results highlights
FY2016 financial results highlights For personal use only …which translated to pronounced financial success Net revenue (A$m) EBIT (A$m) All FY2016 guidance met or exceeded • PDP acquisitions above A$42.0m A$42.3m • EBIT margin of at least 31% 32.2% • NPAT of at least A$8.8m A$9.5m 47.8 15.4 3
Slide 14: Key profit & loss metrics
Key profit & loss metrics For personal use only Pleasing enhancement of all key profit & loss metrics Key profit & loss metrics FY2015 FY2016 • FY2016 profit & loss guidance beaten: PDP liquidations A$55.2m A$60.4m 9% EBIT margin of at least 31% CIV (A$16.7m) (A$13.1m) 22% Net profit after t
Slide 15: Key cash flow metrics
Key cash flow metrics For personal use only Pioneer continued to achieve strong cash generation in FY2016 Key cash flow metrics FY2015 FY2016 • PDP acquisitions of A$42m in line with guidance Gross operating cash flow A$29.2m A$30.1m 3% o A disciplined choice to not Operating cash flow pre PDP acq
Slide 16: Key balance sheet metrics
Key balance sheet metrics For personal use only Pioneer has a strong, growing balance sheet and sits well within debt covenants Key balance sheet metrics FY2015 FY2016 • Large cash increase evidences strong PDP liquidation and supports continued growth Cash and cash equivalents A$2.2m A$4.9m 126%
Slide 17: Key PDP metrics
Key PDP metrics For personal use only Maintenance of strong pricing discipline across well understood products • Demonstrated capital allocation discipline across EPS Historical aggregate PDP investment2,3 accretive investments that lead to further opportunities Total face value acquired = A$1,177m
Slide 18: Key PDP metrics (cont.)
Key PDP metrics (cont.) For personal use only Pioneer’s pricing has reduced or been stable across all key PDP types cents per A$ of face value FY2013 FY2014 FY2015 FY2016 Personal finance pricing1 (cents per A$ of face value) 12 Credit cards1 17.03 16.99 17.81 15.66 10 Personal finance1 11.35 10.63
Slide 19: Key PDP metrics (cont.)
Key PDP metrics (cont.) For personal use only Increasing liquidations and contributions from older parts of PDPs continue to build • Average account balance of payment Half-yearly liquidations arrangement customers is A$10,624 35,000 o Weighted average age of payment Customer payments (A$’000) 30,00
Slide 20: FY2017 outlook
FY2017 outlook For personal use only Another year of growth expected for Pioneer FY2017 operational outlook • The Directors are encouraged by the Company’s prospects for FY2017 • Favourable changes to the debt sale environment have led to Pioneer already having commitments in place for PDP purchasin
Slide 21: The investment case
For personal use only The investment case 21 21
Slide 22: Founder's story
Founder’s story For personal use only Entrepreneurial founder involved in Pioneer’s business since its inception, supported by outstanding Board and executive team 1991 Pioneer is formed following a merger of its predecessor process serving business, West Coast Process Servers, and a debt recovery a
Slide 23: Historical financials
Historical financials For personal use only Pioneer has a proven track record of strong performance across key financial metrics Net revenue (A$m) CAGR = 49% EBIT (A$m) CAGR = 49% 47.8 15.4 38.7 12.1 25.7 7.3 16.6 5.9 9.6 3.1 FY2012 FY2013 FY2014 FY2015 FY2016 FY2012 FY2013 FY2014 FY2015 FY2016 EBIT
Slide 24: Historical financials (cont.)
Historical financials (cont.) For personal use only Pioneer is currently trading at a little over half its forecast price to earnings ratio at IPO despite outstanding operational, financial and corporate achievements since IPO prospectus (4-Apr-14)1 FY2014 results FY2015 results FY2016 results Share
Slide 25: Focus on shareholder returns
Focus on shareholder returns For personal use only Board and management ownership of over 36% supports an ongoing focus on delivering strong underlying earnings growth Total shareholder returns1 EPS and DPS (cents) • At highest level since IPO • FY16 EPS of 20.4c, up 24% over prior corresponding per
Slide 26: Expansion
Expansion For personal use only Pioneer is successfully growing beyond its core business and expanding into new market sectors New PDPs and vendor Expanding into new Diversified product partnerships market sectors offering • Continued growth through the • Pioneer’s core skills, expertise • New sub-b
Slide 27: Appendices
For personal use only Appendices 27 27
Slide 28: Leadership Principles
Leadership Principles For personal use only KPIs are tested against Pioneer’s Leadership Principles for qualitative alignment; it is through these principles that the Company has experienced its strong financial performance and exceptional brand growth 28 28
Slide 29: Board of Directors
Board of Directors For personal use only Highly credentialed Board of Directors with significant senior expertise in the receivables management industry, invested in Pioneer’s success Michael Smith • Managing Director of strategic marketing consultancy firm Black House • Chairman of 7-Eleven Stores
Slide 30: Executive team
Executive team For personal use only Proven executive team with a well rounded and diversity of experience Leslie Crockett • A range of experience across a variety of industries including financial services, property development, construction, retail & manufacturing • Chartered Accountant with an in
Slide 31: Important notice: disclaimer
Important notice: disclaimer For personal use only This presentation has been prepared by Pioneer Credit Limited (“Pioneer”). Summary of information: This presentation contains general and background information about Pioneer’s activities current as at the date of the presentation and should not be
Slide 32: Contacts
Contacts For personal use only Keith R. John Leslie Crockett David Ikin Managing Director Chief Financial Officer Senior Account Director P: 08 9323 5001 P: 08 9323 5008 Professional Public Relations E: krjohn@pioneercredit.com.au E: lcrockett@pioneercredit.com.au P: 08 9388 0944 / 0408 438 772 E: d