Credit Corp Group Limited · ASX:CCP
Credit — FY2016 Earnings Presentation
20 slides from Credit's earnings presentation, Aug 2, 2016
Slide 1: FY16 Results Presentation
For personal use only FY16 Results Presentation 2 August 2016 Thomas Beregi, CEO Michael Eadie, CFO
Slide 2: Competitive leadership in the credit impaired consumer segment
Competitive leadership in the credit impaired consumer segment… For personal use only FY16 Results Presentation | 2
Slide 3: FY16 Financial Results
…delivers 20% growth in 2016… For personal use only FY16 Financial Results FY16 FY15 $ Change % Change Debt Buying $173.2m $155.1m +$18.1m Lending $53.5m $36.0m +$17.5m Total revenue $226.7m $191.1m +$35.6m +19% Debt Buying 1 $39.8m $37.4m +$2.4m Lending $6.1m $1.0m +$5.1m NPAT total $45.9m $38.4m +
Slide 4: Together with strength and diversification
…together with strength and diversification For personal use only Australia / NZ USA Debt Buying (Core) Consumer Lending Debt Buying • Operational superiority • The sustainable alternative for • Large market - Highest asset turnover (1.5x p.a.1) consumers with impaired credit - > 10x AUS / NZ - Lowe
Slide 5: Significant investment to accelerate growth
Significant investment to accelerate growth… For personal use only FY16 FY15 Operating cash flow $229.0m $189.1m PDL acquisitions $(236.4)m $(139.4)m Net lending $(55.1)m $(51.1)m Capex $(2.0)m $(0.9)m Net operating (free) cash flow $(64.5)m $(2.3)m PDL carrying value $253.3m $164.9m Consumer loan n
Slide 6: Maintaining strong returns on shareholder funds
…while maintaining strong returns on shareholder funds For personal use only Cents per share ROE % 23% 17% EPS CAGR 22% 98 83 75 70 58 50 47 44 40 37 29 31 20 8 FY10 FY11 FY12 FY13 FY14 FY15 FY16 DPS EPS ROE FY16 Results Presentation | 6
Slide 7: Additional financial capacity to seize opportunities
Additional financial capacity to seize opportunities For personal use only • Significant covenant headroom remains • Additional $30m tranche of senior debt closed early in FY17. Total available facilities now $180m $400m 80% $300m 60% $200m 40% $100m 20% - 0% FY14 FY15 FY16 FY14 FY15 FY16 PDL carryi
Slide 8: Operational metrics maintained - pricing discipline and accuracy
Operational metrics maintained - pricing discipline and accuracy For personal use only Cumulative collections $ 2,000m $2.0b Actual cash collections $ 1,500m $1.5b $ 1,000m $1.0b Initial projections $ 500m $0.5b - Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Ju
Slide 9: Operational metrics maintained - collection life-cycle
Operational metrics maintained - collection life-cycle For personal use only +12% PDL collections by vintage $90m $75m 31% 30% 32% 23% 32% 24% 28% $60m 25% 26% 29% 31% 32% 13% 12% 15% 12% 12% 17% 15% 11% 17% $45m 13% 14% 15% 16% 17% 19% 16% 20% 22% 15% 19% 15% 25% 23% $30m 22% 48% 47% $15m 44% 43% 3
Slide 10: Operational metrics maintained - productivity
Operational metrics maintained - productivity For personal use only Debt purchase productivity (direct collection staff only) PDL collections per hour $ 300 Full year average FY16: $203 FY15: $200 $ 250 $ 200 2015/16 2014/15 $ 150 $ 100 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY16 Results Pr
Slide 11: Operational metrics maintained - payers base
Operational metrics maintained - payers base For personal use only Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Total portfolio Face value $4.7bn $4.8bn $4.9bn $5.1bn $5.3bn Number of accounts 744,000 698,000 703,000 687,000 673,000 Payment arrangements Face value $909m $963m $1,044m $1,099m $1,171m Number of
Slide 12: Increased operational headcount to support asset growth
Increased operational headcount to support asset growth For personal use only Period end headcount (FTE) FTE # 1,400 Support 1,100 Financial Services Mercantile Debt Buying Operation 800 500 Jun 13 Jun 14 Jun 15 Jun 16 Function Jun 13 Jun 14 Jun 15 Jun 16 Debt Buying Operation 831 919 1,004 1,096 Me
Slide 13: Record PDL investment and strong FY17 pipeline
Record PDL investment and strong FY17 pipeline For personal use only • Strong client proposition to maximise share - Operational improvements facilitate competitive PDL pricing - Industry-leading compliance record and reputation • Over FY16 all forward flow contracts were renewed and some additional
Slide 14: Consumer lending book up by 35% over the year
Consumer lending book up by 35% over the year For personal use only Gross loan book excluding provisions $135m $121m $100m $72m $63m $57m $35m $19m $11m $6m Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Gross loan book (excluding provisions) Annualised revenue FY16 Results Presentat
Slide 15: Strong platform for continued growth in Consumer Lending
Strong platform for continued growth in Consumer Lending For personal use only • Wallet Wizard brand well-established - Increased brand recognition post-television campaign during 1H - Referral channels established - New customer originations maintained and returning customer volumes increasing • Ma
Slide 16: Earnings and returns on track
Earnings and returns on track For personal use only • Profitability and returns projected to further improve in FY17 with book reaching critical mass • On track to achieve pro-forma return in future periods Average net book size 1 ROA % NPAT $125m 12.0% $12.0m $100m 8.0% $8.0m $75m 4.0% $4.0m $50m -
Slide 17: Signs of US market conditions easing
Signs of US market conditions easing For personal use only • Supply conditions remain unchanged but major industry participants report recent price and return improvements: - “We are seeing early signs of pricing improvements in the US market” 1 - “We are starting to see some softening in pricing…an
Slide 18: Credit Corp well-positioned for the transitioning market
Credit Corp well-positioned for the transitioning market For personal use only • Credit Corp has established strong credentials in the new compliance-focused market - Market leading CFPB compliance metrics Name 2015 CFPB complaints per collector 1 Credit Corp Solutions Inc. (Credit Corp) 0.11 US Deb
Slide 19: Initial FY17 Guidance
Initial FY17 Guidance For personal use only FY17 Initial guidance PDL acquisitions $150 - $180m Net lending $35 - $45m NPAT $52 - $54m EPS (basic) 109.7 - 114.0 cents DPS 55.0 - 57.0 cents FY16 Results Presentation | 19
Slide 20: Questions
For personal use only Questions FY16 Results Presentation | 20