News

Credit Corp acquires Baycorp and increases 2020 guidance

Friday, 16 Aug 2019

Credit Corp Group Limited (Credit Corp) announces today that it has acquired Baycorp Holdings Pty
Limited and its associated entities (collectively Baycorp) from Encore Capital Group (NASDAQ: ECPG)
for a total net consideration of approximately A$65 million.

Baycorp is a large and well-established debt purchasing and debt collection operator across Australia
and New Zealand. Its assets comprise a sizeable purchased debt ledger (PDL) book, a PDL collection
platform and agency collection businesses in Australia and New Zealand.

Some integration of the acquired businesses will be required in to order to deliver pro-forma returns.
The PDL collection platform will be promptly merged with Credit Corp’s existing Australian and
New Zealand debt buying business. The New Zealand agency business will be preserved and
enhanced. The Australian agency operation will be progressively restructured to ensure that it operates
sustainably.

Mr Thomas Beregi, CEO of Credit Corp, commented that the acquisition provided both an attractive
secondary PDL book acquisition and the opportunity to create a large and successful agency business.
“We expect to achieve our targeted investment return on the PDL component of the transaction and see
opportunity to scale up our existing agency activities” he said.

Baycorp’s New Zealand agency business enjoys a strong reputation and an impressive position in the
market. Mr Beregi acknowledged the quality of the business and identified the strategic benefit of
acquiring a physical presence in the market. “Entry into the New Zealand agency market by acquiring a
leading operator will enable us to broaden our client relationships and put us in a better position to grow
our debt buying market share” he said.

View the full media release and updated guidance details here.

A strong FY19 result and increased opportunity

Monday, 29 Jul 2019

Credit Corp Group Limited (Credit Corp) reports the following highlights for the 2019 fiscal year:

  • 9% increase in Net Profit after Tax (NPAT) to $70.3 million
  • 16% increase in the consumer loan book to $212 million
  • Acceleration in US debt buying:

o   69% increase in collections

o   40% increase in investment

o   69% increase in year-end headcount

o   A near tripling in segment NPAT

  • A return to investment growth in Australian/New Zealand debt buying

Mr Thomas Beregi, CEO of Credit Corp, said the result reflected strong growth from the consumer lending and US debt buying businesses, which together represented over 36% of 2019 earnings. “Both segments performed very well and we are guiding for them to grow strongly in 2020. The US is on track to fulfil its potential of becoming as large as the Australian/New Zealand debt buying operation in the medium term” he said.

The core Australian/New Zealand debt buying segment produced near-record collections and earnings results despite two and a half years of reduced investment. Mr Beregi acknowledged this strong operational performance and emphasized the importance of further improvement in the company’s industry-leading complaint rate in producing a return to core business investment growth late in the year. “Credit Corp’s compliance superiority is increasingly valued by our clients and is enabling us to hold, and in some cases grow, market share despite aggressive competitor bidding” he said.

The consumer lending business benefited from tighter lending standards adopted by prime lenders and increased recognition of Wallet Wizard’s product superiority in the cash loan segment. Mr Beregi highlighted unexpectedly strong new customer growth. “We have grown new customer lending by 18% in a favourable environment because we have the cheapest and most sustainable product in our segment of the market” he said.

Investment conditions in the US debt buying market remain favourable, with continued growth in unsecured credit issuance and rising charge-off rates. Mr Beregi drew attention to increased investment and capacity in the US. “We increased our investment in the US by 40% with the addition of new purchasing relationships and we grew headcount strongly during the second half. It is important that we continue to grow our headcount to maximize the present market opportunity” he said.

Mr Beregi drew attention to the strong operating metrics being achieved by the business against the two larger incumbent US debt buyers. “Our operating metrics already compare well to our more established competitors and we are still working to improve them. This gives us the confidence to say that we are on track to build a large and successful business in the US” he said.

Outlook for 2020

Expected increases in earnings from the US debt buying and consumer lending divisions will drive strong profit growth in 2020, with guidance for profit growth in the range of 7% to 10%.

A return to investment growth in Australian/New Zealand debt buying and signs of competitor stress in that market create the prospect of increased investment across all three business segments. The company retains significant debt headroom and will invest as opportunities arise.

At this point the company provides PDL investment guidance in the range of $220 - $240 million.

Initial 2020 guidance is provided in accordance with the following ranges:

Guidance (July 2019)

PDL acquisitions

$220 - $240m

Net lending volumes

$60 - $65m

NPAT

$75 - $77m

EPS

138 - 140 cents

DPS

72 cents

 

This media release should be read in conjunction with the Appendix 4E, Consolidated Financial Statements and Results Presentation.

 To watch the presentation go to: http://www.creditcorp.com.au/corporate/investors/interviews-presentations/


Completion of $125 million institutional placement

Tuesday, 02 Apr 2019

Credit Corp successfully completes A$125 million institutional placement

Credit Corp Group (ASX:CCP) is pleased to announce the successful completion of its fully underwritten institutional placement, as announced to the market on Monday, 1 April 2019. 

Click here to read the full media release

Media Release: Market update & equity raising | Investor Presentation: Market update & equity raising 


CCP reports FY19 H1 profit growth of 13% and improved outlook

Tuesday, 29 Jan 2019

Credit Corp Group Limited (Credit Corp) reports the following highlights for the first half of the 2019 fiscal year:
  •         13 per cent increase in Net Profit after Tax (NPAT) to $33.6 million
  •         18 per cent growth in the consumer loan book to $203 million
  •         71 per cent growth in US revenue and initial purchases from two new issuers
  •         Upgraded full year outlook for NPAT, purchasing and net lending

The consumer lending and US business segments exceeded expectations during the half and the core Australia and New Zealand debt buying segment sustained near-record collections despite reduced purchasing.

Mr Thomas Beregi, CEO of Credit Corp said that to maintain collections after two years of reduced investment in Credit Corp’s core Australia and New Zealand segment reflects a very strong operational performance. “Our uniquely resilient collection approach and our focus on continuous improvement have produced an outstanding result from our core debt buying business” he said.

Total investment in financial assets was up by 5 per cent over the prior year, with an increased allocation to the consumer lending and US business segments. The Australia and New Zealand debt buying market remains competitive, with limited purchasing opportunities capable of meeting Credit Corp’s return criteria.

Mr Beregi said that competition remained very strong in the Australia and New Zealand debt buying market. “We have seen some very high prices being paid for purchased debt ledgers (PDLs) by competitors. Our response is to remain disciplined and prepare ourselves for better opportunities in the periods ahead.”

In anticipation of increased investment opportunities across all businesses the company maintains debt headroom of almost $100 million under its present banking facilities.

Consumer lending growth for the half was very strong, with the loan book up by 18 per cent over the same point in the prior year. The result was driven by 20 per cent growth in new customer volume.

Mr Beregi put the strong result down to providing consumers with the cheapest and most sustainable product in the market. “Wallet Wizard is the cheapest cash loan available in our segment of the market. It is substantially cheaper than any commercially-provided offering and is even cheaper than a charitably-funded alternative from the not-for-profit provider.”

US market conditions remain favourable, with continued growth in unsecured credit issuance and charge-off rates which remain below historical levels. Credit Corp has secured a $74 million PDL investment pipeline in the US, a 23 per cent increase on the $60m outlaid in 2018. This investment includes initial purchases from two new issuers, including the largest seller of charged-off debts in the market.

Mr Beregi said that the US was now growing strongly and profitably. “Collections and revenues are up by more than 70 per cent over the prior year. We will continue to build out our Salt Lake City site and plan to grow our purchasing accordingly” he said.

Indicators of collection effectiveness and efficiency in the US operation are already comparable to those being achieved by publicly traded competitors in that market. This provides confidence in Credit Corp’s ability to successfully execute on the substantial US opportunity.

Outlook for balance of 2019

As a consequence of increased US investment and unexpectedly strong consumer lending book growth in the period, 2019 earnings guidance has been revised to represent profit growth in the range of 7 to 9 per cent. The company has also increased its PDL acquisition and net lending guidance. The updated 2019 guidance is in accordance with the following ranges:

Upgraded guidance

(November 2018)

Upgraded guidance

(January 2019)

PDL acquisitions

$170 - $190m

$200 - $210m

Net lending volumes

$45 - $50m

$50 - $55m

NPAT

$67 - $69m

$69 - $70m

EPS

140 - 144 cents

144 - 146 cents

 

This media release should be read in conjunction with the Appendix 4D, Consolidated Interim Financial Statements and results presentation.

 

To watch the presentation click here.


2018 Annual General Meeting

Wednesday, 31 Oct 2018

Credit Corp's Annual General Meeting for Shareholders will be held tomorrow at 11:00am Sydney time at Grosvenor Place, Level 12, 225 George Street in Sydney. To listen to the live audio webcast, please register here

Meeting Results and the Performance Update will be published here tomorrow.