Results Presentation 28 January 2020 Thomas Beregi CEO Michael - PowerPoint PPT Presentation

H1 FY2020 Results Presentation 28 January 2020 Thomas Beregi CEO Michael Eadie CFO

Leadership in the credit- impaired consumer segment… ANALYTICS & DISCIPLINE OPERATIONAL EXCELLENCE SUSTAINABILITY & COMPLIANCE Australian / NZ debt buying  Largest database  Highest asset turnover 1  No adverse orders or undertakings  History of pricing accuracy  Lowest cost to collect 2  Low complaint rate Long-term growth  Purchasing levels vary inversely with  High performing on-shore and off-  $1.4Bn in ongoing repayment pricing shore platforms arrangements ROE 16% - 18%  Leading technology and use of data USA debt buying Low gearing  Adapted knowledge to US  Significant growth in productive  Low regulator complaint rate environment capacity with opening of  Strong client audit outcomes  Large market opportunity second site  Diversified purchasing across major  Emphasis on payment sellers arrangements and a lower proportion of litigated outcomes Australian / NZ lending  Leverage knowledge of consumer  Automated decisioning  APRs below cap applicable to  Up-front loss provisioning  Collection strength mainstream credit  Analytical monitoring  Unmatched efficiency  Regulatory upside - no ‘payday loans’  Unique statistical underwriting  Superior pricing disrupting the market 1.FY20 ratio of cash collections from PDLs to average PDL carrying value in Australian Debt Ledger Purchasing segment of 1.2x 2 Credit Corp Group H1 FY2020 Results Presentation 2.FY20 ratio of cash costs of the Australian Debt Ledger Purchasing segment to collections of 35%

…has delivered sustained growth and returns… NPAT AND RETURN ON EQUITY $ 90m 30% NPAT CAGR 20% $ 75m 25% On track for $ 60m 20% FY20 growth of up to 18% $ 45m 15% $ 30m 10% $ 15m 5% - - FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 * (projected) Total NPAT ROE 3 *Midpoint of guidance range of $81m to $83m Credit Corp Group H1 FY2020 Results Presentation

…with all segments driving growth in H1 of FY2020… FY2020 H1 FY2019 H1 Var % AU/NZ debt buying 1 $112.7m $97.4m 16% 15% US debt buying $28.0m $17.4m 61% AU/NZ lending $50.2m $44.4m 13% growth in NPAT Revenue total $190.9m $159.2m 20% US and consumer AU/NZ debt buying 1 $25.7m $23.0m 12% lending are now US debt buying $3.3m $2.6m 27% 41% of group revenue and 33% AU/NZ lending $9.6m $8.0m 20% of NPAT NPAT total $38.6m $33.6m 15% EPS (basic) 70.3c 70.2c <1% Dividend 36.0c 36.0c - 4 1. AU/NZ debt buying includes agency activities Credit Corp Group H1 FY2020 Results Presentation

… and continued opportunity SEGMENT MARKET CONDITIONS CREDIT CORP POSITIONING AU/NZ  Reduced access to bank funding  Strong capital position  Heightened compliance sensitivity - - $170m of debt headroom debt buying exclusion of some competitors by  Compliance leadership maintained issuers  Recent market share gains  Consolidation of sector underway US  Market remains in equilibrium with  Growth in productive capacity to credit and charge-off growth support increased purchasing debt buying offsetting demand  Diversified purchasing relationships  Formalising of regulations delayed AU/NZ  Continued strong consumer demand  Strong new customer growth  Additional regulatory clarification  Enhanced approval and scoring consumer with release of RG 209 process driving efficiency and customer lending  Continued scrutiny of predatory experience products – payday loans and consumer leases 5 Credit Corp Group H1 FY2020 Results Presentation

Investment growth in all segments… PDL INVESTMENT AND NET LENDING $ 270m Baycorp acquisition and recent  AU/NZ debt buying wins $ 240m $ 210m Continued US debt buying and net 64%  lending growth $ 180m $ 150m $ 120m $ 90m $ 60m $ 30m - FY2018 H2 FY2019 H1 FY2019 H2 FY2020 H1 FY2020 H2 projected Net lending US debt buying Baycorp Aus/NZ debt buying 6 Credit Corp Group H1 FY2020 Results Presentation

…with substantial headroom to further step-up investment FACILITY HEADROOM AND GEARING $ 400m 50% $375.0m $375.0m $350.0m $ 350m $300.0m  Banking facilities increased to $375m $ 300m 40% maturing in 2022 and 2023 $ 250m $211.9m $205.8m  Debt headroom will near $200m at $184.0m $ 200m 30% year-end, Jun-20 $ 150m $120.0m $ 100m 20%  Conservative gearing maintained post the Baycorp acquisition $ 50m - 10% FY2018 FY2019 FY2020 H1 FY2020 H2 projected Net borrowings Total facilities Gearing % 7 Credit Corp Group H1 FY2020 Results Presentation

The Baycorp acquisition is on track… The Aug-19 acquisition is achieving pro-forma   H1 NPAT of $2.9m and on track for $6m for FY2020 Debt purchase transition almost complete   Australian PDLs on core operating system  NZ PDLs to be cut over shortly Integration is ahead of schedule   Annualised cost of savings of $13m achieved  Both AU and NZ agency operations profitable Purchasing relationships in New Zealand enhanced   Buying a record volume in New Zealand 8 Credit Corp Group H1 FY2020 Results Presentation

… and is contributing to strong operational performance AU/NZ PDL COLLECTIONS AND PAYMENT ARRANGEMENT BOOK Total collections up 18% over the pcp  AU/NZ collections up 10% over the  $ 1.4Bn pcp to record levels $ 200m Productivity up 5% over the pcp 1  $ 1.3Bn $ 150m Total cumulative collections above  aggregate pricing expectations 2 $ 100m Face value of AU/NZ payment  $ 1.2Bn arrangements at a record level of $ 50m $1.4Bn Improved contact efficiency - $ 1.1Bn  FY2017 H1 FY2017 H2 FY2018 H1 FY2018 H2 FY2019 H1 FY2019 H2 FY2020 H1 Self-service customer portal delivering  AU/NZ Face value of AU/NZ payment arrangement book (RHS) 8% of AU/NZ collections collections (LHS) 1. Refer Appendix 4 9 Credit Corp Group H1 FY2020 Results Presentation 2. Refer Appendix 2

Ongoing compliance and sustainability leadership… FY2019 AUS EDR COMPLAINT RATE PER $1m COLLECTED 1 Credit Corp Other debt buyers  Industry-leading Australian EDR complaint rate in FY2019  Low complaint rate with US 0 1 2 3 4 5 6 7 8 regulator 2019 US CFPB COMPLAINT RATE PER $1m COLLECTED 2  No regulatory action or enforceable undertakings Credit Corp Publicly traded debt buyer B Publicly traded debt buyer A 0 1 2 3 4 5 6 7 8 1. No. of complaints reported by External Dispute Resolution (EDR) provider (The Australian Financial Complaints Authority) for the 8 months to 30 June 2019 divided by total annual PDL collections expressed in millions of dollars pro-rated for an 8 month period 10 Credit Corp Group H1 FY2020 Results Presentation 2. Complaint metrics from Consumer Financial Protection Bureau (CFPB) database for the 12 months to Sep-19 divided by reported collections https://www.consumerfinance.gov/data-research/consumer-complaints/search/?from=0&searchField=all&searchText=&size=25&sort=created_date_desc

… has contributed to a strong purchasing outlook PDL INVESTMENT FY2020 purchasing guidance $ 300m $310 - $320m $ 250m  Baycorp acquisition $ 200m FY2020 purchasing pipeline  Recent share gains in AU/NZ of $298m contracted at $ 150m January 2020  Initial purchasing from new US issuer $ 100m Baycorp AU/NZ debt buying $ 50m US debt buying - FY2018 FY2019 FY2020 11 Credit Corp Group H1 FY2020 Results Presentation

Investment in building a large and profitable US business… US COLLECTIONS AND ARRANGEMENT BOOK (A$m) $ 200m $ 150m $ 100m  Cost to collect increased to 43% (39% $ 50m pcp) on rapid headcount growth -  Collections 57% higher than pcp FY2017 H1 FY2017 H2 FY2018 H1 FY2018 H2 FY2019 H1 FY2019 H2 FY2020 H1  Payment arrangement book will drive US collections Face value of US payment arrangement book (incl. litigated payers) continued collections growth US NPAT (A$m)  H1 NPAT up 27% $ 10m  Full year NPAT on track for 45-65% $ 8m increase to $8-9m $ 6m H2 1 $ 4m H2 $ 2m H1 H1 H2 H1 H1 - H2 ($ 2m) FY2017 FY2018 FY2019 FY2020 12 1. Midpoint of guidance range Credit Corp Group H1 FY2020 Results Presentation

… with continued expansion of operational capacity… US HEADCOUNT 800 700 700  Utah at practical capacity Second site, 600 Washington  Second site (Washington State) off to State (~270 500 a solid start (current FTE of 40) seats)  Focus on filling Washington State over 400 the next 18 months 300 Existing site,  Seating capacity will support 430 Utah 414 200 increased purchasing and NPAT 363 (~430 seats) 236 216 212 100 182 152 - FY17 H1 FY17 H2 FY18 H1 FY18 H2 FY19 H1 FY19 H2 FY20 H1 Site capacity 13 Credit Corp Group H1 FY2020 Results Presentation

… and the opportunity to grow purchasing US PURCHASING FY2020 US MARKET SHARE 1 $ 120m Est. CCP market share 3.5% $ 100m FY2020 purchasing  Currently purchasing guidance from 6 issuers $ 80m $95 - $100m  Market share of financial $ 60m services of 3.5% FY2020 purchasing pipeline of $83m  Scope for significant $ 40m contracted at purchasing growth January 2020 without adversely $ 20m affecting pricing - dynamics FY2018 FY2019 FY2020 Projection Other Point of sale lender Marketplace lender National listed bank CCP Competitors Global bank National bank 14 1. Financial services only, excludes major issuers not presently selling Credit Corp Group H1 FY2020 Results Presentation