Credit Corp Group FY12 Full Year Results

Credit Corp Group (ASX:CCP) reported FY12 full year results today. There were no surprises with the results coming in within the guidance range provided during the half yearly. The important numbers are as follows:

And a couple of more stats that I feel are important:

The result for the year is excellent. And more importantly, the underlying numbers are strong. The PDL amortisation/collection ratio remains high which means they're writing PDL assets off the balance sheet at a decent clip. Some may even say they're sandbagging the results. Having free cashflow well above NPAT, even after the startup costs of new initiatives, adds weight to this argument.

And the company is now debt free. This will help their pursuits in new initiatives. The biggest initiative is the US expansion. As of now they have established a collections operations, purchased $2.2m of PDLs and have 12 staff members. This is expected to ramp up quickly over the next year with forward flow agreements and the plan to extend to 30 employees by December. The current expectation is for the US operations to break even for FY13 and to start contributing the following year.

The other new initiative is the new consumer credit division - targeting consumers with impaired credit histories that are not catered for by mainstream credit issuers. The loan book for this division has grown to $6m. By comparison Thorn Group's (ASX:TGA) newly started personal loan division is up to $17.3m and Cash Converters (ASX:CCV) is $65m+.

Management remains cautious on the outlook stating that strong competition for PDLs are pushing prices higher. Along with a low credit growth environment their purchasing outlook for the coming year is more subdued. This view also matches that of Thorn Group's NCML, while Collection House (ASX:CLH) appears to be the aggressor in the current climate. CCP's initial guidance for FY13 is as follows:

Very much subdued numbers there, and no doubt the stock market is reacting to this today. But I'll remind everyone that Credit Corp has a history of under-promising and over-delivering. This time last year they made the same unspectacular guidance of flat to single-digit profit growth and reduced PDL purchasing. The company went on to make two profit upgrades during the year to post the great result we have today. Savvy investors may view any price weakness between now and the AGM as an opportune time to accumulate shares in an outstanding company.

CCP was down a massive 7.7% to $6.24.

Disclosure: At the time of publishing, I own shares in CCP.