FY24 Roadshow insights

00:00:00:00 - 00:00:21:17
Ryan Soutar
Ladies and gentlemen. My name is Ryan Soutar. I'm one of the senior managers here at Ice, and we're here with Pioneer credit managing director Keith John. Now, Keith has been kind enough to lend us his expertise surrounding Pioneer, as well as his time this afternoon to give us a presentation which is going to update us on how Colin is tracking and then, as always, we will open the floor up to a Q&A.

00:00:21:17 - 00:00:43:08
Ryan Soutar
Now I've got a couple of questions that will start things off with after the presentation, but if any participants would like to submit questions been asked to Keith, please submit the Q&A function on zoom and I will ask them, afterwards. Now, Keith, it's all yours. Thank you very much for your time. I thanks, Ryan, and thanks to everyone for, for joining us today.

00:00:43:18 - 00:01:09:18
Keith John
one of the things I said to Ryan as, as we were talking before is that there's no questions off limits I place at the end. feel free to ask why there's nothing that, that we, we're not prepared to address or answer for you. what we have in front of us tonight. A is, I pray results road show presentation that we did last week.

00:01:10:07 - 00:01:44:24
Keith John
and this was off the back of a refinancing that we completed at the end of, at the end of June, which really sets this business up well for, FY 25 and beyond. So I'm going to take you through some numbers, some high level numbers from FY 24 ahead of our results. And then, talk you through what our businesses, the value, the assets in our business, how we go about our business and the investment opportunity that sits in front of you today.

00:01:45:08 - 00:02:02:15
Keith John
there is, of course, the important disclaimer and importantly, just to call out that the figures that presented in front of you today, from the companies management accounts, they are as yet audited. So they're not audited and they are subject to change.

00:02:02:17 - 00:02:25:19
Keith John
So in terms of the highlights for FY 24, there are four, important aspects of our business that we've called out. The first is cash collection. So this is the amount of money that we save into our business each year. That was $146 million last year, up 10% on the prior correspond period. EBITDA, grew by a little bit more than that.

00:02:25:19 - 00:02:51:17
Keith John
So really good cost management within our business up to just shy of $97 million, the core assets that we buy. So these are called purchase debt portfolios. I'll talk about those in a moment. We invested just shy of $94 million last year into these assets. Really good growth on, on FY 23 and a really nice pipeline for FY 25 in front of us.

00:02:51:19 - 00:03:11:09
Keith John
And cost of service. This is about the efficiency of our business. How well do we operate. And over the past few years we've worked really hard to bring that down. From the mid 40s to the mid 30s. It's a really good number at the bottom of our target range for the next couple of years, and it's a range of which we're really profitable that.

00:03:11:09 - 00:03:33:18
Keith John
So we're really pleased with the performance and the efficiency of the way where we're operating our business. importantly, the other one major bit is we closed our senior refinance. So I'll talk about that a bit more in a moment. But it saves us $8 million a financial year from May for 25. And that dropped straight to the bottom line.

00:03:33:22 - 00:03:40:24
Keith John
So that's a big saving that that comes for the benefit of shareholders.

00:03:41:01 - 00:04:06:09
Keith John
In terms of pioneer, what do we do? We're a debt recovery specialist that acquires and services retail, finance portfolios. And by that what we mean is we buy credit card predominantly in personal loan portfolios, off the banks, in the non-bank lenders. We bring them onto our balance sheet, we hold them for our benefit, and we work with those consumers over time to get them back paying.

00:04:06:11 - 00:04:28:01
Keith John
We do not do any work for any third parties. So we don't do any commission based work. We don't do anything in the payday sector or the sex sector. So we're not focused on lower quality consumer segments. We're talking about the best quality consumers from the best quality institutions in Australia that have the highest propensity, propensity to cure.

00:04:28:03 - 00:04:54:12
Keith John
And that's where we focus, we're a leader in this market. This market has changed dramatically in the last five years. So much so that amongst the big banks, that really is a to wobbly now, of which pioneer is one half of we're very proud of that. Since 2008, we've invested almost three quarters of $1 billion into these assets across almost 6 billion in receivables.

00:04:54:14 - 00:05:16:23
Keith John
And what that gives us is two things. One is, I very, very solid history of performance, which you can see through our operational performance over time. And second, very deep data sets on which to do our underwriting. So the way that we go about investing our capital and your capital, if you were a shareholder, pioneer into these assets.

00:05:17:00 - 00:05:43:08
Keith John
And that's critically important to make sure we buy the assets at the right prices to make sure we get the right economic outcome from them. For all of us. We currently have an active portfolio of about 2 billion in receivables due to us and all of that 2 billion about $440 million is under arrangement. So these are customers that are paying us weekly, fortnightly or monthly.

00:05:43:10 - 00:06:09:02
Keith John
And it's a very predictable, cash flow that comes into our business. It represents roughly half of our cash flow each year. and we'll talk a bit more about that in a moment. Finally, and this is critically important. Long before ESG was anything in this country, pioneer always talked about having good people doing the right thing by customers as being a good business that was trying to get good outcomes.

00:06:09:04 - 00:06:29:04
Keith John
That has served us exceptionally well. And in an era of heightened, consumer care and consumer advocacy pioneer, it stands out, amongst all others as being the group that delivers that best. And that's one of the reasons why we're successful.

00:06:29:06 - 00:06:49:06
Keith John
A little bit further about the ESG parts of our business. Our purpose is simply to put an end to that stress. We can't solve debt problems for people, but we can stop them worrying about the people that come to us. just like you and me. They going about their daily lives, they are living their life and they're going about it quite well.

00:06:49:11 - 00:07:13:21
Keith John
And then something happens. Death, divorce, sickness, domestic violence might have lost their job. All of the things that we hear about and our job is to help people through those situations. And if we can do that and we do it really, really well, then we will get paid well. The customer will have less stress in their life, they'll have a good experience and be able to go on, grow on their life as well.

00:07:13:23 - 00:07:38:13
Keith John
We have three principles across our business, to which we guide everything. Be human. You know, our business is about dealing with people we don't run scripts. We were about solving problems. When we speak to our customers, choose integrity. We always do the right thing, irrespective of what it means to this business. We do the right thing and we act with purpose.

00:07:38:15 - 00:08:01:23
Keith John
When our people talk to our customers with their to solve problems for them, we're not there to put them into a tailspin and to create difficulty for them. We want to make it a really pleasant experience for those customers. If we do that, and again, we think we do that really well, that lowers our servicing costs, it lowers our compliance cost, it improves the customer experience.

00:08:01:23 - 00:08:25:02
Keith John
And that's really good for, vendors selling debt to us. And our vision is simply to be the first choice. We want customers to choose to deal with us. We want vendors to choose to sell to us are people who work for us, and we want you to invest in us. That's what drives us.

00:08:25:04 - 00:08:47:09
Keith John
In terms of management, my management's been with me for a long time, so critical to the success of the business, obviously. I founded this business, a long time ago now, and I have over 30 years experience in, in financial services, all of in the distressed debt space. Sue Symmons, my company secretary, has been with us for 8 or 9 years.

00:08:47:17 - 00:09:13:05
Keith John
she's really the conscience of our business, looks after our governance, oversees risk and internal audit and all of the things that keep us tight and working. Well, Barry Hartnett, CFO, has been with us for ten years. in addition to his finance responsibilities, has great relationships across the banking sector and the finance sector from which we source, our product.

00:09:13:07 - 00:09:41:13
Keith John
And Andrea Hoskins, been with us for almost five years now. Andrea is responsible for running our operations, our 400 odd people across our business, ultimately reporting to Andrea. And she's responsible for making sure they come to work. We have enough people. I look after our customers appropriately. We get a good outcome for them and for us.

00:09:41:15 - 00:10:07:05
Keith John
In terms of the portfolio, as I said at the outset, there are 2 billion in receivables due to us and those receivables broadly fall into two categories. One is our with our work in progress. So as we buy a new portfolio, it goes there. And those customers, some of them are new to business. Some of them have been with us for a couple of years, and we're working with those customers to understand when they have capacity to pay.

00:10:07:07 - 00:10:33:01
Keith John
This is not a business that takes legal action lightly. or even has that is a real feature of our business. It's a business that works with customers as we understand capacity. Then they either pay us in large sums, they might pay us, sporadically, they might pay out in full, or they might go on an arrangement, go into our performing portfolio, which currently sits at about $440 million.

00:10:33:03 - 00:10:57:11
Keith John
Across that performing portfolio. There are a few features about A1A low cost of service. So it's a really efficient part of our business. Those customers are on predominantly on direct debit, and they pay us, periodically as, as per our agreement. so that's really good for the way we operate our business. that very high quality. Over the last couple of years, that portfolio has been pretty static.

00:10:57:11 - 00:11:18:00
Keith John
And the reason it's been static is because as fast as we're writing new arrangements, customers are paying down their debt. So whilst we're seeing lots of cost of living pressure across the country reflected in retail sales and the fraud, the type of, product that people buy and where they spend that money, they're continuing to pay down debt.

00:11:18:00 - 00:11:41:04
Keith John
We're seeing that across the financial sector. So that's been really good for us. As I said, no payday in there. in FY 25, at the outset of this year, we expect about $70 million to come from that portfolio. So that $70 million in cash collections, it's already booked in. So really, really healthy starting place for our business.

00:11:41:06 - 00:11:51:22
Keith John
And like I said, we generally get about 50% of our revenue from there and 50 from that portfolio.

00:11:51:24 - 00:12:20:19
Keith John
In terms of customer outcomes, now this is really important. This is how we sell our business. This is one of the ways we differentiate ourselves from others. Pioneers is the only purchaser of note that publishes a Net Promoter score, which is how likely are you as a customer to refer us to your family and friends? It's an odd, it's an odd question to pose to someone when you think about debt recovery, but it's how confident we are now.

00:12:21:19 - 00:12:44:16
Keith John
in our service plus 19. It's a remarkable result, of, across NPS. And you will see it first contact just in the middle where it's -46. So -46. That's the day we bought the account from the from the vendor, from the bank or the financial institution. And we make first contact with them. So they've got a very negative outcome.

00:12:44:18 - 00:13:11:23
Keith John
And our job is to solve their stress remember is to is to to help them to relieve them of debt stress. And you can say we do that when they start paying us as plus 13 ongoing payers, plus 60 plus 35 for several pious. And that's really, really good and really healthy. It's one of the ways we demonstrate just how successful we are at the job that we do.

00:13:12:00 - 00:13:34:23
Keith John
In terms of the market in which we operate, fantastic market for us. It's been changing dramatically over the last few years. We've seen a contraction in the number of participants in this market such that there are really two large ones now, us and another, and then there's a few smaller players that sit underneath us. that's been really good for pioneer.

00:13:35:00 - 00:14:00:21
Keith John
We've got the scale, we can operate efficiently. We've got the balance sheet and the cash flow to go and invest in and, and invest a lot of money across this sector. we have a five year agreement. We call them a forward flow agreement. So, if you think about, the way this might work, we have an agreement to buy all of the receivables that look like a certain type every 30 days from CBA for the next five years.

00:14:00:22 - 00:14:30:18
Keith John
We share that contract, largely with one other, and that goes through to 27. That's a great part of our business. We have the best starting position in six years this year, $58 million of investment contracted on day one. Remember we invested 94 last year, just under 100 a couple of years ago and 60 the year before. So we start day one with really healthy pipeline of agreements in place across 13 vendors.

00:14:30:20 - 00:15:04:17
Keith John
We expect to grow that materially through the year. That's going to be really, really good for the health of this business and for the growth in revenue that we expect to come from this business. A market size of $325 million in FY 24, we expect it to grow quite healthily in 25 to about 400 million, driven by the return of a large vendor that's been sitting out of the market for a while, but also by the backlog of debt that people have accumulated over the last few years that we expect to see released to the market.

00:15:04:19 - 00:15:28:16
Keith John
We have about a 25% market share on that basis. and a really good opportunity to grow our share. In terms of that growth, it's really important to understand why why, how are we going to grow this market? Growing because you pay more is not a success. Growing because you have a better proposition for a vendor. That's what makes you successful.

00:15:28:16 - 00:15:51:15
Keith John
And that's what pioneer has and has always had. We're one of the few scale participant in this sector really, really important. we generate a lot of free cash. You know, last year it was well over $65 million in investable cash out of that EBITDA this year with the savings that we expect or we will get from our refi, well over $70 million of investable cash.

00:15:51:17 - 00:16:15:10
Keith John
So that's really, really good. That's an equity investment back into, the growth of this business, which we've got, we've got a market leading reputation. We've always had that. We pride ourselves on it. people like it. We do not offer further credit. This is a big one, because the sellers of this debt would prefer not to sell to someone that has a competing loan.

00:16:15:12 - 00:16:39:08
Keith John
They certainly don't want to sell to someone that has a payday loan like others in our sector do. And, and that's really, really good for us, particularly across the non-banks. And we've got a unique servicing approach where working with those customers over time, in terms of growth, there are a range of performing portfolios that are available for sale in the market, which with which we've been approached about there are warehouse sales.

00:16:39:08 - 00:17:04:17
Keith John
I just spoke about the build up of accounts over the last few years. They're available, there are M&A opportunities and opportunistic, portfolio acquisitions in our market. There's a group in the press at the moment that's selling their portfolios. These are all really, really good opportunities for us. In addition to that, we have less competition because it's contracted markedly over the last few years.

00:17:04:18 - 00:17:23:07
Keith John
And we've got a really, really strong economy. The biggest swing factor in our business is employment. Do people have a job? and as you know, almost everyone in Australia has a job. And that's really good for the health of our business.

00:17:23:09 - 00:17:46:02
Keith John
I talked about the senior refinance. this is what it looks like in front of you. But in short, we've got a new facility of $272 million drawn to 222. it's been led by Nomura. And Nomura have funded us twice before. They are also a substantial shareholder in the company. So they're very aligned to us. Standard covenant package.

00:17:46:02 - 00:18:20:00
Keith John
We're paying a margin of 5.5% with a full four year maturity. That package will save us $8 million this year. It's a right big benefit to the bottom line, obviously, and that will be really good for us. And now us to to increase our profits, markedly this year and next. And it will also allow us to pay down some debt, decreased leverage, and further increase our profits in the future as a big balance sheet focus, in FY 25, we want to get rid of our medium term notes.

00:18:20:00 - 00:18:40:23
Keith John
We need to start on that in FY 25, and we expect to pay down a separate SPV of $16.6 million. We paid off $8 million in the half. We expect that to be finalised by June 25th. So really improving financial metrics right across our business.

00:18:41:00 - 00:19:03:03
Keith John
And finally, the most important part, I think for you is our alignment to shareholders. You know, you want to be invested in a business where management is sitting alongside you, is incentivised to get the right outcomes for you. management is the largest shareholder in this business. I own 13% of a management owns another couple of percent of it.

00:19:03:11 - 00:19:28:08
Keith John
Samuel Terry Asset Management came under the register recently. They owned 16%. James Simpson, who's been with us for a long time, very supportive shareholder, X, founder of Platinum Asset Management key and Nelson Hayes at 8% and Nomura at 7%. Really great bunch of shareholders that have been with us for a while. Samuel Terry are a new fund to the business.

00:19:29:00 - 00:19:54:01
Keith John
and we're very, very happy to have them on board. Importantly for you is our incentivisation and that old adage, show me the incentive and I'll show you the outcome. never more could be true in pioneer. No manager or executive ever gets a short term incentive. We get a base salary and we get a long term incentive.

00:19:54:01 - 00:20:23:24
Keith John
That long term incentive is literally over three years. So we have three yearly targets here for 23, 24 and 25. And assuming age well, some of those omit those incentives roll forward to 426 and are only paid if we hit F1 26. So next financial year we must deliver a statutory net profit after taxation of at least $18 million.

00:20:24:01 - 00:20:57:18
Keith John
If we do, management incentives, are paid out and if we don't, they are not. It's as simple as that. So management has four years worth of work or resting on delivering on next year's number, which I can promise you, they are working relentlessly to deliver upon and expect to deliver upon. Those incentives are paid in shares. So again, they're sitting alongside you with equity invested alongside you in the business.

00:20:57:20 - 00:21:24:02
Keith John
Finally, strategy. We've just had, a couple of days setting up our our three year strategy with the board in April. we had a day with external advisors coming in challenging our thinking, really different, people with different thought to us, an economist, a debt player, a market player, a debt advisor, technology all driving up what we do.

00:21:24:02 - 00:21:49:19
Keith John
There are three key themes that are coming from our strategy. One is to optimise and grow customer outcomes. sounds like BAU. It's actually a big workstream across our business, including uplifting the customer experience through our customer portal, building out our brand awareness and trusting building on that, driving operation efficiencies. There's a lot of automation to be brought into this business.

00:21:50:02 - 00:22:20:00
Keith John
and to start driving down that cost to serve. If we can get that down to the that means a better outcome for for our shareholders. The other side of that is how do we operationalise this business so we can work with more customers in a more efficient manner. And that's about enhancing our capability, delivering on a core system replacement, uplifting our data so that we can process, data more effectively that three quarters of $1 billion we've invested.

00:22:20:06 - 00:22:43:12
Keith John
How do we leverage that data more so we can deliver better customer outcomes, in a more efficient manner? and that program of work, which is led by Andrea Hoskins, our chief operating officer, is is well underway. And finally, what's our focus for 25? There are five key things. There are strong tailwinds for us in this sector.

00:22:43:18 - 00:23:15:22
Keith John
There's significant supply of of portfolios for us to buy. And as I said, we we've got our best start to a financial year in over six years, $58 million under contract. It's up two thirds on where we were at this time last year. cheaper funding is now locked in. we've got a a facility with growth capacity attached to it, the ability to upsise it in the future, and plenty of opportunity to continue to decrease the cost of funds inside that balance sheet.

00:23:15:24 - 00:23:40:04
Keith John
There is continued regulatory focus in this sector. That's really good for a best in class player like Pioneer. And driving that, making sure ahead of the curve, making sure the respect the law and driving agreement and NPS customer experience. Realising operational leverage key to our business as well, driving down costs and driving efficiency through our business over the next few years.

00:23:40:06 - 00:24:05:22
Keith John
And importantly, you've got tested and experienced management. I lead the business as a founder. We've got its executives with extensive experience, across the sector, but in this business as well, and an LTI, management incentives that are aligned to you based on achievement. Next year of delivering a net profit after tax of at least $18 million.

00:24:05:24 - 00:24:27:00
Keith John
Ryan, that concludes my presentation. happy to take questions from, from any of your, your participants. Thank you very much. Hey, that's a brilliant presentation. I'll just kick it off with the couple that I've got here, and then we'll shift to test for questions. Once again, if you'd like me to ask anything. Okay. please just submit the question through the Q&A function.

00:24:27:00 - 00:24:49:02
Ryan Soutar
And so now, obviously, Keith you guys have had a very, very, exceptionally busy, 12 months at Pioneer now with a really strong quarter identified performance, which will be reflected driven growth, in the, share price, as well as completing a $10 million equity rise, which is currently at a premium to the market. You've also signed, you know, the four million dollar saying you could send your full and fill the grant, which looks very attractive currently.

00:24:49:04 - 00:25:17:08
Keith John
What I'm interested in, though, is what's Pawnee currently doing in this field to attract such strong support. Thanks, Ryan. Look, I think there's a range of things. One is, you know, this is a business that had a couple of really tough years for a time, but, it's a business that stands up, with integrity. Right back to our principles at the beginning and is always front and center with investors.

00:25:17:10 - 00:25:46:02
Keith John
And as investors have heard our story, continue to see us prove that, over time and time again and time again, the belief in our future and, and the understanding of our future is there. And that's what's attracting the support. The other part, of course, is we're aligned to shareholders and credit investors think like shareholders. They want people that are there for the long term driving the right long term outcomes.

00:25:46:02 - 00:26:11:13
Keith John
So if I talk about the why we invest money, you know, in our business, we have an investment committee. There are the four executives that sit on it. you know, if one person says, no, we don't do it. This is a business where everyone has to be aligned and everyone has to be on board. And if we're not, then we don't do something because that person cares deeply about us.

00:26:11:15 - 00:26:31:08
Keith John
And if they've got a concern, we should have it. And that's that's what people like to say. I like to say that we're all aligned or pushing in the same direction, and we've got the right amount of tension in our room. We've got risk people going to financial people, we've got operational people driving at the right outcomes. And I think that's serving us very, very well.

00:26:31:08 - 00:27:00:02
Ryan Soutar
And, and being well understood now by equity markets. Well, I really appreciate the update and clarification in that regard. Now we'll see with the new senior facility agreement, it does include the $50 million headroom. Now obviously it doesn't appear that you've withdrawn from that yet. What are the plans for those funds. Yeah. So look I as I said during the presentation, we've got somewhere in the vicinity of 70, $75 million of free cash expected from this business this year.

00:27:00:04 - 00:27:21:18
Keith John
That's investable. we will, you know, we've got much greater, capacity to, to buy this year. So if we were to spend in a similar vein to the, like, FY 20 for $100 million, we're going to need to draw down about half of that facility to do that. but that's fine. That's really good.

00:27:21:18 - 00:27:44:09
Keith John
That's what it's there for. and if we think about that in the contribution of 75% equity, 25% debt, that that'll help us deleverage as well, and that helps us with our cost of funds and that so forth. So look, we haven't drawn down on it yet. there's great opportunities for us. We need to make sure we realise those opportunities first before we draw down on that.

00:27:44:09 - 00:28:05:04
Ryan Soutar
But we expect that that will start occurring this year. I got to appreciate the fact that, now, realistically, between now and the, you know, for the rest of the calendar year, what can investors expect from it? Yeah, I think there's a few things. Right. So first of all, our results are out at the end of, at the end of August.

00:28:05:06 - 00:28:36:24
Keith John
We'll provide some guidance, then some updated investment guidance, in all likelihood, provide some guidance around what you should expect from NPAT and so forth. a lot of that's telegraphed to the market now. And with the $8 million savings, the market's got a fair understanding of where we're heading. So that's the first bit. we think there are a range of opportunities that will come through the market over the course of the next year, and we expect to be able to update update the market on that a bit more regularly than we might have in the past.

00:28:37:12 - 00:28:58:11
Ryan Soutar
as this market's becoming a bit more dynamic for us, for us now. Okay. Now just to pivot to a more macro economic focus. can you talk us through the current state of the debt profile market? And realistically, why pioneer when compared to its competitors, is seeing growth opportunities? 

00:28:58:11 - 00:29:25:09
Keith John
Yeah. So I think there's a range of things that have happened.The first is going back 5 or 6 years ago, this market was really split between sort of five, maybe six large suppliers and then a broad range of smaller players that sat underneath them. but what was very, very clear, and that's why Piney has been so focused on this through its journey. And if you look at our all presentations, we talk about customer treatment as far back as 2014.

00:29:25:11 - 00:29:50:06
Keith John
What we've been focused on is, is it's clear if you deliver a good outcome to consumers, you're going to do well as your business. And if you don't, then you're going to have pressures. And I think we've seen that across the journey. So we've had a range of participants that have left because of compliance issues. And then the other issue is we've had a range of participants that have got in trouble because they've simply paid too much for the debt, okay, they haven't got the return.

00:29:50:12 - 00:30:14:12
Keith John
And that's because Incentivisation is wrong. And, and, and they've gone by the wayside. So there's two parts to this. The first is we've got this contracting market because people have got it wrong on the other side. This is a very healthy market. Pioneer has got a very, very healthy position. You know, it's hard to see any significant competition in the next sort of 18 to 24 months.

00:30:14:12 - 00:30:34:15
Keith John
It's hard to focus beyond that. But we're going to get it in time. Of course. But we've got a pretty clear runway. And then the second is our alignment to the vendors. You know, back to if you're a non-bank lender and there's been a proliferation of them over the course of the last few years. you know, and you're selling debt into this market.

00:30:34:21 - 00:30:54:04
Keith John
You do not want to sell it to someone that isn't aligned to you. You don't want to sell it to someone that is selling payday loans. And pioneer doesn't. And that's really good. They trust us to look after these customers to get good outcomes and to protect their brand. And that's why we're so successful in what we're doing.

00:30:54:06 - 00:31:18:14
Keith John
The real thing for us that we've got to focus on, we've got to remain focused on. It's all very good and well, investing money. You've got to be able to operationalise it. So whilst there is the opportunity for us to spend materially more than $100 million in a year, you know, it won't happen this year because or it's unlikely to happen this year because we need to be able to look after those customers properly through the journey. So this is a growth business with really good growth ahead of us and great opportunity that sits outside of that as well.

00:31:18:19 - 00:31:39:23
Ryan Soutar
Well, it's really positive news and really strong to see an update now. Again so obviously past two years you know 13 just drive rises cost of living pressures appears to be you know the headline in every other news article.
collectively you guys have over 250 K customers across Australia. Realistically how is the customer base fare.

00:31:40:10 - 00:32:03:14
Keith John
Yeah. I mean, I think the challenge for us around this year, we hear we hear the RBA and previous, leaders of the RBA talk about how they're in touch with, which the consumer and we don't see it.

00:32:03:14 - 00:32:26:24
Keith John
You know, we're talking to, we're talking to the everyday Australian and and by that they are everyone. There's doctors and lawyers and professionals in there. There are tradies in there. There are single parents. There's there's the whole melting pot of the Australian population. there are great people, but they're struggling, you know, they have changed their spending habits.

00:32:26:24 - 00:32:51:04
Keith John
They're not buying lamb now because it's too expensive. They're not buying steak as it's too expensive. They've downgraded the present. They're buying their child. These are not things anyone wants to hear. What they are doing is they're fully employed and they want their families to get ahead, which is why they're paying down debt. So there's this element of, parts of of the struggling of the economy is struggling a lot.

00:32:51:04 - 00:33:19:15
Keith John
And it's, it's a really real problem. And it's it's a lot of what we share with our customers. And then there's a strong desire to pay down debt. So whilst employment remains really, really high and there are no forecasts to say that changing, that's really helpful throughout our business. But it would be nice to say that cost of living relief through interest rate decreases and the decrease inflation, so that people can get back to living the way that we all want to live.

00:33:19:15 - 00:33:37:05
Keith John
You know, we don't want to go to the supermarket and have to make a choice based on price for, for staple items. You know, we want to be able to choose what we want. And there's no reason why that shouldn't be occurring in this, in this country. But, you know, really, really good for us. But really challenging for our consumers.

00:33:37:07 - 00:34:02:04
Ryan Soutar
Of course. Of course. Really appreciate those market insights. Now we'll just pivot now to some this many questions. First one here I've got is are all of your I.T. and process upgrades now complete? What savings will those improvements create? 

00:34:03:02 - 00:34:24:15
Keith John
Yeah. So, but it remains a work in progress. And I think for everyone, our our infrastructure is hosted. We've spent an incredible amount of money, just like everyone on, on on continuing to uplift cyber and and data governance and those sorts of things. whilst the bulk of the spend on that's complete, you know, it remains an area we need to continue to invest in in terms of our core platform and those that work.

00:34:25:09 - 00:34:51:13
Keith John
we expect to complete that by the end of 25. and that's all on time and and on budget, everything else, looking really, really healthy. We have not forecast any savings in the any walks across our business at this stage. I think the prudent thing to do is to, bring that into our business led things settle.

00:34:51:15 - 00:35:21:22
Keith John
Take time to really understand, how these new platforms work, where the opportunities exist and extract benefit over time. once we've done that, then we'll start sharing with the business. sorry, with the, with our shareholders. What that means. But clearly we're doing it for a couple of reasons. One is the uplift in compliance. This is a best in class system that, will remove detective controls and have preventative talk controls in place.

00:35:21:22 - 00:35:42:15
Keith John
So we're at the forefront of, of our compliance obligations rather than at a, from a detective level, which is pretty standard in Australia in our sector. That's one. The second is the efficiency for our people. How do we make them more efficient so that they can solve problems more quickly and and solve more problems more quickly? So that's a big part.

00:35:42:17 - 00:36:07:17
Keith John
And the third is our ability to operationalise data in a more efficient way and in a way that we better understand the consumer, because if we can only talk to those consumers with capacity and desire, rather than those consumers without capacity, where we don't want to be adding to stress that's going to be good for our business, is going to be good for our brand, good for those customers as well. So a lot of work to be done, but we're very happy with the progress and, and expect some, you know, some real benefits, but not in the current year.

00:36:07:19 - 00:36:30:02
Ryan Soutar
I got I appreciate the update on that one. Now, that's the last question I've got here for the day is how much of the 16 million statutory profit in financial year 26, you believe will come from the realization of tax assets?

00:36:30:12 - 00:36:54:02
Keith John
look, we're expecting to deliver on this, operationally. Right? So that's that's the commitment. That's that's what we're, that's what we're working towards. You know, we've got a really, really good business, really good operations, you know, right. Cash collections revenue and EBITDA. And that's, you know, we expect to deliver for that operationally. Well, thank you for that clarification.

00:36:54:02 - 00:36:53:07
Ryan Soutar
Okay. Before we wrap everything up, is there anything else you'd like to add? 

00:36:54:08 - 00:37:16:22
Keith John
No I look I think that covers it all. Really appreciate your time, Ryan. And the time of your, and the question from your subscribers, you know, as I say to everyone, if you've got anything after this that you think of, please feel free to reach out to us and we'd be more than happy to answer them for you.

00:37:18:03 - 00:37:25:16
Ryan Soutar
Well, thank you very much for your time, Keith, and thank you very much. Credit for the opportunity. Ladies and gentlemen. Enjoy the rest of your day. Cheese. Thank you.