Investor briefing October 2010
Investor briefing October 2010 POLAND
21 October 2010
POLISH TEAM Country team representatives David Parkinson Tomasz Ciechanowski Mark Sutherland
Katarzyna Jóźwik
Country Manager 24 years with Provident, from U.K.
Business Development Director 11 years with Provident, from Poland
Finance Director 2 months with Provident, from U.K. 14 years with GMAC 6 years with PWC
Marketing Director 2 months with Provident, from Poland 7 years with Deutsche Bank / Consumer Finance / Citibank 1
TEAM & INFRASTUCTURE David Parkinson President
Management Board Piotr Kalisz Business Support Director
Mark Sutherland Finance Director
Zbigniew Hojka HR Director
Jon Rothwell Operations Director
Adam Chiliński Communications Department Director
Tomasz Ciechanowski Business Development Director
John Rea Credit Risk Director
Katarzyna Jóźwik Marketing Director
Alicja Kopeć Legal Director Advisor to Board
2
TEAM & INFRASTUCTURE
TEAM & INFRASTUCTURE Established
1997
Head office
Warsaw
Population
38 million
Employees
2,335
Customers
757,000
Agents
8,549
Branches
79
Area Managers
150
Development Managers
730
Credit issued per customer*
£389
*Credit issued 12 months (Oct 09 – Sep 10)
4
OPERATIONAL STRUCTURE Jon Rothwell – Operations Director
NORTH
Robert Pawlak – Operations Director Poland North
Marek Bigajski – Operations Director Poland South
8 Operating Divisions SOUTH 5
OPERATIONAL STRUCTURE
6
MACRO & POLITICAL ENVIRONMENT
MACRO ENVIRONMENT Exchange rate to sterling
Inflation %
GDP growth %
Consumer confidence index
Unemployment rate %
2007
5.53
4.0
6.7
-1
11.2
2008
4.42
3.3
5.1
-18
9.5
2009
4.85
3.5
1.8
-24
11.9
2010E*
4.58
2.8
3.2
-19
12.0
Source: Citi / Reuters [FX] *All end of 2010 forecasts – except FX & CCI dated as at end of Sept 2010
8
POLITICAL ENVIRONMENT • Election campaigns launched - major parliamentary factions finishing electoral lists, and candidates for mayors of main Polish cities have been nominated
Poland
• Bronislaw Komorowski, the new President, forming political entourage. Objective: to create a political centre independent from PM Tusk's influence. New political force forming • Local elections. First round - November 21; Run-off – 5 December • Parliamentary election – 2011 (Spring or Autumn) • Current opinion polls: Citizens’ Platform 40.7%, Law & Justice - 28.6% and Democratic Left Alliance - 12.6%
9
REGULATION • General trade licence; not subject to any special regulation applicable to financial institutions • Revised Consumer Credit Act to implement the CCD in progress; expected to be finalised end 2010 and effective mid2011
Poland
• ‘Flexible product’ operating within caps on interest rates (four times Lombard rate) and administrative charges (5% of amount lent) since 2006 • As per a number of other lenders, ongoing challenge from Office of Competition and Consumer Protection (“UOKiK”) regarding level of rebates on early repayment of loan
10
MARKET & COMPETITION
CONSUMER FINANCE MARKET Despite the financial crisis, credit market is growing, albeit at a slower pace, which is expected to continue
12
COMPETITION Socio demographic split 5000 +
middle managers, higher educated specialists
B2
3000
lower managers, small entrepreneurs clerks, employees
C1
2000 3000
self employed, qualified workers,
C2
1500 2000
qualified and not qualified workers, farmers
D
900 1750
farmers, administrative support
E
up to 900
PROVIDENT TARGET GROUP
A
BANKS TARGET GROUP
Top managers, higher educated experts
13
MEDIA ACTIVITY 2007 – 2008 high media investment followed by reduced TV activity; trend now reversing with spend growing in cash loan category
14
POLISH TEAM MARKETING CHANNELS 100%
Marketing activities deliver on avg. 39% of all newly recruited customers. 61% comes directly from agents acquisition activities
ND split
80%
60%
40%
20%
20
10 20 -01 10 20 03 10 20 -05 10 20 -07 10 20 -09 10 20 11 10 20 -13 10 20 -15 10 20 -17 10 20 19 10 20 -21 10 20 -23 10 20 25 10 20 -27 10 20 -29 10 20 -31 10 20 33 10 20 -35 10 -3 7
0%
Marketing acquisition channels
7%
Marketing ND
Field
12% Internet 38% TV
10%
Press Direct Marketing & other
Internet and TV are the main new customer acquisition channels
Leaflets 33%
15
POLISH CUSTOMERS’ JOURNEY
COMMUNICATION • AboveTL/BelowTL/ Internet • Local activities
• Provident on TV: 35% share of voice YtD • 70% aided brand awareness
ACQUISITION • Source of acquisition: ÆMedia activities (infoline leads/web apps) ÆOwn branch activities Æ Referrals
RETENTION • CRM – central campaigns for current and paid up customers • Agent relationship • Balance between central pull strategy and through agents
• Sales team promotions
16
CREATIVE JOURNEY
Up to 2006
Emergency
• Provident as a solution for “emergency” • Promoting product benefits • 2006 first customer promotions on TV
2007
“People helping people” Acquisition through promotions • New brand positioning • First image campaign • Emotional elements added to communication • Testimonials used
2008-2009
Focus on Direct Response • Focus on fast delivery and call to action on infoline “If you need fast loan, just call us” • Showing a need and quick solution • Clear exposition of product benefits
• Several promotions for Customers 17
CREATIVE JOURNEY
New positioning plans
2010
Continuation of Direct response approach
2011
“A BETTER WAY FOR YOU TO BORROW”
• Continuation of creatives used in 2009
• Promoting service but with added emotional elements to communication
• Strategic work on new positioning – market research, big idea development
• Direct response messages • Provident as a first choice in a urgent need
18
PROMOTIONAL SUPPORT
Representatives promotion (May 2010) To encourage incremental sales
Double Win promotion (Customer and Representatives – Oct 2010) to increase sales and encourage sales
Representative promotion (November 2010) to encourage sales and acquire new customers
19
PERFORMANCE REVIEW
PERFORMANCE REVIEW •
Highly profitable, cash generative core of the Group
•
Well established with strong management team
•
One of the best performing economies in Europe
•
Weather affected Q1 2010 performance
•
Performed well in Q2 and Q3 2010
•
Improved growth expected
21
PERFORMANCE REVIEW Poland, Czech & Slovakia profit before tax from continuing operations £m 35.0
32.3 29.8
29.5
30.0
24.2 23.3
25.0
22.1
24.8 23.7
20.0 15.0
13.8
10.0 5.0
4.4 4.9
0.0
Q1
Q3
Q2 2008
2009
Q4
2010 22
CREDIT STATUS OF BRANCHES 2
Branch Type Growth Balanced
39
38
Collection
23
CREDIT POSITIONING Predicted Gross Cash Loss % Total Amount Payable end point by year of issue 16%
14.5% 13.3%
14%
11.3%
12% 10% 8% 6% 4% 2% 0% 2008
2009
2010 24
PROSPECTS Targeting a customer base of 1 million+ Only market to avoid recession; economic environment good Good credit quality; impairment levels improved Increased efficiency of operations Good prospects for profitable growth
25
APPENDICES
CUSTOMERS (‘000)
941 813
968 854
871
856
765
758
762
660 504 305 10
72
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 June 2009 June 2009 2010
*June 2009 & 2010 data is 12 months
27
REVENUE (£m)
249.6 205.6
165.5
2004
2005
185.0
183.1
2006
2007
2008
240.4
June 2009
226.3
2009
239.8
June 2010
Source: 2004-2010 Data IFRS *June 2009 & 2010 data is 12 months
28
CREDIT ISSUED 344.9
(£m)
299.2
283.8 226.1
241.1
270.9
279.9 292.3
235.6
198.1 157.9 74.1 1.8
16
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 June 2009 June 2009 2010
*June 2009 & 2010 data is 12 months
29
IMPAIRMENT % REVENUE 42.8% 35.6% 30.3% 26.0% 17.7%
2004
2005
Source: 2004-2010 Data IFRS *June 2009 & 2010 data is 12 months
2006
2007
28.1%
30.9%
20.1%
2008
June 2009
2009
June 2010
30
Key statistics: Poland Half year ended 30 June 2010
2009
£m
% change
£m
% change
8,643
(15.4%)
10,220
(10.7%)
762
(0.4%)
765
(12.8%)
79
-
79
-
Credit issued
135.3
10.1%
122.9
(27.1%)
Revenue
121.2
12.5%
107.7
(7.9%)
Impairment charge
(45.7)
(29.8%)
(35.2)
(68.4%)
Closing amounts receivable from customers
196.3
0.5%
195.4
(26.9%)
Average amounts receivable from customers
221.7
3.5%
214.2
(12.0%)
30.7%
-
26.0%
-
Agent numbers Customer numbers (000s) Branch numbers
Impairment as a % of revenue
31
Provident Polska S.A., IBC Building 11 Polna Str. 00-633 Warsaw Poland T: + 48 22 455 47 47 W: www.providentpolska.pl International Personal Finance Number Three Leeds City Office Park Meadow Lane Leeds LS11 5BD T: +44 (0)113 285 6700 W: www.ipfin.co.uk
21 October 2010
POLISH TEAM Country team representatives David Parkinson Tomasz Ciechanowski Mark Sutherland
Katarzyna Jóźwik
Country Manager 24 years with Provident, from U.K.
Business Development Director 11 years with Provident, from Poland
Finance Director 2 months with Provident, from U.K. 14 years with GMAC 6 years with PWC
Marketing Director 2 months with Provident, from Poland 7 years with Deutsche Bank / Consumer Finance / Citibank 1
TEAM & INFRASTUCTURE David Parkinson President
Management Board Piotr Kalisz Business Support Director
Mark Sutherland Finance Director
Zbigniew Hojka HR Director
Jon Rothwell Operations Director
Adam Chiliński Communications Department Director
Tomasz Ciechanowski Business Development Director
John Rea Credit Risk Director
Katarzyna Jóźwik Marketing Director
Alicja Kopeć Legal Director Advisor to Board
2
TEAM & INFRASTUCTURE
TEAM & INFRASTUCTURE Established
1997
Head office
Warsaw
Population
38 million
Employees
2,335
Customers
757,000
Agents
8,549
Branches
79
Area Managers
150
Development Managers
730
Credit issued per customer*
£389
*Credit issued 12 months (Oct 09 – Sep 10)
4
OPERATIONAL STRUCTURE Jon Rothwell – Operations Director
NORTH
Robert Pawlak – Operations Director Poland North
Marek Bigajski – Operations Director Poland South
8 Operating Divisions SOUTH 5
OPERATIONAL STRUCTURE
6
MACRO & POLITICAL ENVIRONMENT
MACRO ENVIRONMENT Exchange rate to sterling
Inflation %
GDP growth %
Consumer confidence index
Unemployment rate %
2007
5.53
4.0
6.7
-1
11.2
2008
4.42
3.3
5.1
-18
9.5
2009
4.85
3.5
1.8
-24
11.9
2010E*
4.58
2.8
3.2
-19
12.0
Source: Citi / Reuters [FX] *All end of 2010 forecasts – except FX & CCI dated as at end of Sept 2010
8
POLITICAL ENVIRONMENT • Election campaigns launched - major parliamentary factions finishing electoral lists, and candidates for mayors of main Polish cities have been nominated
Poland
• Bronislaw Komorowski, the new President, forming political entourage. Objective: to create a political centre independent from PM Tusk's influence. New political force forming • Local elections. First round - November 21; Run-off – 5 December • Parliamentary election – 2011 (Spring or Autumn) • Current opinion polls: Citizens’ Platform 40.7%, Law & Justice - 28.6% and Democratic Left Alliance - 12.6%
9
REGULATION • General trade licence; not subject to any special regulation applicable to financial institutions • Revised Consumer Credit Act to implement the CCD in progress; expected to be finalised end 2010 and effective mid2011
Poland
• ‘Flexible product’ operating within caps on interest rates (four times Lombard rate) and administrative charges (5% of amount lent) since 2006 • As per a number of other lenders, ongoing challenge from Office of Competition and Consumer Protection (“UOKiK”) regarding level of rebates on early repayment of loan
10
MARKET & COMPETITION
CONSUMER FINANCE MARKET Despite the financial crisis, credit market is growing, albeit at a slower pace, which is expected to continue
12
COMPETITION Socio demographic split 5000 +
middle managers, higher educated specialists
B2
3000
lower managers, small entrepreneurs clerks, employees
C1
2000 3000
self employed, qualified workers,
C2
1500 2000
qualified and not qualified workers, farmers
D
900 1750
farmers, administrative support
E
up to 900
PROVIDENT TARGET GROUP
A
BANKS TARGET GROUP
Top managers, higher educated experts
13
MEDIA ACTIVITY 2007 – 2008 high media investment followed by reduced TV activity; trend now reversing with spend growing in cash loan category
14
POLISH TEAM MARKETING CHANNELS 100%
Marketing activities deliver on avg. 39% of all newly recruited customers. 61% comes directly from agents acquisition activities
ND split
80%
60%
40%
20%
20
10 20 -01 10 20 03 10 20 -05 10 20 -07 10 20 -09 10 20 11 10 20 -13 10 20 -15 10 20 -17 10 20 19 10 20 -21 10 20 -23 10 20 25 10 20 -27 10 20 -29 10 20 -31 10 20 33 10 20 -35 10 -3 7
0%
Marketing acquisition channels
7%
Marketing ND
Field
12% Internet 38% TV
10%
Press Direct Marketing & other
Internet and TV are the main new customer acquisition channels
Leaflets 33%
15
POLISH CUSTOMERS’ JOURNEY
COMMUNICATION • AboveTL/BelowTL/ Internet • Local activities
• Provident on TV: 35% share of voice YtD • 70% aided brand awareness
ACQUISITION • Source of acquisition: ÆMedia activities (infoline leads/web apps) ÆOwn branch activities Æ Referrals
RETENTION • CRM – central campaigns for current and paid up customers • Agent relationship • Balance between central pull strategy and through agents
• Sales team promotions
16
CREATIVE JOURNEY
Up to 2006
Emergency
• Provident as a solution for “emergency” • Promoting product benefits • 2006 first customer promotions on TV
2007
“People helping people” Acquisition through promotions • New brand positioning • First image campaign • Emotional elements added to communication • Testimonials used
2008-2009
Focus on Direct Response • Focus on fast delivery and call to action on infoline “If you need fast loan, just call us” • Showing a need and quick solution • Clear exposition of product benefits
• Several promotions for Customers 17
CREATIVE JOURNEY
New positioning plans
2010
Continuation of Direct response approach
2011
“A BETTER WAY FOR YOU TO BORROW”
• Continuation of creatives used in 2009
• Promoting service but with added emotional elements to communication
• Strategic work on new positioning – market research, big idea development
• Direct response messages • Provident as a first choice in a urgent need
18
PROMOTIONAL SUPPORT
Representatives promotion (May 2010) To encourage incremental sales
Double Win promotion (Customer and Representatives – Oct 2010) to increase sales and encourage sales
Representative promotion (November 2010) to encourage sales and acquire new customers
19
PERFORMANCE REVIEW
PERFORMANCE REVIEW •
Highly profitable, cash generative core of the Group
•
Well established with strong management team
•
One of the best performing economies in Europe
•
Weather affected Q1 2010 performance
•
Performed well in Q2 and Q3 2010
•
Improved growth expected
21
PERFORMANCE REVIEW Poland, Czech & Slovakia profit before tax from continuing operations £m 35.0
32.3 29.8
29.5
30.0
24.2 23.3
25.0
22.1
24.8 23.7
20.0 15.0
13.8
10.0 5.0
4.4 4.9
0.0
Q1
Q3
Q2 2008
2009
Q4
2010 22
CREDIT STATUS OF BRANCHES 2
Branch Type Growth Balanced
39
38
Collection
23
CREDIT POSITIONING Predicted Gross Cash Loss % Total Amount Payable end point by year of issue 16%
14.5% 13.3%
14%
11.3%
12% 10% 8% 6% 4% 2% 0% 2008
2009
2010 24
PROSPECTS Targeting a customer base of 1 million+ Only market to avoid recession; economic environment good Good credit quality; impairment levels improved Increased efficiency of operations Good prospects for profitable growth
25
APPENDICES
CUSTOMERS (‘000)
941 813
968 854
871
856
765
758
762
660 504 305 10
72
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 June 2009 June 2009 2010
*June 2009 & 2010 data is 12 months
27
REVENUE (£m)
249.6 205.6
165.5
2004
2005
185.0
183.1
2006
2007
2008
240.4
June 2009
226.3
2009
239.8
June 2010
Source: 2004-2010 Data IFRS *June 2009 & 2010 data is 12 months
28
CREDIT ISSUED 344.9
(£m)
299.2
283.8 226.1
241.1
270.9
279.9 292.3
235.6
198.1 157.9 74.1 1.8
16
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 June 2009 June 2009 2010
*June 2009 & 2010 data is 12 months
29
IMPAIRMENT % REVENUE 42.8% 35.6% 30.3% 26.0% 17.7%
2004
2005
Source: 2004-2010 Data IFRS *June 2009 & 2010 data is 12 months
2006
2007
28.1%
30.9%
20.1%
2008
June 2009
2009
June 2010
30
Key statistics: Poland Half year ended 30 June 2010
2009
£m
% change
£m
% change
8,643
(15.4%)
10,220
(10.7%)
762
(0.4%)
765
(12.8%)
79
-
79
-
Credit issued
135.3
10.1%
122.9
(27.1%)
Revenue
121.2
12.5%
107.7
(7.9%)
Impairment charge
(45.7)
(29.8%)
(35.2)
(68.4%)
Closing amounts receivable from customers
196.3
0.5%
195.4
(26.9%)
Average amounts receivable from customers
221.7
3.5%
214.2
(12.0%)
30.7%
-
26.0%
-
Agent numbers Customer numbers (000s) Branch numbers
Impairment as a % of revenue
31
Provident Polska S.A., IBC Building 11 Polna Str. 00-633 Warsaw Poland T: + 48 22 455 47 47 W: www.providentpolska.pl International Personal Finance Number Three Leeds City Office Park Meadow Lane Leeds LS11 5BD T: +44 (0)113 285 6700 W: www.ipfin.co.uk
