Credit Corp Group Limited (CCP.AX) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. Welcome to the 2024 Annual General Meeting of Shareholders of Credit Corp Group Limited, and thank you for joining us today. I'd also like to welcome those shareholders who are watching the meeting online via the live webcast. I'm Eric Dodd, Chair of the Board of Directors of Credit Corp Group Limited. And in accordance with the company's constitution, I'm Chair of this meeting. I'd like to acknowledge and pay my respects to the Gadigal people of the Eora Nation, the traditional custodians of the land on which I'm speaking to you from today. And I also acknowledge the traditional custodians of the land on which each of you are working from today. I'd like to pay my respects to elders past and present. As we have a quorum present, I declare the meeting officially open. I'd now like to ask the Company Secretary, Mr. Thomas Beregi, to advise whether we have any apologies.

No apologies.

No apologies. Thank you. I'd also like to introduce your company's directors who are all here with me today. Mr. Thomas Beregi, our Managing Director and CEO. Just raise your hand. Everyone knows you. I know Thomas. Mr. James Millar, Non-Executive Director and Chair of the Audit and Risk Committee; Mr. Trudy Vonhoff, Non-Executive Director and Chair of the Remuneration and HR Committee; Mr. Phil Aris, Non-Executive Director and member of the Nomination Committee and Remuneration and HR Committees; Ms. Lyn McGrath, the Non-Executive Director and Member of the Audit and Risk and Nomination Committee; Mr. Brad Cooper, Non-Executive Director and Member of the Audit and Risk Committees and Remuneration and HR Committee; and Ms. Sarah Brennan, Non-Executive Director, to be appointed to one of those committees, our newest member. Other members of Thomas' executive team are here today. And can I please ask them to stand and make themselves known to the meeting as I introduce them? Mr. Michael Eadie, our Chief Financial Officer and Company Secretary; Mr. Mitch Symes, where is Mitch, our Chief Operating Officer for Australia and New Zealand; Mr. Martin Wu, Chief Analytics Officer; Ms. [ Carrie Lazar ], newly appointed, our Chief People Officer; Mr. Tim Cullen, our Chief Information Officer; Mr. Chris Midlam, Head of Client Services. Chris; and Mr. David Brand, our Head of Marketing. Matt Angell, the President of Credit Corp. USA is currently in the U.S. and unable to be with us here today, although I believe he might be watching the cast. As well as being available for me to call on to assist in answering any questions during the meeting, the executive team as well as myself and the rest of the Board would welcome the opportunity to speak informally with any meeting attendees at the conclusion of this meeting. Also joining us today are the company's legal adviser, Mr. Guy Sanderson, Guy, from Hamilton Locke and Mr. Drew Townsend from Hall Chadwick, the company's auditor. No written questions were received in advance from shareholders for Hall Chadwick with respect to the conduct of the audit and the auditor's report and as per the process set out in this Annual Notice of General Meeting. But I'll call upon Guy and Drew to answer any relevant questions as required during the meeting. I'm going to commence with the Chair address, which will be followed by the CEO's quarterly update presentation, and we will then proceed to the ordinary business of the meeting, which will include the opportunity to ask questions on each item of ordinary business. Following that, we'll open the meeting up to questions covering any aspect of the meeting, including my address, the CEO's quarterly update, or any other relevant matter a shareholder wishes to raise. I'll now run through some instructions for asking questions and voting for those in the room today. Please note that only those who are registered as shareholders or proxy holders for absent shareholders are entitled to ask questions today. That is people who have a yellow or blue voting card. To ask a question, please raise your voting card. When the microphone is brought to you, stand and give your name, the name of the shareholder you represent, if you're a company representative or proxy, and then ask your question. Where appropriate, I'll call on specific directors, management, the auditor or other advisers to respond to shareholder questions. However, I do ask that all questions be put through me as Chairman. If shareholders wish to ask multiple questions, please note that we will take one question at a time from each shareholder or proxy and then return for further questions. Votes on each resolution that are the subject of this meeting will be taken by way of a poll. The poll will be taken on all resolutions at the end of the meeting. And I'll briefly explain prior to voting how the polling process will be conducted. I'll now commence with my address. Creating opportunity is about positioning Credit Corp to generate long-term value regardless of changes in the external environment. This has involved preparing for a range of external outcomes with the objective of developing the capacity and resilience to manage challenges and seize opportunities. This approach has delivered sustained performance and the strategies and flexibility to respond to changing circumstances while laying the foundations for new sources of growth. It has, however, not insulated Credit Corp from short-term periods of underperformance. In the final analysis, 2024 was a year of underperformance. While parts of the business performed well, our assessment of the impact of a deterioration in the position of the U.S. consumer produced a 44% fall in net profit after tax to $50.7 million. Shareholders suffered a significantly reduced dividend and the company's share price finished the year below where it started. As a fellow investor, I share the disappointment felt by all shareholders. But as Chair, however, I'm very proud of Credit Corp's achievements, including solid performances across our Australian and New Zealand businesses and improved execution in the U.S. over the final quarter of the year. We've started 2025 with a sound platform for a return to growth and a positive outlook across all businesses. The backdrop to Credit Corp's improved outlook has been a program of strategic diversification led by the Board and management over many years. Each year, Credit Corp's leadership has evaluated its strategic position, assessed the alternatives for growth and made commitments to develop and expand new businesses. Strategic resolve has combined with disciplined execution to create 3 businesses which are amongst the leaders in their respective markets. And while diversification has been critical to maintaining a growth outlook, the Board recognizes the continued importance of the core business of Australian and New Zealand debt buying on which the foundations of Credit Corp have been built. The core business made a positive contribution to the company's performance despite ongoing adverse market conditions. Australian and New Zealand debt buying sales volumes remained low, producing a continued contraction in collections. The focus for this business has been on carefully managing costs to limit the impact of reduced collections on profits and maintaining standards to preserve the ability to expand should conditions recover. Now this has been achieved and the core business remains very competitive, recording the highest level of direct from issuer purchasing since 2020 and establishing a solid platform for the year ahead. The core business also continued to serve as an excellent base for the development of resources critical to the growth of the company as a whole. In 2024, this comprised of the transfer of key talent and the development of common systems. During the year, 81 people were transferred or seconded to other segments. Improved digital and dialing technologies were implemented and these have subsequently been deployed across lending and collection services operations. Despite recent challenges, the U.S. remains as Credit Corp's most significant growth opportunity. Purchasing was moderated as the focus shifted to operational improvement. A local leadership team was established and an intensive program of operational improvement was undertaken. And while more work will be required in the U.S., concluded the year positively, reporting record quarterly collections over the last 3 months to the end of June 2024. And while the company looks to capitalize on improved U.S. buying conditions, ongoing uncertainty means that operational improvement will remain the priority. Purchased debt ledger prices have fallen to levels not seen for several years, while leading indicators suggest that the supply may continue to increase. Collection outcomes have, however, not been as strong as they have been in the past, despite relatively solid macroeconomic conditions and statistics for the U.S. This has created the prospect that any rise in U.S. unemployment may disproportionately impact collections. So sustained operational improvement will be necessary to address this uncertainty and facilitate more confident bidding for U.S. purchased debt ledgers. The Australian lending business is poised to produce strong earnings growth. The category-leading Wallet Wizard cash lending product delivered record lending volume in 2024, growing the total loan book by 24% to $445 million. The expanded book will translate into significant revenue growth for the year ahead. Maintaining a positive reputation as a responsible and compliant provider has been critical to Credit Corp's success to date. It has underpinned strong and growing client relationships while insulating the company from the costs of adverse stakeholder scrutiny. Important reputational milestones were achieved in 2024. The company maintained its industry-leading external dispute resolution compliant rate in Australia. Consistent effort over many years was rewarded with Credit Corp's Australian debt buying business again being rated by important financial counseling stakeholders as having the best response to consumer hardship of any financial services provider in Australia. This recognition will be particularly significant over the coming year as elevated costs of living increasingly focus stakeholders on consumer hardship responses. The resilience to learn from disappointments and secure an improved outlook is built by a positive culture. The values of transparency, accountability and discipline define the culture of Credit Corp. Transparency to honestly appraise business prospects, identify shortcomings and set a plan of action. Accountability to embrace and achieve challenging goals. And discipline to follow through with the right execution to deliver long-term outcomes. It is the day-to-day application of these values by Credit Corp's people that underpins the actions and outcomes that are creating opportunity. The commitment to our values not only drives the actions of our people, but also shapes the approach to leadership of the Board. Over the past 3 to 4 years, we've undertaken a comprehensive Board renewal process with the average tenure of non-executive directors, excluding myself, now less than 3 years. Last month, as I mentioned earlier, we welcomed Sarah Brennan to the Board as a Non-Executive Director. And I've informed my fellow Board members that I intend to step down as Chair at the 2025 AGM, allowing time for an orderly transition to my successor. I thank my fellow directors, our CEO, Thomas Beregi, and his management team for leading through values and establishing a positive outlook for the future. On behalf of the Board and shareholders, I also thank all employees for their ongoing commitment and dedication to Credit Corp. Thank you. This is pause for applause. Okay. Thomas will now provide an update on the company's performance to date and an assessment of the outlook for the balance of the financial year. So I'm pleased to hand over to our CEO, Thomas Beregi.

Great. Thank you, Eric. Thank you, Eric. I won't ask for applause. I hope it'll be graciously provided. But look, it's great to see you all here today again, many familiar faces, and really appreciate that you're here and look forward to receiving your questions a bit later. So just moving right along. Our objective here at Credit Corp is the leadership of the credit-impaired consumer segment. We define our market as people who've had trouble with credit, most having defaulted on a previous obligation. We operate in very competitive businesses and 3 competencies are critical to our success. We must have superior analytics and discipline because our business is all about pricing and managing risk. Our operations must be strong so that we can compete. And we have to be responsible and compliant to deliver on our promise to our debt sale clients, other stakeholders and the community. And this ensures that our business can continue. Applying these competencies, we target to deliver strong earnings growth into the future while producing acceptable returns. And we define an acceptable return as an ROE of at least 16% with a conservative financial structure. So we have strong metrics and approaches for each of these competencies across our 3 businesses. And our approach has produced a really solid start to 2025. Our U.S. operations have continued to improve. The lending business achieved record first quarter lending volume. And in Australia and New Zealand debt buying, we grew our investment pipeline. So just drilling into that a bit. In the U.S., we started to see improvement over the last quarter of 2024, and Eric has referred to that. So over that final quarter, we saw collections grow by 6% over the prior year. And now in the quarter to September, that has built to 12%. And this improvement is particularly pleasing and it's pleasing because it reflects a lot of hard work by a lot of people and it was achieved in challenging conditions, including elevated repayment plan delinquency, which has not abated since it first emerged 18 months ago and was the backdrop to the impairment that we took in last year's accounts. But also, we've achieved that 12% growth despite a significant reduction in purchasing over the past year. Australia and New Zealand collections also held up well. We purchased strongly over the final quarter of 2024, and that's converted to collections in the first quarter of 2025. So a combination of purchasing and operational execution has helped maintain our book of payment arrangements and that book of payment arrangements should ensure that Australia and New Zealand collections continue to hold up over the balance of the current year. Solid and improving operations have laid a platform for increased purchase debt ledger and investment. In Australia and New Zealand, these sound operations have already helped build our purchasing pipeline over the first part of the year in the face of some renewed competition in the market. While the outlook for the U.S. consumer remains uncertain, further operational improvement will be critical to ensure that we have the confidence to keep buying in that market. So operational improvement remains our key focus there. But we're also focusing our buying a bit more -- a bit differently. Our focus is on buying shorter repayment duration products in the U.S. like lower balance credit cards. And we're doing this as part of managing risk during a period that we judge to be one of heightened uncertainty around the position and the outlook for the U.S. consumer over the next few years. In our lending business, we've managed to hold the lending book during the first quarter despite a bit of reduced customer -- new customer demand. So new customer volume fell by 6% over the prior year, but was still above our pre-COVID peaks. So still in terms of the history of our business, still very solid new customer acquisition. And the enlarged book delivered a lot more returning customers, producing record first quarter total lending volume that I've referred to earlier. So just to wrap up on where we are over the first quarter, we remain on track for strong full year earnings growth. And we're looking at underlying net profit after tax growth of 17% at the midpoint of our guidance range, which I hope you'll agree is a solid recovery. So look, thank you for your attention, and I'll hand back to Eric.

Thank you, Thomas. We'll now move to the formal business of the meeting, including questions in respect of each of the items of business and then open the meeting up to general questions after the formal resolutions have been put. The only items of business to come before the meeting today will be those specified in the Notice of Meeting. We have 4 items of ordinary business that you've had the opportunity to review and consider through the circulated Notice of Meeting and I'll take the Notice of Meeting as read. Votes on each resolution that are the subject of this meeting will be taken by way of a poll at the end of the meeting. Rushad Bachana of Boardroom Limited, our share registry, will act as returning officer in relation to the poll. I'll briefly explain how the polling process will be conducted prior to voting at the end of the meeting. There have been proxies given in respect of today's resolutions, which I intend to disclose when each resolution is considered. As mentioned in the Notice of Meeting, it is intended that any undirected proxies given to the Chair will be voted in favor of the relevant resolution. Item 1 on the agenda is to receive and consider the financial report, the Director's report and the auditor's report of Credit Corp for the year ended 30th of June 2024. There will not be a formal vote on this item. I'll now invite questions in respect of this item. As a reminder, if you'd like to ask a question, please raise your voting card. When the microphone is brought to you, stand up and give your name, the name of the shareholder you represent if you're a company representative or proxy and then ask your question. Are there any questions? Yes.

Thank you, Mr. Chairman. [ Peter Richardson ], shareholder.

Yes. We can hear you, Peter.

I hope this is the right part of the meeting to ask a question. Just on the shareholdings of the directors. They're quite low. This was brought up a few years ago. We suggested maybe the Board should consider having a policy similar to other companies where directors are required to hold 1-year shareholdings and they can have 3 years to build that up. It wasn't acted on a few years ago. Is it part of your considerations? Is it being discussed?

We've actually implemented, Peter, the policy, what a year ago Trudy. We've implemented the policy for requiring all non-executive directors to hold shares. And we've said we'd introduce that over a 3-year period, which I think ends in about another 12 months. Trudy, do you want to add anything to that? But yes, we've hopefully listened, agree with it, and we've implemented the policy. So thanks, Peter. Any other questions?

My name is [ De Gngsun ] [indiscernible]. The company's annual report says the community has high expectations of financial service providers that go beyond minimum legal requirements. We're committed to meeting those expectations to ensure the success of our business and to protect our clients and other shareholders. We take pride in providing our customers with genuine and affordable financial solutions tailored to their needs. On Page 4, it professes that doing the right thing and explain doing the right thing means having the ethical and controlled approach to everything we do. Can it be really the case that these statements to the market in your annual report are accurate, given the business model explained in the report seems to calculate to create a permanent debt trap for most financially vulnerable Australians by encouraging them to take out high interest loans to pay down debts with banks and utilities they are not in a position to pay off.

Okay. I might direct that question to Thomas to answer a bit more fully, but it is certainly not the company's intention to create what you term as death traps. In fact, exactly the opposite. It's our mission, we believe, as a company, to help people out of getting into debt spiral. Thomas, do you want to add anything to that?

Yes. Look, I think there might be some confusion in relation to the way we conduct our operations, particularly the relationship between our debt purchasing activities and our lending activities. So those are conducted separately and we do not refinance debt purchase customers, so people who've already struggled with debt, into our lending products. We don't approach our customer base, our debt purchasing customer base and market loans to them. What we offer those customers who are struggling with existing obligations are a range of flexible solutions that do not involve escalating indebtedness. For the vast majority of consumers that we interact within our debt purchasing book, they will be subject to frozen interest while they maintain repayment plans. And we will continually reevaluate those plans with consumers and ensure they're affordable and that people can hopefully achieve an outcome where they do honor their obligations in a way that's sustainable for them and don't exacerbate any financial hardship that they may be facing. So look, I hope that addresses your question. In essence, the 2 businesses are very separate in the way they operate, particularly around the marketing. And in fact, I think I could say that when customers do approach us who already appear on our debt purchasing database, they are more likely than any other customer to be declined precisely for that reason, because they do have that existing indebtedness that they need to deal with. Thank you. Thank you for that question. I think we had one -- I'll come back to you.

My name is [ Ash Ken ], individual shareholder representing my own shareholding. So -- just on Page 66 of the annual report, it says here, the group amended its collection life cycle assumptions applied in its PDL accounting policy from 6 years to 8 years to bring its practice more into line with industry norms and competitors. Now, just in relation to that, my understanding was that previously that was considered to be conservative by looking at the 6 years and there was typically some residual left, often around 10% or sometimes a little bit more or less in terms of further value to collect from those loans. Now in terms of now that it's been changed from 6 years to 8 years, how much typically residual would be left? And how -- like does it look like in terms of is there any ramp value left and how conservative are those assumptions, et cetera?

I think, again, I'll call on Thomas to explain that in a bit more detail. It is still at the conservative end.

Thank you Ash Ken, for the question. So yes, as you've stated, moving from 6 years to 8 years brings us closer to market practice. In truth, most market participants are amortizing over a period a bit longer, generally 10 years and some operators, in particular, I think one of the largest operators in the U.S. uses a revolving 10 years. So it's continually refreshing 10 years. So specifically, you're asking about how much perhaps fully amortized collections there will still be. And so that will still be the case. We still collect. In Australia, I think over the 2023 year -- and Michael can -- Michael Eadie, the company's CFO, can correct me, I think what around sort of 15% of our collections, maybe even a bit more were from assets beyond the 6 years.

Yes. So I guess Ash Ken there's going to be -- there's going to be a residual. We don't expect it will be material. It's going to be something more, I guess, like 5% of the total collections, 5% to 10%. So it will no longer be a material amount as it has become as Thomas has alluded to.

Thank you. Thanks, Ash Ken. There's a question here.

I'm [ Amanda ], shareholder. My question is addressed to the directors of the company who do not own any shares in Credit Corp. Why aren't they shareholders yet? Is there something they know that discourages them? Do they have plans to buy shares in the company for which they are responsible under the corporation's law as directors?

Okay. I think the answer is in the previous answer I gave. We now have a policy for all directors, non-executive directors to own shares and that's been phased in. But it's a company policy set in stone and approved by the Board and has been, I guess, well accepted by all shareholders we've spoken to over the recent times. But all of those -- and there's certainly nothing that they know that's precluding them from buying shares immediately. I think that -- I did ask the question, I think I answered myself that the policy, in fact, hits at the end of 3-year period. If you've got a 3-year period, Sarah, for instance, just joining has 3 years to build her shareholding up to the required level. Okay. Any other questions? I have one at the back.

I'm an individual shareholder. I'm not sure whether this is...

Could you hold the microphone up? Sorry.

I'm not sure whether my question is pertinent to item 1, but the intelligentinvestor.com.au said that the company had very limited prospects for growth -- okay -- very limited prospects for growth and that it was ceasing coverage of the company. One of its commentators, Graham Witcomb, said that -- said you paid too much for debt ledgers in the United States. How do you respond to this troubling [Audio Gap]?

Well, the first thing I'll say, and probably hand over again to Thomas to answer, is that that is very much in the minority view in terms of those that are following the company. Thomas, you might wish to respond.

Thanks. Thanks for the question. So, yes, look, there will be a range of commentators on the company who always have different views and that's going to be the nature of things. As Eric has alluded to, there are a number of analysts who presently have the company with a buy recommendation, some of the major brokers around town. But yes, there will be a number of different views. In terms of -- in terms of the company's prospects for the future, well, as you heard probably from Eric's address it is our job and management and the Board trying to lead the organization to always ensure that we have prospects for growth and that's precisely why we're operating in 3 or 4 different businesses and in different geographical markets to ensure we can achieve growth regardless of the conditions. In terms of the specific -- and look as we've shown, we have a growing lending business that is going to grow substantially this year and our U.S. business is growing its earnings this year as well. In Australia, we're at a point where we're probably reaching the bottom in terms of the contraction of the market. And so we look forward to recovery in the future and we'll no longer be looking to straddle any further reduction in earnings from that business. In terms of the aspects of your question dealing with the U.S. and purchasing, it is axiomatic to say that we did pay too much for ledgers in the U.S. At the time, based on the conditions we were facing, the prices didn't look like too much. They would have achieved our return criteria based on our understanding. When conditions changed and we started to experience elevated delinquency, we had to adjust the outlook for those purchases and that led to the one-off impairment, which is now being processed through our books through last financial year. And so the present outlook is for all our ledgers to meet the reforecasts that were achieved -- that were put in place at that time. And any subsequent purchasing is being undertaken at prices that in the present conditions, which are more depressed in terms of the collection outlook, we will still achieve our return criteria. So that sets us up for growth. And as we've talked about with further operational improvement, we should start to see improving returns from our U.S. business. Thank you.

Thank you, Thomas. Do we have any other questions? Yes, we have a question.

Mr. Chairman, I have a couple of questions, but I think this one relates to the report specifically. But before I do, I just wanted to thank you for your long service and to wish you well in the future. My question really relates to what you've described it accurately as a fast-growing lending business. And I've gone through the annual report and I read a lot of them and. it's a remarkably impressive document in the sense that it deals with issues like modern slavery, the plight of indigenous people in Australia and all sorts of disadvantaged people. There are pages and pages about the company's response to the climate emergency. So that's great and very welcome. But I can't find anywhere in this document, despite the listing rules and corporations law requirements that refers to the interest rate at which Wallet Wizard lends money to its customers. Now I'm aware of that number and I assume the members of the Board are as well. I think it's currently 48% or so APR and has been so for 7 or 8 years. So it's not like it's a frequently updated number. I'm just wondering why it is, given the legal obligations for continuous disclosure and that sort of thing. Why it is that that number isn't in the annual report?

Michael, would you like to respond to that or Thomas?

There's no conscious decision to disclose one thing or another on our websites, our customer-facing websites that's disclosed that's relevant to customers. I guess the only thing I'd say is that most people's perceptions around interest rates are framed around a home mortgage which might be around 6% or 7%. A home mortgage can be -- can amount to millions of dollars. The amounts we're lending on average are just a few thousand dollars. And so while the interest rate might appear high, it is within the mainstream lending cap. It doesn't resort to any concessional caps that allow for much higher rates of interest to apply. There are no fees. The way the product operates, so it's on a relatively small amount. So we're talking total interest of just hundreds of dollars on the average loan. And if you think about it, particularly with the regulations we have in place in Australia, a lot of the costs for our business are relevant to a loan. They're relatively fixed per loan, whether that loan might be a home mortgage or a few thousand dollars. And that needs to be reflected in our economics to generate an acceptable return. But importantly, in the market, within the suite of products that we compete with, we are providing the most affordable and sustainable solution so that a lot of our customers are going to be looking at a product set, a set of alternatives where the costs are much higher. Now in terms of the way those costs are expressed, the way the legislation works for some of those alternatives that actually end up with a much higher APR or effective interest rates, they're quoted on a flat rate basis. So you'll hear of those as 20% establishment fee and 4% flat per month. Now that on a 1-year advance is about an APR of around 100%. Most of those loans are going to be over an even shorter period and will feature higher repayment amounts than ours, which will be over a longer period, more sustainable. And so over those shorter periods, you can have a 200% APR. So, yes, it is within the comparison set. It's not always easy for us to explain. On our customer-facing website, we do provide an example, which shows how much cheaper our product is against some of the commonly available alternatives. But look, I hope that gives you a bit of an idea of the context we're dealing with. It's not something we shy away from. It's an incredibly flexible product. Someone -- if they feel that they've got themselves into a product with unacceptable cost if they borrow on one day, they can repay the very next day, the whole amount without any cost or other than a day's worth of interest, which might only be a fraction of $1. And so of course, we will lose money on that, but it's completely flexible when anyone needs to. If -- if someone finds an alternative and can refinance cheaper, they can repay us at any time, and it's completely without cost. So that one interest rate [ encaptures ] really the only way we make money out of our lending operation.

Can I just ask a very quick follow up? Would you consider in next year's report perhaps including that number because it does strike me as a key metric that relates to the business. And I think Listing Rule 3.1 kind of mandates continuous disclosure of relevant information and [Audio Gap].

Yes. Sure. Sure. But look we offer a number of products with different interest rates as well and we have products with interest rates in the teens as well. It's not the only product in the same way that some of -- some mainstream lenders in Australia, mainstream finance companies, will offer products where they won't necessarily be disclosing an all-up interest rate in their annual reporting either. It's not a relevant practice. And to do so would obviously require sort of taking into account fees and exception fees and other things. And, yes, look, there are mainstream lenders where the interest rates are not too much lower than that, which we're charging to a different customer base. So look, certainly take on board the premise of your question. I don't agree that there's some regulatory requirement for us to include that in our annual report. We'll consider it and perhaps your question raises an opportunity for us to provide more explanation in our report on the subject of the interest rate and its competitive position and other things and I'll certainly take that on board. Thank you.

Okay. Thank you, Thomas. Are there any other questions? Ash Ken?

Yes. So just in relation to disclosures in the annual report, I feel given all sorts of -- and as the previous questioner spoke about, all sorts of ancillary information provided in the annual report. But one thing that never seems to be discussed is the Board's thinking in relation to the dividend payouts and the dividend payout ratio. Now the company's official stated policy is that they'll consider it on a year-by-year basis. But if you look at historically, except for the period of COVID and the global financial crisis, which were crisis periods and had a substantially lower payout ratio, on average, the rest of the time since listing in late 2000, the company has typically paid around half its earnings as a dividend. So some years a little bit more, some years a little bit less. Now I feel that the Board should be elaborating on their thinking behind that because it's an extremely critical thing, which affects the value of the shares. And one could definitely question the logic of the payout ratio of that somewhere around the 50% mark. If you look at it historically from when the company listed until today, something like approximately 3/4 of the dividends paid to shareholders has been funneled back into the company through various capital raisings over the years. So it doesn't -- the payout ratio and if you look at the target return on equity, 16% to 18%, that far exceeds the returns that either the ASX on average is offering or the vast majority of shareholders can accomplish on their own. Now, given there is, over time, a lot of opportunity for reinvestment of earnings and given the returns on equity achievable, to me, it seems it would be logical for the company to pay no dividend and reinvest 100% of its earnings for growth just on the basis of that target return, which has historically achieved or exceeded on average. And given the growth runway ahead of it in terms of investment opportunities over time, instead of paying it out and then asking for it back in future years, which since listing, the share count of the company has over doubled since then. So the share price would obviously be a lot higher if the company acted as a so-called growth stock and reinvested all its earnings.

Thanks, Ash Ken. The Board spends a lot of time on the issue of dividend payment. We don't have an established hard and fast policy, but we do have a precedent that the market, as you've just pointed out, is well aware of. We consider, as I say, a whole range of issues in relation to recommendation for dividend payment every year, including the capital position, what might be required and so on. And I think there'd be as many people at any range between [ 0 and 75 ], for instance, that would have a view on what it should be. But I can assure you the Board takes into account all aspects of what the requirements of the company would be in terms of capital over the next period before it decides on a dividend policy. Michael, I don't know if there's any need for us to disclose exactly what those considerations are every year. There's nothing we're hiding from, but it is obviously a very important issue for the company Board to deal with every year or every half year, in fact.

Yes. I was probably just to add to that that the kinds of sentiments you're expressing, Ash Ken, the kinds of things the Board also goes through in their sort of capital management discussions and deliberations prior to the approval of any dividend. Probably the other point to note is that whilst yes, there have been some capital raises over the course of the sort of company's period of being listed, they have been relatively sporadic. I think the -- there was a capital raise in 2006, I think I could stand corrected. And then the next one wasn't until 2019, I think, and then another one at the start of COVID in 2020. So they have been somewhat sporadic. So it's probably -- perhaps it's a little bit of a -- it's a little bit difficult to say that just be sort of by looking at it over such a long period of time to kind of say that the company ought to have sort of preserved more capital in order to take advantage of opportunities that were subsequently funded via those capital raisings, just given the sort of lack of regularity in their occurrence. That was all I was going to add. Thank you.

Okay. Thank you. Are there any other questions? We have one here.

Thank you, Chair. My name is [ Byron ]. I'm an individual shareholder. I think my question goes a bit to the projections about revenue and growth and profitability. I wanted to refer you to some of the publicly available reviews of clients of Credit Corp. Particularly, I wanted -- I took the example of a very well-regarded independent consumer review site, ProductReview.com. I won't attempt to read all the individual reviews, but out of about 134 reviews of the company, they were unfortunately quite negative. Score for transparency out of 5 averaged out to 1.2, for rates and fees, 1.2 out of 5, job satisfaction, 1.2 out of 5. 98% of the reviews you could argue were in the negative category. Are you aware of these sort of candid observations that clients and potential clients are seeing out there about the company? And if you're unfamiliar, I have a few examples, but -- yes, I'll leave it at that if you don't need specific examples.

I don't think we're specifically aware of the ones you mentioned. And the Board is obviously made aware of reviews continuously by the houses that tend to follow us in terms of investment. I haven't seen any that basically result in the ratings you've just mentioned. Thomas, are you aware of this?

Look -- yes, look, I'm aware of various product review sites and different feedback. And it's always difficult to control, it's difficult to understand exactly what each -- whether, in fact, every individual is a customer or employee. So we do conduct our own surveys of customers, which are randomized and they are actual customers and collect feedback there. We have a very comprehensive sort of complaint tracking system. And obviously, we take a lot of feedback through that as well, the complaints that are lodged about our actions, and we use that to continuously improve our operations as well as the surveying of customers. And in terms of employees, we do a staff engagement survey roughly every 6 months. And of course, we track any grievances or other feedback that comes from staff and we always set action plans to address it. I guess that's in keeping with our values. We want to be accountable. We want to know what's going on. But obviously, we're going to focus on more credible sources that where we can properly assess what we're receiving and doing something about it. I won't say that that feedback is irrelevant or can be dismissed. We do pay attention to it. But place more weighting on these other measures where we get a bit more granularity and we can set action plans and do something about it. I mean that is the trick of management. We can get consumed by things, but ultimately, it's about what we do. And so the material that provides us information that we can do something about is going to be most relevant to us and that's what we're going to act upon. I will say that in terms of our business, as Eric mentioned, we have some very impressive feedback for our industry. Eric referred to in his address the rating of our response to consumer hardship where we're rated higher than any other financial service provider in the country, higher than any of the major banks, higher than all our competitors. In terms of our complaint rates, which Eric also mentioned, we have the lowest complaint rate per dollar collected of any of our competitors in Australia, and we've maintained that position for a long time. So look, there are a whole bunch of data points and anecdotes that we can focus on and, yes, we try to be across them. But ultimately it's about what we can do. Our business is one -- particularly in our debt purchasing or debt collection business is a business that is enforcing an existing contractual obligation. People don't choose to be a customer of Credit Corp. It's something that happens to them. We do, however, try to make the experiences sort of understanding and appropriate for our consumers while still ensuring that we're able to achieve a financial return.

Thank you. All right. We have any other questions? Yes.

My name is [ David Fox ] representing myself, my self-managed [ fund ]. We've mentioned competition frequently during comprehensive answers referred. Is technology our main competitor these days in terms of the collections business?

Interesting question. We obviously are very cognizant of the competitive technologies that are there. The Board takes a keen interest in that. We keep abreast of it. I don't know if, Tim, if you want to add anything or Thomas again to specifically how we -- but we -- all I can say to you is from a Board perspective, we are very conscious of the impact technology will have on ours as well as obviously most other businesses.

[Audio Gap]

Absolutely. Thomas, do you want to add anything?

[Audio Gap] I'd like to start off and then see if Tim Cullen, our Chief Information Officer, would like to add anything. But look, very relevant question. I guess, from our point of view, we want to ensure that technology is not so much a competitor, but a source of competitive advantage for us. That's our objective as management, is to make sure we're not behind the market. And so we are making considerable investments and improvements in our digital platform. And in fact, our Head of Digital is in the room, and you might like to speak to him at the conclusion of the meeting as well. So lots of additional ways that we're interacting with customers through digital means, not only through sort of web chats, but SMS, e-mail interaction, other ways of communicating with customers that are more contemporary than speaking to someone on the telephone. That activity is also being supplemented with analytics and the use of various other tools for a long time, most of our models that support the prioritization and specification of individual treatment strategies, underwriting for our lending business. These are all supported by historically machine learning models that Head of Analytics, Martin and his team are continually developing and improving and rolling out across our organization to make sure that we're as efficient and as effective as we can be, whether we're speaking to someone manually, whether we're interacting with them on a text message or whether they're engaging with our portal, which has the functionality to kind of auto negotiate with consumers. So look, things are moving rapidly and AI is obviously the latest frontier, which is expanding the range of things we can do and really opening up the potential to provide alternatives to a completely sort of human interaction. And we've made some initial steps there that involve assisting our humans with conducting their conversations. So where the machine is helping people determine what they should do next live while they're interacting with consumers and we'll continue to advance that and ensure or attempt to ensure that we remain ahead of anyone else or any other provider or technology providers in the company. We recently created a new function specifically focused on the use of AI and that is developing some of these use cases that I've referred to and we'll expand to others as we continue on this journey. Our industry is one that is regulated and particularly in the U.S., there are significant impediments to the extent of the use of technology. And a lot of our effort is around making sure that our use of some of these more automated methods is compliant with regulatory requirements as well. So, yes, we want to be at the vanguard and I feel like we've got all the resources in place. And I don't feel that we're at any great competitive disadvantage at the moment. But our job is to aspire to be a leader in our industry and the adoption of technology to ensure we compete. Thanks.

Thanks, Thomas. A pretty comprehensive answer. Are there any other questions? Yes, I see there one more question there.

Yes. And this question is related to the question I asked and I thank you again for your comment on that one. This question is that we know that AustralianSuper is one of the largest shareholder in Credit Corp, and I'm not sure if they're here. They own 4.9% of the shares. Given the understanding of the coexistence of the company's operation in debt collecting and providing loans with relatively high interest rate, do you think it's likely they will continue to hold a position in the company in engaging those activities at the same time? I mean, given it is a common understanding. And then have you had discussion with senior AustralianSuper people about the moral hazard involved in combining debt collection and high interest loan product? And if not, what is the reason?

Yes. Thank you. Oh, sorry, Eric.

Okay. You jump in Thomas.

Look, thank you again for the question. Yes. Look, I'm not sure that AustralianSuper is currently a shareholder that might have been in last year's annual report. So through the year, I think they've significantly reduced their holding. But we do have a number of industry funds that are on the register either directly or through the intermediate fund managers. And we do have a number of other large investors where we are often interacting with their social governance, ESG sections around the nature of our business. And we're fielding questions around the sustainability of the -- of all aspects of our business. And look, I think each of our shareholders who holds our shares or continues to hold our shares, I think, seemingly is comfortable with the explanations they're receiving and the sustainable nature of our business. As I mentioned earlier, our objective is to provide genuine solutions. So in our debt purchase business, we are seeking a genuine resolution of an existing financial obligation, a pathway to clear that obligation in a way that's affordable and doesn't impose or exacerbate any existing hardships. So that is our objective, and that is what we are genuinely trying to do. As I mentioned earlier, we're not marketing to those customers. We're not marketing financial products and we're not seeking to profit further from those customers other than through our normal collection activity. So it is entirely separate. In our lending business, we are providing what we consider to be a vastly superior borrowing solution to the alternatives available to the consumers that we're dealing with. We're dealing with consumers who do have impaired credit records, who have had trouble with credit in the past, and they will be locked out from cheaper alternatives. And their only alternatives will be much higher cost, again, much higher cost than we're offering and often involving higher repayments. And in your earlier question, you spoke about a debt spiral. And I guess that arises where the cost of a product and the size of the repayment because it's repaid over such a short duration is such that the customer needs to come back and get another loan to finance not only the principal -- refinance the principal, but also the interest on the existing loan and that ever increases. Now that's not our business model. It's not the way our product works. Our product sets a repayment duration that ensures that the repayments are an affordable proportion of someone's take-home income. In general, I think on average, we're around 5% or 6% of someone's take-home income will comprise repayments to us on one of our loans whereas for many of our competitors, that's up and beyond 20%, which in an environment where rents are high and other things, it's creating an obligation for a customer to return whereas in our environment, customers who do return are doing so after they've substantially repaid their first obligation and are sort of returning for other reasons. Thank you.

Thanks, Thomas. I might just add that the -- as you glean from Thomas' explanation there, we spent a lot of time on investor relations and talking to investors and getting the sort of feedback you're talking about. We also do it from a Board perspective. Trudy and I spend a lot of time talking to our major shareholders, raising and seeing if there are concerns like that. That's done independently of management. And we put a lot of emphasis on that. We have reacted in very specific -- some of the instances brought up today and listen to that feedback more on the sort of governance and Board issue side than product-specific elements that you're raising here now. But we do have that channel. If there were concerns there, not just major shareholders, but proxy advisers and so on as well. We spend a lot of time on that and attach a lot of importance to it. Okay. One more.

Yes. This question may really be general [Audio Gap]

Sorry, I can't hear anything. Might be me.

[Audio Gap] Just in relation to the sort of cross-pollination between the debt ledger collection business and the lending business. And I just wanted to get to a point of clarity about it. How many customers of the debt ledger business have been offered or provided with debt products from the other part of the business?

Look, I couldn't give you a precise number. It's very few. These will not be customers who have been marketed to. They are customers who have applied independently through other marketing channels. As part of the assessment, we will look at their history with us. And if it's been favorable, such as did they repay their obligation, then that will assist them in being approved. So they are not sort of -- look, they're not specifically sort of discriminated against. But because we've had a previous relationship with them, we have a bit more information than other customers and that will be taken into account in the decision. As I mentioned earlier, more likely than not they'll still have an existing obligation, and therefore, that's likely to prevent them from qualifying for additional lending. So more likely than not, it's probably going to count against them rather than in their favor.

Okay. If there are no more questions, I might move on to agenda item 2. I take it there are no more questions. Agenda item 2 being the reelection of directors. And obviously, the first one being myself, I will ask James Miller to assume the Chair for this specific portion of the meeting. Thank you, James.

Let me add my welcome. Great to be here. I thought I could do this from sitting down, but I'm told I had to come here. This is item 2(a) concerns the reelection of Mr. Eric Dodd as a Director of the company. I'd like to ask Eric to say a few words.

Wasn't even worth sitting down. Well, I didn't get a chance to anyway. Thank you, James. Look, I'll be very brief. You've heard me on many occasions, most of you talk about the role I see myself playing on this Board, how I've enjoyed it over a fairly lengthy period now, some 15 years, less than 4 those as Chair. I've seen this company grow from, when I joined, the share price being $1.50, a value of about $60 million to the company it is today. And the role the Board has played in that in terms of the diversification of the business, the strategic direction it has set, along with management has certainly been something which I've been very proud of being a part of. The thing I've probably enjoyed the most, though, is the development of the executive team. To see the team grow from where they are individually to a team that is now universally admired by analysts in the marketplace certainly is something which I'd like to believe I had a small part in being. But things move on. I've indicated, as I said earlier to the Board that we need to look at refreshment and Board renewal. We've done so. The last part of that doesn't mean it's the end of Board renewal, by the way, because we really want to move to a process where we have continuous Board renewal and refreshment over time. But we spent a lot of time looking at what the needs are for the company in terms of its Board, the non-executive directors, the sort of skills and experience we need to take the company to the next level of its development over the next 5 to 10 years. And that applies to the Chair role as well. We have a process which we've just started to look at that from both an internal and external perspective. And I clearly need and want to see that through. But I've indicated that I will step down from the Chair at this AGM next year. So to finish that process, I'm seeking your vote for reelection to the Board today. Thank you.

Thank you, Eric. The resolution is on the Board. The resolution reads, Mr. Dodd retires and being eligible, offers himself for reelection in accordance with clauses 20.1 -- 20.1 and 20.7 of the company's constitution. Proxy votes received in respect of this resolution are shown on the slide. You can see those. As already noted, voting is by way of a poll, which will be conducted prior to the end of the meeting. So I now invite any questions in relation to this reappointment. We have one over here.

So just in relation to the Board renewal process, so as Mr. Dodd said that he intends to step down in 1 year's time. Now as he mentioned, the company has already looked into the renewal process for new directors that will be brought on into the company. Can the Board talk about what they're looking at in terms of the type of skills that they're looking to add to the Board to strengthen it? I feel that although most of the Board does have relevant financial services experience, I feel that perhaps some people could be added to the Board that have more direct, granular experience, having worked their way up from entry-level positions in debt collection or consumer lending that have that detailed understanding of the process. I feel that, that would be something that can contribute to the Board.

Thank you for your question. I'm going to refer that to the general meeting part of the questions. So I think the Chairman has referred to that and the Board has been largely refreshed. But let's bring that back. Let's stay with, if we can on Eric Dodd's reappointment at this stage, but we will come back to it. Are there any questions relating to the reelection of Mr. Eric Dodd as a Director? No more. If there are no further questions, the Chair, we'll go back to you. Thank you.

Thank you, James. We'll now move to the next item of business, which item 2(b) concerns the reelection of Mr. Phil Aris as a Director of the company. Again, proxy votes are noted. But before we move to that, can I ask Phil just to say a few words in support of his reelection to the Board. Thank you. Phil?

Thank you, Mr. Chairman. Good morning, ladies and gentlemen. It is a privilege to offer myself up for reelection as a Non-Executive Director of Credit Corp. This is my second time I'm standing for reelection, having joined the Board in July 2021. In my time with the company, I've served on the Board with all the committees and currently, I'm on the Rem and HR Committee and the Nominations Committee. To tell you a little bit about myself, my background involves extensive experience in senior executive and Board positions across a range of roles within financial services, marketing, technology sectors across Australia, the United Kingdom and in Asia. My past roles include Chief Executive and Managing Director of CountPlus Limited, Head of Credit Cards for the Commonwealth Bank of Australia, Head of Strategy and Business Development for Thorn-EMI Asia Pacific and Chairman of XPON Technologies Limited. I hold a Bachelor of Economics and a Masters in management. I believe my experience, including my over 3 years sitting on the Credit Corp Board and my strong understanding of the credit-impaired consumer will continue to add value and add to the success of the company in the future. I'm constantly focused on the customer experience, and I strongly share the values of discipline, accountability, transparency and a commitment to helping our communities. And I will make one point and great questions from the floor this morning in regarding our social responsibility. One of the reasons I joined the company initially is because of the outstanding performance the company has under the financial counsellors survey, heads and shoulders above our competition for financial hardship of how we treat our customers. We've also got one of the lowest disputes and complaints in the market and we're leaders in that area. So not only does the company concentrate on return for investors, but how that return is done and that's very, very important. I'll go as far as to say if there wasn't a Credit Corp in the market that the consumer would be worse off in this company. So I think the company is outstanding in regard to how it treats its clients and certainly understand some of the points that you made, sir. But we do put a lot of time and effort into that, and I think it's demonstrated in some of these very important surveys, which the industry pays a lot of attention to. I believe Credit Corp is an outstanding company. It's able to face challenges, demonstrate resilience in adversity, operated by a very capable management and a very effective Board. The company is laying the foundations for a sound platform and is positioning itself well for the future. As part of the team, I'm committed to building a stronger, more sustainable and successful business. I have the time, the energy and dedication to work in your interests. I thank you in advance for your support for my reelection, and I look forward to contributing to the future success of the business. Thank you.

Thank you, Phil. The resolution reads, Mr. Aris retires and being eligible, offers himself for reelection in accordance with clauses 20.1 and 20.7 of the company's constitution. Proxy votes received in respect to the resolution are shown on the slide. Are there any questions in relation to this resolution? Yes, sir?

Peter Richardson, shareholder. Just a question, Mr. Aris, you spoke very passionately about the future and opportunities for the business, but you haven't made any investments in the business, any substantial investments in shareholdings. Is there a reason that you've declined to invest in this company so far?

Well, I do actually hold shares in the company.

1,500?

Correct. Yes. Originally, as I said, July 2021, came on to the Board. I bought shares in early January, February 2022. And actually, at the time I bought shares at $35 a share, so I had belief in the company at that share price and still believe in the future very strongly. I re-bought some more shares recently, about 2 months ago and I'll continue to do so. As Eric said, we have a policy, a minimum shareholder policy. And I think all the Board totally supports that that they should be involved in as an investor, putting their own hard money as an investor into the company to back themselves that they believe in the company. So I believe I have done that. At the moment, I'm on track to meet that minimum shareholding. So I'm very committed.

Okay. Thank you. Yes.

Congratulations in advance in what appears to be your likely reelection. I just wanted to really pick up an issue that the CEO addressed, which is I was wondering whether you were willing to commit to ensuring that next year's annual report actually listed the interest rate of the company's principal lending product through Wallet Wizard in the annual report.

Okay. I think the answer that Thomas gave is one that I can really give you now. It's something we do listen to feedback. It doesn't mean that every single bit of feedback that we get, we act on. That would be impractical. But we appreciate that feedback. We will certainly take it on board and treat it seriously. But, yes...

[Audio Gap]

Sorry.

[Audio Gap] not able to answer the question.

I'm happy to say that it's not my individual decision. We're part of a collective and I mentioned being part of an effective Board and that is about discussing these things. And to ensure that we are -- one of our values is transparency to make sure that we meet that objective. So that will be discussed. I think it's a great question, needs to be discussed. As Thomas said, we do disclose it to our customers, which is really important because if you're going to go into the product, you want to know what you're in for. That's extremely important for investors. That's something we'll need to discuss as a Board.

Thank you. Any other questions in relation to the reelection of Phil? If not, we'll move on to the next item of business, item 2(c), which concerns the reelection of Ms. Sarah Brennan as a Director of the company. I'd like to invite Sarah to say a few words.

Thank you, Chair. I would like once just to be able to address the meeting without having to bring the microphone down, but not quite yet. So thank you, Chair, for the opportunity to say a few words, and good morning, ladies and gentlemen. As Eric mentioned, my name is Sarah Brennan and I am very pleased to offer myself for election to the Board of Directors of Credit Corp Group. As you may have seen from my brief resume in the Notice of Meeting and in the annual report, I've had over 30-year career in the finance industry. During this time, I've had 3 stages of experience in my working life, all which contribute to the experience and knowledge that I bring to the Credit Corp Board. These are initially working for small and large domestic and international financial services companies, commencing as a customer service operation -- sorry, a customer service representative and then moving through organizations to become the COO and the CEO of large institutions. Following this, I moved into my more entrepreneurial activities, which involved conceiving, developing, managing and divesting financial services boutique operations in Australia and then finally, as a Non-Executive Director of industry bodies, superannuation funds, private companies and a number of listed companies. My career has covered a range of different elements in the financial services industry. This includes treasury, pricing and securitization, mortgage broking, funds management, financial market trading, life insurance, investment banking, superannuation, financial planning and wealth management. And while I've worked primarily in Australia, I've had responsibility for and overseen operations in the U.S.A., in the U.K., Europe and Asia. As a Non-Executive Director, I joined my first Board back in 2001 and I've been a member of boards ever since. I've had the experience of being a director of companies large and small, listed and unlisted, parent companies and subsidiaries, and for-profit and not-for-profit organizations. In addition, I've been a member of and chaired many board committees, including investment, audit and risk. Most of my experience has in one way or another been related to the finance industry. And while I'm currently on the Board of a number of other companies, I have rigorously assessed my capacity to ensure that I have sufficient time to dedicate to my duties on the Credit Corp Board and to properly carry out all of my responsibilities to the absolute best of my abilities. I also do not believe I have any conflicts of interest that would impair my ability to fulfill my role on the Credit Corp Board appropriately. I also have a personal philosophy, which aligns with the Credit Corp's policy of having a financial interest in the companies for which I am involved. This has been raised by both Peter and [ Amanda ] today. So if I am elected as a Director at today's meeting and within appropriate trading windows and time frames, it is my intention to acquire shares in Credit Corp. Joining the Board of a company and the resultant responsibilities as a director to you as shareholders is not something that I take lightly. My focus is to ensure that my skill set and experience will bring value to the company. It's also important to me that the purpose and values of the company align with my own. And in the case of Credit Corp, the important role that we play in assisting credit repair of those who may have found themselves in difficulty is important to me and not only what we do, but how we do it, which results in Credit Corp consistently scoring high-end ratings from customers and financial counselors. So, since joining the Credit Corp Board a couple of months ago, I've been impressed by the way that the Board and management approach the task of managing the business to consistently deliver outcomes on behalf of consumers, staff and you, our shareholders. I'm confident I have the skills and experience to make a valuable contribution to your Board. And with your support, I look forward to working in your interests. Thank you very much.

Thank you, Sarah. The resolution reads, Ms. Brennan retires and being eligible, offers herself for reelection in accordance with clause 19.5 of the company's constitution. Proxy votes received in respect of this resolution are shown on the slide. Are there any questions? Yes, sir.

Congratulations again in advance, Ms. Brennan. I just wanted to address the same question that I did to your colleague, which relates to the disclosure of the interest rate at which Wallet Wizard lends to clients and whether you'd be willing to commit to ensuring that that's disclosed in next year's annual report.

Thank you for the question. I would probably -- sorry, thank you, Brad, for turning on my microphone. Thank you very much for your question. I would probably refer to Phil's response. I thought it was -- he covered it very well. It's obviously something that will be discussed at the Board. I would also very much support the aspect of, from a consumer point of view, those people who are entering into arrangements with us that, that is very clearly disclosed, and that very much goes to our point of transparency. But I think the point you raised is a valuable one and I think it will be discussed in due course at the Board. So thank you for your question.

All right. Ask Ken.

You did mention a little bit about your work experience in the financial services industry. You said that you started as a customer service operations. Can you just elaborate in terms of like your experience in customer-facing positions and that aspect of things?

Yes. Look, it's a great question. And the reason I think it is such a great question is I encourage anyone that I know who has children looking to enter the financial services industry, the best place to start is in a contact center or a call center where you are actually engaging with customers because that's where I started when I was at university, that's my first job, was in the contact center of a financial services company. And I spent a number of years there while I was at uni and then sort of progressed through organizations post that. It gives you that actual dealing with real people, that customer experience, that background. It is still a policy of mine with companies that I work with that I actually do spend time in the call centers of those companies over time. Again, just so you don't lose that touch with the people that we're dealing with that are absolutely critical to our business, which are our customers. So yes, it's a core value that I'm very grateful. I'd like to say it was planned, but I probably was a poor university student struggling for a first job that I took that role. But I'm so glad that I did. It's a great background. It's a great question. Thank you.

Thank you, Ash Ken. So any other questions? If there are not, we'll move on to the next item of business -- thank you, Sarah, which is agenda item 3, being the adoption of the remuneration report for the year ended 30th of June 2024. The resolution to adopt the remuneration report is a nonbinding resolution, and there is a voting restriction which applies to it. The company will disregard any votes cast in any capacity on this resolution by or on behalf of any key management personnel who are all the directors and members of management whose remuneration is detailed in the annual report and their closely related parties such as their families. However, those persons can vote as proxies of other eligible shareholders where they have been directed how to vote and the Chairman can vote undirected proxies on behalf of eligible shareholders. Under the Corporations Act, the resolution of shareholders that the remuneration report be adopted or any failure to pass that resolution is advisory only and does not bind the company or its directors. Proxy votes received in respect of this resolution are shown on the table displayed. I invite any questions in respect of this resolution.

So in relation to the remuneration report, firstly, just want to point out that there seems to be this kind of inconsistency in the focus. So you have in terms of the metrics, so on one page you have the company looking at return on equity based on a pro forma gearing of 30%. And then you turn to Page 70, and it's saying that the ROE gate opener is minimum 16%, which it hasn't mentioned anything about the pro forma gearing. So it just seems a little bit inconsistent that we're not keeping the focus everywhere on a consistently aligned metric. So in one place, we're talking about one thing. And then in another place, we're adjusting it to a slightly different metric. Like that's the first thing. The second thing in relation to the remuneration is if you look at the vesting conditions, also on Page 70, under the NPAT CAGR, which has a 50% weighting, so 40% of the performance rights vest if an 8% NPAT growth hurdle is met. Now if you look at -- as we spoke about before, the precedent is that under fairly normal conditions, the company has typically paid around half its earnings as a dividend and the target return on equity is 16% to 18%. So technically speaking, an 8% growth rate, like is literally if you're paying half the earnings as a dividend and meeting the minimum 6% hurdle, you've got 8% growth. So literally, you're rewarding 40% just for hitting the minimum hurdle. So like it seems a little bit excessive, but also why is it based on NPAT and not earnings per share? Because to shareholders, what's actually relevant is the earnings per share. The other thing I would point out is that there's actually no high watermark for earnings, for earnings per share. So if you look at previous years, so before COVID, 2019 financial year, diluted earnings per share was approximately $1.41. Now, even at the FY '25 forecast, the upper end is around $1.47. So if you look at that $1.41, just in that period of 6 years where we've averaged about 4% CPI inflation, like if you watermark that to inflation, that's around $1.79. So we're a fairly long way off earning in real terms what we earned in 2019. I feel like there should be some sort of high watermark hurdle as a minimum for management to get bonuses. Like if we're earning less than we were 5, 6 years ago, I don't think they should be getting rewarded. But yes, like I said, that why NPAT instead of EPS, why the inconsistency in looking at the return on equity metric?

Okay. There's a lot in that question, Ash, and I'll let Trudy, I guess, answer it in detail, being the Chair of the HR and Rem Committee and basically pull that report together, which is a very comprehensive document. We've listened to shareholders and investors over the last few years and they've been very pleased with the reception we've had so far with the way that we have reacted to some of the points that you raised here. Now, Trudy, you can provide a bit more detail on that. But one thing I will just say is that there is a high watermark in terms of bonuses paid. Our staff received none this year.

[Audio Gap]

Trudy, would you like to respond?

So I'll go through the items that you've raised. Hopefully, I've captured them all. But first of all, just to recap for everyone else in the room, for a long-term incentive to be paid, and that's what we're talking about here, there is an ROE gate opener of 16% and that's on pro forma gearing. So I take your point. If we haven't repeated it in the annual report on both pages, we can certainly make sure that it's in there. But it is on pro forma gearing. And we do have conversations with various shareholders and proxy advisers around that benchmark. So once the hurdle ROE is met, if it is met, then in terms of the incentives, there is 50% allocated to NPAT CAGR hurdle, which you've spoken to. And likewise, 50% is then also attributed to meeting a relative TSR return. And I do recall our discussion at last year's AGM and in terms of the NPAT versus EPS question and attributed a small paragraph in memory of you on Page 75 in terms of explaining why we use an ROE hurdle combined with NPAT. We still believe that that's the most appropriate measure for Credit Corp in terms of maximizing or encouraging our executives to maximize our investments at the hurdle return, agnostic of any capital structure that we might have. We talked about -- or you talked about the ROE return and the growth that we have in place. We, I guess, every year, consider those hurdles because what we want for our employees is to make sure that those hurdles are achievable. But stretch and getting that balance right usually takes a fair amount of consideration to make sure that we're still attracting people and that we've got a valid incentive program in place and that our people believe that it can be achieved. I guess with respect to the ROE, that hurdle is, I think, broadly in line with our peers. I think where we are out of line with our peers, both domestically and globally, is the pro forma gearing. Our gearing is particularly low compared to our peers. And that level of gearing is a strategic consideration because access to funding is critical to Credit Corp. We need to be able to have the flexibility to act quickly should an opportunity arise at the right price. So our gearing levels are and have historically been fairly low. I think with respect to the remuneration framework that is in place, we still believe that it is appropriate even though the ROE hurdle has not been met for the last 2 years. And this year, particularly with our performance in the U.S., it was in the Board's view, inappropriate to have STIs and LTIs vesting. So there was no short-term incentive paid this year to our KMPs, nor were there any long-term incentives vesting for our KMPs.

Thank you, Trudy.

In regards to my part of the question about has the Board -- I don't think you answered it. Has the Board looked at having a high watermark hurdle in place in terms of earnings per share adjusted for inflation? Because essentially that's the return that shareholders are receiving as owners of the business is the earnings per share adjusted for inflation? We're well, well below the 2019 high. So I don't feel that anyone executive should be rewarded if our earnings are going backwards per share on a real basis? And why has the Board not considered that?

One, I guess, in terms of what we use for our hurdles, we do revisit that every year. So in terms of our conversations with proxy advisers, shareholders and indeed this AGM, that is part of the input back into our considerations every year. So we always consider EPS. But again, we don't want our staff thinking about how they can manipulate capital in order to get an incentive. So in terms of EPS, of course, we look at EPS, but it's not what we choose to have our employees incentivized with. I think it's a valid measure and lots of companies use it. But for us and our business, we think that the CAGR NPAT growth with the ROE qualifier is the most appropriate for our business.

Okay. And that's been the case for a while. Are there any other questions? Okay. Thank you. Thanks, Ash Ken for those. I'll now move on to item 4 on the agenda, being the issue of performance rights under the long-term incentive plan in respect to the 2025 to '27 performance period to the Managing Director and CEO, Thomas Beregi. The text of the resolution is on the slide now. There are voting restrictions which apply to this resolution. The company will disregard any votes cast in any capacity on this resolution by or on behalf of Mr. Beregi or any of his associates. Similarly, it will disregard any votes cast as a proxy on this resolution by any key management personnel who are all the directors and members of management whose remuneration is detailed in the annual report and their closely related parties such as families. However, those persons can vote as proxies of other eligible shareholders where they've been directed how to vote, and the Chairman can vote undirected proxies on behalf of eligible shareholders. Proxies received in respect of this resolution are shown in the slide displayed. I'll now invite any questions in respect of this resolution. There don't seem to be any questions. And if there are no further questions, then that concludes our discussion of all items of business. I'll now invite any remaining questions from shareholders and proxies related to my address, CEO's presentation and any other relevant matter a shareholder or proxy wishes to raise. Ash Ken is there...

[Audio Gap]

Yes, I was just going to address that. I think a lot of what answer to your question came through in the, I guess, supporting speeches that both Phil and Sarah made in support of their reelection. We've spent a lot of time on looking at the skills that are required for the Board. I've talked about the refreshing or renewal process in terms of the Board over that period of time. We've had external assistance with this. We spent a lot of time individually as Board members and collectively as a Board, talking about what we believe the skills are going to be for the next 5 to 10 years. They are clearly different to the skills that were needed to take this Board through its development to date. The sort of background skills you're talking about would be ideal. But remember, the role of a Board is different to the role of management. And the governance requirements of a Board really do need things such as ASX 200 experience to ensure that the Board is properly governing as opposed to running the business, which is not our role. So all of those issues, I can assure you, have been sought out. There have been some difficult skills to replace on the Board. For instance, Richard Thomas had a very unique blend of skills and experience, but we believe we've been able to replace those. And we believe that the Board that we have in place now and the new Chair that will take this forward are ideally placed and well placed to serve this company in terms of its next 5 to 10 years of growth and further diversification, which is so important to us. But I can assure you it's something the Board spends an enormous amount of time on, making sure we have the right people and that the Board functions collectively the way it does that's been referred to. Any other questions that anyone wishes to raise? Yes, sir? No, sorry, I've got the question down here first.

I'm also a member of Team Invest, as well as being a retail shareholder. What competitive advantage does Credit Corp have over other credit collection agencies operating in the same parts of the U.S.?

Thomas?

Yes. Look, always hard to assess whether you're enjoying competitive advantage. We're not the largest operator. We're not the most profitable. We're not the most successful at this point. So are we enjoying competitive advantage in the U.S. at the moment? Probably not. Do we have the wherewithal to generate some advantage, making us a long-term sort of successful operator and significantly larger than we are? Yes. The core strength that we took to the U.S. or the couple of core strengths that we took to the U.S. included our very strong management of call center operations and collection discussions with consumers. We run very driven and motivated call centers and we seek to obtain very strong collection outcomes while maintaining high standards of sort of contact of compliance. And so that is our starting point. We do often receive very positive feedback on the way we conduct our conversations with customers, very strong feedback from our clients in the U.S. who do a lot of on-site call auditing a lot more than occurs in Australia. So from that point of view, that certainly helps us form strong relationships with our clients. And our effectiveness is building all the time. I don't believe right where we are that we're necessarily behind the largest operators in the market, but there are other smaller competitors who we can probably learn a few things from as we continue to adapt our way of operating in the U.S. We also have very strong technology platforms that support collection operations, including digital that I spoke about and other things we're working on and we would hope that in time, those would also be sources of advantage for us. One of the peculiarities about the U.S. is the increased component of legal collections and that presently is not a source of advantage. That advantage comes with size. As you grow your operation, you become a bigger part of the external attorney network that you use to undertake that activity. And so as we grow, we should be able to narrow that gap as well. And we've certainly increased the resources in that area. So look, in short answer, I'm not sure we're enjoying any great competitive advantage at the moment, but I'm confident that we're improving and -- improving and that in time, we will develop it. One of our other important competencies that I referred to at the beginning of my presentation was analytics and the ability to sort of price and manage debts. And historically, that's been a strength for us. And I think we continue to apply that strength in the U.S. as well. So, yes, look, I hope that addresses the question for you.

Thank you, Thomas. We got one question there.

I was just interested in following up about the U.S. market strategy that the company has. Do you regret entering the U.S. market? Because I think it's fair to say it's been at the very least an expensive experiment, if not a disastrous one. And has the Board considered in recent times exiting the U.S. market?

I suppose -- sorry.

Sorry. Just to sort of add to that, I suppose, picking up on the remarks. Earlier this morning, he said that -- and I think generally, all the responses we've had have been really candid, and I really welcome that, that the company overpaid for its debt ledgers in the U.S. market. But has just said that analytics around valuing those debt ledgers are sort of a core key competency of the company. So I was just wanting to tease out what the position is now about how you regard the U.S. entry strategy and specifically about whether you're considering, given some cost fallacy, whether you're actively considering writing it off?

Okay. To answer your question directly, we have not considered exiting the U.S. We do not regret going into the U.S. as we do not regret any of the strategic diversification of both business lines and geography that we've undertaken in recent years. Without it, the company would be -- if we'd have maintained our position as a monoline debt buyer in Australia, we would have been in big trouble over the last 5- or 6-year period. So this diversification really does -- is one of fairly simply spreading risk. And we believe that the U.S., as I said in my address right at the start, is still the biggest growth opportunity for this company. It doesn't mean, as I said, again, we take our eye off the core business ball, but the U.S. is still a market. And there are others that we will be considering. But no, we certainly don't regret going in there, and we certainly don't have any intention of exiting that market. Add anything to that, Thomas?

No. Thanks, Eric. I think you've covered off on most of the aspects of that question. Just in reference to the point around analytics and mispricing. I think the way we price is based on an assumed set of conditions. When those conditions change, obviously there's the prospect for us losing money. Sure, we always like to have some kind of margin of safety. That's not always possible in a very competitive environment. And so conditions changed and it wasn't so much that we necessarily got it wrong at the time. Perhaps we needed to think more about what could be emerging. Yes, I think in hindsight, it would have been better if we purchased less over certain years, the years that are most exposed to the downturn in collection outcomes. And if I look back at it, it was our intention to purchase less during those periods. But our clients ended up as they were able to do under their contracts, sent us more than the expected volume right up to the maximum caps, and we ended up with more than we were expecting to receive, and that exacerbated the issue. So subsequent to that, obviously, we've changed the way we contract, and we no longer have sort of only sort of monthly caps, but we have cumulative caps on some of our forward buying arrangements which prevent that sort of thing from occurring and would enable us to terminate our buying commitments earlier and that would have minimized our exposure. So yes, certainly, look, I don't think there's anything -- any admission that we're poor in the way we price or any inconsistency in my remarks. We are exposed to changes in conditions and there are things we've got to manage. As I mentioned within my presentation, we're trying to shorten the duration of our cash flows by buying faster liquidating assets in the U.S., recognizing that there is heightened uncertainty. And obviously, we can address that uncertainty by ensuring we're getting our cash back more quickly, we're not exposed over a longer period of time. And that's exactly what we're trying to do while still targeting the same return. Thank you.

Thanks, Thomas. Any other questions? Yes, there's one just here. Just, sorry, hold on. It's a bit of these microphones.

Can you guys hear me? Yes. Yep. This is a question, I guess, for Thomas. You mentioned the U.S. You mentioned a few times today, the U.S., the short-term ability, why [ aren't ] we doing much purchasing there in the short term. So the improvements are going to be more in the operations area. You've mentioned digital in terms of an area to improve in operations across the board. In the U.S. specifically, what other areas can we improve the operations to help the short-term prospects in the U.S.?

Yes, sure. Now just to be really clear, it is our intention to keep purchasing, but the core of one of the basic disciplines we adopt around the way we price is unless we can see sort of improved performance in our operation, we're not going to assume it's going to happen in the future. So we only ever forecast into the future for the purposes of pricing decisions on the basis of what we're actually experiencing at the time. So that creates the requirement to have improvement to improve our market competitiveness. It's got to be existing in our business. We've got to be able to see it in our collection results. So yes, digital is one aspect. There's a lot of work going in, in terms of improving the way our conversations are conducted, the skill levels of our staff that is improving consistently month-on-month, and that's leading to better outcomes. That's probably one of the single most important leverage points is just the basics of the competence of the conversations we're having with our consumers and making sure we're more accurate more of the time in all of those conversations that we have. Substantial improvements are being undertaken through our legal or attorney network in the U.S. We've added additional attorneys in some states to enhance competition and we. And we've ensured that we're responding very promptly to documentation requirements to ensure that our attorneys can undertake their work promptly. And we've got a more comprehensive system of performance management and benchmarking against expectations and competitive attorneys that are starting to improve our performance there. Towards the end of this fiscal year, we will start our planning to insource some of that activity in certain states, and that will be a further step, and that will be something that will yield benefits in future years as our operation expands. We are also, as I mentioned earlier, looking at the deployment of AI. And once again, that's to assist in the accuracy of our conversations, to assist our call center agents in their discussions with customers, to make sure that we're responding consistently and in a way that should generate superior repayment outcomes. And so these sorts of tools really enable that kind of dynamic scripting. The tool can understand what the customer is saying and understand what is the most appropriate response that in all the past many hundreds of thousands and millions of conversations that Credit Corp has had has provided the best outcome. And so they're the sort of things that we're working on to continually improve our operation.

Okay. I am going to have to bring questions to a conclusion pretty quickly. So we're running out of time here. Ash Ken, have you got a quick question you'd like to -- please?

So just in relation to the Australian PDL business, so Thomas commented before that it looks like the contraction in the market is currently bottoming. What does the company believe is the long-term outlook for that segment? Because if you look at historically, basically, like the company's customer base, you would say, is primarily financially in the bottom 50% of the population. So if you look at what's happened in Australia, like the past 10-plus years is even though in terms of the macro conditions, the headline figures have been okay. When you dig a little deeper, that bottom 50% of the population has been doing far worse. Like you look, for example, total GDP has been going up, but GDP per capita has gone backwards for 8 quarters. You look at -- for example, inflation-adjusted GDP per capita measured in U.S. dollars is now the same level in Australia as it was in 2012. So gone nowhere for 12 years. Wealth inequality has increased, et cetera. So even -- and a lot of the debt increase has been sucked up by mortgage debt growth, whereas the bottom 50% of the population have been struggling various things, inflation, et cetera. So in terms of the outlook for that market looking into the next 5 years in the future, like how does the company see that unfolding?

Okay. I am going to ask Thomas to talk to you offline about some of the detail of that Ash Ken. All I'll say is that whilst we do have a view that this will return to better levels, if you like, we haven't factored that in to any of our forecasts, financial forecasts at all. And that's the sort of conservative way we've approached this. But can I ask Thomas to deal with that because we are running out of time. We have to get to a poll. So if you don't mind, I might now move to that. Okay. All right. Well, we will now conduct the poll and I'll go through the voting instructions. Persons entitled to vote on this poll are all shareholders, corporate representatives, attorneys, members and proxy holders who hold yellow voting cards. If you are attending a meeting in more than one of those capacities, for example, as a shareholder and also as a proxy holder, you would have been issued with multiple voting cards. Detailed on the reverse of your yellow voting card is the resolutions put to this poll -- are the resolutions put and relevant instructions are also printed on the reverse of your admission card. Procedures for filling out the voting cards are as follows. If you're a proxy holder and have only directed votes for or against, as shown on the summary of votes attached to your voting card, all you need to do is print your name and sign the yellow voting card and lodge it in the ballot box. By completing the yellow voting card, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. If you're a proxy holder with open votes, as shown in the summary of votes, you'll need to mark a box beside the motion to indicate how you wish to cast your open votes. It's important for proxy holders to note that for their votes to be counted in this poll, you must submit your voting card. In relation to shareholders on the yellow voting card, shareholders also need to mark a box beside the motion to indicate how you wish to cast your vote. Either a tick or a cross is acceptable. Please ensure that you print your name where indicated and sign the voting card. Please note that unsigned voting cards will be invalid. And if you require any assistance, please raise your hand and Rushad Bachana of Boardroom Limited, which I noted earlier as our share registry, is on hand to assist. When you've finished filling in your voting cards, please place them in one of the poll boxes provided by Boardroom. I'll now pause to allow you time to finalize your votes. And would shareholders please raise your hand if you require more time to complete. I'm assuming you all have had enough time to lodge your voting cards. So there being no request for further time, I hereby declare that voting is now closed and ask the Returning Officer to count the votes. The results of the poll will be released to the stock exchange later today. Ladies and gentlemen, that concludes this meeting. And there being no further business, I declare the meeting closed. On behalf of the Board of Directors of Credit Corp, thank you for your participation in today's meeting, and I wish you all a good day. Thank you.