Investment proposition

Our business generates a healthy return on equity and we maintain a well-capitalised balance sheet to support our long-term growth. Growth is fundamental to fulfilling our vision and achieving our plans. We are resilient and profitable, focused on markets where we have identified significant growth opportunities. We have a clear and consistent strategy supported by a leading brand presence in our markets, strong risk management systems and a customer centric approach.

Resilient business model

The resilience of our business model comes from close, weekly contact with our customers, the effectiveness of our risk and credit systems and the short-term nature of our loan book. We are proving this resilience as we manage the business successfully through the global economic downturn.
Even during challenging times, the business model generates good margins and returns. In 2012 we generated a profit margin of 14.6% and a return on capital employed of 20.1%.

Effective risk management systems

Effective risk management underpins our business and is embedded in our approach to short and long-term decision taking. This is supported by well-developed systems and processes that reach from the customer to the Board and touch all of our activities, from provisioning systems, credit losses and funding to agent safety.

Experienced and motivated people

The engagement of our people and the leadership skills and expertise of our Board and senior management are key to delivering success. Our development programmes focus on building the skills of our managers to create the next generation of leaders.
Our Board has extensive experience of operating public listed companies in international markets. Our Senior Management Group has a strong and successful track record and combines long-term home credit expertise with wider financial services experience.

Strong financial profile

Our home credit business model is cash and capital generative. We are well capitalised with shareholders’ equity representing 57.8% of receivables, the equivalent of a bank’s Tier 1 ratio. In 2012, the Group generated operating cash flows of £172.6 million before funding a £74.4 million increase in net receivables. We have a diversified debt funding structure, with a mix of bond and bank facilities and a balanced maturity profile. We have good cover against all of our core funding covenants.

Good profitable growth prospects

We are improving and expanding our operations in existing markets to deliver further growth and profitability. We also see opportunities in new markets around the world where demand for small sum cash loans is increasing.
Improving market penetration in under-represented regions in our established markets will result in strong profit growth as it leverages our existing investment in countrywide branch infrastructure. In our developing markets we also see the opportunity for further geographic expansion.

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