Something I just noticed So their net gain on the PDL portfolio...

Something I just noticed

So their net gain on the PDL portfolio was 147.5m for the half, which is about 40% annualised. That is the lowest I have calculated apart from Covid h2 20, which was 25%. The trend has been down since I started tracking CCP's metrics in 2015 - h1 was 157% - a complete outlier, half 2 - 96%. It has been trending down ever since.

Maybe the PDL assets are not as good a quality as they used to be, and are over-valued. Gross collections have flatlined for four years, even with Covid largess, while the valuation of the PDL assets has moved from $420m to 760m. I think the PDL asset valuation needs to be carefully looked at. Current discount rates should be much higher now as well. Seems a potential red flag!

The Auditor audited the spreadsheet! Did they ask themselves about this slide in the gross collections ratio? It is possible the returns are much lower than they used to be but still meet some hurdle rate. Or that the US part of the business has much lower returns and this is the reason - which brings up another issue I don't wish to cover.

I think this PDL valuation could be padding out the profits. The operating and investing cashflow (FCF) has moved from FY20 to FY23 from +$40m, +65m, -$103m, -100m, obviously during a period of increasing lending. While npat has been around $90 to 100m apart from the Covid year over this period.

I'm not sure the lending increase asset value couldn't be used to mask cash outflows to shore up the balance sheet. The way the personal loans have skyrocketed in such a low quality market could certainly be made to order.

Just saying! I do note that they have been audited by Hall Chadwick with different individuals carrying out the audit as a comfort - although auditors as a rule never catch these things, it is nearly always a whistle blower or outsider - which is funny!

Keen to hear why this isn't a concern.

cheers