.png){kind=small}
In the Spotlight: Credit Clear Ltd (ASX: CCR)
The blue collar, industrial suburb of Mayfield is part of Newcastle folklore, host for more than 75 years to BHP’s plant that was the heart and soul of the steel city.
For decades it was also home to the family of Greg Smith and his eight siblings.
Yet while his father worked for the firm long known as “The Big Australian”, Smith always ran his own businesses, including a party equipment hire firm known as Ark Party Hire. The name was a play on the biblical Noah’s Ark, given it offered everything a party could ever wish for.
Smith long lived by the mantra “keep doing the right thing over and over again and good things will happen”, which has now been adopted by his son Andrew, who calls his father his most important mentor.
“I’ve always been exposed to dinner table discussions about business and he always taught me that there is no substitute for hard work,” says Andrew, now the chief executive of the debt collection technology business known as Credit Clear.
“And for the most part in my life, in line with his mantra, anything I have put out into the world that is positive, it has come back to me multiplied.”
After boarding at St Gregory’s College at Campbelltown in south-west Sydney, one of the biggest rugby league feeder schools in the country, in 1998 Smith junior was invited to play with the Newcastle Knights under 19 team, the year after their senior side had won their first premiership. “I was very much exposed to the systems and culture that contributed to the success of Newcastle over that period,” he says.
But the talented second rower gave up his dream of playing first grade to finish his university studies and start his own business. It would pay handsome dividends two decades later.
In late 2021, at the age of 72, Greg Smith was his son’s most important advisor when the latter sold the business he started less than seven years earlier, the debt collection service company known as ARMA Group Holdings, to Credit Clear for $51 million.
He then migrated into the CEO role he holds today.
The deal was funded through a $25.5 million institutional placement and $4 million share purchase plan.
Given Credit Clear’s previous financial and strategic challenges, Smith acknowledges he had some reservations about agreeing to the deal before a conversation with director Hugh Robertson - who told him the board wanted him to be the new CEO - convinced him to push outside his comfort zone.
“The focus from the board was having an owner-operator CEO who had bootstrapped his own business with no debt and built it from scratch. Who could bring a disciplined approach to running a business. I thought to myself ‘I had been a star player in division three. This was the chance to play in division one,” Smith says.
“The greatest motivator for me initially was also to show to the market that ARMA was a great investment. We were making $7m of profit and I wanted to repay the faith of the Credit Clear shareholders who had put money in to acquire ARMA.”
Those shareholders still include the likes of Alex Waislitz’s Thorney Group, former Toll Holdings boss Paul Little and JM Financial.
Smith also remembered another mantra of his father’s: to only run businesses where you have skin in the game.
Today Credit Clear provides an end-to-end service from its white-labelled AI-driven digital platform, which collects debts in the name of its clients. The group also undertakes legal recoveries through Oakbridge Lawyers.
Its revenue comes from a range of sources including software-as- a-service (SaaS) fees for the digital platform, commissions, and fee for service arrangements.
The firm is chaired by Paul Dwyer, the former CEO of PSC Insurance, which has just been acquired by UK-based broking business Ardonagh Group. Dwyer is also a significant Credit Clear shareholder.
In October 2022 Credit Clear unveiled a three-year plan to triple its market share in the Australian debt collection sector over the period, expanding its market penetration rate from 1.4 per cent to as much as 5 per cent.
Smith says the plans are on track.
“For the most part our growth has been all organic since then. We had to focus on the fundamentals and our penetration into the Australian market,” he says.
Two years ago Credit Clear was burning cash, delivering negative EBITDA growth. In the last financial year it delivered $4m of EBITDA and is now forecasting $7m for 2025.
The firm no longer lodges a quarterly cashflow report with the ASX - a so-called Appendix 4C - after delivering five consecutive quarters of cashflow generation.
“That has also opened us to a group of fund mangers who previously put a cross against us for not generating cash,” Smith says.
“Our financial performance has breathed some confidence back into Credit Clear among investors. Now when we say something, we can achieve it or even better it. Our forecast for 2025 is now very believable, compared to the past.”
As a result the share price has risen almost 75 per cent over the past 12 months.
Smith describes the secret sauce of the firm as three-fold.
“Firstly, and what is most attractive in terms of being a service provider, is the power of our technology supported by our people. Our AI-delivered digital technology allows us to engage with our client’s customers in different ways,” he says.
“Secondly, we care about the experience of the customer.”
The firm regularly surveys its customer base and is consistently receiving high net promoter scores. Smith says the most common refrain from customers is that dealing with Credit Clear is “easy”.
“Thirdly, our processes control our engagement with our clients through a compliance framework. We control the narrative through a digital engagement,” he says.
These attributes are being reflected in the group’s improved win rate in competitive tenders, securing the likes of ANZ, major energy and insurance providers and two of the three biggest telecommunications firms in Australia as clients over the past 18 months.
“We have gone from a tier three collections business to a tier one provider,” Smith says.
The improved profitability has earned Credit Clear the right to expand into new markets, building upon what Andrew says is a five year runway of organic growth in Australia.
“We have a solution easily deployable to other markets such as the UK, where the regulation is very similar to here The customers we have in Australia also have extensive interests in that market,” he says.
“We are at this sweet spot to capture more market share while we have the advantage. We are now asking ourselves where we get the best return, in Australia or overseas? Do we buy a business in the UK that gives us a beach-head into that market or do we just focus on our home market and execute well?”
Despite the wealth crystalised for his family by the sale of ARMA - 60 per cent of $51m sale price was paid in cash - Smith says he still feels like the starry-eyed 18 year old in 1998 who trained alongside some of the best rugby league players in history.
“It has not changed me at all. I live in the same house, drive the same car, have the same mates, largely from uni days in Newcastle. I also have a loving supportive wife and family,” he says.
His most important learning from moving from the private company world to listed life has been the value of good people.
“Having a great team around you is absolutely key. Having good people to empower and delegate to has been a very big change and learning for me,” he says.
“When it was my business, I could jump in and solve a problem. Now I must rely on other people, I have to trust them and I do.”
About the Company
Credit Clear Ltd (ASX: CCR)
Credit Clear Limited engages in the development and implementation of receivables management platform, and provision of receivable collection services in Australia and New Zealand. It operates in two segments, Receivable Collections and Legal Services. The company offers technology-enabled communications platform that helps organizations to drive financial outcomes by changing the way customers manage their re-payments. It provides credit legal services. The company serves the consumer, trade credit, automotive, financial services, government, utility, and insurance industries. Credit Clear Limited "was incorporated in 2015 and is based in Alexandria, Australia.”
Board of Directors & Management
- Mr. Paul Robert Dwyer (Chairman)
- Mr. Andrew Kevin-John Smith (Executive Director)
- Mr. Michael Doery (Non-Executive Director)
- Mr. Hugh Walter Robertson (Non-Executive Director)
- Ms. Jodie Bedoya (Non-Executive Director)
