Humm Group Limited · ASX:HUM
Humm — Investor Presentation (August 2019)
54 slides from Humm's investor presentation, Aug 27, 2019
Slide 1: FY19 Results
27 AUGUST 2019 FY19 Results. 1 flexigroup FY19 Rebecca James Chief Executive Officer Ross Aucutt Chief Financial Officer
Slide 2: We've been helping Australians and New Zealanders fund their lifestyles for over 20 years
27 AUGUST 2019 We’ve been helping Australians and New Zealanders fund their lifestyles for over 20 years. We have more than 1.7 million customers with over 80% choosing to use us frequently. In the last 12 months, investment in technology has seen us advance our credit analysis and collections capab
Slide 3: Responsible lending
FY19 RESULTS UPDATE Responsible lending. • We acknowledge that the community has high expectations of us. • We have a long track record of adapting to and, in many cases, leading industry and regulatory change. • Consumer Leasing: early adoption of Government Panel regulations to launch Lisa. • Buy
Slide 4: Agenda
FY19 RESULTS UPDATE 01. Our journey 02. Highlights for FY19 Agenda. 03. Group financials 04. Strategic update 05. Outlook 06. Appendices 4 flexigroup FY19
Slide 5: Our journey
FY19 RESULTS UPDATE Our journey. 5 flexigroup FY19
Slide 6: Our journey
OUR JOURNEY 6 flexigroup FY19
Slide 7: Our focus: strategic pillars
OUR JOURNEY Our focus. 4 strategic pillars 1. 2. 3. 4. Simplify Lead Streamline Expand our reach, our offering to in Buy Now Pay Later originations with instant our target market, our build profitability and (after all, we started it...) credit decisions audience, our relevance brand strength 7 flex
Slide 8: Highlights for FY19
FY19 RESULTS UPDATE Highlights for FY19. 8 flexigroup FY19
Slide 9: Highlights for FY19
HIGHLIGHTS FOR FY19 1.76 million 65 thousand $2.56 billion customers retail partners transaction volume +8% 5,000 new partners1 +12% $2.64 billion $76.1 million 48% receivables cash NPAT cost to income ratio +11% within guidance flat 9 flexigroup FY19 1. Since launch of humm in April.
Slide 10: Strategic execution is well underway
PROGRAM UPDATE Strategic execution is well underway Brand consolidation quickly achieved. Simplify Business complexity reduced. More to do. Lead Humm launched with great momentum. Market leader for transactions greater than $500. Digital first decisioning leading to improvement in arrears. Streamlin
Slide 11: Group financials
FY19 RESULTS UPDATE Group financials. 11 flexigroup FY19
Slide 12: Group financials: Cash NPAT within revised guidance
GROUP FINANCIALS Cash NPAT within revised guidance flexigroup ($M) FY18 FY19 v PCP% and includes $12M write-off related to Underlying Cash NPAT $86.0 $76.1 (12%) commercial vendor partner becoming Non cash and non recurring items insolvent. Amortisation of acquired intangible assets $4.5 $2.9 (36%)
Slide 13: Group financials: Buy Now Pay Later
GROUP FINANCIALS: BUY NOW PAY LATER +6% • Humm launched in April, with 63,000 new customers (15.5%) joining in just four months and an additional 5,000 sellers, Australia up 42%. Total customers are up 16% with volume growth $541M $574M $31.6M $26.7M of 13% to date in FY20 vs PCP and number of trans
Slide 14: Group financials: Cards
GROUP FINANCIALS: CARDS +10% • Continued volume growth of +10%. • Net portfolio income grew 39% as a result of strong AU Cards +107% growth in receivables and a 21% increase in interest 740M 811M 4.4M 9.1M bearing balances. • Cash NPAT improvement of $4.7M driven by strong FY18 FY19 FY18 FY19 Volume
Slide 15: Group financials: Leasing
GROUP FINANCIALS: LEASING +27% • Volume increase driven by Managed Services and Broker channel. (69%) • Cash NPAT result impacted by $12M impairment taken on Commercial Leasing 232M 294M 7.0M one vendor program. 22.6M • Cash NPAT affected slightly by margin contraction, as well FY18 FY19 FY18 FY19 a
Slide 16: Streamline: early evidence of improved credit decisions and collections
STREAMLINE: EARLY EVIDENCE OF IMPROVED CREDIT DECISIONS AND COLLECTIONS 3.9% • FY19 saw a slight increase in the impairment/average net AU Cards: Impairments/ANR receivables (ANR) number from 3.8% to 3.9%. Underlying (excluding large write off in H1) is 3.0%. 3.9% including normalisation 3.8% 3.0% •
Slide 17: Capital management
GROUP FINANCIALS: FY19 RESULTS UPDATE Capital management. Funding facilities delivering efficient capital management structure with further enhancements to come. 17 flexigroup FY19
Slide 18: Wholesale funding facilities
GROUP FINANCIALS: FY19 RESULTS UPDATE Wholesale funding facilities. Drawn balance Undrawn balance • Well funded for growth with significant funding $2,754M facility headroom. • Euro funding facility of €35M successfully $2,586M $433M established in H2 providing strong platform for growth to fund Fle
Slide 19: Corporate debt facilities
GROUP FINANCIALS: FY19 RESULTS UPDATE Corporate debt Drawn balance facilities. Undrawn balance Gearing ratio % • Gearing 36%, flat year on year. • Execution of €35M funding facility in H2 to support Flexi-Fi growth in Ireland contributed to significant capital release. $46M $51M $92M $100M • Strong
Slide 20: Strategic update
FY19 RESULTS UPDATE Strategic update. 20 flexigroup FY19
Slide 21: 1. Simplify
STRATEGIC UPDATE 1. Simplify Simplify our offering to build profitability and brand strength. 21 flexigroup FY19
Slide 22: Simplify our offering: from this
STRATEGIC UPDATE: SIMPLIFY OUR OFFERING From this: Too many ‘invisible’ brands… Market confusion… No backend integration… Team and system inefficiency… 22 flexigroup FY19
Slide 23: Simplify our offering: to this
STRATEGIC UPDATE: SIMPLIFY OUR OFFERING To this: Buy Now Pay Later Credit cards SME Lending NEW PRODUCT EXTENSION NEW BRAND TO BE NEW PRODUCTS TO BE TO BE REVEALED TODAY REVEALED TODAY REVEALED TODAY Consolidates Oxipay and Consolidates Skye, Once, Pivot to focus on SME Leasing Certegy Ezi-Pay Lomba
Slide 24: Simplify scorecard
STRATEGIC UPDATE: SIMPLIFY SCORECARD Simplify Products Simplify Systems Simplify Service Simplify Operations ✓✓ Moved from 12 products to ✓✓ Architectural roadmap in ✓✓ 50 FTE removed from call ✓✓ Organisational realignment 5 in consumer finance. place to reduce: centre and back office complete. ✓✓
Slide 25: 2. Lead
STRATEGIC UPDATE 2. Lead Lead in Buy Now Pay Later. 25 flexigroup FY19
Slide 26: Strong momentum in four months
STRATEGIC UPDATE: STRONG MOMENTUM IN FOUR MONTHS 42% growth in partners - 5,000 added since April 63,000 new customers Differentiated proposition of interest free spending from $1-$30,000 added since April is resonating with key verticals: Transactions + 19%1 POS Integrations: 1,200 app downloads da
Slide 27: Over 17,000 places to shop with humm
OVER 17,000 PLACES TO SHOP WITH HUMM Peter Alexander. Strandbags. Baby Co. Portmans. Michael Hill. Smiggle. Just Jeans. Myer. Cardiotech. Fitness Equipment. Jay Jays. Sportitude. Shiels. Quiksilver. Jacqui E. Dotti. Getaway Outdoors. Australian Geographic. Temple & Webster. Sunboost. Williams Sonoma
Slide 28: 3. Streamline
STRATEGIC UPDATE 3. Streamline Streamline originations with instant credit decisions. 28 flexigroup FY19
Slide 29: Significant progress transitioning to one platform that is product agnostic and scalable
STREAMLINE Significant progress made in transitioning to one platform that is product agnostic and scalable for growth. One enhanced collections New credit score cards in Partnership entered with Comprehensive system in place for all products. place for AU and NZ Cards. GBG to deploy latest fraud Cr
Slide 30: 4. Expand
STRATEGIC UPDATE 4. Expand Expand our reach, our target market, our audience, our relevance. 30 flexigroup FY19
Slide 31: Expand: covering the market of digital spenders
EXPAND: COVERING THE MARKET OF DIGITAL SPENDERS The The The The The Balancer. Amplifier. Shopper. Nomad. Founder. Lives for the moment. Lives life by making what Lives a lifestyle Lives life prioritising new Lives to create, they have go further. to enjoy. experiences. build, grow. BNPL EXTENSION: S
Slide 32: The Balancer
EXPAND: BUY ANYWHERE, PAY LATER The Balancer. 32 flexigroup FY19
Slide 33: Welcome to the snooze economy
EXPAND: BNPL EXTENSION Welcome to the snooze economy: Buy everything, everywhere with bundll and pay later. It’s Interest Free. It’s BNPL in your pocket. 250.00 $ $ 250.00 Shop Snooze Superbundll Bundll all your weekly Get two weeks to pay Not ready to pay? Use a snooze to Need more time? Switch up
Slide 34: Bundll strategic partnerships
EXPAND: BUNDLL STRATEGIC PARTNERSHIPS Shop+Snooze anywhere Mastercard is accepted with no MSF payable by retailers and no integration required to be part of bundll marketplace. Pay and Snooze Invest and Earn Redeem Rewards Transactions processed Link Raiz and bundll for Loyalty offers will be provid
Slide 35: cartt: new card brand
EXPAND: NEW CARD BRAND The A card designed for Shopper. the dedicated shopper. Add to cartt: and enjoy up to 90 days interest free. Add to cartt: and dodge foreign transaction fees. Add to cartt: and switch to a 9, 12, or 15 month interest free instalment plan. cartt Add to cartt: and receive an ins
Slide 36: The Founder: SME lending
EXPAND: SME LENDING There are approximately 2.3 million small businesses in Australia and 580K in The New Zealand and cash flow is their biggest concern. B2B e-commerce is set to Founder. become double the size of the B2C online market over the next 2 years1. We’re introducing two new solutions to a
Slide 37: Who we are
STRATEGIC REVIEW Who we are. A digital spending powerhouse, helping people buy everything, everywhere, every day 37 flexigroup FY19
Slide 38: Buy Now Pay Later, Credit Cards, SME Lending
STRATEGIC REVIEW Buy Now Pay Later Credit Cards SME Lending 38 flexigroup FY19
Slide 39: Outlook
FY19 RESULTS UPDATE Outlook. 39 flexigroup FY19
Slide 40: Outlook
OUTLOOK Outlook. 2020 flexigroup is in the first year of a three year comprehensive business transformation plan designed to build on its first mover advantage in non-bank consumer finance. Our objectives are clear: accelerate growth, reduce costs, deliver a best in class digital platform, and inves
Slide 41: Appendices
FY19 RESULTS UPDATE Appendices. 41 flexigroup FY19
Slide 42: Group financials
FY19 RESULTS UPDATE Group financials. 42 flexigroup FY19
Slide 43: Group financials: Humm
GROUP FINANCIALS: FY19 RESULTS UPDATE Humm. Volume Closing Receivables $574M, +6% $526M, +7% Strong momentum post humm launch Volume growth +6% vs PCP but since the successful launch of humm, with continued digitisation and $541M $574M $493M $526M significant product enhancements YTD growth is FY18
Slide 44: Group financials: Australia cards
GROUP FINANCIALS: FY19 RESULTS UPDATE Australia cards. Active Customers Volume Cash NPAT growth achieved through 301K, +15% $811M, +10% strong income growth Strong volume growth +10% vs PCP. Net income +39%, as a result of strong growth in 261K 301K $740M $811M receivables (in particular interest be
Slide 45: Group financials: New Zealand cards
GROUP FINANCIALS: FY19 RESULTS UPDATE New Zealand cards. Active Customers Volume (NZD) 615K, +12% $837M, +18% New Zealand’s largest non-bank card provider with strong customer, volume 551K 615K $710M $837M and receivables growth Strong growth continuing with volumes up 18%, FY18 FY19 FY18 FY19 (incl
Slide 46: Group financials: Consumer leasing (AU/IE)
GROUP FINANCIALS: FY19 RESULTS UPDATE Consumer leasing (AU/IE). Volume (AU) Volume (IE) $56M, (28%) $46M, +77% Strong growth in Flexi-Fi Ireland offsetting decline in Lisa $78M $56M $26M $46M Volume in line with PCP. Strong volume growth with Flexi-Fi Ireland volume up 77% offsetting continued decli
Slide 47: Group financials: AU commercial leasing
GROUP FINANCIALS: FY19 RESULTS UPDATE AU commercial leasing. Volume Closing Receivables $214M, +45% $337M, +18% 45% volume growth through traction in Managed Services and broker channel $148M $214M $285M $337M Significant volume momentum built during FY19 driven by: FY18 FY19 FY18 FY19 • Growth of M
Slide 48: Group financials: NZ commercial leasing
GROUP FINANCIALS: FY19 RESULTS UPDATE NZ commercial leasing. Volume (NZD) Closing Receivables (NZD) $87M, (4%) $159M, (6%) NPAT uplift achieved through tight cost management $91M $87M $170M $159M There has been a slight decline in sales which will be FY18 FY19 FY18 FY19 reversed with the launch of w
Slide 49: Capitalised software write down
GROUP FINANCIALS: FY19 RESULTS UPDATE Capitalised software AU Cards 18.0 AU 6.5 NZ 4.0 write down. $9.8M FY20 write-off NZ Cards As a result of moving to a new target system 19.0 architecture we have taken $10.9M impairment of software in FY19. Humm 3.0 Over FY20 as further systems are rolled out we
Slide 50: Group financials: balance sheet
GROUP FINANCIALS: FY19 RESULTS UPDATE Balance sheet ($M) FY18 FY19 v PCP% Cash and cash equivalents $125 $143 14% Receivables and customer loans(1) $2,352 $2,567 9% Investment in associate $0 $14 – Other assets $11 $11 (4%) Current tax receivable $1 $16 3,020% Deferred tax assets $0 $12 – Goodwill $
Slide 51: Group financials: operating and consolidated cash flow
GROUP FINANCIALS: FY19 RESULTS UPDATE Operating cash flow ($M) FY18 FY19 v PCP% NPAT ($9) $62 778% Impairment loss on receivables and customer loans $67 $87 32% Impairment of goodwill and other intangible assets $95 $11 (89%) Customer remediation $7 $0 (100%) Depreciation and amortisation expenses $
Slide 52: Group financials: Profit & Loss
GROUP FINANCIALS: FY19 RESULTS UPDATE Profit & Loss ($M) FY18 FY19 v PCP % Interest income $339 $358 5% Interest expense ($95) ($101) 6% Other portfolio income $119 $115 (3%) Net income $364 $372 2% Receivables and customer loan impairment expenses ($67) ($88) 32% Impairment of goodwill and intangib
Slide 53: Thank you
FY19 RESULTS UPDATE Thank you 53 flexigroup FY19
Slide 54: Disclaimer
Disclaimer. No recommendation, offer, invitation or advice without limitation any liability arising from fault or negligence) for any direct or indirect loss or This presentation is not a financial product or investment advice or recommendation, offer damage which may arise or be suffered through us