Latitude Group Holdings Ltd. · ASX:LFS
Latitude — Investor Presentation (April 2021)
25 slides from Latitude's investor presentation, Apr 19, 2021
Slide 1: Market Briefing
Market Briefing 19 April 2021
Slide 2: A leader in consumer finance disrupting payments and lending
A leader in consumer finance disrupting payments and lending
Slide 3: Executive summary
Executive summary A leader in consumer finance disrupting payments and 1 Volume recovery by working with our partners traditional lenders Latitude is well positioned: 2 Launching new products and accessing new segments • Large addressable opportunities in consumer payments and loans 3 Sustainable co
Slide 4: Latitude is well positioned as Australia and New Zealand's largest non-bank consumer finance company
Latitude is well positioned as Australia and New Zealand’s largest non-bank consumer finance company Shop small, pay weekly Shop big, pay monthly Shop anywhere, pay flexibly BNPL BIG TICKET GO & GEM INSTALMENTS LatitudePay growing rapidly as BNPL LatitudePay big ticket launching 2021 Latitude GO/Gem
Slide 5: Large addressable opportunities in consumer payments and loans
Large addressable opportunities in consumer payments and loans Large industries being disrupted Latitude well positioned Instalments Consumer payments • Consumers are embracing new payment options outside the domain of traditional LATITUDE’S BNPL AND INTEREST FREE PLATFORM IS WELL POSITIONED TO GAIN
Slide 6: Latitude's B2B2C model is the basis of our advantage
Latitude’s B2B2C model is the basis of our advantage Scheme Spending Lending & Interest Free Instalments Lending Product Portfolio Mix2 & Credit Insurance Shop small, pay weekly Personal Loans Interest Free Up to $1,000 (Part Broker) Instalments – 57% CORE Integrated Shop big, pay monthly Scheme ~90
Slide 7: Leading partners drive our growth
Leading partners drive our growth Top tier merchants in growth segments such as the ‘home economy’ Note: Selected merchant and commercial partners in Australia and New Zealand shown. Not all merchants operate in both markets. 13
Slide 8: Alongside proven lifecycle marketing and graduation capabilities
Alongside proven lifecycle marketing and graduation capabilities Interest Free Instalments Scheme Spending & Credit of interest free Instalments of Instalments products customers 84% products volume was generated from repeat purchases1 50% reused their card as a general purpose credit card2 Lending
Slide 9: Strongly performing and resilient business
Strongly performing and resilient business Cash NPAT Average Gross Receivables (A$m) (A$m) 274 244 7,569 7,206 6,955 224 2018 2019 2020 2018 2019 2020 9
Slide 10: Volume (front book) and receivables (back book) fell in 2020, driven by two factors
Volume (front book) and receivables (back book) fell in 2020, driven by two factors which are COVID-19 related Receivables Volume • Volume for the Latitude Group fell from $8.9bn in FY19 to $7.0bn in FY20 • International and travel scheme and travel Personal Loans fell • Average Gross Receivables (A
Slide 11: Volume recovery by working with our partners
Volume recovery by working with our partners Group volume run-rate approaching 2019 levels Instalments Group volume1 (A$m) COVID-19 impacted 35 30 • Supporting our partners in the ‘home economy’ 25 • Rapid volume recovery 20 • Further upside expected from recovery 15 lockdown in retail spend 10 ong
Slide 12: Growth enabled by strengths and continuing investment
Growth enabled by strengths and continuing investment Investment in product, marketing Risk expansion from unwinding Specialist consumer finance and digital experience COVID-19 actions capabilities to grow share New and enhanced products; BNPL, High credit quality through COVID-19; Traditional lende
Slide 13: Grow instalments
Grow instalments Instalments products well positioned for growth Volume growth initiatives being executed Latitude BNPL and interest free platform is well positioned to gain Unwinding COVID-19 actions share of consumer payments and traditional credit cards • Return to previous credit underwriting se
Slide 14: Latitude's interest free Instalments presentment vision
Latitude’s interest free Instalments presentment vision • Pay over 10 weeks, shop up to • Pay over up to 24 months, shop • Pay over up to 60 months, shop $1,000 up to $3,0001 up to $30,000 • No interest ever • No interest ever • 6 months interest free on any purchase over $250 • Monthly subscription
Slide 15: Grow lending
Grow lending Specialist consumer lender growing share Volume growth iniUaUves being executed Increasing activation and penetration of our Latitude has specialist capabilities in consumer lending: ~5,800 accredited brokers – reducing “time to +89pts3 ü Risk-based pricing and credit decisioning capabi
Slide 16: Strong asset quality
Strong asset quality High quality customer base Improved credit quality during COVID-19 High credit quality new customer originations, with 72% of customers rated CR1-2 72% 12 mth PD 64% 26% 26% 27% 27% 0.8% Comparable to 33% 52% of customers are major banks homeowners1 37% 37% 37% 37% 39% 2.1% 90+
Slide 17: Diverse, effective and flexible funding sources
Diverse, effecQve and flexible funding sources RBA supportive monetary policy Diverse Funding Platform Historical and forecast 1 month BBSW – Low base rates expected to persist Warehouse & ABS 50+ Investors across 6 programmes current issuances 2.4% 2.2% 2.0% 1.8% Significant Capacity 1.6% 1.4% A$5.7b
Slide 18: Capital strength underpinned by a prudent approach
Capital strength underpinned by a prudent approach Liquidity Management Capital Stress Testing Comprehensive and diversified strategy Prudent capital management approach Comprehensive stress test regime • Appropriate capital strength to protect • Pioneer in the Australian market – with against adver
Slide 19: Sustainable cost reduction through digitisation and automation
Sustainable cost reduction through digitisation and automation Simplification programme – established to simplify and digitise Latitude’s products, customer operations and technology Digital experience and productivity enhancements for the originations, servicing and collections functions, and the D
Slide 20: Significant investment already made
Significant investment already made Historical A$m FY18 FY19 FY20 • Latitude continues to invest in the BAU – Opex Capex Total Opex Capex Total Opex Capex Total normalised levels of c.A$40m p.a. Closed Investment Costs • Significant step-up investment already Transition and Replatforming (5.7) (25.3
Slide 21: Strong growth, profitability and returns underpinning attractive cash flow generation
Strong growth, profitability and returns underpinning attractive cash flow generation Significant leverage in the Latitude operating model A$m High quality receivables book 120 5.2% 5.1% 5.0% 4.9% 4.9% Opportunity for growth 4.7% 100 97 94 94 93 4.1% 89 Cost base 3.6% 84 80 Scale benefits with oppor
Slide 22: Growth potential in new geographies and lending partnerships
Growth potential in new geographies and lending partnerships Grow instalments internationally Develop new lending partnerships Across Asia, digital payment methods are disrupting Changing customer preferences and digital traditional bank credit card and transfer payments transformation continue to d
Slide 23: Demystifying Latitude's historical profit (FY20)
Demystifying Latitude’s historical profit (FY20) Actual Stat Profit to Proforma NPAT to Cash NPAT A$m (unless otherwise specified) 40.1 62.7 10.1 24.8 42.9 7.9 50.7 48.3 223.9 186.3 128.1 (32.6) Combi ned NPAT Changes in capital Other historical New public listed Employee Tax effect of Proforma NPAT
Slide 24: Dividend policy and 1H21 expectations
Dividend policy and 1H21 expectations Dividend Policy 1H21 Dividend Current intention of Latitude is to pay Anticipate the first dividend will be dividends approximately A$79 million Planned future dividend payout ratio At Completion, Latitude will have a zero range is 60% to 70% of Cash NPAT franki
Slide 25: Prospects
Prospects Any financial forecast or other forward-looking statement is inherently unreliable in the context of the COVID-19 impacts in Australia, New Zealand and internationally and the uncertainty of the success and timing of vaccine distribution. The Directors believe that this too would apply to
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