Latitude Group Holdings Ltd. · ASX:LFS
Latitude — Investor Presentation (February 2022)
36 slides from Latitude's investor presentation, Feb 21, 2022
Slide 1: Latitude FY21 Results
Latitude FY21 Results 21 February 2022 Latitude Group Holdings Limited ACN 604 747 391
Slide 2: Important notice and disclaimers
Important notice and disclaimers Important notice and disclaimer The following important notice and disclaimer applies to this presentation (“Presentation”) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained i
Slide 3: Important notice and disclaimers (cont'd)
Important notice and disclaimers (cont’d) Information and liability To the maximum extent permitted by law, LFS and its respective affiliates and related bodies corporate and each of their respective directors, officers, partners, employees, agents and advisers (together, the “Beneficiaries”) exclud
Slide 4: Table of contents
Table of contents FY21 results: Highlights 05 Financial Update 20 Appendices 29 Investor Presentation FY21 4
Slide 5: FY21 Highlights
01 FY21 Highlights Ahmed Fahour Managing Director and CEO
Slide 6: Positive results despite broader economic challenges
Executive summary: Positive results despite broader economic challenges Highlights: Challenges: •1 Statutory profit $160m, Cash NPAT $232m, ROE 17% •1 Rolling lockdowns and consumer • Total Volume of $7.3bn up 4.3%, Lending1 up 41.6% and NZ Instalments confidence driving lower customer footfall 2 in
Slide 7: Volume growth, lower costs, better quality book leads to higher Risk Adjusted Returns
Volume growth, lower costs, better quality book leads to higher Risk Adjusted Returns (RAI) 4% volume growth in FY21 v PCP1 Better credit quality, higher payments & (Excluding international and travel, volume is up 6%) risk pricing delivering higher RAI returns Volume ($m) RAI (pre-provision)/ AGR (
Slide 8: Strong volume performance despite disruptive operating environment and elevated repayments
Strong volume performance despite disruptive operating environment and elevated repayments Extended lockdowns and restrictions across Australia and New Zealand required all non-essential in-store retail trading to close, impacting key Latitude partners Instalments Volume ($m) 550 500 NSW outbreak be
Slide 9: Instalments Update
Instalments Update Instalments highlights BNPL customer base (000’s) 539 Product 458 380 • Launch of LatitudePay+ into 'big ticket' BNPL 265 157 • Executed on Latitude’s 'Future of Interest Free' program including the deployment 41 of 6 months interest free on purchases of $250 or more on Latitude G
Slide 10: Lending Update
Lending Update Lending highlights Personal Loans again topped Product The Adviser’s 2021 Product of • Personal Loans performed strongly in both Australia and New Zealand with volume up 41% Choice survey for Non-Banks ― Volumes up 48% in Australia and 27% in New Zealand ― Latitude has maintained its
Slide 11: Drivers of Latitude Growth FY23+
Drivers of Latitude Growth FY23+ Partnerships International expansion Digitisation Latitude Humm tomorrow acquisition Synergies and growth from Symple acquisition Economy normalises Latitude present 11
Slide 12: Symple acquisition on track to deliver synergies
Symple acquisition on track to deliver synergies Large addressable opportunity in Latest developments and Expected PBT Synergies2 consumer loans opportunities $5bn1 Existing Synergies FY22E FY23E Latitude fixed rate c.$41m Leadership ✓ Deal closed on 26 October 2021, with technical integrations well
Slide 13: The acquisition of Humm Consumer accelerates our growth strategy
The acquisition of Humm Consumer accelerates our growth strategy and consolidates our position as ANZ’s leading non-bank consumer lender ▪ Rapidly accelerates Latitude’s strategy to win customers and merchants across ACCELERATED Australia and internationally ~60k +5m #1 GROWTH ▪ Leverage and grow in
Slide 14: Accelerated growth strategy
Accelerated growth strategy Rapidly accelerates Latitude’s strategy to win customers and merchants across Australia and internationally Pro 2.8m customers1 2.6m customers1 Forma 5.5k merchants 60k merchants2 2 Receivables 2 Receivables 3 Receivables Customers1 2.8m 2.6m 5m+ Platforms5 Platforms Plat
Slide 15: Enhanced economics
Enhanced economics $65m full run rate synergies with $55m from cost and funding synergies $65 million (pre-tax) of expected full run rate synergies Synergies estimates are conservative and executable Conservative ~9% of combined cost ▪ Technology and operations cost benefits from base1 fully realise
Slide 16: Enhanced economics
Enhanced economics Double digit Cash EPS accretion from full run rate synergies Incremental Cash Profit Before Tax (A$m) 55 90 Annualised 10 100 Annualised Synergies FY23 Cash PBT 35 35 In-Year 20 35 Synergies 55 In-Year Cash PBT Humm Consumer Cost & Funding Incremental Cash PBT Revenue Synergies In
Slide 17: A compelling acquisition with substantial strategic and economic benefits
A compelling acquisition with substantial strategic and economic benefits Transaction ▪ Acquisition of Humm Consumer for consideration of $335 million, comprising 150 million Latitude shares 1,2 and $35 million cash3 overview ▪ Cements Latitude’s position as the leading non-bank consumer lender in A
Slide 18: International growth underway – live in Canada and Singapore
International growth underway – live in Canada and Singapore Canada Singapore formerly • Successfully launched personal loans in Canada • Live in Singapore, with over S$1.7m of volume generated in December • Large addressable opportunity with ~C$600bn1 consumer • Rebrand complete from OctiFi to Lati
Slide 19: Dividends
Dividends Allocation of Cash PBT* Dividend per Share (cents) 323 PBT 1H21 7.85 91 28% Tax expense 2H21 7.85 50% 161 Dividends 7.7% dividend FY21 15.70 22% 71 Reinvestment yield1 FY21 *Note: Presented as Profit before Tax & Significant Items with tax expense attributable to cash NPAT and Reinvestment
Slide 20: Financial Update
02 Financial Update Paul Varro CFO
Slide 21: FY21 Financial Update
FY21 Financial Update Better risk adjusted Strong ROE & tangible Increased NPAT DPS & EPS Metrics returns & lower opex equity outcomes Statutory NPAT ($m) RAI yield 1 ROE% Proforma Cash EPS2 160bps 41bps 3% 10.6% 18.2% 16.6% 160 10.2% 23.1 22.4 45 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 Cash NPAT ($
Slide 22: Receivables have stabilised…4% volume uplift, offset by continued repayments elevation
Receivables have stabilised…4% volume uplift, offset by continued repayments elevation 4% volume growth in FY21 v PCP, led by PL & Auto Volume ($m) (43) (92) (1) Driving stabilised receivables v 1H20 441 AGR ($m) 7,337 7,372 7,032 (11.5)% (0.5)% (2.6)% 6,526 6,493 6,327 FY20 PL & Auto 1 28D Instalme
Slide 23: Operating income down on lower receivables, pricing actions driving improved competitiveness
Operating income down on lower receivables, pricing actions driving improved competitiveness at appropriate returns ~66% Operating Income change driven by AGR Operating Income key drivers: (71) (42) 4 4 (2) • Assets: $71m driven by FY21 AGR down Rate Impact $35m $550m/8% v 2020 934 (17) Mix1 (25) Pr
Slide 24: Improved asset quality and higher customer repayments delivering lower net charge offs
Improved asset quality and higher customer repayments delivering lower net charge offs Credit quality of new customer originations increased - 69% of Lower net charge off rates… customers rated CR1-21 (up ~600bps vs 2019) 3.83% 3.37% 3.28% 27% 26% 29% 32% 32% 32% 2.66% 2.54% 2.12% 37% 37% 38% 38% 38
Slide 25: Enhanced Risk Adjusted returns delivering improved yield
Enhanced Risk Adjusted returns delivering improved yield Risk Adjusted Income (RAI)1 yield up 41bps 94bps Enhanced Risk adjusted returns (66)bps 0bps 6bps 7bps 10.57% • Prudent 2020 credit strategy, coupled 10.16% (26)bps Mix2 (40)bps Pricing 9.63% with disciplined 2021 performance delivering strong
Slide 26: Operating Expenses down 4%
Operating Expenses down 4% Disciplined cost management delivering 4% cost out • Marketing spend to support Volume (12) growth reinitiated after pause in FY20 18 (0.1) • Operating model changes, productivity initiatives and simplification driving (22) lower Employee expense • Other operating expenses
Slide 27: Investment & significant items
Investment & significant items FY21 FY21 FY21 ($m) Opex Capex 1 Total Investment-related expense Technology Investment and Simplification 19.4 51.2 70.6 BNPL – Big Ticket 3.1 8.9 12.0 Corporate Development (Acquisition & Integration) 9.5 – 9.5 International 2.5 – 2.5 Total Investment-related Signifi
Slide 28: Diverse, cost-effective funding underpinned by prudent capital management
Diverse, cost-effective funding underpinned by prudent capital management Cost 50+ 48% Offshore Prudent capital management Diverse Funding Platform Effective Investors Investors approach • Programmatic issuance and robust maturity concentration settings • 3 warehouse transactions • Appropriate capit
Slide 29: Appendix
03 | Appendix [{ LATITUDE
Slide 30: Growth in Latitude profit combined with leading returns and capital strength
Growth in Latitude profit combined with leading returns and capital strength FY20 FY21 vs FY20 1H21 2H21 Proforma Volume ($m) 7,032 7,337 ↑ 4.3% 3,697 3,640 Statutory NPAT ($m) 45 160 ↑ 255% 90 71 Cash NPAT ($m) 224 232 ↑ 4% 121 111 Proforma Cash EPS1 (cents) 22.4 23.1 ↑ 3% 12.1 11.0 Dividend per Sh
Slide 31: Cash NPAT to Stat PAT
Cash NPAT to Stat PAT Pro forma Change % Change % ($m) FY21 FY20 FY21 vs FY20 2H21 1H21 2H21 vs 1H21 Interest income 932.4 1,058.1 (11.9)% 451.3 481.1 (6.2)% Interest expense (160.3) (178.0) (9.9)% (80.1) (80.2) (0.1)% Net interest income 772.1 880.1 (12.3)% 371.2 400.9 (7.4)% Other operating income
Slide 32: Partners in community - 2021 highlights
Partners in community - 2021 highlights Ardoch - 48 volunteers putting in 504 hours to support children with 50 BETTER GIVING literacy and numeracy employees Jumped to #24 on attended sessions Duffy Books in $130,000 in Australia & Australia’s Best for Sorted Money Home - 2,073 $44,000 in New Zealan
Slide 33: Customer profiles
Customer profiles Diverse range of customers across generations1 57% of customer relationships are 5+ years1 9% 5% 10% 20% 18% 18% 57% 16% 24% 24% 18-27 28-37 38-47 48-57 58-67 68+ <=1 year 1-3 years 3-5 years 5+ years 81% of customers are full-time and part-time employees2 52% of customers are home
Slide 34: Delinquency performance over time
Delinquency performance over time Delinquencies (30+ days past due) by product, Australia Delinquencies (30+ days past due) by product, New Zealand % Accounts 30+ days past due % Accounts 30+ days past due 9% 9% 8% 8% 7% 7% 6% 6% 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% 0% 2008 2009 2010 2011 2012 2013 2014
Slide 35: Leadership team
Leadership team Investor Presentation FY21 35
Slide 36: Thank you
Thank you Investor Relations Matt Wilson +61 401 454 621 Media Mark Gardy +61 412 376 817
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