Humm Group Limited · ASX:HUM
Humm — Investor Presentation (February 2020)
46 slides from Humm's investor presentation, Feb 25, 2020
Slide 1: 1H20 Results
25 FEBRUARY 2020 1H20 Results. 1 flexigroup 1H20 RESULTS Rebecca James Chief Executive Officer Ross Aucutt Chief Financial Officer
Slide 2: We're a digital spending powerhouse, helping people buy everything, everywhere, every day
1H20 RESULTS UPDATE We’ve been helping Australians and New Zealanders fund their lifestyles for over 20 years. We serve over 1.8 million customers as we continue to rewrite the playbook for digital spending. The transformation strategy put in place 12 months ago is delivering, demonstrated by the ke
Slide 3: Responsible lending. BNPL code.
1H20 RESULTS UPDATE Responsible lending. BNPL code. • We acknowledge that the community has high expectations of us. • flexigroup recognised early in 2019 the need to establish a • We have a long track record of adapting to and, in many cases, self-governing Code of Practice (Code) and began engagin
Slide 4: Agenda
1H20 RESULTS UPDATE 01. Our journey 02. Highlights for 1H20 Agenda. 03. Group financials 04. Strategic update 05. Outlook 06. Appendices 4 flexigroup 1H20 RESULTS
Slide 5: Our journey
1H20 RESULTS UPDATE Our journey. 5 flexigroup 1H20 RESULTS
Slide 6: Our journey
OUR JOURNEY 6 flexigroup 1H20 RESULTS
Slide 7: Highlights for 1H20
1H20 RESULTS UPDATE Highlights for 1H20. 7 flexigroup 1H20 RESULTS
Slide 8: 1.87 million customers
HIGHLIGHTS FOR 1H20 1.87 million 69 thousand $1.3 billion customers retail partners transaction volume +12% +15% +28%* 11% $34.5 million 54% return on equity Cash NPAT cost to income ratio reflecting short term investment and +50bps +8% restructuring *Excludes Consumer Leasing, Once & Lombard which
Slide 9: Transformation is well underway
HIGHLIGHTS FOR 1H20 Transformation is well underway. Brand and product consolidation quickly achieved. Simplify Simplification of systems and operations progressing well and in line with plan. Lead Differentiated focus on making $1,000+ purchases more affordable is resonating. 3,000 new retail locat
Slide 10: Group financials
1H20 RESULTS UPDATE Group financials. 10 flexigroup 1H20 RESULTS
Slide 11: Group financials
GROUP FINANCIALS flexigroup ($m) 1H19 1H20 v PCP% Cash NPAT 31.9 34.5 8% Cash NPAT of $34.5m, up 8%. Non cash items Growth in interest income from increased receivables. This was offset by the reduced fee income Amortisation of acquired intangible assets 1.6 1.2 (25%) from restructuring BNPL to imp
Slide 12: Buy Now Pay Later
GROUP FINANCIALS Buy Now Pay Later. Cash NPAT of $8.4m, down 48% with highlights from the period including: +23% (13%) • Strong volume growth of 23% reflects market penetration $14.0M and merchant integrations in Australia (both Little Things $2.0M Fee simplification and Big Things), New Zealand and
Slide 13: Cards
GROUP FINANCIALS +2% +40% Cards. Australia Cards Cash NPAT of $4.1m grew in 1H20 with key Cards (AU & NZ $773M $788M $11.9M $16.7M performance metrics including: combined) • Skye transactions in 2Q20 up 24% compared with 1Q20 1H19 1H20 1H19 1H20 as the business continues to ramp up. VOLUME C A S H
Slide 14: Commercial and Leasing
GROUP FINANCIALS Commercial and Leasing. Cash NPAT of $9.4m in 1H20, up 141%. Key points include: • Australia Commercial renewed strategic focus towards +141% SMEs leading to an uplift in margins combined with (25%) broadly similar volumes in 2Q20 against the prior comparative period. • Risk appe
Slide 15: Improved Credit Decisions and Collections
GROUP FINANCIALS Group 3.7% 3.3% Net losses/ANR 1H19 1H20 Improved Credit Decisions and Collections. BNPL 5.2% 4.9% Net losses/ANR • BNPL: Decrease in net losses/ANR reflects credit quality 1H19 1H20 of receivables combined with an increase in shorter finance terms and the change in merchant mix. •
Slide 16: Capital management
GROUP FINANCIALS Capital management. Funding facilities delivering efficient capital management structure with continued enhancements and innovation. 16 flexigroup 1H20 RESULTS
Slide 17: Wholesale funding facilities
GROUP FINANCIALS Wholesale funding facilities. Drawn balance Undrawn balance • Well funded for growth with significant funding facility headroom. $3,218M • Long established humm securitisation program continuing to drive funding efficiency – $265m issuance in November, including $2,867M $674M $103m
Slide 18: Corporate debt facilities
GROUP FINANCIALS Corporate debt facilities. Drawn balance Undrawn balance Gearing ratio % • Gearing of 34%1, representing a material improvement on 1H19. $92M $36M $100M $103M • Improved gearing aided by over $550m of successful capital markets issuance in 1H20. • Corporate debt headroom of $103m 70
Slide 19: Strategic update
1H20 RESULTS UPDATE Strategic update. 19 flexigroup 1H20 RESULTS
Slide 20: 1. Simplify
STRATEGIC UPDATE 1. Simplify Simplify our offering to build profitability and brand strength. 20 flexigroup 1H20 RESULTS
Slide 21: Our simplified offering
STRATEGIC UPDATE: SIMPLIFY Our simplified offering. Three clear propositions. Unique, recognisable brands. Buy Now Pay Later Credit Cards SME Lending Making larger lifestyle driven Buy Now. Pay Later. Everywhere The ultimate shopping Helping businesses get wiired purchases more affordable companion
Slide 22: Simplify scorecard
STRATEGIC UPDATE: SIMPLIFY Simplify scorecard. Simplify Products Simplify Service Simplify Operations Simplify Systems ✓ Simplified Commercial Leasing ✓ 70 FTE removed from call centre and ✓ Optimisation of Manila operations ✓ 3 telephone systems to 1 to business with focus on SME back office functi
Slide 23: 2. Lead
STRATEGIC UPDATE 2. Lead Lead in Buy Now Pay Later. 23 flexigroup 1H20 RESULTS
Slide 24: Differentiated proposition of interest free spending from $1-$30K is resonating
STRATEGIC UPDATE: LEAD Differentiated proposition of interest free spending from $1-$30K is resonating. BNPL Australia and New Zealand humm Australia In 1H20, we’ve seen… Average transaction value $348 32% more customers Transactions per customer ‘Little things’ 4.1 annualised 66% more transactions
Slide 25: Announcing today 3,000 new places to shop with humm
STRATEGIC UPDATE: LEAD Announcing today 3,000 new places to shop with humm. ParlourX. Ginger & Smart. EziBuy. Connor. American Swiss. BlueSky. Inglot. Lego. Johnny Big. Blue Illusion. Tarocash. Rockwear. RSPCA. Silk Laser Clinics. United Chemists. Attune. Cornerstone Health. National Pharmacies. Blo
Slide 26: 3. Streamline
STRATEGIC UPDATE 3. Streamline Streamline originations with instant credit decisions. 26 flexigroup 1H20 RESULTS
Slide 27: One credit origination platform scalable for growth
STRATEGIC UPDATE: STREAMLINE One credit origination platform scalable for growth. Credit decision automation Creation of bespoke Enhanced registration One enhanced collections Collection efficiency1 reducing referral rates BNPL serviceability process for humm with system in place for all increased s
Slide 28: 4. Expand
STRATEGIC UPDATE 4. Expand Expand our reach, our target market, our audience, our relevance. 28 flexigroup 1H20 RESULTS
Slide 29: Covering the market of digital spenders
STRATEGIC UPDATE: 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 Lives to create, they have go further. to enjoy. new experiences. build, grow.
Slide 30: World first
STRATEGIC UPDATE: EXPAND World first. FOR CUSTOMERS FOR RETAILERS » Buy Now. Pay Later. Everywhere. » Unlocks access to BNPL without integration. » Use everywhere Mastercard is welcome. » E liminates merchant services fees. » Shop online and instore. » N o minimum spend. 30 flexigroup 1H20 RESULTS
Slide 31: Launching today – bundll marketplace
STRATEGIC UPDATE: EXPAND Launching today – bundll marketplace. Shop. 31 flexigroup 1H20 RESULTS
Slide 32: bundll marketplace
STRATEGIC UPDATE: EXPAND bundll marketplace. Shop. TWO CLICK » Select item INSTANT » Search by brand BUNDLL » bwhat undll knows you and SHOPPING » Select “Pay with bundll’ FILTER » Search by store LEARNS & you love EXPERIENCE » Details autofill FEATURE » Search by product CURATES » Curates and sugge
Slide 33: bundll strategic partnerships
STRATEGIC UPDATE: EXPAND bundll strategic partnerships. » Australia’s largest mobile » bundll promoted across » Partnership with first consumer focused Groupon channels and Coca-Cola Amatil investment platform. customer communications. vending machines. » bundll being made » bundll positioned as BNP
Slide 34: Who we are
STRATEGIC UPDATE: EXPAND Who we are. A digital spending powerhouse, helping people buy everything, everywhere, every day. 34 flexigroup 1H20 RESULTS
Slide 35: Buy Now Pay Later, Credit Cards, SME Lending
STRATEGIC UPDATE: EXPAND Buy Now Pay Later Credit Cards SME Lending 35 flexigroup 1H20 RESULTS
Slide 36: Outlook
1H20 RESULTS UPDATE Outlook. 36 flexigroup 1H20 RESULTS
Slide 37: Outlook
OUTLOOK Outlook. 2020 flexigroup is in the first year of a three year 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 invest in loved bra
Slide 38: Appendices
1H20 RESULTS UPDATE Appendices. 1 H 2 0 R E S U LT S U P D A T E 38 flexigroup 1H20 RESULTS
Slide 39: Strong Receivables Growth in New Products
GROUP FINANCIALS +16% BNPL Receivables $552M $642M 1H19 1H20 Strong Receivables Growth +4% in New Products. Australia Cards • BNPL: Increase of 16% driven by strong volume growth of Receivables $679M $708M 23% on 1H19. 1H19 1H20 • Australia Cards: Increase of 4% as a result of strong +10% volume gro
Slide 40: Profit and Loss
GROUP FINANCIALS Profit and Loss ($m) 1H19 1H20 v PCP % Interest income 176.5 181.8 3% Interest expense (50.2) (45.7) (9%) Other portfolio income 59.6 45.7 (23%) Net income 185.9 181.8 (2%) Receivables and customer loan impairment expenses (52.9) (38.6) (27%) Impairment of goodwill and intangible as
Slide 41: Balance Sheet
GROUP FINANCIALS Balance Sheet ($m) 1H19 1H20 v PCP % Cash and cash equivalents 117.5 168.2 43% Receivables and customer loans1 2,474.2 2,670.8 8% Investment in associate 13.1 14.3 9% Other assets 9.8 24.0 145% Current and deferred tax assets 29.1 77.0 66% Goodwill 243.3 245.2 1% Other intangible as
Slide 42: Operating and Consolidated Cash Flow
GROUP FINANCIALS Operating Cash Flow ($m) 1H19 1H20 v PCP % NPAT 31.3 33.3 6% Impairment loss on receivables and customer loans 55.2 38.6 (30%) Impairment of goodwill and other intangible assets – – – Depreciation and amortisation expenses 7.1 9.6 35% Changes in other operating assets and liabilitie
Slide 43: Segment reconciliation
GROUP FINANCIALS Segment reconciliation. Certegy New Zealand Leasing Consumer Leasing Commercial New Zealand Cards Australia Cards Dec-18 Certegy New Zealand Leasing POS Leasing AU Commercial New Zealand Cards Australia Cards FlexiWay/FlexiFi Oxipay New Zealand Oxipay (Ireland) BNPL Commercial and L
Slide 44: 1H19 income statements
GROUP FINANCIALS 1H19 income statements. Half-Year 31 December 2018 (re-stated) Australia Commercial and New Zealand A$m BNPL Cards Leasing Cards Total Net income 51.2 36.9 51.9 45.9 185.9 Operating expenses (17.8) (16.6) (31.5) (22.8) (88.7) Impairment losses on receivables and customer loans (10.7
Slide 45: Thank you
1H20 RESULTS UPDATE Thank you 45 flexigroup 1H20 RESULTS
Slide 46: Disclaimer
Disclaimer. No recommendation, offer, invitation or advice officers, employees, advisers and agents disclaim all liability and responsibility (including This presentation is not a financial product or investment advice or recommendation, offer or without limitation any liability arising from fault o