Weaver Fintech Ltd. · JSE:WVR
Weaver Fintech — HomeChoice International — FY2016 Earnings Presentation
33 slides from Weaver Fintech's earnings presentation, Apr 7, 2017
Slide 1: 2016 annual results presentation
2016 annual results presentation
Slide 2: Agenda
Agenda 1. The environment 2. 2016 performance • Retail • Financial Services • Group strategic objectives 3. Outlook HomeChoice International PLC
Slide 3: The environment
The environment HomeChoice International PLC
Slide 4: A tough macro-economic climate
A tough macro-economic climate • Low GDP growth • High inflation - food in particular • Constrained credit market • Variable rand at the vagaries of political and credit rating uncertainties MPC f/cast HomeChoice International PLC 4
Slide 5: 2016 performance
2016 performance HomeChoice International PLC
Slide 6: Group highlights
Group highlights Revenue up 19.3% to R2.7 billion Rand million 2 664 2 233 Financial 1 959 1 662 • Retail sales up 25.1% to R1.5 billion 1 434 • Loan disbursements up 10.4% to R1.3 billion • Operating profit up 11.7% to R648 million • Earnings per share up 6.7% to 414.8 cents 2012 2013 2014 2015 201
Slide 7: Regulations impacting interest and other income
Regulations impacting interest and other income Jan March April May Freemium Retail service Retail revolving Prescribed in Retail fees inc: credit facility interest rates R19 to R29 launched: drop : 5% Scaling Funeral interest rate Credit life sold on insurance drop from 33% all short-term loans to
Slide 8: Good results in a tough consumer environment
Good results in a tough consumer environment • Both businesses performed well 2016 % 2015 R’000 change R’000 • Retail revenue up 19% Revenue 2 664 19.3% 2 233 • Financial Services up 22% Retail sales 1 498 25.1% 1 197 • Gross profit margin impacted by Finance charges and initiation fees 941 5.2% 894
Slide 9: Stable credit performance
Stable credit performance Group receivables (net) 2191 Rand million 1773 1487 • Debtor costs up 20% compared to revenue 1148 growth of 19% 995 • Retail debtor costs up 24% impacted by • higher levels of customer acquisition (good demand from new TV acquisition 2012 2013 2014 2015 2016 Retail Financi
Slide 10: Conservative provisions being maintained
Conservative provisions being maintained 2016 % change 2015 Retail: gross receivables R1 507 m 24.7% R1 209 m Provision as % of receivables 18.9% 18.7% Non performing loans (120+ days) 8.7% 9.5% NPL times cover 2.2 2.0 Financial Services: gross receivables R1 147 m 21.1% R948 m Provision as % of rec
Slide 11: Trading expenses well managed
Trading expenses well managed 2016 2015 % 2016 2015 R’000 R’000 change % of revenue % of revenue Marketing costs 188.9 180.9 4.4% 7.1% 8.1% Staff costs 332.0 264.1 25.7% 12.5% 11.8% Amortisation and depreciation 54.9 52.9 3.7% 2.1% 2.4% Other 213.9 169.0 26.6% 8.0% 7.6% Other trading expenses 789.7
Slide 12: Cash management a key focus
Cash management a key focus Cash collected from customers up 16% Rand million 3 303 • Operating cash flows before working 2 845 capital up 9.7% to R699 million 2 389 2 184 • Cash generated from operations down 1 758 22.7% to R277 million due to high working capital absorption: • strong Retail sales
Slide 13: Analysis of group cashflows
Analysis of group cashflows Rand million 701 423 370 139 58 159 141 15 101 46 11 EBITDA WC mvt Net interest Tax paid Net capex Share issue Net proceeds Repayments Dividends Other Net inflow from IB of liabilities paid liabilities • Capital expenditure focused on technology systems – more normalised
Slide 14: Statement of financial position
Statement of financial position 2016 2015 % change R’000 R’000 Non-current assets 578 2.6% 563 Net cash and cash equivalents 187 > 100% 87 Trade and other receivables 2 215 23.9% 1 787 Inventory 214 25.4% 170 Other assets 5 (28.6%) 7 Total assets 3 199 22.4% 2 614 Equity 2 030 15.9% 1 751 Interest b
Slide 15: Capital management
Capital management Gearing Shareholder returns 415 Cents per share 389 • Net debt to equity increased from 353 26.2% to 28.7% and remains comfortably below Board’s upper limit 307 282 of 40% Return to shareholders • Headline earnings up 7.5% to 161 158 148 R425 million 110 • Return on equity impacte
Slide 16: Retail
Retail HomeChoice International PLC
Slide 17: Retail financial performance
Retail financial performance Revenue Rand million 1 755 2 083 1 572 1 345 • Revenue up 18.7% to R2.1 billion 1 178 • strong response to product innovation, marketing campaigns and credit offer • repositioned Retail business model - no growth in finance charges and initiation 2012 2013 2014 2015 2016
Slide 18: Innovation and new credit facility driving sales
Innovation and new credit facility driving sales • Retail sales up 25.1% to R1.5 billion • innovation driving strong growth in heritage bedding and textile ranges • introduced branded home appliances and Retail electronics sales mix • arrested decline in hard goods category • grew fashion and footwe
Slide 19: Retail performance
Retail performance • Efficient growth of customer base - cost of Retail customer base up 9% 700 Thousands 641 acquiring customers down 14% to R453 591 538 • Digital fastest growing channel at 40% - now 496 12% of business • investment in web and mobi platforms to optimise conversion • rapid adoption
Slide 20: Financial services
Financial services HomeChoice International PLC
Slide 21: Financial Services financial performance
Financial Services financial performance • Loan disbursements up 10.4% to R1.3 billion Financial Services revenue 581 Rand million • impacted by regulation - lower acceptance 478 rates from new affordability process 386 • significant effort to stream-line processes 316 and educate customers – disbur
Slide 22: Financial Services performance
Financial Services performance • Piloted two new customer acquisition Loan disbursements 76% Rand million 73% channels 73% • full end-to-end mobi loan 75% 70% application outside of call centre (scaled in Feb 2017) • opened first retail presence in showroom – customers engage 2012 2013 2014 2015 201
Slide 23: Group strategic objectives
Group strategic objectives HomeChoice International PLC
Slide 24: Driving customer growth through analytics
Driving customer growth through analytics • Retail business continues to attract new customers to the group Group customer base up 10% to 744 000 • effective acquisition campaigns Thousands 744 driving 18% growth in new customers 677 619 • 17 000 new foreign names 557 511 (14% growth on LY) • custom
Slide 25: Digital engagement
Digital engagement Retail: 28% of all group credit extended 846 via digital channels Rand million 745 • Digital sales increased by 40.3% and now 12% of Retail sales (2015: 11%) 620 • Mobi her preferred shopping channel (56%) 479 Financial Services 345 • Good migration to smartphones with 35% of cust
Slide 26: Expand into new markets and Africa
Expand into new markets and Africa • Pan-African expansion remains a strong growth opportunity in the medium term • Retail business currently focusing on existing foreign territories (10% of all sales) • 17 000 new foreign customers acquired (up 14%) • Increased marketing activities (introduced TV)
Slide 27: Outlook
Outlook HomeChoice International PLC
Slide 28: Outlook
Outlook • Trading environment expected to remain difficult and the unsecured credit market constrained • In this environment, we will continue to focus on driving growth through: • strong product innovation to attract and retain customers • maintain strict credit policies and focus on cash collectio
Slide 29: Thank you
Thank you HomeChoice International PLC 29
Slide 30: Annexures
Annexures HomeChoice International PLC
Slide 31: Notes
Notes ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________ ________________________________________________________________________
Slide 32: Notes
Notes ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________ ________________________________________________________________________
Slide 33: Disclaimer
Disclaimer This document has been prepared and issued by and is the sole responsibility of the management of HomeChoice International PLC and its subsidiaries (the “Company” or the “Group”). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitati
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