Humm Group Limited · ASX:HUM
Humm — Investor Presentation (February 2019)
55 slides from Humm's investor presentation, Feb 26, 2019
Slide 1: 1H FY19 Results
26 FEBRUARY 2019 1H FY19 Results Rebecca James 01 Flexigroup Ross Aucutt Chief Executive Officer Chief Financial Officer 1H FY19
Slide 2: Responsible lending
1HFY19 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 N
Slide 3: Results highlights
1H FY19 RESULTS UPDATE Results highlights. Strong customer and volume growth. Profit result impacted by large provision requirement in AU Commercial 3 Flexigroup 1H FY19
Slide 4: Customers
1H FY19 RESULTS UPDATE Customers +17% 1056K 1238K 272,000 new customers added to reach 1.2 million active customers (+17% v pcp) 1H18 1H19 4 Flexigroup 1H FY19
Slide 5: Retail Partners
1H FY19 RESULTS UPDATE Retail Partners +8% 57K 62K 5,000 new partners added to reach 62,000 partners (+8% v pcp) 1H18 1H19 5 Flexigroup 1H FY19
Slide 6: Volume
1H FY19 RESULTS UPDATE Volume +19% $1102M $1306M $204m in additional transactional volume to reach a total volume $1.306B (+19%. pcp) 1H18 1H19 6 Flexigroup 1H FY19
Slide 7: Receivables
1H FY19 RESULTS UPDATE Receivables +13% $2249M $2547M Total receivables $2.547B (+13% pcp) 1H18 1H19 7 Flexigroup 1H FY19
Slide 8: Impairment costs have increased
1H FY19 RESULTS UPDATE Impairment costs Group Impairment / ANR% have increased 2.9% 2.9% 2.9% 3.0% 4.3% 1H17 2H17 1H18 2H18 1H19 • Results impacted by $10M (post-tax) impairment taken in AU Commercial on one vendor program. • In addition, remediation to ongoing collections process issues within AU C
Slide 9: Cash NPAT
1H FY19 RESULTS UPDATE Cash NPAT -22% Cash NPAT $31.9M including $10M impact of increased provision in AU Commercial 40.9M 31.9M FY19 Cash NPAT guidance of $76-80M 1H18 1H19 9 Flexigroup 1H FY19
Slide 10: Group Financials
1H FY19 RESULTS UPDATE Group Financials 10 Flexigroup 1H FY19
Slide 11: Group Financials - Growth
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Growth FlexiGroup ($M) 1H FY18 1H FY19 v PCP% Underlying Cash NPAT 43.4 41.9 (3%) Non-recurring items 1 2.5 10.0 n/a Cash NPAT 2 40.9 31.9 (22%) Statutory NPAT 3 (48.9) 31.3 164% Volume 1,102 1,306 19% • Strong customer and volume Closing Receivables 2,249 2
Slide 12: Buy Now Pay Later
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE +12% +9% • Digitisation of BNPL Product • Enhancements to Buyer Pre-Authorisation Buy Now process Pay Later $267M $298M $15.9M $17.4M • Normalisation of OPEX (after significant investment in pcp) (Certegy) 1H18 1H19 1H18 1H19 • Strong discipline in arrears m
Slide 13: AU cards and NZ cards
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE • Continued volume growth of +11% +11% • Net portfolio income grew 40% as a result of strong growth in receivables and usage • Cash NPAT reduction of $3M driven by the AU cards 358M 395M 3.4M (88%) anticipated collections issues identified in FY18 0.4M as a
Slide 14: Commercial Leasing and Consumer Leasing
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE +93% • Volume increase driven by Managed Services and Broker channel • Cash NPAT result impacted by $10M post- (107%) tax impairment taken on one Vendor Commercial 86M 166M 9.1M program (0.6M) Leasing 1H18 1H19 1H18 1H19 • Improving secondary income performa
Slide 15: Capital Management
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Capital Management Funding facilities delivering efficient capital management structure with further enhancements to come 15 Flexigroup 1H FY19
Slide 16: Funding Facilities
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Wholesale Funding Drawn balance Undrawn balance Facilities $2,571M $2,867M $523M $508M Well funded for growth with significant funding facility headroom Euro funding facility well advanced to fund Flexi-Fi $523m $2,064M $2,344M volume in Ireland Well establi
Slide 17: Corporate Debt Facilities
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Corp Debt Facilities Drawn balance Undrawn balance Corporate debt increased by $47M YoY – Gearing ratio % gearing increased to 70% from 44% pcp Gearing increase primarily the result of funding required on new business volumes $11M $36M and the impact of the
Slide 18: Dividends per share (cents)
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Dividends per share (cents) 3.85 3.85 3.85 3.85 3.85 Final dividend declared – 3.85 cents in 1H17 2H17 1H18 2H18 1H19 line with 1H FY18, 100% franked 18 Flexigroup 1H FY19
Slide 19: Strategic Review
1H FY19 RESULTS UPDATE Strategic Review 19 Flexigroup 1H FY19
Slide 20: Strategic review context
STRATEGIC REVIEW - CONTEXT 150Days 40 Senior leaders 540 Merchant partners 3,000+ 5 Customers in the job focused on strategy Interviewed Offices visited Interviewed FlexiFi Ireland, NZ Cards in Auckland, Certegy Adelaide, state offices in Brisbane and Melbourne 20 Flexigroup 1H FY19
Slide 21: Point of departure: our heritage
STRATEGIC REVIEW Point of Our Heritage. departure In 1991 FlexiGroup opened up a complete new world of financing. Nearly 30 years later – in the digital age – with 1.2 million customers and 62,000 merchant partners, in a world where transactions are borderless and credit decisions are virtually inst
Slide 22: Business assessment
STRATEGIC REVIEW Our operations Our products Our partnerships • Large amount of • Too much complexity • Highly concentrated duplication • Lack of scalability • Unloved • Not consumer demand-driven • High touch and highly • Out of date • Bricks and mortar Business manual service model focussed assess
Slide 23: FlexiGroup today: complexity
FLEXIGROUP TODAY. Complexity CONSUMER COMMERCIAL CARDS NO INTEREST NZ CARDS & IRELAND LEASING LEASING EVER COMMERCIAL LEASING & INSTALMENT LEASING INSTALMENT PLAN PLAN Chattel Mortgage Managed Service 42 16 26 13 28 11 Applications & Applications & Applications & Applications & Applications & Applic
Slide 24: FlexiGroup tomorrow: What
FLEXIGROUP TOMORROW. What. The digital spending powerhouse, helpingpeople buy everything, everywhere, every day 24 Flexigroup 1H FY19
Slide 25: FlexiGroup tomorrow: How
FLEXIGROUP TOMORROW. How. Rewriting the playbook for digital spending 25 Flexigroup 1H FY19
Slide 26: FlexiGroup tomorrow: Why
FLEXIGROUP TOMORROW. Why. To make aricher, fuller life affordable for everyone 26 Flexigroup 1H FY19
Slide 27: $5.8B market profit opportunity in core products
STRATEGIC REVIEW $5.8B market profit opportunity in our core product range C ON SU MER A N D SME LEA SIN G B N PL $435M C R ED IT C A R D S $1.3B $100M AU $3.7B AU AU NZ $297M NZ $2M NZ 27 Flexigroup 1H FY19
Slide 28: We can win more by being customer led
STRATEGIC REVIEW WE CAN WIN MORE OF IT BY BEING CUSTOMER LED Knowing our customers 28 Flexigroup Half Year Result 2019
Slide 29: Customer personas
STRATEGIC REVIEW The Organised Budgeter The Millennial Consumer The Confident Spender The Calculated Maximiser The Business Builder Profile Profile Profile Profile Profile 30-50 yo 18-35 yo 28-45 yo 28-55 yo SMEs Often home owners Urban, digital natives Financially confident Financially established
Slide 30: 4 steps to transformation
STRATEGIC REVIEW 4 steps to transformation 1. 2. 3. 4. Simplify Lead Streamline Expand our offering and get In Buy Now Pay Later originations with instant our reach, our target fit to fight (after all, credit decisions market, our audience, we started it ...) our relevance 30 Flexigroup 1H FY19
Slide 31: Simplify our offering and get fit to fight
STRATEGIC REVIEW 1. Simplify Simplify our offering and get fit to fight 31 Flexigroup 1H FY19 Simplify our offering and get fit to fight
Slide 32: Questions we've asked ourselves
STRATEGIC REVIEW Questions we’ve asked ourselves Does it align to Does it solve a significant Do we have the ability to do it our purpose? Is it scalable? market need? better than the competition? Does it leverage our core Is it aligned to our risk Will it create shareholder capabilities? appetite?
Slide 33: Simplify: key initiatives
STRATEGIC REVIEW - KEY INITIATIVES Simplify Products Simplify Systems Simplify Service Simplify Operations move to future state digital first, seamless buyer realign shared service Stage One: Simplification of architecture, decommission and seller experience, with an functions to better support cons
Slide 34: Product simplification: from and to
STRATEGIC REVIEW FROM: TO: BNPL Consumer Lease Cards Commercial Lease 34 Flexigroup 1H FY19 Simplify our offering and get fit to fight
Slide 35: Lead in Buy Now Pay Later
STRATEGIC REVIEW 2. Lead Lead in Buy Now Pay Later 35 Flexigroup 1H FY19 Lead in buy now pay later
Slide 36: Product consolidation
STRATEGIC REVIEW: PRODUCT CONSOLIDATION MILLENNIAL • Currently serving 17% of the market in volume and 44% in CONSUMER receivables*. • Merginig OxiPay and Certegy Ezipay Avg age: 18-35 Avg Transaction: $274 • The only product that will: • Service transactions from $1 to $30K • Support a diverse reta
Slide 37: The Trans Tasman opportunity
STRATEGIC REVIEW – THE TRANS TASMAN OPPORTUNITY HEALTH RETAIL H OME IMPR OVEMEN T $22 B $70 B $65 B $4B $8B $23B Diagnostic $21B Furniture imaging Computers Lifestyle $10B Dental $3.4B $19B $2B $20B Vets Fashion/ $17B Cosmetics DIY Hardware $1B $3.2B optometry $0.6B Domestic $20B Appliances Trade/ S
Slide 38: New product
STRATEGIC REVIEW: PRODUCT CONSOLIDATION New product • Launching in Australia at the end of March, New Zealand at the end of June • Perfect for the little and BIG purchases in life • Offering greater flexibility to repay – up to 60 months • 12,000 seller locations and 1 million customers at launch •
Slide 39: Streamline originations with instant credit decisions
STRATEGIC REVIEW 3. Streamline Streamline originations with instant credit decisions 39 Flexigroup 1H FY19
Slide 40: Digital first decisioning environment
STRATEGIC REVIEW: DIGITAL FIRST DECISIONING ENVIRONMENT Group Credit Decisioning Framework Name Portfolio Data Identity DOB Macro Economic Address Application We know our customers. We Buyer/Seller Form can contact them. AML/Fraud Email/Mob Segmentation Product DL/PP/MC Profitability Output Credit B
Slide 41: Expand our reach
STRATEGIC REVIEW 4. Expand Expand our reach, our target market, our audience, our relevance 41 Flexigroup 1H FY19
Slide 42: Opening up new distribution channels
STRATEGIC REVIEW – OPENING UP NEW DISTRIBUTION CHANNELS The Confident Spender FRICTIONLESS SIGN UP E X PA N D O U R R E A C H Fast to join Direct to customer acquisition for credit Instant decision cards in Australia Instant provision Profile 28-45 yo Financially confident 9 0 D AY S I N T E R E S T
Slide 43: Instant decision / instant provision
STRATEGIC REVIEW – AUSTRALASIAN FIRST Instant decision/ instant provision 43 Flexigroup 1H FY19 Expand our reach
Slide 44: Our winning advantage: five principles
STRATEGIC REVIEW - OUR WINNING ADVANTAGE Across all of our products we will stick to five principles - always: 1. 2. 3. 4. 5. Simplify our products Deliver customer Create product Grow the value of Leverage scale and a and brands to reduce experiences that platforms that allow us customers seamlessl
Slide 45: 4 steps to transformation
STRATEGIC REVIEW 4 steps to transformation 1. 2. 3. 4. Simplify Lead Streamline Expand our offering and get In Buy Now Pay Later originations with instant our reach, our target fit to fight (after all, credit decisions market, our audience, we started it ...) our relevance 45 Flexigroup 1H FY19
Slide 46: Tanarra Capital
STRATEGIC INVESTOR Tanarra Capital • Tanarra Capital has committed to invest $25.1M in the company to be used for strategic initiatives and general purposes • Strong endorsement of the strategy and significant transformation program announced today • Placement of 20,113,947 shares at a value of $1.2
Slide 47: Appendices
HY19 RESULTS UPDATE Appendices 47 Flexigroup 1H FY19
Slide 48: Certegy
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Certegy Volume $298M, +12% Volume Trend 1H19 v pcp, +12% Digitisation delivering strong volume growth 267M 298M 267M 274M 298M Strong volume growth +12% 1H18 1H19 1H18 2H18 1H19 Significant NPAT growth +9% Volume growth demonstrates the continued success of
Slide 49: Australia Cards
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Australia Cards Active Customers 198K, +14% Volume $395M, +11% Continuing strong volume growth and launch of innovative new product 174K 198K 358M 395M 1H18 1H19 1H18 1H19 Strong customer growth +14% vs PCP Launch of Skye MasterCard replaces existing Once an
Slide 50: New Zealand Cards
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE New Zealand Active Customers Volume (NZD) Cards 571K, +21% $428M, +18% New Zealand’s largest non-bank card 470K 571K 363M 428M provider with strong customer, volume and receivables growth 1H18 1H19 1H18 1H19 Strong growth continuing with volumes up 18%, (inc
Slide 51: Consumer Leasing (AU/IE)
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE Consumer Volume Closing Receivables Leasing (AU/IE) $52M, +1% $147M, (5%) New Lisa product gains traction with retail customers 52M 52M 155M 147M 1H18 1H19 1H18 1H19 Volume in line with PCP. Strong volume growth from Flexi-Fi within Ireland has been mostly o
Slide 52: AU Commercial Leasing
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE AU Commercial Volume Closing Receivables Leasing $135M, +177% $331M, +34% Repositioning the business driving across the board growth 49M 135M 246M 331M 1H18 1H19 1H18 1H19 Significant volume momentum built during 1H19 driven by: Cash NPAT -$7.6M, (269%) - Gr
Slide 53: NZ Commercial Leasing
GROUP FINANCIALS - 1H FY19 RESULTS UPDATE NZ Commercial Volume (NZD) Closing Receivables (NZD) Leasing $34M, (15%) $153M, (11%) Refocusing of business to deliver future growth 40M 34M 173M 153M 1H18 1H19 1H18 1H19 Future growth driven by launch of first of its kind ‘lease hub’ in partnership with In
Slide 54: Statutory NPAT to Cash NPAT reconciliation
STATUTORY NPAT TO CASH NPAT RECONCILIATION FlexiGroup ($M) 1H FY18 1H FY19 v PCP% Profit after income tax on statutory basis ($48.9) $31.3 164% Non cash items Amortisation of acquired intangible assets $2.4 $1.6 (33%) 1H FY18 included the impairment of Impairment of Goodwill & Other Intangibles $89.
Slide 55: Thank You
Thank You 55 Flexigroup Half Year Result 2019