Humm Group Limited · ASX:HUM
Humm — Investor Presentation (August 2022)
37 slides from Humm's investor presentation, Aug 25, 2022
Slide 1: FY22 Results
FY22 RESULTS Rebecca James | CEO Adrian Fisk | CFO 25 August 2022 Authorised for release by the hummgroup Board of Directors humm group limited ACN 122 574 583 Level 1, 121 Harrington Street, The Rocks, Sydney NSW 2000
Slide 2: Core Strength - In Two Businesses
FY22 RESULTS // 25 AUGUST 2022 CORE STRENGTH - IN TWO BUSINESSES BIGGER TICKET PROFITABILITY ROBUST CREDIT COST STRONG LIQUIDITY FINANCIER FUNDING GROWTH PERFORMANCE REDUCTION POSITION $51.1m $113m $3.3b of unrestricted cash 2.8% $9m Cash NPAT in FY22 in receivables + 20% PCP $896m <2% 1.4c Net Loss
Slide 3: Executed Key Initiatives To Strengthen Further
FY22 RESULTS // 25 AUGUST 2022 EXECUTED KEY INITIATIVES TO STRENGTHEN FURTHER LAUNCHED ALIGNING TO NEW CLOUD BASED TIGHTER INCREASED ‘BIG TICKET’ INSTALMENTS MARGIN FINANCIAL CORE TECHNOLOGY MANAGEMENT FLEXIBILTY ` Accelerated growth in Commercial AU Delivered new scalable Portfolio is 77% hedged Se
Slide 4: Agenda
FY22 RESULTS // 25 AUGUST 2022 01 | GROUP OVERVIEW 02 | CONSUMER FINANCE AGENDA 03 | COMMERCIAL UPDATE 04 | GROUP FINANCIALS 05 | SUMMARY 06 | APPENDICES 4
Slide 5: To Be The Favoured Way To Pay For Bigger Purchases
FY22 RESULTS // 25 AUGUST 2022 TO BE THE FAVOURED WAY TO PAY FOR BIGGER PURCHASES CONSUMER FINANCE #1 POS financer for ANZ leading provider POSITIONING transactions over $500 of specialist asset finance CORE EXPERTISE RECEIVABLES $1.8bn $1.5bn >> Instant credit decisioning VERTICALS/ Health // Car S
Slide 6: Cash NPAT Walk
FY22 RESULTS // 25 AUGUST 2022 CASH NPAT WALK Companion product to 'Big things' – HUMMGROUP CASH NPAT reducing marketing requirement Tighten credit settings Core/mature Consumer products $61m Exit non-viable merchants Launch of UK and ( 12.5 ) Canada in FY22. 21.3 FY23 subject to review of investmen
Slide 7: Consumer Finance
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Slide 8: Our Consumer Finance Business
FY22 RESULTS // 25 AUGUST 2022 OUR CONSUMER FINANCE BUSINESS 3% $1.8B RECEIVABLES $48m 'Big things' 'Little things' POSITIONING • Small ticket ‘Pay in 5’ Point of sale interest free instalments • Average ticket $4,000 • Reduced competition • Average ticket $234 • Highly competitive MARKET POSITION •
Slide 9: NZ Cards: Strong And Resilient Profit Profile
FY22 RESULTS // 25 AUGUST 2022 NZ CARDS: STRONG AND RESILIENT PROFIT PROFILE NZ CARDS VOLUME (A$M) FY22 • 1 in every 3 new cards issued was a humm product 1 RESILIENT THROUGH COVID-19 PERFORMANCE • $694m volume flat to PCP, slightly below pre–COVID-19 359 levels 335 • New credit enhancements drove a
Slide 10: AU Cards: Ready For The Travel Rebound
FY22 RESULTS // 25 AUGUST 2022 AU CARDS: READY FOR THE TRAVEL REBOUND AU CARDS VOLUME (A$M) FY22 • Start of travel in Q4 saw volume growth of 15% on PCP – TRAVEL IMPACTS however still below pre-COVID-19 levels 416 PERFORMANCE • Accelerated paydowns softened in 2H with receivables returning to growth
Slide 11: BNPL: Focusing On Profitable 'Big Ticket'
FY22 RESULTS // 25 AUGUST 2022 BNPL: FOCUSING ON PROFITABLE ‘BIG TICKET’ BNPL VOLUME 1 (A$M) FY22 • Continued volume growth reflects engagement with GROWTH DRIVEN BY ‘SMALL TICKET’ IN AUSTRALIA small ticket e-commerce purchases 602 PERFORMANCE • humm AU ‘Big things’ down $52m in FY22 offset by growt
Slide 12: FY23 Consumer Priorities
FY22 RESULTS // 25 AUGUST 2022 FY23 CONSUMER PRIORITIES ALIGNING TO ‘BIG TICKET’ TECHNOLOGY SERVICE IMPROVING CORE SIMPLIFICATION TRANSFORMATION MARGIN Consolidation of bundll and humm AU Transitioning the domestic ` Reduce call volumes with Optimising profitability through instalment business onto
Slide 13: Commercial Update
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Slide 14: Momentum & Strong Risk Settings
FY22 RESULTS // 25 AUGUST 2022 MOMENTUM & STRONG RISK SETTINGS EXCELLENT GROWTH MOMENTUM QUARTERLY VOLUMES: COMMERCIAL >> Onboarded more than 212 new brokers and increased receivables to $1.5 billion >> Continued investment ensuring that the business continues to deliver a differentiated 388 275 ser
Slide 15: Invest & Grow Broker Channel
FY22 RESULTS // 25 AUGUST 2022 INVEST & GROW BROKER CHANNEL >> ANZ’s leading provider of specialist asset finance with over $1.5bn in receivables >> Primarily offers equipment finance to growing SMEs to fund the purchase of revenue-generating assets. >600K SMEs within the target customer segment >>
Slide 16: Total Addressable Market
FY22 RESULTS // 25 AUGUST 2022 TOTAL ADDRESSABLE MARKET TARGETING A $49B ADDRESSABLE MARKET UNDERSERVED BY THE BANKS SME LENDING MARKET BROKER CHANNEL DIFFERENTIATED APPROACH $41b asset finance $8b estimated asset WHY DO SMEs USE BROKERS? >> Convenience BROKER ONLY >> Best service provider to broker
Slide 17: FY23 Priorities
FY22 RESULTS // 25 AUGUST 2022 FY23 PRIORITIES FOCUSING OUR TECHNOLOGY FURTHER GROWING PRESENCE SHARPENING MARGIN INVESTMENT ON STRENGTHENING OUR IN CHOSEN SECTORS MANAGEMENT SIMPLIFICATION BALANCE SHEET ` Increasing business development team size Investing in FY23 in a scalable tech platform Enhanc
Slide 18: Group Financials
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Slide 19: Hummgroup Financial Performance
FY22 RESULTS // 25 AUGUST 2022 HUMMGROUP FINANCIAL PERFORMANCE CASH NPAT STATUTORY NPAT IMPACTED BY IMPAIRMENT OF INTANGIBLES • Gross income of $440.4m broadly in line with PCP • Net operating income down 4.1% due to volume related increase in cost of HUMMGROUP ($M)1 FY22 FY21 V PCP origination and
Slide 20: Committed To Cost Transformation
FY22 RESULTS // 25 AUGUST 2022 COMMITTED TO COST TRANSFORMATION HUMMGROUP OPERATING EXPENDITURE INVESTMENT DRIVING HIGHER OPERATING EXPENSES UP $10.8M 0.5 2.4 (1.4) • Investment in UK and Canada of $12.3m (pre-tax) -up from $1.5m in PCP 6.1 (7.3) 10.8 0.3 • Payroll expense up $11.1m – international
Slide 21: Committed To Cost Transformation
FY22 RESULTS // 25 AUGUST 2022 COMMITTED TO COST TRANSFORMATION COST TO INCOME RATIO • Separation of the Commercial and Consumer business has enabled focus on COST TO INCOME RATIO1 the costs base • Operational leverage being achieved in the Commercial business • Right size of the Consumer cost base
Slide 22: Credit Risk Management
FY22 RESULTS // 25 AUGUST 2022 CREDIT RISK MANAGEMENT DATA & TECHNOLOGY DRIVING SUSTAINABLE IMPROVEMENTS GROUP • Net loss/ANR of 2.8% down 70bps reflecting our strength in credit decisioning and PRODUCT1 DENOMINATOR FY22 FY21 management practices. This is a historical low for net loss across the Gro
Slide 23: Credit Impairment Charge
FY22 RESULTS // 25 AUGUST 2022 CREDIT IMPAIRMENT CHARGE NET LOSS DOWN $6.9M ON PCP $M FY22 FY21 MVMT • BNPL net loss increased $13.7m or 45% on PCP driven by ‘small ticket’ Net loss 82.0 88.9 (6.9) volume growth of 64% and increased losses in the humm AU 'Little things'. 'Big things' Macro provision
Slide 24: Strong Balance Sheet To Fund Growth
FY22 RESULTS // 25 AUGUST 2022 STRONG BALANCE SHEET TO FUND GROWTH WHOLESALE FUNDING FACILITIES WHOLESALE FUNDING FACILITIES $3,921m • Well established funding platform a strategic differentiator against peers with $3,381m increased capacity to support growth $896m $975m • Executed a term out of BNP
Slide 25: Consumer Finance
FY22 RESULTS // 25 AUGUST 2022 CONSUMER FINANCE CONSUMER FINANCE REDUCED EARNINGS IN A CHALLENGING OPERATING ENVIRONMENT $M FY22 FY21 V PCP • Gross income down due to lower Cards receivables and yield pressure from competition Gross income 321.4 347.1 (7.4%) • Cash NPAT down due to lower gross incom
Slide 26: Consumer Finance: Humm Australia
FY22 RESULTS // 25 AUGUST 2022 CONSUMER FINANCE: HUMM AUSTRALIA HUMM AUSTRALIA (‘BIG THINGS’) FY22 FY21 FY20 HUMM AUSTRALIA (‘LITTLE THINGS’) FY22 FY21 FY20 Volume (A$m) 513.5 553.4 553.4 Volume (A$m) 301.8 178.7 90.9 Receivables (A$m) 593.9 610.8 556.5 Receivables (A$m) 48.3 38.6 12.0 Product yield
Slide 27: Consumer Finance: Cards
FY22 RESULTS // 25 AUGUST 2022 CONSUMER FINANCE: CARDS New Zealand Australia NEW ZEALAND CARDS FY22 FY21 FY20 HUMM90 FY22 FY21 FY20 Volume (A$m) 693.8 695.4 750.6 Volume (A$m) 478.3 416.9 596.5 Receivables (A$m) 572.4 639.9 700.5 Receivables (A$m) 435.2 454.9 578.4 Interest bearing balances (%) 60.3
Slide 28: Commercial And Leasing
FY22 RESULTS // 25 AUGUST 2022 COMMERCIAL AND LEASING COMMERCIAL AND LEASING STRONG MOMENTUM IN COMMERCIAL & LEASING SEGMENT $M FY22 FY21 V PCP • CNPAT of $28.7m up 28.7% on FY21, driven by continued growth in operating income as the business has seen significant volume and receivables growth Gross
Slide 29: Flexicommercial: Summary
FY22 RESULTS // 25 AUGUST 2022 FLEXICOMMERCIAL: SUMMARY FLEXICOMMERCIAL FLEXICOMMERCIAL FY22 FY21 FY20 FY22 FY21 FY20 AUSTRALIA NEW ZEALAND Volume (A$m) 983.0 465.4 262.9 Volume (A$m) 113.3 74.8 75.0 Number of transactions 9,663 6,141 n/a Number of transactions 3,445 7,545 n/a Product yield (%) 10.3
Slide 30: Summary
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Slide 31: Summary
FY22 RESULTS // 25 AUGUST 2022 SUMMARY Profitable Strong capital and Prudent ` Refocus Improve and resilient funding position credit management on the core profitability through business yield and cost management 31
Slide 32: Appendices
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Slide 33: Profit And Loss ($M) FY22
FY22 RESULTS // 25 AUGUST 2022 PROFIT AND LOSS ($M) FY22 FY211 FY201 v PCP % Interest income 341.2 340.6 359.4 0.2% Fee and other income 99.2 103.3 114.9 (4.0%) Gross income 440.4 443.9 474.3 (0.8%) Cost of origination (27.6) (26.8) (28.6) (3.0%) Interest expense (84.1) (74.2) (89.3) (13.3%) Net ope
Slide 34: Balance Sheet ($M) FY22
FY22 RESULTS // 25 AUGUST 2022 BALANCE SHEET ($M) FY22 FY21 FY20 v PCP % Cash and cash equivalents 281.0 218.2 157.5 28.8% Receivables 219.8 226.2 (2.8%) 638.2 Chattel loans 1,277.9 643.8 98.5% Customer loans 1,729.6 1,783.1 1,814.4 (3.0%) Inventories 2.1 1.0 1.9 110.0% Current tax receivable 5.4 –
Slide 35: Consolidated Cash Flow ($M) FY22
FY22 RESULTS // 25 AUGUST 2022 CONSOLIDATED CASH FLOW ($M) FY22 FY21 FY20 v PCP % Interest income received from customers 359.7 349.7 374.5 2.9% Fee and other income received from customers less cost of origination 73.2 76.9 89.9 4.8% Payment to suppliers and employees (217.0) (176.8) (176.1) (21.7%
Slide 36: Disclaimer
FY22 RESULTS // 25 AUGUST 2022 DISCLAIMER No recommendation, offer, invitation or advice anything contained in, or omitted from, this presentation. This presentation is not a financial product or investment advice or recommendation, offer or invitation by any person or to any person to sell or purch
Slide 37: Thank You
THANK YOU