Weaver Fintech Ltd. · JSE:WVR
Weaver Fintech — HomeChoice International — H1 2016 Earnings Presentation
29 slides from Weaver Fintech's earnings presentation, June 2016
Slide 1: June 2016 interim results
June 2016 interim results
Slide 2: Agenda
Agenda 1. The environment 2. Group results 3. Segmental results 4. Performance against strategic objectives 5. Prospects HomeChoice International PLC
Slide 3: The environment
The environment HomeChoice International PLC
Slide 4: A tough macro-economic climate
A tough macro-economic climate Weekly exchange rate Rand per US Dollar • Consumer confidence is below 2008/2009 17 financial crisis levels 15 • Weak labour market – unemployment in South Africa remains high at 26.2% 13 • Consumer spending constrained by inflation 11 Jan Feb Mar Apr May Jun Jul Aug S
Slide 5: Regulation has negatively impacted the Group
Regulation has negatively impacted the Group • National Credit Regulator’s prescribed affordability assessment regulations introduced excessive burden on customers to produce proof of income • formally employed customers find it inconvenient to provide documentation • informally employed customers l
Slide 6: Group results
Group results HomeChoice International PLC
Slide 7: Good results in the tough consumer environment
Good results in the tough consumer environment • Strong revenue growth of 16% with both businesses performing well Group revenue up 16% to R1.2bn Rand million 2 233 • Retail revenue up 15% 1 959 1 662 • Financial Services revenue up 19% 1 434 H1 • Gross profit margin down 30 bps to 48.8% despite con
Slide 8: Credit performance
Credit performance Group trade and loans receivable • Debtor costs up 18% compared to revenue Rand million 1 856 1 773 growth of 16% 1 487 • Retail debtor costs up 24% impacted by 995 1 148 • higher levels of customer acquisition (new TV acquisition channel generated good demand but at higher risk t
Slide 9: Conservative provisions being maintained
Conservative provisions being maintained 2016 H1 2015 FY 2014 FY Retail: gross receivables R1 231 m R1 209 m R1 064 m Provision as % of receivables 19.0% 18.7% 18.6% Non performing loans (120+ days) 8.9% 9.5% 8.7% Times cover 2.1 2.0 2.1 Financial Services: gross receivables R1 026 m R948 m R749 m P
Slide 10: Trading expenses
Trading expenses 2016 H1 2015 H1 Change on 2016 2015 R’000 R’000 prior period % of revenue % of revenue Marketing costs 92.3 82.8 11.6% 8.0 8.3 Staff costs 142.2 120.3 18.2% 12.3 12.1 Amortisation and depreciation 27.8 13.6 104.6% 2.4 1.4 Other 97.5 86.0 13.3% 8.5 8.6 Other trading expenses 359.8 30
Slide 11: Cash management remains a key focus of the group
Cash management remains a key focus of the group • Cash generated from operations up Cash generated before working capital changes up 14% to R309m 18.3% to R145 million Rand million 637 • good management of working 546 capital – up 11% to R164 million 452 414 • costs well managed 309 • lower growth
Slide 12: Capital expenditure
Capital expenditure Capital expenditure Rand million 183 162 Amortisation and 2016 H1 2015 H1 Change depreciation Rm Rm on prior period PP&E 10.9 8.0 37% 60 60 Intangibles 16.9 5.6 202% Total 27.8 13.6 105% 28 2012 2013 2014 2015 2016 H1 Land and buildings Equipment Total • Capital expenditure signi
Slide 13: Statement of financial position
Statement of financial position Rand million Change on 2016 H1 prior period 2015 H1 Dec 2015 PP&E and intangible assets 524 15% 457 524 Trade and loan receivables 1 856 17% 1 580 1 773 Inventory 251 10% 228 170 Net cash and cash equivalents 19 (57%) 33 87 Other assets 85 39% 61 58 Total assets 2 735
Slide 14: Capital management
Capital management Gearing Shareholder returns Cents per share • Net debt to equity increased marginally from 27.2% to 27,8% (final draw-down on new call 389 centre building facility and lower cash on hand) 353 • Comfortably within target range < 40% 307 282 (0.8 times annualised EBITDA) Return to s
Slide 15: Segmental results
Segmental results HomeChoice International PLC
Slide 16: Retail financial performance
Retail financial performance Retail revenue up 15% to R875m Rand million • Revenue increased by 15% to R875 million 1 755 1 572 • Retail sales up 16% despite impact of new 1 345 H1 1 178 affordability regulations • Finance charges and initiation fees up 12% • reduction in interest caps in May 2016 5
Slide 17: Innovation driving Retail sales
Innovation driving Retail sales 2016 sales mix • Retail sales up 16% to R579 million Percentage • product innovation and range development driving strong volume growth - particularly Bedding and textiles 73% in core bedding Homewares 13% Personal electronics 7% • good demand for new fashion category
Slide 18: Investing in our Retail omni-channel strategy
Investing in our Retail omni-channel strategy • Digital Retail sales up 18% through focus on driving additional traffic while maintaining 2016 new acquisition campaigns (net sales) current improvements to conversion rates Percentage • New call centre well received by staff with average agent perform
Slide 19: Financial Services performance
Financial Services performance Financial Services revenue up 19% to R277m • Loan disbursements up 7% to R583 million Rand million 478 386 • lower acceptance rates from new H1 316 affordability process, particularly 255 first-time loan customers 277 • Revenue up 19% to R277 million 158 182 233 115 •
Slide 20: Financial Services
Financial Services Loan disbursements • Regulation has negatively impacted business 1 200 Rand million 73% 73% • lower new acceptance rates - loan 900 75% 70% disbursements made to existing 600 80% customers increased to 80% 300 • significant effort to stream-line business 0 process and educate cust
Slide 21: Performance against strategic objectives
Performance against strategic objectives HomeChoice International PLC
Slide 22: Driving customer growth through analytics
Driving customer growth through analytics • Retail business continues to attract new Group customer base up 6% Thousand customers to the group 714 677 • Retail customer base up 5% to 674 000 619 557 511 • pan-African customer base up 9% • Financial Services customer base up 2% to 135 000 • new custo
Slide 23: Digital engagement
Digital engagement Credit extended via digital channels Rand million 743 620 • Retail: 479 • 11.6% of Retail sales (2015: 11.0%) 345 • strong growth in mobi – up 46% 372 384 • Financial Services • good migration to smartphones with 2012 2013 2014 2015 2016 H1 25% of customers registered on mobi • 69
Slide 24: Expanding into new markets and Africa
Expanding into new markets and Africa • Retail business focusing on existing territories • increased marketing activities (introduced TV) • Pan-African sales up 28%, represent 11.6% of total sales (2015: 10.5%) • Strong growth from Mauritius insurance operations • Expansion into Africa remains a gro
Slide 25: Prospects
Prospects HomeChoice International PLC
Slide 26: Prospects
Prospects • We anticipate macro-economic conditions to remain challenging • In this environment, we will: • maintain strict credit policies • continue to focus on cash collections and cost control • implement strategies to mitigate impact of reduction in interest rates effective May 2016 • continue
Slide 27: Thank you
Thank you HomeChoice International PLC 27
Slide 28: Notes
Notes ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________ ________________________________________________________________________
Slide 29: 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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