Release Date: March 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fintech business achieved double-digit profit growth, contributing 92% of total profits.
- Operating profit increased by 28% to ZAR620 million.
- Customer base grew by 39% to over 2 million, driven primarily by fintech.
- Strong cash collection from customers, up to ZAR8.5 billion.
- Digital transactions now account for 84% of total transactions, improving efficiency and reducing costs.
Negative Points
- Retail sales declined by 24% to ZAR1.2 billion due to credit tightening.
- Gross profit margin impacted by Forex and markdowns.
- Net interest expenses increased by 59% due to higher interest rates and funding needs.
- Retail customer base declined by 16% to 530,000.
- Provision rate for fintech book increased from 15.4% to 18.7% due to deferred rehabilitation portfolios.
Q & A Highlights
Q: We've had strong cash collections. Where are your differences lying?
A: Paul Burnett, Group Finance Director, Executive Director: The group's credit books are short-term in nature, and a high proportion of disbursements and GMP are extended to existing customers, ensuring quality collections. We're pleased with how these books continue to yield and our ability to manage disbursement levels impacts our cash generation positively.
Q: The bricks and mortar strategy seems to have compelling benefits. Is this a departure from the digital strategy?
A: Chris De Wit, Retail CEO: Our ambition is still to have 30% plus in the digital space, combining voice with the digital experience. The showrooms complement the digital strategy by providing a physical experience where customers can engage with our brand and products.
Q: There appears to be opportunity in the ecosystem. What have you seen in practice over the last year?
A: Sean Wibberley, Chief Executive Officer, Executive Director: We've seen a step change in cross-selling between FinChoice and PayJustNow. Personalized offers to customers have shown nice traction, particularly in lending and insurance, driving more touchpoints and higher revenue per user.
Q: Have there been improvements in revenue diversification? Are you planning on launching further verticals?
A: Sean Wibberley, Chief Executive Officer, Executive Director: We currently have lending, insurance, and payments verticals. We aim to grow our fee-generating side, adding more insurance products and exploring retail credit at the point of sale. We're also considering a club program to integrate our verticals further.
Q: What are your medium-term targets for ROE and Rocky?
A: Paul Burnett, Group Finance Director, Executive Director: We're targeting above 15% for ROE and Rocky, confident that changes in retail and Weaver's cross-sell and fee generation will help us achieve this by 2025.
Q: What is the actual collection rate for Weaver and retail? Can you talk about PJN and credit quality?
A: Sean Wibberley, Chief Executive Officer, Executive Director: HomeChoice retail has improved collections post-new scorecard. PayJustNow's bespoke scorecard has reduced bad debt and extended credit to existing customers. FinChoice saw a slight decline in collection rates, prompting a slowdown in disbursement growth to maintain high collection standards.
Q: Does PJN have the same customer base or attract a more affluent customer?
A: Gregoire Lartigue, Non-Executive Director: PJN is attracting a more affluent customer segment, with higher financial F&C segmentations accelerating as we bring on merchants that facilitate splitting products for higher-end customers.
Q: How do you see the new search and discover affecting the PJN business?
A: Gregoire Lartigue, Non-Executive Director: The new search and discover functionality has driven significant traffic back to our merchants, delivering 27 million leads last year. This strategy is expected to drive substantial business back to our partners.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
