HUMM GROUP LIMITED — Annual Report 2009

Aug 19, 2009

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2009 Full Year Results

20[th] August 2009

John DeLano Chief Executive Officer and Managing Director

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Chief Financial Officer
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Disclaimer

Important Notice

No recommendation, offer, invitation or advice

This presentation is not a recommendation, offer or invitation by any person or to any person to sell or purchase securities in FlexiGroup Limited (“FlexiGroup”) in any jurisdiction. This presentation contains general information only and does not take into account the investment objectives, financial situation and particular needs of individual investors. Investors should make their own independent assessment of the information in this presentation and obtain their own independent advice from a qualified financial adviser having regard to their objectives, financial situation and needs before taking any action.

Exclusion of representations or warranties

No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability or adequacy of any statements, estimates, opinions or other information, or the reasonableness of any assumption or other statement, contained in this presentation. Nor is any representation or warranty, express or implied, given as to the accuracy, completeness, likelihood of achievement or reasonableness of any forecasts, prospective statements or returns contained in this presentation. Such forecasts, prospective statement or returns are by their nature subject to significant uncertainties and contingencies many of which are outside the control of FlexiGroup. Any such forecast, prospective statement or return has been based on current expectations about future events and is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described. To the maximum extent permitted by law, FlexiGroup and its related bodies corporate, directors, officers, employees, advisers and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use or reliance on anything contained in, or omitted from, this presentation.

Jurisdiction

The distribution of this presentation including in jurisdictions outside Australia, may be restricted by law. Any person who receives this presentation must seek advice on and observe any such restrictions.

Nothing in this presentation constitutes an offer or invitation to issue or sell, or a recommendation to subscribe for or acquire securities in any jurisdiction where it is unlawful to do so. The securities of FlexiGroup have not been, and will not, be registered under the US Securities Act of 1933 (as amended) (“Securities Act”), or the securities laws of any state of the United States. Neither this presentation nor any copy hereof may be transmitted in the United States or distributed, directly or indirectly, in the United States or to any US person including (1) any US resident, (2) any partnership or corporation or other entity organised or incorporated under the laws of the United States or any state thereof, (3) any trust of which any trustee is a US person, or (4) any agency or branch of a foreign entity located in the United States. No securities may be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or pursuant to an exemption from, or in a transaction not subject to,

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Agenda

Highlights and overview - Chief Executive Officer Results analysis - Chief Financial Officer Priorities and Outlook - Chief Executive Officer

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Key Messages

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Certegy delivers early, exceeds expectations

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Responsible tightening of credit criteria – 90 day arrears stable NPAT growth outpaces receivables, driven by increased non-interest income BLiNK Mobile Broadband a new source of income - now 20,000 subscribers - FXL solidly positioned as Telco supplier with key retail partners Funding maintained through Global Financial Crisis and funders provided $200m in funding for Certegy

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Highlights

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FY09 NPAT[1] of $33.5m; exceeds original guidance of $28m-$30m Certegy full year NPAT[1] positive $0.2m vs negative $1.5m guidance at acquisition Fully franked final dividend of 3 cents per share to be paid October 15th FY10 NPAT[1] guidance of $37m-$39m

FY10 NPAT1 guidance of $37m-$39m
			Change
	FY09		FY08 - FY09
NPAT1	$33.5m	�	4%
Certegy NPAT1	$0.2m
NPAT (like for like)	$33.3m	�	3%
Volume	$417.6m	�	41%
Net Operating Cash Flow 2	$31.7m	�	10%
End of period cash (Unrestricted and Restricted)3	$101.9m	�	-3%

Notes:

1 Excludes Certegy Intangible Amortisation ($0.7m for FY09)

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FlexiGroup Limited, 3 Diverse businesses - Leasing, Interest Free & Mobile Broadband

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Trading since 1988, IPO Dec 2006

• Lease & loan products offered in IT, electrical & travel channels

Preserves margin for the retailer

• Customers appreciate loaner, protect & affordable monthly payments

Key Metrics (approx)

• 100,000 transactions p.a.

• 350,000 customers

• 5,600 retail outlets

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• Trading since 1989, acquired Oct 2008

Interest free & cheque guarantee products offered in diverse industries Increases sales volumes for retailers

• No interest (ever) payable by the customer

Key Metrics (approx)

• 150,000 transactions p.a.

• 725,000 customers

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Launched in retailers, Feb 2009

• Casual and contract mobile broadband offered through IT retailers Increases margins for the retailers

• Customers enjoy easy in-store activation, protect & loaner features

Key Metrics (approx)

• 20,000 subscribers

• 350 IT retail outlets

• 5,100 retail outlets

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Certegy & Mobile Broadband an engine for growth and customer acquisition

Annual transaction growth of 103%

2H09 shows the changing mix of business, due to Certegy and launch of BLiNK Mobile Broadband

Accounts for 63% of transaction volume in 2H09

Unit Volume '000's 1H 08 2H 08 1H 09	2H 09 2H09 v 2H08 Growth
Flexirent 42 42 39	41
Other Leases/Electrical 12 10 10	8
Loans (Personal & Travel) 2 1 1	0
Certegy 40	68
BLiNK Mobile Broadband	17

Total FXL 56 54 89 134 150%

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NPAT Growth exceeds growth in receivables

Increased NPAT by acquiring sound credit quality volume and growing other income

Tightened credit criteria in late 2007 - lease volumes contract and lease losses maintained

Certegy growth drives receivable growth

Volume $m 1H 08 2H 08 1H 09	2H 09 2H09 v 2H08 Growth
Flexirent $96m $93m $80m	$88m -5%
Other Leases $50m $30m $27m	$23m -22%
Loans (Personal & Travel) $33m $8m $3m	$1m
Certegy $69m	$126m
Total Volume $179m $131m $179m	$239m 82%
Total Receivables $497m $482m $505m	$540m 12%

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FXL is well placed to take market share in the fast growing Mobile Broadband (MBB) market

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Market size - ~100K subscribers a month

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MBB adds - 6x the subscribers of fixed line Forecast market growth - CAGR of 26% to 2013

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Source : Goldman Sachs

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BLiNK positions FXL as a Telco supplier, with a differentiated product, to retail partners

BLiNK MBB - leverage FXL core capabilities

• Motivate & drive retail partners

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BLiNK - a new source of income & customer acquisition

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New high growth product line, incremental to – Flexirent now with 20,000 active subscribers

Mobile Broadband (MBB) is a natural cross sell with laptops – an FXL strength Secured agreement with Optus

MBB economics a function of acquisition & data costs and customer tenure

FXL is able to offer compelling value to retailers by leveraging existing infrastructure

BLiNK brand heavily promoted with media advertising and special offers

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Certegy exceeds expectations - profitable for FY09

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Certegy’s NPAT[1] of $0.2m vs original guidance of ($1.5m loss) at time of acquisition

Driven by early introduction of new sources of income

Certegy focused on implementation of new product features – 2H09 volume growth 5%

Portfolio performing satisfactorily

Existing funders provide support:

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1H 09 2H 09 ACTUAL ACTUAL	FY10 GUIDANCE
Volume $69m $126m	$268m
Closing Net Receivables $54m $118m	$172m
Certegy NPAT -$1.2m $1.4m	$7.2m
Amortisation of Intangibles -$0.1m -$0.6m	-$1.2m
Integration Costs (post tax) -$0.5m
Impact on Group NPAT -$1.8m $0.8m	$6.0m

• $150m Oct 08

• $ 50m Feb 09

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Results analysis Garry McLennan Chief Financial Officer

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Consistent performance in challenging times

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• FY09 NPAT[1] $33.5m vs FY08 $32.3m and original guidance of $28-$30m

Strong revenue performance

• Fee and other income up 29% (19% like for like)

• Net interest income down 3% on FY08, with 2H09 up 14% on 1H09 due to Certegy

Minimal increase in overheads except:

• Certegy overheads – new business acquired

• Support for BLiNK mobile broadband

Impairment losses and provisions

• due to growing Certegy portfolio

• no increase in Flexirent

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+4%
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New product initiatives drive growth in fee and other income

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Fee and other income now 54% of Operating Income

Increasing fee and other income % reduces impact of interest rate movements on FXL

A number of product initiatives have driven fee and other income growth:

• Interim rental

• Protect income

• End of term income incl. sale of asset

• Certegy fees

• Mobile Broadband

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Ratio of Fee Income Increasing Over Time
$90m 60%
54%
47%
50%
40%
$60m 40%
30%
73.6
$30m 56.9 20%
40.6
10%
$0m 0%
FY07 FY08 FY09
Fee/Other Income Fee/Other Income %
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Lease losses and loan losses decline on 1H09

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Lease losses flat on 1H09 due to credit tightening in FY07

Personal Loan losses decline – portfolio in run-off

Certegy losses in line with expectations as receivables continue to grow

	Impairment losses($m)	2H 08	1H 09	2H 09
	Leases	9.4	8.3	8.3
	Personal Loans	4.2	4.2	3.2
	Leases/Personal Loans	13.6	12.5	11.5
	Certegy		0.1	2.7
	Total Impairment Losses	13.6	12.6	14.2
	Recoveries/Debt Sales	-0.9	-2.3	-1.4
	Net Impairment Losses	12.7	10.3	12.8

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Extensive credit experience from over – 1.5 million customers reduced exposure and risk from poor credit quality customers

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Recruited top talented collections team – upgraded collections technology

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Despite the environment, 90 day delinquencies have been stable

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Products financed are for customers day to day usage – this has kept losses and arrears stable

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• Low values and low repayments make our products affordable - even in difficult times

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• Broad mix of business - lease and interest free

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Stable performance enhances Funder confidence in FlexiGroup

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Note:
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90 Day plus delinquencies include any contract which is overdue by 90 or more days and reflects the total remaining principal outstanding.

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31% growth in underlying operating cash flow over FY08

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• Growth and product initiatives are driving increased underlying cashflow[1] ($67.3m v $51.2m) as follows:

• Flexirent/Blink Fees - $10.1m

• Certegy - $3.3m

• Pricing initiatives - $13.6m

These have offset the strategy of contracting lease volumes, where necessary, to maintain credit quality

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+31%
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Net cash inflow increased by $2.8m to $31.7m

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Net cash inflow from operating activities reflects the cash generated after:

• Self funding of loans, leases and lease periods

• Cash deposited in loss reserves

• Timing differences relating to asset payments

Cash Flow Summary ($m)	FY08	FY09
Underlying Cash Flow from Operating Activities	51.2	67.3
Tax paid (FY08 includes $4.6m prior period)	-15.8	-12.3
Self funding of loans, leases, lease periods	-8.9	-5.9
(Increases) decreases in Loss Reserves	-6.7	-6.4
(Increase)/Decrease in Mobile Broadband Modem Inventory		-2.0
Timing of asset payments	9.0	-9.0

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$101.9m in Unrestricted and Restricted Cash at Bank

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End of period unrestricted cash at bank decreased from $59.4m to $52.6m YOY - $15m payment for Certegy in OCT08

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Increase in cash loss reserves to support Certegy volume Cash loss reserves of $49.3m are held in addition to $52.6m Cash at Bank Loss reserves are fully refundable once funders’ facilities have been repaid Cash loss reserves exceed historic annual loss rates by more than $25m FXL has $15m in vendor financing debt for Certegy All other debt is non recourse to FXL

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No bank covenants are linked to FXL share price

Cash at Bank Summary ($m)	FY08	FY09
Unrestricted Cash at Bank1	59.4	52.6
Restricted cash loss reserves	42.9	49.3

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Funding maintained through global financial crisis

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Funders

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Funders
Funders provide $740m to FlexiGroup in FY09
–
5 existing - average tenure 7.5 years
$m
– 900
longest tenure 21 years
– all facilities reviewed in the past 12 months renewed 800 768 Funding Limit 740
– Undrawn has declined as Certegy portfolio grows 700
248 163
Undraw n facility
In addition to undrawn facilities the following 600
can be used to fund new volume in 2010 500
Draw n Facility
400
–
repayments on 30JUN09 receivables
– 300 520 577
repayments from contracts established in FY10
200
Cost of funds increases from increased long
100
term swap rates and credit margins
-
Funding as at Jun 08 Funding as at Jun 09
FXL is exploring opportunities to increase
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FXL is exploring opportunities to increase and restructure facilities to:

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Growth initiatives and outlook for FY10 John DeLano Chief Executive Officer and Managing Director

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Outlook for FY10

FY10 NPAT guidance of $37-$39m

• Certegy contribution of $7.2m as receivables portfolio grows

• Other income growth partially offsets credit policy driven reduction in Flexi lease/loan receivables

• Increased cost of funds

• BLiNK Mobile Broadband will not contribute until FY11 due to subscriber acquisition costs

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FY10 volume growth resulting from:

• BLINK Mobile Broadband penetration of retail channels

• Certegy portfolio reaches steady state in Jan 2010

• Flat lease volumes expected as cautious approach to credit is maintained

• New Products in pipeline (both finance and telco related)

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Continue to build talented team – key FY09 executives added

• CFO formerly HSBC CFO

• Credit and Risk – formerly Head of Risk GE Money

• Collections – named NSW collections leader of the year

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Appendices

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Appendix 1 – Detailed Profit and Loss

FlexiGroup Limited

Profit & Loss Statement

A$ MILLION	FY08	FY09
Interest income	109.9	110.8
Interest expense	(44.8)	(47.9)
Net Interest income	**65.1 **	**62.9 **
Other Net Income	56.9	73.6
Operating Income	**122.0 **	**136.5 **
Payroll and related expenses	(33.9)	(36.3)
Depreciation & amortisation expenses	(3.2)	(4.2)
Other expenses	(15.7)	(20.9)
Total Expenses (before impairment)	(52.8)	(61.4)
Impairment losses	(20.5)	(23.0)
Lossprovision	(1.4)	(4.2)
Net Profit Before Tax	**47.3 **	**47.9 **
Tax Expense	(15.0)	(14.4)
Net Profit After Tax (before amort'n)	**32.3 **	**33.5 **

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Appendix 2 - Detailed Balance Sheet

FlexiGroup Limited Balance Sheet

A$ MILLION	FY08 FY09
Assets Cash at bank Loans and receivables Allow ance for losses Other receivables Unamortised initial direct transaction costs Rental Equipment Inventory Plant and equipment Deferred tax assets Goodw ill Other Intangible Assets	59.4 52.6
	481.9 540.2 (9.6) (13.7)
	472.3 526.5
	1.0 3.6 32.4 30.7 2.9 3.0 0.0 2.0 3.9 4.2 6.2 7.4 50.2 79.9 8.0 14.5
Total Assets	636.3 **724.4 **
Liabilities Borrow ings Loss Reserve Net Borrow ings Payables Current tax liability Provisions Deferred tax liabilities	521.2 591.7 (42.9) (49.3)
	478.3 542.4 25.5 31.5 8.2 4.4 1.0 1.5 24.6 25.5
Total Liabilities	537.6 **605.3 **
Net Assets	98.7 **119.1 **

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Appendix 3 – Detailed Cash flow analysis

FlexiGroup Limited Cash Flow Statement

A$ MILLION	FY08	FY09
Underlying Cash Flow from Operating Activities	51.2	67.3
Tax paid - (FY08 includes $4.6m from prior period)	(15.8)	(12.3)
Self funding of loans, leases and lease periods	(8.9)	(5.9)
(Increases) decreases in Loss Reserves	(6.7)	(6.4)
Inventory	0.0	(2.0)
Timingof assetpayments	9.0	(9.0)
Net cash inflow provided from operating activities	**28.8 **	**31.7 **
Cash flows from investing activities
Capital expenditure	(6.4)	(6.3)
Purchase of Certegybusiness and acquisition costs	0.0	(18.4)
Net cash outflow from investing activities	(6.4)	(24.7)
Cash flows from financing activities
Dividends	(19.1)	(14.0)
Net cash outflow from financing activities	(19.1)	(14.0)
Net impact of exchange rate movements	(0.6)	0.2
Net increase (decrease) in cash and cash equivalents	**2.7 **	(6.8)