HUMM GROUP LIMITED — Annual Report 2017

Aug 14, 2017

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FlexiGroup is the market leader in Point of Sale consumer and commercial finance across Australia and New Zealand.

FlexiGroup combines enormous distribution reach with unrivalled product breadth. FlexiGroup continues to digitise and streamline its business to fully capitalise on its market leading positions. Equally important, FlexiGroup has proven funding, receivables and risk management capability. FY17 delivered Cash NPAT results on guidance; a solid performance as we refocus the business. In FY18 we are transforming platforms and processes, focusing on underperforming units. FY19 will see FlexiGroup return to cash NPAT growth.

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FY17 results delivered on guidance – as we invest for growth

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Cash NPAT Volume
$90.3m $1,949m
(4%) +54%
$94.1m $90.3m $1,268m $1,949m
FY16 FY17 FY16 FY17
Closing Receivables ROE %
$2,047m 14%
+9% (4%)
$1,874m $2,047m 18% 14%
FY16 FY17 FY16 FY17
Cash EPS (Cents) Statutory NPAT
24.9 $87.4m
(11%) +74%
28.0 24.9 $50.2m $87.4m
FY16 FY17 FY16 FY17
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Growth investments delivered in FY17

Sales and Marketing

Skills and Capability

• Launched Flight Centre relationship in Australia and co-branded card in New Zealand - sales above target

• • Commercial managed services offering to market – tier 1 consulting firm signed. Lenovo partnership established

• • Developed & launched Oxipay as online offering and moving in store in AU and NZ, signed 549 retailers

• • Flexi-Fi Launched in Ireland, 60 retailers with 600 in trial

• New Management team embedded and driving the business • Strong new director appointments in AU and NZ have broadened Board skills, experience and independence • Recruiting Chief Customer Officer and Chief Information Officer

• Data and analytics team embedded

• • Social media and digital team established

Products

Collections and Risk

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Regulatory and
Governance
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• Digitised AU cards online origination platform creating market leading experience • Finalising exit of unprofitable non-core business and realignment of program agreements • Developed clear strategy and commenced migration of AU cards onto NZ platform • Built strategic API capability

Enhanced collections investment has led to improved impairments and reduced arrears from 9.1% to 8.6% of total receivables Third party consultants validated that risk modelling and data capture processes remain a key strength New Chief Risk Officer embedding improved risk culture Significant enhancement of internal risk control environment

• Improved funding facility, with lower capital contribution and funding costs to support growth in the AU Cards business • New independent directors appointed in AU and NZ

• Pro-active approach to pre-empting legislative and regulatory changes

• • Group Asset and Liability Committee upskilled

• Project governance structure created to drive oversight of strategic project execution

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FY18 Cash NPAT guidance $85-90m

Cash NPAT Bridge

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FY16 FY17
• $94.1m $90.3m FY18
$85-90m
(Continuing (Continuing
estimate
Operations) Operations)
5 - 10
•
9.3
7 - 9
27.8
11.7
4
11.5
26.5
•
13.9
14.0
9.7
•
•
35.4
33.9
(2.8)
(6.5)
FY16A FY17A Certegy Ongoing invesment Underlying FY18 estimate
Ireland and Oxipay performance
Certegy AU Cards AU Leasing NZ Leasing NZ Cards Corporate Debt Costs
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Financial Results

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• Exceptional growth in AU cards. Reinvigorating NZ; beginning to deliver early benefits

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AUSTRALIA CARDS
Volume $534m Closing Receivables $483m
61%
55%
$200m $237m $332m $534m $210m $232m $311m $483m
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
Cash NPAT $9.7m Total Revenue $57.5m
18%
(31%)
$11.0m $12.3m $14.0m $9.7m $42.4m $42.4m $48.8m $57.5m
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
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NEW ZEALAND CARDS
Volume $623m (NZD) Closing Receivables $650m (NZD)
1%
3%
$559m $598m $603m $623m $586m $637m $650m $650m
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
Pro-forma - pre FXL acquisition Pro-forma - pre FXL acquisition
Cash NPAT $31.3m (NZD) Total Revenue $142m
210% 213%
$10.1m $31.3m $45m $142m
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
FY16 as reported FY16 as reported
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• Exceptional growth across key metrics with clear path from transaction volume to revenue and profit

• Cash NPAT lower due to rapid growth in interest free volume. This will translate into higher profits in FY19

• Receivables growth across all major retailers, with strong take up in Flight Centre

• Ongoing growth in cards customer number and usage. In addition to cross sell from growing Oxipay customer base in FY18

• Strong business with New Zealand’s largest seller network of over 13,000 merchants

• Transitional year with investments in management, sales and marketing reinvigorating growth

• Receivables set to grow strongly with profitability improving in FY18

• Proprietary, modern and mobile friendly technology platform with a broad product suite providing a unique opportunity to expand our market

• Becoming Group card centre of excellence will provide scale benefits and cost savings

• Adopting NZ cards platform in Q3 FY18

• Target intact; $1bn Australia cards receivables, $35m Cash NPAT by FY20

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Leasing repositioning underway – selective approach to quality growth

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AUSTRALIA LEASING
Australia Leasing Volume $205m Australia Leasing Receivables $299m
25% 10%
$127m
$139m
$110m
$60m
$50m $94m
$120m $114m $111m $175m $162m $160m
FY15 FY16 FY17 FY15 FY16 FY17
Commercial Point of Sale Commercial Point of Sale
Cash NPAT $13.9m Cash NPAT/ANR 4.8%
(4.4%)
(47%)
$10.2m $26.5m $13.9m 4.0% 9.2% 4.8%
FY15 FY16 FY17 FY15 FY16 FY17
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NEW ZEALAND LEASING
NZ Leasing Volume $92m NZ Leasing Closing Receivables $182m
(9%)
(9%)
$62m $101m $92m $166m $201m $182m
FY15 FY16 FY17 FY15 FY16 FY17
NZ Leasing Cash NPAT $11.5m NZ Leasing Cash NPAT/ANR 6.0%
(2%)
(0.7%)
$7.0m $11.7m $11.5m 9.5% 6.7% 6.0%
FY15 FY16 FY17 FY15 FY16 FY17
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• Commercial repositioning has delivered strong volume growth +88%. Focus has been on asset and credit quality and improving our connections with Sellers and Buyers. This has temporarily impacted short term profitability

• Australia leasing cash NPAT impacted by investments in Ireland and Oxipay $6m as per FY17 guidance

• FY17 was impacted by the TRL portfolio run-off, resulting in the contraction of the Receivables book to $182m

• Strong asset management drove NPAT of $11.5m

• Volume opportunities in FY18 around broadening market exposure through partnership agreements, diversifying asset classes and further developing relationships

• Significantly improved the customer value by building long term relationships. Repeat customers doubled year on year. Short term profitability impacted

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• Impairment costs improving – strong receivables management paying dividends

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FXL Group Impairment / ANR %
2.7% 2.7% 3.1% 3.5% 2.9%
FY13 FY14 FY15 FY16 FY17
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Total Arrears / Receivables
8.8% 9.4% 9.0% 12.0% 10.7%
FY13 FY14 FY15 FY16 FY17
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• Strong collections improvement delivered by investment in new credit process and strong receivables management

• • Cards growth improves credit risk mix

• Shift to lower risk commercial segments

• Further improvement expected as scale builds

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Significant funding improvements in place with reduced capital commitment

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Secured Funding Facilities
Drawn Undrawn
$703m
$444m
$480m
$498m
$1,828m $1,904m
$1,256m
$1,114m
FY14 FY15 FY16 FY17
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• New facility in place to fund AU cards growth, with a 33% reduced capital commitment

• Clear opportunities to term securitisations in Certegy, Cards and Commercial in both AU and NZ

• Review all funding lines to reduce costs and increased ROE

• APS120 minimal impact

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Capital Management – deleveraging and dividends

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Dividends Per Share (cents) Dividend payout ratio
14.5 17.8 17.8 14.5 7.7 59% 59% 60% 56% 31%
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
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Corporate Debt Facilities
Drawn Undrawn
$46m
$51m
$55m $55m $142m
$126m
$25m
$45m $45m
$25m
FY13 FY14 FY15 FY16 FY17
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• Final dividend declared – 3.85 cents in line with H1 payout ratio, 100% franked

• •

• Reduced payout ratio to allow for deleveraging while simultaneously supporting investment strategy

• Corporate debt reduced by $16m YoY – gearing reduced from 67% in FY16 to 53% in FY17

• • • Continuing to deleverage in FY18

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Capex investments in technology

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CAPEX Investment Profile
$3m
$18m $26m $24m $25m $28m
FY14 FY15 FY16 FY17 FY18F
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FY18 CAPEX CategoryFY18 Capex Category
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26%
68%
6%
Growth Regulatory Other
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• Digitising FXL and costs of projects to improve customer experience to be funded with consistent Capex spend • A large component of CAPEX spend in FY18 is moving to one card platform and front end digitization – expected to drive significant synergies. • CAPEX to reduce to maintenance levels from FY19 – ~20% Cash NPAT

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Business Outlook

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Our markets are strong

Market themes

• NAB Online Retail Sales Index/ABS Retail Trade Statistics - April 2017

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Six key strategic priorities identified for driving cash NPAT

PRIORITY

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Digitise
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Consolidation of consumer business
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Enter new segments &
launch new products
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Build cross sell capability
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Refocus commercial and leasing
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Embed stronger governance
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KEY INITIATIVES • Simplify and consolidate front and back end platforms • Move to two core operating platforms across AU & NZ • Invest in CRM and data analytics technology • End to end digitsation of Certegy and consumer leasing • Centralise marketing to leverage investment & capability • Create one Australian consumer sales team, leveraging deep retailer relationships • Target growth of existing book • Centralise data management • New AU card launch • Certegy – Entering professional services, home services, dental and many others • Commercial – Managed services and subscription models • Oxipay is a low cost customer acquisition engine • Build CRM capability and expertise • Drive product cross sell to generate incremental income • Digitise front and back end • Leverage trans Tasman relationships • Appoint new director in AU • Drive project governance • Ensure ordered roll out of all new initiatives

DUE DATE

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Q3-Q4’18

Q2’18 Q2’18 Ongoing Q3’18 Q3’18 Ongoing Ongoing Q4’18 Q3’18 Ongoing Q2’18 Ongoing Ongoing

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Digitising and consolidating AU Consumer business. Investing in capabilities

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DIGITISE THE BACK & FRONT END CONSOLIDATING AU CONSUMER SALES TEAMS INVESTING IN MARKETING
Digital Originations Platform GM – AU
Consumer
Credit & Fraud Chief Customer
Officer
CRM & Marketing Head of
Head of
Business
Consumer Sales
Development
Product System
Core Platform - Unsecured Core Platform - Secured
State Sales National Account
National BDMs
Managers Managers Head of Customer Head of CRM &
Core Collections platform Head of Operations
Experience Digital
Financials / ERP
Area Managers
Data Centralised
•
•
Investing over 2 years to transform consumer •
Single consumer sales and business
Creating centralized marketing team
platforms with little material impact to current •
development team Centralizing Ops under Chief Customer Officer
•
capex investment level •
National account management approach Investing in CRM and data analytics capability
•
•
Moving from multiple front end systems to one •
Segmenting retailers to ensure high touch on
Embedding social media capability in house
consumer front end
•
high value relationships, low touch on lower Commence B2C marketing
•
Consolidating and simplifying IT stacks
value relationships
•
•
Moving to cloud based SAAS
Single product pricing model to appropriately price
for risk
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$20-25m of operating cost reduction over FY18-20

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Creating a simpler FXL aligned to customer needs. Financial reporting to reflect this

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AU Consumer
CARDS POS LEASING NO INTEREST EVER
Receivables 54% Cash NPAT
57%
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NZ Consumer
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CARDS POS LEASING NO INTEREST EVER
30% 31%
Receivables Cash NPAT
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AU Commercial

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MANAGED SERVICES DEALER FINANCE BROKERS
7% 7%
Receivables Cash NPAT
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NZ Commercial

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MANAGED SERVICES DEALER FINANCE BROKERS
9%
13%
Receivables Cash NPAT
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From 1H18 FXL we will report under the new segments above, in addition to reporting under FY17 segment structure

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AU Cards exceptional growth with rising profitability

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AU CARD PORTFOLIO GROWING STRONGLY
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CUSTOMER PROFITABLE AFTER 11 MONTHS
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$500m 180k
160k
$400m
140k
$300m
120k
$200m 100k
FY16 FY17
1 2 3 4 5 6 7 8 9 10
Closing Receivables Customer (#)
Year
Receivables
No of Customers
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• •

• Objective is to leverage existing retailer $1bn receivables target intact •

• relationships and cross sell card opportunities Interest free to interest bearing improving,

• • New product launch, MasterCard agreement translating to profit growth •

• signed as new scheme partner for global card Interest free duration continues to shorten usage

• • Flight Centre relationship very successful

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KEY INDICATOR VERY POSITIVE
10,000
9,500
9,000
8,500
8,000
FY16 FY17
Avg spend per card
Average Spend per card ($)
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• Increasingly used for everyday spend – average card spend up 14% year on year

• • ~4000 customers use our cards to make purchases everyday. $1.6m value of purchases are made everyday

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Cards is a major growth engine and will deliver $30-35m Cash NPAT by FY20

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NZ Cards portfolio continues to show growth

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KEY INDICATORS POSITIVE
4,800 2.8
4,600 2.7
4,400 2.6
4,200 2.5
4,000 2.4
FY16 FY17
Avg spend per card Frequency of Usage (avg times per month)
Frequency of usage
Average Spend per card ($)
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VOLUMES AND RECEIVABLES CONTINUES TO GROW

CUSTOMER PROFITABLE AFTER 8 MONTHS

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$630m $120m
$90m
$620m
$60m
$610m
$30m
$600m $0m
FY16 FY17
Total Volume MasterCard Receivables
1 2 3 4 5 6 7 8 9 10
Year
Volume
MasterCard Receivavles
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• Q and Flight Centre MasterCard launched in market during FY17

• • These will drive volume growth in the coming years

• •

• Strong business - New Zealand’s largest seller Increasingly used for everyday spend –

• network of over 13,000 merchants Average card spend up 9% YoY and monthly

• • Proprietary, modern and mobile friendly average frequency of usage is up on prior year

• •

• technology platform with a broad product suite Moving from a closed loop only product offering

• providing a unique opportunity to expand our to an open loop MasterCard portfolio providing market open acceptance opportunities internally and online

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Cards is a major growth engine and will drive long term success

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• Digitising Certegy model to maintain market leadership. Cash NPAT growth expected to return in 2019

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|||||
|---|---|---|---|
|UNDERLYING|BUSINESS STRONG. INVESTING FOR FUTURE|
|GROWTH|
|Volume $524m|
|(3%)|
|(2%)|
|$552m|$535m|$524m|
|FY15|FY16|FY17|
|Closing Receivables $466m|
|(2%)|(1%)|
|$478m|$470m|$466m|
|FY15|FY16|FY17|
|Cash NPAT $33.9m|
|3%|(4%)|
|$34.4m|$35.4m|$33.9m|
|FY15|FY16|FY17|
|Certegy Volume Mix|
|Retail & Homeowner|VIP Non-Solar|Solar|
|$192m|$185m|$177m|
|$194m|
|$136m|
|$107m|$150m|$157m|
|$206m|$224m|$200m|$190m|
|FY14|FY15|FY16|FY17|

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|||
|---|---|
|INVESTMENT PLAN UNDERWAY|
|•|
|Digitisation drives retailer take up and improved customer experience|
|•|
|Building a seamless retailer experience|Utilising Flexi-Fi model platform. Frictionless POS experience to be|
|delivered by Q4|
|•|
|Deepening professional services penetration|
|•|
|Focusing on higher margin segments and|Increase penetration in high value, high margin retail categories,|
|volume growth|including dental and home improvement|
|•|
|Total customer base of 1.6m increase usage and on going activations|
|•|
|Acquiring and activating customers|Acquiring new customers from cards and Oxipay cross sell|
|•|
|Digitizing VIP program, underpinned by vastly improved data analytics|
|Relaunching VIP loyalty program|
|•|
|Leveraging rich data collected at origination to supply insights to|
|retailers|
|Optimise data analytics capability|
|•|
|Using data to make more informed customer and sales decisions|
|•|
|Currently 14,000+ relationships -Targeting incremental 3,000|
|•|
|Leveraging strong retailer penetration|
|Cross sell products range to retailers – Oxipay and cards|

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Entered new segments and building scale

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• Deepening our retailer relationships by offering full suite of payment solutions

• Using Oxipay as a low cost acquisition tool

• Leveraging as a cross sell tool for Certegy and cards

• Increasing number of retailer relationships

• Launched in NZ – August 1[st] , 2017

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• Rapid deployment and in-house development

• • New platform and offering built in <6 months

• Test platform for roll out across Certegy

• • Strong strategic relationships in place with key local retailers Building scale and retailer penetration

• Launched in Australia - 24th July

• Investing to build scale and profitable growth

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Complex business structure, transitioning to a simpler FXL

• TODAY FY18 - 20

• • • 10 product platforms 5 product platforms

• • • 16 brands Reduced brand portfolio

• • • 25 consumer leases 7 consumer leases

• • • 8 transactional banking platforms 2 transaction banking platforms

• • • 15 live websites 10 websites

• • • 10+ digital front ends 5 digital front ends

• • • No single CRM system One CRM process, buyer and seller view

• • • In house databases Cloud based databases Simplification and revenue growth helping to drive cost to income ratio to ~40% by FY20 • Capex $28-31m in FY18 – no material increase from FY17

• TODAY

• • 10 product platforms

• • 16 brands

• • 25 consumer leases

• • 8 transactional banking platforms

• 15 live websites

• 10+ digital front ends

• • No single CRM system

• OPEX included in guidance

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Improving our digital customer experience and leapfrogging our new competitors

• Originations made easy

• PIN to Sign Contract • Reimaging and simplifying origination

• • Removing paper contracts and email processes

• Unified Customer Journeys • Applying a CX design approach to provide best practice experience

• Simplifying seller payments • Reducing retailer time to settle on transactions from next day to same day payment for cards

Early benefits in FY17

• Creating digital journeys

• Process efficiency • Reducing origination from 53 inputs to 11

• • Utilizing automated data capture to speed process

• Transaction simplicity • Delivering POS integration and self service transaction management via online seller portals

• • In store capability through use of unique barcode technology https://oxipay.com.au/ https://oxipay.co.nz

• NPS increase of >10%

• Origination calls decreased by 30%

• • Customer retention increase by 10%

23

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Building commercial leasing in Australia and New Zealand

Market trends creating opportunities

• Market continues to move away from dealing directly with incumbent banks – opportunity for SME Direct business

• Growth in branded finance programs in AU & NZ – Flexi Commercial has proven track record in this solution

• Managed Services product generating substantial interest in the market

• Accelerated growth in Broker channel through aggregator relationships

Managed services delivering growth and improved credit quality

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FY16 FY17 FY18 Impairment / ANR%

• Industry trending towards Everything as a Service “XaaS”

• Opportunity to capitalise as first movers in the market

• Tier 1 clients improving credit profile of total portfolio

Investing in capability and execution

• Leveraging Trans-Tasman relationship to provide strategic offering in both markets

• • Developed a co-ordinated AU & NZ asset management team, advanced asset management tools and customer portal

• • Rebuilt and streamlined internal processes

• • Improving service offering and reducing opex through quicker and easier data capture and credit decisioning

• Built strong leadership team, leveraging their skills, capabilities and deep-rooted networks

• • Confident outlook FY18 with volume and rising cash NPAT

24

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Building stronger corporate and project management governance

Corporate Governance

• Two independent directors appointed in FY17

• Two independent directors appointed to NZ board

Project Governance

• All investment requires detailed business case that aligns with the strategy

• Independent consulting firm appointed – focused on delivering IT strategy, revenue growth and costs synergies

• Further director renewal – John Skippen retires November 2017

  • Project managers report to Project Governance Committee monthly

• New committees fully operational

• Risk Committee strengthened

  • All spend and project spend tracking authorized by Group CFO

• Enhanced treasury function

• Group asset and liability committee upskilled

• Utilising specialized resources on an interim, as needed basis (within budget)

• Pro-actively implementing Government Panel recommendations on consumer leasing in FY18

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Summary and Conclusions

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FY17 results As we invest delivered on in growth guidance, $90.3m

To take advantage of our technologies, funding and distribution strengths

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To return to Cash NPAT growth in FY19

26

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Appendices

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FY17 Cash NPAT delivered $90.3m

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FY16 FY17
$94.1m FY17 Cash NPAT Bridge $90.3m
(Continuing (Continuing
Operations) Operations)
18.5
9.3 1.5
3.7
4.3
27.8
11.7
12.6 0.2
26.5
11.5
13.9
14.0
9.7
Ireland/Oxipay (6)
POS Leasing
/Commercial (6)
35.4
33.9
(2.8)
(6.5)
FY16 Certegy AU Cards AU Leasing NZ Leasing NZ Cards Net Corporate Debt FY17
Costs
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Certegy AU Cards AU Leasing NZ Leasing NZ Cards

Corporate Debt Costs

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FXL at a glance

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FY17 Total Portfolio FY17 Volume FY17 Receivables FY17 Cash NPAT
Income
$445m (+20%) $1,949m (+54%) $2,047m (+9%) $90.3m (-4%)
($6.5m)
(8.0%)
$92m
$40m
5%
9% $182m
$205m
$113m 9% $11.5m
11% $524m
26%
27% 13%
$466m
$299m $33.9m
23%
15%
$108m 38%
24%
$13.9m
$57m
15%
13% $594m $483m
30% 23%
$617m
$9.7m
30%
$27.8m
$534m 11%
27%
$126m 31%
28%
Certegy Australia Cards New Zealand Cards
Australia Leasing New Zealand Leasing Net Corporate Debt Costs
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• Building an unrivalled product offering across the AU/NZ Consumer finance sector

Improve customer experience with a simplified and lower cost structure – benefits start in FY19

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$1-$500 $500-$1k $1k-$2k $2k-$4k $4k-$10k $10k-$30k
DEALER SIZE
FXL PRODUCT
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FXL Overview

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Australia Australia New Zealand New Zealand Certegy Cards Leasing Cards Leasing • • • • • Retail and Retail point of sale Leasing - Point of Leasing - Point of Retail point of sale homeowner “No Interest Free sale, SME and sale, SME and Interest Free Interest Ever” Cards Vendor program Education Cards payment plan • • • • Visa card Key segments Key segments Mastercard • Key segments subsequently technology education and subsequently domestic solar, used for everyday retailers, OEM government used for everyday home retail purchases vendors sectors, retail purchases improvement and • technology • Key segments Key segments high margin retail vendors major furniture major retailers, • 1.5m customers retailers, travel technology, have used product and home furniture and improvement travel

$466 million receivables

$483 million receivables

$299 million $182 million receivables receivables

$617 million receivables

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Regulatory

We see actively managing compliance as a competitive strength. We try to be part of the regulatory process and part of the solution

We proactively engage with our regulators

What does this This approach mean? works

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Segment Performance Overview

	Certegy Australia Cards New Zealand Cards Australia Leasing New Zealand Leasing Net Corporate Debt Costs Total FlexiGroup (Continuing Operations) Discontinued Operations Total FlexiGroup	FY16 FY17 Growth v PCP $535m $524m  (2%) $332m $534m  61% $136m $594m  337% $164m $205m  25% $101m $92m  (9%) $1,268m $1,949m  54% $82m $3m  (96%) $1,350m $1,952m  45% Volume	FY16 FY17 Growth v PCP $470m $466m  (1%) $311m $483m  55% $620m $617m  (0%) $272m $299m  10% $201m $182m  (9%) $1,874m $2,047m  9% $220m $121m  (45%) $2,094m $2,168m  4% ClosingReceivables	FY16 FY17 Growth v PCP FY16 FY17 $35.4m $33.9m  (4%) 7.5% 7.2%  $14.0m $9.7m  (31%) 5.2% 2.4%  $9.3m $27.8m  199% 6.1% 4.5%  $26.5m $13.9m  (47%) 9.2% 4.8%  $11.7m $11.5m  (2%) 6.7% 6.0%  ($2.8m) ($6.5m)  131% $94.1m $90.3m  (4%) 6.0% 4.6%  $2.9m $2.7m  (5%) 1.2% 1.6%  $97.0m $93.0m  (4%) 5.4% 4.4%  Cash NPAT / ANR Cash NPAT1

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Consolidated Statutory Income Statement

A$m FY16 FY17 v PCP % Total portfolio income $396.4 $462.8 17% Interest expense $(79.0) $(102.0) 29% Netportfolio income $317.4 $360.8 14% Receivables and customer loan impairment expenses $(78.6) $(62.8) (20%) Depreciation and amortisation expenses $(14.3) $(16.2) 13% Operatingand other expenses $(154.8) $(159.6) 3% Profit before income tax $69.7 $122.2 75% Income tax expense $(19.5) $(34.8) 78% Profit after income tax $50.2 $87.4 74% Non-cash items Amortisation of acquired intangible assets $3.7 $4.2 15% Other adjustments $43.1 $1.4 (97%) Total non-cash items $46.8 $5.6 (88%) Group Cash NPAT $97.0 $93.0 (4%) Discontinued operations $(2.9) $(2.7) (7%) Cash NPAT from continuing operations $94.1 $90.3 (4%)

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Balance Sheet

A$m Cash and cash equivalents Receivables and customer loans Other assets Current tax receivable Goodwill Other intangible assets Total assets Payables Borrowings Other liabilities Current and deferred tax liabilities Total liabilities Equity Gearing(1) ROE(2)	FY16 FY17 v PCP %
	$174 $167 (4%) $2,079 $2,166 4% $23 $13 (44%) $3 $5 58% $299 $321 8% $101 $114 13%
	$2,680 $2,787 4% $49 $50 3% $1,949 $2,008 3% $42 $31 (27%) $27 $27 (3%)
	$2,067 $2,115 2%
	$612 $672 10%
	67% 53% (14%) 19% 14% (5%)

(1) Gearing is recourse (corporate) borrowings as a percentage of equity excluding intangible assets.

(2) Calculated based on Cash NPAT as a percentage of average equity.

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Cash Flow

Operating Cash Flow A$m FY16 FY17 v PCP % NPAT $50.2 $87.4 74% Impairment loss on receivables and customer loans $78.6 $62.8 (20%) Depreciation and amortisation expenses $14.3 $16.2 13% Impairment of goodwill and other intangible assets $26.1 $0.0 (100%) Changes in operating assets and liabilities $(26.4) $(6.8) (74%) Other non-cash movements $4.6 $1.4 (69%) Operating cash flow $147.4 $161.0 9% Consolidated cash flow A$m FY16 FY17 v PCP % Operating cash flow $147.4 $161.0 9% Capex $(24.2) $(24.6) 2% Acquisitions and divestments $(187.1) $(7.6) (96%) Changes in customer loans and receivables $(58.0) $(159.0) 174% Investing cash flow $(269.3) $(191.2) (29%) Proceeds from equity raising - net of transaction costs $144.4 $0.0 (100%) Proceeds from corporate borrowings $239.0 $135.0 (44%) Repayment of corporate borrowings $(142.0) $(150.8) 6% Net movement in non-recourse borrowings $(21.4) $75.9 (455%) Dividends and share basedpayments $(55.2) $(36.9) (33%) Financing cash flow $164.8 $23.2 (86%) Net(decrease) / increase in cash $42.9 $(7.0) (116%) Operating Cash Flow A$m FY16 FY17 v PCP % NPAT $50.2 $87.4 74% Impairment loss on receivables and customer loans $78.6 $62.8 (20%) Depreciation and amortisation expenses $14.3 $16.2 13% Impairment of goodwill and other intangible assets $26.1 $0.0 (100%) Changes in operating assets and liabilities $(26.4) $(6.8) (74%) Other non-cash movements $4.6 $1.4 (69%) Operating cash flow $147.4 $161.0 9% Consolidated cash flow A$m FY16 FY17 v PCP % Operating cash flow $147.4 $161.0 9% Capex $(24.2) $(24.6) 2% Acquisitions and divestments $(187.1) $(7.6) (96%) Changes in customer loans and receivables $(58.0) $(159.0) 174% Investing cash flow $(269.3) $(191.2) (29%) Proceeds from equity raising - net of transaction costs $144.4 $0.0 (100%) Proceeds from corporate borrowings $239.0 $135.0 (44%) Repayment of corporate borrowings $(142.0) $(150.8) 6% Net movement in non-recourse borrowings $(21.4) $75.9 (455%) Dividends and share basedpayments $(55.2) $(36.9) (33%) Financing cash flow $164.8 $23.2 (86%) Net(decrease) / increase in cash $42.9 $(7.0) (116%)

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Disclaimer

No recommendation, offer, invitation or advice

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 purchase securities in FlexiGroup Limited (“ FlexiGroup ”) in any jurisdiction. This presentation contains general information about FlexiGroup only in summary form and does not take into account the investment objectives, financial situation and particular needs of individual investors. The information in this presentation does not purport to be complete. Investors should make their own assessment of the information in this and obtain their own independent presentation independent advice from a qualified financial adviser having regard to their objectives, financial situation and needs before taking any action. This presentation should be read in conjunction with FlexiGroup’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange.

Exclusion of representations or warranties

The information contained in this presentation may include information derived from publicly available sources that has not been independently verified. 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 statements 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 described. Readers are cautioned not to undue reliance on materially from the expectations place forward looking statements. Actual results or performance may vary from those expressed in, or implied by, any forward looking statements. FlexiGroup does not undertake to update any forward looking statements contained in this presentation. To the maximum extent permitted by law, FlexiGroup and its related bodies corporate, directors, officers, employees, advisers and agents disclaim all liability and without limitation from fault or for direct or responsibility (including any liability arising negligence) any 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.

This document is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this document nor anything contained herein shall form the basis of any contract or commitment. In particular, the document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. 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. Each institution that reviews the document that is in the United States, or that is acting for the account or benefit of a person in the United States, will be deemed to represent that each such institution or person is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, and to acknowledge and agree that it will not forward or deliver this document, electronically or otherwise, to any other person.

No securities may be offered, sold or otherwise transferred except in compliance with the registration requirements of applicable securities laws or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of applicable securities laws.

Investment Risk

An investment in FlexiGroup securities is subject to investment and other known and unknown risks, some of which are beyond the control of FlexiGroup. FlexiGroup does not guarantee any particular rate of return or the performance of FlexiGroup securities.

All amounts are in Australian dollars unless otherwise indicated.

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