Humm Group Limited (HUM) Earnings Call Transcript & Summary

Good afternoon and welcome. My name is Andrew Abercrombie, and I am the Chair of humm group limited. On behalf of my fellow directors, it's my pleasure to welcome you to the virtual 2021 Annual General Meeting of humm group limited. I welcome shareholders and others joining us online. We have a quorum, so I declare the meeting open. The notice of meeting has been distributed, and I will take it as read. I would now like to introduce your Board, the Chief Executive Officer and Chief Financial Officer and the group company Secretary: on my right, joining me here in Melbourne, John Wylie; on my left, Christine Christian, Deputy Chair, Chair of Risk and Compliance Committee. Joining us from Sydney, from left to right: Rajeev Dhawan, Chair of the People and Remuneration Committee; Alistair Muir, Chair of the Technology Committee; and Carole Campbell, Chair of the Audit Committee; then, Rebecca James, Chief Executive Officer; Adrian Fisk, Chief Financial Officer; and Belinda Hannover, group company Secretary. Mr. Marcus Laithwaite, our auditor from PwC, is also in attendance today. He will be available to respond to any specific questions you may have in relation to the audit of hummgroup's financial statements. Questions received prior to the meeting and directed to the auditor have been responded to directly. The agenda for today's meeting is as follows. First, I will comment on a number of important matters. Rebecca James will then speak. And after Rebecca's address, we will proceed with the formal items of business set out in the notice of meeting. On behalf of the directors of hummgroup, the company, I'm pleased to again welcome you all to the 2021 Annual General Meeting. It is with a sense of achievement that I'm addressing you today as the Chairman of hummgroup following our name change and rebrand in November 2020 and pleasing growth across the board. Together with Rebecca and the management team, I'll be sharing positive news about hummgroup's achievements. However, as the largest investor in hummgroup myself, I would like to make a couple of opening remarks about our share price. Like many others in the buy now pay later space, our share price has been impacted over the last 12 months, but if we leave aside macro market factors and focus on our own experience, one of the primary reasons has been the COVID-19 pandemic and the associated impacts. We experienced significant reductions in volume as a consequence of COVID-19 lockdowns, especially in some of our largest origination areas of Melbourne, Sydney and Auckland. In addition, our travel partners were impacted severely as state and international borders remained closed during financial year '21. The lockdown impact was amplified, as one of the company's advantages has and continues to be its presence at the physical point of sale where we have offered buy now pay later since 2008. It is clear that COVID-19 impacted in-store origination, as purchasing moved online. And while our e-commerce growth did benefit from this channel shift, the headwinds from COVID-19 on hummgroup were probably more severe than many of our competitors, particularly because our strength is in financing larger purchases which are typically purchased in store. We have navigated through the COVID-19 storm with conservative and astute judgment. As we exit the lockdown period, the growth story that Rebecca will share with you is self-evident. I'm very confident that Rebecca and the management team will leverage the growth opportunities inherent in the business. We remain committed to growing shareholder value, and the Board will balance returns and investment for growth. Performance, turning to our performance. During financial year '21, hummgroup added 450,000 new customers, up 20% on financial year '20, taking total customers for the company to over 2.7 million. The company delivered financial year '21 cash net profit after-tax of $68.4 million, up 121.1% on the prior year. Growth in cash NPAT has been driven by increased profitability of the Cards segment, above-system growth in Commercial and Leasing, together with management focus on cutting underlying costs within the business. The other driver of cash NPAT performance in financial year '21 was a $21.6 million pretax benefit from releasing a proportion of the COVID-19 overlay provision. This reflects the benefit of improvements in the economic outlook and portfolio performance from ongoing investment in an improving credit decisioning platform. Total transaction volume of $2.7 billion for financial year '21 was up 8.2%, financial year '20 being $2.5 billion, as growth in Commercial and Leasing and buy now pay later was offset by a decline in Cards, with COVID-19 restrictions impacting travel. International expansion. In February 2021, hummgroup announced plans to launch its buy now pay later product humm into the United Kingdom and Canada. A significant opportunity exists to displace outdated traditional point-of-sale finance and capture higher-value purchases in both markets. hummgroup launched in the United Kingdom in financial year '21, where we have a head start with merchants we already partner with via our successful Irish buy now pay later business. We will be live imminently in Canada. When comparing humm to competitors in the market, I have no doubt that we will be delivering a solution that is superior for the merchant in increasing transaction values and conversions and being fairer for the consumer. Capital management. I would like to reiterate my thanks to participating shareholders for their support of hummgroup's equity raising that completed in September 2020. The issue of $115 million in new shares via an accelerated nonrenounceable entitlement offer has provided the company with greater financial flexibility; and the opportunity to pursue new growth initiatives, including international expansion. I participated in the capital raise to the value of $7.5 million and have increased my stake in the company since then to 100 million shares. The Board is aware of the significant responsibility for the capital invested by new and existing shareholders in hummgroup. We are confident the strategy outlined at our October 2021 Investor Day is the optimal use of capital to provide attractive long-term returns for our shareholders. We also demonstrated continued success in the public securitization market with over $1 billion of asset-backed securities issued during the financial year '21 year. In the first 5 months of financial year '22, we've already issued over $600 million in asset-backed securities, which continues to support our capital efficiency. At 30th of June 2021, hummgroup had substantially deleveraged with 0 net corporate gearing and a strong balance sheet to fund local and international growth. We also announced at our Investor Day held in October 2021 that the Board had confirmed an intention to return to dividend payments from first half '22 with an expected payout ratio of 30% to 40%. Regulatory. During the period, hummgroup was named as one of the founding accredited members of the Australian Finance Industry Association's buy now pay later code of practice. hummgroup called on the industry to come together and establish the code back in 2019 and proudly supports the high industry standards of service for customers that the code endorses along with building best practice across the buy now pay later sector. hummgroup continuously works to improve consumer outcomes. This is demonstrated by low arrears rates and less than 2% of buy now pay later revenue in Australia being earned from late fees substantially less than other industry players. Our focus has been and always will be to act in the best interest of consumers. With Australia at the forefront of the installment payment revolution, regulatory changes continue to be a constant theme. In October 2021, the Reserve Bank of Australia announced that it would allow merchants to surcharge fees for buy now pay later transactions. While these changes will continue to shape the industry both locally and globally, we know that our pedigree in consumer finance will allow the business to thrive in the face of change. Board and management. As you will have observed in the notice of meeting, 3 directors, including myself, are up for election or reelection. In particular, we were pleased to announce the appointment of Mr. Alistair Muir as an independent nonexecutive director of the company in financial year '21. Mr. Muir has a strong background in data and digital innovation, as demonstrated in roles with Insurance Australia Group, Telstra digital media; and through his work with CSIRO's entrepreneurship program. We are already benefiting from his proven experience in guiding digital innovation and development as Chairman of the new Technology Committee. This skill set is critical for expansive transformation and growth, and I thank him for his contribution. In July 2021, Mr. Adrian Fisk was appointed as Chief Financial Officer of hummgroup. Mr. Fisk joined hummgroup from Willow, a data technology business where he was Chief Financial Officer and Head of Partnerships. Prior to this role, Mr. Fisk was a partner and the national leader for KPMG's financial services practice, working with banks, fintechs, wealth, insurance and private equity firms, providing strategic direction, financial performance, risk and cultural transformation advice to clients. I would also like to thank Mr. Jason Murray, the outgoing CFO, for his contributions to hummgroup. Outlook. Financial year '21 has been one of the most pivotal years in hummgroup's 30-year history. We're seeing a structural shift towards fixed-term installments rather than revolving credit, which started in Australia and is now spreading across the world. Notwithstanding that, our Commercial and Leasing group remains as a safe, self-contained business with a predictable and significant cash net -- NPAT. The company hosted an Investor Day in October 2021 where management provided financial analysis of our products as well as a detailed road map of the growth strategy. As we enter into the next phase of hummgroup's evolution, I am confident the right team and strategy are in place to navigate and win in the rapidly changing payments landscape. In conclusion and on behalf of the Board, I would like to thank our shareholders for their continued support. And I would also like to thank all employees across Australia, Canada, Ireland, New Zealand and the United Kingdom for their hard work during financial year '21. I'll now hand over to Rebecca James for her Chief Executive presentation. Thank you.

The vision of hummgroup is to be the favored way to pay for bigger purchases. It's as simple as that. It's a vision that speaks to both our future, our heritage; spans our entire suite of products; and capitalizes on our strengths in funding and securitization. Our commitment to shareholders. Before turning to our FY '21 performance, I'd like to make clear that we are totally committed to growing shareholder value. It is our objective to be able to return cash to shareholders while still growing. And importantly, we will carefully manage shareholder capital committed to our growth plans. These are our commitments to you. We've come a long way in the 3 years since we announced our new strategy focused on simplifying and growing the business. We now have a single platform serving everybody from Generation Z and millennial spenders through to young families and SMEs. hummgroup finances everything, from life's little luxuries through to significant purchases. hummgroup has a proven ability to scale. In the last 3 years, we have profitably grown our BNPL business, hitting over $1 billion in volume in FY '21 for the first time; our Commercial business, which is now on a pathway to $1 billion in volume; our customers to 2.7 million; and our BNPL merchants to over 20,000. We have also proven our ability to deliver technology transformation. We have the swiftest credit decision in market. It takes only 3 minutes to apply for up to $30,000. We've fully digitized the customer experience, with a 4 app -- 4.8 app rating. We have replatformed our BNPL stack for U.K., Canada; and will be shipping this back to Australia shortly. And we've continually rolled out new features to drive engagement and transaction frequency to 19 times a year across our consumer-facing products in Australia. We have also demonstrated continued efficiency gains, making us leaner and more agile as we grow. We remain committed to a sub-40% cost-to-income ratio. We have reduced full-time employees by over 30% since December 2018. And in 2 years, operating expenses excluding marketing and depreciation has reduced from $151 million to $134 million. Finally, we have improved capital efficiency by 210 basis points to 13.9% over the last 3 years and reduced corporate gearing from 36% in June 2018 to 0 in June 2021. Looking to our FY '21 performance. hummgroup reported a cash net profit after-tax of $68.4 million. humm, bundll and our new product hummpro make up our buy now pay later segment; and delivered volume of over $1 billion, up 31.3% on FY '20. This reflects volume performance in humm Australia, particularly in little things; humm Ireland; and the increasing contribution from bundll and hummpro. This translated to cash NPAT of $1.2 million in FY '21, although this included significant investments in new products and markets. Excluding these investments, cash NPAT was $22.8 million. Our Australian Cards volume of $416.9 million was down 30.1%; and reflects the COVID-19 impacts on merchant activity, particularly in travel. Despite the decrease in volume, cash NPAT of $16.8 million increased 121.1% from better credit performance and the reversal of credit provisions, with less customers in hardship. New Zealand Cards volume of $695.4 million was down 7.4%, largely attributable to the impact of COVID-19 on long-term interest-free travel merchant activity, with everyday spend up. Cash NPAT of $28.1 million represented an increase of 28.9% largely as a result of improvement in impairment losses from the write-back of COVID-19 provisions. With borders reopening, we expect our Cards businesses to be a beneficiary of the pent-up demand for travel. We are working closely with our travel partners and in constant dialogue about how we approach the reopening. While it's too early to predict the volume expected over the coming years, the common theme with our travel partners is one of excitement around the future of travel. In all, these consumer-facing products collectively generated $2.1 billion in volumes in FY '21. And we've only just begun to make inroads into an almost $2 trillion addressable market. Finally, our Commercial and Leasing business was a strong performer during the year, delivering volume of $540.3 million, up 55.6% on FY '20. The uplift in volume was driven by the continued momentum in flexicommercial Australia following the successful shift in strategic focus towards small to medium enterprise lending via the broker channel. Cash NPAT of $22.3 million increased 431% predominantly as a result of the partial release of the COVID-19 provision. While we have been busy generating volume, we have also maintained a very sharp focus on our credit performance. Across hummgroup, we have a superior credit decision engine delivering net loss-to-average net receivables of 3.5% in FY '21, down 60 basis points on FY '20. This is the direct result of continued investment in our proprietary decision engine to improve credit performance. The strong FY '21 results and the platform we have built give us the confidence to invest in our strategy, which is designed to support and accelerate our long-term growth. Let me now speak briefly about the trends we have seen in the first quarter of FY '22 before moving on to discuss our strategic priorities and our medium-term growth focus and targets. The first quarter saw a solid volume performance across all our lines of business. hummgroup delivered first quarter FY '22 volume of $763.3 million, up 39.6% on pcp. Our buy now pay later segment delivered volume of $308.8 million in the first quarter of FY '22, up 44.5% on pcp. Our Australia and New Zealand Cards businesses delivered volume of $249.4 million, up 7.6% on pcp despite continued international border closures. Finally, our Commercial and Leasing segment delivered volume of $205.1 million in the first quarter FY '22, up an impressive 102% on pcp. Turning to our strategy. hummgroup has 4 areas of focus that will support our future growth. The significant work over the prior years has positioned us to put our firepower behind these growth initiatives; and expand our customer numbers, merchant numbers and addressable market both locally and abroad. These initiatives will underpin our ability to reach our medium-term targets. We will expand the reach of our installment payment core by attracting new merchants and platforms in our current markets; drive customer engagement and transaction frequency, building our products that are loved and used every day; find new audiences through partnerships for our innovative products; and expand into new markets internationally through a considered and differentiated strategy that will appeal to a broader range of retailers and customers than traditional buy now pay later players. We're now seeing technology, banks and loyalty programs looking to enter the buy now pay later space to capitalize on the structural shift towards fixed-term installments with proven buy now pay later providers. This is because we are closer to the customer, bridging the relationship between shopping, financing, transacting on the lifestyle they want. In FY '21, hummgroup has focused on finding new audiences through partnerships for its innovative products. We are very pleased today to announce a new 10-year partnership with Air New Zealand to offer a range of financial services for Airpoints members in New Zealand. Air New Zealand powered by hummgroup will be coming to customers in 2022, with our first product expected to launch then. This partnership will tap into the large and engaged Airpoints loyalty database. Air New Zealand is seen as one of the world's most innovative airlines, and they've chosen one of the world's most innovative finance companies to partner with. For Air New Zealand, we'll have an outsourced model in place where hummgroup manages the product day to day and earns fees based on key metrics. Marketing and distribution sits with Air New Zealand. We have also previously announced strategic partnerships with banks, Westpac New Zealand; loyalty programs, Velocity Frequent Flyer; and retailers Mitre 10, Home and Hardware (sic) [ Home Hardware ]; and schemes like Mastercard to grow hummgroup's customer base and distribution reach. Turning to international expansion. The United Kingdom and Canada represent strategic opportunities for humm's differentiated offering in bigger ticket, longer-term installment plans. In the second half '21, we launched humm in the U.K., and we'll be able to finance up to GBP 3,000 in the coming days. We will also be live in Canada imminently, with a focus in both geographies on home and home improvement, health care, automotive and luxury retail. The addressable market opportunity of each target vertical will be captured organically and via a number of strategic software partnerships and integrations. These partnerships provide the ability to scale with minimal investment and represent a key pillar of hummgroup's growth strategy. hummgroup now has an interest-free installment product for every purchase occasion that will drive the way our customers live, shop and budget. At the FY '21 results, we outlined for the first time our cross-sell strategy. Over the last few years, we have streamlined our shop front. And a lot of hard work has been undertaken to ensure we can cross-sell our products and have a single customer view. While the cross-sell percentages as at FY '21 are encouraging, we believe there is a significant opportunity across the portfolio both to increase the number of products our customers interact with as well as the overall growth in customers. With a broad and profitable proposition and a track record of executing on our strategy, we are confident in our medium-term targets, which we are defining as a 3- to 4-year time horizon for the business. Over that period, we plan to more than double our FY '21 volume driven by customer numbers, average transaction values and frequency of transactions across the core growth portfolio. This will translate to approximately doubling of gross income and average net receivables and delivering over $100 million in cash NPAT. Finally, with the strong uplift in gross income as well as managing our costs carefully with initial period of expansion, we expect our cost-to-income ratio to be below 40%. Before handing back to the Chairman, I want to briefly reference our investment checklist. We use this to guide our decision-making and to help us carefully manage shareholder capital committed to our growth plans. When we invest for growth, we ask ourselves these questions. Will this investment enhance our already strong unit economics, allow us to continue to self-fund our growth now and into the future? We've demonstrated this through the new verticals the company has entered into, into recent years, including dental, automotive and luxury retail, where there is less competition and stronger profitability. Will it maintain flexibility in our business model? Does it allow for the continued evolution of technology and consumer preferences? Does it allow us to be nimble? We introduced humm//TAPP in June 2021, removing the need for merchants to perform in-store integration and giving humm customers more places to shop. Does it stretch our expertise and our competitive advantage further? Does it differentiate us in the market? We announced our entry into the virtual power plant market with LG Energy Solution to accelerate the adoption of solar and battery technologies and make renewable energy more affordable to Australian homeowners. Does it improve our capital efficiency? We issued over $1 billion of asset-backed securities in FY '21 and over $600 million in FY '22 year-to-date. And will it improve returns to shareholders over the medium and long term? On this, we are exploring the divestment of our New Zealand Commercial business, subject to any proposed sale meeting management's valuation expectations. This highlights our focus on decisions that make a difference and the lens through which we consider our investments to facilitate future returns for our shareholders. This will be in the form of both dividends and growth. As the Chairman flagged, we were pleased to announce at our recent Strategy Day that hummgroup will return to paying dividends in the first half FY '22 with a targeted payout ratio of 30% to 40%. I would like to conclude by acknowledging our whole team across Australia, Canada, Ireland, New Zealand and the United Kingdom. Many of them have worked tirelessly to ensure our customers and merchants continue to be well supported, especially with ongoing lockdowns and the prolonged effects of COVID-19 on the jurisdictions we operate in. As we emerge from the pandemic and grow, we're putting significant firepower into our marketing efforts and product experience, actively shaping how people will buy in the future. hummgroup is a diversified business with no drawn corporate debt and a strong balance sheet. I'm excited about the future as we continue to focus on generating sustainable profit to support the company's local, international and partnership growth strategy. Thank you, and I'll now hand back to the Chairman.

Thank you, Rebecca. Before addressing the items of business and inviting questions, I will outline the meeting procedures. All holders will have the opportunity to comment on and ask questions in relation to today's items of business. I will hold comments and questions until the item of business has been introduced and holders have been invited to ask questions. This year, holders will again be able to ask questions online during the meeting, and we have introduced a new functionality to allow holders to dial in and ask questions by voice over the telephone. Detailed instructions are provided on the virtual meeting online guide available on our website. [Operator Instructions] I also ask that questions be confirmed to the business of the meeting -- confined. I'm sorry. [Operator Instructions] Link's contact details are available in the notice of meeting and within the virtual meeting online guide. [Operator Instructions] And I encourage you to submit your questions online now, and we will address your question when we arrive at the relevant item of business. I'll endeavor to answer all relevant questions from holders during today's meeting. However, I do reserve the right as Chair to rule questions as not pertaining to the AGM, out of order; and to take questions on notice. I propose that the order of taking questions will be as follows: first, from any holders using the teleconference facility by voice; and second, from any holders who have asked a question via the online platform. Following discussion on each item, valid direct and proxy votes received prior to the meeting will be displayed, and I will then ask the meeting to vote on the item. Shareholders will be able to cast their vote via the online platform today by selecting the "get a voting card" button. Please refer to the virtual meeting online guide for assistance or use the help line specified. The voting exclusions for item 2 are set out in the notice of meeting. As set out in the notice of meeting, I intend to vote all undirected proxies that I hold in favor of each resolution to be put to the meeting today. Voting on all items will be conducted by poll, which I now declare open. As the results of the poll will not be available before the meeting closes, they will be released to the ASX and made available on our website later today. There are 5 items of formal business: consideration of the financial report, directors' report and auditor's report of the company for the financial year ended 30th of June 2021; adoption of the 2021 remuneration report; election of Alistair Muir as a director; reelection of myself as a director; and reelection of Carole Campbell as a director. So we'll now move to the first formal item of business, which is the consideration of the financial report, the directors' report and the auditor's report of the company for the financial year ended 30th of June 2021. While there is no resolution for this item, it is an opportunity for shareholders to ask questions on the reports, the management and operations of hummgroup generally as well as the audit. I now invite shareholders and proxy holders who wish to ask a question to do so. Are there any questions from holders on the telephone on item 1?

There are no telephone questions for this item, Chairman.

Thank you, operator. I'll now take questions from holders watching online who have submitted their questions by text. Are there any questions from holders online for item 1?

There are Chairman. Your first question is around humm share price. "It's continued to go backwards, although the offering appears quite appealing. Does humm have a problem with marketing its product?"

No, the product -- marketing is really one of our Chief Executive's strengths. There probably is a challenge communicating the subtlety of how we market our product because it's not obvious. So all the growth scenarios and promotional scenarios that Rebecca shared with you a few moments ago -- I think you'll find a very relevant answer to your question here.

Next question, Chairman. Is humm being operated in a way that it is looking for investors to acquire it at a good price soon?

humm is operated in a way that goes to our mission and vision, again as [ Beck ] shared with you recently. Our mission is to provide easy installment plans that enable you to buy now, pay later and budget responsibly for the things customers need and love. The vision is to be the favored way to pay for bigger purchases. And at our recent Investor Day, we set out our medium-term targets' 3- to 4-year time frame -- and believe there is a strong pathway forward to achieve these goals, which includes more than doubling volume, approximately doubling gross income and achieving over $100 million in cash NPAT.

Thank you, Chairman. Your next question is on competitors. "I see your competitors moving at a fast pace, keeping up with all the new fintech companies arising within the industry. Is humm positioning themselves to take advantage of the new markets, entering the lending landscape and further opportunities for the consumer and SMEs?"

We have a variety of products which focused on various segments within the market, so yes, we are positioning ourselves to take advantage of new markets both in terms of industry verticals, geographical locations, demographic breakdown, segmentation. For example, our -- many of our customers do not use our competitive -- our competitors' products. And we've actually made reference to particularly our big things product as buy now pay later for grown-ups. So there's many further opportunities that we intend to evolve, but we keep those to ourselves for the time being because one thing at a time. And the prioritization that [ Beck] has shared with you 10 minutes ago is the key.

Thank you. One for you, [ Beck ], potentially. In terms of the business name and changing it to humm from flexigroup, shareholder would like to know: "It doesn't really convey anything about a BNPL platform." Would you like to respond?

Thank you for the feedback. In the last 2.5 years, humm is a relatively new brand. We've been able to garner very strong consumer recognition and awareness as a brand name. Based on independent research, humm has increased its brand awareness by almost 20% in the last year and sits at around 40% brand awareness, which again is exceptionally high for such a young product. In addition, we have the best customer satisfaction across all of the buy now pay later players in the market, which really goes to the heart of our digital experience. Our rebranding at a corporate level really just reflects this strong traction that we've been able to achieve in a very short period of time with the brand name humm amongst consumers, and now our corporate identity reflects the products that we are offering to consumers on a day-to-day basis.

Thank you. Your next question, Chairman, is compared to virtually all other listed BNPL companies, the one key differentiator for hummgroup is that it is profitable despite its share price is languishing relative to many of its peers. Why is the Board and CEO not actively reintroducing shareholder dividends? This would enable humm to leverage its profitability for the benefit of shareholders both in terms of dividend income and the rerating of its shares on the ASX.

Thank you for that question. The answer is we are reinstating based on the background that, in March last year, none of us knew what the outcome of humm was going to be -- I'm sorry, the entire economy globally. So we felt that it was wise to be conservative, but the Board is committed to returning to dividends, commencing first half '22.

Thank you. Your next question is on overseas expansion. "So humm has lagged its competitors in expansion to overseas markets. Why has the Board [ and Executive being ] slow in its ability to expand overseas? Also, shareholders' value has eroded." And sorry. That's a dividend question, but would the Board consider a buyback?

Do you want to address the issue of slow to be overseas? Or will -- humm will be declaring a dividend. We've already reiterated that, so is the question about slow expansion overseas or a buyback?

It's a slow expansion overseas, Chairman. And also would the Board consider a buyback? It's a 2-part question.

Okay, well, I'll answer the second one, first, which is, yes, it's a possibility. And it's on public record that we are looking at offers for our New Zealand Commercial business. With respect to the overseas expansion, I might hand that over to Rebecca.

[ Thank you ], Drew. Our goal for international expansion is -- really been one of quite careful consideration. We really wanted to identify the markets where we felt we would have the warmest reception and also markets where we have a strong foothold in either domestic merchant relationships that also operate in the United Kingdom as well as Canada and also markets where we can use our footprint in Ireland as a launch pad to growth into the United Kingdom. And that's very much why we've chosen those 2 markets. I'd also convey that buy now pay later and its adoption is still very much in its infancy in both of those 2 markets. We are not too late. The penetration of buy now pay later into the retail segments across the united and -- United Kingdom and Canada is still as little as 3%, with rapid, rapid growth; and so now the time is prime for us to enter those markets. And we thank shareholders for our support on our international strategy.

Thank you. Next question comes from [ Greg Pi ]. "First, I'd like to offer the highest praise to management for transforming humm and lifting profitability. It has become a strong, multifaceted and multinational financial services business with huge scope for growth. However, the share price has not kept pace with this evolution. humm is trading on a P/E of 6x and a price-to-NAV of 0.5x. I understand that management spends time communicating with brokers and investors but is not being rewarded for these efforts. Therefore, does management have any view -- new plans to improve communication and lift the share price to properly reflect value?"

Okay, well, thank you for that feedback. We did hold a Strategy Day in October, where we outlined the strategy for growth and provided more transparency on our products and the future profitability and growth profiles of these products. I'm confident that the strategy developed by Rebecca and the management team will leverage the growth opportunities inherent in the business. We're focused on delivering shareholder value and look forward to keeping you updated on the company's progress in the future.

Thank you. This one is for you, Rebecca. CHOICE magazine awarded humm its [ stinkiest product ] award this year. Could both or the Chair and CEO but, first, you, [ Beck ], comment on how damaging this has been and whether we have amended the product given the reputational risk that's been tied with a brush of just being a glorified payday lender?

We're deeply concerned about the unsubstantiated claims that have -- made by CHOICE, which really were leveled at the buy now pay later industry as a whole as opposed to humm specifically. I'd like to reassure our shareholders that we have very stringent and rigorous affordability checks when we are considering lending to consumers. These checks include a detailed product suitability check which we actually do through third-party credit provider [ illion ]. And we also conduct mandatory income verification on all of our app-driven purchases in store and online for any purchase that's over $1,000. As a comparison: Canstar recently assessed humm across 84 different criteria, including its lending practices; and was 1 of only 2 providers that was awarded 5 stars. More than 28,000 customers rate humm 4.8 out of 5 in the app store. And I can assure you that, with less than 1.5% of our customers applying for financial hardship support and our exceptionally low loss in arrears, we know that we are getting it right. In terms of reputational risks, I can assure you that many of our retail partners and merchants remain some of our staunchest supporters. And it has not affected any of our retail partnership relationships, nor has it impacted the growth that we've experienced as a business, since the CHOICE Awards.

Thank you. Another one for you, [ Beck ]. "Can you please inform shareholders when humm Canada will begin signing up merchants and start transacting?"

The launch in Canada. So we have started to sign up merchants, and the launch is imminent and will take place this side of Christmas.

Thank you. Another one for you, Rebecca. What has the float of both Latitude and [ Liberty ] meant for the competitive environment for humm over the past 18 months? Latitude is particularly reliant on Harvey Norman. Does hummgroup do more business with Harvey Norman than Latitude?

Thank you for the question. Absolutely. The retail point-of-sale finance market is competitive, but as you can see by our growth rates, particularly if we look at the buy now pay later segment in the first quarter of this year, even throughout lockdown, we achieved a growth rate of over 40% on pcp, so we're certainly holding our own when it comes to being able to compete in this environment. With regards to a relationship with Harvey Norman, we actually had a relationship with Harvey Norman. That was not to do with our buy now pay later business. It was to do with our consumer leasing product, and we grandfathered that product over 2 years ago now.

Thank you. Another one for you, Rebecca: Will the takeover of Afterpay by Square create market opportunities for us given that a lot of Australian Afterpay shareholders are expected to sell out rather than switch into Square CDIs?

Look. I don't like to kind of predict with a crystal ball whether shareholders will switch preference, but what I can say, from an executional point of view within our business, one of the benefits, I believe, in our partnership strategy is that we will continue to see banks, loyalty program providers and tech [ plays ] and partnerships continue in the sector. And as you can see, even with our partnership with Air New Zealand today, we are very well placed with our reputation and our technology and customer experience to partner exceptionally well with these blue chip organizations.

Thank you. Next question, for you, Rebecca. Does hummgroup have a strategy for blockchain?

We continue to look right across the spectrum in terms of technology advancements and their impact on us and the type of services that we wish to offer consumers within our ecosystem, so that has led to a large number of technology advancements that we've made and many of which have been world firsts: the first open-loop use-anywhere buy now pay later product with bundll; humm//TAPP; and even our buy now pay later product for SMEs, hummpro. And so we will continue to look at a range of different features that we want to offer our consumers when it comes to financial services products. Blockchain isn't on the immediate horizon in terms of consumer demand, but we will continue to look at features that make sense for our customers.

Thank you. Another one for you, Rebecca. It's around JobKeeper. "Please explain why we went so heavily into JobKeeper, claiming $9 million for 395 Australian staff across 2 financial years when companies of our size required a 30% drop in revenue to qualify. Why didn't we repay any of this money like so many of the 474 listed companies which accessed JobKeeper have done? Does the Chair agree that the JobKeeper has become a notoriously wasteful scheme with $38 billion of the $88 billion going to employees, which didn't satisfy the revenue drop requirements of the scheme? Is it prudent for us to remain in the top 1% of JobKeeper claimants in Australia given the reputational damage?"

I might tackle that one, Drew, and hand it over to you if you've got anything further to add. Firstly, our Cards business was hit exceptionally hard by COVID-19. We have significant exposure to the travel sector. And so I can assure that we absolutely qualified with the -- over a 30% drop in revenue, particularly within that sector. We claimed $2.8 million in FY '20 and $6.2 million in FY '21. And the benefits of that were as they were intended by the government, which was to keep the majority of our people employed through that period of time. Through FY '20 as well, I can reassure shareholders that most -- all of the executive team took significant drops in [ salary ]; as well as our Board, who reduced their director's fees during this period of time. We are very pleased with the government support. And it certainly did what it intended to do to help us maintain our operations and most importantly our people during that time.

Thank you. Next question is to the Chairman. John Wylie's Tanarra Capital was recently instrumental in Kerry Stokes seizing control of Boral despite Board opposition, when he sold his circa 4% stake in the Seven Group takeover. "Could the Chairman comment on whether Mr. Wylie is agitating for a change-of-control transaction at humm? And is Andrew, as the Founder, determined to keep the company independent even if a takeover offer is made? Also, what is the average price Tanarra and the Chair paid for their stakes?"

As a Board member, I have fiduciary duty to shareholders. And as a major shareholder, I want the best possible outcome for all shareholders. So clearly it makes sense, and I have a legal obligation, to consider any proposition that may be attractive to shareholders, including myself, including Tanarra. So that's just a permanent state of play. As to the average price for Tanarra [ came in ], I can't recall. And as for me, our Board [ has preferred ], what, since 2006 -- I think my -- I was left with about 63 million shares. I now have 100 million, which would have been bought on 4 or 5, maybe even 6, different times. And frankly, I wouldn't have a clue what the average price was right at this minute.

If I could add. We have open discussions as a Board all the time about optimizing shareholder value. And that's our responsibility as public company directors and we take that very seriously. And this -- the entire Board, including ourselves, are committed to getting the best possible shareholder value for shareholders.

Thank you. Next question is for the Chairman. "The Chairman remains the largest shareholder of the company but, like all shareholders, won't be enjoying the drop in the share price. Could the Chair comment on whether he has pledged his shares to any financiers and whether he could potentially face margin calls if the stock continues to fall?"

No, I haven't, and no, I won't. Having said that, I'll take the opportunity for the question to use those numbers to emphasize how much I believe in the future. And astute investors would have observed that I bought several million shares literally in the last few months because I believe that the strategy that [ Beck ] and her team have articulated is very realistic, and I believe in the team's ability to execute.

Thank you. Next question, for the Chairman. Did any of the 5 main proxy advisers in the Australian market recommend a vote against any of today's resolutions? Which of the proxy advisers are covering us? And has there been a material proxy protest vote against any of today's resolutions? "Will you disclose proxy votes before the debate on today's resolutions so shareholders can ask questions if there have been any protest votes?"

Yes. As I foreshowed when I outlined the procedures, the answer to the last question is no. They will be available after the meeting. As for the first part of the question: not to my knowledge. I'll be happy just to check with our company Secretary, but I don't believe so.

Thank you. Next question is for the Chairman. "Given the interesting discussions across a range of topics today, could the Chair undertake to make an archived copy of the webcast, plus a full transcript of proceedings, available on the company's website? Nine Entertainment Chairman Peter Costello, who appreciates the benefit of a parliamentary Hansard transcript where MPs don't have to scroll through old videos to find out what was said, made this change last week and had a full transcript of Nine AGM online before the end of the day. Given that Drew went to follow Peter Costello into Higgins, will be follow -- will you follow this lead in terms of AGM transcripts?"

Well, as you are obviously very well informed, you know that I actually didn't really want to follow Peter. Nor did I, in fact, do so. However, in relation to this particular proposition, I can't see why not, but I will run it past my Board before making a commitment.

Thank you. Your next question, Chairman, is around reelections broadly. Treasury Wine Estates has voluntarily moved to annual elections for directors in line with best practice that occurs in both the U.S. and the U.K. Dual-listed companies like News Corp, BHP and Rio Tinto all do this due to the laws in the U.S. and the U.K. "Given Director John Wylie is a strong advocate for the -- best practice corporate governance, is he prepared to counsel the Board and our nonindependent Chair to turn humm into a small-cap pioneer on this question? Mr. Wylie used to advise BHP, and BHP has promised to voluntarily keep annual elections even after dissolving its DLC and returning primarily to the ASX next year."

Well, the -- this is directed at myself. I may defer to John in a minute, but you've been a busy man, [ Stephen ]. I can see now that it's you. How are you? We have not had this on the table for discussion, but I can speak for myself and the rest of the Board to say we are all open-minded, capable people who are very focused on corporate governance. And we'll make changes as needs be. John, would you like to make a comment?

Yes. Look. There are 3 directors, out of the 6 directors on the Board, who are up for reelection today, so that's a pretty good opportunity for exercise of shareholder democracy in this company. So this company is committed to good corporate governance. Just in terms of the last point of your question, [ Stephen ], I haven't advised BHP on their governance at any stage. And those -- that approach of putting all directors up for annual election is one that's come from the U.K. It's sort of coming into Australia but hasn't really arrived yet.

Thank you. Next question, Chairman. When disclosing the outcome of all resolutions today, will the Chair support the idea of publicly disclosing how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative recently adopted by [ Metcash ] and [ Southern Cross Media ] after their AGMs. "What does the Chair think of this idea?"

Clearly there's no problem. However, there's 495 million shares on issue. We know the percentage to 2 decimal points, so it shouldn't be too hard to figure out.

Thank you. A question for you, Chairman. "Tanarra only has 4% of humm yet was given a Board feet through John Wylie. How is this appropriate when he rallied against Seven Group receiving 2 board seats at Boral when it owned more than 20% of the company? Would every 4% shareholder in humm be given a Board seat, or did John get a special deal? That said, he's a highly capable director, so don't sack him just now for owning 4%. At least he has real skin in the game."

Well, I couldn't sack him for only 4% because he actually has in excess of [ 5%-odd, yes ]. And he -- well, he took a placement for 5% and then took up his rights last year. And I think it's fairly clear and obvious to anybody who understands the investment marking -- investment banking market in Australia that to have John in our Board is an asset, not a liability, so no, he did not get a special deal. I was enthusiastic to invite him on for his free advice that he normally charges an outrageous amount for.

We're happy to invest because we think humm is a special company with a very good future. And we think Rebecca James is a very good CEO. She's doing a fantastic job in challenging circumstances in this sector. And if -- we have got over 5%. We took up our full rights in the equity issue last year. I bought shares subsequently. And so we're expressing confidence in the future of this company.

Thank you. No further questions on item 1, Chair.

Thank you. Okay, item 2 is a resolution for the adoption of hummgroup's remuneration report for the financial year ended 30th of June 2021. The remuneration report is included in hummgroup's 2021 annual report, and I will take it as read. The Board and management remain committed to hummgroup delivering sustainable profit while implementing initiatives to expand our customer numbers, merchant numbers and addressable market both locally and abroad. We're confident that the remuneration framework will continue to provide the appropriate amount and mix to reward executives and drive positive outcomes for shareholders. I now invite shareholders and proxy holders who wish to ask a question to do so. Are there any questions from holders on the telephone on item 2?

There are no telephone questions for this item, Chairman.

Thank you, operator. I'll now take questions from holders watching online who have submitted their questions by text. Are there any questions from holders online for item 2?

No questions, Chairman.

Thank you. So displayed on the screen are details of the direct and proxy votes received, prior to the meeting, for this resolution. Please cast your vote now. And I will now move to item 3. [Voting]

Item 3 is for the election of Alistair Muir, who in accordance with the company's constitution retires as a director and offers himself for election. Alistair has been a member of the Board since March 2021 and is the Chair of the Technology Committee. Alistair is an experienced digital executive and entrepreneur with a focus on growing and scaling digital businesses. He has extensive experience in financial services and fintech and has worked with a broad range of ASX 50 and Fortune 500 companies to successfully launch new digital products and ventures. This includes launching what is now Apple Music in Australia through to supporting the creation of more than 30 new companies from world-class science and technology from the CSIRO and other publicly funded research institutes. The Board considers that Alistair's technology skills, along with proven experience in guiding digital innovation and development for transformation and growth, supports his election. The Board, with the exception of Alistair in relation to his own election, recommends the election of Alistair Muir as a director. I now invite shareholders and proxy holders who wish to ask a question on this item to do so. Are there any questions from holders on the telephone on item 3?

There are no telephone questions for this item, Chairman.

Thank you. I'll now take questions from holders watching online who have submitted their questions by text. Are there any questions from holders online for item 3?

No questions, Chairman.

Thank you. So displayed on the screen are details of the direct and proxy votes received, prior to the meeting, for this resolution. Please cast your vote now. And I will now move to item 4. [Voting]

Item 4 is for my reelection as a director of hummgroup. I became a founding director of the original FlexiRent business in 1991. I was the Chief Executive until 2003 and I have been a nonexecutive director since November 2006. I'm currently the Chairman of the Board, Chair of the Nomination Committee and a member of the Technology Committee. I'm an experienced commercial and tax lawyer and was a founding partner in a legal firm operating in both Sydney and Melbourne. I left the law to complete an MBA at IMD in Switzerland. Following time abroad, I returned to Australia; and became involved in property, investment and tax consulting. During this period, I gained control of a new bankrupt group, from which a small finance company emerged. The Board, with the exception of myself in relation to my own reelection, recommends my reelection as a director. I now invite shareholders and proxy holders who wish to ask a question to do so. Are there any questions from holders on the telephone on item 4?

There no telephone questions for this item, Chairman.

Thank you, operator. I'll now take questions from holders watching online who have submitted their questions by text. Are there any questions from holders online for item 4?

Yes, Chairman. First question is: "Andrew, well done on being the Founder of the company, but isn't it time that hummgroup had an independent Chair? Are you intending to serve a full 3-year term? And is it standard practice for the Board to resolve on the chairmanship at the first Board meeting after each AGM? Do you have Board support to remain Nonindependent Chair for the foreseeable future? Could the Lead Independent Director please also comment on this issue?

Yes. As things stand, I will continue. We have -- as [ Beck ] articulated, we are entering a brave, new world with respect to which we feel we're very well positioned. The Lead Independent Director would be Christine.

[indiscernible] Christine?

Thank you for the question. Andrew continues to have the support of the Board. He has served the Board effectively and has a lot of experience being the Founder of the business and also has a large equity stake, so to that end, he is very aligned to the success of the company.

Thank you. No further questions, Chairman.

Thank you. So displayed on the screen are details of the direct and proxy votes received, prior to the meeting, for this resolution. Please cast your vote now. And I will move to item 5. [Voting]

Item 5 is for the reelection of Carole Campbell, who in accordance with the company's constitution retires as a director and offers herself for reelection. Carole has been a member of the Board since May 2018, is the Chair of the Audit Committee and is a member of the People and Remuneration Committee. Carole has over 30 years financial executive experience in a diverse range of industries, including professional services, financial services, media, mining and industrial services. Carole commenced her career with KPMG; and has held executive roles with Macquarie Group, Westpac Institutional Bank, Seven West Media, Bis Industries and Merivale. The Board considers that Carole's extensive experience in accounting, treasury, finance and risk management supports her reelection. The Board, with the exception of Carole in relation to her own reelection, recommends the reelection of Carole Campbell as a director. I now invite shareholders and proxy holders who wish to ask a question to do so. Are there any questions from holders on the telephone on item 5?

There are no telephone questions for this item, Chairman.

Thank you, operator. I'll now take questions from holders watching online who have submitted their questions by text. Are there any questions from holders online for item 5?

Yes, Chairman. This is a question for Carole from [ Stephen Mayne ]. "Looking forward to watching the webcast later and reading the transcript, if you produce one. Is Carole prepared to vote for the AGM transcript, annual elections of voting results by shareholders as well as shares like a scheme? Could Carole please address the meeting on these matters?"

Thanks, [ Stephen ], for your question. I'm going to repeat the comments that the Chair made earlier. In principle, I have no objection to it, but I would like the opportunity to consult with my colleagues first before deciding on that.

Thank you. No further questions, Chairman.

Okay, thank you, Suk Hee. So displayed on the screen are details of the direct and proxy votes received, prior to the meeting, for this resolution. Please cast your vote now. [Voting]

That concludes the discussion on all items for today's meeting.

Okay, so before I close the meeting, I'll check that we haven't received any further questions and that there are no questions from holders that we may have inadvertently missed in relation to today's items of business. Operator, are there any remaining questions from holders on the telephone?

There are no telephone questions, Chairman.

Thank you, operator. I will now check that there are no further questions that have been submitted online. Moderator, are there any further questions from holders online?

There are, Chairman. This one is for Rebecca. What are some of the immediate challenges that humm is facing at the moment? And there's a number of points around marketing which have already been addressed, but the question is around the immediate challenges that humm is facing.

I believe that we are leaning into these challenges. Particularly, I think Australia, when it comes to buy now pay later, is one of the most competitive retail point-of-sale finance markets around the globe. And I feel that we're taking on those challenges exceptionally well, when you think about the customer experience, the 4.8 app rating, the swiftness in our ability to make credit decisions in store, the warm regard in which our merchants hold for us. humm is a relatively new brand. It's only been in market for 2.5 years and we have steadily increased our brand awareness over that time frame. It now sits at around 40%, which is a fantastic result for such a strong -- for such a young product and company.

Thank you. And one last question from the moderator: Chairman, why is not an independent director chairing the resolution for the Chairman's reelection?

Several of us had deep and meaningful discussions around this point and agreed that, given the virtual nature of the meeting, it was simply an additional complication that would have no bearing on the outcome. So in the interest of expedience is the answer.

Thank you, Chairman, no further questions.

Okay, as there are no further questions, I now declare the meeting closed. On behalf of the Board, I would like to thank our shareholders for their ongoing support. And thank you very much for your attendance today.