Harmoney Corp Limited

Hello and welcome to Harmony's first half 25 results presentation. I'm David Stevens, the CEO and Managing Director of Harmony. With me today is Simon Ward, our CFO. Harmony has produced a very strong profit result this half, which I'm really looking forward to sharing with you today. This result has been underpinned by the work we have done developing and launching Stellair 2.0 over the past 24 months. This has set us up to capitalise on the huge market opportunity we have in front of us particularly as interest rates and market conditions begin to improve. One aspect that I'm most looking forward to for the first time is providing current year profit guidance as well as our profit target for next financial year. Now turning to slide two. Today I'll begin with our first half 25 key highlights and our financial year 25 profit guidance and FY26 target. Then I'll remind you of Harmony's key differentiators. I'll then hand over to Simon who will take you through our financial results. Finally, I'll discuss our outlook and highlight the embedded value in our business before responding to your questions. You can submit a question on the webcast at any time during the presentation by typing it into the ask a question box and then hitting submit. We'll then endeavour to respond to your questions during the Q&A at the end. Now turning to slide three and then on to slide four. To highlight our key achievements for the first half of 25, This half we achieved a $2 million statutory net profit after tax, up from a $600,000 loss in the same period last year. This was primarily driven by our $2.3 million cash net profit after tax, which is up over 350% from the same period last year, driven by improvements across all our key metrics and our continued loan book growth. As a result, we delivered an annualized 13% cash return on equity for the half. Cash return on equity is our cash end part for the half, over our average total equity in the half, annualised. This result places us well on track for achieving our target 20% cash return on equity run rate in second half 25. Our loan book continued to grow, up 4% on PCP, with Stellair 2.0 propelling 43% growth in Australian new customer lending. Our net interest margin on new lending during the half continued at 10%, raising the average NIM for the entire loan book back to 9%, within our targeted nine to 10% range. Our loan book credit performance continued to strengthen with credit losses down to 3.7% for the half from 4.2% in the same half last year. Our high levels of automation drove further efficiency gains with our cost to income ratio continuing to fall, now down to 18%. With all these metrics heading in a positive direction, Harmony is well capitalized for continued profitable loan book growth with total warehouse capacity over 900 million $21 million in unrestricted cash plus $7.5 million in undrawn corporate debt. Now turning to slide five. I'm really pleased to announce that for the first time Harmony is now in a position to provide the market with current year cash impact guidance as well as our cash impact target for next financial year. Our confidence to begin providing this guidance is driven by reaching the significant milestone of successfully rolling out our Stellair 2.0 platform in Australia together with the performance and strength of our $783 million loan book. In financial year 25, we expect to deliver a cash end part of $5 million up from $700,000 last year. We also remain well on track to achieve our previously stated target of reaching a 20% cash return on equity run rate in the second half of this financial year, having already achieved a 13% cash return on equity this half. To achieve this guidance, we expect to maintain our net interest margin within our targeted 9% to 10% range. In our next financial year, financial year 26, we are targeting a cash NPAT of over $10 million and a cash return on equity in excess of 25%. This will be underpinned by Stellair 2.0 delivering more prime customers in both markets and compounding loan book growth as increased new customers become satisfied existing customers returning for subsequent borrowing needs. We also continue to expect to maintain our net interest margin within our targeted nine to 10% range through financial year 26. Now turning to slide six and onto slide seven. What sets Harmony apart from others? We're Australia and New Zealand's largest 100% online consumer direct lender. We have a total market opportunity of 150 billion with our current market share less than 1%. So we have a huge total addressable market in front of us. Our algorithms partner with Google to attract prime, high intent customers at low cost and then our direct relationship with those customers and great customer experience sees them returning again and again for their next borrowing needs at near zero acquisition costs. We use deep first party data and AI models to deliver a prime loan book at a greater than 5% risk adjusted income. That being our income after both funding costs and credit losses. We are funded by three of the big four Australian banks, plus public securitizations. Our stellar automation drives a low cost-to-income ratio of 18%, and our cash return on equity this half is 13%, meaning we're well on track to achieving our targeted 20% cash return on equity run rate during the second half of this financial year. Just a quick reminder of our products on the right-hand side of the page. Our loans are up to $70,000, with an average new loan size of $18,000, which is dispersed to customers within minutes. We offer personalized rates based on borrower's risk profile. We don't charge any fees other than a one-off establishment fee, and all our loans are fully compliant with applicable consumer legislation. Our loans are typically used for renovations, debt consolidation, and helping people with life events such as travel, education, and weddings. Now turning to slide eight. To profitably build scale, it's clear that you need automation. For that, you need advanced automation and AI capability. And to do that successfully, you need more than just tech. You need massive amounts of quality first-party data. First-party data means that financial information is direct from the customer, not hand-picked or pre-filtered by a broker. We consistently attract over 10,000 new customer accounts each month. All of this data is used to continually train our AI models. This is a huge number of new customers for any business. This high volume of consumer financial data, combined with 10 years of historic data, effectively supercharges training of our AI learning so we can optimize for sophisticated, highly efficient marketing with platforms such as Google, giving us the right customers at low cost, and risk-adjusted income in excess of 5% gained through more accurate risk assessment of customers. This combination of data, AI, and automation built into our technology platform that has been a core feature of Harmony since our inception over 10 years ago. Now turning to slide nine. The power of Stellair's machine learning goes far beyond assessing customers at their point of the loan application. It plays a significant role throughout the entire lifetime of our relationship with the customer. Harmony is highly selective when it comes to audience targeting. We need to ensure our marketing spend is efficient and effective. This is where sophisticated customer acquisition models play a key role. and again, where huge amounts of first-party consumer data is key. When these models are used with powerful digital marketing platforms like Google, Microsoft Ads, and Facebook, the result is highly targeted and cost-effective customer acquisition. What this means in practice is that we can acquire the right customers for the right price at scale, and critically, we can forecast this with a high level of reliability. Proof of our ability to target the right customer with the right product is reflected in our Google reviews and Shopper approved scores with over 58,000 reviews and an average score of 4.8 out of 5. Moving to the second column. Naturally, we work hard to ensure we deliver a great customer experience so we can create annuity revenue as satisfied customers return with minimal customer acquisition cost. This experience is underpinned by our automated, simple and streamlined 100% online process. And in the third column, our ability to scale remains an important factor in the Harmony model and our continued investment in technology remains a key enabler. Already in this year, we've achieved a cost to income ratio of 18%, which is exceptional. The diagram at the bottom of the page shows how all these factors combine to support the lifetime value of a customer. Our customer acquisition model helps us to attract the right customers. Our application and loan experience is highly tuned to customer satisfaction, so customers return to Harmony for their future needs. Based on our experience, this cycle is expected to lead to 140% in additional originations to the same customer that minimal customer acquisition cost. For example, on average, a customer taking out an initial $20,000 loan would return to Harmony for an additional $28,000. So cumulative total borrowings of $48,000, and that's just our experience so far. Now turning to slide 10. At Harmony, we have an experienced and shareholder-aligned leadership team. We have deep FinTech experience and have a large personal stake in the business with board and management owning 30% of the business and in addition a significant 10% long-term incentive share plan. The leadership team has long-term commitment to the business with an average tenure at Harmony of over seven years. We've included in our appendix Harmony's shareholder composition showing the 30% board and management ownership and further detail on substantial shareholders and the remaining shareholder make-up. Now turning to slide 11, I'll hand over to our CFO Simon Ward who'll take you through our financial results in more detail.

Thanks David and hello everybody. Please turn to slide 12 summarising our key financial metrics for the half. I'll begin by going through each of these metrics briefly now before going into more detail on the following slides. As David has mentioned, we've had a very strong half, with our cash impact up by 350% on the first half last year to $2.3 million. This was a consequence of improvements across pretty much every key metric, starting with our loan book, which continued its record of growing every half since Harmony listed in 2020, now at $783 million. While the loan book is up 4% on the same half last year, revenue grew 7% to $64 million, driven by both the loan bulk growth and by a higher average lending rate across the loan portfolio. A net interest income percentage, also known as net interest margin or NIM, contracted 20 basis points from the first half last year to 9%. But with new lending NIM continuing at over 10% through the first half of this year, we see our portfolio NIM continuing to head higher through the rest of the year. Risk-adjusted income, which is net interest income less incurred credit losses, improved 30 basis points to 5.3%, with lower credit losses more than offsetting the 20 basis point reduction in NIN just mentioned. Acquisition costs as a percentage of loan originations improved 10 basis points to 3.2%, as origination growth resumed, with Stelia II having a positive impact in Australia. Our cost-to-income ratio also continued to improve, down 300 basis points to an exceptional 18%. Our cost-to-income ratio includes all of our cash operating expenses. It's detailed in our profit and loss statement in the appendix. To align this ratio with cash MPAT and peer group ratios, non-cash share-based payments and depreciation and amortisation are now excluded. Had they been included, This ratio would still have been an exceptional improvement, dropping from 24% first half last year to 20% this half. In both cases, the improvement is driven by Harmony's high levels of automation, enabling us to scale our loan book without having to scale operating costs, a leverage advantage that will continue to build as our book continues to grow. This half we're reporting statutory net profit after tax of $2 million, up from a statutory loss in first half last year of $600,000. That improvement was primarily driven by the 350% increase in our cash impact to $2.2 million, up from a $500,000 profit first half last year, which is a combination of our growing book, growing revenue, improved risk adjusted margin, and improved cost to income ratio. On the next few slides, I'll now discuss each of these key performance metrics in more detail.

So now turning to slide 13, looking at our loan book and revenue.

Following the rollout of Stellaire 2.0 in Australia last year, we've begun to experience a re-acceleration of our loan book growth, with the total loan book up 4% on first half last year, and Australia up 14%. The New Zealand loan book contracted 6% in local currency when compared to first half last year due to economic and market regulatory headwinds weighing in the second half of the financial year 24 and early this financial year. However, in the second quarter of this year, New Zealand originations increased by 14% on the prior quarter, following a New Zealand platform update that we released in October 24 prompted by the government's repeal of overly prescriptive affordability regulations. With New Zealand inflation already comfortably backed within the Reserve Bank's target range, and the cash rate easing cycle well underway, we expect this to feed through to stronger economic conditions and demand in the New Zealand market. In addition, Australia 2.0 will be rolled out in New Zealand through the second half of this financial year, and we expect it will have a positive impact there as it has in Australia. Moving on to revenue, once again revenue growth outstripped loan book growth, with revenue growing 7% to 64 million on a higher loan book average interest rate. As loans originated during lows in the interest rate cycle, they've been replaced with growth at higher lending rates, increasing the average lending rate to 16.8%.

Now turning to slide 14, looking at our lending margins.

One of Harmony's key differentiators is the strength of our lending margins, underpinned by our proprietary AI-driven credit assessment models, which drive attractive pricing to prime borrowers alongside low credit losses, with those low credit losses then unlocking competitive funding rates. As you can see in the chart on the top right, all three of the metrics driving our margins have trended positively over this half. with our loan book average lending rate increasing 40 basis points to 16.8%, our average funding rate falling 10 basis points to 8.1%, and our credit losses reducing 30 basis points to 3.7%. As shown in the chart on the bottom right, this has increased our loan portfolio NIM to 9%. Importantly, our NIM includes all funding costs, including the costs of our corporate debt. On top of our improving NIM, reduced credit losses have increased our risk-adjusted margin, which is our net interest margin after credit losses, up to 5.3%. Now, I just want to pause for a moment here to emphasise the distinction between net interest margin, which is the margin earned after funding costs are deducted, and risk-adjusted margin, which is that net interest margin that after loan defaults are also deducted. When I look around the industry, many focus on only their NIM, not taking into account credit losses, which clearly misses a key part of the story. Our focus is on risk-adjusted margin, taking into account funding costs and credit losses. And with a risk-adjusted margin of 5.3%, we're a standout performer in the prime lending market.

Next, turning to slide 15, focusing on credit performance.

Our consumer direct model provides us with rich, deep consumer data, unfiltered by brokers and other intermediaries, which we use to train our AI credit models. This has enabled us to build a prime loan book of resilient borrowers, with 72% employed in either professional, office, or trade roles, 87% aged over 30, and nearly 40% of whom own their own home. Further demographic detail on the loan book is provided in the appendix to this presentation. As shown in the chart on the top right, credit losses in the half have continued to reduce, now down to 3.7%. This improvement is as we're now seeing minimal influence from our early Australian scorecard, which I talked about in our last few presentations, replaced over two years ago in our family and our rearview mirror. The New Zealand loan book has proven very resilient. with losses not showing any adverse impact from the tighter economic conditions over the past 12 months, remaining stable at near historic lows. Again, with New Zealand inflation now back within the Reserve Bank target range and the official cash rate easing cycle well underway, we expect this to feed through to stronger economic conditions and to reduce pressure on household incomes. Finally, our 90-plus day arrears, which are a window into near-term future losses, remain low and stable at 64 basis points. Now turning to slide 16, looking at our operating expenses. A key feature of Harmony's business model has always been our Stelia platform and the high levels of automation that it provides, enabling us to scale our loan book without similarly scaling operating costs. This half, compared to the same half last year, Our loan book has grown 4%, our revenues by 7%, while our operating costs have reduced by 9%. This has resulted in our cost-to-income ratio reducing from an already low 21% to an even lower 18%. Low operating costs, combined with a growing loan book and a widening risk-adjusted margin, have delivered our sixth consecutive half of cash-impact profitability. up 350% on the same half last year to $2.2 million, which equates to a 13% cash return on equity and puts us well on track to deliver our targeted 20% cash return on equity run rate during the second half of this financial year.

Next, turning to slide 17, which looks in more detail at our capital position. The company has a well-diversified funding programme.

with warehouses from three of the big four Australian banks, as well as being an established capital markets issuer of asset-backed securities. As is typical with warehouse and asset-backed securitisation funding arrangements, Harmony's own money is also invested in its loan book. The strong credit quality of Harmony's loan book means that we can be extremely capital efficient, with borrowings supporting 96% of the current loan book and Harmony providing the rest. That capital efficiency also means that Harmony's existing accessible cash reserves of more than $30 million are sufficient to support loan book growth of over 50% to $1.2 billion without any need to raise equity. In addition to those existing cash reserves, Harmony being profitable enables us to reinvest profits as our equity in further loan book growth. taking growth well beyond the $1.2 billion supported by existing cash reserves. This half was an example of just that, with this half's loan book being entirely funded from this half's profits. Maintaining the same cash reserves means enabling us to maintain the same cash reserves that we had at the start of the half. And with that, turn to slide 18. I'll hand you back to David to take you through our outlook.

Thanks, Simon. Continuing now to Outlook, please turn to slide 18 and then to slide 19. Firstly, I'd like to give you an update on Stellair 2.0. At the beginning of this half, we moved 100% of our Australian new originations to Stellair 2.0. The graphic on the left illustrates the success story we're seeing from Stellair 2.0, which has been able to provide a 90% uplift in loan offers to new customers in the half, which has translated to a 43% uplift in dollars lent compared to the same period last year when traffic was directed to Stellair 1.0. This was achieved through advanced algorithms and rules in Stellair 2.0 to address segments of our customers that were underserved in the past. Previously, a customer applying for $5,000 was assessed in a similar way to someone applying for $70,000. This meant that for the same 10,000 people we get each month, Stellair 1 would have only given a loan offer to 650 people per month. Under Stellair 2.0, this has increased to 1,250 people per month, which is a 90% increase. We offered nearly double as many loans under $15,000 in the six months to 31 December 24 compared to the six months to 31 December 23. These are people who are good credits who have likely been automatically declined in Stellair 1.0 because of its inflexibility. You may recall from our earlier presentations, this was an area that we expected Stellair 2.0 to better serve our customers. Alongside these underlying improvements, the team has deployed a beautiful new application flow which is driving better customer retention throughout the application process and helps us collect more accurate financial data. Now turning to slide 20. Harmony is well positioned to capitalize on the capabilities of our new platform and into its next phase of growth. We have four main strategic priorities. Our core platform. continued improvement in our conversion of applicants into customers, developing new opportunities and increasing margin. Within the platform, our biggest immediate focus is bringing the power of Stellair 2.0 to our New Zealand customers. Importantly, we have always built the new platform with multiple countries in mind, so this isn't a huge piece of work and is already well advanced with our first New Zealand loans expected to be written next month on Stellair 2.0. By the end of this financial year, we expect to complete the New Zealand rollout and be able to fully retire Stellair 1.0, which will drive further costs out of the business. On conversion, the game changer has been the real-time visibility into every interaction our customers have with Harmony, and that data feeding back into our new product development. This has allowed us to release over 1,800 times in the last six months, a mixture of small and big updates to increase conversion, and we'll continue that effort moving forward. However, there is also huge scope for an increased use of AI tools to personalize the application experience and the offers customers receive. Having Stellair 2.0 live enables us to much more easily bring new features to market, such as safely increasing our maximum loan size to $100,000 for high credit worthy applicants, which we'll be introducing later this half. In addition, we already collect most of the data we need to assess the customer for multiple products. So the next step is to employ the capabilities brought by Stellair 2.0 to expand the lending products we have available. And while it's too early to get into specifics at this stage, we also have some exciting new partnership opportunities that we're working on that will leverage the flexibility and capabilities of Stellair 2.0. The personalization that Stellair 2.0 affords us not only allows us to ensure more people get a great offer when they come to us, it also means that we can maintain both strong loan book growth and our target net interest margin of 9% to 10% through a new pricing optimization engine we are developing. We'll also continue developing increasingly sophisticated process automation, which will deliver even better customer experience at scale and with lower costs. Now turning to slide 21. Next, I wanted to take a moment to highlight an important insight, which is a significant value that is embedded in Harmony's existing loan book. which may not be well understood. You can see in the chart on the left that Harmony's own equity in its loans on its balance sheet, plus its net cash being our cashless, our corporate debt, total $50 million. Then on top of this, the expected risk-adjusted income from that loan book is at least an additional $70 million, with risk-adjusted income being the net income after deduction of funding costs and credit losses. This takes the total value embedded in just the existing loan book to at least $120 million. Importantly, the $70 million of risk-adjusted income is based on our realistic typical repayment experience, with some borrowers paying off their loans ahead of schedule, as we do not impose any fees or penalties on them doing so. If we calculated based on the contracted repayment schedule, the embedded risk-adjusted income would be significantly higher than that $70 million. Then moving on to the right-hand side of the page, there is the additional value embedded in Harmony's business model, our proprietary platform and processes. We have our proprietary highly automated customer acquisition and credit assessment engine in Stellair 2.0, which delivers over 10,000 new applicants creating an account every month with Harmony. Our great customer experience then sees those customers returning again and again for their future borrowing needs. at next to zero additional cost to Harmony due to our direct relationship with those customers. Our AI models attract prime borrowers at a net interest margin of 10% and a risk adjusted margin greater than 5% and do all this at an 18% cost to income ratio. We also have an established and diversified funding program in place with warehouse funding from three of the bigger four Australian banks and an APS program with existing total capacity over $900 million for immediate growth needs and the market confidence to expand beyond this when required. Now turning to slide 22. And to wrap up, just a reminder from our earlier slide. In financial year 25, we expect to deliver a cash end part of $5 million and in our next financial year, financial year 26, we're targeting a cash end part of over $10 million and a cash return on equity in excess of 25%. That concludes the results presentation for today. Now turning to slide 23. We're about to move on to answering questions that have been raised during this presentation, but I'd like to first take the opportunity to remind you that Harmony has set up Investor Hub, which is a dedicated platform for investors to learn more about us and engage directly with Harmony's leadership team. I'd encourage you to sign up, as this is where we regularly post new content, including videos accompanying our ASX announcements, interviews, research reports, and webinars. If you think of any questions after today's presentation is completed, I'd encourage you to log in and ask those on our Investor Hub, where we'll endeavour to respond as quickly as we can. We'll now turn to answering your questions. Just a reminder, you can submit a question on the webcast by typing it into the ask a question box and then hitting submit. Okay, we're going to the first question. On capital, you have given good comments on where the book can grow to $1.2 billion with current capital. As earnings come through, you forecast, would you now consider capital self-sustaining? Yeah, great question, and absolutely. That's the key point of the slide. We don't plan to raise any equity. That's a good question for the next one. In order to maintain growth until the end of FY26 targets, will you require an equity raise? The short answer is no. Obviously, if there was a strategic reason, maybe M&A or something like that, we'd consider it, but certainly in our organic forecasts through financial year, financial year 26 and beyond, we don't plan on raising any equity. Next question, similar themes around capital. Do you plan on issuing a dividend this or next financial year? There's currently no plans to issue dividends. We will obviously assess that as years go by. Obviously, if we got to a position where we had surplus cash or cash beyond what we saw grow for the business, we would look to dividends. That's probably a good segue to the next question. With the share price trading below intrinsic value, would you consider a share buyback? I guess similar response to the dividend question. Obviously, we believe that the cash we have in the business, we have better use of that cash in the business for right now, but obviously to my earlier point, if we were in a position where we're spinning off high levels of cash and that was surplus, we'd look to potentially pay down corporate debt. and potentially do a share buyback if the market conditions were right. Great to see the progress on lowering your cost-to-income ratios. Given the book mix at the moment, where would you consider mid-cycle risk-adjusted income moving to? Look, I think we've always had a target of 5% to 6% where at 5.3% for the half We're continuing to see some expansion there, so I think that will continue to grow and ideally grow at over 6% where we can, but we've obviously got to make sure we get the right balance between top line growth and margin. We can't grow it forever, but obviously you can see the returns that we're spinning off on just a 5.3% RAI. With interest rates coming down, will you look to accelerate growth and will this impact profitability?" Good question. We do obviously expense all our customer acquisition costs upfront. We've capped that into our numbers that we've put out for financial year 25 and financial year 26. We're expecting good top line growth in there as well. We watch that, but obviously if the demand is there at the right cost, we'll take it. But no, our forecasts have all that factored in for the next 18 months. The improvement in credit losses are very impressive. Can we expect any further improvement? Do you have any data on returning how many customers who are better credit risk? Are you tracking the default performance of customers approved by Stellair 2.0, but would have not been approved by Stellair 1.0? Great questions. There's quite a few questions in there, which I'll do my best to answer. Yeah, look, they are impressive. We spent a few years ago, our first Australian scorecard, we took higher loss on, and that's very typical. I've been in the space for nearly 20 years, and whenever you start up a new product or a new jurisdiction, that's quite typical. that we're well through that now, that scorecard that was closed down over two years ago, and we're continuing to see improvement from that new scorecard. Stellair 2.0, our rears are lower than Stellair 1.0, so we're seeing the better performance already through that, and that's done on a cohort or vintage static loss basis, so if people are familiar with that, so we're looking at tracking the same months from when the loan was originated and comparing that, so you can get a like-for-like comparison. We have lots of data on returning customers. We know that returning customers are better credit risk. We've got 10 years of experience with that across both countries, so we continue to, as we get more existing customers on the book, to your point, that lowers the credit risk. Next question, are you forecasting any funding rate cuts to get to the 10 million FY26 target? Not as such. We borrow off the swap rates already in Australia and New Zealand, and we typically borrow on the two to three year rates anyway. As much as they move, but no, I'm not in the game of trying to guess movements in interest rates. We use those rates the best we can, and we are confident on where those rates are now that we will achieve those targets. How do rate cuts flow to your NIM? Great question. There is a bit of a lag impact because 85% or so of our book is swapped. The interest rate is swapped to a fixed rate, but certainly it does flow. As I said to my last point, we do borrow off the two to three year swap rates, so some of those rate cuts are already built in to those swap rates, but probably not that much. To be fair, the Australian swap rates aren't that much lower than what the cash rate is. That bounces around, obviously. Just to be clear, it's not like our margin's being impacted every month by what those swap rates are doing. As I said, when we lend money to a customer, we take swaps out. We fix it at that time. It would only be new business that's impacted by that. There's not much volatility at all in that. Do you anticipate a flat employee count moving forward, enabling further reductions in the 18% cost-to-income ratio? Yeah, great question, and absolutely. Our management team and support team is fully staffed at the moment, and we don't plan on increasing or decreasing that. The only roles may be collections roles as the book gets bigger, but they're not significant cost roles. This is the whole point of the Harmony business compared to other models. We are a platform business first and foremost. We're not a business that requires more salespeople to go on the streets and knock on doors and do that sort of stuff. This business has been built off a platform to leverage it, so we will continue to drive that cost to income ratio down. How do you see the ongoing interest rate environment and is it favorable to Harmony? Yeah, absolutely. We've been through a couple of years of significant increasing in interest rates, and that's obviously hurt profitability. As interest rates fall, that is helpful to us. It also, as Simon mentioned in his note, and I did in the press release today as well, the New Zealand economy is interest rates are cut and they're starting to see growth again. The lower interest rates ultimately gives people more money in their pockets, and that gets people more encouraged to do home renovations and do things that use our products. It's really positive for us. With the regulatory changes now implemented, what's your timeline for returning to growth in New Zealand? Do you see New Zealand as an important market still, or would Harmony look to expand into bigger markets rather than try and grow in New Zealand? Yeah, great question. Yeah, look, the regulatory change has certainly helped by the new government here, what went through last September. No, look, New Zealand's still a big part of our business. Obviously, we haven't rolled Stellia 2.0 into New Zealand yet. That's significant for us. That's going to happen, as I said, the first loans will be written next month and by the end of the financial year, it should be fully rolled out. We expect to see some benefit from that and the regulatory changes that have gone through. New Zealand becomes a smaller and smaller part of the group as Australia, just by pure population size. The Australian books now 57% of the group. That percentage will continue to get larger. But that's not at the expense of the New Zealand book. We will expect that book to return to growth once we get the Stellar 2.0 rollout done and we get the focus back there. At this stage, we don't plan on moving any further than Australia and New Zealand. We feel this huge opportunity just in those markets for our products. We don't need to achieve those numbers and a lot more that we've talked about. in our guidance, we can absolutely do that in Australia and New Zealand many times over.

Okay.

We've planned to lift your maximum loan size to $100,000. How much do you expect this to add to your lending growth rate? Look, we're not scaling all these amounts up to $100,000. We're really using that for our top credits that come through. It's not going to be going up by like a 30% or something like that, or 40% because we're not scaling all the levels up. We have demand for those size loans for top credit quality customers. It's great to be able to offer that. It makes us as a company more appealing. No, I'm not expecting that to be a material change to the business, but I do believe it's a value add that a lot of other lenders out there won't do. Could you please explain how to interpret the acquisition originations ratio? I might get Simon to do that so I can have a glass of water.

Yeah, so this is a really important ratio for the way we do our marketing because we expense all of our acquisition costs upfront, unlike where people use intermediaries and the costs are amortized over the life of the loan. So we like to track how much we're spending on our acquisition compared to how much we are originating over a period. So the origination ratio is simply our cost of originations over the period, over the total volume that we do originate. And it's a powerful metric for us because a lot of our originations, as we talked about before, are from existing customers They've enjoyed the experience the first time and so they come back to us for another loan. And because they have that direct relationship with us, no intermediary in between, there are no acquisition costs or practically no acquisition costs associated with them coming back. So the more and more that that builds, the better and better this ratio gets. And the more and more new customers we bring on, then the more and more returning customers we get coming back for further borrowing.

Great. Thanks, Simon.

Any plans to expand funding capacity from corporate debt or warehouse financing? Yeah, look, as the book grows, we'll obviously continue to increase our warehouses or look to ABS deals. There is lots and lots of questions on here, everyone, which is great for the interest, but apologies for making it for everyone, but I'll do my best. You mentioned increasing the maximum loan size to 100K in the second half of 2025. What's driving this decision? What impact do you expect this to have on credit quality and margins? Are there any other product expansions being considered? If I've sort of half covered off that, what's driving the decision, I think I've covered that. What impact do you expect to have on credit quality and margins? No impact on credit quality. Margins, potentially there's a little bit more margin because we do more at that level if there's less sort of competition, but I wouldn't expect there to be material change or much of a change on either of those two. Are there any other products being considered? Absolutely. As I said on previous calls, our engineering product teams have been building this platform for the last two years. We didn't go out externally and do it. We built it internally. A big chunk of those resources, once we got New Zealand live and the migration done by the end of the financial year, a huge amount of resources free up for us. They're going to be working on innovation, new products, adjustments to products, all that stuff, the really exciting innovative stuff that most businesses find really hard to get to. We're there in a few months' time, and that's super exciting for us to be able to really spend time on that space, which is hard to get to. But we feel we've done the hard yards, and we're now in a position to do that. Do your partnerships target new market segments or improved existing engagement with current customer base? Look, a combination of predominantly the latter, getting that conversion up, getting more products to customers that are there. We're not moving too far away on product development from our personal lending in a secured and unsecured space. there will be product modifications and things like that that come with it, but not a big leap into mortgages or something like that. Do you intend to keep marketing spend relatively stable and allow most growth through returning customers, or do you intend pushing marketing spend upwards to drive more growth? Yeah, great question. There's a combination of that. We want to make sure we deliver profitability, growth, There's a combination. We can go really hard on marketing, and that will obviously reduce profitability, as I said, we expense everything up front, but we feel we've got the balance right. Obviously, as we put on more customers on book, and Stellair 2.0 is a great example there, we're putting a lot more customers on book, even though the deal size is a little bit lower. It's great, though, because with more customers on book, we need more returning and repeating customers. There is a snowball effect, so as we get larger, those returning customers get a number, get larger as well, and that creates great growth for us in coming periods because, as I mentioned before, there's no acquisition costs associated with finding those. Given the really strong return on equity, You're guiding FY26, is this influenced by your corporate debt maturity of June 26? Do you have any early thoughts around paying down or refinancing this debt? No, the return on equity assumes a corporate debt, so there's no benefit built in by that being repaid. Corporate debt's fairly common in this type of business, so whilst June 26 is a little while away, we potentially could look to pay it down. Again, we'll make a capital decision around buybacks, dividends, corporate debt, and the like at the appropriate time. Given the strong origination growth seen more recently, the assumptions on loan book growth look somewhat conservative in your FY26 guidance. We haven't given loan book growth for financial year 26, but we've obviously given profit guidance so you can maybe work backwards a little bit. As I said, we'll take the growth if it's there, but we want to make sure we've got a very strong profitable business that's doing it efficiently. As I said, Stellar 2.0 gives us a huge huge leap forward in terms of getting top line growth as well as bottom line growth.

Okay. I think that's pretty much it, where we're at to.

So we're at 10 to the hour on that point. I'd like to thank everyone for their attendance today and great questions. We look forward to meeting with some of you over the coming period as we do our Investor Roadshow. On that, I'll close the call. Thank you.