Humm Group Limited

Good morning. Thank you for joining us for our full year results presentation. My name is Rebecca James, CEO of Hum Group, and I'm joined today by our new CFO, Adrian Fiske. I'd like to start today by talking you through our group highlights for the half before discussing our plans to accelerate local and international growth. I'll then hand over to Adrian, who will walk you through our financials. We will, as always, allow for your questions at the end of the presentation. At Hum Group, we're liberating people from a one-size-fits-all approach to finance. We enable seamless approvals for purchases big, small, or business-related, empowering consumers to choose how they wish to pay with terms from five fortnights through to five years. Today, 2.7 million customers entrust us to help them buy and pay over time. And we're just getting started. In the second half of 21, we launched Hum in the UK and we'll be live in Canada by the first half of this financial year. We've secured our first global partnership with Westpac New Zealand. These partnerships are being pursued around the globe. As we grow internationally, we're putting significant firepower into our marketing efforts and product experience, actively shaping how people will buy in the future. Turning to slide five, you'll see the group highlights for the year. This year, Hum Group reported a cash end pat of $68.4 million up 121% on the prior year. During the period, we've added 450,000 new customers, up 20% on PCP, taking total group customers to over 2.7 million. We ended the period with $108 million in unrestricted cash, up from 15 million in June 2020. Combined with our nil net corporate gearing, this gives us balance sheet flexibility. We now have a superior credit decision engine, delivering a net loss to A&R of 3.5% in FY21, a direct result of continued investment in this area. And our buy now, pay later business is well and truly humming. Our BNPL segment volumes of over $1 billion is up 31% on PCP. and reflects the strong performance of Hum in Ireland, Little Things in Hum Australia, and the increasing contribution of our newer products, Bundle and Hum Pro. A standout performer in our results is our refocused commercial business, as origination has successfully shifted to SME lending through the broker channel. Volume for this segment of $540 million increased 56% on the previous year. The strong full-year results reinforce our strategy, designed to support and accelerate our long-term growth. Turning to slide seven, HUM has four areas of focus that will support its short and long-term 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, partners and addressable market, both locally and abroad. We will go to market with our new products, Bundle and Hum Pro, which target new segments, new partnerships and new audiences to expand our reach, drive customer engagement and transaction frequency, building our products that are loved and used every day. expand our installment payment core by attracting new merchants and platforms in Australia and New Zealand through our differentiated product offering, 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 BNPL players. Turning to slide eight, you'll see that Hum Group now has an interest-free instalment product for every purchasing occasion that will drive the way our customers live, shop and budget. This slide also highlights the difference of each product and the types of purchases made. On the left-hand side of the graph, Hum Big Things is used approximately once a year for larger, more specific transactions, with our average transaction value in FY21 of just under $4,000. While we work hard at increasing this transaction frequency, the velocity will never match little things currently used five times per year, up from three on prior period, with an average transaction value of $275. The increasing interactions keep Hum top of mind when our customers finance larger ticket items. In addition, over 90% of Little Things transactions in Australia were made by existing customers, highlighting the stickiness of this product construct. Rounding out the smallest and most frequent of transactions, we have Bundle, which enables customers to buy everywhere, every day, and is being used 97 times per year. As a mobile product, customer acquisition costs are low, and this is a great way to introduce customers to the broader Hum Group product suite. We also have Hum90, our revolving credit product. In FY21, our Hum90 customers transacted 42 times up from 30 on the prior period. For Humpro, we look forward to providing an update on customer behaviour as the product continues to build scale. Across all these products, our customers transacted 19 times per year. This distinction of each product across the purchasing spectrum also gives us confidence that our customers will benefit greatly from using more than one Hum Group product. Currently, 18% of Hum customers have made both a big and little transaction. In a quick 18 months, one quarter of our bundle customers also have a Hum account. While the overlap in cards and hum is small at present, we believe that there is a big opportunity here given the Hum90 rebrand in November, which now allows us to more actively promote our combined product suite. We are confident that we can continue to increase our cross-sell activity into the future. We're seeing a structural shift in paying fixed-term instalments over revolving credit, which started in Australia and is now spreading across the world. And we're seeing technology, banks and loyalty programs wanting to enter this space to capitalise on this trend, looking to proven buy-now-pay-later providers to drive customer engagement and retention. In FY21, Hum Group was focused on finding new audiences through partnerships for our innovative products. We've entered into a number of strategic partnerships with major banks like Westpac in New Zealand, loyalty programs such as Velocity Frequent Flyer, retailers like Mitre 10 and Home Hardware. and issuers like Mastercard to grow Hum Group's customer base and distribution reach. Excitingly, discussions of world progress with a number of banks, loyalty programs and retailers, both locally and globally. We expect the partnership channel to be a significant contributor to customer numbers with a target of delivering 250,000 additional customers in FY22. On slide 10 we continue to drive customer engagement by adding merchants to the network which shows the strength of the product and our differentiated customer proposition. In the last 12 months the company added over 9,000 new retailers taking our total to 82,000. Turning to slide 11, this is translated into rapid growth for our Buy Now, Pay Later products, a key driver of expanding our installment payment call as the brand continues to gain traction and consumers use our products more regularly. We have presented the volumes on this page on a half-year basis to show the longer-term momentum in our BNPL segment across big things, little things, and the combination of our new products, Bundle and HumPro. In the portfolio, big things has been impacted by the various state lockdowns as a predominantly in-store transaction. However, we continue to generate momentum across our key verticals, especially healthcare, and believe there is still room for strong organic growth in the portfolio, as evidenced by the volume increase of 26.1% in the fourth quarter of last year. Little Things has performed very strongly in recent periods, driven by the consumer shift to online shopping and the ability to grow our merchant network. Finally, Bundle and the recently launched Hum Pro. I want to point out here that the data is quarterly, as Bundle only launched in February 2020. However, we are really pleased with the products, their utility based on the positive online reviews and the frequency with which our consumers are using these products. On slide 12 is Hum90, which has been reinvigorated and rebranded in November 2020. One of the core features of this product is the ability to offer fixed-term installment payment plans through a feature we call the Hum90 WRAP for any transaction over $250 or up to 60 months interest-free at key retail partners. The businesses are both very profitable with interest-bearing balances sitting around the 60% mark for both of our card segments. We continue to look at ways to activate spend among our customer base through brand crush discounts exclusive to the app and targeted lifecycle marketing. Turning over the page, slide 13 summarises the opportunity and our approach in Canada and the United Kingdom. We will be differentiated through offering bigger ticket, longer term instalment plans, an area that has traditionally been served by white label credit cards. With a number of these players retreating from the market and Buy Now Pay Later offering a more flexible solution for both retailers and consumers, we are confident in gaining traction in these markets. In addition, like we have across all of our jurisdictions, we are focusing on target verticals through software partnerships and integration. We believe that this is a very cost effective way to scale quickly. Slide 14 is an update on the progress and expected timings for major milestones in Canada and the UK. The UK already launched an FY21 with the Pay in 5 smaller ticket product. We expect the next iteration of up to £3,000 to be in market by October, followed by big things of up to £20,000 in January 2022 and subject to regulatory approval. We have already generated significant momentum signing over 300 retailers, including the Hutt Group, which has 200 brands across 800 retail locations. In Canada, we're on track for a combined little and big things launch this half. Finally, we wanted to provide an idea of the level of investment required for our international expansion plans. We forecast a cash impact impact of between $12 to $14 million this financial year as we continue to invest in platforms, marketing, people and credit performance. We also expect volume of circa $150 million, which is subject to regulatory approvals in the United Kingdom. Skipping over slide 15 and turning to slide 16, I'd now like to give an update following our strategic review of our commercial business. The Flexi Commercial strategic review has been completed with the recommendation to invest and grow the Flexi Commercial broker channel. This takes into consideration the successful refocusing of the business to SME lending, favourable market conditions and strong business momentum. We are pleased with the portfolio performance, including the securitisation pricing achieved in March, which has allowed us to drive much greater capital efficiency, a key recommendation from the strategic review. Flexi Commercial is focused on delivering commercial asset finance for the SME market. Our top three assets being transport, construction and light commercial vehicles. We've served over 4,300 customers in FY21 with an average deal size of $75,000. This makes us the second largest NBFI commercial asset finance lender in Australia. Our market leading service is how we've stood out in the broker channel and has been underpinned by an investment in technology. which allows us to drive efficient decisions and differentiates us from traditional lenders. 45% of deals are decisioned on the same day and 35% of approved deals are now automated, making us quicker, nimbler and easier to work with than those traditional lenders. On slide 17, you'll see that this refocused business delivered operating income of $50.5 million, an increase of 51% on FY20. The continued growth in operating income has come as we have successfully moved to broker-originated SME lending. We also were delivering increased capital efficiency, with capital deployed as a proportion of the portfolio declining materially following the ABS transaction of $450 million in March 2021. To give you an idea, the initial capital deployed in respect of the March 2021 ABS transaction was 6.5%. We're also continuing to explore the introduction of mezzanine debt into the warehouse facility, which will lead to a further improvement in capital efficiency. I'd now like to hand over to Adrian to walk us through our FY21 group financials.

Thank you, Rebecca. I've been in the CFO role now for just over a month, and I joined HUM as I'm passionate about the transformation of consumer and SME finance. I'm attracted to HUM's culture of innovation, its credit and funding capabilities and its growth ambitions. I'm here today to outline the strong financial performance of HUM Group for the 2021 financial year, which has resulted in a cash end pad of $68.4 million up 121.1%. We reported gross income of $443.9 million for the year, down 73% on the prior period. There are a number of component parts when evaluating our revenue. We have a number of high growth products where revenue is growing consistent with our strategy. We also have legacy products in runoff affecting our year-on-year revenue performance. There are also environmental factors driving revenues such as competition in the buy now pay later sector, and COVID-19 continues to impact our cards portfolio, particularly travel. I will go into all of these in more detail when we cover the segment performance. Net operating income of 342.9 million was down 5% on the prior comparative period. Net operating income has benefited from lower interest costs from a strong and active balance sheet management. I consider our funding to be a strategic differentiator for our business. Impairment losses were down 59.5% and I would like to point out that this performance included lower actual losses of 20.1 million. This is a direct result of the hard work in improving processes and technology and credit decisioning across the whole portfolio in the last few years. In addition, we benefited from the release of 21.6 million of the 43.3 million COVID-19 overlay provision booked in FY20. I will discuss this specifically later. Our tax expense of 28.9 million reflects a normalised effective tax rate, noting that FY20 had a number of one-off adjustments. Combined, this led to a cash end pat of 68.4 million. Finally on dividends, the Board is determined not to play a final dividend for FY21. We are very confident in the strength of our balance sheet and consider this to be a strategic asset in this environment as we continue to invest. The combination of profitability and cash generation means that we are uniquely placed to balance growth and shareholder distributions in the future and the Board will continue to review this position. Turning now to Buy Now Pay Later on the following slide. FY21 was a year of investment of Buy Now Pay Later, resulting in a cash end pad of $1.2 million up from $2.7 million loss in the prior year. I would like to note that the Buy Now Pay Later numbers have been reinstated to include Bundle and Humpro, which were previously reported at FY20 in the cards and commercial leasing segments respectively. We've provided a reconciliation in the pact that sets out these changes. We are pleased by the strong volume momentum generated in FY21, which increased 31%. This has predominantly been driven by Hum Island, Bundle and Hum Little Things in Australia. Gross income was up 120.6, sorry, gross income of 120.6 million decreased slightly. Hum Australia saw growth in little things and a growing combination from bundle. Gross income was also impacted by margin compression from competition across specific verticals in buy now, pay later, and reduced fees from older surdigy contracts. At the net operating income level, interest expense decreased. Origination costs also grew as we continued to build momentum in the Hum network. From a credit performance perspective, impairment losses were significantly lower by 34.3%, with actual losses of 10.3 million lower. Operating expenses increased by 4.3 million, and this is in line with increased activity from new products being developed and launched, as well as the international expansion. For clarity, we have broken out the investments made across new products and in international expansion, as this relates to Bundle and HumPro. International expansion accounted for 5.8 million cash NPAT drag for FY21, and this relates to investment in people, marketing and systems. We are confident in the future growth of these innovative products, which has been validated by the blue chip partnerships signed in recent months. New products take time to build sustainable revenues, and we will continue to make the necessary adjustments to drive growth and profits. Turning to the card segments, which were profitable in FY21 despite adverse economic conditions. In Australia cards, cash NPAT of $16.8 million was up 121%. Volume of $417 million was impacted by the ongoing effects of COVID-19 on merchant activity, specifically in the travel industry. Gross income of $91.1 million was down, largely a result of the pay down of the discontinued Lombard and Once products, which are in runoff. This pay down also had a positive effect on profitability through the reduction in net loss. Importantly, our current product in market, Hum90, continues to perform well, with strong interest bearing balances broadly steady over FY21. Impairment losses of 1.9 million was down 94.4%, driven by a lower net loss of 9.1 million, as well as a partial release of the COVID-19 provision as a result of significant reduction in customer hardship. Looking at New Zealand cards, the segment continues to be a strong performer in our portfolio. Cash NPAT of $28.1 million was up 28.9% on FY20. Volume was down 7.4% due to the impact of COVID-19 on travel merchant activity in the long-term interest-free portfolio. Gross income of $135.4 million was down because of lower volume and lower receivables. Net operating income of 107.3 million was broadly flat, as lower gross income was offset by a decrease in interest expense. Impairment losses of 19.4 million was down 42.6%, and this was largely from the partial right back of the COVID-19 provision, which reflects the improving economic outlook. On commercial leasing, I echo Bec's comments on our commercial leasing business that has continued to grow over FY21. Our SME lending proposition has resonated with our broker network and I'm excited about the future of this business. Cash end pad of $22.3 million was up 431%. Volume increased by 55.6%, driven by strong origination growth in the Australian commercial, providing commercial asset finance through the broker channel. While gross revenue was largely flat year on year, Australian commercial increased 47% for the year. However, it was offset by a discontinued and profitable consumer leasing portfolio in runoff. While volume continues to grow, we remain focused on our credit standards and using technology to improve decisioning. And this is reflected in the lower net loss of 3.1 million and arrears in this segment. Operating expenses were down 3.1%. And again, this represents the lower cost from the consumer leasing book in runoff while increased activity in the Australian commercial business added to costs in this segment. Now turning to operating expenses. I would like to provide some additional information around our operating expenses on a cash and PAT basis. This is a particularly important area of focus for me and for our business. Our operating expenses increased by 5.9% and while payroll costs decreased, there has been an uptick in marketing costs and depreciation amortisation. We continue to maintain our disciplined approach to costs, with payroll expense down $3.9 million. This has been achieved by continuing to leverage technology to automate and better serve our customers. Our success in FY21 also resulted in a normalised level of incentive payments when compared to FY20. In addition, we benefited from an increase in government payments which have now ceased. Operating expenses increased by 0.9 million and reflects the increase associated with overseas expansion activities, partially offset by the continued benefit we receive from the rationalisation of products. Marketing expense of 30 million was up 6.3 million against FY20. A conscious push was made to build brand awareness and continue to develop the HUM brand after our rebranding back in November 20. The increase in marketing has had a positive effect on attracting and activating customers, as evidenced by the strong volume growth in the buy-now-pay-later sector in the second half of 2021. Depreciation increased $7.1 million and reflects the investment in new product development including Bundle, HumPro, as well as the recently launched HumTap. Looking at the bottom right hand corner, we have provided our cost to income ratio and also broken out the marketing and depreciation impacts. Importantly, the core business costs have maintained their lower trend in FY21. And I note the ratio has also been impacted by lower net operating income. Turning to our credit performance, which was a highlight for FY21, our FY21 net loss and impairment performance was driven by our investment in technology and focus on credit decisioning and collections over the last few years. Net loss, which represents gross write-offs, less bad debt recoveries, was down 18.6% for the year. Buy now, pay later decreased 10.3 million and reflects the investment we've made in our credit origination engine, including a bespoke buy now, pay later serviceability model. AU cards is down 9.1 million and benefited from the pay down in discontinued products, as well as a broader hum wide group improvements in fraud in partnership with GBG. New Zealand cards was an anomaly up 2.5 million. And this related to front book, including a new open loop card scheme program that is a higher loss rate than the legacy closed loop products. We note that this is off an extremely low base. Commercial and leasing continues to perform strongly and reflects our credit approval processes combined with management implementing a new credit matrix for decisioning. Turning to the COVID-19 overlay provision, the other material movement that affected the impairment performance in FY20, at the bottom right-hand corner of the page, we have provided the balance sheet movements between FY20 and 21. The $43.3 million COVID-19 overlay provision charge raised in FY20 was reduced during the year, with $21.6 million remaining on balance sheet. We believe the remaining COVID-19 overlay provision is prudent, given the continued uncertainty surrounding COVID-19 and its impacts on the economy. In looking at the balance sheet provision movements in more detail, the BNPL segment COVID-19 provision increased slightly. This was because the HUM provisions released during the year were offset by an increased provision for the bundle. This is reflective of delivering a new product into market, and we continue to adjust our settings over the year to drive growth and profitability. Although New Zealand cards net loss increased, the improved economic outlook led to a 4.9 million COVID-19 provision reversal. AU cards and commercial leasing were broadly flat in line with the net loss performance. Turning to our credit risk management slide, I won't spend too much time on this slide but as you can see there are very positive multi-year trends in loss performance against average net receivables for most of our segments. The group performance was 3.5% which is down 60 basis points and we continue to look at ways to better manage our credit performance. Turning over the page, I believe our funding platform is a real strategic differentiator against our peers. Our track record across all of our facilities cannot be replicated overnight by our competitors. The team has been extremely busy with over $1 billion in asset-backed securities issued during the year, with a number of transactions achieving record low pricing. Some of the key highlights include the two HUM securitisations in October and June. The successful execution of these transactions also reinforced our leadership position in green ABS notes. Our Flexi commercial securitisations in March 21 was upsized from $300 million to $450 million following strong investor demand. Finally, looking to the right hand side of this graph, we enter FY22 with almost 1 billion in headroom to fund our future growth ambitions. On the next slide is our corporate debt facilities. The company has substantially strengthened its balance sheet and our corporate debt facilities remain undrawn as at 30 June 21. In June 21, we secured commitments for $110 million under a new three-year syndicated revolving loan facility, which replaced the existing $197 million facility. The new syndicated loan also diversifies our core banking relationships with two new international banking partners joining the lender group. The smaller facility is in line with the company's current debt needs and will also have the positive effect of reducing undrawn fees. We finished the year with $107.6 million in unrestricted cash and combined with our syndicated loan facility gives us the balance sheet flexibility to pursue future growth initiatives. And on that note, I'd like to pass back to Rebecca to close the presentation.

Thank you Adrian. In closing, we're excited about the future. Hum Group has numerous growth initiatives underway, including international expansion, new product growth, and new partnerships. We will also be holding an investor day on the 27th of October, where we will provide a full strategic update alongside volume and other measures for FY22. Thank you for your support, and I'd now like to open the call for questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star send 2. If you're on a speakerphone, please plug up the handset before to ask a question. And the first question comes from Apoorv Tagal with UBS. Please go ahead.

Good morning, Rebecca and Adrian. Good to see the momentum across the business with those new partnerships and the new products. But just with the lockdowns, can you talk about the net impact at the start of FY22? I know you said earlier that Little Things has had an offset from online. But I guess the impact of volume is still net negative for the group, given that you have exposure to big things, cards, which is the hospitality exposure, and then SME lending as well.

Thanks for the question, AP. We have started the year with strong momentum and growth across all of the segments. And this is also, I think, a benefit of our diversified product strategy and the shift that we've made towards direct-to-customer acquisition, particularly over the last 12 months. And so this diversified strategy with Hum Little Things, with Bundle and Hum Pro, and also the continued demand in our Phylexi commercial business has seen us start the year in positive growth territory.

Okay, that's pleasing to hear. Second question, just on the cost outlook in GFI 22, you said in the presentation pack expecting a moderate increase in the CTI ratio. Is that an increase on the 55% for FY21 or the approximately 59% in the second half of 21? And if I can ask more specifically as well, within the buy now, pay later business, there's a slide where you called out about a $22 million investment in FY21. Should we expect a substantially higher level of dollar investment in 22, just given the international expansion now in buy now, pay later?

We haven't given any specific cost guidance for next year other than to point out the investment that we'll be making into the UK and Canada. And we continue to be focused on costs right across the business. Obviously, we'll be continuing to invest into our new products.

Okay, sure. Just one final question before I close off. This is on the gross income margins. There's some further sort of compression there in the second half, particularly in buying our pay later. Can you just talk about the competitive environment in BNPL and whether those margins are now the new base or if there could potentially be further potential downside in 22?

There is, given the competitiveness of the sector AP, which you've pointed out, there is pressure on merchant services fees. What we've been able to benefit from, particularly in our bigger ticket items, has been the underlying, I guess, restructure of our credit approach in this segment. So we have substantially reduced the net loss to A&R, particularly in hum big things, and this will be a permanent resetting for us as a business. We've also, because of the tenure that we have had in this business and the successful securitizations, we have one of our best competitive advantages, which is the lowest kind of cost of funds we believe out of our competitive set, particularly in that larger ticket category. And so what that means is that we have been able to combat some of that top line merchant services pressure with strong performance in credit risk management and cost of funds. And so we have been able to hold that net transaction margin across particularly that area of the portfolio fairly steady. And it is a key focus for us moving forward.

Got it. Okay. Thanks for your time, guys.

Your next question comes from Brendan Kerrig with Macquarie. Please go ahead.

Good morning. I just had a follow-up just on the cash impact forecast in the international division. So is it fair to think about that as that sort of quarantine to international and then similar to what we've been seeing in the investment within the division that they will just offset the the profit contribution from the domestic and island Buy Now Pay Later business.

Yeah, so I think what we have from a product development perspective, which is where a core amount of the investment occurred last year, we feel that we've got that product investment relatively right with the introduction of Bundle and HumPro. And so now the investment is in scaling those products up. And so we are expecting the overall investment and cash impact to be slightly lower than the investment that we've made in last financial year. And so it's safe to take that guidance range of that $12 million to $14 million as the investment from a growth perspective. Okay.

Okay, that's clear. And then just on the Aussie cards business, apologies if it was touched on specifically, but the $163 million of travel volumes, is it fair to assume that that's very close to zero in FY21 and why you haven't separately called out the volumes for travel in the chart on slide 21?

That would be fair. That would be fair. While we did see some positive shoots from a domestic travel perspective, obviously that's with what's happening in the country, around the country right now, that's reversed.

Okay. And then the last question, just on leasing, obviously stronger performance in the business. So just to clarify the strategic reviews, in essence, it's done and that business is now happily, you're happy owners of that division and that business now going forward?

Yeah, the successful reorientation to that broker-originated channel, which is predominantly chattel mortgages, is absolutely we are thrilled with the business performance in that area of the business and believe it's very much a strong strategic asset of Home Group.

Okay. That's all for me today.

Thanks. Your next question comes from Scott Hudson with MST. Please go ahead.

Yeah, good morning, everybody. Just, I guess, a follow-up question on the cash impact on BNPL. That $15.8 million in regards to the domestic business through 21, I mean, does that recede in 22, given, I guess, Pum Pro and Bundle are now up and running?

Yeah, so we've completed the bulk of our investment in those products. And as Rebecca said, this is now about scaling into international markets and scaling across the country.

Yeah, so relative to that $15.8 million, I mean, has that, I guess, become a tailwind in 2022? Or is there still a cost associated with scaling those businesses up? Or is that captured in the $12 to $14 million in the international market?

We do see that the investment in this area of the business being less than what it was in the prior year. And the majority of that is captured in that impact of the international expansion.

Okay, great. And then just going to, I guess, the chart on page eight, which I guess summarises all the BNPL offerings. Can I get a sense of... I guess it seems like the volume has been driven more by the little things, products and bundle products more recently. In terms of, I guess, the economics of each of those products, I mean, is big things still the biggest earnings driver of the BNPL product solution?

At present, yes, that would be fair to say. And I think we will get more into the unit economics of each of the products from a contributor perspective at the Investor Day, Scott. I will point out that obviously the last 12 months with all of the various lockdowns has muted probably the growth that we've had in big things recently. But in the last quarter, with the economy open, we had 26% growth in big things. So there is very real momentum within that business. There's also two segments which keep volumes while impacted. you know, at reasonable levels, even with various states in lockdown. And that is our health vertical, which has had phenomenal growth, particularly in dental, veterinary, and we've had some new partnerships in private health. And so all of those businesses remain open. Solar and solar installations in most areas are still able to go ahead, which is a key area. And also things like home improvement with a lot of that work outdoors still able to run and go through. So it's really the retail vertical and big things which is impacted as a result of lockdown. When we're open and the growth that we've made in those other verticals, you know, shows that we can drive very real volume through there like we did in the fourth quarter with that 26% growth.

That's great. Thanks. And then I guess lastly, just in terms of regulatory approvals in the UK, I mean, is that just a time thing or is there any risk associated with?

We believe, given that we have a very strong track record in a number of markets of offering both regulated and non-regulated products, we're very confident in that. completely on track to do up to 3,000 pounds in October, which does cover the bulk actually of transactions that we will do within that market. So we see no risks in getting that over the line.

That's great. Thank you very much.

Once again, if you'd like to ask a question, please press star then one on your telephone and wait for your name to be announced. Your next question comes from Sean with Morningstar. Please go ahead.

Hi, good morning, everyone. I've just got a couple of questions. The first one, Rebecca, you guys talked about competing via higher ticket items, but yet the slide shows that for international expansion, you guys are starting off with the lower ticket items first. So I'm just curious, is this a function of just smaller items being more well-known and resonating better, or is this just reflective of larger items taking more time to get through the approval process?

In the United Kingdom, it's purely a function of regulatory approval. So not a sign of appetite from the market. And in fact, from a merchant perspective, we've seen very strong appetite from bigger tickets. So as I said, we'll be heading into the £3,000 purchase in October in the United Kingdom, and then we'll expand that out once we've got regulatory approval to go higher than that £3,000 limit. In Canada, we've already received all of the regulatory approvals that we need in that market. And so we will be launching with the combined little and big things offering combined when we launch later this half.

All right, thanks for that. My second question is just on bundle. I remember Hamish previously talked about there being partnership opportunities with other institutions. So I'm just curious, you know, are there, what's the progress around here? Can you perhaps talk to the kinds of, you know, what sort of institutions are you talking to? You know, is it just the banks or is it someone else in the pipeline? And I guess also on this note, can you also elaborate on why should a bank choose Bundle? Then they can, like in the case of CBA, develop it themselves and

We are seeing a broad spectrum of technology players, banks and loyalty programs now really looking to enter this space and capitalise on the structural shift that we're seeing from revolving credit style products to fixed term instalment products. And so why? And it's really because buy now, pay later companies are close to the customer. And there is a very real stickiness with that. And you can see that with the number of transactions that we're getting per annum with Bundle, which is just under 100 transactions per year. And it's because we bridge this relationship between shopping, financing and transacting on the lifestyle that these consumers want. So there's a very real incentive right now for merchants, for payment platforms, for finance companies, banks and loyalty programs. to all try and get closer to the customer via this channel. And also when we think about payments in this way, you know, from a banking perspective and particularly larger banks with legacy technology, they're looking to capture on this huge shift quickly. And so the partnership that we've done with Westpac New Zealand is really a testament to that. And we're seeing more and more in the conversations that we're having with potential banking partners, the need and the desire to get to market quickly with a proven product in this space. But of course, the opportunity doesn't just lie with banks. We're seeing a lot of loyalty programs, the partnership that we've done with with Velocity Frequent Flyer and Virgin is the first buy now, pay later rewards-based card program globally. And we expect, we absolutely expect this trend to continue.

Thanks for that.

There are no further questions at this time. I'll now hand back to Ms. James for closing remarks.

Thank you. Thank you for those questions. Thank you for your time today. And Adria and I look forward to meeting with many of you one-on-one over the next couple of days. Thank you.