The fintech arm of JSE-listed investment holding company HomeChoice International will now open for the year to 31 December 2023, despite a significant decline in sales in its traditionally known retail business. Profit increased again.
According to the group's financial report, the growth of its fintech division Weaver contributed to 92% of the group's operating profit.
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Weaver Fintech's revenue rose 31% to R1.9 billion, and the fintech division's pre-tax profit rose 27% to R426 million.
“Due to its short-term nature and high cash yield from its books, collections from customers will reach R6.7 billion in 2023, more than 1.5 times the total debt book,” the company said in a statement. .
PayJustNow accelerates growth
Weaver's customer base has grown by 72% to 1.6 million, with a high repeat customer rate.
The Fintech segment offers personal loans and insurance, as well as payment solutions and merchant services through PayJustNow (buy now, pay later).
PayJustNow delivered gross merchandise value of R1.5 billion, up 104% year-on-year.
PayJustNow debuted in 2019 and has recorded significant growth, with its all-digital customer base doubling to 1.3 million in the last year. On this platform, he has more than 2,500 sales partners, which span his 8,000 locations.
CEO Sean Wibberley said: “We are pleased that our digital-first approach continues to deliver strong financial performance.”
Retail sales are disappointing
The retail side of the business is less optimistic, but the group believes it is better placed for future growth following an “effective credit strategy change”.
Last year, the Group deliberately strengthened its credit policy, which resulted in a 24% decline in sales but improved customer quality and performance.
HomeChoice is now putting a new focus on its unique traditional bedding and textile lines.
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Although the debtor's costs were reduced by 30% and transaction expenses were reduced by 8%, these measures were not able to compensate for the decline in sales. As a result, retail operating profit decreased by 34% to R52 million. The retail business generated R345 million in cash through effective working capital management.
Other notable features include:
- Revenue was R3.7 billion.
- Composite earnings per share increased 7.2% to 309.3 cents.and
- The final dividend was 83 cents per share (up 7.8%).
Home Choice stock price
Credit supply and cash flow
The group's fintech and retail divisions tightened credit risk standards last year. Weaver's fintech debtor costs increased 28%, which was lower than revenue and book growth of 32%. Improved customer quality and tighter credit limits reduced costs for private debtors by 30%.
The company has increased its capital to R3 billion and believes it has room to fund Weaver FinTech's growth with R1.5 billion in cash and undrawn facilities.
“[We] We believe there is significant potential to expand the Weaver Fintech product range and cross-sell these products within our growing ecosystem,” said Shirley Maltz, Executive Chairman.
“There is also a lot of work being done in retail to rebuild the business, and this is starting to show up in improved performance.”
