HomeChoice delivers profit

QUANTUM LEAP: FINTECH DIVISION ECLIPSES RETAIL CONTRIBUTING 92% OF REVENUE

JSE-listed investment holding company HomeChoice International’s fintech segment has once again lifted its operating profit, this time for the year to 31 December last year, despite a significant drop in sales volumes of its retail business, for which it is traditionally known.

According to the group’s financials, growth from its fintech segment, Weaver, contributed 92% to the group’s operating profit. Weaver Fintech’s revenue climbed 31% to R1.9 billion and profit before tax for the fintech side of the business was up 27% to R426 million.

“The short-term nature and strong cash yields from the book resulted in customer collections of R6.7 billion in 2023, which is more than 1.5 times the size of the gross debtors’ book,” the company said.

PayJustNow cements its growth

Weaver’s customer base has increased by 72% to 1.6 million with high levels of repeat business.

The fintech segment offers personal lending and insurance, as well as payment solutions and merchant services through PayJustNow – a buy now, pay later offering.

PayJustNow has delivered gross merchandise value of R1.5 billion – a 104% increase on the previous year.

PayJustNow came onto the scene in 2019 and has recorded significant growth, with its all-digital customer base doubling to 1.3 million in the past year. The platform has over 2 500 merchant partners, spanning 8 000 points of presence.

“We are pleased that our digital-first approach continues to result in strong financial performance,” said CEO Sean Wibberley.

Retail sales disappoint

The retail side of the business is less rosy, although the group is of the view that it is better positioned for growth going forward, following “effective credit strategy changes”.

In the past year, the group has deliberately tightened its credit policy, which led to a 24% reduction in sales but improved the quality of its customer and book performance. HomeChoice now has a renewed focus on its unique heritage bedding and textile lines.

There was a 30% reduction in debtor costs, and trading expenses dropped 8% – but these measures could not compensate for the lower sales. Therefore, operating profit in the retail segment fell by 34% to R52 million. The business generated R345 million in cash from effective working capital management.

Other salient features include:

▶ Revenue at R3.7 billion;

▶ Headline earnings per share up 7.2% to 309.3 cents; and

▶ A final dividend of 83 cents per share, up 7.8%.

Credit provisioning and cash flow

The group’s fintech and retail segments tightened their credit risk criteria in the past year. Weaver Fintech debtor costs increased by 28%, which is lower than revenue and book growth of 32%. Better quality customers and stricter credit limits reduced retail debtor costs by 30%.