Plea to HUM boardStop fighting. Make a dignified exit. Your...

Plea to HUM board

Stop fighting. Make a dignified exit. Your behaviour has beenshameful and unprofessional, and caused great financial harm to your shareholders.You have trashed the HUM share price as well as your reputations. Both “sides” have allowed stubbornness and emotion to override common sense. The disastrous sale process has been a huge waste of time and money, and a serious distraction from strategy and management of the business. Announcements in the last two months have been unhelpful and misleading. The 16/6 update was particularly clumsy: only by comparing it with the 1H22 results could one see that HCF actually made a loss to 31 May, and some shareholders misunderstood that. Board chaos is allowing speculation and perhaps market manipulation to ferment. The market very urgently needs clarity on the following

1. Explicit refutation of any breach of covenants and of need for an equity raising.
2. What was the segmental CNPAT breakdown of the results for the 5 months to 31/May? You have these figures, so announce them. It is too long to wait for the full year result and annual report in late August.
3. In BNPL, what was the pre-tax spending on overseas expansion /market development etc costs?

My analysis: 1H 22 HCF result was+$12.5m, and 31/5/22 YTD +$8m, so HCF made $4.5m after tax loss in 5 months. This at least is factual. My broad guestimates are that this comprises (cashafter tax) $4.0m profit in AU cards, $15m profit in NZ Cards, and $23.5mloss in BNPL, over 5 months to 31 May. The BNPL loss compares with $2.6mprofit in 1H21 and a loss of $9.7m in 1H22. It’s easy to see that the HCFdisaster has occurred in BNPL, not Cards- although that is with the caveat thatthe info released on 16/6 was extremely limited and selective. The Boardshould have disclosed the results of the 3 HCF segments separately: over recentweeks the Board talked about the decline quite stridently in words, but why notprovide the separate figures to explain this claim? The Board has alsonoted BNPL headwinds including worsening defaults by customers. It shouldgive figures for this and for the cost of overseas expansion, which has nothingto do with the BNPL business locally. It is remarkable that the 16/6trading update did not mention impairments at all. Shareholdersmust be able to make up their own minds and they can’t when the figures are allcombined.

Subject to disclosure of more detail,I conclude that NZ and AU Cards are both still making satisfactoryprofits but BNPL has gone from bad to horrible. It’s impossible to tellhow much of that is because of a severe deterioration in BNPL impairments asopposed to huge overseas expansion costs, or other things. I can only surmisethat the Board didn’t want to clarify this because the details are embarrassingand would indicate where the main failures of HUM’s BNPL strategy lie. Now thatthe Board has announced its gradual resignations, there can be no further lossof reputation by explaining all this.