S h a w a a n d P P a r t n e r s E E m e r g i n g L L e a d e r s C C o n f e r e n c e 1 6 t h M a y 2 0 1 9 Scott Baldwin Siva Subramani Managing Director Chief Financial Officer
Introduction Money3 is an Australasian Secured Automotive Loans Specialist. Since inception, the combined business has serviced 500,000 Australasian customers with over $1b in loans Money3 is a Secured With $100m+ available Responsible lending Through exceptional Automotive Loans in deployable capital , drives and improves customer service we specialist and non-bank Money3 will continue the quality of our provide customers, credit provider of pre- to grow its loan book growing Secured excluded by the banks, owned automotive finance Automotive Loan and market share with the opportunity, to millions of Book support and flexibility Australasian’s excluded by to own their own banks and other non-bank vehicle lenders AN OPEN ROAD AHEAD OF US 2
H1 FY19 Highlights Sale and exit of SACC (Branch and Online) lending and Go Car Finance acquisition provides business additional capital to be deployed into Secured Automotive Loan Book and geographical growth Acquisition of Go Car Finance in NZ adds AUD52.1m to Secured Automotive Loan 14.3% 14.3% increase in Gross Loan Book to Book and opens up new geography with $351.9 million (in H1 FY19) strong prospects for growth 12.2% Sale and exit from SACC (Branch and Online) 12.2% increase in Broker Division lending, through MBO releases ~$46m in Revenue to $40.4 million (pcp) capital into Secured Automotive Loan Book 9.3% 9.3% increase in Group Revenue to $100m+ ($50m debt, ~$46m from SACC $66.0 million (pcp) sale and cash) available to accelerate Secured Automotive Loan Book growth 13.2% 13.2% increase in Group EBITDA to $31.1 million (pcp) H1 FY19 dividend of 5.00 cents fully franked 13.3% 13.3% increase in Group NPAT to $17.5 million (pcp) Bad debts well managed and in target range of 5-6% of gross loan book 3
H1 FY19 Financial results H1 H1 Group Financial Results 12.2% Mvt % FY19 FY18 Amounts in $m unless otherwise stated Increase in Broker division revenue to $40.4m Revenue 66.0 60.3 9.3% Expenses (34.9) (32.9) 6.1% 13.2% EBITDA 31.1 27.4 13.2% Increase in Group EBITDA EBITDA as % of revenue 47.1% 45.5% NPAT 17.5 15.4 13.3% 13.3% Increase in Group NPAT NPAT as % of revenue 26.6% 25.6% EPS (Basic) 9.84 9.80 0.4% cents per share 4
H1 FY19 Financial results 24.4% Increase in Broker division H1 H1 Group Operating Cashflows cash collected ($92.8m) on H1 pcp Mvt % FY19 FY18 Amounts in $m unless otherwise stated 30.0% Receipts from customers 66.3 58.6 13.1% Increase in Broker division loans advanced ($87.1m) on H1 pcp Payments to suppliers and employees (23.7) (21.1) Net finance costs paid (4.7) (5.7) Income tax paid (8.3) (11.1) Net cashflows 29.6 20.7 43.0% Revenue is highly correlated (excluding loans advanced) with cash receipts. Cash advanced, net of principal repayments, contributing to growth of 47.8 28.5 67.7% One-off tax refund as a result of the loan book new accounting standards. 5
H1 FY19 Cash conversion metrics H1 H1 Cash Conversion Metrics FY19 FY18 Amounts in $m unless otherwise stated Income statement NPAT 17.5 15.4 Add: Impairment expense 11.9 10.1 Cash NPAT 29.4 25.5 Cash flow statement Net cash flows from operating activities 29.6 20.7 (excluding loans advanced) Add: Capitalised borrowing costs - 2.2 Net operating cash flow 29.6 22.9 Cash conversion 99.3% 111.4% 6
Secured Automotive Loans continue to grow Gross Loan Book increased to $419.4 $419.4m million (in CY19 to March 31, including ~$60m to be divested) $52.1m added to Secured Automotive $52.1m Loans in New Zealand from Go Car Finance (in CY19 to March 31) 19.3% growth in Secured $296.1m Automotive Loans in Australia to $100m+ ($50m debt, ~$24m cash and $296.1 million (YTD March 2019) ~$46m from SACC sale) available to accelerate Automotive Loan Book growth 12.3% increase in Go Car Finance 12.3% loans to $52.1 million (in CY19 to March 31) Secured Automotive Loans 83.0% (including Go Car Finance) make Bad debts well managed and in target up 83.0% of the Gross Loan Book range of 5-6% of gross loan book 7
Quality remains key while growing Secured Automotive Loan Book 19.3% increase in Secured Automotive Loan Book in Australia (YTD March 2019). Loan Book growth key leading indicator of future revenue. GROSS LOAN BOOK ($m) SALE AND EXIT OF BRANCH AND ONLINE FOR ~$46m, CAPITAL TO BE REDEPLOYED INTO AUTOMOTIVE LOANS 450 419.4 398.3 19.3% 400 52.1 * 46.4 12.4% growth in Secured 350 308.1 292.8 Automotive Loans in 273.1 - 300 - Australia (YTD FY1) 245.1 - 7.6% 250 - 198.8 296.1 182.1 280.7 200 - 156.4 - 248.2 231.9 212.9 9.4% 126.2 - 150 187.9 - 151.8 127.4 100 106.8 78.8 50 38.2 39.5 24.6 29.4 21.1 24.2 31.8 23.0 18.3 22.4 70.6% 35.6 31.5 33.6 33.0 33.0 31.7 25.0 26.6 28.7 28.1 0 Secured H1 FY15 H2 FY15 H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 H2 FY18 H1 FY19 Mar-19 Auto Loans Small Amount Credit Contract Larger Amount Longer Term Secured loans Go Car Finance Money3 is now an Automotive Loans Specialist with ~$100m+ in deployable capital and an exceptional cash collections capability 1 in 4 secured automotive applications settle as Money3 continues to prioritise the long-term quality of the Secured Automotive Loan Book *Included for comparative purposes only. Go Car Finance was acquired in Q3 FY19. 8
SACC exit Money3 has entered into an agreement to sell the assets of the Branch and Online distribution channels that support SACC (pay day) lending The sale will yield in excess of ~$46m, $35m up front and the remainder over 6 months. Sale includes corporate entities operating SACC lending Post transaction this will see the complete exit of SACC lending by Money3 and allow the business to focus on the growth of its Secured Automotive Loan Book in both Australia and New Zealand Sale to one of the founders of the business and the management team PURCHASER ACQUIRES ALL STAFF, ASSETS, The MBO acquires all staff, lease and other OBLIGATIONS AND obligations of the corporate entities LIABILITIES, INCLUDING THE CORPORATE ENTITIES AND ACL Non-compete clauses and a complementary referral agreement for automotive lending SACC sale will release ~$46m to be redeployed into Secured Automotive Loan Book 9
Dividend Money3 is intending Money3 to pay DRP with a 2.5% to pay a fully 5c fully franked discount franked 10c for interim FY19 dividend for FY19 and FY20 10
Money3 enters NZ market with acquisition of Go Car Finance 11
Go Car Finance Go Car Finance acquisition Over AUD52.1m of Go Car Finance has an With 4m cars in New provides Money3 with existing Secured existing financing facility Zealand and Go Car’s geographical expansion, Automotive Loan Book with significant capacity strong brand, there is market access and a strong at a leading bank. significant growth existing business to opportunity leverage “The cultural similarities between Money3 and Go Car are very real and we look forward to the opportunity of sharing best practices. With support from the Money3 mothership we believe we will be able to significantly grow our market share of the used car finance market here in New Zealand.” – Go Car Founder and CEO, Roy Gormley 12
AUD52.1m Secured EXCEPTIONAL CUSTOMER RELATIONSHIPS $52.1m Automotive Loan • With a 95% “likely to recommend” Book score • Returning customers comprise one in five of new loans Over 12 years in • For the direct team, three in five loans operation with strong are to returning clients brand recognition STRONG RELATIONSHIPS WITH DEALERSHIPS • Long established dealer relationships in place Access to own • Several deeply aligned “Partner debt facility, fully Dealer” relationships funded for growth 13
Automotive market opportunity Australian automotive market Money3 Opportunity Money3 market share Huge Market • 1 out of 550 registered vehicles in $80bn+ 1 of annual vehicle sales • $20bn Australia are financed by Money3 $20bn 2 annual market for consumer • • Money3 estimates it finances 3% of vehicle financing the used car market annually $6bn 3 is attributed to used car sales • Growing • 19.2 million registered vehicles in Australia Market opportunity • Over 1.2m new vehicles and 2.1m used • $100m+ of available funds providing vehicle sales 3 annually significant headroom for loan book ~2.1% 4 increased number of cars on • growth Australian roads in 2017 (or over 400,000 • Over 500,000 unique customers vehicles) • Expansion into New Zealand through acquisition Servicing Gap 1 Roy Morgan: Report - State of the Nation 27: Australian Automotive Industry accelerates towards ‘Decade of • Money3 estimates 4-5 million Australian’s are Upheaval’ – March 2017 either not serviced or excluded by traditional 2 Royal commission into misconduct in the banking, superannuation and financial services industry: Report - lenders Some Features of Car Financing in Australia 3 ABS, 5671.0 Lending Finance, Australia, December 2017 (13 February 2018) Table 9 – Finance Commitments, • Requires highly experienced customer care for Motor Vehicles: Australia, Original ($000) <http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0>. function to serve appropriately 4 Australian Bureau of Statistics: Report - 9309.0 - Motor Vehicle Census, Australia, 31 Jan 2018 14
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