CVC LIMITED — AGM Information 2019

Nov 24, 2019

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25 November 2019

CVC Limited | Annual General Meeting Presentation

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Disclaimer

Important Notice

This Presentation (as amended) (Presentation) has been prepared and issued by CVC Limited ACN 002 700 361 (CVC).

This Presentation must not be copied or distributed to other persons without the prior written consent of CVC, which may be given or withheld in its absolute discretion.

This document is not a prospectus and does not contain all of the information which would be required to be disclosed in a prospectus.

Financial amounts

All dollar values are in Australian Dollars (A$) and financial data is presented as at the date of this presentation unless stated otherwise. CVC’s results are reported under Australian International Financial Reporting Standards, or AIFRS.

Future performance

This Presentation contains certain ‘forward looking statements’ including statements regarding or based on CVC’s current belief, intent, assumptions or expectations with respect to the financial condition and performance, results and operations, business plans and objectives or management, capital adequacy, risk management practices and specific or general provisions.

Summary Information

The information contained in this Presentation is of a general nature and in summary form. Neither CVC (nor any of its respective officers, employees, related bodies corporate, affiliates, agents or advisers) guarantees or makes any representation or warranty, express or implied, as to, or takes responsibility for, the accuracy, or reliability of the information contained in this document. CVC does not represent or warrant that this document is complete or that it contains all material information about CVC or which a prospective investor or purchaser may require in evaluating a possible investment in CVC or acquisition of CVC shares.

It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision or that would be required in a prospectus prepared in accordance with the Corporations Act.

Forward looking statements can generally be identified by the use of forward looking words such as ‘anticipate’, ‘believe’, ‘expect’, ‘project’, ‘forecast’, ‘estimate’, ‘likely’, ‘intend’, ‘should’, ‘will’, ‘could’, ‘may’, ‘target’, ‘plan’ and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance or outlook on future earnings, distributions or financial position or performance are also forward looking statements. The forward looking statements contained in this Presentation involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of CVC, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct.

There can be no assurance that actual outcomes will not differ materially from these forward-looking statements.

Disclaimer

Statements in this Presentation are made only as of the date of this Presentation unless otherwise stated and information in this Presentation remains subject to change without notice.

Not an Offer

This Presentation is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian law and does not constitute an invitation to subscribe for or buy any shares in CVC, including in any jurisdiction in which it would be unlawful, or a solicitation to engage in or refrain from engaging in any transaction.

Not investment advice or a recommendation

This Presentation does not constitute investment or financial product advice, nor is it a recommendation to acquire shares in CVC. It is not intended to be used as the basis for making a financial decision, nor is it intended to constitute legal, tax, accounting or other advice. In particular, this Presentation is not intended to be relied upon as advice to any person and does not take into account the financial situation, objectives or needs of any person. This Presentation may not be relied on to make an investment or other financial decision, and you should make your own assessment and take independent professional advice in relation to the information, before making any investment decision in relation to CVC.

No party other than CVC has authorised or caused the issue, lodgement, submission, dispatch or provision of this Presentation, or takes any responsibility for, or makes or purports to make any statements, representations or undertakings in this Presentation. Any information or representations not contained in this Presentation may not be relied upon as having been authorised by CVC.

Nothing contained in this document nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee, whether as to the past, present or future. Past performance information given in this document is given for illustrative purposes only and should not be relied upon as (and is not) any indication of future performance.

To the maximum extent permitted by law, CVC, officers, employees, agents and advisers disclaim all liability for any expenses, losses, damages or costs incurred by you as a result of this presentation being inaccurate or due to information being omitted from this Presentation, whether by way of negligence or otherwise, make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this Presentation.

The information in this Presentation remains subject to change without notice.

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CVC Limited | Annual General Meeting Presentation

CVC Results Summary

1 JULY 2018 – 30 JUNE 2019

• NPAT profit of $1.0m (2018: profit $27.1 million); NPAT loss attributable to shareholders of $2.1 million (2018: profit $22.7 million)

• Completion of the development of the Bunnings and associated bulky goods centre at Port Macquarie, New South Wales and Caltex travel centre at Caboolture, Queensland

• The continued refurbishment of the Mooloolaba Wharf, Queensland with the rejuvenation of the centre with re-leasing and repositioning of retail tenancies

• Advances made in planning approvals for property projects at Marsden Park, Donnybrook, Liverpool, Turrella, Kingsgrove and Bentleigh

• Increased ownership in the Liverpool and Turrella projects in New South Wales to approximately 67% which, along with Marsden Park, East Bentleigh and Donnybrook, are expected to provide long term value to shareholders

	2019	2018
Segment Contribution	$’millions	$’millions
Direct property investment	16.4m	15.4m
Property backed lending	5.8m	8.4m
Funds management	1.5m	1.6m
Commercial debt and alternative assets	0.3m	1.2m
Listed investments	(5.7m)	13.7m
Private equity and venture capital	(1.7m)	1.6m
Convertible note interest	(4.3m)	(0.1m)
Unallocated	(11.3m)	(9.0m)
Tax effect	-	(5.7m)
Net Profit After Tax	1.0m	27.1m

• Strong contribution to earnings from property backed lending

• Completion of the capital raising by the CVC Emerging Companies Fund and the launch of Eildon Debt Fund, with a combined total Funds Under Management of approximately $100 million

• Payment of fully franked dividends of 15 cents per share during the year

• Undertook a strategic review of the operations of CVC which has led to a repositioning of the business

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CVC Limited | Annual General Meeting Presentation

Business Review

Position

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CVC Limited | Annual General Meeting Presentation

Simplification of Business Model

Previous model

• Diversified investment company with many different strategies

• Focus on preserving diversification across a number of investment segments, and within those segments

• Investment in smaller less concentrated positions

• Complexity in explaining and capitalising on CVC core competencies

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Simplified model

• ✓ Reduce number of strategies and do them well

• ✓ No absolute requirement to have a diversified portfolio

• ✓ Investment strategies centred around CVC’s core competencies and skills

• ✓ Cost reduction due to efficiency of having lower number of investments and less diverse investment universe

• Resourcing reflective of a requirement to have wide coverage of many investment segments

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CVC Limited | Annual General Meeting Presentation

Simplification Pathway

		Goal		Progress		Next Steps
Investment	•	Rationalised investment portfolio	•	Strategic review undertaken to	•	Continue to simplify portfolio
Strategy	•	High conviction positions with ability to influence outcomes		identify non-core elements of business model	•	Update market on rebalanced portfolio post 31 December 2019.
	•	Focus on core competencies	•	Development of strategy to capitalise	•	Continued adherence to streamlined
Refocus / Reposition	•	Market understands the CVC position and offering	•	on core skills of investment team Established ongoing review	•	business plan Continue to educate investors and
				framework and timetable		market about progress
	•	Cost of running business corresponds	•	Cost base significantly reduced	•	Continue to monitor and improve
Reduce Costs		with a simplified strategy		(c.$1.5m of annual costs have been removed)		efficiency to ensure sustainable operating cost base and sufficient
						resources to deliver returns
	•	Maximise value of CVC investment	•	Divestment of approximately $33m	•	Patient and focused approach to
		portfolio		of investments in listed equities and		divestment of non-core investments
Divestments	•	Remove core investments from		private equity segments
		portfolio	•	Rebalancing of the portfolio in this
				period directed toward property
				debt opportunities

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CVC Limited | Annual General Meeting Presentation

About CVC – Direct Property Investments 1 JULY 2018 – 30 JUNE 2019

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2019 Return
Invested
at 30 June 2019 $31.1m [2] Profit $16.4m Return 55%% [[1]]
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55%%[[1]] No. of Investments

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2020 Objectives

• Continue progression of key investments through planning and repositioning

• Identification of shorter term development / investment opportunities either directly or in conjunction with key partners to grow recurrent income and source opportunities for the funds management segment

• Finalise pre-lease commitments for the Caboolture development and commencement of the development of stage 2

• Identification of long term property holdings to supplement the income from existing major projects currently progressing through planning

Advancement of major planning projects:

• Marsden Park (Exhibition of PSP)

• Donnybrook (Exhibition of PSP)

• East Bentleigh (VPA Strategic Site)

• Turrella (Planning Commenced)

• Liverpool (Collaboration Area)

Commercialisation of significant projects:

Investment Summary

• Caboolture (Negotiations progressing with major retail operator to anchor the balance of the site)

Project Completion/Advancement:

• Completion of the Bunnings retail centre development in Port Macquarie

• Continued refurbishment and repositioning of the Mooloolaba Wharf

• Completion of the Caltex travel centre at Caboolture

1. Return is calculated as annual earnings divided by the average of total opening and closing direct property investments, net of property debt, during the financial year.

2. Invested amount at 30 June 2019 includes direct property investment, net of specific property debt.

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CVC Limited | Annual General Meeting Presentation

About CVC – Property Backed Lending

1 JULY 2018 – 30 JUNE 2019

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2019 Return
Invested
at 30 June 2019 $41.3m Profit $5.8m Return 16%% [[1]]
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16%%[[1]] No. of Investments

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2020 Objectives

• Increase investment position in secured mortgage loans, across both senior and mezzanine opportunities on solid risk adjusted returns

• Utilise funds management capability to partner with other investors to gain access to larger loan positions that would ordinarily be too large for CVC alone

Investment Summary

• With tightening credit markets and property value volatility, this has generated greater loan opportunities that are generating higher returns and improved security on loans

• Given the current state of the market, there has been a greater focus on risk management, with more rigorous deal assessment process and investment management, including independent review of project feasibility, developer, project sensitivity and market analysis

1. Return is calculated as annual earnings divided by the average of total opening and closing loan balances during the financial year.

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CVC Limited | Annual General Meeting Presentation

About CVC – Funds Management

1 JULY 2018 – 30 JUNE 2019

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2019 Return
Invested
at 30 June 2019 $32.4m32.4mm Profit $1.5m1.5mm Return 5%% [[1]]
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Invested
at 30 June 2019 $32.4m32.4mm Profit $1.5m1.5mm Return 5%% [[1]] No. of Investments
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2020 Objectives

• Continuing investment into property funds management opportunities where CVC has core skills and industry reach

• Increase contribution to group revenue from management fees/performance fees

• Continuing to support the development of external fund manager relationships, while providing the opportunity to deploy uncommitted funds to generate recurrent income.

• Continued successful management of Eildon Capital Limited (ASX: EDC) through Eildon Funds Management, now a wholly owned subsidiary of CVC

• Australian Invoice Finance continues to grow its loan factoring operations, with the support of CVC and a new investor base

• Bigstone Finance continues to grow its commercial loan portfolio, with total loans written during the financial year increasing by 216%

Investment Summary

• CVC rolled out new fund offerings, including:

• CVC Emerging Companies Fund, a joint venture between CVC and Evans Dixon, raised $45 million focused on investing in unlisted and listed emerging companies;

• The establishment of the Eildon Debt Fund contributory mortgage fund, with approximately $50 million of loans funded and a further $20 million of commitments since November 2018; and

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1. Return is calculated as annual earnings divided by the average of total opening and closing investments in funds management opportunities during the financial year.

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CVC Limited | Annual General Meeting Presentation

About CVC – Alternative Assets/Debt

1 JULY 2018 – 30 JUNE 2019

2019 Return Invested at 30 June 2019 $9.9m9.9mm Profit $0.3m0.3mm

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Invested
at 30 June 2019 $9.9m9.9mm Profit $0.3m0.3mm Return 3% [1]
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No. of Investments
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13

2020 Objectives

• Increase investment through fund managers, with established networks and robust credit policies, such as Bigstone Finance

• Provide highly secure, asset backed income generating loans

• Maintain borrowers and business segments

Investment Summary

• Transaction flow in this segment has been strong as major banks reduce their risk and tightening available credit, especially to the Small to Medium and middle market borrowers

• CVC has provided funding to support the growth of loan portfolios external fund managers

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1. Return is calculated as annual earnings divided by the average of total opening and closing loan balances during the financial year.

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CVC Limited | Annual General Meeting Presentation

About CVC – Listed Investments

1 JULY 2018 – 30 JUNE 2019

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2019 Return
Invested
at 30 June 2019 $59.8m59.8mm Profit ($5.7m)5.7m)m) Return (8.08.0%
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Invested No. of
at 30 June 2019 $59.8m59.8mm Profit ($5.7m)5.7m)m) Return (8.08.0% [1] ) Investments 43
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2020 Objectives

CVC’s current investment portfolio as at 21 November 2019 is as follows:

• The objective is to rebalance the portfolio to more concentrated holdings in high conviction investments

• Continue to work closely with investee companies to create value

Investment Summary

• Substantial positive contributions from CYC, MSV and PBP

• Substantial negative contributions from BNO, INP and IDZ

• The process of rebalancing the investment portfolio commenced over the course of the second half of the financial year

1. Return is calculated as annual earnings divided by the average of total opening and closing listed investments during the financial year.

CVC Major Holdings

	Name	Code	% Ownership	Value (AUD)2
	Cyclopharm Ltd	CYC	10.1%	$8.4m
	Mitchell Services Ltd	MSV	5.3%	$5.5m
	TasFoods Ltd Universal Biosensors	TFL UBI	14.0% 13.4%	$5.6m $4.5m
	Heritage Brands Ltd	NSX.HBA	7.7%	$4.3m
	Longtable Group Ltd Telix Ltd	LON TLX	6.5% 0.4%	$2.4m $1.7m
	Vita Life Sciences Ltd	VLS	3.5%	$1.2m
				$33.6m

2. Based on last trade price available on 21 November 2019

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CVC Limited | Annual General Meeting Presentation

About CVC – Private Equity Investments 1 JULY 2018 – 30 JUNE 2019

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2019 Return
Invested
at 30 June 2019 $11.1m Profit ($1.7m) Return (11%11%% [[1]] )
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Return (11%11%%[[1]] ) No. of Investments

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2020 Objectives

Investment Summary

• Rebalance the portfolio to more concentrated holdings in high conviction investments

• Investments in Cleanspace and Think Conveyancing were sold as seed investments into the CVC Emerging Companies Fund

• Continue to work closely with investee companies to create value and/or identify transaction opportunities

• Work with CVC Emerging Companies Fund and its team to foster its growth as a distinct investment strategy

• Sale of PrimeQ generating a 103% uplift on the original investment

• Continuing to review investment opportunities with the objective of rebalancing the portfolio to more concentrated holdings with increasing investment size in high conviction positions

1. Return is calculated as annual earnings divided by the average of total opening and closing listed investments during the financial year.

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CVC Limited | Annual General Meeting Presentation

Year to Date

1 JULY 2019 – 30 JUNE 2020

Following year end, CVC has commenced the implementation of the revised strategy which has seen:

• Divestment of $33m of listed equities realising profits of approximately $3m from these positions. Currently held listed investments (11 positions down from 43 as at 30 June 2019) are tracking near 30 June 2019 values over the portfolio as at November;

• Proceeds of listed equities sales have predominantly been committed or redeployed into property backed lending, providing for income generation in a secure environment. Total investment of approximately $60m in this segment;

• CVC has entered into unconditional contracts to purchase a greenfield development site suitable for a neighbourhood shopping, medical and childcare centre in Marsden Park, NSW. Settlement is forecast H2 FY2020, with development to occur in H1 FY2021;

• A further $26m has been committed from external investors into the Eildon Debt Fund which is managed by Eildon Funds Management a wholly owned subsidiary of CVC Limited;

• The CVC Emerging Companies Fund has made its second call (of three) for capital due to the successful deployment of the initial tranche of equity ($15m);

• Substantial reduction in ongoing overhead costs have been realised which will be seen in H2 FY2020 numbers.

Segment Investment Allocation	2020	2019
Cash	20.1%	23.6%
Direct Property1	16.9%	12.8%
Property Backed Lending	26.4%	17.0%
Funds Management	13.6%	13.3%
Alternative Assets/Debt Listed Investments	4.2% 13.7%	4.1% 24.6%
Private Equity Investments	5.1%	4.6%

1. Net of specific property debt

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Private Equity
Investments
Listed Cash and deposits
Investments
Alternative
Assets/Debt
Direct Property
Funds
Management
Property Backed Lending
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CVC Limited | Annual General Meeting Presentation

CVC Outlook

1 JULY 2019 – 30 JUNE 2020

• Implementation of the simplified strategy is continuing with a transition from less concentrated positions to high conviction exposures leveraging off CVC core capabilities;

• Remaining active in property backed lending at this stage of the property cycle;

• Continued progression of key direct property investments that can unlock substantial long term value for shareholders;

• Equities performance for FY2020 will be largely determined by higher value positions in portfolio such as TFL, LON, UBI, MSV, CYC, TLX;

• Private equity portfolio is being actively managed inline with the wider business objectives to maximise value and streamline portfolio;

• Transition to the new investment strategy provides uncertainty regarding the profit for the year ending 30 June 2020 and payment of dividends.

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CVC Limited | Annual General Meeting Presentation

CVC Limited Proxy Results

1 JULY 2018 – 30 JUNE 2019

Agenda Items

Item 2 – Adoption of Remuneration Report

For	Against	Abstain	Discretion	Excluded	Total
1,101,451	38,689	528,956	13,262,885	-	14,931,981

Item 3 – Election of Mr Ian Campbell

For	Against	Abstain	Discretion	Excluded	Total
1,666,511	-	2,585	13,262,885	-	14,931,981
Item 4 – Election of Mr Alexander Rapajic-Leaver
For	Against	Abstain	Discretion	Excluded	Total
1,662,544	-	6,552	13,262,885	-	14,931,981
Item 5 – Share Buyback Program
For	Against	Abstain	Discretion	Excluded	Total
1,624,109	25,477	19,510	13,262,885	-	14,931,981

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CVC Limited | Annual General Meeting Presentation