FLEETPARTNERS GROUP LIMITED — AGM Information 2020

Feb 10, 2020

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Eclipx Group Limited 2020 Annual General Meeting

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11 February 2020

1

A enda g

Agenda

1. Chairman’s Welcome, Introduction of Board and Management

2. Chairman’s address

3. Chief Executive Officer’s address

4. Voting

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2

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1. Chairman’s Welcome, Introduction of Board and Management

3

Introduction of Board and Management

Board

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KERRY ROXBURGH Chairman and Independent NonExecutive Director since March 2015

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GAIL PEMBERTON Independent NonExecutive Director since March 2015

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TREVOR ALLEN Independent NonExecutive Director since 26 March 2015

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RUSSELL SHIELDS

Independent Nonexecutive Director since 26 March 2015

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LINDA JENKINSON Independent Nonexecutive Director since 4 January 2018

Renewal of the Executive Team

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JULIAN ✓ BEVAN ✓ RUSSELL GUEST Chief Chief Executive Commercial Officer Officer

JAMES ✓ ALLAWAY Head of Strategy, M&A & Restructuring

JONATHAN SANDOW Group Finance Director

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RUSSELL WEBBER Managing Director – New Zealand

MATTHEW SINNAMON General Counsel

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JASON ✓ JODI ✓ MUHS SAMPSON Chief Financial Head of Human Officer (Acting) Resources (Acting)

DOM DI GORI ✓ EDWARD Treasurer HO

EDWARD HO Chief Risk Officer

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4

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2. Chairman’s address

5

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3. Chief Executive Officer’s address

6

Business update

Positive momentum and progress

Key messages

Notable matters

1. Emergence of core positive jaws in 1Q FY20 result[1] Non-core divestments have progressed ahead of initial timetable

2. objective; Right2Drive and CarLoans are progressing

3. Gross corporate debt reduced from $350m to $240m[2] Execution of cost optimisation is progressing in line with

4. expectations Group focus on product and market development across corporate,

5. mid- and SME market

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Immaterial exposure
Right2Drive and
to changes in
CarLoans on track
insurance
for sale in FY20
commissions
Proceeds of asset
sales, treasury
activities and 45% cost to income
business initiatives target by exit FY21
applied to corporate
debt repayment
FleetPartners—STP credit [3]
90%
70%
50%
30%
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
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Notes:

1. Unaudited result—positive jaws being NOI growth and cost reduction in the core fleet business versus prior comparative period

2. See slide 10 for detail

3. Straight-through novated lease credit processing for FleetPartners has lifted from 46% in October to 74% by December 2019. See slide 12 for detail

7

Sim lification Plan – rationale p

The Simplification Plan is designed to return the Group to a market leading, pure-play fleet business that has been delivering consistent returns for 32+ years

Simplification Plan

Rationale

1. Remove sources of earnings volatility

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Non-core Strengthening
1 divestments balance sheet 2
SIMPLIFICATION
PLAN
Cost
3 Core refocus 4
optimisation
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• Reduce gearing, extend maturities and tailor facility to

• 2. Fleet only – maximise treasury experience

• Eliminate costs associated with group complexity and

• 3. drive strong corporate cost discipline

• Reprioritise all resources to develop our products and

• 4. target markets in our Core Fleet business

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1 Non-core divestments

Divestments have progress ahead of initial timetable objective

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1) NON-CORE DIVESTMENTS 2) EXIT DATE 3) SUPPORT GROSS DEBT 4) TRANSITIONAL
REPAYMENTS ARRANGEMENTS
✓
July 2019 ✓ To July 2020
✓
✓ September 2019 ✓ To March 2020
– On track for FY20 ✓
✓
– On track for FY20
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Pure-play, market leading fleet company

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2 Strengthening balance sheet

TARGETING GROSS DEBT OF $175M

COMMENTS

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•
Gross debt post asset sales Amended corporate debt facilities
& scheduled amortisation [1]
•
(Net debt $189m) Target steady state gross debt through: Extended of maturities to 2022 and 2025, with
• Scheduled amortisation of $10m per half support from existing lenders
• Organic capital generation • Provide stability, certainty and flexibility of
$350m $85m • Pro forma cash position as at 31 December capital structure [2]
of $68m
• Carrying value of Right2Drive is $38m ILLUSTRATIVE SENSITIVITY – PATHWAY TO
STEADY STATE (A$m)
$265m $15m Effective Blended Interest Rate (%) [3]
$10m
$240m 7.0% 6.5% 6.0% 5.5% 5.0%
265 (18.6) (17.2) (15.9) (14.6) (13.3)
250 (17.5) (16.3) (15.0) (13.8) (12.5)
$175m 225 (15.8) (14.6) (13.5) (12.4) (11.3)
200 (14.0) (13.0) (12.0) (11.0) (10.0)
175 (12.3) (11.4) (10.5) (9.6) (8.8)
150 (10.5) (9.8) (9.0) (8.3) (7.5)
ASSET BACKED SECURITISATION
AUS NZ
A$450
A$330 A$352
A$277 NZ$250
NZ$224
1H19 Debt 2H19 Australian Scheduled Pro forma Target gross
reduction / ABS amortisation 1Q20 debt
asset sales of debt 2014 2015 2016 2017 2018 2019
(A$M)
Average Gross Debt
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Notes:

1. $20.5m cash paid to reduce corporate debt from $285.7m at 30 September 2019 to $265.2m at completion of the corporate debt refinance on 28 October 2019 2. Intention to bring leverage <2.0x (defined in FY19 presentation) for at least 2 consecutive periods before paying dividends

2. Interest expense charged with reference to last 12 months average gross debt balances and fees for undrawn committed limits

10

3 Cost optimisation – 45% group cost to income target by exit FY21[1,2]

Execution of the cost optimisation plan is progressing in line with expectations

% EXIT RUN-RATE PHASING

INITIATIVE	INITIATIVE	TARGET	FY19	FY20	FY21	COMMENTS
	Senior management renewal	$2.3m	0%	80%	100%	• Senior management retention and renewal
	Occupancy	$2.6m	50%	100%	100%	• Exit of offices at 1 O’Connell Street, Sydney, Vero Tower Auckland, consolidation of Richmond office
						• Productivity initiatives including process improvements and
	Simplified productivity	$6.3m	0%	50%	100%	the removal of group stranded costs to reflect a more
						simplified operating structure
						• Reduction in complexity of group resulting in improved
	Group discipline	$3.8m	30%	70%	100%	expense management, lower reliance on third party support,
						T&E discipline, and insurance reduction
	Annualised exit run-rates	$15m	$2.4m	$10.3m	$15m	• Core and Group including stranded cost reduction
	Cash costs to realise	$10 – 15m				• One-off cash costs to realise target savings

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FY19 Pro forma opex bridge and
cost optimisation plan ($m)
141.6 (36.0)
(6.2)
99.5 (15.0)
84.5
90.1
Core
90.1
Core
FY19 pro forma for Right2Drive opex CarLoans opex Group (Core & Cost-out (exit FY21) Illustrative Group post
divestments stranded) cost-out
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Notes

• 1.Cost to income ratio at exit run-rate FY21. Cost to income measured as the ratio of group expenses (pre share based payments expense) to net operating income post EOL. Share based payments expense being a non-cash accounting item booked in the income statement based on fair value. The change reflects replacement of cash based incentives with equity remuneration to align executives with shareholders over a longer period

• 2.This plan has been independently reviewed by a third party

11

4 Core refocus – product and market

Group focus on product and market development across corporate, mid- and SME market

OPERATING LEASES

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FY19 new business written
71%
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NOVATED
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FY19 new business written
29%
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SME
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Under-
represented
Mid-market
& SME Expanding decisioning
Testing phase
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Australian order pipeline

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110
100
90
80
70
60
50
Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
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Straight through credit processing

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80%
70%
60%
50%
40%
30%
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
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Addressable market

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SME businesses
2.3m
TAM
c0.8 – 1.0m
acceptable
credits
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*Estimated total addressable market (TAM) size using ABS data

Commentary

• Australian FY19 order pipeline at 3yr highs

• Recent client wins providing momentum

• Closure of sub-scale NZ equipment business

Commentary

• Eclipx has an immaterial exposure to the changes in insurance commissions

• Straight-through novated lease credit processing for FleetPartners has lifted from 46% in October to 74% by December 2019

Commentary

• OEM partnership testing underway

• Drawing on New Zealand experience in SME operating leasing

• Future partnership discussions underway

• Remain under-penetrated in existing corporate clients’ addressable employee base

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12

Sim plification Plan – executed and outstanding

PRIORITIES	FIRST 8 MONTHS	FIRST 8 MONTHS	FIRST 8 MONTHS	TARGET			COMMENTARY
	✓
1) Non-core divestments	✓			• Exit Right2Drive in FY20			• As a pure-play fleet leasing company, Eclipx is well placed to leverage identified market
	✓			• Exit CarLoans in FY20			opportunities
	✓	Warehouses extended
				• Net debt to EBITDA <2.0x before			• Interest expense expected to reduce to
2) Strengthen balance sheet	✓	Corporate debt refinance		dividends1 • Steady state drawn gross debt of c.$175m			~$10m once at steady state debt levels versus $18.5m in FY19
	✓	AUS & NZ ABS completed
				• 45% cost to income ratio by		exit FY212
3) Cost optimisation	✓	Targets set and cost optimisation initiated		• $15m net cost reduction in	Core, including		• Experienced positive jaws in 1Q20
				stranded costs
4) Core refocus	✓	Target market segmentation		• Product and market focus across corporate, mid- and SME market			• Focused on growth opportunity in novated and SME markets and stable growth in corporate

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Notes:

1. Adjusted net debt to EBITDA <2.0x for two consecutive quarters before dividend payment

13

1. Cost to income measured as the ratio of group expenses (pre share based payments expense) to net operating income post EOL

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1. Voting

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