FLEETPARTNERS GROUP LIMITED — AGM Information 2020

Feb 10, 2020

Level 6, 601 Pacific Highway St Leonards NSW 2065

W www.eclipx.com

Eclipx Group Limited | ABN: 85 131 557 901

11 February 2020

Eclipx 2020 Annual General Meeting - CEO’s Address

To 31 December 2019, we experienced positive jaws in our core fleet business, meaning both NOI growth and cost reduction relative to the first quarter in FY19. The business including novated has progressed well, reflecting its resilience and the continued focus of our broader team.

As it relates to our residual non-core businesses, Right2Drive and CarLoans, we have received interest from strategic and financial buyers. These have been short-listed and are currently working through diligence. While the timing of asset sales can be difficult to predict, we do expect to sell both Right2Drive and CarLoans during FY20, based on what we see today.

The non-core business sales to date and other treasury initiatives have progressed ahead of our initial time expectations, reducing the gross debt balance by 31% to $240 million. This in turn has reduced our, gearing and therefore steady state corporate interest costs.

The execution of our cost optimisation plan is well underway with solid progression and remains in line with our expectations. We remain firmly on track to our target of 45% by FY21 exit.

We look forward to providing updates on our progress in due course but in the first instance, let’s talk through our Simplification Plan in detail.

We announced the Simplification Plan at our 1H19 results on 31 May 2019, about two weeks after I joined the Eclipx Group. The purpose of Simplification is to deliver the group back to its core business; a stable fleet business that has delivered consistent earnings and returns for more than 32 years.

The Simplification Plan is made up of four macro components

1. Non-core business divestments; to remove sources of earnings volatility from the group;

2. Balance sheet strengthening; through an amend & extend restructuring of our corporate debt facility, tailoring it for the implementation of our Simplification Plan. The proceeds from non-core sales, combined with the removal of non-core earnings volatility has had a positive impact on our balance sheet ratios and remain compliant with covenants;

3. Cost optimisation; through the divestment of non-core businesses we are able to eliminate complexity and reduce sticky costs across the Group. We have also been implementing strong

corporate disciplines around group costs. All of this has been developed through careful planning, and is currently in execution phase; and

1. Re-focus on our Core fleet business; through the development and refinement of its processes and the broadening of product and target markets, including novated and SME

In the eight months since we announced this plan, we have been systematically working through each component of Simplification—this presentation outlines our progress to date and our remaining priorities.

The objective of Simplification is to return the group back to a focused, pure-play fleet business.

We defined the perimeter around the non-core businesses, and prepared them for sale.

We sold GraysOnline and AreYouSelling in July 2019, on a more rapid timetable than we had initially expected.

This was followed by the sale of Commercial Equipment Finance Australia in September 2019. We also closed down our sub-scale New Zealand equipment financing business in December 2019.

Right2Drive has been significantly restructured since May 2019. We changed the leadership with the appointment of Jason McMillan as MD, who has more than 30 years’ experience in debt collections and process improvement.

His team have made some solid progress including a circa 30% reduction in branches, an overhaul of corporate processes, and a strong focus on collections. On 31 January 2020, the general insurers in New Zealand decided to withdraw their appeal to the New Zealand Supreme Court, following a finding against them in the High Court, a matter that we had discussed at the time of our FY19 results.

In parallel, with the restructuring, we have been preparing this non-core business for sale.

As I mentioned earlier, Right2Drive and CarLoans are both expected to be sold during FY20, based on the strategic and financial interest we see today.

As our non-core businesses were sold, the net proceeds were applied to the reduction of our corporate debt.

The removal of non-core earnings volatility combined with gross debt reduction had a meaningful impact on our debt ratios, which ultimately strengthened our balance sheet.

Between May and September, we refinanced our corporate debt facility to tailor it to a more simplified business. The refinance ultimately stabilised our balance sheet, and gave us the required covenant headroom and the flexibility to execute our Simplification Plan.

In the space of three months, we issued more securitisation paper than had been done by the Group in the last three years. We tapped the Asset Backed Securitisation market in New Zealand in late

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September and Australia in mid-December, raising circa $700 million, which had the benefit of both reducing our funding costs and permanently releasing capital.

This capital release, scheduled debt amortisation and proceeds from non-core sales has led to an overall reduction in gross corporate debt from $350 million in 1H19 to a pro forma $240 million in 1Q20, as it shown in the waterfall chart.

This represents an overall reduction of 31% over the period. As at December our cash position was $68 million, implying a pro forma net debt position of $172 million.

We are currently targeting gross debt of circa $175 million, with further reductions expected to come from scheduled amortisation, non-core business sales, organic capital generation and improved cash liquidity management.

The planning that has gone into the cost optimisation has been significant.

We are moving through each bucket in parallel, with the first two categories being senior management renewal and property already largely executed.

The other two categories are currently in execution phase, which is on track and is progressing well.

We will provide a further update on optimisation at the first half result in May, as well as our core business performance.

There is so much momentum within the group in support the core fleet leasing business. This includes significant executive focus, resourcing reallocation, process improvements and importantly disciplined capital allocation.

While the Simplification Plan is being executed, our executive have been incredibly focused on maintaining and developing our core fleet business.

Bevan Guest, our Chief Commercial Officer, has been doing a great job managing the core, and limiting any distraction from the execution of the Simplification Plan.

Our operating lease business is stable, with high quality, sticky customers—our top 20 customers have been with us for an average of more than eight years. Industry awards, such as being named partner of the year from Coca Cola Amatil’s panel of more than 90 suppliers, has led to strong advocation and represents validation of our quality service proposition. We have seen some good client wins, supporting long term writings as well as our solid existing near-term new order pipeline.

Our NPS is helping us secure new client wins. This is evident in operating leasing but also in Novated where employee word of mouth is so powerful. In FY19, this business saw 12% new business writings growth, and now represents nearly 30% of our annual new business writings. Our novated growth is solid and continues to buck the negative trend we are seeing in new car sales. Interestingly, the

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deterioration in new car sales, is supporting our end of lease sales, as many consumers are opting for used over new in our various disposal partner channels.

We have invested in our novated business and pride ourselves in having an opt-in product offering, which allows our target market, the employees, choose their own add-on products, where they deem appropriate. For the avoidance of doubt, ancillary product add-on commissions are immaterial to our earnings.

We are pleased with the changes we are continuing to make to the business. In FleetPartners Novated, for example, we continue to improve our user experience. We have seen an increase of credit straight through application processing from 46% to 74% in just three months.

As we look forward, we see additional opportunity in SME and mid-market. This space is large and less penetrated relative to markets for large corporates and governments. As we have mentioned previously, we will move carefully into this space, and seek to develop our partnerships, processes and capabilities during FY20, and see it as a source of good risk adjusted growth and returns into FY21 and beyond.

We have made solid progress against our Simplification Plan since announcing it eight months ago.

Our non-core divestment program has progressed well, with the residual Right2Drive and CarLoans expected to be sold during FY20.

The proceeds from these residual sales, combined with and other treasury initiatives, will be applied to the further reduction in gross debt. This in turn will lead us towards our $175 million gross debt target and steady state corporate interest costs of circa $10 million, down from $18.5 million in FY19.

Our cost optimisation plan is well underway with good progress made against our plan. We remain on track to our target $10.2 million run-rate by exit FY20 and $15 million exit FY21.

We look forward to providing updates on our progress on our Simplification Plan, including core refocus, in due course.

ENDS

Matt Sinnamon

Company Secretary matt.sinnamon@eclipx.com +61289737118

About Eclipx

Eclipx is a leading provider of fleet leasing, management and vehicle rentals to corporate, SME and consumers in Australia and to corporate and SME customers in New Zealand.

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