HARMONEY CORP LIMITED — Investor Presentation 2021

Mar 16, 2021

ASX SMALL AND MID-CAP CONFERENCE 2021

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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IMPORTANT NOTICE AND DISCLAIMER

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The material in this presentation is provided for general information purposes only and is current as at the date of this presentation. It is not a prospectus or product disclosure statement, financial product or investment advice or a recommendation or offer to acquire Harmoney shares or other securities. It is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Investors should assess their own financial circumstances and seek professional legal, tax, business and/or financial advice before making any investment decision. The information in this presentation does not purport to be complete. It should be read in conjunction with Harmoney’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange and www.asx.com.au and www.nzx.com New Zealand’s Exchange, which are available at respectively.

This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Harmoney Group’s business and operations, market conditions, results of operations and financial condition, specific provisions and risk management practices. Such forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of Harmoney Group and which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date thereof. Past performance is not indicative of future performance.

No representation or warranty, express or implied, is made as to the fairness, completeness, accuracy, adequacy or reliability of information, opinions or conclusions in this presentation, including the financial information. To the maximum extent permitted by law, none of Harmoney or its related bodies corporate or their respective, its directors, officers, employees or contractors or agents do not accept liability or responsibility for any loss or damage resulting from the use or reliance on this presentation or its contents or otherwise arising in connection with it by any person, including, without limitation, any liability from fault or negligence.

The financial information in this presentation has not been audited in accordance with Australian Auditing Standards.

This presentation contains certain non-IFRS measures that Harmoney believes are relevant and appropriate to understanding its business. Investors should refer to the HalfYear Results for 1H21 for further details.

All values are expressed in New Zealand currency unless otherwise stated.

All intellectual property rights in this presentation are owned by Harmoney.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• LARGEST DIRECT PERSONAL LENDER ACROSS AU AND NZ. ORIGINATIONS OF $1.9+ BILLION

CUSTOMERS TEAM NET PROMOTER SCORE 83 FTEs (NZ + AU) GOOGLE REVIEWS FTE ENGINEERS, PRODUCT 4.7/ 5 MANAGERS, DATA SCIENCE SHOPPER APPROVED 4.7/ 5 NZ HOMEOWNERS 49% (% OF CUSTOMERS) AU HOMEOWNERS 63% (% OF CUSTOMERS)

69[51%]

KEY METRICS 1H21 PRO FORMA REVENUE $42m TOTAL ORIGINATIONS $1.9b REVENUE (PRO FORMA) 20% CAGR (1H17-1H21)

NEW ZEALAND AWARDS

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COMPANY OF THE YEAR
2015 • 2016 • 2017 • 2018 • 2019
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AUSTRALIAN AWARDS
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2017 • 2018
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ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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STRONG MOMENTUM POST IPO

DEC ‘20 SECURED UP TO $200M IN FUNDING FROM M&G INVESTMENTS

FEB ‘21 RELEASED LIBRA ™ 1.7 INTO AU

19 NOV ‘20 IPO NET PROCEEDS OF ~$57M RECEIVED

JAN ‘21 EXCEEDED PROSPECTUS ORIGINATION FORECASTS

FEB ‘21 PAUL LAHIFF APPOINTED INDEPENDENT DIRECTOR (AU BASED)

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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LIBRA ™ 1.7 DOUBLES NEW BUSINESS ORIGINATIONS IN AUSTRALIA

• ™

• • Libra 1.7 initial roll-out on 10 February.

• Built specifically for the Australian market.

• ™

• • Libra 1.7 is an enabler of the Millennial products.

• ~100% uplift in conversion of accounts to funded loans in 13 days since launch, driven by no additional marketing spend.

~100%

INCREASE IN DAILY NEW LENDING

• We expect this to stabilise to an 80% uplift in originations from Libra ™ 1.7 for the similar marketing spend.

• As a result, Group receivables have grown to $481m as at 23 February 2021.

Libra™1.7 is Harmoney’s new generation, real-time behavioural credit decisioning and pricing engine (CDP), built into Stellare™. This new release significantly enhances our lending model in Australia without impacting credit quality and was developed with the help of machine learning to analyse data from 53,000 Australian customer applications, identifying 100+ behavioural characteristics relevant to predicting credit risk.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• STRONG ORIGINATION GROWTH SINCE 2014

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$1.9+ BILLION OF LOAN ORIGINATIONS

• Harmoney has originated over

$1.9 billion in personal loans across AU and NZ since 2014, making it the largest 100% direct lender in AU / NZ. • Loan origination CAGR growth of 79% over this period.

CAGR 79%

• This being achieved whilst maintaining a net interest margin of ~11%.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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100% DIRECT PERSONAL LENDER POWER OF THE 3Rs

NEW AND EXISTING DEAL FLOW

POWER OF THE PROVEN BUSINESS MODEL

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NEW CUSTOMERS

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Harmoney originates customers of new loan traffic via low/no-cost online channels, comparison sites NEW CUSTOMERS and also using Google Smart Bidding. EXISTING CUSTOMERS (3Rs) REPEAT: Additional loan limit for active loan in good standing and EXISTING CUSTOMERS service capacity. RETURN: Paid-off customer returning for a new loan. RENEW: Retention play for existing customer with an active loan in good standing.

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VOL TO 31 JAN 2021
$565m
Accounts created in CY2015
Losses on repeat
borrowed $118m in CY2015. By 31
loans engaged
Jan 21 this same cohort of accounts
under the 3Rs are
borrowed $565m, as more became
~40% lower than
borrowers and many returned for
first time loans.
subsequent loans.
VOL YR 1
$118m
32.5K 32.5K
INCREASING
ACCOUNTS ACCOUNTS
VOL VIA 3Rs AT
CREATED CREATED
$0 marketing
CY2015 CY2015
cost
YR 1 CONVERSIONS CONVERSIONS to 31
Jan 2021
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ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• 1H21 RESULTS HIGHLIGHTS

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1H21 RESULTS HIGHLIGHTS

$1.9B TOTAL PERSONAL LOAN ORIGINATIONS

Harmoney has now originated over $1.9 billion in personal loans across AU and NZ making it the largest 100% direct personal lender in AU and NZ.

™ LIBRA 1.7

SIGNIFICANTLY IMPROVED LENDING MODEL RELEASED IN AU

™ ™ - Stellare ’s lending model - Libra launched in Australia on 10 Feb 21, resulting in a ~ 100% increase in conversion of accounts to funded loans.

47%

STRONG QUARTER ON QUARTER ORIGINATION GROWTH

Originations accelerated through 1H21, with 47% growth in 2Q21 approaching pre-COVID levels.

0.60%

90+ DAY ARREARS AT HISTORIC LOWS

Credit quality focus with portfolio benefiting from high levels of home ownership and full-time income. No deterioration in credit quality resulting from COVID during 1H21.

$42M

PRO FORMA REVENUE

Pro forma revenue has performed despite impacts of COVID. This is due to a highquality risk-based priced portfolio and significant customer lifetime value generated through our 3R’s program.

$468M

HIGH YIELDING PERSONAL LOANS

High yielding personal loans receivables balance reflecting Harmoney’s position as direct personal loan market leader across Australia and New Zealand.

$290M+

INCREASED WAREHOUSE LENDING CAPACITY

Harmoney has over $290m in undrawn warehouse funding lines to support loan book growth and the transition of the balance sheet to 100% warehouses.

11%

NET INTEREST MARGIN

Market leading NIM of 11% remaining stable during turbulence in last 12 months and as originations accelerate post-COVID.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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2Q21 GROWTH WITH RETURN TO MARKETING

• Origination accelerated through 1H21, with

• 2Q21 approaching pre-COVID levels.

• 2Q21 Group originations $115m, 47% growth on 1Q21.

• 1H21 Group originations of $194m.

AUSTRALIA (2Q ON 1Q)

• Total originations grow by 69%.

• New customer originations grow by 207% with resumption of marketing expenditure following proceeds from Nov 2020 IPO.

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NZ AU
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ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• POWER OF THE PROVEN BUSINESS MODEL

• Harmoney leveraged the 3Rs in 1Q21 to originate from quality existing accounts.

• In 2Q21, Harmoney resumed a marketing program and saw new customer originations grow by 127%.

• Lag effect between marketing activity and origination in 2Q21 with normal marketing resuming very late in the quarter.

• With IPO proceeds received late Nov 20 expect increased marketing spend in 2H21 to further grow originations.

Our collaboration with Google continues to grow in 2021 as we accelerate growth in Australia using the unique strengths of our Stellare™ platform and Google’s unparalleled audience reach.

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3Rs NEW – OTHER ONLINE
MARKETING SPEND NEW – LOW/NO COST ONLINE
NEW – GOOGLE SMART
BIDDING
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1H21 HISTORICAL LOWS IN GROUP ARREARS AND LOSSES

AUSTRALIA

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• Arrears at historical lows in both AU and NZ.

• Upgraded proprietary scorecards and conservative risk settings through 2020 driving improved performance.

• Group losses at historical lows and continue to track to forecast.

NEW ZEALAND

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• Portfolio showing resilience through COVID with ~1% of customers currently on a payment holiday.

• High-quality loan book performance enables greater funding diversification.

• Due to our high-quality loan book, Harmoney's funding structures do not utilise or require any Government support in AU or NZ.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• DIVERSIFIED FUNDING: $290M+ UNDRAWN

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NEW ZEALAND
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$168m UNDRAWN

AUSTRALIA A$113m UNDRAWN

WAREHOUSE VS PEER-TO-PEER

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WAREHOUSE PEER-TO-PEER

• M&G warehouse committed facility to January 2024, up to a $200m limit.

• BNZ/NAB warehouse committed facility recently extended to December 2022, up to $153m limit.

• In addition to the above, non-binding Heads of Agreement executed with Heartland Bank for new warehouse facility (and transfer of existing P2P loans into warehouse) for $130m.

• AU warehouse facility - In Feb 2021 committed facility extended to Jan 2023 and limit increased to $177m (previously $115m) – approved by Big 4 Bank.

• A$113m of undrawn funding in the warehouse facility.

• In addition to the above, non-binding Heads of Agreement executed with Heartland Bank for new warehouse facility (and transfer of existing P2P loans into warehouse) for A$70m.

The transition to 100% warehouses is well underway and will be largely completed over the next 12 months.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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STRATEGY AND OUTLOOK

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• HARMONEY CUSTOMER ENQUIRY $7.4B ($3B IN AU)

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~A$150B
AU PERSONAL
LENDING MARKET
SOURCE: RBA, ‘D2 – LENDING AND CREDIT AGGREGATES’; ABS, ‘5671.0 – LENDING
FINANCE, AUSTRALIA (NOVEMBER 2018) – TABLE 52’.
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~$15B
NZ PERSONAL
LENDING MARKET
SOURCE: RBNZ, ‘C5 – SECTOR LENDING (REGISTERED BANKS AND NON-BANK
LENDING INSTITUTIONS)’. NOTE: PERSONAL LOANS ARE DEFINED AS PERSONAL OR
CONSUMER LOANS WHICH ARE NOT FULLY SECURED ON RESIDENTIAL PROPERTY
INCLUDING OVERDRAFTS, CREDIT CARDS, AND TERM LOANS.
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MAJOR BANK MARKET SHARE IN DECLINE 2015: ~90% → 2018: ~50%

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BRANCH /
STORE
PURCHASE
DOWN 70%
ONLINE
PURCHASE
UP 113%
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BORROWERS MOVE TO ONLINE PURCHASE

HARMONEY TOTAL ENQUIRY SURPASSES $7.4B* $3B IN AUSTRALIA * FROM AUG 2014-FEB 2021

Online research (consideration) strong at ~83%. Online purchase increasing 113% since 2015.

SOURCES: KANTAR SHOPPER PULSE OCTOBER 2020. GOOGLE CONSUMER BAROMETER RESEARCH 2015.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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• $1B P.A. AUSTRALIAN ORIGINATION TARGET

By matching NZ performance to our AU business today = $1B per annum opportunity

PARITY IN 3R PERFORMANCE

PARITY IN NEW CONVERSION

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GAP TO
NZ PARITY
AU ~25%
OF NZ
=
+
AU CONVERSION NZ CONVERSION
(Prior to Libra 1.7)
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HARMONEY AU ORIGINATION TARGET P.A. $1B

Applying Harmoney NZ funnel metrics to Harmoney AU

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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ROADMAP TO $1B P.A. AUSTRALIAN ORIGINATION TARGET

CUSTOMERS DEMAND FRICTIONLESS FINANCE

MONEY IN MOMENTS 113% BROAD LENDING LIMITS GROWTH IN ANY DEVICE / INTERFACE = + ONLINE TRUSTED BRAND PURCHASE DELIVERABLE DUE EARLY RESULTS LIBRA ™ 1.7 FEB 21 ~100% LIFT IN CONVERSION LIBRA ™ 1.8 JUN Quarter 21 TBC TBC TBC TBC

Harmoney is meeting customer demand for a simple and seamless experience and identifying opportunities for product initiatives. For example, an opportunity to create a BNPL-like experience for higher value purchases.

FRICTIONLESS FINANCE

MILLENNIAL RELEASE 1 MILLENNIAL RELEASE 2 RELEASES 3-5

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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WHY IS HARMONEY’S MODEL SUCCESSFUL?

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Attractive revenue profile, loan book, $1.9Bn+ in originations at market leading NIM of ~11%.

COMPELLING FUNDAMENTALS

Significant presence in NZ and release of Libra 1.7 into Australia in Feb 21 resulting in doubling of conversion into new loans.

STRONG MARKET POSITION

Opportunities to expand product into complementary segments and verticals by leveraging customer data.

CREDIT PRODUCT INNOVATION

WAREHOUSE Diversified warehouse funding FUNDING programs in place across SECURED Australia and New Zealand with $290m+ undrawn.

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TECHNOLOGY EMPOWERED

OPERATING LEVERAGE

STRONG CUSTOMER RETENTION

EXPERIENCED TEAM

Proprietary technology, Stellare™ enables automation, machine learning, data utilization and direct marketing.

Stellare™ enhances customer lifetime value and minimises distribution costs, facilitating scale and efficiency, leading to Cash opex being 19% of pro forma revenue.

High customer satisfaction and personalized relationship direct with customer through 3Rs program.

Highly experienced management team with a demonstrable track record of success in consumer finance in AU/NZ.

ASX SMALL AND MID-CAP CONFERENCE – 17 MARCH 2021

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QUESTIONS?

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