Slovar Limited — Investor Presentation 2021

Feb 15, 2021

ASX: MNY

money3

Investor Presentation Results - 1H FY21

16 February 2021

Scott Baldwin
Managing Director

Siva Subramani
Chief Financial Officer

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About money3

Customer focused, Consumer & Commercial finance company

Strong brands across Australian and New Zealand

Ubiquitous customer journey from introducer to loan settlement – driven by proprietary technology with strong integration with introducers software

Large addressable market across Australia & New Zealand covering new and used assets for consumers and commercial purposes

Group now funding over $30m of asset purchases a month

Market leading collections via our Customer Care teams

Strong proprietary technology allowing for seamless integration of third party loan books

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Money3 Group - growing addressable market opportunity

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Non-conforming loans - Australia

• $381m loan book* (January 2021)
• Annual market opportunity - >$1bn¹ - used vehicle financing to sub prime applicants
• 1/450 registered vehicles in Australia funded by Money3

Products

• Automotive loans (consumer)
• Personal loans (consumer)

AUTOMOTIVE FINANCIAL SERVICES

Near prime Consumer & Commercial - Australia

• $47m loan book (January 2021)
• Annual market opportunity - $3bn¹ in used vehicle financing to near prime applicants
• Large annual market opportunity in new Consumer and commercial assets
• Less than 1% market share providing a huge opportunity to grow

Products

• Automotive loans (consumer)
• Automotive loans (commercial)

Go Car Finance

Goes way further

Near prime & non-conforming loans - New Zealand

• $122m loan book (January 2021)
• NZ$9.5b² annual motor vehicle sales
• Go Car estimates it finances <1% of the total car market
• 1/700 vehicles funded by Go Car Finance
• Funding expansion in 2021

Products

• Automotive Loans (Consumer)
• Vehicle compliance & maintenance services
• Loan protection waivers

¹ Money3 estimates ² December 2020 Motor Fax published by the Financial Services Federation
*Includes GMPA acquisition loan book (acquisition completed 2 February 2021)
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1H FY21 Highlights

• Acquired Automotive Financial Services (AFS) broadening addressable market and adding $46.7m (end of January 2021) to Group's loan book;
• Acquired GMF Australia Pty Ltd (GMFA), a subsidiary of General Motors Financial Corporation Inc, adding $23.3m to the loan book;
• Strong start to 2H FY21 with continued outperformance in customer collections as a result of a market leading Customer Care team that leverages strong proprietary tech;
• Oversubscribed capital raise - adding $52m equity to fund acquisitions and loan book growth;
• Record cash collections in 1H FY21 $165m up 23.6% over pcp;
• Credit Quality of book continues to improve which will lead to an on going reduction in impairment provisions;
• Secured $250m warehouse facility with Credit Suisse - $10m reduction in cost of funds when fully deployed;
• Secured $55m warehouse facility with Westpac.

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Strong loan book growth

Acquisitions drive strong start to 2H FY21

Strong book growth via organic growth and acquisition at start 2H, providing a solid foundation for underpin FY22 results

Loan Book - Feb 2021

• Auto - Consumer
• Auto - Commercial
• Personal

1.8%
2.6%
95.6%

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Highlights - 1H FY21

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Revenue

increased 8.3% to $67.9m on pcp

EBITDA

increased 32.8% to $40.5m on pcp

NPAT

increased 26.8% to $19.9m on pcp

Strong positive cashflow impact from government stimulus allowing customers to pay out loans early

Good credit quality driving a reduction in bad debts and improving impairment provisions

New loan originations

(cash advanced) 9.3% increase on pcp to $151.1m

Loan book

increased 11.1% on pcp, 9.3% increase since June 30

Cash collected

increased 23.6% to $165.0m on pcp

Funding and strategic partnerships has allowed New Zealand to take market share

Strong loan origination growth despite Victorian and Auckland lockdown

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1H FY21 Financial Results

| Group Financial Results
(Continuing operations)
Amounts in $m unless otherwise stated | 1H FY21 | 1H FY20 | Mvt % |
| --- | --- | --- | --- |
| Revenue | 67.9 | 62.7 | 8.3% |
| Bad debts, net | (7.6) | (9.7) | (21.6%) |
| Movement in impairment provisions | (0.4) | (2.8) | (85.7%) |
| Expenses | (19.4) | (19.7) | (1.5%) |
| EBITDA | 40.5 | 30.5 | 32.8% |
| EBITDA margin | 59.6% | 48.6% | |
| NPAT | 19.9 | 15.7 | 26.8% |
| NPAT Margin | 29.3% | 25.1% | |

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Increasing trend in Amount Financed

Australia

$101.4m cash advanced in 1H FY21

New Zealand

$49.7m cash advanced in 1H FY21

Increase in Group’s cash advanced on pcp

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Improving credit quality

Improving credit quality driving down impairment provision requirements and improving EBITDA

Positive impact on “Strong” credit quality customers as a result of Customer Care initiative and Government stimulus

Credit quality should continue to improve with recent acquisitions

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Funding - very solid foundation

• $250m warehouse facility with Credit Suisse – providing for a $10.0 million interest expense saving when fully deployed,
• $150m funding facility with FCCD (Fortress Australia) – scheduled to be repaid at the end of FY21,
• $55m warehouse facility with Westpac – supporting the growth of Automotive Financial Services
• $8.5m funding facility with Australian Office of Financial Management
• Over subscribed $52m equity raise to fund further loan book growth and acquisitions
• $70m cash on hand at the end of January 2021
• In advanced negotiation with a New Zealand bank for a $40m debt facility to support the growth of Go Car Finance

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AFS

AUTOMOTIVE

FINANCIAL

SERVICES

AFS acquisition

Acquisition completed on 4 January 2021

Strategic fit

Acceleration into near prime automotive segment

Servicing several hundred Dealer Groups¹

Strong loan book quality²

Earnings accretive

Funding diversification from large Australian bank³

Successful business model and experienced management team

Lot of similarities with the Go Car acquisition in 2019

FY22 Revenue (forecast)
~$14m

FY22 NPAT (forecast)
~2.5m

Strong loan book quality
30+ days arrears less than 1% of book

Purchase consideration
$10.8m

¹ https://afico.com.au/

² AFICO - AFS secures S&P Global Ratings

³ AFICO - Westpac increases senior debt (source: https://afico.com.au/)

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1HFY21 - New Zealand Growing from strength to strength

• Go Car finance acquisition completed in March 2019
• Strong strategic fit with group
• Growing contributions to loan book growth (Loan book doubling since acquisition) and profitability
• 20.6% contribution to group revenue and growing
• 1/700 registered vehicles in New Zealand financed with significant opportunity to grow market share
• Margins expected to improve with loan book growth
• Has maintained Group growth during Victorian lockdown period
• Good blueprint for Automotive Financial Services acquisition

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Group - Gross loan book growth

*Includes $40m debt facility offer from a NZ Bank
^Includes deferred revenue impairment provision on loan book

Existing debt facilities support loan book growth to ~$800m²

*assumes fortress is repaid at the end of FY21

Expanding addressable market & market share is driving strong growth momentum, group now advancing over $1.5m per day in new loan origination

Return on Equity (RoE) to grow towards 20% with increasing leverage as new debt facilities are utilised

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FY21 - Outlook

Forecast NPAT $36m

• FY21 forecast takes into consideration the continuing uncertainty around COVID-19 with the following assumptions;
• No prolonged lockdowns occurring in the reminder of the financial year;
• Stability in unemployment rates;
• Announced Government stimulus packages remaining in place until March 2021; and
• Anticipate paying 9 cents in dividends for FY21.

Target Loan book ~$600m by end of FY21

• Strong loan book growth and significant improvement in the cost of debt will provide the foundation a significant uplift in NPAT and ROE

Continue to pursue strategic acquisitions to add scale in terms of product or distribution channels

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Appendix 1 - Corporate Information

CAPITAL STRUCTURE

ASX 300 Company
Shares on issue	207.6 million
Share Price (15th February 2021)	$2.87
Market capitalisation	$595.8 million
Earnings per share (1H FY21) - Basic	10.64 cents
Dividends per share (interim)	3.00 cents

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Appendix 2 - Cash collections

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Disclaimer

The content of this presentation has been prepared by Money3 Corporation Limited (the Company) for general information purposes only.

Any information included in this presentation on COVID-19's impact on future financial performance, including industry sectors, income, profit and employment types, represent estimates of management. However due to the unprecedented nature of the events, these views are inherently uncertain and Money3 takes no responsibility for the accuracy of such views.

Any recommendations given are general and do not take into account your personal circumstances and therefore are not to be taken as a recommendation or advice to you.

You should decide whether to contact your financial adviser so a full and complete analysis can be made in respect to your personal situation.

Whilst all care has been taken compiling this presentation neither the Company nor any of its related parties, employees or directors give any warranty with respect to the information provided or accept any liability to any person who relies on it.

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money3

Managing Director
Scott Baldwin
Telephone: +61 3 9093 8255
Email: s.baldwin@money3.com.au

Chief Financial Officer
Siva Subramani
Telephone: +61 3 9093 8246
Email: s.subramani@money3.com.au

Investor Relations
Simon Hinsley
Telephone: +61 401 809 653
Email: simon@nwrcommunications.com.au