Nutun Limited · JSE:NTU
Nutun — Transaction Capital — H1 2022 Earnings Presentation
78 slides from Nutun's earnings presentation, May 2022
Slide 1: Presentation for the half year ended 31 March 2022
presentation for the half year ended 31 March 2022 YEARS AS A LISTED ENTITY
Slide 2: Transaction Capital group structure
Transaction Capital group structure Growing earnings base through vertical integration, entering adjacent markets & expanding total addressable market MOBILITY PLATFORM GLOBAL DIGITAL SERVICES Enables mobility of private & public commuters in South Africa Combines unique technology, data & analytics
Slide 3: Opportunity
opportunity We are undaunted by challenge. Challenge is opportunity. transactioncapital.co.za It all depends on perspective.
Slide 4: Contents
presentation Contents for the half year ended 31 March 22 1 Performance overview Slide 05 2 WeBuyCars Slide 14 3 SA Taxi Slide 22 4 Transaction Capital Risk Services (TCRS) Slide 30 5 Conclusion Slide 38 6 Appendix Slide 40
Slide 5: Performance overview
Performance overview Results for the half year ended 31 March 22 9th Place | Share Price Performance Top Rated Sunday Times Top 100 Companies • Most Accessible Senior Management Top 100 | Financial Times Ranking • Best Integrated Annual Report Africa’s Fastest Growing Companies 2022 South Africa 202
Slide 6: Transaction Capital 10-year performance
Perf orm anc e overvie w Transaction Capital 10-year performance Long-term track record of growth since listing in 2012 HY2022 vs HY2021 HY2022 Strong earnings HEPS¹ Interim dividend per share Return on equity Return on assets performance Headline earnings¹ Earnings growing at 38% 28% 74% 14% 4.5
Slide 7: Key performance drivers
Perf orm anc e overvie w Key performance drivers Consistent earnings growth reinforces relevance & resilience of business models MOBILITY PLATFORM GLOBAL DIGITAL SERVICES High growth earnings Continued steady recovery High growth earnings accelerated by shareholding 60 046 58 520 R15.6 billion 11.
Slide 8: Divisional operational overview
Perf orm anc e overvie w Divisional operational overview Robust operational performance exceeding pre-pandemic levels ~33% ~30% ~100% ~95% ~95% ~100% ~100% ~17% 57% ~15% ~13% 53% ~95% 40% 21% 18% ~4% 20% 70 73 1 800 000 32 500 000 800 000 10 008 10 123 5 593 5 803 6 925 7 235 9 753 6 274 7 948 2 318
Slide 9: Group portfolio mix
Perf orm anc e overvie w Group portfolio mix Earnings diversification enhanced, yielding higher growth Composition of earnings 5% 26% 30% 42% 43% 37% 2022 1% 2021 2020 58% SA Taxi TCRS 27% 30% GEO 1% WeBuyCars Total earnings | 2022 Earnings attributable to TC | 2022 2021 Movement Headline earnings (
Slide 10: Operating context
Perf orm anc e overvie w Operating context Highly relevant business models, well positioned in relation to structural elements in local & global environment Markets Mobility Consumer environment Business models continue to demonstrate resilience & Personal Vehicles Public Transport ◉ Interest rate h
Slide 11: WeBuyCars performance overview
Perf orm anc e overvie w WeBuyCars performance overview Increased consolidation of WeBuyCars’ high growth earnings accelerates TC's growth over medium-term Sustainable high earnings growth potential Leading private commuter mobility platform in SA’s large & resilient used vehicle market Business mod
Slide 12: SA Taxi performance overview
Perf orm anc e overvie w SA Taxi performance overview Recovery of key operational metrics | Demonstrating resilience & relevance Resilient operational, credit & financial performance Sustainable growth potential SA Taxi promotes public commuter mobility in minibus ◉ Loan applications, loan originati
Slide 13: TCRS performance overview
Perf orm anc e overvie w TCRS performance overview Positioned for strategic growth initiatives to capture emerging opportunities Robust financial performance High growth potential TCRS now delivers an expanded range of digital ◉ Facilitates effective functioning of consumer credit customer services:
Slide 14: WeBuyCars
02 WeBuyCars Results for the half year ended 31 March 22
Slide 15: Used vehicle market context & environment
W eBuyCars Used vehicle market context & environment Vehicle ownership is an aspiration rooted in South African culture Shift in personal vehicles from passengers to owners Positive shift towards used vehicles1 In 2020 23% of households used personal PERSONAL VEHICLES vehicles as their main mode of
Slide 16: Structural market conditions support used vehicle industry resilience
W eBuyCars Used vehicle market context & environment Structural market conditions support used vehicle industry resilience South Africa’s vehicle parc1 is despite new vehicle sales over last 10 years Shift from new to used vehicles New vehicle sales from FY2019 New vehicle sales Write-off rate
Slide 17: Strong growth in used vehicle sales
W eBuyCars Used vehicle market context & environment Strong growth in used vehicle sales Vehicle sales & prices in South Africa New & used vehicles financed 47% New vehicles1 Used vehicles1 ~474 000 ~1.2 million 33% 44% financed2 32% financed3 2.6% Y-O-Y4 2.9% Y-O-Y4 2.5 times1 Total used-to-new
Slide 18: Used vehicle industry is large & highly fragmented
W eBuyCars Used vehicle market context & environment Used vehicle industry is large & highly fragmented, with various operating models Dealer | Groups vs Independent ◉ Stockholders with inventory on balance sheet private commuter private commuter ◉ >3 000 dealers (~2 100 franchised) Stockholder ◉ De
Slide 19: WeBuyCars financial performance
W eBuyCars WeBuyCars financial performance Continue to outperform against several key metrics | Well placed to build on long-term track record of growth Strong growth rate CAGR HY2020 – HY2022: Headline earnings 58% to R406m (HY2021: R257m) Headline earnings 48% EBITDA 52% Headline earnings at
Slide 20: WeBuyCars operational performance
W eBuyCars WeBuyCars operational performance High growth business | Well placed to build on long-term track record of growth CAGR HY2020 – HY2022: E-commerce sales >100% Record monthly volumes Vehicles bought 31% ◉ Favourable structural market conditions Vehicles sold 32% ◉ Average advertising
Slide 21: WeBuyCars strategic growth priorities
W eBuyCars WeBuyCars strategic growth priorities Favourable structural market conditions | Strategic initiatives continue to yield positive results with amplified opportunities Vehicle supermarket | Dome Medium-term target to volume of vehicles traded to 15 000 per month ◉ Initial medium-term targ
Slide 22: SA Taxi
SA Taxi Results for the half year ended 31 March 22 World Finance Sustainability Awards in category of Most Sustainable Inaugural social bond issuance on JSE’s sustainable segment Company in the Mobility Industry Social bond of the year award 2022 Environmental Finance
Slide 23: Commuters rely on minibus taxis
SA T ax i Environment & market context Structural elements support minibus taxi industry resilience Minibus taxi is the largest & most vital mode of transport within integrated public transport network Minibus taxi >16% since 2013¹ PUBLIC 84% ◉ Preferred form of transport due to accessibility & fl
Slide 24: Minibus taxi industry is defensive & growing
SA T ax i Environment & market context Minibus taxi industry is defensive & growing despite challenging environment less Monthly supply¹ than Monthly demand² Total SA Taxi’s market supply total application ~1 800 ~10 100 HY2021: ~1 600 HY2021: ~7 950 Total Addressable Market >250 000 NEW NEW PRE
Slide 25: Environment & market context: operator profitability
SA T ax i Environment & market context Minibus taxi industry is defensive & growing with resilient operators | Environment & lower commuter mobility impacting industry profitability Vehicle prices Fuel prices including fuel levies SA Taxi’s interest rates6 19.0% Average interest rate at Commuter mob
Slide 26: Vehicle mobility analytics applied to manage credit & insurance risk
SA T ax i Vehicle mobility analytics applied to manage credit & insurance risk Minibus taxi industry is indispensable to SA’s productivity | Improvement in commuter activity but not expected to recover to pre-pandemic levels in short-term Lockdown levels in 2020 Risk-adjusted lockdown levels in 2021
Slide 27: SA Taxi financial performance
SA T ax i SA Taxi financial performance Operating metrics exceeding pre COVID-19 levels | Slower recovery in collections 46.1 44.5 Headline earnings 42.0 ◉ 4% to R220m (HY2021: R228m) ◉ TC’s attributable portion 4% to R181m (HY2021: R188m) ◉ Pre-provision profit 12% 12.2 11.8 11.6 Net interest
Slide 28: SA Taxi credit performance
SA T ax i SA Taxi credit performance Improved credit quality | Credit metrics remain above target range Gross loans & advances 18% to R15.6bn R11.3bn R13.2bn R15.6bn ◉ Toyota vehicle prices 3.5% in HY2022 | Further 3% in April 2022 ◉ Number of loans originated 23% | Value 33% 18% 20% 21% •
Slide 29: SA Taxi strategic growth priorities
SA T ax i SA Taxi strategic growth priorities Opportunity to expand Total Addressable Market across the mobility ecosystem Optimise SA Taxi’s core business • More affordable finance products • Cost recalibration continues • Parts procurement efficiencies • Broaden SA Taxi’s total addressable market
Slide 30: Transaction Capital Risk Services
Transaction Capital Risk Services Results for the half year ended 31 March 22
Slide 31: Global digital customer services environment
T rans ac tion Capital Ris k Servic es Environment & market context Global digital customer services | Structural elements support industry relevance & growth South Africa is preferred destination for outsource services4 3 shifts reshaping the global services landscape EFFECT OF COVID Poland 2 India
Slide 32: Collection services in South Africa
T rans ac tion Capital Ris k Servic es Environment & market context | Collection services in South Africa Structural elements support industry relevance & growth in South Africa | Consumer sector remains strained 1 in 3 24% ~26 million of credit-active ~40 million Consumers are consumers are Adults¹
Slide 33: Consumer credit environment | South Africa & Australia
T rans ac tion Capital Ris k Servic es Consumer credit environment | South Africa & Australia Household debt to income1 Cost of servicing debt1 The impact of COVID-19 pandemic continues to be felt5 66.2% (HY2020: 75.3%) 7.5% (HY2020: 8.5%) However, expected to given rising interest rate enviro
Slide 34: TCRS market positioning | diversified business model
T rans ac tion Capital Ris k Servic es TCRS market positioning | diversified business model Expanded total addressable market | Diversified by service, revenue model, geography, sector, client & mandate Suite of digital customer Leveraging its low-cost infrastructure & technology, TCRS provides a br
Slide 35: Acquisition of NPL portfolios as principal
T rans ac tion Capital Ris k Servic es Acquisition of NPL portfolios as principal Collection multiple vintage performance¹ as at 31 March 2022 Growth trajectory to support future positive performance 6 876 2018 1.4 1.2 2.6 R218m 5 883 5 321 book debts acquired (Rm) 2019 1.2 1.3 2.5 Cost price of pur
Slide 36: TCRS financial performance
T rans ac tion Capital Ris k Servic es TCRS financial performance Demonstrated strong financial performance | Historical growth rates accelerated 86.6 83.5 81.8 Headline earnings¹ 25% to R164m (HY2021: R131m) 71 Non-interest revenue 14% to R1.3bn (HY2021: R1.2bn) 56 58 ◉ Revenue from collection
Slide 37: TCRS strategic growth priorities
T rans ac tion Capital Ris k Servic es TCRS strategic growth priorities Global digital services business offers distinct avenues for growth Leveraging its low-cost infrastructure & technology, TCRS provides a broader range of digitally enabled customer services as a trusted partner to a global clien
Slide 38: Conclusion
Conclusion Results for the half year ended 31 March 22
Slide 39: Key take-aways
Conc lus ion Key take-aways Strong operational performance Adequate access to liquidity Strategic repositioning of divisions Earnings growth at rates higher To execute on organic & acquisitive WeBuyCars & SA Taxi than pre-pandemic levels growth ◉ Enables mobility of private & public commuters ◉ High
Slide 40: Appendix
Appendix Results for the half year ended 31 March 22
Slide 41: Appendix contents
Appendix for the half year ended 31 March 22 Contents 1 TC investment case Slide 42 2 WeBuyCars Slide 43 3 SA Taxi Slide 50 4 Transaction Capital Risk Services (TCRS) Slide 60 5 Capital management Slide 66 6 ESE impact Slide 70 7 Glossary Slide 75
Slide 42: Transaction Capital | compelling & unique investment case
Appendix Transaction Capital | compelling & unique investment case Develops its business platforms with unique value propositions, diversified & resilient revenue streams, & best-of-breed data, technology & processing capability to Identifies, invests in & operates a diversified provide distinct com
Slide 43: Appendix WeBuyCars
02 Appendix WeBuyCars Results for the half year ended 31 March 22
Slide 44: WeBuyCars positioning statement
Appendix Positioning statement WeBuyCars Entrepreneurial & founder-led; leveraging ~20 years of experience in proprietary vehicle, price & consumer data with artificial intelligence WeBuyCars WeBuyCars has no brand affiliation is South Africa’s & offers a diverse range of vehicles for sale In an ind
Slide 45: WeBuyCars | market positioning
Appendix WeBuyCars | market positioning Competitive advantages Proprietary data Well-known, reputable & trusted brand ◉ Leveraging ~20 years of vehicle, price, consumer ◉ In an industry where trust & customer satisfaction has been low & other data with AI & machine learning ◉ Effective advertising c
Slide 46: Global listed peers
Appendix Global listed peers WeBuyCars business model unique in South Africa with comparable international peers Europe 2021 Asia Pacific 2021 Revenue Vehicles sold Revenue Vehicles sold (US$) (‘000) (US$) (‘000) P 5.3bn2 597 F 251m5 1.5 1 M 3.9bn2 231 F 10bn2 n/a E 878m3 50 South Africa 2021 Revenu
Slide 47: WeBuyCars stacks up well against comparable international peers
Appendix WeBuyCars stacks up well against comparable international peers Profitability surpasses comparable peers, supported by efficient inventory management & effective advertising spend ◉ E-commerce & physical ◉ E-commerce & physical ◉ E-commerce & physical ◉ E-commerce & physical ◉ E-commerce &
Slide 48: Frictionless, vertically integrated e-commerce platform
Appendix Frictionless, vertically integrated e-commerce platform Data & technology led | Creating differentiated experience Selling journey CLICK COMPLETE ESTIMATED OFFER WE COME TO YOU EVALUATION & Apply online Seamless experience Quick & easy IMMEDIATE PAYMENT obligation-free offer or VISIT US Dri
Slide 49: WeBuyCars national footprint
Appendix WeBuyCars national footprint Vertically integrated e-commerce & physical infrastructure E-commerce platform ◉ 100% data driven processes | Proprietary pricing algorithms ◉ Online solution allows to buy, exchange or finance vehicle & offers F&I products 7 Limpopo 30% 25% (HY2021: 31%) >7 000
Slide 50: Appendix SA Taxi
Appendix SA Taxi Results for the half year ended 31 March 22 World Finance Sustainability Awards in category of Most Sustainable Inaugural social bond issuance on JSE’s sustainable segment Company in the Mobility Industry Social bond of the year award 2022 Environmental Finance
Slide 51: SA Taxi positioning statement
Appendix Positioning statement An innovative & pioneering business model SA TAXI with operations expanding throughout the is a vertically integrated financial services & asset value chain mobility platform A unique blend of vehicle procurement, retail, repossession & refurbishment capabilities, util
Slide 52: Environment for minibus taxi operators
Appendix Environment for minibus taxi operators Minibus taxis are the preferred mode of public transport due to competitive pricing, accessibility & reliability Lower LSM consumers spend ~40% of monthly household income on public transport fares Commuter trips via bus & rail often travel first & las
Slide 53: SA Taxi market positioning: customer base
Appendix SA Taxi market positioning Vertically integrated business model Proportion of customers classified SA Taxi Finance as previously financially excluded Proportion of customer base Average score 15.6 billion 37 587 ~1.2 Score below which at which SA Taxi Gross loans Loans Vehicles traditional
Slide 54: SA Taxi Direct
Appendix SA Taxi market positioning Vertically integrated business model SA Taxi Direct ◉ SA Taxi Direct sells new minibus taxis & QRTs >R1.0 billion ◉ SA Taxi’s QRTs: Vehicle turnover per year • Rebuilt to a high-quality HY2022: R688m | 46% • Trusted product in the minibus taxi industry • Provide
Slide 55: SA Taxi Auto Repairs
Appendix SA Taxi market positioning Vertically integrated business model SA Taxi Auto Repairs ~24 000m² >3 600 >75% Workshop Minibus taxis Credit recovery rates facilities rebuilt per year on repossession, HY2021: ~20 000m² HY2021: >2 600 refurbishment & resale >70 ~667 ~47 Refurbishment Employees T
Slide 56: SA Taxi Protect insurance
Appendix SA Taxi market positioning Vertically integrated business model Telematics utilised for insurance underwriting, SA Taxi Protect premium pricing & prevention & detection of loss events >34 000 Majority financed Cell captive Insurance clients choose to be through Guardrisk clients insured by
Slide 57: SA Taxi Auto Parts
Appendix SA Taxi market positioning Vertically integrated business model SA Taxi Auto Parts Manage cost of claim ◉ Import & locally procure new parts from source at cost ◉ Salvage used parts from vehicles not economically viable to repair ◉ credit losses & cost of insurance claims SA TAXI Auto
Slide 58: SA Taxi transaction-based account
Appendix SA Taxi market positioning Vertically integrated business model | Ultimate intention to combine telematics, rewards, finance & credit into transaction-based account for operators SA Taxi transaction-based account SANTACO & SA Taxi delivering sustainable benefits to SA Taxi clients & the ind
Slide 59: SA Taxi operational performance
Appendix SA Taxi operational performance SA Taxi operator profile Credit profile of loans on book ~1.2 49 years 4.3 years 75 months 5.1% 44 months >10 000 ~900 Vehicles Average age Average age of Average loan term Credit loss ratio Average remaining Applications Loans originated per customer of cust
Slide 60: Appendix Transaction Capital Risk Services
Appendix Transaction Capital Risk Services Results for the half year ended 31 March 22
Slide 61: Transaction Capital Risk Services positioning statement
Appendix Positioning statement TRANSACTION Transaction CAPITAL Capital Risk RISK SERVICES Services Investing into best-in-class technology to enhance combines its unique our hard-to-replicate digital backbone, provide technology, data & analytics data-driven insights & create alternative revenue opp
Slide 62: TCRS market positioning
Appendix TCRS market positioning Competitive advantages TCRS’s proprietary data Analytics ◉ Database of SA’s distressed consumers ◉ Predictive & layered voice analytics to determine: ◉ Continuously enriched (with collection & • Propensity to pay • Dynamic matter prioritisation contactability results
Slide 63: Unique technology, data & analytics competencies
Appendix Unique technology, data & analytics competencies Enabling intelligent digital business services Master Data Universe (MDU) - enriched data on each individual Predictive & layered voice analytics to determine ◉ WHEN to contact | Right time to call & right day to pay other data sources Data f
Slide 64: TCRS strategic growth initiatives to create value
Appendix TCRS strategic growth initiatives to create value Growth in the market for NPL portfolios expected to continue accelerating as impact of COVID-19 plays out over medium term Top buyers of Top buyers of consumer debt in Europe2 consumer debt in USA¹ Buyer $million Top buyers of Buyer $million
Slide 65: Environment & market context | Australia
Appendix Environment & market context | Australia Australian consumer credit environment Australian consumer employed but highly leveraged Australian debt collection environment consumers ◉ Unemployment & steady wage growth | Government support reducing work sought ◉ Predominantly employed | Lockd
Slide 66: Appendix Capital management
Appendix Capital management Results for the half year ended 31 March 22 Social bond of the year award 2022 Environmental Finance
Slide 67: Diversified debt funding strategy
Appendix Diversified debt funding strategy Group liquidity position remains robust, underpinned by a conservative debt structure Diversification by debt investor category & capital pool Diversification by geography 9% 21% 13% 1% 6% Local Institutional investors 5% International 21% Rest of Africa Ba
Slide 68: Diversified debt funding strategy | Continued
Appendix Diversified debt funding strategy | Continued Private structured finance On balance sheet Debt structure Pass through structures Warehousing facilities (majority international DFIs) & syndicated loans HY22 balance outstanding R5.9 billion R2.1 billion R6.0 billion R5.7 billion Composition ~
Slide 69: Adequate access to liquidity
Appendix Adequate access to liquidity Enables execution on organic & acquisitive growth opportunities WeBuyCars Assets R34.7 billion R19.5 billion R6.2 billion R4.8 billion Total Assets Total Assets Total Assets Total Assets R14.7 billion R4.0 billion R1.3 billion Inventories Net Loans & Advances Pu
Slide 70: Appendix ESE impact
Appendix ESE impact Results for the half year ended 31 March 22
Slide 71: Transaction Capital's commitment to delivering shared value
Appendix Transaction Capital’s commitment to delivering shared value Delivering shared value ◉ Business model operationalises commitment to sustainable & inclusive growth Our societal purpose is to enable mobility access Our societal purpose is to promote stable, • Consistently generating good comme
Slide 72: Economic impact
Appendix Economic impact Facilitating economic development Transaction Capital’s focus on traditionally under-served market segments where it can make a meaningful social impact supports economic growth & development We empower SMEs through financial inclusion We drive economic growth by promoting c
Slide 73: Economic impact | Continued
Appendix Economic impact | Continued Supporting social inclusion Bettering industries we serve SA Taxi promotes social inclusion by helping millions SA Taxi works to better the public transport of commuters to access services & economic opportunities industry for all stakeholders We support a critic
Slide 74: Social impact & environmental impact
Appendix Social impact & environmental impact We hire inclusively We understand our important role in promoting climate resilience Our employment practices contribute to socioeconomic transformation Group carbon footprint & reduction targets The Transaction Capital board comprises 14 directors, of w
Slide 75: Appendix Glossary
Appendix Glossary Results for the half year ended 31 March 22
Slide 76: Glossary
Glossary AUS Australia COVID-19 The novel Coronavirus & the disease it causes B2B Business-to-business (vehicle dealerships) CPS Cents per share A vehicle inspection certification providing information on the mechanical B2C Business-to-consumer DEKRA Report & technical status of the vehicle CAGR Com
Slide 77: Glossary
Glossary Non-performing consumer loan portfolios acquired by TCRS to be TC Transaction Capital NPL portfolio collected as principal Open market TCRS Transaction Capital Risk Services Minibus taxi operator not previously an SA Taxi client taxi operator Additional gross margin earned on value-added pr
Slide 78: Disclaimer
DISCLAIMER This presentation may contain certain "forward-looking statements" regarding beliefs or expectations of the TC Group, its directors & other members of its senior management about the TC Group's financial condition, results of operations, cash flow, strategy & business & the transactions d