Slide 1: FY22 Investor Presentation
FY22 Investor Presentation David Stevens CEO and Managing Director Simon Ward CFO All values in $NZD unless stated otherwise HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 1 1
Slide 2: Important notice and disclaimer
Important notice and disclaimer The material in this presentation is provided for general information purposes No representation or warranty, express or implied, is made as to the fairness, only and is current as at the date of this presentation. It is not a prospectus or completeness, accuracy, ade
Slide 3: Contents
Contents 1. Delivering results FY22 2. Overview of business model 3. Financial results 4. Strategy, ESG and outlook HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 AUGUST 2022 3
Slide 4: Delivering results FY22
Delivering results FY22 HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 4
Slide 5: Harmoney FY22 actual pro forma performance compared to market guidance
Harmoney FY22 actual pro forma performance compared to market guidance FY21 FY22 FY22 Change Actual1 Guidance1 Actual1 vs. PCP Loan book $501m > $650m $685m 37% Revenue $79m > $92m $91m 15% Net lending margin 6.8% > 8.3% 8.4% 160bps Cash NPAT ($0.4m) Profitable $1.5m $1.9m Warehouse funding 61% > 90%
Slide 6: 9 key points you should know about us
9 key points you should know about us Cash NPAT profitable and Attractive 11.7% net Quality portfolio. positive cash flow from interest margin. Ability to >40% Homeowners. operating activities. easily adjust rates due to 0.45% 90+ day arrears. Unrestricted cash $35m. consumer-direct model. Diversified
Slide 7: Rapid growth across all key business metrics
Rapid growth across all key business metrics 1. Account acquisition 2. Loan originations 3. Customer annuity 57% 85% ■ NZ Growth Growth ■ AU from IPO AU expansion powering rapid account Highly automated Stellare® platform Subsequent originations ~130% of first growth. converting more accounts into lo
Slide 8: Australian expansion powering loan book growth
Australian expansion powering loan book growth 113% growth in Australian loan book Group loan book ● Record year end $685m pro forma Group loan book, representing 37% growth on pcp. ● Loan book now 94% funded by warehouses, allowing move to statutory only reporting from 1 July 2022 onwards. ● Growth
Slide 9: Overview of business model
Overview of business model HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 9
Slide 10: Customer value proposition
Customer value proposition Delivering faster, fairer loans through our Use of funds smart technology • Personalised fixed rates based on Renovation Loans Debt Consolidation customer credit characteristics. • Loans up to $70k in AU/NZ with loan terms of 3, 5 and 7 years. • Average new loan size ~$22,0
Slide 11: Harmoney's strategy: 100% consumer-direct
Harmoney’s strategy: 100% consumer-direct Growth opportunities of consumer-direct model Personal Other financial products loan (e.g. line of credit, secured, home loans) HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 AUGUST 2022 11
Slide 12: Data + ML + Automation
Data + ML + Automation Every month, over 12,000 new customer accounts help us train High volumes of up-to-the-moment consumer financial data – combined with our 7+ years of our machine learning and historic data – “supercharges” training of our automation machine learning models, helping us optimise
Slide 13: The Harmoney business model maximises customer lifetime value
The Harmoney business model maximises customer lifetime value Right customer Great experience Massive scale • Build reliable target consumer model • First-class customer experience • Exploit tech to build scale, speed, through machine learning and high creates annuity revenue as and automation to de
Slide 14: Financial results
Financial results HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 14
Slide 15: Key performance indicators
Key performance indicators FY22 Statutory FY22 Pro Forma FY21 Pro Forma Loan book $642m $685m $501m Revenue $78m $91m $79m Net interest margin 11.7% 12.1% 10.6% Net lending margin 9.3% 8.4% 6.8% Direct opex $28m $28m $20m Indirect (fixed) opex $19m $19m $17m Cash NPAT $0.2m $1.5m ($0.4m) HARMONEY ©2
Slide 16: Australian expansion delivers strong revenue growth
Australian expansion delivers strong revenue growth Average customer interest rate 15.9% Group revenue growth ● Stellare® lending platform and consumer-direct model delivered 37% group loan book growth, now 94% warehouse funded, driving statutory revenue of $78m up 99% pcp. ● Convenient and quick on
Slide 17: Consumer-direct data and experience delivers lower CAC
Consumer-direct data and experience delivers lower CAC Australian cost to origination ratio Marketing cost to origination % improved by 45% ● Stellare® applies continuous machine learning to deep consumer data to focus on desirable, high intent customers, lowering marketing costs. ● Customers enjoy
Slide 18: Deep data and machine learning deliver prime loan book
Deep data and machine learning deliver prime loan book 9.3% Net Lending Margin (after losses) Credit losses ● Convenient online consumer-direct model provides deep data, powering machine learning and automation to deliver resilient prime borrowers at scale. ● Loan book comprised of more than 40% hom
Slide 19: Leading funding model delivers efficient cost of funds and use of capital
Leading funding model delivers efficient cost of funds and use of capital Diversified funding model delivers Average funding rate ● Funding from 3 of the “Big 4” banks, securitisation program and transition to warehouse funding 94% complete, reduced pro forma cost of funds by 180bps. 180bps Reductio
Slide 20: Stellare automation powers scalability
Stellare® automation powers scalability Scalability drives profitability Loan book to opex growth ▬ Loan book ▬ Fixed opex ● Highly automated Stellare® platform enables loan book to scale faster than opex, with total loan book growing 37% while indirect (fixed) opex grew 10%. ● Loan book growth contr
Slide 21: Strategy, ESG and Outlook
Strategy, ESG and Outlook HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 21
Slide 22: Strategic growth initiative 1: Continue AU expansion
Strategic growth initiative 1: Continue AU expansion AU replicating in 9x market Huge potential for Harmoney in A$140bn market1 ● Stable market and an enormous growth opportunity for Harmoney as consumers gravitate online, with the vast majority of personal lending still provided by banks and tradit
Slide 23: Strategic growth initiative 2: Expand product offering
Strategic growth initiative 2: Expand product offering Non-prime accounts 1,000 / per month avg. New customers funded by Harmoney. 12,000 6,000 / per month avg. - Harmoney Opportunity per month avg. “Prime” accounts - bureau qualified people each month that are New customer not served by our current
Slide 24: Environment, Social & Governance (ESG) at Harmoney
Environment, Social & Governance (ESG) at Harmoney Harmoney is pleased to include our inaugural ESG summary, providing an opportunity to highlight our achievements this year, and set out our commitment to advancing ESG principles at Harmoney, and reporting on progress. Environment Social Governance
Slide 25: Outlook
Outlook Interest rates and pricing response FY23 outlook ● Ability to pass through targeted borrower interest rate increases through sophisticated risk based pricing model, >100bps average increase passed Origination growth though in April 2022 without impacting demand. ● Funding costs protected wit
Slide 26: Appendix
Appendix HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 31AUGUST AUGUST2022 2022 26
Slide 27: A$274m Australian Loan Book
A$274m Australian Loan Book Building a high skill, high value customer base Employment status Property ownership Age of borrowers Loan purpose Region HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 AUGUST 2022 27
Slide 28: NZ$339m New Zealand Loan Book
NZ$339m New Zealand Loan Book Building a high skill, high value customer base Employment status Property ownership Age of borrowers Loan purpose Region HARMONEY ©2022 FY22 INVESTOR PRESENTATION 31 AUGUST 2022 28
Slide 29: Profit and loss (pro forma and statutory)
Profit and loss (pro forma and statutory) Year ended 30 June 2022 Year ended 30 June 2021 Statutory Pro forma Adjustments Pro forma Statutory Pro forma Adjustments Pro forma #039;000 #039;000 #039;000 #039;000 #039;000 #039;000 Interest income 73,624 16,966 90,590 37,643 40,917 78,560 Other income 4,121 (3,638) 483 1
Slide 30: Key operating and financial metrics
Key operating and financial metrics Statutory Pro Forma Pro Forma Pro Forma Year ended Year ended Year ended Change % 30 June 2022 30 June 2022 30 June 2021 Loan book value and growth Total originations (#039;000) 472,364 472,364 255,457 85% New customer originations (#039;000) 302,831 302,831 136,381 122
Slide 31: Cash Flow Balance Sheet
Cash Flow Balance Sheet Year ended Year ended 30 June 2022 30 June 2021 30 June 2022 30 June 2021 #039;000 #039;000 #039;000 #039;000 Cash flows from operating activities Cash and cash equivalents 62,747 76,464 Interest received 73,829 38,231 Trade and other assets 1,839 1,894 Interest paid (18,611) (10,295) Fin