Change Financial Ltd · ASX:CCA
Change Financial — Merger or Acquisition (September 2020)
42 slides from Change Financial's merger presentation, Sep 11, 2020
Slide 1: Strategic Acquisition and Capital Raising
Strategic Acquisition and Capital Raising September 2020 ASX: CCA
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation has been prepared by Change Financial Limited (Change Financial) in good faith. No express or implied warranty is given as to the accuracy or completeness of the information in this document or the accompanying presentation. All statutory representations
Slide 3: Contents
Contents Page 4 Highlights Page 5 Change Platform Page 6 Platform Revenue Model Page 7 Strategic Acquisition Page 16 Corporate Overview & Capital Raising Page 20 Change Team Page 22 Financial Snapshot – Post Acquisition Page 23 Appendix Page 33 Risks September 2020 | P. 3
Slide 4: Highlights
Highlights B ack gr ou n d • Change is a US-based fintech listed on ASX(ASX: CCA) offering Banking as a Service (BaaS) technology • Change operates its Platform in the US and is currently working to onboard a pipeline of US customers • Signed binding agreement to acquire the assets of Wirecard NZ an
Slide 5: Change Platform – where we fit in the banking ecosystem
Change Platform – where we fit in the banking ecosystem Change is the critical infrastructure provider that connects existing licensed banks with modern API- driven brands (e.g. fintechs). This infrastructure layer is called Banking as a Service (BaaS). FINTECH/BRANDS SERVICES Brand / Brand / Brand
Slide 6: Platform Revenue Model
Platform Revenue Model Customers have different requirements and revenue lines vary depending on payments and products. Change can earn revenue from its customers in the following ways: Upfront Set Up and Transaction Processing Services Fees Fees Recurring Non-Financial Recurring Software Transactio
Slide 7: Strategic Acquisition
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Slide 8: Transaction Overview
Transaction Overview Change Financial Limited (Change) has signed a binding agreement to acquire the Transaction Summary assets of Wirecard NZ and Australia (Wirecard) Consideration Cash conside ration of A$7.8 million(1) • Wirecard provides innovative card management and platform solutions. Custome
Slide 9: Transaction Background
Transaction Background The Acquisition… The Business… I n Jun e, Wir eca r d NZ, a n d it s w h o lly o w n ed Wir eca r d pr o vid es in n o va t ive pa ymen t subsid ia r y Wir eca r d Aust r a lia , w er e pla ced ma n a g emen t a n d pla t fo r m so lut io n s. in t o vo lun t a r y a d min ist
Slide 10: Strategic Rationale
Strategic Rationale The acquisition delivers significant strategic and financial benefit to Change. B lu e-C h ip C lien t B ase P ar t n er sh ips/R elat ion sh ips Acceler at e P r odu ct +120 customers in +35 countries Visa, AMEX, Diners, UnionPay and JCB Dev elopmen t including the big 4 Austral
Slide 11: Acquisition adds Significant Scale and Growth
Acquisition adds Significant Scale and Growth +120 Customers +36 Countries US$11.1M Revenue(2) Pre-acquisition: 1 customer and partner(1) Pre-acquisition: 1 country Pre-acquisition: NA(1) Global Workforce Los Angeles, Brisbane, Melbourne, Auckland, Santo Domingo Pre-acquisition: Los Angeles, Brisban
Slide 12: Financial Snapshot – Post Acquisition
Financial Snapshot – Post Acquisition A diversified revenue mix A quality revenue mix across Asia, Americas and Asia Pacific between recuring revenue and one-off fees 12,000 FY19 FY20 10,000 Revenue (thousand USD) 8,000 6,000 4,000 2,000 Asia Oceania N. America S. America Europe Africa - FY19 FY20 R
Slide 13: Growth Strategy
Growth Strategy Upgrading current existing Platform with new features from acquisition – addressable market increases x10 with addition of debit and credit card features On boarding of +10 customers in the US over next 12 months Upgrade of existing acquired customers to new card management software.
Slide 14: Acquisition Accelerates Development Pipeline
Acquisition Accelerates Development Pipeline Pre-Acquisition Post-Acquisition (1) BaaS APIs Mobile Solution BaaS Mobile Solution Data Insights Dynamic Controls Multi-Currency Prepaid Cards APIs Prepaid Cards Debit Cards Credit Cards Data Insights Dynamic Controls Features EMV Virtual Cards US$ US$ A
Slide 15: Core Proven Technology Platform
Core Proven Technology Platform Acquired tech is Change can now Virtual and built on same process for combo- code base as credit, debit and functionality Change Financial prepaid cards cards Full support for Fully Opportunity to EMV and internationalised, integrate contactless multi-currency solutio
Slide 16: Corporate Overview & Capital Raising
Corporate Overview & Capital Raising
Slide 17: Capital Raising Summary
Capital Raising Summary Overview The Company is launching a capital raising to raise up to A$11.3 million 1. Placement raising A$6.4 million Capital Raising Structure 2. Two (2) for eleven (11) Entitlement Offer raising A$4.9 million Capital Raising Price Placement and Entitlement Offer priced at A$
Slide 18: Indicative Timetable
Indicative Timetable P l ac e me nt , E nt i t l e me nt Of f e r and Ac qui s i t i o n Trading halt commences Tuesday, 8 September 2020 Transaction & Capital Raising Announcement - Trading Recommences Friday, 11 September 2020 Ex date Tuesday, 15 September 2020 Entitlement Offer Record Date 7pm We
Slide 19: Corporate Overview
Corporate Overview Capital Structure Share Price History Last Share price (ASX: CCA)1 A$0.115 $0.60 Existing Shares on issue 284 million $0.50 New Shares issued as part of 119 million Capital Raising $0.40 Total Shares on issue $0.30 403 million following Capital Raising $0.20 Market capitalisation
Slide 20: Executive Team
Executive Team Alastair Wilkie Clayton Fossett Vinnie D'Alessandro Greg Johnson CEO COO CTO EVP Relationship and Service Delivery Alastair, an experienced Clayton has more than 20 Vinnie D’Alessandro has over Greg has over 10 years executive in the financial years experience in fintech, 20 years of
Slide 21: Board of Directors
Board of Directors Ben Harrison Harley Dalton Ian Leijer Chairman Director Finance Director Ben Harrison has worked in the corporate finance Harley has over 20 years’ experience in investments Ian is a Chartered Accountant with over 25 years’ team at a leading corporate advisory firm where he and th
Slide 22: Financial Snapshot – Post Acquisition
Financial Snapshot – Post Acquisition Pro-Forma Profit & Loss Pro-Forma Balance Sheet US$'000 US$'000 Revenue and other income 11,112 Cash 4,947 Employee benefits expenses (6,564) Current Receivables 3,077 Advertising & marketing expenses (50) Right of Use Asset - Current 270 Program management cost
Slide 23: Appendix
Appendix change.
Slide 24: Platform Revenue Model
Platform Revenue Model Customers are all different and revenue lines vary depending on the customer’s payments and product offering. Change can earn revenue from its customers in the following ways: Customers are charged one-time set-up fees to onboard to Change’s Platform (e.g. Bank Identification
Slide 25: Industry Drivers
Industry Drivers Cur r e nt o p e r a t i ng Le g a c y i ssue s l a nd sc a p e Ev o l v i ng ma r k e t • Legacy providers • Increasing regulatory • Changing consumer have antiquated and compliance spending patterns technology and requirements and and behaviours. commoditized complexity. offerings
Slide 26: Market Opportunity
Market Opportunity • Number of US debit and prepaid transactions projected to hit 132 billion p.a. b y 2025(1) Cashless society driving significant growth • Addressable market transaction volume growth projected at approx. 60% per annum to 2025(1) • High barriers to entry - less than 30 Mastercard c
Slide 27: Timeline
Timeline Commenced build Consumer banking Finalized Transformational of payments and app reached development of acquisition card issuing +150,000 customers payments and card platform issuing platform Strategic Secured partnership with cornerstone • PCI DSS CBKC secured investment from certification
Slide 28: Our Benefits
Our Benefits Designed For Speed Flexibility and The Future To Market Control A modern payments and Fully integrated Providing the card issuing platform infrastructure and management and allowing delivery of partnerships improving control to implement innovative new time to market. and modify your fi
Slide 29: Industry Agnostic Solution
Industry Agnostic Solution Change’s Platform can power payment and card solutions across a wide range of industries. Online Emerging Payments Markets In-Store Lending Retail Buy Now, Expense Pay Later Management September 2020 | P . 29
Slide 30: Our Technology
Our Technology Microservices Cloud Based API Driven Audit Framework Global & Scalable Architecture Scale up operations Intuitive, accessible Audit trail and event- Easily adaptable Built on AWS and with limited and self-service based architecture application for new latest technologies incremental s
Slide 31: Platform Benefits
Platform Benefits Change’s innovative payments and card issuing platform includes the following features: Banking as a Mobile Solution Program API Connectivity Data Insights & Mastercard Service Dashboard Dynamic Controls Processor White-labelled Manage payment Built for connecting Payment processin
Slide 32: Innovative Payments and Card Issuing
Innovative Payments and Card Issuing Change is redefining the possibilities of payments and card issuing. Providing innovative infrastructure and tools for building customizable solutions via open APIs, our platform has been designed for companies who want to control their offering of payment produc
Slide 33: Key Risks
Key Risks This section discusses some of the key risks associated with any investment in Change, which may affect the value of Change shares. The risks set out below are not listed in order of importance and do not constitute an exhaustive list of all risks involved with an investment in Change. Bef
Slide 34: Key Risks (cont.)
Key Risks (cont.) Topic Summary Furthermore, there is a risk that due diligence conducted has not identified issues that would have been material to the decision to enter into the Acquisition. A material adverse issue that was not identified prior to entry into the Acquisition could have an adverse
Slide 35: Key Risks (cont.)
Key Risks (cont.) Topic Summary The financial capacity of, and The ability of Change to achieve its stated objectives will depend on the performance by the parties of their obligations under the recourse to, the Vendors of agreements for, and related to, the Acquisition. If any party defaults in the
Slide 36: Key Risks (cont.)
Key Risks (cont.) Topic Summary COVID-19 Risk The global economic outlook is facing uncertainty due to the current COVID-19 (novel Coronavirus) pandemic, which has been having, and is likely to continue to have, a significant impact on global capital markets. While to date COVID-19 has not had any m
Slide 37: Key Risks (cont.)
Key Risks (cont.) Topic Summary Change relies on its information technology systems to perform key functions critical to its ability to service its customers by providing its payment solutions. In addition, Change relies on information technology systems provided by third party technology vendors su
Slide 38: Key Risks (cont.)
Key Risks (cont.) Topic Summary Change’s reputation may be Change’s brand and reputation is important in attracting and retaining clients. There is a risk that Change’s brand and reputation may damaged be tarnished by incidents such as negative publicity, a data security breach or a one-off unforese
Slide 39: Key Risks (cont.)
Key Risks (cont.) Topic Summary Equity underwriting risk Change has entered into an underwriting agreement under which the Underwriters have agreed to fully underwrite the Entitlement Offer, subject to the terms and conditions of the underwriting agreement. Prior to settlement of the Entitlement Off
Slide 40: Key Risks (cont.)
Key Risks (cont.) Topic Summary No assurance can be given that the New Shares will trade at or above the Offer Price or that there will be an active market in Change shares. None of Change, its directors or any other person guarantees the performance of the New Shares. The operational and financial
Slide 41: Foreign Jurisdictions
Foreign Jurisdictions Ineligible Shareholders The Capital Raising is not being extended to, and does not qualify for distribution or sale by, and no New Shares will be issued to, Ineligible Shareholders, and where the Presentation has been dispatched to Ineligible Shareholders, the Presentation is p
Slide 42: changefinancial.com
change. changefinancial.com
Change Financial — Merger or Acquisition (September 2020) on 6ix