Pexa Group Limited · ASX:PXA
Pexa — Merger or Acquisition (October 2023)
30 slides from Pexa's merger presentation, Oct 5, 2023
Slide 1: UK update and proposed Smoove plc acquisition
UK update and proposed Smoove plc acquisition Investor presentation October 2023 © Property Exchange Australia Limited (PEXA) 2023. This information is subject to copyright and is confidential. It is intended for use only by the recipient on a “need to know” basis. Reproduction or disclosure to a th
Slide 2: Important notices and disclaimers
Important notices and disclaimers This presentation and the information accompanying it (Presentation) has been We use words such as ‘will’, ‘may’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, accuracy or the reliability of the underlying assumptions used to estimate such prepared and provided sole
Slide 3: Acknowledgement of Traditional Custodians
In the spirit of reconciliation, PEXA acknowledges the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respect to their Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples today. We a
Slide 4: Speakers and agenda
Speakers and agenda Glenn King Group Managing Director UK update Page 4 and Chief Executive Officer Introduction to incoming CEO UK Page 17 Scott Butterworth Chief Financial and Growth Officer Proposed acquisition of Smoove plc Page 19 Joe Pepper Q&A Page 28 Chief Executive Officer UK 3
Slide 5: UK update
UK update 4
Slide 6: Our strategy
PURPOSE PRIORITIES Our strategy ENHANCE EXTEND EXPAND EVOLVE We will enhance the core Exchange in Australia to We will provide innovative insights and digital We will bring digital property solutions to international We will invest in our people, platform, and brand to build deeper customer relation
Slide 7: UK property transaction market is sizeable
UK property transaction market is sizeable Re-mortgage transactions (#’000 pa) 1 Sale and purchase transactions (#’000 pa) 1 1,400 UK 2,000 UK Australia Pre-GFC Australia 1,800 1,200 Pre-GFC 1,600 Covid 1,000 1,400 1,200 Post-Brexit 800 1,000 600 800 GFC period 400 600 GFC period Post-Brexit Covid 4
Slide 8: UK property processes perform poorly
UK property processes perform poorly Jurisdiction Transaction fall through rate Transaction completion time 1 UK 31% 12-24 weeks Canada Very rare ~12 weeks US 4% ~9 weeks Australia Rare 8-12 weeks Source: International strategy consulting firm; PEXA 7 1 UK is a measure of England and Wales
Slide 9: PEXA creates benefits for all UK stakeholders
PEXA creates benefits for all UK stakeholders Today Benefits with PEXA 81% of purchasers and 43% of remortgages Consumers suffer detriment Faster, cheaper, more transparent remo and S&P experiences Unexpected costs > £1k for 63% of purchasers Poor customer experiences, excess capital, Mortgage portf
Slide 10: Re-mortgage market instruction process
Re-mortgage market instruction process Indicative re-mortgage flows Instruction source Instruction method Instruction firm 5 Minority 2 Direct Fees 1 3 appointment assisted Instructions Borrower Lender ~80% Majority £ Panel Manager Cash paid Lender 3 1 Cash 4 back Borrower Others Others ~20% Broker
Slide 11: Sale and purchase instruction process
Sale and purchase instruction process Indicative sale and purchase flows Instruction source Instruction method Instruction firm ~90% Home builder Full-service Estate agent law firms recommended Direct 1 c.300 Intermediary appointment appointed Mortgage broker recommended Conveyancing ~50% ~50% facto
Slide 12: Our approach to the UK
Our approach to the UK Create infrastructure Generate demand Monetise PEXA Connect PEXA Build UK Create advocacy Grow REMO Grow S&P platform to the digital business for e- flows flows development landscape capability conveyencying PEXA Go Bank of England Migrate Optima from Government and Build Opti
Slide 13: Remo platform becoming richer, and more integrated
Remo platform becoming richer, and more integrated Calendar end Calendar end Calendar end Calendar end 3Q23 4Q23 1Q24 2Q24-onwards Workspace / PMS Create Workspace API E-Certificate of Title API Authorise funds API reconciliation reporting Integration Document API Prepare workspace API Law firm inst
Slide 14: Aiming to launch S&P from Calendar Q3-2024
Aiming to launch S&P from Calendar Q3-2024 End calendar End calendar End calendar TBD Q3 2024 1 Q4 2024 1 Q1 2025 1 Release 0.5 Release 1.0 Release 2.0 Release 2.5 Objective Enables buyer’s and seller’s Demonstrate end-to-end S&P Funds sourcing solution available Supports New Home builders and conve
Slide 15: Integration of PEXA and Optima offers underway
Integration of PEXA and Optima offers underway Commercial Integrated Target MVP constructs Journey State Description Description Description Description • Creates an aligned case journey between • Optima integration with new PEXA UIs • Creation of a fully aligned conveyancing • Guaranteed service le
Slide 16: Continued progress against the four lender focussed imperatives
Continued progress against the four lender focussed imperatives • Evolution of Optima Legal proposition developed and customer engagement underway Build Optima population • Migration of Optima into PEXA Group and onto PEXA technology underway • LBG tender won – 2 year contract, increased allocation
Slide 17: Progress and milestones
Progress and milestones PEXA platform Remortgage Bank of England Sale & Purchase Sale & Purchase Reconnaissance discovery & build Go-Live discovery launch penetration → 2020 Q1 2021 → Q1 2022 2022 → 2024/2025 targets Remortgage = 25% - 40% by Board approval, First Lenders Remortgage Sale & 2025 fund
Slide 18: Introduction to incoming CEO UK
Introduction to incoming CEO UK 17
Slide 19: Introduction to Joe Pepper
Introduction to Joe Pepper Chief Executive Officer TM Group 2018- 2023 25 years business Managing Director – EDM Mortgage Support Services process re-engineering EDM Group executive experience 2013- 2017 across the financial, legal and property sectors – the last 10 years in Joe Pepper Business Deve
Slide 20: Transaction overview
Transaction overview 19
Slide 21: Australian and UK takeover law differences
Australian and UK takeover law differences This transaction is operating under the UK takeover regime, which is different to takeover law in the Australian market. The transaction is subject to the approval of Smoove shareholders, the approval of the UK Court and regulatory approvals which we are cu
Slide 22: Smoove overview
Smoove overview • On-line conveyancing panel manager for S&P and Remos Re- Business mortgage 7% • Provider of other digital platforms to assist home ownership Description Market Share journeys Direct Sale & 3% Purchase Founded: 2003, as ULS Technologies Corporate HQ: Thame, Oxfordshire (1hr 20 mins
Slide 23: Comprehensive product set
Comprehensive product set Smoove product overview Product Customer on- Agent customer Conveyancing boarding and ‘White label’ panel ‘Practice in a box’ Practioner Description Conveyancer portal panel communications management for conveyancers compliance tools portal Transaction Business Value chain
Slide 24: Long track record of innovation
Long track record of innovation Major industry awards achieved by Smoove: 2006 – 23 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Smoove-FY23-H1-interim Results Presentation; moneyage.co.uk; Trust Pilot 23
Slide 25: Strategically attractive acquisition
Strategically attractive acquisition • ~7% Remo market share1 Re-mortgages • Provides reach into the ‘cash back’ market segment not currently served by Optima Legal Builds scale and depth • ~3% 1 direct S&P share2 through active panel management firms Sale & • Opportunity to cross sell the PEXA plat
Slide 26: Transaction overview
Transaction overview Price 54 pence per Smoove share in cash 69.3% to closing price of 31.9 pence per share on 21 April 20231 Purchase premia & 74.1% premium to 1-month pre-offer period VWAP of 31.0 pence per share2 transaction acquisition multiples 43.9% premium to 3-month pre-offer period VWAP of
Slide 27: Transaction impact on PEXA Group balance sheet post completion
Transaction impact on PEXA Group Balance sheet post completion Sources and uses of funds (for the transaction) Existing lending facility drawn down1 A$35.0m • Transaction funded through cash currently held by PEXA, which has been drawn down New lending facility drawn down1 A$6.5m under the existing
Slide 28: Indicative timeline
Indicative timeline Posting of scheme document with meeting notice and timetable 28 days after 2.7 release Shareholder scheme meeting Q4 2023 Second court hearing Q4 2023 Closing date Q4 2023 Note: timings are indicative only, are dependent on regulatory approvals and customary conditions and theref
Slide 29: Q&A
Q&A 28
Slide 30: Investor relations
Investor relations Media Hany Messieh Danielle Tricarico General Manager Investor Relations Head of Corporate Affairs e: hany.messieh@pexa.com.au e: danielle.tricarico@pexa.com.au t: + 61 414 446 876 t: + 61 403 688 980 29