Slide 1: FY20 results presentation
FY20 results presentation Beyond Simplification 11 November 2020
Slide 2: Legal disclaimer
Legal disclaimer This Presentation contains summary information about Eclipx Group Limited (Eclipx) and its subsidiaries and their Such forward‐looking statements are based on numerous assumptions regarding Eclipx’s present and future business activities current as at the date shown on the front pag
Slide 3: FY20 results agenda
FY20 results agenda Beyond Simplification 1 Core performance highlights Strategic Pathways 2 Simplification Plan Corporate 3 Financial result SME 4 Platform stability Novated 5 Strategic Pathways 6 Summary 3 3
Slide 4: 1. Core performance highlights
1. Core performance highlights 4
Slide 5: FY20 highlights
FY20 highlights ($m unless specified) FY20A FY19A Var (+/-) 1 GROWTH IN 2 EARNINGS REFLECTS BUSINESS c. 70% Core income summary Increase in available liquidity NOI (pre-provisions)1 174.1 173.8 +0.2% DEFENSIVE QUALITIES in the last six months EBITDA2 85.4 81.9 +4.3% 3 4 NPATA 47.5 46.5 +2.2% c. 47%
Slide 6: Core EBITDA performance
Core EBITDA performance Core EBITDA (pre AASB 16) growth of 4.3% in FY20, supported by stable NOI pre-provisions, Simplification-led cost optimisation and higher end of lease income Run-rate1 opex currently $84m representing a total annualised cost reduction $15.5m $5.3m $90.6m Higher macro-risk ove
Slide 7: Bridging Core EBITDA to Core NPATA
Bridging Core EBITDA to Core NPATA FY20 Core NPATA of $47.5m, up 2.2% on FY19 Refer to slide 23 for detailed expectation analysis $90.6m ($5.3m) ($2.4m) ($6.0m) ($9.8m) Depreciation & interest relating to rented ($19.6) property Depreciation relating to plant and equipment Non-cash executive and emp
Slide 8: New business writings
New business writings The pipeline for new business writings was replaced by a deliberate shift to lease extensions in response to the emergence of COVID Group new business writings (NBW)—half yearly ◼ NBW replaced by deliberate shift to extensions1 $339m $61m $413m $374m $355m $278m 1H19 2H19 1H20
Slide 9: 2. Simplification Plan
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Slide 10: Simplification completed one year ahead of plan
Simplification completed one year ahead of plan $350m $175m $155m 1 2 Non-Core Strengthened divestments balance sheet 1H19 gross Targeted FY20 gross debt gross debt debt SIMPLIFICATION PLAN 3 4 Run-rate opex Cost Investment in Corporate optimisation sustainable $84.0m Core growth SME Reduced by >$15
Slide 11: 1) Non-Core divestments
1) Non-Core divestments With the divestment of its six Non-Core businesses, Eclipx is now a pure-play fleet management platform with three market leading brands May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Pure-play fleet management
Slide 12: 2) Strengthened balance sheet
2) Strengthened balance sheet 46% reduction in gross debt—target of $175m has been exceeded by $20m 30 September 2020: • $155m of gross debt • $56m of unrestricted cash • $99m of net debt • Strong covenant headroom—net debt to EBITDA of 1.10x $350m $64m (rel. 3.25x covenant) in FY20 vs 3.03x (rel. 3
Slide 13: 3) Cost optimisation (pre AASB 16)
3) Cost optimisation (pre AASB 16) Run-rate annualised opex of $84.0m reduced by >$15m (15.6%) since FY19 $196.0m HQ shared service cost ($96.5m) allocation to Non-Core FY19A Core opex including cost allocated (stranded) in Non-Core FY20A Core opex including $3.8m of Non- Run-rate (annualised) Core
Slide 14: 4) Core refocus—Strategic Pathways
4) Core refocus—Strategic Pathways The Group is focussed on delivering its Strategic Pathways—profitable growth through its three target markets Corporate STRATEGIC PATHWAYS SME Novated 14
Slide 15: 3. Financial result
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Slide 16: Group income statement
Group income statement Divestment of Non-Core businesses is improving Cash NPATA growth at the Group level $ million FY19 FY20 FY20 PCP (%) pre AASB 16 post AASB 16 pre AASB 16 Net operating income (pre end of lease income and impairments) 233.8 153.2 153.2 (34%) Comments End of lease income 28.6 32
Slide 17: Group balance sheet
Group balance sheet A strong balance sheet was a critical objective delivered by our Simplification Plan $ million 30 Sept 19 30 Sept 20 PCP (%) Assets Comments Cash and cash equivalents 97.1 55.8 (43%) Restricted cash and cash equivalents 142.5 152.0 7% • Strong focus on strengthening the balance s
Slide 18: Cash generation
Cash generation Continued strong organic cash flow generation supporting Eclipx’s repayment of corporate debt and liquidity reserves—Cash conversion was 178% in FY20 Cash flow Organic cash generation and cash conversion $m $m FY20 FY20 Operating cash flow Net cash flow (32.2) Customer receipts 755.4
Slide 19: New business writings
New business writings New business writings impacted from COVID disruption and deliberate extension strategy Corporate NBW—half yearly ($m) Comments • Corporate new business writings (NBW) in 2H20 ◼ Corporate ◼ Panel ◼ NBW replaced by deliberate shift to extensions1 down 35% pcp as clients favoured
Slide 20: AUMOF & VUMOF
AUMOF & VUMOF Stable AUMOF and reduction in ‘managed only’ units consistent with strategy to exit lower margin fleets Assets under management or financed (AUMOF; $bn) Comments ◼ Financed (Interest earning assets) ◼ P&A • AUMOF down 4% pcp as a result of lower 2.1 2.1 2.1 2.0 NBW in 2020 driven by im
Slide 21: Core financial performance
Core financial performance Adverse impact from COVID on NOI being offset by higher end of lease income and lower operating expenses Core financial performance Comments Net Operating income down 5% on pcp driven Net operating income pre EOL ($m) by: • COVID related impairment provision overlay 144.3
Slide 22: Core income statement
Core income statement Solid financial performance in challenging conditions, supported by business defensive qualities FY20 FY20 PCP (%) Comments $ million FY19 pre AASB 16 post AASB 16 pre AASB 16 • Net operating income (pre EOL & impairments) fell 3% pcp, primarily Net operating income (pre end of
Slide 23: Expectation analysis—post Simplification
Expectation analysis—post Simplification FY20A (incl. all stranded costs) FY21 (expectation) Cash item Commentary Core NOI pre end of lease income & provisions $140.8m ✓ • No guidance provided Core end of lease income $33.3m ✓ • Used car market expected to remain stable • Provisions expected to be l
Slide 24: 4. Platform stability
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Slide 25: Platform stability
Platform stability Post Simplification, Eclipx is much better positioned to meet the challenges of a protracted economic downturn, including an ex-stimulus environment Topic Macroeconomic risks Mitigating factor Defensiveness enabling growth 1) NOI pre-EOL & • Impact from lower business • NOI suppor
Slide 26: 1) Net operating income pre-EOL & impairment
1) Net operating income pre-EOL & impairment NOI pre-EOL includes 89% predictable annuity-like income from current leases, supported by $2.0 billion of AUMOF Annuity-like income accounts for 89% of NOI pre-EOL & impairment Source of earnings 11.0% Annuity-like income is income earned over the life o
Slide 27: 2) End of lease income
2) End of lease income During 2H20, ECX sought to balance liquidity risk management with maximising EOL profitability Disposed vehicles and end of lease income per vehicle Commentary Profit per vehicle ($) Vehicles sold (units) • Uplift in profit per vehicle in 2H20 6,598 6,683 • Stronger used car p
Slide 28: 3) Asset risk—33 years of expertise delivering consistent results
3) Asset risk—33 years of expertise delivering consistent results 33 years of experience supporting stable delivery of end of lease outcomes Well established residual value setting process RV setting delivers consistent results c.20% above book value • Eclipx’s residual value setting methodology and
Slide 29: 4) Credit risk—provisioning for uncertain macro post COVID/stimulus roll-off
4) Credit risk—provisioning for uncertain macro post COVID/stimulus roll-off Group adopting a provisioning overlay for uncertainty associated with COVID and any implications of stimulus roll-off Provisioning (% of operating leases, finance leases & trade receivables on balance sheet) Commentary Flee
Slide 30: 5) Funding & asset backed availability
5) Funding & asset backed availability Significant warehouse capacity to support organic growth plans Warehouse capacity as at Sep-20 1 Warehouses and public market asset backed securitisation ✓ Most unique and diversified funding structures in the A/NZ FMO market ✓ Warehouse capacity available for
Slide 31: 6) Group liquidity and corporate debt
6) Group liquidity and corporate debt Eclipx is well positioned for macro uncertainty with $181m of Group liquidity and significant debt covenant headroom Group liquidity (30 September 2020) Corporate Debt—De-gearing leverage (Net Debt to adjusted EBITDA 1) Leverage Covenant $125m $181m 3.50x c.70%
Slide 32: 5. Strategic Pathways
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Slide 33: Digitised experience
DIGITISED EXPERIENCE 1. 1 Best in market digitised experience • Better UX and NPS 2. 2 Retain and attract new customers PREDICTIVE CAPABILITY CUSTOMER 1 DATA 5 DEVELOPMENT • Increase NBW EXPERIENCE ANALYTICS 3. 3 More NBW receivables for securitisation pools RETAIN 98% / ATTRACT 2 OPERATING • More r
Slide 34: Total addressable market opportunity
Total addressable market opportunity All three target markets have large underpenetrated total addressable market (TAM) Corporate (>20 size fleet) Novated SME (<20 size fleet) ✓ Stable market system growth ✓ Strong employer and employee benefits ✓ Large market opportunity for operating leasing based
Slide 35: Approach to the market opportunity
Approach to the market opportunity Strategic priorities 1. Maintain customer retention rates of 98%+1 First “end-to-end” novated leasing Novated 2. Active customer targeting, including focus on sale and lease experience with STP credit back opportunities, supported by CRM investment and enhanced sal
Slide 36: Digital & infrastructure transformation progressing
Digital & infrastructure transformation progressing Eclipx continues to invest in enhanced customer experience and operational process efficiency ACHIEVED TO DATE ONGOING INVESTMENT $1.5M $0.6M Expand Fleet FY21 Management High staff engagement rate within GROWTH MAINTENANCE • $9m allocated for Prod
Slide 37: 6. Summary
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Slide 38: Summary—positioned for growth
Summary—positioned for growth Simplification complete New business writings End of lease M&A • Market leading, pure-play fleet platform • New customers looking to outsource fleet • Continued positive trend in used markets • Significant strategic and financial logic management post COVID/seeking liqu
Slide 39: Questions
Questions eclipy
Slide 40: Appendices: Business unit reporting
Appendices: Business unit reporting 40
Slide 41: Business unit performance
Business unit performance NEW SEGMENTS – 2H20 (POST AASB 16) Consumer (CL/ ($m, unless stated) Fleet AU Novated AU New Zealand Core R2D Georgie) CEF Grays AYS Divested Group NOI before EOL & Impairments 39.5 11.2 16.8 67.5 3.9 0.1 – – – 4.0 71.4 End of Lease 11.7 0.5 5.6 17.8 0.1 – – – – 0.1 17.8 Im
Slide 42: Business unit performance
Business unit performance NEW SEGMENTS – 1H20 (POST AASB 16) Consumer (CL/ ($m, unless stated) Fleet AU Novated AU New Zealand Core R2D Georgie) CEF Grays AYS Divested Group NOI before EOL & Impairments 41.1 12.6 19.7 73.4 7.5 0.9 – – – 8.4 81.8 End of Lease 11.1 0.4 4.0 15.5 (1.2) – – – (1.2) 14.3
Slide 43: Business unit performance
Business unit performance NEW SEGMENTS – 1H19 Consumer (CL/ ($m, unless stated) Fleet AU Novated AU New Zealand Core R2D Georgie) CEF Grays AYS Divested Group NOI before EOL & Impairments 44.2 12.1 17.0 73.3 13.3 2.3 3.3 33.7 0.9 53.4 126.7 End of Lease 10.6 – 3.6 14.2 – – 0.0 – – 0.0 14.2 Impairmen
Slide 44: END
END eclipy