Credit Clear Limited · ASX:CCR
Credit Clear — Merger or Acquisition (December 2021)
38 slides from Credit Clear's merger presentation, Dec 16, 2021
Slide 1: ARMA Acquisition Summary
ARMA Acquisition Summary ASX: CCR 16 December 2021
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This presentation has been prepared by Credit Clear Limited ACN 604 797 033 (“CCR”). This presentation has been prepared in relation to CCR’s proposed acquisition of ARMA Group Holdings Pty Ltd (ACN 627 261 161), NZ Recoveries Limited (ARBN 649 747 786) and Force Lega
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer Not investment advice This presentation is not financial advice, financial product advice or a recommendation to acquire CCR securities (nor does it or will it form part of any contract to acquire CCR securities). It has been prepared without taking into account the o
Slide 4: Important Notice and Disclaimer
Important Notice and Disclaimer Disclaimer To the maximum extent permitted by law, CCR, its directors, officers, consultants, employees and agents and the Other Persons (together, the “Persons”) expressly exclude and disclaim all liability, for any expenses, losses, damages or costs suffered or incu
Slide 5: Important Notice and Disclaimer
Important Notice and Disclaimer Financial data Unless otherwise stated, all dollar values in this presentation are millions of Australian dollars (A$ million). Potential Investors should note that this presentation contains pro forma historical and forward looking financial information. The pro form
Slide 6: Technology that improves customer interactions
Technology that improves customer interactions • Credit Clear’s technology uses behavioural analytics, artificial intelligence and machine learning to improve interactions between customers and businesses • Adoption by account receivables functions and the financial recovery industry shows the platf
Slide 7: Credit Clear to acquire 100% of ARMA - ARMA overview
Credit Clear to acquire 100% of ARMA - ARMA overview Full suite of recovery services: ARMA is a fast-growing and highly profitable provider of contingent debt recovery solutions, outsourced accounts receivables and Debt Recovery Commercial litigation services. Recoveries Competitive advantages: Indu
Slide 8: Acquisition to add significant value
Acquisition to add significant value Transaction accelerates revenue growth and pathway to profitability - ARMA is highly profitable with $6.4m normalized EBITDA in FY21 from $15.5m revenue - Strong momentum into Q1FY22 with $2.6m EBITDA from $4.8m revenue - Significant opportunity to convert >65% o
Slide 9: ARMA Acquisition – Combined group (Illustrative)
ARMA Acquisition – Combined group (Illustrative) Company FY21 Pro-Forma $26.5m $15.5m FY21 Revenue $11.0m FY21 Gross profit $6.0m $7.3m $13.3m FY21 EBITDA ($2.5m) $6.4m $3.9m (normalised)3 FY21 Pro-forma end 359k2 279k 648k users Indicative net cash1 $9.0m 1. Indicative cash position at 30-Nov-2021
Slide 10: Enhanced coverage and footprint
Enhanced coverage and footprint Complementary acquisition enhances existing and new sector coverage: Utilities Insurance Finance IAL/IAG Hollard Sumo Gallagher Bassett Other verticals OneSteel Open Colleges TAFE NSW Queensland Wilson Parking Healius Tyco Health Water Automotive Consumer Anytime Fitn
Slide 11: Acquisition + Funding Summary
Acquisition + Funding Summary • Acquisition of ARMA for a purchase price of $46m, plus an earnout ‒ Purchase price of $46m (60% cash and 40% scrip consideration) ‒ Acquisition conditional on certain conditions including consent of 60% of customers based on revenue to a pre-sale restructure by ARMA ‒
Slide 12: Credit Clear
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Slide 13: Strategic initiatives for long-term growth
Strategic initiatives for long-term growth Accelerate Core Growth Enhance Digital Capabilities Transformational Growth q Increase client base by targeting a Planned technology investment Targeting local and international broad range of sectors and targeting 4 categories customer acquisition opportun
Slide 14: Hugh Robertson appointed Non-Executive Director
Hugh Robertson appointed Non-Executive Director Hugh Robertson joins the CCR Board, bringing 35 years’ experience in financial services and equity capital markets Credit Clear’s Board of Directors Gerd Schenkel Lewis Romano Chairman Executive Director & Co-Founder Hugh Robertson Newly appointed Non-
Slide 15: Record FY21 financial performance
Record FY21 financial performance Financial Record revenue and digital gross profit underpinned by increasing $11.0m $3.5m >90% +1,250% uptake of digital Total Revenue Digital Revenue1 Digital GP margin Increased FY21, record high FY21, record high Conversion2 Large corporate customer base FY21 prov
Slide 16: Strong financial track record
Strong financial track record Total Revenue ($m) Digital Revenue ($000) 1Q22 Digital Total rev: Traditional (early stage) $3.4m Traditional (late stage) 1400 Total: $11.0m $1.3m +70% Total revenue 1200 growth 3.5 FY21 vs FY20 +147% 1000 FY21 vs FY20 Total: $6.5m 800 Acquisition 1.4 of Credit Solutio
Slide 17: Strong Momentum into Q1FY22
Strong Momentum into Q1FY22 Financial Corporate Record Record high high Litigation update4 $3.4m $1.3m >90% +117% Legal proceedings disclosed in the IPO prospectus (Osborne Total quarterly revenue Quarterly digital revenue1 Digital GP margin Increase in traditional to Matter) have been digital conve
Slide 18: Success converting clients to digital platform
Success converting clients to digital platform Credit Solutions1: Gross Profit Conversion to digital enhances gross profits4 Pre- vs Post-Acquisition2 ($m) 3 73% gross profit uplift, i.e. an additional 8.6 1 2 $1.1m from conversion of Credit Solutions’ 1.1 6.3 existing traditional collections to Cre
Slide 19: Case study (Large Australian Water Utility) – digital vs non-digital
Case study (Large Australian Water Utility) – digital vs non-digital Collect more money, from more customers, faster with a better customer experience using digital Conversion Rate Digital vs non-digital debate put to bed1 Using Credit Clear’s digital solution, the client was able to collect from mo
Slide 20: Global partnering and teaming agreement with Techub
Global partnering and teaming agreement with Techub Overview of Techub: Techub is a leading contact service provider headquartered in Johannesburg, South Africa Techub boasts a global client base with a particularly strong representation in the UK and US Techub indicates the total value of outstandi
Slide 21: ARMA Acquisition
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Slide 22: Transaction summary
Transaction summary ARMA is a full suite provider of debt recovery solutions servicing the Australian and New Zealand markets • Since ARMA was established in 2015, it has delivered rapid growth with record monthly revenue achieved in June 2021 • Record FY21 financial performance with revenue of $15.
Slide 23: Large corporate customer base
Large corporate customer base Immediate digital conversion opportunity Select customers Gallagher Bassett Foxtel 279k ~181k 65% Digitally convertible Wilson Parking TAFE NSW End-user accounts end-user accounts FY21 Immediate conversion FY21 opportunity Sumo IAL/IAG Humm Group OneSteel Other metrics:
Slide 24: ARMA performance highlights
ARMA performance highlights Record revenue performance and strong Financial growth. This growth has continued into Q1 FY22 with record $4.8m in revenue underpinned by industry leading collection rates and new client wins $15.5m $6.4m $5.1m Q1 FY22 Large corporate customer base which is complementary
Slide 25: ARMA strong financial track-record
ARMA strong financial track-record Net Revenue1 & GP – Q1FY20 to Q1FY22 EBITDA2 – Q1FY20 to Q1FY22 A$000’ A$000’ 5,000 +33% 2,800 +75% Revenue 2,600 4,500 EBITDA 2,400 4,000 2,200 2,000 3,500 1,800 3,000 1,600 2,500 1,400 1,200 2,000 1,000 1,500 800 1,000 600 400 500 200 0 0 Q1FY20 Q2FY20 Q3FY20 Q4F
Slide 26: ARMA Acquisition – Conversion opportunity (Illustrative)
ARMA Acquisition – Conversion opportunity (Illustrative) Conversion to digital enhances gross profits Significant opportunity to convert lower margin ARMA: Gross Profit Pre- vs Post-Acquisition1 ($m) traditional revenues to higher margin digital revenues Digital Traditional 46% 90% 2 Gross Gross mar
Slide 27: Capital Raising Overview
Capital Raising Overview • Capital Raising of $29.5m comprising: • Institutional Two Tranche Placement (“Institutional Placement”) to raise $25.5m at $0.40 per share ‒ Tranche 1 Institutional Placement to raise c$12.74m under existing ASX LR 7.1 capacity ‒ Tranche 2 Institutional Placement to raise
Slide 28: Capital Structure
Capital Structure Shares Shareholding % Acquisition Shares Shareholding % Placement & SPP Issued Share Capital AGM4 (Pre-transaction) (Pre-transaction) shares issued shares issued (Post-transaction) (Post-transaction) Directors Gerd Schenkel 201,667 0.1% 125,000 140,340 - 467,007 0.1% Marcus Price 8
Slide 29: Indicative Timetable
Indicative Timetable Trading halt Tuesday, 13 December 2021 Record Date Wednesday, 15 December 2021 Placement Closing Date Wednesday, 15 December 2021 Announcement of ARMA Acquisition and Related Capital Raise Thursday, 16 December 2021 Trading Halt Lifted Thursday, 16 December 2021 SPP Offer Opens
Slide 30: Key Risks
Key Risks This section discusses some of the key risks with an investment in shares in CCR. Each of the risks set out below could, in isolation or in combination, if they eventuate, have a material adverse impact on CCR’s business, financial condition, results of operations and prospects. The risks
Slide 31: A. Acquisition Risks
A. Acquisition Risks If the Acquisition completes, CCR will become directly or indirectly liable for any liabilities that ARMA has incurred in the past, including liabilities which were not identified by CCR during its due diligence or which are greater than expected, and for which CCR may not have
Slide 32: A. Acquisition Risks
A. Acquisition Risks Completion of the Acquisition is conditional on a number of conditions being satisfied or waived, including completion of the capital raising, no material adverse change occurring, that ARMA conducts a pre-sale restructure, requiring in certain cases customer consent and employe
Slide 33: B. Business Risks
B. Business Risks The Company is committed to the effective management of risk to reduce uncertainty in the Group’s business outcomes and to protect and enhance shareholder value. There are various risks that could have a material impact on the achievement of the Group’s strategic objectives and fut
Slide 34: B. Business Risks
B. Business Risks Given COVID-19 and other recent Australian and global macroeconomic events, Australia is experiencing economic volatility, which may in turn materially affect the operating and financial performance and prospects of many businesses including CCR. Events relating to COVID-19 have re
Slide 35: B. Business Risks
B. Business Risks The use of CCR’s technology platform is dependent on the ability of its clients and their customers to access the internet. Should internet Reliance on access to internet access be disrupted, restricted or become materially more expensive, usage of the technology platform may be ne
Slide 36: C. Capital Raising Risks
C. Capital Raising Risks CCR has entered into an underwriting agreement under which Bell Potter Securities Limited (the Underwriter) fully underwrites the Institutional Placement, subject to the terms and conditions of the underwriting agreement between the parties (the Underwriting Agreement). The
Slide 37: International Offer Restrictions
International Offer Restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares (New Shares) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may
Slide 38: Contact Us
Contact Us Company David Hentschke Credit Clear e: david@creditclear.com.au Investors Warrick Lace Credit Clear m: +61 (0) 404 656 408 e: warrick.lace@creditclear.com.au 0132711-0000003 SYO1: 2001648567: 1