Fleetpartners Group Limited · ASX:FPR
Fleetpartners — H1 2020 Earnings Presentation
49 slides from Fleetpartners's earnings presentation, May 13, 2020
Slide 1: Eclipx Group 1H20 Results Presentation
GROUP Eclipx Group 1H20 Results Presentation eclipX @Q FieetPartners @ fieetplus A FleetChoice Julian Russell // Chief Executive Officer Damien Berrell // Chief Financial Officer Authorised by // The Board of Eclipx Group Limited 13 May 2020
Slide 2: Legal disclaimer
Legal disclaimer This Presentation contains summary information about Eclipx Group Limited (Eclipx) and its subsidiaries and their activities current as at the date shown on the front page of this Presentation. The information in this Presentation does not purport to be complete. It should be read i
Slide 3: 1. Group highlights
1. Group highlights
Slide 4: Strong progress against the Simplification Plan & prudent action in the wake of COVID-19
Strong progress against the Simplification Plan & prudent action in the wake of COVID-19 v Outperformance on every line item Y Core EBITDA Y 10.6% versus 1H191 ¥ 12.6% versus 2H19' v_ Five of six non-core divestments completed Y $12.5m ‘annualised’ cost savings versus $15m target in Core? v Simplifi
Slide 5: Core and non-core performance
1. Group highlights Core and non-core performance On a like for like basis, the core Fleet business delivered EBITDA growth of 10.6% and 12.6% relative to 1H19 and 2H19 respectively CORE NON-CORE Go to market brands: Sold in last 12 months?: @ fleetplus e FleetPartners a FleetChoice eclipXer grayson
Slide 6: Core illustrative core NPATA if non-core businesses had been exited
1. Group highlights Core— illustrative core NPATA if non-core businesses had been exited Core standalone NPATA growth of 29% relative to 1H19, on a like for like basis b iaieiaieiaieieiaielnieieiiaieieieieieialaiialal 1H20 core standalone performance = =[[-~~~~~ $48.4m ($1.8m) 1.5m) T | $46.6m (s 31
Slide 7: 2. Simplification progression
2. Simplification progression
Slide 8: Simplification progression
2. Simplification progression Simplification progression Execution is tracking ahead of plan ORIGINAL PRIORITIES EXECUTED CURRENT PRIORITIES v | CarLoans.... grayso Right2Drive Right2Drive held for sale and being managed for capital 1) Non-core divestments ) J | areyouselling | / | <>Georgie + Targe
Slide 9: Right2Drive divestment — preparation for separation
2. Simplification progression @ Right2Drive divestment — preparation for separation Right2Drive continues to be managed for capital, with ECX targeting exit before the end of FY20 RESTRUCTURE NOW COMPLETED New management team Collections improving and credit hire quality increased Branch size reduce
Slide 10: Strengthen balance sheet
2. Simplification progression @® Strengthen balance sheet Gross debt reduction of $50m to target of c.$175m, through scheduled amortisation, organic capital generation and R2D sales proceeds DELEVERAGING PATHWAY (drawn gross debt) 31 March 2020: + $225m of gross debt $350m $85m + $81m of cash holdin
Slide 11: Cost optimisation — $12.5m annualised cost savings
2. Simplification progression ® Cost optimisation — $12.5m ‘annualised’ cost savings versus $15m target in core by the end of FY211 INITIATIVE | Senior management renewal | Occupancy Simplified productivity Group discipline Annualised exit run-rates Notes TARGET $2.3m $2.6m $6.3m $3.8m $15m % EXIT R
Slide 12: Cost optimisation (pre AASB 16)
2. Simplification progression ® Cost optimisation (pre AASB 16) Well progressed cost optimisation plan with core costs down from $99.5m in FY19 to an annualised first half of $87m COST TO INCOME %! NET OPERATING INCOME (asm) ¢-19 temporary reductions (not reflected in 1H20 opex) + Temporary reductio
Slide 13: Core refocus — operating leasing
2. Simplification progression ® Core refocus — operating leasing Focus on high quality revenue and improving customer value proposition NEW BUSINESS WRITINGS (EX PANEL) ($m) 1H17 2H17 1H18 2H18 1H19 2H19 1H20 COMMENTS + Focus on customer value proposition has seen a continued increase in NPS + Seaso
Slide 14: Core refocus — novated expansion
2. Simplification progression @® Core refocus — novated expansion 11% growth in new business writings on an LTM basis and 7.5% half on half—significant slowdown in March as COVID emerged NEW BUSINESS WRITINGS ($m) 128 112 114 106 100 : i a 1H17 2H17 1H18 2H18 1H19 2H19 1H20 NOVATED LEASE UNITS WRITT
Slide 15: Core refocus
2. Simplification progression @ Core refocus Anumber of business initiatives underway, with a prioritisation of risk-based capital allocation GROWTH OUTCOMES TO BE DERIVED FROM CUSTOMER EXPERIENCE CORE REFOCUS CRM SYSTEM ENHANCEMENTS VALUE-ADD PRODUCTS & DATA DRIVEN INSIGHTS PROCESS EFFICIENCY Custo
Slide 16: 3. Group financial performance
3. Group financial performance
Slide 17: Group income statement
3. Group financial performance Group income statement’ COMMENTS 4H20 1H20 CHANGE $m 1H19 _,,1H20 ines PCP — — a pre AASB16) (pre AASB16) Simplification Plan driving higher profitability Net operating income before end of ease income ya, 7 te ve osx) + Divestment of non-core businesses has produced a
Slide 18: Group balance sheet
3. Group financial performance Group balance sheet COMMENTS $m 31-Mar-20 30-Sep-19 The balance sheet reflects the continuing operations of the business (as per the ASSETS statutory accounts) and has been adjusted to reflect: * Cash and cash equivalents 60.8 97.1 + The sale of non-core assets: * Rest
Slide 19: Cash generation — sources and uses
3. Group financial performance Cash generation — sources and uses STRONG CASH FLOW FOR THE HALF SOURCES AND USES OF FUNDS (1H20) $m + Positive performance in the core as the Group executes against its Simplification Opening Cash at bank (unrestricted) 97.1 Plan + Strong operational rigour around cas
Slide 20: 4. Core financial performance
4. Core financial performance
Slide 21: Core business metrics relatively stable
4. Core financial performance Core business metrics relatively stable Continued strong growth of Novated is serving to replace the impact from exiting low ROE “panel” business, and NBW implications as we enter the bottom of our replacement cycle for new business written 3-4 years ago NEW BUSINESS WR
Slide 22: Core business metrics relatively stable
4. Core financial performance Core business metrics relatively stable Stable results for both VUMOF and AUMOF VEHICLES UNDER MANAGEMENT OR FINANCED (VUMOF) (End of period, 000’s) mFunded Fleet mFunded Novated Managed only 103.4 979 102.4 99.7 100.1 93.3 32.6 33.2 13.0 14.0 56.8 56.3 1H16 2H16 41H17,
Slide 23: Core financial performance
4. Core financial performance Core financial performance COMMENTS Net Operating income up 1% on pep driven by; + Margin expansion due to the ABS term-out of the Australia and New Zealand warehouses: + Strong growth in funding commissions associated with Novated business writings + Lower management f
Slide 24: Core - Fleet and Novated
4. Core financial performance Core - Fleet and Novated' e FleetPartners @ fleetplus FleetChoice COMMENTS 1H20 1H20 CHANGE PCP $m (unless stated) TH19 eeansoie) (post AASOI6) (pre AASB16) = The move towards more profitable new business writings is being offset against a the run-off of Managed Only un
Slide 25: 5. COVID-19 risk assessment & mitigation approach
5. COVID-19 risk assessment & mitigation approach
Slide 26: COVID-19 risk assessment & mitigating factors
5. COVID-19 risk assessment & mitigation approach COVID-19 risk assessment and mitigating factors COVID-19 disruption presents challenges that ECX is addressing through its risk mitigation approach TOPIC COVID-19 RISK ASSESSMENT MITIGATING VARIABLES, 1) NOI pre EOL income Impact from lower business
Slide 27: NOI pre-EOL and impairment
5. COVID-19 risk assessment & mitigation approach @ Net operating income before end of lease income (NOI pre-EOL and impairment) NOI pre-EOL includes 87% predictable annuity-like income from current leases, supported by a $1.4 billion funded book ANNUITY-LIKE INCOME ACCOUNTS FOR 87% OF NOI PRE IMPAR
Slide 28: End of lease income
5. COVID-19 risk assessment & mitigation approach @ End of lease income (EOL income) — unit profitability drivers Circa 60% of EOL income relates to end of contract charges, and provides buffer to impact of used car market pricing DISPOSED VEHICLES AND END OF LEASE INCOME PER VEHICLE COMMENTS + The
Slide 29: Active management of disposals & inventory risk management
5. COVID-19 risk assessment & mitigation approach @/ © Active management of disposals & inventory risk management Managing disposals on a vehicle by vehicle basis to maximise EOL income whilst protecting liquidity 2) END OF LEASE INCOME (EOL INCOME) — ACTIVE MANAGEMENT OF DISPOSALS + Temporary press
Slide 30: Liquidity — inventory risk management
5. COVID-19 risk assessment & mitigation approach © Liquidity — inventory risk management Eclipx’s has 2.2 — 3.5x liquidity coverage relative to the illustrative inventory liquidity call cases RISK MITIGATION STEPS LIQUIDITY PROFILE v Preservation of existing cash and cash equivalents ($81m) 25m 106
Slide 31: Funding and covenant position
5. COVID-19 risk assessment & mitigation approach @® Funding and covenant position Proactively sought and received corporate debt covenant relief to provide flexibility for the period of COVID-19 and beyond COVENANT CHANGES = = Oct-19 leverage agreement «=== Revised leverage agreement = = Oct-19 ICR
Slide 32: Credit risk
5. COVID-19 risk assessment & mitigation approach © Credit risk Conservative credit disciplines combined with a quality underlying security and customer base COMMENTS + More than 33 years of experience with unique credit insights through cycles in A/NZ + All financing secured by PPSR on vehicles (no
Slide 33: 6. Outlook
6. Outlook
Slide 34: FY20 outlook
6. Outlook FY20 outlook COVID-19 Liquidity End of lease outcomes New business writings M&A + $106m in liquidity access as at end of + Temporary pressure on used car market + NBW will be lower in 2H20 as customer + Pursuing sale of Right2Drive March during isolation period extension activity will rep
Slide 35: Questions
Questions
Slide 36: Appendices
eclip® Appendices: a) Business unit reporting b) Financial reconciliations c) Funding d) Non-core businesses e) AOFM
Slide 37: Appendices: Business unit reporting
Appendices: a) Business unit reporting
Slide 38: Business units performance — 1H20
Appendices: Business unit reporting Business units performance — 1H20 NEW SEGMENTS — 1H20 (POST AASB16) Sold 24 April Sold 2H19 Consumer Held for sale! (Sm, unless stated) FleetAU _Novated AU _ New Zealand Core R2D _(CL/Georgie __ Under review CEF Grays AYS Divested Group NOI before EOL & Impairment
Slide 39: Business units performance — FY19
Appendices: Business unit reporting Business units performance — FY19 NEW SEGMENTS — 1H19 Consumer | Held for sale/ ($m, unless stated) FleetAU _Novated AU _ New Zealand Core R2D _(CL/Georgie Under review CEF Grays AYS Divested Group NOI before EOL & Impairments 442 24 170 733 133 23 156 33 337 09 3
Slide 40: Business units performance — FY18
Appendices: Business unit reporting Business units performance — FY18 NEW SEGMENTS — 1H18 Consumer —_Held for sale/ ($m, unless stated) FleetAU _Novated AU _ New Zealand Core R2D _(CL/Georgie Under review CEF Grays AYS Divested Group NOI before EOL & Impairments 444 10.0 168 12 196 38 234 37 301 7 4
Slide 41: Appendices: Financial reconciliations
Appendices: b) Financial reconciliations
Slide 42: Group income statement
Appendices: Financial reconciliations Group income statement COMMENT CHANGE $m 4H19 1H20 1H20 bop (pre AASB 16) (post AASB16) (pre AASB16) Net operating income before end of lease income 426.7 18 818 (35%) & impairment End of lease income 142 143 143 1% Net operating income before impairment charges
Slide 43: Appendices: Funding
Appendices: c) Funding
Slide 44: Liquidity and funding
Appendices: Corporate Debt overview Liquidity and funding Most diversified funding structures in the domestic fleet space with the support of more than 50+ lenders and investors Eclipx funded (own credit) Third party = Warehouse ABS market Cash Principal & Agency Primary source of funding Tactical u
Slide 45: Corporate Debt overview
Appendices: Corporate Debt overview Corporate Debt overview ILLUSTRATIVE SENSITIVITY - PATHWAY TO STEADY STATE (sm) KEY TERMS SUMMARY Effective Blended Interest Rate (%)? Participants => Six lenders T0% 88% OO GF 8.0% Maturi + Revolver & Term Loan (October 2022) jaturi s 265 = (18.6) (17.2). (15.9)
Slide 46: Appendices: Non-core businesses
Appendices: d) Non-core businesses
Slide 47: Held for sale - Right2Drive
Appendices: Non-core businesses Held for sale - Right2Drive PERFORMANCE + During 2H19 and 1H20, R2D has increased the focus on the collection of its debtor book, culminating in improved cash collections + Business restructure initiated in 2H19 now complete + Branch rationalisation from 32 in 1H19 to
Slide 48: Appendices: AOFM
Appendices: e) AOFM
Slide 49: Proposed AOFM COVID-19 forbearance funding structures for non-ADIs
Appendices: AOFM Proposed AOFM COV-19 forbearance funding structures for non-ADI’s Liquidity and forbearance risk mitigation and management COVID-19 FORBEARANCE FUNDING SUPPORT Customers seeking alsa payment holidays ale (ABS Payment ECX securitisation holiday support . SPV cashflows AOFM $15bn S@ 8