Slide 1: Appen Limited Equity raising presentation
21 November 2023 Appen Limited Equity raising presentation NOT FOR DISTRIBUTION IN THE UNITED STATES
Slide 2: Important notice and disclaimers (1 of 4)
Important notice and disclaimers (1 of 4) Important Notice and Disclaimers This investor presentation (Presentation) is dated 21 November 2023 and has been prepared by Appen Limited (ACN 138 878 298) (Appen). • This Presentation has been prepared in relation to: • a pro rata accelerated non-renounce
Slide 3: Important notice and disclaimers (2 of 4)
Important notice and disclaimers (2 of 4) Appen prepares its financial information in accordance with the Corporations Act, Australian Accounting Standards (AAS) adopted by the Australian Accounting Standards Board (AASB) and International Financial Reporting Standards (IFRS) adopted by the Internat
Slide 4: Important notice and disclaimers (3 of 4)
Important notice and disclaimers (3 of 4) Each recipient of this Presentation should make its own enquiries and investigations regarding all information included in this Presentation including the assumptions, uncertainties and contingencies which may affect the Appen Group's future operations and t
Slide 5: Important notice and disclaimers (4 of 4)
Important notice and disclaimers (4 of 4) APPEN GROUP AND THE UNDERWRITER None of the underwriter nor any of its Extended Parties, nor the advisers to Appen, have authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this Presentation and do not make or purport t
Slide 6: Summary
Summary ▪ Revenue conditions have deteriorated further than what was expected at the time of the previous equity raising announced on 16 May 2023 1 FY23 trading update ▪ The challenging external operating and macroeconomic conditions that were noted at the 1H FY23 results have persisted into 2H FY23
Slide 7: Trading update – year to date performance
Trading update – year to date performance Unaudited FY23 financial update for the ten months Continued challenging external operating and ending 31 October 20231: macroeconomic conditions in Global Services October YTD Vs pcp ▪ Customers continue to value our work, however ongoing reduction in custo
Slide 8: Trading update – monthly unaudited financial update
Trading update – monthly unaudited financial update1 Revenue Underlying EBITDA and underlying cash EBITDA (excluding FX)2 $20.8m $20.5m $20.8m $21.9m Jul-23 Aug-23 Sep-23 Oct-23 20 15 ($0.6m) ($1.0m) 10 ($2.1m) 5 ($2.3m) ($2.5m) ($2.7m) - ($3.1m) Jul-23 Aug-23 Sep-23 Oct-23 ($3.4m) % change on PCP P
Slide 9: Continuing to see opportunities in generative AI
Continuing to see opportunities in generative AI LLM model US tech firm Asian tech firm builder Conversational AI A large and longstanding Assembled team of software evaluation to improve project is now mostly focused engineers to support software performance of globally on generative AI model codin
Slide 10: Executing on our turnaround
Executing on our turnaround Focus area Progress on 1H23 turnaround initiatives Progress on 2H23 turnaround initiatives • Established business management systems • Execute cost saving initiatives Operational rigor • Cost reallocation to growth vectors • Target operating model deployed • Streamlined c
Slide 11: Further action to reduce cost base
Further action to reduce cost base Continuing to manage costs in line with the revenue Cost reduction is resulting in an improved opportunity and market conditions underlying cash EBITDA3 (excl. FX) position Jul-23 Aug-23 Sep-23 Oct-23 ▪ Appen has completed 100% of the initiatives announced on 10 Ma
Slide 12: 2023 outlook
2023 outlook ▪ Notwithstanding the weaker revenue environment, Appen remains focused on returning to underlying EBITDA and underlying cash EBITDA profitability on an annualised, run-rate basis1,2 ▪ The additional cost out initiatives recently implemented and those announced are expected to be enable
Slide 13: Strategic considerations
Strategic considerations ▪ Appen has significant potential despite the highly challenging external operating environment it currently faces ▪ Appen’s Board is continuously assessing opportunities to realise this value for shareholders, including responding to third party interest in its businesses.
Slide 14: Equity raising details
Equity raising details • Fully underwritten ~A$30 million Equity Raising comprised of: • A 1 for 3.65 pro rata accelerated non-renounceable entitlement offer (“Entitlement Offer”) to existing eligible shareholders to raise Offer structure and ~A$23.6 million size • An institutional placement (“Place
Slide 15: Equity raising timetable
Equity raising timetable Events Dates Announcement of the Equity Raising Tuesday, 21 November Placement and Institutional Entitlement Offer bookbuild Tuesday, 21 November – Wednesday, 22 November Announcement of results of the Placement and Institutional Entitlement Offer Thursday, 23 November Appen
Slide 16: Key risks
Key risks This section discusses some of the key risks associated with an investment in shares in Appen. These risks may affect the future operating and financial performance of the Appen Group and the value of Appen shares. The risks set out below are not necessarily listed in order of importance a
Slide 17: Key risks (cont.)
Key risks (cont.) Business risks The funds raised under the Offer, together with Appen's existing cash reserves, and future operating cashflow are currently expected to be sufficient to fully meet Appen's business operations. However, no assurance can be given by Appen that its short term funding re
Slide 18: Key risks (cont.)
Key risks (cont.) Business risks If the actions of competitors or potential competitors of the Appen Group become more effective, Appen may be unable to compete successfully. For example, competitors of the Appen Group might adopt more aggressive strategies to capture market share, or alternatively,
Slide 19: Key risks (cont.)
Key risks (cont.) Business risks Through the ordinary course of business, members of the Appen Group collect a range of data from customers and crowd workers. Appen Group is subject to, and must comply with a range of strict data protection and privacy laws in Protection of jurisdictions where it op
Slide 20: Key risks (cont.)
Key risks (cont.) Business risks Climate-related risks may impact Appen and/or its customers. There are risks related to the transition to a lower-carbon economy and risks related to the physical impacts of climate change. Transition risks arise when transitioning to a lower-carbon economy and may e
Slide 21: Key risks (cont.)
Key risks (cont.) Offer risks Appen has entered into an underwriting agreement with the underwriter pursuant to which the underwriter has agreed to fully underwrite the Entitlement Offer and the Placement (Underwriting Agreement), subject to those terms and conditions of the Underwriting Agreement.
Slide 22: Summary of Underwriting Agreement
Summary of Underwriting Agreement Appen entered into an underwriting agreement with the underwriter in respect of the Offer on 21 November 2023 (Underwriting Agreement). The Underwriter's obligations under the Underwriting Agreement, including to underwrite the Placement and the Entitlement Offer of
Slide 23: Summary of Underwriting Agreement (cont.)
Summary of Underwriting Agreement (cont.) • any adverse change occurs, or there is a development involving a prospective adverse change, in the assets, liabilities, financial position or performance, profits, losses or prospects of the Appen Group from those respectively fully and fairly disclosed i
Slide 24: International selling restrictions
International selling 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
Slide 25: International selling restrictions (cont.)
International selling restrictions (cont.) Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or mater