Slide 1: Half Year FY22 Results
Half Year FY22 Results All values in $NZD unless stated otherwise HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 1
Slide 2: Contents
Contents 1. 1HFY22 Financial Highlights & Upgraded FY22 Guidance 2. Why 100% consumer-direct (B2C) wins 3. Growth initiatives 4. Appendices All amounts in this presentation are denominated in $NZD unless otherwise stated HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 2
Slide 3: 1HFY22 Financial Highlights
1HFY22 Financial Highlights The 100% direct difference Group loan book AU loan book (A$) Cash NPAT $557m +19% (Dec 2020 $468m) $185m +83% (Dec 2020 $101m) $1m Consistency ($1m Dec 2020) Net Interest Margin Net Lending Margin Group 90+ day arrears 13.1% +220bps (Dec 2020 10.9%) 9.3% +210bps (Dec 2020
Slide 4: Rapid growth across all key business metrics
Rapid growth across all key business metrics 1. Account acquisition 2. New loan originations 3. Superior net margins 13% CAGR CAGR 39% 224% 9% Powerful consumer-direct acquisition engine. Over High growth of new customer originations Superior net interest margin and net lending margin 769k customer
Slide 5: New originations grow 224% on marketing scale up post IPO
New originations grow 224% on marketing scale up post IPO New customer loan origination growth Group loan originations fuels receivables book growth ● Significant growth in loan originations continues ● 58% of new customer loan originations now come CAGR 155% from Australia (42% New Zealand) ● New cu
Slide 6: Loan book growth led by Australia expansion
Loan book growth led by Australia expansion Continued growth in 1HFY22, led by strong Group loan book AU originations ● Record period end $557m Group loan book, representing 22% growth on 2HFY21 (annualised) ● Growth driven predominantly by 50% growth in Australian loan originations on 2HFY21, from
Slide 7: Harmoney upgrades FY22 market guidance
Harmoney upgrades FY22 market guidance FY21A 1HFY22A FY22F Change v pcp Loan book $501m $557m >$650m >30% prev. >600m Revenue $79m $43m >$92m >16% Net lending margin 6.8% 9.3% >8.3% >150bps prev. >7.0% Cash NPAT ($0.4m) $0.7m Profitable Harmoney forecasts its transition to warehouse funding to be ~90
Slide 8: Harmoney exceeds its Nov 2020 IPO potential
Harmoney exceeds its Nov 2020 IPO potential KPI Dec 21 Oct 20 Change Australian replication of Significant Australian loan book consumer-direct (B2C) Stellare A$185m A$98m 89% increase growth credit and marketing models Reducing Harmoney capital Halving capital required/ ~6% ~12% required Doubling RO
Slide 9: Why 100% consumer direct (B2C) wins
Why 100% consumer direct (B2C) wins HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 9
Slide 10: Largest 100% online consumer-direct personal lender
Largest 100% online consumer-direct (B2C) personal lender across Australia & New Zealand The long term value of consumer-direct Harmoney growth flywheel Our unique strategy is to create direct relationships with consumers 100% online, at scale, then nurture them to create high value now and into the
Slide 11: The consumer-direct multiplier effect
The consumer-direct (B2C) multiplier effect Meeting customers evolving needs $464m ● With a consumer-direct (B2C) relationship, Stellare® targets customers for remarketing campaigns; offering the right solution for the ● customer at the right time The multiplier effect in action: 4x ○ 42K accounts from
Slide 12: Why 100% consumer-direct wins
Why 100% consumer-direct (B2C) wins Consumer-direct market tailwinds Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation Growth opportunities of consumer-direct model Current personal loan Other financial products Home loans HARMONEY ©202
Slide 13: More Aussies signed up for their personal loan online
● More Aussies signed up for their personal loan via online than via phone, branch, broker combined Google, Kantar Shopping Pulse, May 2021. HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 13
Slide 14: Market Size: Harmoney & listed peers
Market Size: Harmoney & listed peers <2% Australian personal lending market Huge market opportunity Australian personal lending (Dec 2021) ● The Australian personal lending market represents Harmoney and listed peers Australian market an enormous growth opportunity as consumers share as at 31 Dec 21
Slide 15: Consumer-direct means deep consumer data
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Consumer-direct means deep consumer data Broker: Limited data Direct: Deep data Deep data + A.I. 10010110000100111001101111001 1001011000010011100110111100 00001011100111111111100010110
Slide 16: Stellare's automated loan application process
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Stellare’s automated loan application process facilitates rapid scalability Fully automated loan applications are 66% 80% Straight-through-processing (STP) measures the ratio of loans t
Slide 17: Customer acquisition proven in NZ
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Customer acquisition proven in NZ - now driving Australian growth Proven acquisition model CAC reducing over time ● The Stellare® marketing model outbids competitors for target consumer
Slide 18: How does Stellare's integration with Google work?
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns How does Stellare’s Automation integration with Google work? CLV Value $ Google’s smart bidding algorithm Device Browsing & Search Location history +250 more data points Website browsing Demograph
Slide 19: Efficient, accurate and optimised customer acquisition
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Efficient, accurate and optimised customer acquisition Prototyping Globally, Facebook has more than 1.93 billion daily users. HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 19
Slide 20: Deep data refines Libra scorecards
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Deep data refines Libra scorecards Extensive rich data fuels our proprietary technology 7 yrs Rich customer application 769k People have joined Harmoney history $7.6b Personal lending en
Slide 21: Libra: behavioural data powered credit decisioning engine
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Libra: Harmoney’s behavioural data powered credit decisioning engine Stellare® Libra 1.7/1.8: better-than-ever Stellare® Libra 1.7: ~25% better credit conversion Bureau credit scores ar
Slide 22: Continual Libra improvements lead to the best performance ever
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Continual Libra improvements lead to the best performance ever Group arrears & losses performance Arrears in Australia & New Zealand Group arrears and losses continue to perform ahead o
Slide 23: Libra's accuracy rewarded with funding diversity
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Libra’s accuracy rewarded with funding diversity, lower cost of funds and increased return on equity ~$300m undrawn funding capacity Average funding rate ● Consistent low loss rates hav
Slide 24: Scalability powered by automation
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation Scalability powered by automation Revenue grows materially faster than opex ● Automation powers operating cost efficiencies Revenue Fixed Opex ● 100% online application with 66% of appl
Slide 25: $1 billion average loan book expected to generate ~$45m Cash EBITDA
Deep Consumer Lower High Data Lower Lower Fixed Funding Shareholder + = CAC Losses Opex = Costs Returns Automation $1billion average loan book expected to generate ~$45m Cash EBITDA Indicative model Cash EBITDA $60m FY21 1HFY22 At $1b Average Book ~% Avg $m $m ~$m Book Revenue 79 43 160 16% $45m $40
Slide 26: Growth initiatives
Growth initiatives HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 26
Slide 27: Harmoney's growth initiatives - three areas of focus
Harmoney’s growth initiatives - three areas of focus 1. Australian expansion 2. AU/NZ conversion gains 3. Enhanced & new products New New initiatives products Dynamic limits Enhanced 9x NZ Libra 7 year term AU loan offers co-borrower 1.7/1.8 Improving conversion rate ● Enhancing our existing product
Slide 28: Australia direct $1b+ p.a. opportunity on replicating NZ growth
1. Australia direct $1b+ p.a. opportunity on replicating New Zealand’s growth and repeat business New Zealand Australia Existing customers generate >50% of originations, Existing customers generate ~20% of originations as longer established, highly satisfied, direct as customer base grows, future ann
Slide 29: Conversion improvements alone can rapidly grow our loan book
2. Conversion improvements alone can rapidly grow our loan book Quality of accounts attracted to Harmoney Our journey to offering lending to more customers. represents untapped potential to convert credit worthy customers through initiatives focused With our current strong rate of account creation, c
Slide 30: Our data superiority drives new products
3. Our data superiority drives new products: beyond personal loans to personal lending Data advantage The ultimate personal A product for everyone loan We will use our data advantage Strategy Strategy to identify opportunities and • Redesign the personal loan to fit the • Delivering value beyond the
Slide 31: Appendices
Appendices HARMONEY ©2022 HALF YEAR FY22 RESULTS 28 FEBRUARY 2022 31
Slide 32: AU$185m Australian portfolio
AU$185m Australian portfolio. Building a high skill high value customer base. Employment status Property ownership Age of borrowers Loan purpose Region A 28% B 20% C 26% D 9% E 5% F G 7% A 28% B 28% C 20% D 14% E 5% F G H A - Debt consolidation / 28% D - Used vehicle / 9% G - Household items / 7% A
Slide 33: NZ$363m portfolio
NZ$363m portfolio. Building a high skill high value customer base. Employment status Property ownership Age of borrowers Loan purpose Region A 30% B 18% C 24% D 5% E 8% F 4% G 5% A 34% B 13% C 12% D 9% E 5% F 5% G H I J A - Debt consolidation / 30% D - Used vehicle / 5% G - Household items / 5% A -
Slide 34: Profit and loss reconciliation
Profit and loss (pro forma and statutory reconciliation) 6 months ended 6 months ended 31 December 2021 31 December 2020 6 months ended 6 months ended Pro forma Pro forma 31 December 2021 31 December 2020 #039;000 #039;000 NPAT NPAT Interest income 42,611 41,535 Other income - 19 #039;000 #039;000 Total income 4
Slide 35: Cashflow
Cashflow 6 months ended 31 December 2021 6 months ended 31 December 2020 #039;000 #039;000 Cash flows from operating activities Interest received 30,857 14,751 Interest paid (6,572) (4,136) Other income (1,068) 4,044 Payments to suppliers and employees (23,138) (16,063) Net cash generated / (used in) by ope
Slide 36: Balance sheet
Balance sheet 31 December 2021 #039;000 30 June 2021 #039;000 Cash and cash equivalents 55,888 76,464 Trade and other assets 2,616 1,894 Finance Receivables ¹ 455,223 310,196 Expected credit loss provision (18,152) (15,375) Property and equipment 262 642 Intangible assets 5,915 3,455 Deferred tax assets 1
Slide 37: Key operating and pro forma financial metrics
Key operating and pro forma financial metrics 6 Months ended 6 Months ended 31 December 2021 31 December 2020 Change % Loan book value and growth Total originations (#039;000) 205,169 93,099 120% New customer originations (#039;000) 128,692 39,701 224% Existing customer originations (#039;000) 76,477 53,398 4
Slide 38: Important notice and disclaimer
Important notice and disclaimer The material in this presentation is provided for general information purposes No representation or warranty, express or implied, is made as to the fairness, only and is current as at the date of this presentation. It is not a prospectus or completeness, accuracy, ade