Fleetpartners Group Limited · ASX:FPR
Fleetpartners — H1 2019 Earnings Presentation
39 slides from Fleetpartners's earnings presentation, May 31, 2019
Slide 1: Simplification and 1H19 Results Presentation
eclipx Eclipx Group Simplification and 1H19 Results Presentation Julian Russell // Chief Executive Officer Muhs // Head of Strategy and Investor Relations 31 May 2019
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 in
Slide 3: Agenda
Eclipx Group Simplification and 1H19 Results Presentation Agenda 1. Simplification 2. Assessment of the Core Businesses 3. 1H19 Financial Performance 4. Execution Pathway 5. Appendix eclipx
Slide 4: 1. Simplification
eclipx 1. Simplification
Slide 5: Simplification plan
1. Simplification Simplification plan Simplification involves a sole focus on the core fleet and novated businesses—high quality businesses that have been producing stable, predictable earnings and generating strong return on capital for over 30 years Prior operating model Simplification model X Pur
Slide 6: Prior Operating Model has led to Complexity and Inefficiency
1. Simplification Prior Operating Model has led to Complexity and Inefficiency Prioritisation of inorganic growth has distracted the Group from the Core and led to significant cost over-runs & COMMENTS * Acquisitions have distracted management focus from optimising the Core lms Operating expenses (A
Slide 7: Defining the Simplification Perimeter — Core and Non-Core
1. Simplification Defining the Simplification Perimeter — Core and Non-Core Divestment of Non-Core businesses will enable the Group to solely focus on profitable Core growth, and resize the cost base and corporate debt LTM EBITDA: $84.8 million if LTM NPATA: $54.1 million i iL LTM NPATA: ($7.1) mill
Slide 8: 1H19 Results Overview
1. Simplification 1H19 Results Overview 1H18 2H18 ar a] COMMENTS (restated?)| (restated?) A$m (unless stated) » Recently communicated to the ASX: Net Operating Income 155.6 156.9 132.0 o Non-core: Specific issues related to Grays, Right2Drive and Commercial Equipment have impacted earnings o Core: F
Slide 9: 1H19 Financial Performance Summary
1. Simplification 1H19 Financial Performance Summary Whilst Core financial performance was stable against a challenging backdrop, the Non-Core businesses have underperformed (as previously noted to the market) Core Fleet & Novated Non-Core Divest & Under Review (A$m) — a 1H18 Net Operating EBITDA In
Slide 10: Eclipx is Compliant with its Covenants at 31 March 2019
1. Simplification Eclipx is Compliant with its Covenants at 31 March 2019 With the strategic and operational resetting of the group under the simplification plan, Eclipx has recently commenced a process to review and reset its corporate debt facilities Current Corporate Debt Reset Corporate Debt Fac
Slide 11: Covenant Scenario Analysis
1. Simplification Covenant Scenario Analysis Eclipx has a number of immediately actionable strategies to divest non-core businesses and reduce corporate debt Pro forma leverage ratio impact (31 Mar 2019) LTM Illustrative Pro forma Options Description EBITDA leverage ratio‘.2 + Sub-scale | carloans.c
Slide 12: Execution Pathway
1. Simplification Execution Pathway A clear pathway forward for Eclipx over the coming months eee » Non-Core perimeter defined » Eclipx will update the market with progress Business _ . Divestments * Business sale processes are commencing or have commenced * Resizing of the cost base to reflect a mo
Slide 13: 2. Assessment of the Core Businesses
2. Assessment of the Core Businesses
Slide 14: Core - Stable Financial Profile
2. Assessment of the Core Businesses Core - Stable Financial Profile The Core Fleet and Novated businesses have consistently produced stable, top line growth x% CAGR Historical performance’ 1H19 result (vs pcp)? 43% +3% Net Operating Income (after EOL income) (A$m) FY13, 1H16 (LTM) 41H19 (LTM) 1H18
Slide 15: Core - Operating Metrics
2. Assessment of the Core Businesses Core - Operating Metrics Core performance has been consistently underpinned by stable growth rates across all metrics. New Business Writings were slightly down in 1H19 due to a higher number of vehicles entering into inertia and improving pricing and margin disci
Slide 16: Fleet - Resilient and Stable Fundamentals
2. Assessment of the Core Businesses Fleet - Resilient and Stable Fundamentals Core has a long operating track record and a loyal blue-chip customer base. The go-forward strategy includes an emphasis on incremental profitable growth through market sub-segmentation priorities (e.g. SME and mid-market
Slide 17: Novated - Growing and Significantly Under-penetrated
2. Assessment of the Core Businesses Novated - Growing and Significantly Under-penetrated Novated VUMOF has been growing at ~10% per annum supported by positive sub-segmentation market dynamics and a low cost base =) COMMENTARY Potential to increase penetration of existing customers Employee penetra
Slide 18: Differentiated Core Competencies
2. Assessment of the Core Businesses Differentiated Core Competencies The Core platform is defined by its capabilities, which provides the group with flexibility for product development, better capital allocation options and new organic growth pathways * Customer-centric DNA Brand / Customers ° 32+
Slide 19: 3. 1H19 Financial Performance
3. 1H19 Financial Performance
Slide 20: 1H19 - Group Income Statement
3. 1H19 Financial Performance 1H19 - Group Income Statement 1H18 A$m (unless stated) a Note 1) Net operating income before end of lease income and impairment 139.1 End of lease income 115 Net operating income before impairment charges 186.7 Fleet impairment - Credit impairment (1.4) Net operatit 195
Slide 21: Cash Flow Analysis
3. 1H19 Financial Performance Cash Flow Analysis Eclipx generated $32 million free cash in 1H19, increasing its unrestricted cash balance to $94 million Sources and uses of funds (1H19) ASm Opening Cash at bank (unrestricted) Sources of Funds: 1H19 EBITDA 31.3 Debt drawn - Warehouse 238 Debt drawn —
Slide 22: Balance Sheet
3. 1H19 Financial Performance Balance Sheet A$m (unless stated) Assets Cash and cash equivalents Restricted cash and cash equivalents Trade and other receivables Leases Inventory (incl motor vehicles) PP&E and other assets: Intangibles Total assets Li ‘Trade and other liabilities Borrowings - Wareho
Slide 23: Funding
3. 1H19 Financial Performance Funding Well diversified funding model of warehouse, ABS issuance and P&A funding arrangements, which positions Eclipx well for continued growth Funding Summary 31 ASm (unless stated) Dra Undrawn Eclipx-funded (warehouse facilities) 4,129 165 Eclipx-funded (asset-backed
Slide 24: Credit — Performance and Risk Management
3. 1H19 Financial Performance Credit — Performance and Risk Management 90+ days arrears history’ (% of securitised Fleet receivables in Australia & New Zealand) 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Cumulative Net Loss by Vintage? (% of sec
Slide 25: Residual Value — Performance and Risk Management
3. 1H19 Financial Performance Residual Value — Performance and Risk Management Australian used car sale prices and tariffs $20,000 $17,000 $14,000 $11,000 $8,000 $5,000 1990 1994 1998 2002 2006 2010 2018 50% 40% 30% 20% 10% 0% lam Tariff Rate % (RHS) == Avg Large & SUV ($) (LHS) = Avg Small ($) (LHS
Slide 26: Core - Fleet and Novated
3. 1H19 Financial Performance Core - Fleet and Novated The Core businesses are stable 1H18 A$m (unless stated) (restated)* (Refer to Note 1) NOI (before EOL and impairment) N2 End of lease income 176 Impairment (07) NOI 88.2 Opex (46.4) EBITDA 418 NPATA 276 Fleet NBW 308 Novated NBW 97 Total NBW 404
Slide 27: Fleet - End of Lease
3. 1H19 Financial Performance Fleet - End of Lease Future end of lease income is expected to remain in line with 1H19 Residual value setting remains consistent over time Residual Value as % of Financed Value (New Business Writings) (Fleet Australia, 48 month contracts with 80,000 km) RV% 2016 2017 2
Slide 28: Assets for Sale - Grays
3. 1H19 Financial Performance Assets for Sale - Grays 2H18 ASm (unless stated) (restated)' Industrial 201 163 164 (18%) Auto 104 113 132 21% Wine " 10 9 (17%) Total Sales 315 286 305 (3%) Industrial 26.8 255 207 (23%) Auto 9.0 94 10.4 16% Wine 34 34 26 (24%) Net Operating Income 39.2 38.0 33.7 (14%)
Slide 29: Assets for Sale - Commercial Equipment Australia
3. 1H19 Financial Performance Assets for Sale - Commercial Equipment Australia 1H18 2H18 ASm (unless stated) (restated)* (restated)! efer to Note 1) (Referto Note 1) NOI (before EOL and impairment) 37 5A 33 (12%) Impairment - (0.4) (56) na NOI : 37 47 (2.3) na Opex (27) (3.1) (28) 2% EBITDA 1.0 16 (
Slide 30: Assets for Sale - Right2Drive
3. 1H19 Financial Performance Assets for Sale - Right2Drive Right2Drive 1H18 2H18 ASm (unless stated) (restated)* (restated)* Fa COMMENTS (Refer to Note 1) (Refer to Note 1) Branches 35 35 32 (9%) . FY18 results adjusted for impact of AASB 15. and prior period restatements relating to revenue recogn
Slide 31: Under Review - Car loans and trade-in services
3. 1H19 Financial Performance Under Review - Car loans and trade-in services CarLoans..... are you selling’ GET A BETTER CAR Sub-scale businesses have been placed under review 1H18 2H18 A$m (unless stated) (restated)' (restated)' =) COMMENTS (Refer to Note 1) (Refer to Note 1) "0 ss Q CarLoans.... O
Slide 32: 4. Execution Pathway
eclipx 4. Execution Pathway
Slide 33: Execution Pathway
4. Execution Pathway Execution Pathway A clear pathway forward for Eclipx over the coming months eee » Non-Core perimeter defined » Eclipx will update the market with progress Business _ . Divestments * Business sale processes are commencing or have commenced * Resizing of the cost base to reflect a
Slide 34: 5. Appendix
5. Appendix
Slide 35: Group Income Statement
5. Appendix Group Income Statement 1H18 Adjustments 1H18 $ million (reported)! and restatements* (restated) 1 to Note 1) (Refer to Note 1) (Refer to Note 1) Net operating income before end of lease income and impairment 142.8 (3.7) 139.1 1267 End of lease income 17.5 175 142 Net operating income bef
Slide 36: Business Units Performance — 1H19
5. Appendix Business Units Performance — 1H19 Current Segment Reporting — 1H19 (ASm, unless stated) Feet CEF Commercial Fleet sue neommercial Novated (Gao AYS R2D Consumer Grays Group NOI before EOL & Impairments 42 33 475 168 01 17.0 124 23 09 B3 286 337 1267 End of Lease 10.6 0.0 10.6 36 - 36 - -
Slide 37: Business Units Performance — 2H18
5. Appendix Business Units Performance — 2H18 Current Segment Reporting — 2H18 (ASm, unless stated) Feet CEF Commercial Fleet sue neommercial Novated (Gao AYS R2D Consumer Grays Group NOI before EOL & Impairments 48.6 54 537 139 05 144 16 34 28 154 332 381 1393] End of Lease 14.2 0.0 14.2 46 - 46 04
Slide 38: Business Units Performance — 1H18
5. Appendix Business Units Performance — 1H18 Current Segment Reporting — 1H18 (ASm, unless stated) Feet CEF Commercial Fleet sue neommercial Novated (Gao AYS R2D Consumer Grays Group NOI before EOL & Impairments mA 37 48.4 167 01 168 70.0 38 17 19.6 351 391 739.1 End of Lease 13.2 - 13.2 40 - 40 05
Slide 39: Reconciliation of restated accounts for 1H18 and 2H18
5. Appendix Reconciliation of restated accounts for 1H18 and 2H18 Current Segment Reporting — 1H18 Business Unit Simplification — 1H18 (ASm, unless stated) coustralian Australian Grays Commerc) Gfoup| | (ASm, unless stated) eet Sender CEF Grays R2D Group EBITDA (reported) 315 13.9 96 6. 5] 615| | EB