Nutun Limited · JSE:NTU
Nutun — Transaction Capital — H1 2018 Earnings Presentation
37 slides from Nutun's earnings presentation, May 2018
Slide 1: Interim Results Presentation for the Half Year Ended 31 March 2018
20 18 INTERIM RESULTS PRESENTATION FOR THE HALF YEAR ENDED 31 MARCH 1
Slide 2: Group Highlights
GROUP HIGHLIGHTS 2018 INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MARCH 2
Slide 3: Group Structure and HY18 Financial & Operational Highlights
TRANSACTION CAPITAL GROUP STRUCTURE HY18 FINANCIAL & OPERATIONAL HIGHLIGHTS (HY18 compared to HY17) CEO: Terry Kier, 11-year group tenure CEO: David Hurwitz, 13-year group tenure CEO: Dave McAlpin, 10-year group tenure R173 MILLION R8.9 BILLION R310 MILLION 50.8 CPS R119 MILLION R1.0 BILLION HEADLIN
Slide 4: Group Strategic & Operational Highlights
GROUP STRATEGIC & OPERATIONAL HIGHLIGHTS ACCELERATED BOOKBUILD IN MARCH 2018 DEBT CAPITAL MARKETS Evolution beyond foundation phase Robust access to the debt capital markets • Expanded base of local & specifically international investors • Raised R1.8 billion in HY18 • International shareholding inc
Slide 5: Transaction Capital Performance Since Listing
TRANSACTION CAPITAL PERFORMANCE SINCE LISTING CAGR: HY core HEPS (HY12 to HY18)¹ ▲21% Interim dividend per share (HY14 to HY18) ▲37% 1 705 Total shareholder return (HY13 to HY18)² ▲29% 1 509 1 185 900 500 525 17 20 26 10 31 12 37 15 43 21 51 9 6 2012 2013 2014 2015 2016 2017 2018 Interim dividend pe
Slide 6: Group Portfolio Mix
GROUP PORTFOLIO MIX COMPOSITION OF EARNINGS 6% 6% 38% 37% 2018 2017 56% 57% SA Taxi TCRS GEO ACCRETIVE CASH DEPLOYMENT CONVERTING INTEREST INCOME ON EXCESS CASH INTO OPERATING EARNINGS AT TCRS Rm Growth Headline earnings 2018 2017 2018 SA Taxi¹ 173 144 ▲20% TCRS¹ 119 93 ▲28% Group executive office (
Slide 7: Transaction Capital Risk Services
TRANSACTION CAPITAL RISK SERVICES 2018 INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MARCH 7
Slide 8: Transaction Capital Risk Services (TCRS)
TRANSACTION CAPITAL RISK SERVICES (TCRS) 1 Innovative & bespoke technology systems that drive superior performance & efficiency TRANSACTION CAPITAL RISK SERVICES IS A 2 Generating in-depth insights from the continuous collection of accurate TECHNOLOGY-LED, & valuable data to develop a consolidated v
Slide 9: Global Listed Peers
GLOBAL LISTED PEERS PREDOMINANTLY ACQUIRERS OF NPL PORTFOLIOS AS PRINCIPAL UNITED STATES & EUROPE EUROPE Acquirer of NPL portfolios as principal Acquirer of NPL portfolios as principal THAILAND Acquirer of NPL portfolios as principal Contingency & FFS collector BRAZIL Acquirer of NPL portfolios as p
Slide 10: Environment & Market Context
ENVIRONMENT & MARKET CONTEXT CHALLENGING CONSUMER CREDIT ENVIRONMENT WITH UPSIDE POTENTIAL CREDIT REHABILITATION IS A CRUCIAL ELEMENT IN SOUTH AFRICA, OF THE 35 MILLION ADULTS¹ THERE ARE: IN GROWING AN INCLUSIVE ECONOMY 9.7 MILLION (~40%) NON-PERFORMING CREDIT TRANSACTION CAPITAL’S CONSUMER CREDIT R
Slide 11: TCRS Market Positioning
TCRS MARKET POSITIONING COMPETITIVE ADVANTAGES TCRS PROPRIETARY DATA • Database of South Africa’s distressed consumers • Continuously enriched (with collection & ContactAbility results) ANALYTICS • Predictive & layered voice analytics to determine: › Propensity to pay › Right time to call REPUTATION
Slide 12: TCRS Performance Since Listing
TCRS PERFORMANCE SINCE LISTING STRATEGIC GROWTH INITIATIVES TO CREATE VALUE CAGR HY12 to HY18: 186 STRATEGIC GROWTH INITIATIVES HY core headline earnings¹ ▲19% HY core EBITDA ▲21% • Current SA economic climate favours acquisition of NPL portfolios 143 • Exploring NPL acquisitions selectively in Aust
Slide 13: TCRS' Diversified Business Model
TCRS’ DIVERSIFIED BUSINESS MODEL ORIGINATE MANAGE COLLECT VALUE ADDED SERVICES, LEAD PAYMENT SERVICES & CONTINGENCY & FFS GENERATION & CUSTOMER ACQUISITION ACCOUNT MANAGEMENT A$1.062 30% Insurance BILLION Public sector Utilities, Telcos & Other Telcos & Other Specialist lending 14% AUSTRALIA 26% Ban
Slide 14: Contingency & FFS: South Africa and Australia
CONTINGENCY & FFS SOUTH AFRICA: TRANSACTION CAPITAL RECOVERIES 30% Insurance Provider of collection & recovery services, including early stage rehabilitation, late stage collections & legal recoveries Public sector Utilities, Telcos & Other 14% AUSTRALIA 26% Banking & Commercial Insurance 2 377 22.2
Slide 15: Acquisition of NPL Portfolios as Principal
ACQUISITION OF NPL PORTFOLIOS AS PRINCIPAL ESTIMATED REMAINING COLLECTIONS (ERC)1 ACQUISITION OF NPL PORTFOLIOS CONTINUES 2 VINTAGE PERFORMANCE AS AT 31 MARCH 2018 • Current South African economic context favours acquisition of NPL portfolios Other Specialist • 17 portfolios acquired for R218m with
Slide 16: TCRS Financial Performance
TCRS FINANCIAL PERFORMANCE • Core headline earnings ▲28% to R119m › Headline earnings organic growth ▲>15%² 78.8 81.5 75.6 › Accretive cash deployment converting cash yield into earnings • Contingency & FFS revenue › Growing revenue from adjacent sectors 51 44 › Insurance, telecommunications & publi
Slide 17: SA Taxi
SA TAXI 2018 INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MARCH 17
Slide 18: SA Taxi
SA TAXI An innovative & pioneering business model with operations expanding throughout 1 SA TAXI IS A VERTICALLY the financial services & asset value chain, building a scalable platform that can be leveraged in adjacent markets INTEGRATED TAXI A unique blend of vehicle procurement, retail, repossess
Slide 19: SA Taxi Impact
SA TAXI IMPACT DELIVERING SHARED VALUE FOR THE INDUSTRY SME EMPOWERMENT ECONOMIC TRANSFORMATION DEVELOPMENTAL CREDIT ACHIEVING INCLUSIVE GROWTH BLACK WOMEN UNDER THE OWNED SMEs 100% OWNED SMEs 20% AGE OF 35 YEARS 16% R1.56 BILLION R20.2 BILLION LOANS ORIGINATED CREATING LOANS ORIGINATED CREATING SUS
Slide 20: SA Taxi Impact
SA TAXI IMPACT CREATING A MORE SUSTAINABLE MINIBUS TAXI INDUSTRY TOGETHER WITH INDUSTRY LEADERSHIP JOINT INITIATIVES WITH MINIBUS TAXI INDUSTRY INCLUSIVE GROWTH • Launch of “Black Elite” fuel campaign AVERAGE SCORE SCORE BELOW WHICH • Launch of WiFi at rank & in taxis AT WHICH SA TAXI GRANTS FINANCE
Slide 21: Environment & Market Context
ENVIRONMENT & MARKET CONTEXT MINIBUS TAXI INDUSTRY IS RESILIENT, DEFENSIVE & GROWING DESPITE SA’S ECONOMIC CLIMATE TRAIN <1 MILLION ▼ PUBLIC TRANSPORT COMMUTERS RELY COMMUTER TRIPS DAILY ON MINIBUS TAXI GIVEN ITS ACCESSIBILITY, MINIBUS TAXI AFFORDABILITY, RELIABILITY & FLEXIBILITY RECEIVES 44% OVER
Slide 22: Environment for Minibus Taxi Operators
ENVIRONMENT FOR MINIBUS TAXI OPERATORS MINIBUS TAXI OPERATORS REMAIN RESILIENT IN A CHALLENGING ECONOMIC ENVIRONMENT CHALLENGING ENVIROMENT WITH UPSIDE POTENTIAL STRUCTURAL ELEMENTS DOMINANT & GROWING MODE OF PUBLIC TRANSPORT R433 300¹ 15% (Competitively priced; convenient; accessible) INCREASING CO
Slide 23: SA Taxi Evolution
SA TAXI EVOLUTION CREATING VALUE AT NEW FRONTIERS TO PROVIDE FINANCE, INSURANCE & OTHER SERVICES THAT ENABLE THE SUSTAINABILITY OF THE MINIBUS TAXI COMMUNITY FORMATIVE YEARS 2018 OUR VISION A finance offering Offering expanded & operations • To extend products & services to additional verticals, unl
Slide 24: SA Taxi Market Positioning
SA TAXI MARKET POSITIONING VERTICALLY INTEGRATED BUSINESS MODEL DATA & TELEMATICS OPERATIONS SA TAXI HAS BEEN TRACKING ON AVERAGE EACH OF OUR VEHICLES TRAVEL ON MINIBUS TAXIS FOR OUR VEHICLES TRAVELS 6 500 ROUTES COVERING APPLIED IN CREDIT VETTING, INSURANCE, COLLECTIONS & REPOSSESSION ~11 YEARS 6 4
Slide 25: SA Taxi Performance Since Listing
SA TAXI PERFORMANCE SINCE LISTING STRATEGIC GROWTH INITIATIVES TO CREATE VALUE CAGR HY12 to HY18: Non-interest revenue composition: STRATEGIC GROWTH INITIATIVES HY headline earnings¹ ▲21% 26% (HY12) to 34% (HY18) Gross loans & advances ▲12% • New vertical integration NPL ratio ▼ 9% Recovery on repos
Slide 26: SA Taxi Financial Performance
SA TAXI FINANCIAL PERFORMANCE • Headline earnings¹ ▲20% to R173m 48.4 › All organic growth 50.1 46.1 • NIM ▲ to 11.3% from 11.0% › Funding costs ▲by 40bps to 11.7% o Average repo rate ▼25bps o Foreign debt ▲to 21% from 20% (FY17), fully hedged to Rand › Average interest rate of 23.6% on origination
Slide 27: SA Taxi Credit Performance
SA TAXI CREDIT PERFORMANCE • Gross loans & advances ▲15% to R8.9bn 18.0 17.2 › Number of loans originated ▲4% 17.2 › Rand value of loans originated ▲8% › Toyota vehicle prices ▲1% between 1 October 2017 & 31 March 2018 & another ▲1% on 1 April 2018 › VAT ▲1% on 1 April 2018 • NPL ratio remained stab
Slide 28: SA Taxi Operational Performance
SA TAXI OPERATIONAL PERFORMANCE SA TAXI OPERATOR PROFILE GEOGRAPHIC DISTRIBUTION VEHICLES ON BOOK 1.2 87% 31% 3.8 YEARS >85% 6% 3% 2% VEHICLES TOYOTA LOANS ORIGINATED TO REPEAT AVERAGE AGE INSURED 5% PER CUSTOMER VEHICLES CUSTOMERS (DURING HY18) OF VEHICLE WITH SA TAXI 9% SA TAXI 13% CUSTOMER CREDIT
Slide 29: Capital Management
Deal of the Year 2018: Best securitisation deal Africa – Securitisation in Africa and Structured Finance CAPITAL MANAGEMENT 2018 INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MARCH 29
Slide 30: Capital Management
CAPITAL MANAGEMENT PERFORMANCE • Robust access to the debt capital markets › Raised ~R1.8bn in debt facilities from 32 separate funding 42.8 21.0 35.5 transactions in HY18 15.0 31.9 › SA Taxi fully funded for > 12 months 12.0 • Continue to diversify funding sources 3.5 3.6 3.7 › Diverse debt investo
Slide 31: Funding Philosophy
FUNDING PHILOSOPHY DIVERSIFICATION DIVERSIFICATION DIVERSIFICATION INNOVATION BY FUNDING BY DEBT INVESTOR BY Innovation is encouraged to cultivate unorthodox thinking STRUCTURE CATEGORY GEOGRAPHY & develop pioneering funding solutions DIVERSIFIED & ENGAGED DEBT INVESTORS • Diversification by geograp
Slide 32: Shareholding
SHAREHOLDING • Accelerated bookbuild (March 2018) › Expanded base of local & specifically international investors 5% 42% › Everglen remains the largest shareholder › ~72 million shares sold by Everglen › 80% of the accelerated bookbuild taken up by international investors 31 March 2018 • Foreign own
Slide 33: Conclusion
CONCLUSION 2018 INTERIM RESULTS FOR THE HALF YEAR ENDED 31 MARCH 33
Slide 34: Investment Case
INVESTMENT CASE COMPELLING & UNIQUE AS WE EXECUTE ON OUR STRATEGY • Two well established, autonomous & unique financial services businesses: › SA Taxi › Transaction Capital Risk Services (TCRS) • Positioned in attractive market segments occupying leading market positions TRANSACTION CAPITAL • Highly
Slide 35: Investment Case Continued
INVESTMENT CASE CONTINUED COMPELLING & UNIQUE AS WE EXECUTE ON OUR STRATEGY BUT UNDERPINNED BY A ROBUST • Experienced, diverse & independent directors at group & subsidiary level CORPORATE GOVERNANCE • Institutionalised governance, regulatory & risk management practices FRAMEWORK & SOUND GOVERNANCE
Slide 36: Questions
QUESTIONS (a) Transaction Capital
Slide 37: Disclaimer
DISCLAIMER This presentation may contain certain "forward-looking statements" regarding beliefs or expectations of the TC Group, its directors & other members of its senior management about the TC Group's financial condition, results of operations, cash flow, strategy & business & the transactions d