Nutun Limited · JSE:NTU
Nutun — Transaction Capital — FY2020 Earnings Presentation
49 slides from Nutun's earnings presentation, 2020
Slide 1: Results Presentation for the Year Ended 30 September
TRANSAC TI ON C API TAL Results Presentation FOR THE YEAR ENDED 30 SEPTEMBER
Slide 2: Group Performance
GROUP PERFORMANCE 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 3: Transaction Capital 5-Year Performance
TRANSACTION CAPITAL 5-YEAR PERFORMANCE 2 LONG-TERM TRACK RECORD OF GROWTH CAGR FY14 – FY19: HY20 results pre COVID-19 adjustments 2 215 Core headline earnings1 ▲24% in line with historical growth track record Core HEPS1 ▲23% Core headline earnings1 ▲19% Dividend per share ▲31% Core HEPS1 ▲18% Total
Slide 4: COVID-19 Impacts FY20 Results
COVID-19 IMPACTS FY20 RESULTS 3 CREDIT IMPAIRMENT CHARGES & ADJUSTMENTS TO CARRYING VALUE OF PURCHASED BOOK DEBTS MUCH HIGHER THAN IN HISTORICAL PERIODS SUBDUING FY20 EARNINGS | ▲PROVISION COVERAGE & PROTECTING BALANCE SHEET 10% 11% RESILIENT & AGILE RESPONSE TO COVID-19 • Pre-provision profit1 ▲10%
Slide 5: Strategic Highlights
STRATEGIC HIGHLIGHTS 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 6: Transaction Capital Strategic Highlights
TRANSACTION CAPITAL STRATEGIC HIGHLIGHTS 5 TRANSACTION CAPITAL’S RESILIENCE & AGILE RESPONSE TO COVID-19 ENABLED SIGNIFICANT STRATEGIC PROGRESS IN 2020 ESTABLISHED & RELEVANT BUSINESS MODELS RESILIENCE OF CAPITAL STRATEGY WAS TESTED & PROVEN IN FY20 • SA Taxi & TCRS business models established over
Slide 7: Positioning Transaction Capital for Growth
TRANSACTION CAPITAL STRATEGIC HIGHLIGHTS 6 POSITIONING TRANSACTION CAPITAL FOR GROWTH VALUE ACCRETIVE ACQUISITION OF 49.9% OF WeBuyCars ENHANCED ENVIRONMENTAL, SOCIAL & ECONOMIC (ESE) FRAMEWORK INVESTING INTO TRANSACTION CAPITAL’s THIRD ADJACENT MARKET VERTICAL • Measurable ESE reporting • South Afr
Slide 8: SA Taxi Strategic Highlights
SA TAXI STRATEGIC HIGHLIGHTS 7 WELL PLACED TO RESUME LONG-TERM TRACK RECORD OF GROWTH RESILIENT PERFORMANCE | PRE-PROVISION PROFIT ▲11% DELIVERING VALUE FOR THE MINIBUS TAXI INDUSTRY • Quick alignment of operating models, financial structures & growth plans • ~R400m formal payment relief to clients
Slide 9: TCRS Strategic Highlights
TCRS STRATEGIC HIGHLIGHTS 8 WELL PLACED TO RESUME LONG-TERM TRACK RECORD OF GROWTH RESILIENT PERFORMANCE | PRE-PROVISION PROFIT ▲12% CONSERVATIVE APPROACH TO ANTICIPATED IMPACT OF COVID-19 PROTECTING BALANCE SHEET • Quick alignment of operating models, financial structures & growth plans • Future co
Slide 10: Group Structure
GROUP STRUCTURE 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 11: Transaction Capital Group Structure
TRANSACTION CAPITAL GROUP STRUCTURE 10 GROWING EARNINGS BASE BY EXPANDING EXISTING TOTAL ADDRESSABLE MARKET & ENTERING ADJACENT MARKET SEGMENTS TRANSACTION CAPITAL 49.9% 73.7%2 100% WeBuyCars¹ SA TAXI TRANSACTION CAPITAL RISK SERVICES SERVICES CAPITAL SOLUTIONS Collection services (SA & Australia) A
Slide 12: Transaction Capital Group Portfolio Mix
TRANSACTION CAPITAL GROUP PORTFOLIO MIX 11 COMPOSITION OF EARNINGS 7% 65% 5% 56% 8% SA Taxi 2020 TCRS 2019 GEO 20% WeBuyCars 39% 2020 2019 Movement Headline earnings Rm Rm 2020 SA Taxi 181 446 ▼59% TCRS¹ 55 298 ▼82% GEO 21 45 ▼44% WeBuyCars2 19 - ▲>100% TOTAL 276 789 ▼65% Cents per share 44.3 129.0
Slide 13: Capital Management
CAPITAL MANAGEMENT 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 14: Strong Balance Sheet Position with Unfettered Access to Liquidity
STRONG BALANCE SHEET POSITION WITH UNFETTERED ACCESS TO LIQUIDITY 13 R23.4 bn R16.1 bn R5.1 bn R1.4 bn TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS ASSETS R11.4 billion R2.5 billion INVENTORIES R423 million NET LOANS & ADVANCES PURCHASED BOOK DEBTS PROPERTIES R428 million R17.0 bn R13.4 bn R3
Slide 15: Diversified Debt Funding Strategy
DIVERSIFIED DEBT FUNDING STRATEGY 14 PASS THROUGH WAREHOUSING PRIVATE STRUCTURED FINANCE ON BALANCE SHEET DEBT STRUCTURE STRUCTURES FACILITIES (MAJORITY INTERNATIONAL DFIs) & SYNDICATED LOANS FY20 BALANCE OUTSTANDING R4.6 billion R1.5 billion R5.5 billion R2.4 billion COMPOSITION ~33% ~11% ~39% ~17%
Slide 16: WeBuyCars
WeBuyCars 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 17: Used Vehicle Market Context & Environment
USED VEHICLE MARKET CONTEXT & ENVIRONMENT 16 SA’S VEHICLE PARC HAS GROWN STEADILY DESPITE NEW VEHICLE SALES ▼OVER LAST 10 YEARS MODES OF TRANSPORT SOUTH AFRICA’S VEHICLE PARC¹ IS GROWING • E-hail | Small proportion due to affordability 40% DESPITE NEW VEHICLE SALES ▼ OVER LAST 10 YEARS 1% PUBLIC NEW
Slide 18: Used Vehicle Market Is Resilient, Defensive & Growing
USED VEHICLE MARKET CONTEXT & ENVIRONMENT 17 USED VEHICLE MARKET IS RESILIENT, DEFENSIVE & GROWING DESPITE SOUTH AFRICA’S ECONOMIC CLIMATE STRONG RECOVERY IN USED VEHICLE SALES | ALREADY AT PRE COVID-19 LEVELS VEHICLE SALES IN SOUTH AFRICA AGE OF USED VEHICLES SOLD ▲ SHIFT FROM NEW TO USED VEHICLES
Slide 19: WeBuyCars Market Positioning
WeBuyCars | MARKET POSITIONING 18 COMPETITIVE ADVANTAGES 2. ARTIFICIAL INTELLIGENCE (AI), ANALYTICS & LEAD GENERATION • AI applied to › Ensure vehicles bought & sold at a fair price › Adjust pricing according to value & demand, preserving margins & high stock turn • Lead generation to target high-qu
Slide 20: Midstream Vehicle Supermarket
MIDSTREAM 19 VEHICLE SUPERMARKET
Slide 21: Midstream Vehicle Supermarket
MIDSTREAM 20 VEHICLE SUPERMARKET
Slide 22: WeBuyCars Strategic Growth Initiatives
WeBuyCars STRATEGIC GROWTH INITIATIVES 21 WELL PLACED TO BUILD ON LONG-TERM TRACK RECORD OF GROWTH FAVOURABLE STRUCTURAL MARKET CONDITIONS | BUSINESS MODEL MORE RELEVANT IN POST COVID-19 ENVIRONMENT MEDIUM-TERM TARGET TO ▲VOLUME OF VEHICLES TRADED TO 10 000 PER MONTH WeBuyCars’ GEOGRAPHIC DISTRIBUTI
Slide 23: Global Listed Peers
GLOBAL LISTED PEERS 22 A MIX OF MARKET PARTICIPANTS INCLUDING ONLINE PLATFORMS; MARKET PLACES; FRANCHISE DEALERS; E-COMMERCE WITH VEHICLE SUPERMARKETS WeBuyCars BUSINESS MODEL UNIQUE IN SA WITH COMPARABLE INTERNATIONAL PEERS 1 Advertising Europe Revenue Units sold cost as % Advertising 2019 (US$) (‘
Slide 24: WeBuyCars Stacks Up Well Against International Peers
WeBuyCars STACKS UP WELL AGAINST COMPARABLE INTERNATIONAL PEERS 23 PROFITABILITY SURPASSES COMPARABLE PEERS, SUPPORTED BY EFFICIENT INVENTORY MANAGEMENT & EFFECTIVE ADVERTISING SPEND • Hybrid model including • Hybrid model including • Hybrid model including • Hybrid model including e-commerce & phys
Slide 25: Financial Performance
FINANCIAL PERFORMANCE 24 A HIGH GROWTH BUSINESS INVESTMENT IN WeBuyCars WILL ACCELERATE OPPORTUNITY FOR WeBuyCars TO ▲UNIT ECONOMICS PER ESTABLISHED INFRASTRUCTURE CAPITAL LIGHT TRANSACTION CAPITAL’S GROWTH RATE VEHICLE SOLD FROM GREATER TAKE-UP OF F&I PRODUCTS¹ FACILITATING OPERATIONAL LEVERAGE BUS
Slide 26: Operational Performance
OPERATIONAL PERFORMANCE 25 SIGNIFICANT GROWTH ACHIEVED CAGR 2017 to 2020 Vehicles sold per year ▲ 58% Vehicle supermarket visits per year1 ▲ 42% Advertising expense per vehicle ▼ 11% 1 928 1 937 Robust stock turn at ~25 days resulting in high cash conversion rates 1 661 1 530 25.3 24.1 24.6 STRONG C
Slide 27: SA Taxi
SA TAXI 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 28: Environment & Market Context
ENVIRONMENT & MARKET CONTEXT 27 MINIBUS TAXI INDUSTRY IS DEFENSIVE & GROWING WITH RESILIENT OPERATORS STRUCTURAL ELEMENTS SUPPORT MINIBUS TAXI INDUSTRY RESILIENCE DEMAND FOR MINIBUS TAXIS > SUPPLY IN SOUTH AFRICA MINIBUS TAXI IS THE LARGEST & MOST VITAL MODE OF TRANSPORT TOTAL DEMAND WITHIN INTEGRAT
Slide 29: Environment for Minibus Taxi Operators
ENVIRONMENT FOR MINIBUS TAXI OPERATORS 28 INDUSTRY IS DEFENSIVE & GROWING WITH RESILIENT OPERATORS DESPITE CHALLENGING ECONOMIC ENVIRONMENT CHALLENGING ENVIRONMENT FOR MINIBUS TAXI OPERATORS WITH LOWER COMMUTER MOBILITY & RESTRICTED OPERATIONS IMPACTING PROFITABILITY REPO RATE SA TAXI’S INTEREST RAT
Slide 30: SA Taxi's Fleet Movement (Telematics Data)
SA TAXI’S FLEET MOVEMENT (TELEMATICS DATA) 29 RECOVERY IN ACTIVITY OF MINIBUS TAXI FLEET BENCHMARKED AGAINST PRE COVID-19 LEVELS (2020 VS. 2019) PRE-LOCKDOWN LEVEL 5 LEVEL 4 LEVEL 3 LEVEL 2 LEVEL 1 COVID-19 HAS PROVEN THAT OPERATING VEHICLES1 (%) THE MINIBUS TAXI INDUSTRY IS INDISPENSABLE TO SA’s EC
Slide 31: SA Taxi Financial Performance
SA TAXI FINANCIAL PERFORMANCE 30 Headline earnings • ▼57% to R221m | Transaction Capital’s attributable portion ▼59% to R181m › After consolidating 81.4% (FY19: 98.5%) 45.6 44.2 • Pre-provision profit ▲11% 43.2 Net interest margin² at 11.8% (FY19: 12.2%) • Weighted average interest rate at originati
Slide 32: SA Taxi Credit Performance
SA TAXI CREDIT PERFORMANCE 31 Gross loans & advances ▲14% to R12.2bn • Momentum in sale & finance of pre-owned vehicles | Refurbishment capacity ▲ 32.3 • Market share of vehicle supply maintained • Toyota vehicle prices ▲5.6% in FY20 | Further ▲1.5% in October 2020 • Offset by number of loans origin
Slide 33: Transaction Capital Risk Services
TRANSACTION CAPITAL RISK SERVICES 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 34: TCRS Market Positioning | Diversified Business Model
TCRS MARKET POSITIONING | DIVERSIFIED BUSINESS MODEL 33 BY BUSINESS ACTIVITY, REVENUE MODEL, GEOGRAPHY, SECTOR, CLIENT & MANDATE BUSINESS ACTIVITIES COLLECTION SERVICES DIVERSIFICATION Contingency & FFS Australia Other ~4% ~90% NPL Portfolios as principal 30% 1% ~6% Australia 4 4% 17% Contingency &
Slide 35: Environment & Market Context | South Africa
ENVIRONMENT & MARKET CONTEXT | SOUTH AFRICA 34 DEFENSIVELY POSITIONED IN A CHALLENGING CONSUMER CREDIT ENVIRONMENT MACRO- & SOCIO-ECONOMIC ENVIRONMENT PLACING PRESSURE ON CONSUMERS | COVID-19 WILL ADVERSELY IMPACT CONSUMER CREDIT SECTOR FURTHER 10.0 million ~ 37 million (~40%) NON-PERFORMING CREDIT
Slide 36: TCRS's Business Model Gains Relevance Post COVID-19
TCRS’S BUSINESS MODEL GAINS RELEVANCE IN A POST COVID-19 ENVIRONMENT 35 TRANSACTION CAPITAL’S CONSUMER CREDIT REHABILITATION INDEX (CCRI) CONSUMER’S PROPENSITY TO REPAY DEBT DETERIORATING WITH WEAK ECONOMIC CONDITIONS EXACERBATED BY COVID-19 SOUTH AFRICA’s NATIONAL REHABILITATION PROSPECT TRENDS | Q
Slide 37: Environment & Market Context | Australia
ENVIRONMENT & MARKET CONTEXT | AUSTRALIA 36 AUSTRALIAN CONSUMER CREDIT ENVIRONMENT AUSTRALIAN CONSUMER EMPLOYED BUT HIGHLY LEVERAGED AUSTRALIAN DEBT COLLECTION ENVIRONMENT • 6.9% unemployment (September 2020), ▲unemployment an emerging risk CONSUMERS • Persistently high levels of household debt to d
Slide 38: TCRS Strategic Growth Initiatives to Create Value
TCRS STRATEGIC GROWTH INITIATIVES TO CREATE VALUE 37 AS MARKET DYNAMICS POST COVID-19 BECOME CLEARER, THE ACQUISITION OF NPL PORTFOLIOS IN SOUTH AFRICA & AUSTRALIA PROVIDE OPPORTUNITIES TO ACCELERATE CAPITAL DEPLOYMENT FOR ATTRACTIVE RISK-ADJUSTED RETURNS TOP BUYERS OF TOP BUYERS OF CONSUMER DEBT IN
Slide 39: TCRS Strategic Growth Initiatives to Create Value
TCRS STRATEGIC GROWTH INITIATIVES TO CREATE VALUE 38 AS MARKET DYNAMICS POST COVID-19 BECOME CLEARER, THE ACQUISITION OF NPL PORTFOLIOS IN SOUTH AFRICA & AUSTRALIA PROVIDE OPPORTUNITIES TO ACCELERATE CAPITAL DEPLOYMENT FOR ATTRACTIVE RISK-ADJUSTED RETURNS TCRS’s FUNDING REQUIREMENTS FOR THE ACQUISIT
Slide 40: Acquisition of NPL Portfolios as Principal
TCRS STRATEGIC GROWTH INITIATIVES TO CREATE VALUE 39 ACQUISITION OF NPL PORTFOLIOS AS PRINCIPAL IN SOUTH AFRICA & AUSTRALIA GROWTH TRAJECTORY TO SUPPORT FUTURE POSITIVE PERFORMANCE COLLECTION MULTIPLE VINTAGE PERFORMANCE¹ AS AT 30 SEPTEMBER 2020 Cost price of purchased book debts acquired (Rm) Rand
Slide 41: TCRS Financial Performance
TCRS FINANCIAL PERFORMANCE 40 Pre-provision profit from continuing operations ▲12% to R649m • Far higher adjustment to carrying value of purchased book debts R588m (FY19: R159m; HY20: R161m) › Conservative approach dealing with anticipated impact of COVID-19 on future cashflows 97.7 › Non-cash adjus
Slide 42: Shareholding, Dividend & Board of Directors
SHAREHOLDING, DIVIDEND & BOARD OF DIRECTORS 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 43: Shareholding, Dividend & Board of Directors
SHAREHOLDING, DIVIDEND & BOARD OF DIRECTORS 42 7% 19% RBH introduced as strategic long-term shareholder in November 2020 • Intention to invest R500m • Secondary market purchase of 1.8% in November 2020 (12m shares at R21 per share) • Specific authority to issue 12.4m shares to RBH subject to shareho
Slide 44: Questions
QUESTIONS 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 45: Appendix
APPENDIX 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER FURTHER DISCLOSURES AVAILABLE FOR DOWNLOAD ON TRANSACTION CAPITAL WEBSITE | www.transactioncapital.co.za/investor.php
Slide 46: Glossary
GLOSSARY 2020 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
Slide 47: Glossary
GLOSSARY 46 AUS Australia COVID-19 The novel Coronavirus & the disease it causes ACCSYS Accsys, a 100% owned subsidiary of TCRS CPS Cents per share A vehicle inspection certification providing information on the mechanical & technical B2B Business-to-business (vehicle dealerships) DEKRA Report statu
Slide 48: Glossary
GLOSSARY 47 HEPS Headline earnings per share TC Transaction Capital JIBAR The Johannesburg Interbank Average Rate TCBS Transaction Capital Business Solutions, a 100% owned subsidiary of TCRS NPL Portfolio Non-performing consumer loan portfolios acquired by TCRS to be collected as principal TCRS Tran
Slide 49: Disclaimer
DISCLAIMER 48 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 transaction