Nutun Limited · JSE:NTU
Nutun — Transaction Capital — FY2018 Earnings Presentation
43 slides from Nutun's earnings presentation, 2018
Slide 1: Transaction Capital Results Presentation
TRANSACTION CAPITAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 SEPTEMBER 1
Slide 2: Group Highlights
GROUP HIGHLIGHTS 2018 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2
Slide 3: 2018 Financial & Operational Highlights
TRANSACTION CAPITAL GROUP STRUCTURE 2018 FINANCIAL & OPERATIONAL HIGHLIGHTS (FY18 COMPARED TO FY17) CEO: Terry Kier, 11-year group tenure CEO: David Hurwitz, 13-year group tenure CEO: Dave McAlpin, 10-year group tenure R368 MILLION R9.4 BILLION R682 MILLION 111.7 CPS R273 MILLION R1.4 BILLION HEADLI
Slide 4: Transaction Capital Performance Since Listing
TRANSACTION CAPITAL PERFORMANCE SINCE LISTING CAGR: Core HEPS (FY12 to FY18)¹ ▲20% 1 769 Dividend per share (FY14 to FY18) ▲33% Total shareholder return (FY13 to FY18)² ▲40% 1 525 1 275 1 000 688 549 490 112 37 21 49 16 52 22 69 30 81 40 96 50 9 2012 2013 2014 2015 2016 2017 2018 Total dividend per
Slide 5: Group Portfolio Mix
GROUP PORTFOLIO MIX COMPOSITION OF EARNINGS 6% 7% 40% 2018 54% 40% 2017 53% SA Taxi TCRS GEO Rm Rm Growth Headline earnings 2018 2017 2018 SA Taxi¹ 368 303 ▲21% TCRS¹ 273 233 ▲17% Group executive office (GEO) 41 41 Total 682 577 ▲18% Cents per share 111.7 96.4 ▲16% Headline earnings excludes once-of
Slide 6: Santaco Acquires 25% Stake in SA Taxi
GROUP STRATEGIC HIGHLIGHTS SANTACO ACQUIRES 25% STAKE IN SA TAXI FOR R1.7 BILLION CREATING A MORE SUSTAINABLE MINIBUS TAXI INDUSTRY SANTACO SHAREHOLDERS2 10% trickle 3rd party funding3 dividend Vendor Finance (VF) of R521m R1.2bn TRANSACTION CAPITAL¹ SANTACO SPV - 75% Ownership 25% - 81.4% consolida
Slide 7: SA Taxi Initiatives Supporting the Minibus Taxi Industry
GROUP STRATEGIC HIGHLIGHTS SA TAXI INITIATIVES PROVIDING BROAD BASED PARTICIPATION IN THE VALUE CHAIN SUPPORTING & SUSTAINING THE MINIBUS TAXI INDUSTRY “BLACK ELITE” FUEL LOYALTY PROGRAMME INSURANCE INITIATIVES TAXI AUTO PARTS (TAP) • Launched in April 2018 • Credit life & Road Cover products • Laun
Slide 8: Delivering on Growth - Acquisition of NPLs as Principal
GROUP STRATEGIC HIGHLIGHTS DELIVERING ON GROWTH - ACQUISITION OF NON-PERFORMING LOANS AS A PRINCIPAL GROWTH TRAJECTORY COLLECTION MULTIPLE VINTAGE PERFORMANCE 1 EXPECTED TO SUPPORT FUTURE POSITIVE PERFORMANCE AS AT 30 SEPTEMBER 2018 2 989 1 867 2 690 2014 1.5 0.9 2.4 1 461 2015 1.9 2.1 4.0 1 681 1 3
Slide 9: Delivering on Growth - Bookbuild and Debt Capital Markets
GROUP STRATEGIC HIGHLIGHTS DELIVERING ON GROWTH 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 • SA Taxi raised R4.0 billion in FY18 • International s
Slide 10: SA Taxi
SA TAXI 2018 10
Slide 11: SA Taxi Is a Vertically Integrated Minibus Taxi Platform
SA TAXI SA TAXI IS A VERTICALLY An innovative & pioneering business model with operations expanding throughout the financial services & asset value chain, building a scalable platform that can be INTEGRATED MINIBUS TAXI leveraged in adjacent markets PLATFORM UTILISING A unique blend of vehicle procu
Slide 12: SA Taxi Impact
SA TAXI IMPACT DELIVERING SHARED VALUE FOR THE INDUSTRY SME EMPOWERMENT ECONOMIC TRANSFORMATION & INCLUSIVE GROWTH BLACK DEVELOPMENTAL CREDIT ACHIEVING INCLUSIVE GROWTH OWNED SMEs 100% OWNEDWOMEN UNDER THE SMEs¹ 23% AGE OF 35 YEARS¹ 23% R3.3 BILLION LOANS ORIGINATED R21.9 BILLION LOANS ORIGINATED SU
Slide 13: Environment & Market Context
ENVIRONMENT & MARKET CONTEXT MINIBUS TAXI INDUSTRY IS RESILIENT, DEFENSIVE & GROWING DESPITE SA’S ECONOMIC CLIMATE TRAIN < 800 000 ▼ 22% PUBLIC TRANSPORT COMMUTERS RELY COMMUTER TRIPS DAILY ON MINIBUS TAXI GIVEN ITS ACCESSIBILITY, MINIBUS TAXI AFFORDABILITY, RELIABILITY & FLEXIBILITY RECEIVES 44% OV
Slide 14: Environment for Minibus Taxi Operators
ENVIRONMENT FOR MINIBUS TAXI OPERATORS MINIBUS TAXI OPERATORS REMAIN RESILIENT IN A CHALLENGING ECONOMIC ENVIRONMENT CHALLENGING ENVIRONMENT STRUCTURAL ELEMENTS VEHICLE PRICES DOMINANT & GROWING MODE OF PUBLIC TRANSPORT ▲ to 15% R433 300¹ JH ▲ ~R1 900 (Competitively priced; convenient; accessible) V
Slide 15: Fuel Price Increases Absorbed Through Fare Increases
ENVIRONMENT FOR MINIBUS TAXI OPERATORS FUEL PRICE INCREASES PARTIALLY ABSORBED BY COMMUTERS THROUGH FARE INCREASES IN 2018 FARES DETERMINED BY EACH ASSOCIATION PER ROUTE • The industry ensures operators remain profitable • Demand for minibus taxi services is relatively inelastic MPUMALANGA FARE INCR
Slide 16: Minibus Taxi Is the Preferred Mode of Public Transport
ENVIRONMENT FOR MINIBUS TAXI OPERATORS MINIBUS TAXI IS THE PREFERRED MODE OF PUBLIC TRANSPORT DUE TO COMPETITIVE PRICING, ACCESSIBILITY & RELIABILITY SHORT DISTANCE ROUTE | SOWETO TO JOHANNESBURG: 23KM LONG DISTANCE ROUTE | JHB TO DURBAN: 595KM Minibus Minibus Bus - taxi Train Bus BRT taxi Train Bus
Slide 17: SA Taxi Market Positioning
SA TAXI MARKET POSITIONING VERTICALLY INTEGRATED BUSINESS MODEL 17
Slide 18: SA Taxi Market Positioning: Vertically Integrated Business Model
SA TAXI MARKET POSITIONING VERTICALLY INTEGRATED BUSINESS MODEL TO PROVIDE FINANCE, INSURANCE & OTHER SERVICES THAT ENABLE THE SUSTAINABILITY OF THE MINIBUS TAXI INDUSTRY FINANCING OPERATIONS INSURANCE OPERATIONS R9.4 BILLION ▲13% 3.3% R687 MILLION ▲23% >85% GROSS LOANS & ADVANCES CREDIT LOSS RATIO
Slide 19: SA Taxi Strategic Growth Initiatives
SA TAXI STRATEGIC GROWTH INITIATIVES TO PROVIDE FINANCE, INSURANCE & OTHER SERVICES THAT ENABLE THE SUSTAINABILITY OF THE MINIBUS TAXI INDUSTRY INSURANCE OPERATIONS FINANCING OPERATIONS • Broadened client base • Continue to enrich SA Taxi’s proprietary database & (financed by SA Taxi & open market c
Slide 20: SA Taxi Performance Since Listing
SA TAXI PERFORMANCE SINCE LISTING CAGR FY12 to FY18: Non-interest revenue composition: Headline earnings¹ ▲19% ▲ to 36% (FY18) from 26% (FY12) 368 Gross loans & advances ▲12% NPL ratio ▼ 9% Recovery on repossession: Credit loss ratio ▼ 8% ▲ to >73% (FY18) from <65% (FY12) 303 Gross written premium ▲
Slide 21: SA Taxi Financial Performance
SA TAXI FINANCIAL PERFORMANCE • Headline earnings¹ ▲21% to R368m › All organic growth 51.1 48.6 • NIM at 11.0% 47.6 › Average interest rate on origination 23.6% (FY17: 24.4%) o NCA max cap of 33.5% › Funding costs ▲by 20bps to 11.6% (FY17: 11.4%) 11.4 11.6 o Repo rate ▼25bps 11.1 11.0 o Foreign debt
Slide 22: SA Taxi Credit Performance
SA TAXI CREDIT PERFORMANCE • Gross loans & advances ▲13% to R9.4bn 17.1 17.7 › Number of loans on book ▲7% 17.4 › Rand value of loans originated ▲9% › Toyota vehicle prices: diesel ▲2%; petrol ▲1% › VAT ▲1% on 1 April 2018 • NPL ratio at 17.7% › Challenging operating environment o Petrol price1 ▲12%
Slide 23: SA Taxi Operational Performance
SA TAXI OPERATIONAL PERFORMANCE SA TAXI OPERATOR PROFILE CREDIT PROFILE OF LOANS ON BOOK 1.2 3.9 YEARS 69 MONTHS 37% VEHICLES PER CUSTOMER AVERAGE AGE OF VEHICLE AVERAGE LOAN TERM1 AVERAGE APPROVAL RATE 47 YEARS 85% >R6 000 47 MONTHS AVERAGE AGE OF OWNER TOYOTA VEHICLES MINIMUM MONTHLY OPERATOR PROF
Slide 24: Transaction Capital Risk Services
TRANSACTION CAPITAL RISK SERVICES 2018 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 24
Slide 25: TCRS Is a Technology-Led, Data-Driven Provider
TRANSACTION CAPITAL RISK SERVICES (TCRS) TRANSACTION CAPITAL Innovative & bespoke technology systems driving superior RISK SERVICES IS A performance & efficiency TECHNOLOGY-LED, Generating in-depth insights from the continuous collection of accurate & valuable data to develop a consolidated view of
Slide 26: Environment & Market Context
ENVIRONMENT & MARKET CONTEXT DEFENSIVELY POSITIONED IN A CHALLENGING CONSUMER CREDIT ENVIRONMENT CREDIT REHABILITATION IS A CRUCIAL ELEMENT MACRO- & SOCIO-ECONOMIC ENVIRONMENT IN SOUTH AFRICA IN GROWING AN INCLUSIVE ECONOMY 9.6 MILLION (~40%) NON-PERFORMING CREDIT CONSUMERS² TRANSACTION CAPITAL’S CO
Slide 27: TCRS Market Positioning: Diversified Business Model
TCRS MARKET POSITIONING DIVERSIFIED BUSINESS MODEL VALUE ADDED SERVICES TRANSACTIONAL SERVICES COLLECTION SERVICES VALUE ADDED SERVICES, LEAD PAYMENT SERVICES & CONTINGENCY GENERATION & CUSTOMER ACQUISITION ACCOUNT MANAGEMENT & FFS Insurance Public sector MARKET CONDITIONS & REDUCES CONCENTRATION RI
Slide 28: TCRS Unique Compared to Globally Listed Peers
TCRS MARKET POSITIONING UNIQUE COMPARED TO GLOBALLY LISTED PEERS 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 principal (
Slide 29: TCRS Competitive Advantages
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: REPUTATION OF PERFORMANCE › Propensity to pay • Onl
Slide 30: Strategic Growth Initiatives to Create Value
STRATEGIC GROWTH INITIATIVES TO CREATE VALUE VALUE ADDED SERVICES TRANSACTIONAL SERVICES COLLECTION SERVICES VALUE ADDED SERVICES, LEAD PAYMENT SERVICES & CONTINGENCY GENERATION & CUSTOMER ACQUISITION ACCOUNT MANAGEMENT & FFS SOUTH AFRICA: • New sectors: Insurance, education & other • Apply data & a
Slide 31: Australian Debt Collections Market
AUSTRALIAN DEBT COLLECTIONS MARKET MARKET PARTICIPANTS AUSTRALIAN DEBT COLLECTION MARKET: 557 MARKET PARTICIPANTS REVENUE OF ~A$1.2 BILLION FOR 2018 ACQUISITION OF NPLs AS PRINCIPAL 62.7% CONTINGENCY COLLECTIONS 30.5% • Credit Corp 16.4% • illion (formerly Dun & BradStreet) 3.8% • Collection House 1
Slide 32: TCRS Performance Since Listing
TCRS PERFORMANCE SINCE LISTING CAGR FY12 to FY18: FY core headline earnings¹ ▲20% 429 FY core EBITDA ▲23% 331 273 239 233 188 168 135 134 125 121 105 93 88 1 291 1 461 1 867 2 989 1374 347 420 471 561 728 891 2012 2013 2014 2015 2016 2017 2018 Purchased book debts (Rm) Estimated remaining collection
Slide 33: TCRS Financial Performance
TCRS FINANCIAL PERFORMANCE • Core headline earnings ▲17% to R273m • Revenue from principal collections ▲22% • Contingency & FFS revenue ▲19% › Growing revenue from adjacent sectors 77.4 77.3 › Insurance, telecommunications & public sector 76.8 contributing 38% of SA contingency revenue 53 (FY17: 27%
Slide 34: Investment into People
INVESTMENT INTO PEOPLE EMPLOYEE VALUE PROPOSITION | MAKING IT AN EXCITING PLACE TO WORK 2018 HIGHLIGHTS TCRS SOUTH AFRICA¹ 115 promotions of which 61% are women & 85% are black2 88% of high potential employees retained “Investors in 74% of employees are women people organisation” ACCREDITATION AFFIR
Slide 35: Capital Management
CAPITAL MANAGEMENT 2018 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER Deal of the Year 2018: Africa – Securitisation & Structured Finance 35
Slide 36: Capital Management Performance
CAPITAL MANAGEMENT PERFORMANCE • Robust access to the debt capital markets 50 › Raised ~R4.9bn in debt facilities from 45 separate 38.9 40 30.9 funding transactions in FY18 30 32.8 › SA Taxi fully funded for > 12 months • Continue to diversify funding sources 3.8 3.5 3.7 › Diverse debt investor base
Slide 37: Funding Philosophy
FUNDING PHILOSOPHY DIVERSIFICATION BY DIVERSIFICATION BY DIVERSIFICATION BY DEBT INVESTOR CATEGORY FUNDING STRUCTURE GEOGRAPHY 20% 21% 11% 20% 33% Warehousing Life companies facilities 39% On-balance sheet 22% Banks 37% 80% 17% Securitisation Asset managers Local Structured finance DFIs Internationa
Slide 38: Shareholding
SHAREHOLDING • Accelerated bookbuild (March 2018) › Expanded base of local & international investors › Everglen remains the largest shareholder at 29% 6% › ~72 million shares sold by Everglen › 80% of the accelerated bookbuild taken up by 32% international investors • Foreign ownership ▲from 6% to 1
Slide 39: Conclusion
CONCLUSION 2018 RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 39
Slide 40: 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 41: 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 GOVERNANCE FRAMEWORK & • Institutionalised governance, regulatory & risk management practices SOUND GOVERNANCE PRACTICES
Slide 42: Questions
QUESTIONS 42
Slide 43: 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