Thank you, Cameron, for the introduction, and good morning. We are pleased to present Axsesstoday s FY18 end of year results, and FY19 guidance.

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1 Level 9, 360 Collins Street Melbourne, Vic 3000, Australia ASX Announcement AXL FY18 Results Conference Call - Transcript Melbourne, 27 August 2018, 9.00am (AEST) Peter Ferizis: Thank you, Cameron, for the introduction, and good morning. We are pleased to present Axsesstoday s FY18 end of year results, and FY19 guidance. FY18 Results Highlights Year at a glance 100% $514m In $7m Increase of NPAT by 94% over pcp Basic 11.8c EPS Increase of Net Receivables over pcp to $336m Gross Receivables New Securitisation program established Youngest Australian company to issue a Simple Corporate Bond More than 11,000 SME end customers Canadian business passes A$1.7m in originations 3 Axsesstoday is a specialist lender to small to medium size businesses. The 2018 financial year was a milestone year for Axsesstoday from an operational and financial perspective. We delivered exceptional top line growth, with net receivables increasing 100% to $336 million. We also delivered on our twice upgraded NPAT guidance of $7 million, representing a 94% increase in FY17. We delivered double digit EPS growth to our existing shareholders, which was a fantastic result as we undertook an aggressive capital structure optimisation program across FY18, including two oversubscribed equity capital raisings, and the establishment of our $200 million securitisation facility. PAGE 1

2 FY18 Results Highlights Our fintech platform Best in class customer and merchant experience Ultra efficient administration Scalable credit risk management Optimised funding Real time credit approvals Automated credit bureau and identity verification Advanced customer and introducer application portals New customer log in screens Implementation of proven score cards being installed into system Initiative planned for machine learning to optimise credit decisions Continuous interest cost optimisation Initiative planned for real time re-balancing of portfolio across funding lines Sustained cost advantage Strong market share gains Stable credit performance Reducing cost of funds 4 We have established a best in class fintech platform, built from the ground up specifically for the SME lending markets. As well as presenting the financial results in this presentation, I also wanted to take this opportunity to explain to our investors how important technology and capital optimisation is to Axsesstoday and our growth ambitions. Our continued focus on investment in digital technology will provide us unparalleled capabilities, including best in class customer and retail merchant experience, increase of operational efficiencies, it will improve our credit risk and funding models to optimise portfolio performance, and reduce cost of funds. We will continue to invest significantly into our technology platform across FY19, with some exciting developments such as the release of our version two platform, which is expected during the year. FY18 Results Highlights Our Customer proposition Unique financing solution Powered by technology Alignment with retail merchants Offering flexible facilities for SMEs Speed of acceptance benefiting merchant and customers Providing access to customers with untapped potential for future sales Amortising operating lease (no residual/bullet), chattel mortgage and other finance products offered Flexible features with annual payment options Hospitality structured with reducing payments throughout the term All loans are secured by PPSR over equipment and personal guarantees Seamless end to end system Integrated front end customer origination platform and back end loan management system Bank statements reviewed and assessed by IT system followed by credit analyst Accelerated investment in IT systems to increase capacity to support growth and continue to improve operating leverage Strong distribution channels White label offering to selective retail merchants Strong brand awareness Tailored and strategic marketing materials Development of innovative offering to further entrench channels 5 PAGE 2

3 The customer value proposition is simple. We provide a unique, flexible financing solution to SME s, which is powered by our technology platform and our strong alignment with our retail merchants. FY18 Results Highlights Positioned for rapid growth FY 2012 Disruptive digital financing launched FY 2014 Expansion into transport vertical FY 2017 Launched SME business loans FY 2018 Scalable funding platform established $336m Commenced operations in response to a need for a unique product offering and enhanced through a compelling digital finance solution Expanded into transport and trial into other sectors following strong customer demand Successful launch of business loans leveraging digital expertise Significant technology investment Investment into technology to release updated platform and design new product NET LOANS $4m $16m Optimisation through $200m warehouse facility and $55m corporate bond 1 $53m $168m FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Now positioned for rapid growth following 6 years of product development and technology investment 6 1 Simple Corporate Bond settled July 2018 Axsesstoday was founded in 2012, and has continued to experience strong organic growth. Aside from an exponential increase in net loans over the last six years, we ve invested significantly in product development and technology, particularly in FY18, and FY18 was the company s most important achievements, having successfully established two key foundations to underpin long-term sustainability. The first was establishing a disruptive technology and platforms, and the second was optimising the capital structure to incubate and grow new opportunities, whilst accelerating shareholder returns, and with this foundation, the company is well placed to expand its market offerings into new areas and segments that are strategically complimentary to the current business offerings. FY18 Results Highlights Our market opportunity $88b SME Lending Release new products by leveraging platform Maintaining current origination volumes would result in normalised long term PBT of $25-30m per annum $11b Lease Finance 1 $1.6b Equipment Financing 2 Expansion into new segments Increase market share in existing product offering Source: 1. ABA, ABS Lending Finance, 2017 $336m Current Loan Book +100% growth in FY18 7 PAGE 3

4 We have a significant market opportunity ahead of us. We have a great opportunity to increase market share in the equipment financing space, currently our core focus. We estimate this to be a $1.6 billion market in Australia alone, and with the potential movements following the Royal Commission we see tremendous opportunities to continue to take market share from incumbent operators using our best in class platform. Importantly, there is a significant market in the broader SME financing area, which includes an $11 billion lease market which covers across a variety of segments, and the $88 billion SME lending market, which we intend to penetrate by releasing new products which leverage our technology platform. Y18 Results Business Update Operational growth across all core business units Hospitality EQUIPMENT FINANCING Transport BUSINESS LOANS All Sectors Includes coffee machines, display units, cooking equipment Includes second hand trucks, trailers, forklifts, light commercial vehicles and tools of trade Initially working capital funding in hospitality and transport, currently expanding to all industries NET LOAN ($m) NET LOAN ($m) NET LOAN ($m) Net loans $99m Net loans $192m Net loans $16m Gross loans $145m Gross loans $214m Gross loans $18m Average contract size $16k Average contract size $50k Average contract size $21k Average contract life 50 months Average contract life 58 months Average contract life 12 months Customers 5,405 Customers 2,094 Customers * Equipment Finance and Business Loans are listed in detail. Does not include breakdown of all sectors. Across our current core business units, the equipment finance division has continued to outperform year on year, with the hospitality and transport segment loans increasing by 52% and 178% respectively over PCP. The short-term business loans product also increased by 138% to $16 million and is generating strong profitability following its pilot commencement in 2017, and so we expect this to be a big focus for us in FY19 as we commit internal resources to expand this segment. PAGE 4

5 Y18 Results Business Update Portfolio growth ASSETS UNDER MANAGEMENT (Net Receivables $m) FY18 growth +100% Consistent and rapid loan book growth to $336m as at 30 June GROSS WEEKLY ORIGINATION VOLUMES ($m) PCP growth +47% Average gross value expected to increase based on expansion of introducer network Our total loan book has continued to grow rapidly, with a 100% increase to $336 million as of 30th of June In total, the weekly origination volumes increased by 47% over PCP, and represented annualised volumes during the year of $230 million. Y18 Results Business Update Revenue and finance costs REVENUE AND FINANCE COSTS HALF YEAR BASIS (Net Receivables $m) Both revenue and finance costs continue to improve through portfolio growth Revenue Finance cost AVERAGE ANNUALISED FUNDING COSTS (%) 10% Optimisation of Axsesstoday s capital structure continues to reduce annualised funding costs 8% 6% 4% 2% 0% 12 During this growth, the company has continued to focus on capital optimisation, resulting in consistent reduction in the weighted average cost of debts, from the highs of 10% in FY16 to circa 7% in FY18, and this has been driven by several funding initiatives, including the $200 million warehouse facility that was settled in May PAGE 5

6 So, we expect our funding costs will continue to reduce further following the full year impact of our securitisation program, together with the continued refinance of existing debt facilities with the simple corporate bond offering. FY18 Results Financials Financial results KEY FINANCIAL METRICS ($) FY18 FY17 Change (YoY) Loan receivables $336m $168m +100% Revenue $50.8m $22.2m +129% EBITDA $26.3m $11.4m +130% NPBT $10.2m $5.2m +97% NPAT $7.0m $3.6m +94% Strong growth in all key operating metrics $336m loan book will deliver % revenue growth in FY19 EPS (basic) 11.85cps 10.52cps +13% 14 So, we are pleased to record strong growth in all key metrics across FY18. As a result of this strong growth and reduction in cost of funding, EBITDA for the group increased 131% to $26.4 million, and EPS grew by 14% to 11.8 cents per share, and on a fully diluted basis EPS growth was 24% over the prior year. A final dividend has been declared of 2.9 cents per share. FY18 Results Financials Credit performance Streamlined approvals and administration processes Robust credit controls enabling attractive risk adjusted returns Improved by high repayment profile and recoveries Portfolio performance better than industry benchmarks Credit quality remained consistent in line with portfolio maturity and policy changes Arrears recognition policy was updated during to be consistent with securitisation and industry practice: Transitional changes ahead of AASB 9 implementation to occur 1 July 2018 An updated approach to 30 day and greater arrears policy to reflect industry best practice FY18 Impairments at 1.6% of net receivables Resulted in bolstered reserves from $1.9m to $3.9m (+105% over pcp) AASB 9 impact incorporated Impairment provision budgeted for in FY19 under new dynamic AASB 9 provisioning and in line with industry standards. in FY19 guidance of $ m 18 In terms of credit portfolio performance, the group impairments were 2% of net receivables, which was below the general provision expense of 2.5% of net receivables. PAGE 6

7 As a result the underlying reserves were bolstered by $1.9 million to $3.9 million in total, and during the year the group also made numerous changes to its arrears recognition policy to be consistent with securitisation and industry practice, which included transitional changes ahead of AASB9, which was subsequently implemented and adopted on the 1st of July The group has implemented a new dynamic risk policy in line with industry benchmarking, and we re expecting a slight increase to provisioning, with a budgeted 3-3.5% of impairments in our FY19 guidance, which remains well below our industry peers. This policy is dynamic and will continue to be reviewed and refined to correlate with underlying performance. FY18 Results Outlook Continued revenue growth Strong revenue growth expected to continue in FY % revenue growth forecast in FY19 driven by continued net loan book growth Excludes impact from new sectors or products released in FY19 Strong origination volumes expected across FY19 TOTAL REVENUE ($m) % growth FY16 FY17 FY18 FY19 20 The outlook for the group is exciting. Total revenue is expected to increase by approximately % over FY18, based on our current run rate and pipeline of opportunities. We also expect the impact of funding initiatives to drive profitability and increase scalability in FY19 and beyond. The FY19 NPAT guidance is reaffirmed at $12.5-$13 million, which is an increase of over 80% over FY18, and this earnings guidance excludes the impact from new opportunities and markets the group is entering, which would deliver accelerated growth in FY20 and beyond. PAGE 7

8 FY18 Results Outlook Summary SME focused lender with a disruptive fintech platform Point of sale Rapid growth Technology focus Increasingly profitable Customer friendly Innovative point of sale technology Loan book growth to $336m in FY18 (up +100% YoY) Significant investment into core technology platform over 6 years $7.0m FY18 NPAT achieved the twice upgraded guidance Over 11,000 customers 24 In summary, Axsesstoday is a specialist lender to SME s. The group has continued to demonstrate rapid loan book and earnings growth, underpinned by its continued investment in digital technology. We re delighted to have presented the FY18 results and FY19 guidance, and would now like to open the conference to questions. [START OF QUESTIONS] Jonathan Higgins: Good morning, Peter. Just quickly, obviously we re seeing some new information coming to light within this presentation around expanding addressable markets as well as the products and what not. Are you able to just give us a little bit of colour on the first cab off the ranks in that, and when we re likely to possibly see the soft launch on products into the market in that segment? Peter Ferizis: Yes. Thank you, Jonathon. We have identified organic growth opportunities that are highly strategic to our existing business and diversify our portfolio away from the hospitality and transport segments. We ve identified these opportunities that are highly strategic and provide cross-pollination across our existing customer base. The new verticals will substantially reduce the customer acquisition costs, and we see these product offerings as being highly complementary to the existing customer base. We haven t disclosed yet what those initiatives are, however we do confirm that they are currently in the process of being developed during the first half of 19. Jonathon Higgins: Just, last one for me is just around, probably, just the margin and the leverage. I mean, obviously it s difficult when you re growing 100% year on year, you ve got to invest for growth pre receiving the growth, and obviously the earnings off that, and I know you guys have a pretty high sort of hurdle rate on the return on those initiatives, but is there any idea as to, if you were to start turning the book off now, have the number of FTE s just to run the current book and products, how much you d be making as, sort of like an escrow number? PAGE 8

9 Peter Ferizis: We have run those scenarios, and assuming that we continue maintaining the current origination volumes and removing the investment in growth opportunities and the FTE associated with that growth, we would estimate that net profit before tax on a normalised basis for the group would be between $20-$25 million [for FY19]. Jonathon Higgins: All right. That s all from me, thanks Peter. Peter Ferizis: Thank you. PAGE 9