MoneyMe Limited (MME) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to this Extraordinary General Meeting of the Shareholders of MoneyMe Limited. I'm Peter Coad, Chair of the Board, and I would like to thank you all for attending our online meeting this morning. As this meeting is being held virtually with shareholders present in many locations, I would like to acknowledge the traditional owners of the country on which we are each present and recognize their continuing connection to land, waters and culture. We pay our respects their elders past, present and emerging. It's 11:00 a.m. Sydney time, the nominated time for the meeting. As a quorum is present, I'm pleased to declare the meeting open. The notice of the meeting was made available to the shareholders and lodged with the ASX on the 22nd of December 2021, and I propose to take the notice as read. Shareholders were also sent a voting form for the meeting. The virtual meeting online guide was also made available to shareholders. This provides instructions on how to ask questions and vote at this meeting through the online platform and how to ask questions via our telephone line. I'll remind shareholders of the arrangement for questions and voting when we get to the formal business of the meeting. If you lose connection to the meeting at any time, you can log back in to the online platform by returning to the login page and following the prompts. You will then receive an automated e-mail with a recovery link for you to click on to reconnect to the meeting. Alternatively, please call our share registry provider, Link Market Services, on 1300-554-474 for assistance. If we experience any technical issues today, a short recess or an adjournment may be required to resolve those issues. If this occurs, I will advise you accordingly. During today's meeting, you will also hear from Clayton Howes, our Managing Director and Chief Executive Officer. My fellow Nonexecutive Directors, Susan Wynne, Scott Emery and Jon Lechte are also joining the meeting via the online platform. We're also joined today by Neal Hawkins, our Chief Financial Officer; and Jonathan Swain, our Company Secretary. The agenda for today's meeting is set out in the notice of meeting. Before we proceed to considering the formal resolutions, Clayton Howes, our Managing Director and CEO, will give a short address providing background to the proposed acquisition of SocietyOne, which was announced to the ASX on the 17th of December 2021 and which is the primary reason this meeting is being called.

Thank you, Pete, and good morning, everyone. I am delighted to speak to you today, providing you with the short background to the proposed acquisition of SocietyOne by MoneyMe, which combines 2 of the most widely recognized consumer credit disruptors to boost revenue, customer and profit growth. As summarized on Page 3, the strategic value from the proposed transaction is immense, delivering a powerful combination of SocietyOne's strong brand recognition, a high-value customer base with MoneyMe, and leveraging our leadership in product innovation, execution efficiency and customer experience through our proprietary technology platform, Horizon. SocietyOne increases our scale and distribution through complementary direct and broker distribution capabilities as well as increasing customer data and more funding advantages. The combined business will accelerate the group's pace of winning market share from incumbent lenders with scale advantages and winning customer experiences. Outlined on Page 4, the proposed transaction also reflects a highly complementary combination of these 2 leading digital consumer lenders in Australia. SocietyOne, a pioneer and leading brand in disruptive consumer lending, with a strong track record of attracting customers with an average age of 45, using mostly traditional distribution channels. MoneyMe is a leader in innovation with its own technology, Horizon, and AI that delivers highly automated, innovative credit products and customer experiences to a younger customer group using mostly direct and digital distribution and multiple products. As announced on December 17, the combination delivers key benefits for the business model. The first, significant operating leverage through increased scale as the SocietyOne business is migrated to MoneyMe's Horizon platform. MoneyMe's loan book size increases by 72% pro forma. The second, a material cost synergy opportunity of $17 million per annum in pretax cost synergies by removing duplicate functions, systems, premises, processes and an incremental opportunity to lower funding costs through accelerated securitization. The third, a large revenue synergy opportunity of $15 million per annum pretax from providing SocietyOne's customers access to MoneyMe's diverse product suite and a far superior customer experience using the Horizon platform that will reduce time of cash into your account from 1 to 2 days to 1 to 2 hours. The fourth, unlocking new distribution opportunities by expanding broker channels, leveraging SocietyOne's credit score product with about 147,000 customers and the banking-as-a-service partnership opportunity with Westpac. The fifth, with over $2 billion of combined customer origination data, we will advance our data-driven credit risk management even further. Combining MoneyMe's FY '21 revenue with SocietyOne, pro forma there's an 86% increase in revenue. This plan delivers a material uplift in cash profitability of the group in future years following the combination and synergies. Page 6 of the presentation. The consideration offered to SocietyOne shareholders is up to 75.2 million MoneyMe shares. It's a scrip consideration. A cash consideration option has also been offered and a condition of the transaction is that shares representing no more than 7.5% of SocietyOne elect cash. The total cash consideration is set at a maximum of $9.7 million, assuming 7.5% of SocietyOne shareholders elect cash. Shareholders representing 79% of SocietyOne has signed the MIA and 78% had elected to receive the scrip consideration at 7th of December. If 100% of elections were for scrip consideration, SocietyOne shareholders would own 30.5% of MoneyMe post transaction and MoneyMe would issue 75.2 million MoneyMe shares as consideration. If 92.5% of elections were for scrip consideration, SocietyOne shareholders would own 28.9% of MoneyMe post transaction and MoneyMe would issue 69.6 million MoneyMe shares as consideration. Based on MoneyMe share price at market close on the 16th of December '21, the total value of the consideration is $132 million if 100% of SocietyOne shareholders elected for MoneyMe shares. The transaction has a scheduled completion date and issue of consideration shares on Tuesday, the 15th of March 2022. Further details about the transaction and its terms are contained in the investor presentation that you'll see on the ASX on the 17th of December 2021 by MoneyMe. We are excited to be leading industry consolidation and turbocharging our journey to become the #1 nonbank credit provider here in Australia. Pete, I'll hand back to you for consideration of the formal resolutions.

Thank you, Clay. Ladies and gentlemen, we'll now move on to the formal part of the meeting. I'll start by explaining the arrangements for asking questions and voting on the 2 resolutions to be considered today. As set out in the notice of the meeting, there are 2 ways that shareholders can raise questions at this meeting: via the online platform or via telephone. If you're registered on the online platform as a shareholder or proxy holder, you can submit questions by selecting the Ask a Question tab at the bottom of your screen and then typing in your question. You can submit questions now or at any time before the meeting considers the item of business to which your question relates and to be dealt with at the appropriate time. If you have a question already prepared, I encourage you to submit it now so that as many questions as possible can be answered. I would ask that you keep your questions short and to the point so that as many shareholders as possible have the chance to ask a question. All questions submitted via the online platform will go through our Company Secretary, Jonathan Swain, as moderator for the meeting. Jonathan will identify each person who asks a question and read out the question. I will then either answer the question or pass it on to the most appropriate person to answer. Where questions relating to an item of business have been received prior to the meeting, we will deal with these in the same way. To ask questions via telephone, you will need to dial in to the meeting using the number displayed on the screen. Shareholders wishing to access the meeting will need to use their unique pin provided to them by Link Market Services in accordance with the instructions set out in the notice of the meeting and the virtual meeting online guide. If you don't have a pin and would like to ask a question via the phone, please contact Link on 1-800-990-363 to get your pin. When you dial into the meeting, you will be asked to mute your online sound and listen to the meeting by phone. When you wish to ask a question, you'll need to dial *1 on your keypad. The teleconference moderator will ask your name and will then introduce you and prompt you to ask your question. In order to ensure that all shareholders have a reasonable opportunity to comment and ask questions, we ask that shareholders do not ask more than 2 questions at a time. We reserve the right to rule out questions that do not relate to the business of the meeting. We will also not answer questions that are same or substantially similar to questions that have already been answered. Otherwise, we'll endeavor to answer as many of the questions asked as we can. For each item of the business, we will take telephone questions first and then respond to questions raised via the online platform. As Chairman, I have determined that voting on each of the resolutions to be considered at this meeting be conducted by a poll. Shareholders were given the opportunity to appoint a proxy to vote on their behalf at this meeting by lodging the voting form that accompanied the notice of meeting. As set out in the notice of meeting, as Chairman, I will vote all directed proxies in accordance with the directions provided by shareholders and will vote all undirected proxies in favor of all resolutions. Shareholders who have not appointed a proxy vote on their behalf may cast a direct vote during this meeting using the electronic voting card that you received when you registered via the online platform. Those shareholders may cast a direct vote at any time from now until 5 minutes after the close of the meeting. If you have any questions about casting your vote online, please refer to the virtual meeting online guide. This can be accessed from the Download section at the bottom right-hand side of your screen. Shareholders, I now ask to consider the 2 resolutions set out in the notice of the meeting dated 22nd December 2021. For each of the proposed resolution, I will introduce the resolution and there will be an opportunity for shareholders to ask questions on the resolution in line with the process that I've just described. Once there are no further questions on that resolution, I will display a slide showing the total direct and proxy votes received on that resolution prior to the meeting. I now formally open the poll for each resolution. The results of the poll will be released on the ASX company announcements platform and will be made available on the company's website after the close of the meeting. We now consider Resolution 1. The approval sought by this resolution is required for the purposes of ASX Listing Rule 7.1 to permit the company to issue the consideration shares to SocietyOne under the terms of the acquisition. If the resolution is not passed, the company will not be able to proceed with the issue of the consideration shares and the acquisition cannot be completed. Clay has already provided background on -- to the acquisition and further details of the rationale for and the terms of the acquisition were set out in the notice of the meeting. After the resolution has been moved, there will be a time for comments and questions. I now move that for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the company to issue the consideration shares to SocietyOne shareholders at the time of completion of the acquisition of SocietyOne and otherwise on the terms and conditions set out in the explanatory memorandum accompanying the notice of the meeting. I'll now address any questions relating to this resolution. Operator, are there any telephone questions from shareholders on the resolution?

Chair, there are no telephone questions at this time.

Okay. Thank you, operator. We'll now address any questions submitted for this resolution via the online platform. So Jonathan, do we have any questions from the online platform?

No, Chair. No questions through the online platform at this time. Thank you, Peter.

Okay. Well, thank you for that. As there are no questions on this resolution, I'll now put the resolution to the meeting. The direct and proxy votes received for this resolution prior to the meeting is shown on the slide, which is now visible. If you wish to vote on Resolution 1 online using your electronic voting card, please do so now. [Voting]

We now move to consider Resolution 2, which is to seek ratification of the prior issue of 5 million warrants. If this resolution is passed, the issue of the warrants will be excluded from calculating the company's 15% limit on issuing equity securities in ASX Listing Rule 7.1. This will effectively increase the number of securities that MoneyMe can issue without shareholder approval over a 12-month period following the issue date of the warrants. Further details of the warrants that were issued and the application of Listing Rule 7.1 to that issue are set out in the notice of the meeting. After the resolution has been moved, there will be time for comments and questions. I now move that for the purposes of ASX Listing Rule 7.4 and for all other purposes, shareholders ratify and approve the prior issue by the company of 5 million warrants on the 2nd of November 2021 as announced to the ASX on the 27th of September 2021, otherwise described in the explanatory memorandum accompanying the notice of the meeting. We'll now address any questions relating to this resolution. Operator, are there any telephone questions from shareholders on the resolution?

Chair, there are no telephone questions at this time.

Okay. Thank you. Jonathan, are there any questions that have been submitted via the online platform?

Chair, there are no questions via the online platform for this resolution.

Thank you, Jonathan. So thank you. As there are no questions on this resolution, I'll now put the resolution to the meeting. The direct and proxy votes received for this resolution prior to the meeting is shown on the slide, which is now visible. If you wish to vote on Resolution 2 online using your electronic voting card, can you please vote now? [Voting]

So that ends the formal part of this Extraordinary General Meeting. I now declare the meeting closed. As I said earlier, the poll will remain open for a further 5 minutes and shareholders who have not already voted may lodge their online votes during that time. The results of the meeting will be announced on the ASX company announcements platform and will be available on the company's website as soon as possible after the close of this meeting. I'd like to thank you all for participating in our online meeting today and look forward to your continuing support during the coming year. Thank you.