Credit Clear : CCR Lifts Revenue by 140% through Strategic Acquisition

16 December 2021 ASX Announcement

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Credit Clear Acquisition Lifts Revenue by 140% and Drives Growth of AI Platform

Key Highlights:

use	• Credit Clear Limited (ASX: CCR) enters a binding agreement to acquire 100% of ARMA Group
		Holdings1, a leading provider of debt recovery solutions servicing the Australian and New Zealand
		markets
	• Acquisition increases Credit Clear's scale, adding more than 400 active clients, growing revenue
		by 140% to $26.5m (normalised and unaudited pro-forma FY21 basis), and EBITDA to $3.9m
		(normalised and unaudited pro-forma FY21 basis)
	• Expands reach of Credit Clear's award-winning technology platform in the Australasian market
		with the addition of ARMA's senior sales team and established industry relationships
	• Accelerates adoption of Credit Clear's technology in the receivables management industry,
		improving effectiveness and enhancing the customer experience
	•	Acquisition details:
personal		o Acquisition price of $46m (60% cash 40% scrip) plus Earnout
	o Acquisition funding to be secured through a $29.5m capital raising consisting of a fully
	underwritten $25.5m two-tranche institutional placement ("Institutional Placement") and
	a $4m share purchase plan ("Share Purchase Plan", together with the Institutional
	Placement, the "Capital Raising").
• Credit Clear has successfully completed its $25.5 m Institutional Placement of new fully paid
	ordinary shares ("New Shares"). The Institutional Placement was fully subscribed at the issue
	price of $0.40 per New Share
• An investor briefing will be held on Tuesday, 21 December 2021, at 11am. Please register at the
	following address: https://attendee.gotowebinar.com/register/2973852817907513100for the
For		briefing.
Credit Clear Limited (ASX: CCR) ("Credit Clear" or the "Company") is pleased to announce that it has

signed an agreement to purchase 100% of ARMA Group Holdings1 ("ARMA"), (the "Acquisition"), a leading Australian and New Zealand debt collection service provider.

The Acquisition accelerates growth of Credit Clear, leveraging the Company's scalable AI platform across ARMA's more than 400 active clients and differentiated geographic footprint. Credit Clear's technology has proven to be significantly more effective and profitable than traditional methods of collecting accounts receivable. The platform produces high levels of customer satisfaction and retention with a Promoter Score (NPS) of +44 in FY21. Industry validation of Credit Clear's platform was achieved last week, when

Credit Clear Limited	W: creditclear.com.au	ABN: 48604797033
Level 4, 6 Riverside Quay	E: [e-mail]	ACN: 604797033	1
Southbank VIC 3006	P: 1300 909 934	ASX Code: CCR

the company was awarded the 'Best Use of AI in Fintech' at the 2021 Australian FinTech Awards last week.

Credit Clear has successful track record of acquiring clients who manage consumer receivables and transitioning them to its digital platform, as demonstrated through Credit Clear's acquisition of Credit onlySolutions in 2019. The acquisition of ARMA and the addition of its acclaimed senior sales team, enhances Credit Clear's geographic presence, and broadens its industry coverage. It also strengthens the financial and operational profile of the combined group as the Credit Clear technology will significantly increase the operating leverage of ARMA. In this way the technology is being used to deliver on Credit Clear's

strategic initiatives and to deliver long-term shareholder value.

The founders of ARMA, Andrew Smith and Shane Ashton will continue to manage the ARMA business as part of the Credit Clear Group, and all ARMA employees will also transfer across to Credit Clear. Andrew

useSmith will join the Credit Clear Board as an executive director.

Credit Clear CEO, David Hentschke, said: "Credit Clear is at the forefront of a major global transformation in the way businesses interact with their customers. The ARMA acquisition provides us an opportunity to deploy this leading digital technology across ARMA's significant existing client base and to win considerable new business together. It will accelerate top line growth and build on the tremendous success Credit Clear has achieved in expanding the use of the digital platform after acquiring Credit

personalSolutions in 2019. The management and senior staff of ARMA provide a very strong cultural alignment with Credit Clear and a strong foundation for a successful journey ahead."

ARMA Overview

ARMA is a market leading specialist provider of contingent debt recovery solutions, outsourced accounts receivables and litigation services, servicing a large corporate client base across Australia and New Zealand.

Since ARMA was established in 2015, the business has delivered strong financial performance, reporting r venue2 of $15.5m and EBITDA2 of $6.4m in FY2021, underpinned by organic growth and high gross margins (FY2021: 46%). ARMA's strong growth momentum has continued into FY22 with the company recording $4.8m in revenue and $2.6m in EBITDA in Q1FY22 (unaudited EBITDA).

Acquisition Rationale

ForFollowing Credit Clear's acquisition of Credit Solutions in 2019, the Company successfully leveraged its technology platform for use in account receivables. The company has transitioned Credit Solutions' clients to its higher margin (~90%) digital solutions. The acquisition of ARMA presents a similar strategic opportunity, but on a larger scale, noting the following attractive attributes:

1. Opportunity to acquire a well-established, market leading business with a track record of growth and strong financial performance,

Credit Clear Limited	W: creditclear.com.au	ABN: 48604797033
Level 4, 6 Riverside Quay	E: [e-mail]	ACN: 604797033	2
Southbank VIC 3006	P: 1300 909 934	ASX Code: CCR

5. Enhanced profile leveraging Credit Clear's proven track record of acquiring and effectively integrating traditional debt recovery businesses.

4. Presents a significant traditional-to-digitalconversion opportunity with ~65% of ARMA's end-userbook readily available to be transitioned to digital solutions, underpinning the potential to achieve significant uplift in gross profit margins, and

onlyuseAndrew Smith MD of ARMA, said: "We are exceptionally proud of the achievements of the ARMA business over the past few years. The impressive growth trajectory and profitability are a result of exceptional client service, operational efficiencies and an empathetic approach towards our clients' customers. Credit Clear's acquisition of ARMA allows us to continue this business, with the benefit of Credit Clear's award-winningtechnology that significantly enhances our offering through behavioural analytics, adaptive workflows and artificial intelligence. I look forward to joining the Credit Clear Board and team in driving the business towards its global ambitions in the account receivables industry."

3. Secures one of Australia and New Zealand's leading sales teams, providing enhanced access to Sydney, Regional NSW and New Zealand markets,

2. Expands Credit Clear's customer base with an additional 400+ customers acquired across new industry sectors - consumer, education, parking - while significantly diversifying Credit Clear's exposure within current targeted sectors - insurance and commercial,

Acquisition Summary

Total consideration for the acquisition is $46m, plus an earnout component:

• Initial consideration of $46m (60% payable in cash and 40% payable in scrip), which represents an 7x EV / EBITDA multiple (on unaudited and normalised FY21 results), plus
• An earnout component based on client migration to the digital platform in the first 12 months post-acquisition (60% payable in cash and 40% payable in scrip).

personalUpon completion, ARMA vendors' estimated shareholding in Credit Clear will be ~13.3% and will be escrowed for 12 months. The transaction is expected to complete in February 2022 following the satisfaction of conditions including obtaining consents of customers representing at least 60% of the r venue of ARMA to a pre-sale restructure being conducted by ARMA.

Capital Raising Summary

Credit Clear is undertaking a Capital Raising to raise gross proceeds of $29.5m to fund the cash component of the acquisition and transaction costs. Key components of the Capital Raising are as follows:

For	• Approximately 73,750,000 new fully paid ordinary shares in Credit Clear to be issued from the
	Capital Raising,
	• The Capital Raising is not conditional upon Credit Clear shareholders approving the ARMA
	acquisition, and
	• The Institutional Placement is fully underwritten by Bell Potter Securities Limited.

Credit Clear Limited	W: creditclear.com.au	ABN: 48604797033
Level 4, 6 Riverside Quay	E: [e-mail]	ACN: 604797033	3
Southbank VIC 3006	P: 1300 909 934	ASX Code: CCR

Institutional Placement

Credit Clear has successfully completed its $25.5m Institutional Placement at an issue price of $0.40 per New Share. The Institutional Placement closed on 15 December 2021 and was fully subscribed at the issue price.

The New Shares to be issued under the:

• Tranche 1 Institutional Placement (~31,853,011 shares to raise approximately $12.74m) will be

only	allotted on 23 December 2021 under the Company's existing ASX LR 7.1 capacity, and
• Tranche 2 Institutional Placement (~31,896,989 shares to raise approximately $12.76m), are
subject to shareholder approval at the Company's EGM, which is intended to be held on 21
use	January 2022. The Tranche 2 Institutional Placement shares will be allotted following shareholder
approval on or around 28 January 2022.
The New Shares issued under the Institutional Placement will rank equally with existing shares on
issue.

Share Purchase Plan

• Share Purchase Plan to raise up to $4m at $0.40 per share3, and
• Further information on the Share Purchase Plan will be set out in the Share Purchase Plan Offer Booklet which is expected to be lodged with the ASX and made available to eligible Shareholders on or around 20 December 2021.

personalShareholders' Meeting

The issue of the scrip consideration to ARMA is required to be approved by shareholders at a Credit Clear Extraordinary General Meeting ("EGM"), which is currently expected to be held on 21 January 2022. In addition, certain resolutions will be proposed to shareholders in respect of the Tranche 2 Institutional Placement (which will partly fund the cash consideration payable to ARMA) as well as allowing certain Directors of Credit Clear to participate in the Institutional Placement.

All Directors who are Credit Clear shareholders (holding ~18% of Credit Clear shares on issue as at the time of this announcement) intend to vote in favour of the resolution in respect of the issue of shares to ARMA at the meeting. Where eligible to vote, all Directors also intend to vote in favour of the Capital Raising resolutions (which are intended to fund the cash consideration for the Acquisition).

ForAustralian FinTech Awards 2021

Credit Clear's AI-driven adaptive workflows are a decisioning tool and core component of Credit Clear's broader digital account receivables platform that uses Artificial Intelligence ("AI") to optimise communications content and dynamically determine best channels of engagement to deliver improved collection outcomes amongst receivables portfolios, whilst protecting customer relationships.

The Australian FinTech Awards celebrate Australian organisations and entrepreneurs that are leading FinTech in terms of innovation and digital disruption. On 8 December, Credit Clear was awarded 2021 winner of the 'Best Use Of AI' category for improvements demonstrated in collection outcomes following deployment of its AI technology.

Credit Clear Limited	W: creditclear.com.au	ABN: 48604797033
Level 4, 6 Riverside Quay	E: [e-mail]	ACN: 604797033	4
Southbank VIC 3006	P: 1300 909 934	ASX Code: CCR

Indicative Timetable

Below is an indicative timetable for the completion of the Acquisition and the Capital Raising.

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	Trading Halt			Tuesday, 14 December 2021
		Record Date		Wednesday, 15 December 2021
		Institutional Placement Closing Date			Wednesday, 15 December 2021
		Announcement of ARMA Acquisition and Related Capital Raise		Thursday, 16 December 2021
		Trading Halt Lifted			Thursday, 16 December 2021
use		Share Purchase Plan Opens and Booklet Made Available		Monday, 20 December 2021
	Settlement of Tranche 1			Wednesday, 22 December 2021
	Allotment of Tranche 1 Shares		Thursday, 23	December 2021
		Dispatch of EGM Notice			Thursday, 23	December 2021
		EGM		Friday, 21 January 2021
		Settlement of Tranche 2			Thursday, 27	January 2021
		Allotment of Tranche 2 Shares		Friday, 28 January 2021
personal		Share Purchase Plan Closes			Friday, 4 February 2021
	Settlement of Share Purchase Plan		Thursday, 10	February 2021
	Date: Tuesday, 21 December 2021			Friday, 11 February 2021
		Allotment of Share Purchase Plan shares

All dates and times are indicative only and subject to change. Subject to the requirements of the Corporations Act 2001 (Cth), ASX Listing Rules and any other applicable laws, Credit Clear, in consultation with the Underwriter, reserves its right to amend this timetable at any time.

Additional Information

Additional information about the Acquisition and the Capital Raising, including key risks, is contained in the Credit Clear investor presentation released to the ASX today.

Investor Briefing

Time: 11am AEDT

ForRegistration: Please register here: https://attendee.gotowebinar.com/register/2973852817907513100f r the briefing.

The briefing will be hosted by Credit Clear CEO David Hentschke, ARMA CEO and Founder Andrew Smith and Credit Clear Chief Product Technology Officer Jason Serafino, who will provide an update on Credit Clear's latest technology development including the company's award-winning AI capability. There will also be an opportunity to ask questions during a live Q&A.

Credit Clear Limited	W: creditclear.com.au	ABN: 48604797033
Level 4, 6 Riverside Quay	E: [e-mail]	ACN: 604797033	5
Southbank VIC 3006	P: 1300 909 934	ASX Code: CCR