Pepper Money : Investor Presentation

Pepper Money Limited

MARKET BRIEFING

Acquisition of Stratton Finance

Accelerating Pepper Money's growth and extending market position

April 4, 2022

Copyright 2022 Pepper Money Limited. Confidential.

AGENDA

Accelerating Pepper Money's growth and extending market position

TRANSACTION

OVERVIEW

STRATTON OVERVIEW

STRATEGIC RATIONALE

•  Pepper Money to acquire a 65% interest in Stratton Finance (Stratton) for $78m, reflecting 100% value of $120m¹

•  Put and Call Option over remaining 35% shares, exercisable from Q1 CY2024 through Q1 CY2026 - base price of $42m subject to performance related indexation

•  Acquisition expected to complete in 3rd quarter of CY2022, subject to Foreign Investment Review Board (FIRB) approval and other customary conditions precedent

•  Leading online direct-to-consumer (D2C) asset finance broking platform, with 23+ years of experience, strong brand recognition and trust

•  115+ internal, agented and franchisee (brokers / loan writers), $700m in FY2021² contracts settlements, 19k leads per month and a contact database of 1.3m+

•  Proprietary in house build systems delivering broker efficiency and great customer experience

•  Strong profit margins and cash generation

•  Build on strong organic growth of Pepper Money's Asset Finance business via a controlling stake in one of our key Distribution Partners

•  Strengthen our D2C offering to complement third party distribution channels

•  Through close co-operation and high levels of systems integration with Stratton, continue to deliver great service, and enhance and expand our product offering to make more Pepper Money products the best lending solution for customers looking to finance a range of assets

1. Subject to completion adjustments for cash and debt and like balances at completion. 2. FY - represent financial year ending 30 June.

Accelerating Pepper Money's growth and extending market position

FUNDINGFINANCIAL

IMPACT

•  Initial 65% share acquisition - cash settled, in part funded by drawing on our Corporate Debt Facility (CDF)

•  CDF - $200m facility, currently drawn to $50m

•  Pepper Money has option to settle Put and Call Option over remaining 35% Stratton shares in cash and / or Pepper Money Limited shares

•  Transaction is expected to have no impact on Pepper Money's dividend payout ratio or capacity to fund in-line or expansion growth opportunities

•  Ownership of a key asset finance Distribution Partner means we retain a share of Stratton earnings on loans originated to Pepper Money in addition to those originated to other lenders

•  Increased Pepper Money's asset finance volumes via Stratton expected over time through superior offering: price, product and processes, together with residential mortgages and other products

ABOUT STRATTON

Stratton operates in a large addressable market

ASSET FINANCE

$185bn

Consumer: $59bn¹

Commercial: $126bn²

~1.9%³

Consumer: ~3.2%

Commercial: ~1.3%

1. New household loan commitments for purchase of road vehicles, other transport vehicles and equipment, New household loan commitments, ABS 5601.0 Lending Indicators Table 27, January 2021 - December 2021 (published February 2022). Assumes market size is approximately 4x lending commitments for last 12 months. 2. New business loan commitments, finance lease and fixed term, purchase of vehicles, plant and equipment, ABS 5601.0 Table 29, 31 and 33, January 2021 - December 2021 (published February 2022). Assumes market size is approximately 4x lending commitments for last 12 months. 3. Represents Pepper Money's Asset Finance AUM as at 31 December 2021 (closing) as a proportion of total consumer and commercial motor and equipment financing. 4. Personal finance, ABS 5601.0 Lending indicators Table 27 new loan commitments, December 2011 - December 2021 (released February 2022). 5. Motor vehicle finance, ABS 5671.0 Lending finance Table 9 finance commitments, November 2018 (released January 2019). Note: Following the November 2018 series, the ABS ceased publication of this data set, with updated data not available. 6. Australian new motor vehicle sales, Federal Chamber of Automotive Industries, December 2011 - December 2021C(roepleyarsigedhtF2eb0r2u2arPy e20p2p2e)r.7M.GonloebyalLAimutoitmedot.ivCeoCnofindseunmteiarl. Study 2021 Australian perspective. Q14: When it comes to your loan/lease/subscription account, what is most important to you? N= 814