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Half Year 2018

Transaction Capital Risk Services Funder Prospectus

2

Confidentiality Disclaimer

This document, including all information regarding Transaction Capital Risk Services Proprietary Limited and its subsidiaries and associated companies, collectively referred to as “TCRS”, is

confidential and is not for discussion, circulation or publication to any third party without the prior written consent of Transaction Capital Limited. The information and financial arrangements outlined

herein are for the benefit and information of the original recipient of this document, who by acceptance of this document is deemed to have accepted responsibility for ensuring that such confidentiality

will be maintained at all times.

Contents

I Overview of TCRS…………………………………………………………… 3

II Market Context (South Africa) ……………………………………………… 11

III Business Model ……………………………………………….. ………….... 20

IV Technology & Data Platforms ……………………………………………… 25

V Transaction Capital Recoveries (“TCR”) …………………………………. 30

VI Transaction Capital Business Solutions (“TCBS”) ……………………… 41

VII Financial & Operational Performance…………………………………….. 43

VIII Other TCRS’ Companies…………………………………………………… 49

IX Growth Opportunities………………………………………………………. 53

X Funding …………………………………………………………………….. 55

Overviewof TCRS

I

4

TCRS is part of the JSE-listed Transaction Capital

A vertically integrated minibus taxi platform

incorporating a unique blend of vehicle procurement,

retail, repossession & refurbishment capabilities,

with finance & insurance competencies for focused

vehicle types. Combined with its proprietary data,

analytics capabilities & technology, SA Taxi is able

to provide SMEs operating within the minibus taxi

industry with a complete financial & allied services

offering.

A technology-led, data-driven provider of customer

management services in South Africa (SA) &

Australia. TCRS’ scalable & bespoke fintech

platform improves its clients’ ability to originate,

manage & collect from their customers. The division

leverages its technology & data to mitigate risk &

maximise value for clients throughout the customer

engagement lifecycle

CEO: Terry Kier, 11-year group tenure

R173 MILLION

HEADLINE

EARNINGS 1

R8.9 BILLION

GROSS LOANS

& ADVANCES

R258 MILLION

NON-INTEREST

REVENUE

CEO: Dave McAlpin, 10-year group tenure

R119 MILLION

HEADLINE EARNINGS 1

R1.0 BILLION

PURCHASED

BOOK DEBTS

75.6%

COST-TO-INCOME

RATIO³

R222 MILLION

PURCHASED BOOK DEBTS

ACQUIRED THIS PERIOD

CEO: David Hurwitz, 13-year group tenure

R310 MILLION

HEADLINE

EARNINGS 1

50.8 CPS

HEADLINE EARNINGS

PER SHARE

21 CPS

INTERIM DIVIDEND

PER SHARE

15%FOREIGN INVESTOR BASE

R10.4 BILLION

MARKET CAPITALISATION 2

3.7%

CREDIT LOSS RATIO

25.7%

RETURN ON EQUITY

17.2%

NON-PERFORMING LOAN

RATIO

16.5%

RETURN ON EQUITY

R2.0 BILLION

ESTIMATED REMAINING

COLLECTIONS

R854 MILLION

NON-INTEREST REVENUE

▲20% ▲15% ▲22% ▲17% ▲28% ▲11%

▲32%

HY17 3.3%

HY17 5%▲40% HY17 78.8%

▲6%

HY17 24.1%

HY17 17.2%

HY17 16.1% ▲ 33% ▲34%

Notes:

Financial ratios & results exclude once-off acquisition costs of R22 million incurred during the FY17 year.

1. Headline earnings attributable to the group, excluding minority interest | 2. Market capitalisation as at 31 March 2018 | 3. Excludes the effect of acquisitions

Results as at 31 March 2018

5

Who is TCRS?

Innovative & bespoke technology systems that drive

superior performance & efficiency

1

2 Generating in-depth insights from the continuous collection of accurate

& valuable data to develop a consolidated view of an individual that

enables precise & informed internal & external decisioning

3 Improving its clients’ ability to originate, manage & collect

from their customers through their lifecycles, thus maximising value

Assisting its clients by accelerating cash flow as an agent on an

outsourced contingency or fee-for-service (“FFS”) basis, or as a

principal in acquiring & collecting non-performing loan portfolios

Proactive workforce management & technology facilitate a flexible

& dynamic servicing capability able to meet a client’s unique

requirements

Regarded as a trusted partner by large consumer-facing

businesses & credit providers across multiple industries

4

Enabling clients to generate higher risk-adjusted returns through

their engagements with their customers at the point of origination,

management & collection

5

6

7

TRANSACTION CAPITAL

RISK SERVICES IS A

TECHNOLOGY-LED,

DATA-DRIVEN PROVIDER OF

CUSTOMER MANAGEMENT

SOLUTIONS IN SOUTH AFRICA

& AUSTRALIA THROUGH A

SCALABLE & BESPOKE

FINTECH PLATFORM,

ENABLING ITS CLIENTS TO

MITIGATE RISK THROUGH

THEIR CUSTOMER

ENGAGEMENT LIFECYCLE

6

The history of the TCRS group

1900’s 2005 2010 2015 Today2000’s

1958Rand Trust is founded.

1997MBD is founded.

1999Principa Decisions is founded.

1998MBD’s first principal debt acquisition. To

fund the transactions, Gensec Bank Ltd (now

Sanlam Capital Markets) acquires equity in

MBD.

2000African Bank Investments Limited

acquires MBD.

2003The soon to be Transaction Capital

Group acquires MBD. The MBD Group

acquires competitor Asset Solutions

Company.

2004The MBD Group establishes Capital

Data a specialised business focused on

legal collections solely for debt owned

by the MBD Group.

2006MBD’s first Securitisation programme formed.

2007Transaction Capital is formed.

2008Transaction Capital acquired 90% of Rand Trust.

Rand Trusts’ first Securitisation programme

established.

2009The MBD Group merges with the CMS Group, its

competitor and second largest player in the

distressed debt collections market. MBD was at

the time the largest player – the merger results in

the formation of the most dominant collection

house in South Africa.

2012Transaction Capital Limited Lists on the JSE.

MBD and Rand Trust refinances their

respective securitisation programmes. Two

new on balance sheet structures are

established for each operation, allowing each

entity to issue secured loans. Each funding

structure is established under a common

terms agreement with the Standard Bank of

South Africa acting as facility agent.

Transaction Capital acquires the remaining

10% of Rand Trust.

2016The Transaction Capital Risk Services Group

(“TCRS”) is formed, a wholly owned

subsidiary of the Transaction Capital Limited

Group. TCRS incorporates MBD (rebranded

as Transaction Capital Recoveries), Rand

Trust (rebranded as Transaction Capital

Business Solutions), BDB Data Bureau

(rebranded as Transaction Capital Payment

Solutions (TCPS) and Principa Decisions.

2017Transaction Capital augment the TCRS group

with the acquisition of 100% of Recoveries

Corp (Australia), 75% of Road Cover and

51% of the Beancounter.

2018TCRS acquired 100% of

the ordinary shares of

Accsys Proprietary Limited

(“Accsys”).

7

TCRS’ journey since listing

81.0%

318

420

561

523 571

9301 000

2012 2013 2014 2015 2016 2017 2018

Tu

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AR

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• Transaction Capital Lists on the JSE

• Transaction Capital acquires 100% of

TCBS

• Entered the payments services sector

via the acquisition of BDB

• Entered the SA municipal collections

sector

• ISO Data security accreditation

obtained

• Management team and overarching

strategy centralised

• Early adoption of IFRS9

• Improved penetration in the Tier 1

banking and specialised lending

sectors

• Increased focus on SA

telecommunications collections sector

• Entered the SA insurance collections

sector

• TCR achieves level 3 B-BBEE rating

• Technology enhancements, including

implementation of new predictive

dialer and the creation of the Master

Data Universe

• Rebrand to leverage Transaction

Capital’s brand equity

• Acquired 75% of Road Cover

• Acquired 51% of The Beancounter

• Transaction Capital augment the

TCRS group with the acquisition of

100% of the Australian-based debt

recoveries specialist Recoveries Corp

• TCR obtained a level 2 B-BBEE

rating

201720162015201420132012 HY 2018

• Implementation of Work Force

Management technology to optimise

resource allocations and Payment

efficiency

• Continued acquisition of NPL

portfolio across multiple industries

using creative and bespoke capital

solution frameworks

• Ongoing refinements and

enhancements to predictive dialer

technology, including Right Time to

Call (“RTTC”) analytics

• Operational and strategic integration

of Acquisitions

• Acquisition of 100% of Accsys

Financial highlights for the Half Year ended 31 March 2018

Headline earnings Cost-to-income ratio Value purchased book

debts acquired

Employees Asset turnover ratio Return on equity

R119m R222m 3 349 48.9% 17.7%R233m FY17

8

Key operating segments in TCRS group

Transaction Capital Risk Services provides a comprehensive range of structured credit risk management, debtor management, data

management, collections, customer engagement, call centre and capital solutions to South Africa’s largest credit providers as well as

Australia’s government, insurance, banking and finance, utilities and telecommunications market sectors.

Further augmented by

acquisitions from 2016 to

2018

Provides customer management solutions leveraging its

consulting, data analytics and technology capabilities, focusing

mainly on the customer credit lifecycle.

Provides payment processing services through electronic funds

transfer and related products to corporate clients.

Provides invoice discounting, working capital finance &

commercial receivables management solutions to SMEs

Provides a comprehensive range of customer management and

capital solutions to South Africa’s largest credit providers.

Pre

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CS Holdings

A technology-led, data-driven analytics driven provider of

customer management and capital solutions in South Africa and

Australia, that enables its clients to effectively manage their

customers through their lifecycle.

Empowers South African consumers with the knowledge of their

personal credit information.

9

Led by an experienced management teamTransaction Capital and TCRS’s executive management team holds extensive experience in the disciplines that make the company uniquely

successful as a customer management solution provider.

Dave McAlpinTCRS | Chief Executive OfficerGroup tenure – 10 years

MBA, Bcom, Associate of the Chartered

Institute of Management Accounts

(A.C.M.A.)

• Appointed as TCRS CEO in 2014

• Over 15 year’s experience both in South

Africa and international retail

• Joined the Transaction Capital Group in

2008 as the Chief Executive Officer of

Principa Decisions

• Served as the CEO of Forza Group for 4

years

• Held various senior positions within the

Massmart and Wooltru Group

Stephan VenterTCR | Debt Acquisition

ExecutiveGroup tenure – 11 years

BSc Mathematical Statistics &

Mathematics

• Joined MBD in December 2007 after

spending three and a half years at FNB

• Served as the Head of Sales & Solutions in

the Private Label Department at FNB

• Prior to FNB, headed up an African Bank

subsidiary providing working capital solutions

to SMMEs

• Honed his analytical, financial and strategic

skills in his time as an equities analyst with

CSFB and an actuarial assistant with Liberty

Life

Rob MonteithTCRS | Chief Information

OfficerGroup tenure – 3 years

MBA, BSc Engineering, Metallurgy

• Appointed as TCRS CIO in 2015.

• Chairman of Principa & TCPS

• Served as GM of Business Solutions (part of

Business Connexion)

• CEO of JSE-listed USC Software, from 2009

– 2014

• Moved into the IT space with SA Breweries.

• Gained early experience running

metallurgical extraction plants in the gold

industry, and constructing chemical and

water treatment plants

Robert AmoilsTCRS | Chief Financial OfficerGroup tenure – 1 year

B.Bus.Sci ((Hons) Finance,

Chartered accountant CA(SA)

• Appointed as TCRS Group CFO in 2018

• Served as Group CFO and co-head of M&A

for Vestacor Limited for 12 years

• Held various executive and non-executive

directorships within the Vestacor Group

(Property and Retail focused)

• Co-founder and Financial Director of

Vividend Income Fund Limited for 3 years

• Served as Group CEO of Stuttafords Stores

for 3 years

• Served articles at Kessell Feinstein

Edward KhouryTCRS | Business DevelopmentGroup tenure – 3 years

Bachelor Degree in Commerce

• Appointed as business development

executive in 2015

• 30 year’s experience in the Credit Bureau

industry

• CEO of TransUnion Credit Bureau and was

later promoted to Group CEO for TransUnion

Africa

• Worked with the Credit Regulator

representing the Credit Bureau Industry

interest in the formulation and

implementation of the National Credit Act

Dineo SekweleTCRS | Executive Group HR Group tenure – 1 year

Masters in Management and Innovation.

Qualification in Construction

Management Program & BA HR and

Economics.

• Over 19 year’s experience in HR

• Previously HR Director of Group Five’s

Engineering and Construction (Building) and

later promoted to Cluster HR Director within

the Investment and Concessions Cluster

• Passionate about unleashing potential and

developing people, creating a positive

environment engaging, motivating & inspiring

to bring the best results

10

Led by an experienced management teamDeon PienaarTCBS | Chief Executive OfficerGroup tenure – 10 years

B.Compt (Hons) & Chartered accountant

CA(SA)

• Appointed CEO of Transaction Capital

Business Solutions in February 2012

• CEO of Mortgage Capital from September

2010

• Deon joined Transaction Capital Recoveries

in 2007 with responsibility for the governance

function (Risk, Internal Audit, Compliance

and Legal) and special projects

• Completed his articles with PWC before

joining the Nedbank Group in Internal Audit

Marnus BroodrykTransaction Capital SME

Services | Chief Executive

OfficerGroup tenure – 18 months

B.Compt (UNISA), Professional

Accountant (SAIPA)

Jaco RossouwPrincipa|Chief Executive OfficerGroup tenure – 13 years

BSc majoring in mathematics and

computer science

• Appointed CEO of Principa in 2016.

• Over 26 years of experience specialising in

the insurance, private banking retail and

financial services industries.

• A technologist and analyst at heart with a

track record of delivering innovative

business solutions over a wide geographical

region from South Africa to the Middle East

and Europe.

• Serving as leader, motivator, imagineer, to

one of the finest collections of data, business

and computer scientists in SA.

Eugene BeckRoad Cover | Chief Executive

OfficerRoad Cover tenure – 13 years

Entrepreneur

Carl de VilliersTCR | Managing DirectorGroup tenure – 15 years

B.Acc and B.Acc (Hons); Chartered

accountant CA(SA); Chartered

Management Accountant (A.C.M.A.).

• MD of TC Recoveries since 2016.

• TCRS exco member.

• Appointed as Chief Revenue Office of TC

Recoveries in 2014.

• Joined TC Recoveries as Group FM in 2003

and has been in the group ever since

• Attended the Executive leadership program

at Harvard Business School, Boston, USA in

2011.

• Served articles at PWC.

Teryl SchroennAccsys | Chief Executive OfficerGroup tenure – 16 years

MMI-Damelin. Finalist at the 2016

National Business Awards

Nicholas HarrakRecoveries Corp | Chief

Executive OfficerGroup tenure – 18 years

LBLS

David HurwitzTC | Chief Executive OfficerGroup tenure – 13 years

BAcc (Hons) HDipTax (University of

Witwatersrand), Chartered accountant

CA(SA)

• Appointed as Transaction Capital CEO in

2014.

• Served as head of capital markets team, SA

Taxi CFO and Transaction Capital CFO.

• Joined Transaction Capital’s founding

shareholders in 2005 upon the acquisition of

SA Taxi following which Transaction Capital

was formed.

• Active in debt capital markets since 1997.

• Served articles at Grant Thornton.

Market

Context (South Africa)

II

South African consumers remain vulnerable, with

persistently high levels of household debt-to-

disposable income, low economic growth and high

unemployment. Of the 25.3 million credit-active South

African consumers at December 2017, 9.7 million had

impaired credit records.

This climate favours the acquisition of non-performing

loan portfolios as a principal asset. Although these

macro- and socio-economic challenges affect

consumers’ ability to repay debt, regulatory changes

regarding affordability assessments have prompted

more responsible and lower levels of credit extension,

particularly in the retail sector. This is expected to

result in earlier rehabilitation of the consumer over the

medium term.

Market overview

South African

consumers with

impaired credit records

9.7m

Credit-active South

African consumers

25.3m

13

TCRS competitive advantages

PERFORMANCE

ANALYTICS

• Predictive & layered voice analytics to

determine:

› Propensity to pay

› Right time to call

› Right day to pay

› Dynamic matter prioritisation

› Optimised campaign

› Veracity of Promise to Pay

TCRS PROPRIETARY DATA

• Database of South Africa’s distressed consumers

• Continuously enriched (with collection &

ContactAbility results)

SCALABLE TECHNOLOGY PLATFORM

• Dialer enhances scale of ContactAbility

› Enabled over any omni-channel

› ~38 million outbound calls per month

› ~6 million voice interactions per month

› ~600 000 payments received per month

• Workforce management enables

› Flexible work-hour scheduling

› ▲ talk time

› ▲ activations

› ▼ staff turnover

› ▼ cost of collection

REPUTATION OF PERFORMANCE

• Only local listed industry participant

(TCRS is a subsidiary of TC a listed

entity)

• Diverse range of local & international

stakeholders

• Ranked as 1st or 2nd in 89% of

mandates

INVESTMENT IN COMPLIANCE

• Fair treatment of our clients’ customers

• Compliant with legislation

• Active membership across various professional

bodies

• Benchmarking against international best

practices

14

It is a challenging consumer credit environment

9.7 MILLION(~40%) NON-PERFORMING

CREDIT CONSUMERS

(NCR 31 December 2017)

ELEVATED LEVELS OF

UNEMPLOYMENT

AT 26% (▼from 27.7% high)

25 MILLION

Credit Active Consumers

in South Africa

71.9% HOUSEHOLD DEBT

TO DISPOSABLE INCOME

REMAINS HIGH (▼from a high of 74.4%

as DEBT GROWTH < INCOME GROWTH)

ESCALATING COSTS OF

HOUSEHOLD ESSENTIALS

OVER THE MEDIUM-TERM

AT 5.3% (▼from 6.4%)

2014: SOUTH AFRICANS

WERE THE BIGGEST

BORROWERS IN THE WORLD

(WORLD BANK REPORT)

15

The unsecured consumer non-performing market is growing

Non-Performing Loan Market Size & Growth (Rbn)

Unsecured finance in South Africa has grown over 3 of the last 6 years. This

unsecured finance segment is TCRS’s target market.

Macro-& socio-economic environment

o Increased number & size of NPL portfolios

available to acquire as a principal asset

from clients preferring immediate recovery

from their NPLs

o Consumers’ disposable income stressed,

negatively affecting their ability to repay

debt

o Increased cost & extended time to collect

Regulatory environment

o Stable over the past 18 months

o Regulatory changes regarding affordability

assessments result in more responsible &

lower levels of credit extension

o Earlier rehabilitation of consumers over

medium-term

41 49

70 80 84 83 79 76

135120

114 104 102 102

115114

-

20

40

60

80

100

120

140

160

180

200

2010 2011 2012 2013 2014 2015 2016 2017

Bill

ions

Unsecured finance Mortgages & secured finance

16

TCRS is the largest market player across multiple metrics

Other fragmented

participants in

addressable market

such as

of 201 mandates on client panels where TCRS are represented:

TCRS rank

1stor 2nd

73%

16%

in 89%R21BILLION¹Acquisition of

non-performing

loans as acquired

as principal

R585MILLION

Gross loans & advancesTransaction CapitalBusiness Solutions

R76bn¹FACE VALUE OF NON-PERFORMING

UNSECURED CONSUMER DEBT

MONITORED BY NCR

R21BILLION¹Contingency &FFS collections

Sectors split by revenue per segment as at 31 March 2018

1. R76 billion comprises credit monitored by the NCR as at 31 December 2017. TCRS’ target market & assets under management also includes sectors not regulated by the NCR, being SMEs, education, insurance, public

sector, telecommunications, SOEs & utilities

17

TCRS also benchmarks itself against leading listed peers globally

Different geographies use different languages to describe solutions and services

BRAZIL

Acquirer of NPL portfolios as principal

(unlisted)

EUROPE


AUSTRALIA

Predominantly an acquirer

of NPL portfolios as principal

SOUTH AFRICA & AUSTRALIA

Acquirer of NPL portfolios as principal,

contingency & FFS collection services

Diversification supports performance in varying market conditions

o Diverse revenue model: Acquisition of NPL portfolios vs Contingency & FFS collector

o Spread across various consumer credit sectors: Banking, specialist lending, credit retail, utilities, telcos,

insurance & public sectors

o Spread across 2 geographies: South Africa & Australia

THAILAND

Acquirer of NPL portfolios as principal,

contingency & FFS collector

UNITED STATES & EUROPE


18

TCRS contributes to the effectiveness of the credit system

1 in 6

1 in 4credit active people

1 in 2non-performing credit consumers

TCRS talks to…

Resulting in

…each month

5.7m

South African adults

Unique customers

R300m

Collections each month

600k

Number of payments received each month

38m

Outbound calls per month

Voice interactions each month

6m

19

Keeping abreast of best practices

TCRS is a member of the following

professional bodies:

• Council for Debt Collectors

• ADRA (Association for Debt Recovery

Agents)

• Institute of Credit Management

• SACRRA (South African Credit & Risk

Reporting Association)

• Business Process enabling South Africa

(BPeSA)

The following are other memberships that

are maintained in order to keep abreast of

best practices in the industry and to have

representation on industry bodies

including:• National Credit Regulator (NCR)

• Business Process enabling South Africa

(BPeSA)

• Institute of Credit Management

• Consumer Payments Association (CPA)

• ACA International

TCRS ensures it keeps up to date with the regulatory environment in which it operates as well as best practices in the industry both

globally and locally.

The collections and credit industry news update & regulatory developments for

2017 and 2018:

• Amendments were introduced in the Magistrates Court Act relating to the regulation of EAOs

• The National Credit Regulator has targeted a number of retailers regarding the inclusion of

club fees in credit agreements. The High Court confirmed that Club Fees and extended

warranties sold were not in contravention of the NCA.

• The Financial Sector Regulation Act introducing the first phase of Twin Peaks was

promulgated in August 2017. Debt Collectors are now subject to the Financial Sector

Conduct Authority.

• The National Credit Amendment Bill 2018 was published for comment in December 2017,

followed by Parliamentary Hearings in January / February 2018. Highlights of the Bill include:

o Proposed once-off Debt Intervention which could result in the extinguishing of unsecured

debt of over-indebted consumers who apply for debt intervention

o The proposed criminalisation of contraventions of section 126B which prohibits the sale

and collection of prescribed debt

• SARS implemented a debt collection strategy which included the appointment of debt

collection companies to recover billions of outstanding taxes. TCR has been included in the

SARS panel of debt collectors.

• The High Court ruled in favour of retailers in finding that certain sections of the NCA dealing

with credit assessments of consumers be set aside. In effect, credit providers are no longer

required to collect particular forms of documents proving a consumer’s income (i.e. three

months bank statements) when the consumer applies for credit.

Changes to legislation regarding non-authenticated early orders (NAEDO),

which would require consumers to confirm with their bank before an early debit

order becomes active on their account, has been delayed to October 2019.

The business continually evaluate the impact of any changes on the valuation of its existing

purchased debt portfolio and there are no material changes in this regard.

Transaction Capital Recoveries’ exposure to

emolument attachment orders (EAOs) is

insignificant due to no new EAOs being

initiated for a number of years

Business Model (South Africa)

III

21

TCRS bespoke value proposition

Originate1 Manage2 Collect3

Rehabilitating customers and solving

our clients’ impaired debt problems

through capital solutions

Identifying and winning new

customers by taking advantage of

world class data analytics

Enabling frictionless payment

processes and insightful customer

management

Customer engagement lifecycle

Customer management solutions

Capital solutions

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“TCRS provides solutions at the intersection of

our clients and their customers”

The Transaction Capital Risk Services division operates across three aspects of the value chain – originate, manage and collect. TCRS will

sustain its growth by applying its capabilities across each of those three segments in different client sectors, leveraging the businesses according

to the value chain segment they’re strongest in.

22

Service offering for clients throughout their customers’ lifecycle


Rehabilitating customers and solving

our clients’ impaired debt problems

through capital solutions

Identifying and winning new

customers by taking advantage of

world class data analytics

Enabling frictionless payment

processes and insightful customer

management


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Lead generation &

customer acquisition

Payment & account

managementCollection services

SME financing Debt purchasing

23

Services performed by various providers in the TCRS group



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• Leads generation

• Predictive & prescriptive modelling

• Segmentation modelling

• Systems (Smart & FICO)

• Analytics

• Bespoke value added services and

solutions

• Customer retention, profitability,

predictive & prescriptive modelling


• Analytics

• Payment processing

• Receivables management


• Analytics

• Early stage rehabilitation

• Late stage collections

• Legal recoveries

• B2B collections

• Invoice discounting

• Trade financing

• Property financing

• Spot book acquisition

• Structural outsourcing

• Forward flow agreements

Lead generation & customer

acquisition

Payment & account


Debt purchasingSME financing

24

Services are offered in a variety of industries



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Lead generation & customer

acquisition

Payment & account


Debt purchasingSME financing

100%

SMEs

7%

84%

1%8%

Creditretail

Valueaddedservices

Telcos & OtherInsurance

19%

2%

15%

47%

14%3%

Creditretail

Banking

Specialist lending

Insurance & telcos

OtherPublicSector

18%

8%3%

8%10%

51%

2%

26%

30%

14%

30%

Creditretail

Banking

Insurance &Other

Public sector

Telcos

Australia

Specialist lending

AUSTRALIA

Insurance

Public sector

Facilities, Telcos & Other

Banking & commercial

25%

32%

37% 6%

Creditretail

Banking

Specialistlending

Other

Sectors split by revenue per segment as at 31 March 2018

Technology & Data Platforms (South Africa)

IV

26

Data and technology are used throughout

Identify priority in which to contact

customers and collect debts based on

individual customer data from the Master

Data Universe (MDU)

Individual customer data from the MDU

indicates the optimal contact channel and

time, allowing for higher contact success

and optimal workforce productivity

Predictive dialler optimises connections

enabling efficient workforce management

and better conversion

Receive PTP from the connected base,

each rated as to the probability of

payment for increased accuracy in

payment prediction

On receipt of PTP, payment probability

platforms and conversion rates are

continually monitored/reassessed to

maximise collection efficiency.

Surrogate datasets determine the value of the book Determine the purchase price or agency

fee based on similar database behaviours

and success rates

Value of debts on book

38 million call attempts per month

5.8 million

connections made

per month

~50% Promise-to-

Pay (PTP)

~50%

Pay

Enriched

customer

behaviour data

enables higher

contact and

conversion rates

Data is processed and fed back into the

MDU at the end of each day to optimise

prioritisation and enable the updating of

contact details.

As the data becomes enriched, the

funnel narrows, increasing accuracy and

predictability

Focus is on tailored

message content, enabled

by individual customer

behaviour data

~15% Right party

contact madeRight party contact made is ~ 15% of the

5.8 million connections made per month

27

Enriched data on each individual

Enriching the data creates an exponential effect on efficiency in contactability, which in turn translates into propensity to pay.

The Master Data Universe and its applications are constantly evolving and enhanced with new technologies.

• Opportunity to monetise data

• POPI compliant

Data is current,

relevant &

accurate as per:

CREDIT

BUREAU

DATA

OTHER DATA SOURCES

such as the Department of Home

Affairs & the Deeds Office

Data from

PRINCIPAL

PORTFOLIOS

ACQUIRED

Data sourced

from MDU

for maximised

ContactAbility

Transactional Data

enriched with collection

& ContactAbility results

MASTER DATA UNIVERSE (MDU)

9.2 MILLION

UNIQUE & VALID ID NUMBERS

Each uniquely scored with a TCRS

propensity to pay score

94%

COVERAGE OF SOUTH

AFRICA’S

NON-PERFORMING

CREDIT CONSUMERS

2 in 5South African adults

2 in 3credit-active people

Up to 5

per unique ID number

ASSOCIATED

TELEPHONE NUMBERS

6 MILLION

POSTAL

ADDRESSES

unique & valid

>

• WHEN to contact

• HOW to contact

• WHICH address/number to

use

• Propensity to pay

120 000UNIQUE & VALID company

registration numbers

28

Systems

Via inter-connected systems, the operations can run seamlessly from start to finish.

MDU

CORE TRANSACTIONAL

SYSTEM

• Customised per client

• Ease of use

• Quick to train

• Decrease staff turnover

• Decrease cost of collection

CAMPAIGN BUILDER

• Real-time management tools

• Automated messaging

• Champion Challenging

Predictive analytics to determine:

• Propensity to pay

• Right time to call

• Right day to pay

• Dynamic matter prioritisation

DIALER & WORKFORCE

MANAGEMENT

• Enhances scale of contactability

• Schedule the workforce

• Flexible work hour selection

• Increase talk time (more than 3

hours per 6 hour shift)

• Increase activations (deeper

penetration of customer base)

MANAGEMENT & BUSINESS

INFORMATION

• Customised value-add insights

to clients

• Allows TCRS to win more

mandates

• Enhanced management of

compliance and reputation

ENABLED OVER MULTIPLE OMNI-CHANNELS

• Capability to contact customer by preferred contact method

COLLECTIONS

• Promise-to-pay management

• Multiple payment channels

1 2 3 4

5

6

Data sourced

from MDU

for maximised

ContactAbility

Transactional Data

enriched with collection

& ContactAbility results

29

Technology is a barrier to entry

• Data is gathered and constantly enriched over time

• Generation of in-depth insights

• Continuous and consistent collection of accurate and valuable data

• Development of a consolidated view of an individual

• Enabling precise and informed internal and external decisioning

Data & Analytics

• Proactive workforce management & technology

• Facilitation of a flexible & dynamic servicing capability able to meet a client’s unique

requirements

• Technical and specialist skills required

People & Skills

• Cost of systems and data processing ability

• Book buying and data collectionInvestment

• Advanced technology at the forefront of technical capability

• Sizeable, scalable platform positioned for growth

• Robust systems to support the technology, data and processing required

• Use and prioritisation of technology during the development stages of the business has

resulted in a bespoke and scalable system that is purpose-built and streamlined

Technology &

Systems

Transaction Capital Recoveries (“TCR”)

V

Transaction Capital Recoveries (previously known as

MBD), is the leading independent provider of credit

management solutions in Southern Africa.

Its core service is the collection of accounts

receivables encompassing the entire credit cycle

using both call centre and legal collection frameworks

and methodologies. It has clients in both the private

and public sector, with substantial portfolios of

accounts receivables. Inherent in this service is an

option to acquire accounts receivables portfolios and

its strong balance sheet is a key differentiating factor

in unlocking value for its clients.

Ancillary services provided to credit providers include

administration, back-up service provider, consulting,

data analytics and software services.

32

Within TCR services are performed

Collect

Clie

nt e

ng

ag

em

en

t m

od

el

Cu

sto

me

r

ma

na

ge

me

nt

solu

tions

Ca

pita

l so

lutio

ns


• Analytics

• Early stage rehabilitation

• Late stage collections

• Legal recoveries

• Spot book acquisition

• Structural outsourcing

• Forward flow agreements

Collection services

Debt purchasing

Offering a truly comprehensive range of credit

management solutions, TCR has positioned itself as

the leader in the South African corporate, commercial,

retail and public sectors, along the way developing

technology and infrastructure unrivalled in its ability to

offer clients the competitive edge. TCR perfected the

proprietary operational processes and protocols

essential in delivering the best results whilst keeping the

focus on customer centricity and unrivalled service,

always measuring itself by the value added to the

bottom line.

While the core offering provides pre-legal (early stage

and late stage) collections, legal collections and debt

acquisition solutions, TCR’s trusted reputation and

strategically aligned relationships with leading

companies enables it to extend its core service offering

in the form of pre-billing, billing, and insurance claims

outsourcing solutions.

33

TCR offers bespoke collection services

Optimal business to customer

collection solutions

When it comes to revenue

continuity, efficient management and

optimal control over the collections

cycle is undoubtedly one of the most

critical deliverables in business

today. TCR provides a collection

solution aimed at ensuring the best

results when it comes to delivery on

revenue targets.

Consumer Collections Business Collections Public Sector Solutions

World-class business to

business conversion solutions

Professionals who trade business-

to-business understand that the

reality of non-performing debt can

often mean a compounding threat to

revenue stability.

TCR understands and implements

the critical commercial conversion

solutions essential for bottom line

success, spanning across most

industries, and applying the latest

trend and conversion

methodologies.

Extensive experience in debt

collection and debt book

analysis

TCR has been assisting various

public sector entities with their

revenue enhancement and data

analysis, offering receivables

management solutions that span the

entire collections lifecycle. TCR

recognises that the public sector

operates within a complex

regulatory framework and requires

unique revenue management

solutions and strategies.

34

Key services powered by bespoke, scalable systems

Hosting and administration

TCR offers a range of account hosting

and administration services to clients

scalable to both Private and Public

sector organisations.

Debt acquisition

TCR offers strategic assessment and

evaluations of clients’ debtor books and

can assist with valuation, restructuring,

acquisition and servicing of accounts

receivable portfolios.

Specialised legal collections

Once all means have been exhausted

to collect on arrear accounts using our

pre-legal solutions, it may be time to

engage in more rigorous decisive

legal campaigns.

Third party collections: early to late stage

TCR offers professionalism and

collaboration of seasoned industry experts

renowned for “all-stage” collection

success.

Credit intelligence and strategic consulting

TCR’s dedicated Business Knowledge

division offers clients access to the credit

industry’s top business minds.

Full Service Collections Solutions

Delivering every stage of the collections life cycle.

Using wold-class call centres alongside specialised legal collection services, TCR offers a comprehensive range of receivables

revenue collection solutions, whether one day old or many years older. Using leading collection solutions, TCR manages non-

performing debt, delivering results in any stage of the collections life cycle, simply and conveniently.

35

TCR provides services to a variety of credit providers

Select

clients

$

36

Agency “fee for service” vs purchase book buying “principal” revenue

Agency “Fee for service” revenue

TCR was the first debt buyer in South Africa, and to date is a

dominant player in this market. Purchase books are generally sold

by credit providers after being worked by “fee for service” agents and

approximately 18 months post write off.

Its scale and significant database provides TCR with an inherent

competitive advantage in pricing and onboarding of new books.

Once purchased, all collections accrue to TCR instead of just the

percentage commission as with agency revenue.

Right to Collect: In certain cases, where transfer of ownership of the

book is problematic or prohibited by law, TCR acquires the exclusive

right to collect on a book for a specified period of time, thus providing

the credit provider with a partial upfront recovery in addition to a

recurring recovery percentage over time

TCR offers strategic assessment and evaluation of clients’ debtor books and can assist with valuation, restructuring, acquisition

and servicing of accounts receivable portfolios.

TCR offers a host of outsourced customer management and

collections services from day 1 delinquency reminders for payment

(pre-write off) to legal collection services on long-outstanding

receivables (post-write off).

TCR responds to specific client needs and tailors its campaigns

according to clients’ recovery objectives.

TCR is generally appointed to panels and competes with in-house

collections teams as well as competitors.

TCR earns a pure success based commission on collections.

In some cases TCR works accounts as an agent before they are

sold off by the client

Purchase book buying “principal” revenue

37

Identify clients who TCR would like to collect on behalf of.

Present the business to them and add to pre-approved client

list.

Invitation to bid to be agency collector received by TCR via

an RFP. Formal response submitted with relevant

documents.

Formal response submitted with relevant legal documents.

Client adjudicates tender and provides a score to bidders

and responses.

Price is offered to the client via tender or set by client. Commission rates are

reasonably standardised based on the ageing of the

book.

The client generally appoints a panel with minimum 2 and

maximum 10 collecting agencies.

Client divides book based on the number of collectors on

the panel.

Performance is monitored on an ongoing basis, and clients generally favour successful collectors in the allocation of

matters, subject to concentration risk constraints,

to maximize value.

1

2

3

5

6

4

7

8

Formal and competitive bid for agency collection process

38

Invitation to bid for book received by TCR or book is placed on the market via an

open tender process.

Completion of registration documents including NDA and

submission of regulatory compliance documents.

Receipt of data either via secure FTP site or password encrypted medium. Draft sale agreement is distributed for

comments. due diligence and compliance processes

commence.

Valuation process begins on data received. An initial price

is arrived at using various valuation methodologies.

Valuation meeting is held where the valuation is

disseminated and critically discussed considering risk

factors. A price range is developed.

An investment committee (Invesco) document is

completed with the business case and projected financials

A pre-Invesco meeting is held to discuss the final pricing and a final proposal is completed for discussion at the Invesco.

An Invesco meeting (with shareholders depending on threshold) is held whereby a final decision is made on the

bid price and strategy.

An official bid is placed with the seller either via an auction process or through a formal

written offer document.

Formal and competitive book purchasing process

Sale is concluded with successful bidder and final agreement is concluded between parties.

Purchase price is paid to seller and final data and document is forwarded to purchaser.

1

2

3

5

6

4

7

8

9

39

• In duplum - Anomalies in the In Duplum calculation

• Prescription - Data Integrity & time to prescription & interruption opportunity

• NCA compliance

• All verifiable information

• Data set is complete and has integrity to be able to place reliance on analysis done

• Collection cost

• Contactability

• Link analysis to MDU

• Dependent on type of book

• Valuation relevant

• Looking at key metrics of the book

• Expected average payments

• Expected number of payments

• How credit was extended – credit extension policy

• Current collection strategies

• Enforceability of claims

.

Regulatory

and legal

Credit granting

& recovery

process

Data

Integrity

Debtor

portfolio

analysis

Individual

debtor

Choice of

valuation

methodology

VALUATION

Due diligence processTCRS maintains a Business Knowledge team made up of actuarial scientists, engineers and statisticians who run all our statistical

valuation models on existing books as well as on potential acquisitions. TCRS normally receive a full data set from the books offered

to us for purchase. Once received, the following is considered during the due diligence process:

40

First Principles Approach

Surrogate activation yields are incorporated to estimate the number of accounts that will be activated over the next 𝑥 number of months.

Here, 𝑥 is linked to the average number of months until impairment (for the portfolio under valuation).

Valuation methodologiesValuation is based on the use of surrogates which are based on existing books, segmented to create statistically reliable predictors of the

book being valued. Full investment process involving a formal investment committee that involves senior TCRS executives (as well as

Transaction Capital board members when acquisitions are material).

First Principles (Per Recency, Score etc.)

Similar to the First Principles Approach discussed above, this method utilizes in-house experience of activations and drop-offs.

However, for this method activation yields are segmented based on payment recency or propensity to pay score, obtained from relevant

surrogates.

Markov Chain Legal Model (Legal accounts)

TCRS adopts a time-homogeneous, absorbing Markov chain model as a stochastic measure of how accounts move through the legal

process over time.

Yield Per Recency

Yields from appropriate surrogates are segmented according to payment recency and said yields are projected onto the portfolio under

valuation.

Payer Run-down

When a portfolio consists mainly of accounts with recent payment information (paid in the last 6 months), a Payer Run-down is

implemented to estimate future cash flows.

Amortised Cost

Using actual performances of surrogates, TCRS estimate expected cash flows and GP’s for a 60-month period. This model is based on

a number of Sigmoidal functions.

Transaction Capital Business Solutions (TCBS)

VI

Transaction Capital Business Solutions (“TCBS”)

forms part of Transaction Capital Risk Services,

having started out as the very familiar brand, Rand

Trust, it has been assisting businesses with credit

solutions for over 60 years by developing new cash

flow and credit risk solutions for businesses

TCBS provides its clients with a fully outsourced

debtor administration service. In addition, the

company specializes in advancing working capital

finance to credit approved clients using pre-

determined credit criteria. Funds are advanced to

clients in the form of a purchase price as TCBS

purchases eligible receivables to its clients where

tangible security exists.

As an ancillary product, TCBS also advances

secured loans to its clients with tangible assets,

including the debtor books where applicable, serving

as security for the loans. The ancillary products

constitutes a smaller portion of the company’s

business, being (circa 36%) while invoicing

discounting constitutes the balance (circa 64%).

Accordingly, TCBS owns a debtors book of short-

term discounted invoices and loan receivables which

are secured.

Financial & operational performance

VII

44

TCRS operational performance

RESULTING IN

Transaction Capital

Recoveries SA South Africa

Australia

$30m

Average

collections per

month

Average number of

outbound calls per month

Average number of voice

interactions per month 267 k

Average number of payments

received per month 121 k

1.4m

~267 000

~121 000

R300m

Average

collections per

month

Voice interactions per

month 5.8m

Outbound calls from the

dialer per month 38m

~250 000

Disbursements

for clients each

month

~630 000Debit Orders & Naedo

transactions

processed for clients

each month

~R2.5bn

Of payments

processed for

clients each

month

South Africa

45

TCRS Group Financial

Highlights as at 31 March 2018

Headline Earnings

R119m

Assets under

Management

R51.4bn

Return on Assets

7.9%

Return on Equity

17.7%

Asset turnover ratio

48.9%

Estimated remaining

collections

R2.0bn

Books in total

219

Portfolios acquired for

R218m

17

Notes: Figures include South Africa and Australia0

46

TCRS financial performance as at 31 March 2018

• Core headline earnings ▲28% to R119m

› Headline earnings organic growth ▲>15%²

› Accretive cash deployment converting cash yield

into earnings

• Contingency & FFS revenue

› Growing revenue from adjacent sectors

› Insurance, telecommunications & public sector

contributing 38% of SA agency revenue

(HY17: 20%)

• Cost-to-income ratio improved (excluding the effect

of acquisitions)

› Total costs ▲4%²

› Continued investment in data (MDU), technologies

(dialer & workforce management) & analytics

yielding efficiencies

› Frugal cost management

70 93 119

97

143

186

524

715

938

571

930

1 03

0

81.5 80.381.0

51

44

34

2016 2017 2018

Headline earnings (Rm) Services EBITDA² (Rm)

Total income (Rm) Purchased book debts (Rm)

Cost-to-income (%)¹ Principal/contingency collections revenue split

1.Core EBITDA (excluding Transaction Capital Business Solutions)

2.Excluding the effect of acquisitions

47

TCRS financial performance: purchased book debts

• Current South African economic context favours acquisition of

NPL portfolios

• 17 portfolios acquired for R218m with a face value of R8.3bn

(HY17: 13 portfolios for R210m with a face value of R2.8bn)

• Further investment of R4m in Australian portfolios

• 219 portfolios (including 7 Australian portfolios) owned in total

with a face value of R20.6bn

• Purchased book debts ▲11% to R1 030m (includes Australia of

R9m) (HY17: R930m)

• 2018 ERC of 2.3 times (> internal target of ~2.2 times)

• ERC ▲34% to R1.99bn (includes Australia

of R12m)

• Longevity in the yield of principal portfolios on book, expected to

support future positive performance

• Asset-turnover ratio remains high at 48.9% (diluted by high

value of portfolio acquisitions – including Australia)

Vin

tag

e

ESTIMATED REMAINING COLLECTIONS (ERC)

VINTAGE PERFORMANCE AS AT 31 MARCH 2018

Collection multiple of Rand value deployedto acquire purchased book debt portfolios

2.1

2.1

1.7

1.5

0.8

2.3

2.7

2.7

3.2

2.2

2018

2017

2016

2015

2014

Collections to date (31 March 2018) 96-month ERC

1.4

1.7

1.0

0.6

0.2

TCRS invests in its

peopleEach member of the dynamic and growing team

shares a common passion and commitment for what

TCRS does and the role it plays in touching the lives

of South Africans, through personable care and

attention, an unwavering culture of customer service

and an unbridled obsession for nurturing

relationships.

TCRS recognizes that people provide it with the most

dynamic competitive advantage. The ethos is

positive and inspirational and the people flourish not

only as individuals but also as part of a team.

Individual excellence is nurtured and rewarded.

Performance and incentives are closely aligned with

business strategy and consistently managed at every

level of the business.

Total Headcount

3 349

Black employees

74%

Female employees

63%

Training per employee

22.2hrs

Other TCRS Group Entities

VIII

50

Principa

Experts in using data insights to predict human behaviour and drive the optimal outcome: from identifying the most profitable

customers or account holders to target to identifying the most cost-effective marketing initiative for a defined market segment.

Principa aims to turn data into wisdom that enables companies to work wonders

Data scientists, developers and consultants work together to develop data analytics products and solutions that derive answers,

predictions and recommend actions from large and complex data sets for over 150 companies in 30 countries in Africa, Middle East

and Europe.

• Commitment to confidentiality and integrity

• Proven track record – over 150 blue-chip client references

• Member of the Consumer Credit Association

• Member of the Institute of Credit Management in Southern Africa

• Member of the Transaction Capital Group

Our CustomersSoftwareConsultingData Analytics

51

International and local acquisitions made

• Agency debt collector and insurance claim administrator

• Founded in 1991 in Melbourne Australia

• Acquisition date – 1 January 2017

• Provides customer management solutions to a well-diversified blue-chip client base

within government, insurance, banking & finance, utilities & telecommunications market sectors

• Services include debt recovery solutions, insurance claims recoveries, customer services, & litigation management services

• Offices in Melbourne & Sydney, Australia in addition to a near-shore call centre & corporate services centre in Suva, Fiji

• Employs ~600 staff members

• Rationale:

› Strong entry point into Australian market, earning hard currency based returns

› High quality business generating predictable earnings with high cash conversion rates & strong organic growth prospects

› Australian debt collection industry highly fragmented (with ~20 companies accounting for 85% of the market) providing an opportunity to

expand acquisitively

› Transaction Capital will apply its expertise & capital to the purchase of non-performing loan portfolios in Australia

› Recoveries Corporation’s expertise in insurance recoveries will be applied to Transaction Capital’s fledgling insurance recoveries

business in South Africa

100% OF RECOVERIES CORPORATION GROUP LIMITED

• Value added services focusing on subscription based products

• Founded in 2005

• Acquisition date – 1 December 2016

• Offers proprietary value-added services to mass consumer market on a subscription basis

• Services include administration of RAF claims, COID Act claims & claims against various road agencies & municipalities

• Products typically embedded in other subscription-based products in insurance, banking, motor & retail industries, & are also distributed to

consumers via direct marketing channels

• Rationale:

› Strong entry point into the value added services market in South Africa

› High quality business generating predictable earnings with high cash conversion rates & strong organic growth prospects

› Partnering exceptional entrepreneur to develop the business to its full potential

› Offer Road Cover’s products to mass consumer market through TCRS’s existing banking, retail, insurance, telecommunications clients

› Road Cover’s products can be offered into SA Taxi’s client & commuter base

› Efficiencies achieved with regard to client origination, management (i.e. payment) & collection processes

75% OF ROAD COVER

52

International and local acquisitions made

• Cloud-based accounting service aimed at SMEs

• Founded in 2008

• Acquired 51% of Beancounter on 1 December 2016

• Provides full outsourced accounting, payroll and tax services through “software-as-a-service” technology to SMEs on a monthly retainer basis

• Rationale:

› Early entry into the specialist, cloud accounting services market in South Africa

› Well-positioned with solid organic growth prospects

› Partnering young entrepreneur to develop the business to its full potential

› Augment Transaction Capital Business Solutions’ existing offering to its SME clients

› Working capital funding offered into The Beancounter’s SME client base

MAJORITY SHARE OF THE BEANCOUNTER

• Payroll services outsourcer

• Founded in 2005

• Acquired 100% of Accsys on 1 December 2017

• Accsys is a provider of Human Capital solutions, TCRS believe that there are synergies to be extracted by offering the Accsys’ service to TCBS,

Bean Counter and TC Payment Solutions customers . In addition, TCRS will seek to sell the services of these group entities (TCBS – working

capital finance, Bean Counter – accounting solutions including payroll services, consulting services and time and attendance offerings and TC

Payment Solutions – payment services) to Accsys’ customers.

• TCRS plan to offer a bundled service (incorporating a full product suit with other Group services) to new and existing customers following the

purchase.

• Rationale:

› Group synergies and cross-sell of group services and product solutions into the existing customer base

› Bundle-service opportunities to new and existing customers

100% OF ACCSYS

Growth Opportunities

IX

54

Strategic objectives to achieve long term vision

19

Funding

X

56

Overview of debt funding

Through the TCR operation, TCRS is seeking to continue to increase the number and

size of non-performing loan portfolios it acquires, with a focus on bespoke capital

transactions with targeted clients, to acquire non-performing loan portfolios to deliver

superior risk-adjusted returns. Through its TCBS operation, TCRS will grow the

existing debt and trade finance business offerings.

TCRS 2018 funding target for the next 12 months is approximately R514 million

following R391 million raised in the 2017 financial year. It is anticipated this capital

target will be accessed from various capital pools.

Capital requirements TC group diversification & liquidity overview

Funding philosophy

Diversification of structure

Positive liquidity mismatch as at 31 March 2018

The group’s funding philosophy includes:

Innovative thinking

▪ Innovative thinking is encouraged and cultivated to develop pioneering funding

solutions

Judicious risk mitigation

▪ Optimal liquidity management between asset and liability cash flows

▪ Effective management of interest rate risk, currency risk and roll over risk

▪ Controlled exposure to short term instruments

▪ Diversification by geography, capital pool, debt investor and funding mandate

Engaged debt investor

▪ Recurring investment by debt investors motivated by performance, the ease of

transacting and appropriate risk adjusted returns

▪ Transparent and direct relationships with debt investors where necessary facilitated

by valued intermediaries

Optimal capital structures

▪ Proactively managing valuable capital and funds raised across the group

▪ Bespoke and innovative funding structures to meet the requirements and risk

appetite of a range of debt investors while also targeting an optimal WACC

▪ No cross-default or guarantees between structures

45%

51%

4%On-balance sheet

Securitisation & structured finance

Warehousing facilities

23%

20%

22%

35%Life companies

Banks

DFIs

Asset managers

Diversification of category

-

1 000

2 000

3 000

4 000

5 000

0-6months

6-12months

1-2years

2-3years

3-4years

4-5years

5+years

Assets Liabilities Cumulative

57

TCR Obligor Funding Group Other TCRS Group Entities

Funding structures within the TCRS group

Transaction Capital

Credit Health

Origin Eight Financial Services

MBD Legal Collections

Transaction Capital Recoveries

[TCR]

(87% owned by TCRS)

Transaction Capital

Payment Solutions

[TCPS]

TCBS Obligor Funding Group

Transaction Capital Business

Solutions

[TCBS]

Principa Decisions

Recoveries Corporation

Australia

[RC]

Road Cover

(75% owned by TCRS)

Bean Counter

(51% owned by TCRS)

Mortgage Capital

Transaction Capital Recoveries

Botswana

TCRS raises debt funding from the capital markets primarily for its TCR and TCBS operations in two separate funding structures. The following diagram

details the various entities that make up the group and also indicates which entities form obligors within the TCR and TCBS funding structures. These

obligors provide security to the lenders in each funding structure.

Accsys a Transaction Capita

Compnay

58

TCRS funding structure overview

TCRS offers two main funding structures to meet individual investors’ mandates and risk profiles. Each funding

structure is designed to separately finance the two largest operating entities in the TCRS group – namely TCR

and TCBS. The diagram below summarises these structures:

iThemba Trust

100%

Ordinary

shares

83% Ordinary shares 17% Ordinary

shares

On Balance Sheet

Syndicated loans

On Balance Sheet

Syndicated loans

Deb

t in

ve

sto

rs

Debt arranger Facility agent

SOURCE | Transaction Capital Half Year Results 2018

Debt outstanding as

at 31 March 2018

R413m

Committed unused

facilities as at 31

March 2018

-

R250 m

R500 m

R750 m

R1 000 m

R1 250 m

R1 500 m

-

3

6

9

12

15

2010 2011 2012 2013 2014 2015 2016 2017 2018HY

Debt issued (RHS) # of unique investors

TCR

R527mTBS

R130mTCR

R234mTBS

59

Structural features

Structure type On balance sheet On balance sheet

Listing / credit rating Unlisted / unrated Unlisted / unrated

First issue date 31 July 2006 30 May 2008

Revolving period Open ended Open ended

Final legal maturity date N/A N/A

Investor appetite Local banks, life company & asset managersDevelopment financial institutions, local banks & asset

managers

Capital structureSenior loans < 55%

Equity funding > 45%

Senior loans < 90%

Subordinated funding > 10%

Debt outstanding 31 March

2018R413m R527m

Current funders 2 8

Security SPV Diotrim Proprietary Limited Almemax Proprietary Limited

Facility agent Standard Bank of South Africa Limited Standard Bank of South Africa Limited

Key covenants

Senior debt service cover > 1.5 times

Senior interest cover > 3.0 times

Senior debt to asset < 70%

Equity % of debt > 82%

Senior Net Debt Interest Cover > 1.35 times

Subordinated Debt to Senior Debt > 10%

Senior Net Debt to Portfolio Value < 66%

TCR TCBS

60

The TC group is both locally and internationally funded

TC has traditionally raised funding from a number of banks, institutional investors and asset managers.

TCs current funders include the following:

2014 2005 - 2018 2008 - 2018 2007 – 2008 & 2010

2006 - 2018

2011 - 2018

2016 - 2018

2014, 2016 - 2018

2017

2012, 2014 , 2015 & 2017 -2018

2007 - 20182011. 2013, 2015 -

2018 2015 - 20182017

2010, 2013, 2015 -

2017

2015 & 2016

2013 & 2015

2017

2015 & 2016

2010, 2013 & 2015

2017 2010, 2014 & 2017 2017

2018

61

Contact List

SA TaxiTransaction Capital Risk Services

Dave McAlpin

Chief Executive Officer

Phone: +27 (0)11 560 6262

Email: [email protected]

Robert Amoils

Chief Financial Officer

Phone: +27 (0)11 560 6110


David Hurwitz

Chief Executive Officer

Phone: +27 (0) 11 049 6733


Phillipe Welthagen

Investor relations

Phone: +27 (0) 11 049 6729


Mark Herskovits

Capital Markets Director

Phone: +27 (0)11 550 9303


Matthew Simpkins

Capital Markets | Deal Origination Head

Phone: +27 (0)11 592 8649


Mohammed Antuley

Capital Markets | Senior Deal Originator

Phone: +27 (0)11 550 9554


Megan Morreira

Capital Markets | Funder Relations

Phone: +27 (0) 11 592 8409


Head Office

342 Jan Smuts Avenue

Hyde Park

Johannesburg

Head Office

230 Jan Smuts Avenue

Dunkeld West

Johannesburg

Head Office

179 15th Road

Randjespark

Midrand, Johannesburg

Transaction Capital

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SA Taxi Development Finance (Pty) Ltd is a registered Developmental Credit Provider : NCRCP4754SA Taxi Finance Solutions (Pty) Ltd is a registered Developmental Credit Provider : NCRCP4373SA Taxi Securitisation (Pty) Ltd is a registered Developmental Credit Provider : NCRCP2617Potpale Investments (Pty) Ltd is a registered Developmental Credit provider : NCRCP6238SA Taxi Protect (Pty) Ltd is a registered Financial Services Provider : FSP29354

transaction capital risk services funder prospectus · sanlam capital markets) acquires equity in...

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