EPY Easy Peasy Yield ++ Growth Potential, page-117

In addition to the interview with Chris Judd, Flinders highlight the company in their latest online newsletter:

Investment Case Key Questions

1. Growth Opportunity: Invoice, trade and equipment finance companies are growing strongly as banks have focussed
on mortgage lending and have left these ‘niche’ business products to others. There are relatively few companies with
the capital and skill to successfully provide these services efficiently and well. Earlypay has market leading
technology and an experienced team of credit assessors which has seen it gain market share. Adding equipment and
trade finance to their offering has increased their growth opportunities with both new and existing clients. Invoice
finance is growing its market share of business lending and there is still a long way to go. It has less than half the
market share than it does in either the US or UK.

2. Management: CEO Daniel Riley and COO James Beeson are experienced operators and have navigated the
company exceptionally well through Covid and are now growing the company strongly as the economy recovers.
They are conservative with a strong focus on shareholder returns and risk. Overhauling their credit and customer
service systems in recent years has given them a good lead on their competition and helped lift their market share
with finance brokers and in the direct market.

3. Financial Strength: Lending growth absorbs capital. Earlypay has a strong balance sheet following a capital raising
in 2021 but also generates capital due to its strong profitability. It also has access to a growing warehouse funding
facility with large local banks. These facilities and other debt funding instruments put into place over the past two
years are also dropping the company’s cost of funding new business, leading to higher margins.

4. Risks: Invoice lending is inherently lower risk than personal or business lending against cashflow. There is security
and it is made up of many regular short-term transactions. Risk is identified early. Equipment finance does need
greater assessment, but machinery and vehicles are some security. Rising interest rates are passed on quickly and
tend to improve margins as the cost of funding facilities lag.

5. Valuation: our Assessed Company Valuation (ACV) is currently $0.91 providing 98% upside over the current share
price. The company has over 20% compound EPS growth over the next three years, pays a healthy yield and is a key
player in an expanding market. While it is one of the smallest companies in the Flinders portfolio, we see it as a great
growth opportuni