Change Financial : Quarterly update & Appendix 4C

For personal use only

ASX Announcement

31 January 2022

December 2021 Quarterly Update and Appendix 4C

FY2022 Q2 Highlights

• Revenue in December quarter totalled US$1.8 million (A$2.5 million)
• Contracted Annual Recurring Revenue (ARR) increased to US$4.7 million (A$6.5 million)
• Strong pipeline of contracted project work which delivers revenue in addition to ARR
• Receipts from customers totalled US$1.5 million (A$2.0 million) for the quarter
• Cash position of US$1.6 million (A$2.2 million) as at 31 December 2021
• New non-dilutive unsecured term facility of A$1.5m entered into post end of Q2
• Vertexon customer ready platform delivered on schedule and within budget
• PaySim Application Programming Interface (API) complete and ready for Q3 launch
• Launched the new branding for Change's two core products and new company website
• Continued growth in sales pipeline and secured key contracts which will deliver future revenue
• Commenced onboarding first Payments as a Service (PaaS) client with targeted launch in Q3 FY22

31 January 2022 Change Financial Limited (ASX: CCA) ("Change" or "the Company"), an Australian based global fintech providing tailored payments solutions, card issuing and testing to banks and fintechs, is pleased to release an update on the Company's business activities along with the Appendix 4C for the quarter ended 31 December 2021 (Q2 FY22).

Change CEO Alastair Wilkie commented, "We have made fantastic progress during the quarter as the Change team continued to focus on executing our strategic plan. We achieved key milestones including the launch of our Vertexon platform, completion of our PaySim API and launch of our new website and product branding which are driving increased activity with our sales team and engagement with our customers."

"We continued to grow our sales pipeline and see these opportunities progress through the sales funnel. During the quarter, we converted a significant number of opportunities into contracted revenue which will be realised in future quarters.

"Our team made significant progress onboarding our first PaaS client in the US which is expected to go live this quarter. We also have interest from several new and existing clients for our SaaS offering in the US, Oceania and LATAM."

"We released the beta of PaySim API in Q2 and successfully tested with a Big 4 Bank in Australia. We are proud to have PaySim API available for general release to market in Q3. We are already seeing strong demand from new and existing clients to leverage the API to improve their payments testing automation and integration."

Cash Flow and Financial Update

Revenue for the December quarter was US$1.8 million (A$2.5 million1) while receipts from customers totalled US$1.5 million (A$2.0 million), compared to US$2.8 million (A$3.7 million) for the previous quarter. This reduction in cash receipts relative to the prior quarter was due to two key factors: strong cash collections in Q1 of both current and prior period invoiced revenue, and lower customer invoicing in Q1 relative to Q4 FY21 which delivered lower cash receipts in the quarter.

There was a significant increase in customer invoicing in Q2, particularly in December, which is expected to drive cash collections in Q3.

Change's cash position at the end of the quarter was US$1.6 million (A$2.2 million), compared to US$3.5 million (A$4.7 million) from the previous quarter. Cash operating costs remained broadly in line with the previous quarter as the Company continued to execute the Go-to-Market strategy to drive growth. In addition, the Company entered into an unsecured loan facility to assist funding the ongoing operations and future growth of the business. This facility was finalised following the end of the quarter as per the announcement dated 31 January 2022.

Change's contracted ARR increased to US$4.7 million (A$6.5 million) with the signing of the new Payments as a Service client in the US (as announced on 13 October 2021). The Company maintains a healthy contracted pipeline of project work which it earns above ARR. For the first half of FY22, approximately 55% of revenue was derived from recurring income streams whilst approximately 45% was derived from project and licence income (i.e. non- recurring income). Further details on Change's sales pipeline are provided below.

• AUD/USD = 0.72

CHANGE FINANCIAL LIMITED WEBSITE www.changefinancial.com ACN 150 762 351

REGISTERED ADDRESS: Level 11, 82 Eagle Street, Brisbane QLD 4000 POSTAL ADDRESS: c/o Change Financial Limited, GPO Box 5011, Brisbane QLD 4001

For personal use only

ASX Announcement

31 January 2022

ARR Run Rate

Contracted (US$ million)

Q1 and Q2 FY22 Contracted ARR Run Rate includes annual minimum fee commitments from new US client announced on 13 October 2021 with revenue expected to commence in Q3 FY22.

The Company also notes that it earns revenue in multiple currencies from its global customer base. The Company notes that the majority of revenue is invoiced in USD, AUD and NZD and therefore the Company's reported results will be impacted by currency fluctuations. To assist users of the reports the Company will include the applicable exchange rates.

Business Activities

Completed Key Product Development and Launched Vertexon and PaySim products

During the quarter Change completed key product development and officially launched the new branding for its two core products:

Vertexon - accelerates growth and scalability through providing card and payments solutions to banks and fintechs around the world. Through the unifying of cards, payments and processing technologies, Vertexon delivers a modern digital solution for prepaid, debit and credit cards. Change launched the Vertexon SaaS platform on Amazon Web Services (AWS) in Sydney to service banks and fintechs in the Oceania region. The multi-tenancy design of the of the platform is highly scalable and the seamless integration enables it to be easily implemented in multiple geographic markets in a matter of days. The customer ready platform was delivered on schedule and within budget. Change's sales team has generated several new opportunities across our key markets for our PaaS solution.

Read more about Vertexon at Change's website: https://changefinancial.com/vertexon/

PaySim - helps banks and fintechs accelerate their development and product release cycles through automated payment testing solutions. During the quarter, Change completed the beta phase for the new PaySim Application Programming Interface (API). The API enables clients to automate load, stress and regression testing to produce comprehensive results reporting and is the foundational component of PaySim's software as a service offering. Over the past 15 months, Change has been investing in new products, features and development, culminating in the release of PaySim. PaySim is used by five of the top 10 digital payments companies2 globally.

Additionally, Change launched its new website during the quarter. The new website, combined with increased public relations activities, complements the release of the new Vertexon and PaySim brands to drive market awareness and sales growth.

Read more about PaySim at Change's website: https://changefinancial.com/paysim/

Sales Pipeline Growth

During the quarter, Change continued to focus its efforts on increasing opportunities in the pipeline. The sales team has continued to deliver a significant increase in opportunities quarter on quarter, with a total of 158 opportunities at the end of December across both the Vertexon and PaySim products.

Whilst the pipeline of opportunities continues to grow, Change has successfully closed several substantial opportunities during the quarter. Of particular note are the following significant client wins:

• https://www.emergenresearch.com/blog/top-10-leading-digital-payment-companies-in-the-world

CHANGE FINANCIAL LIMITED WEBSITE www.changefinancial.com ACN 150 762 351

REGISTERED ADDRESS: Level 11, 82 Eagle Street, Brisbane QLD 4000 POSTAL ADDRESS: c/o Change Financial Limited, GPO Box 5011, Brisbane QLD 4001

CHANGE FINANCIAL LIMITED WEBSITE www.changefinancial.com ACN 150 762 351

REGISTERED ADDRESS: Level 11, 82 Eagle Street, Brisbane QLD 4000 POSTAL ADDRESS: c/o Change Financial Limited, GPO Box 5011, Brisbane QLD 4001

CHANGE FINANCIAL LIMITED WEBSITE www.changefinancial.com ACN 150 762 351

REGISTERED ADDRESS: Level 11, 82 Eagle Street, Brisbane QLD 4000 POSTAL ADDRESS: c/o Change Financial Limited, GPO Box 5011, Brisbane QLD 4001