Project Lion

Concept Deck

30 January 2019
 STRICTLY CONFIDENTIAL
Introduction and Background
Pursuant to initial discussions, the management team of NAZA has requested for a Concept Paper on the potential fleet outsourcing and
management between KLEZCAR and NAZA Corporation

On 20 December 2018, KLEZCAR, a car rental provider, met with the management team of Naza Corporation (“NAZA”) on a potential fleet outsourcing and management between
KLEZCAR and NAZA;
 We understand that as at today NAZA has a fleet size of 600 vehicles being utilised as company cars.
 After 2 years, the fleet is sold at a significant discount to selected dealerships resulting in huge financial loss to NAZA.
 The management team of NAZA is keen to explore a potential partnership with KLEZCAR on the fleet outsourcing and management for the 600 vehicles and has requested for
KELZCAR to prepare a concept paper on the said proposal.

Naza’s Existing Arrangement Potential Fleet Outsourcing and Management

After 2 year period, NAZA

Naza provides executives Naza provides executives
2 outsource the vehicles to with company car for a
1 with company car for a KLEZCAR for period of 2 years 1
period of 2 years period of 2 years

3 4
KLEZCAR utilise Profit sharing on
After 2 year period, NAZA sells NAZA sells cars to partner
the vehicles for NAZA’s vehicle that
2 fleet to selected dealership at a dealership after expiry of 2
its car rental generate income
significant discount 5 years fleet outsourcing
business and management between
KLEZCAR and NAZA

Slide 2 of 11
 STRICTLY CONFIDENTIAL
Commercial Proposition
KLEZCAR utilise NAZA’s vehicles for its car rental business during the 2 year period for a profit share

Structure for Fleet Outsourcing and Management Key Terms of Fleet Outsourcing and Management

After 2 year period, NAZA

Services Proving management and rental services of NAZA Vehicles to third
Naza provides executives party renters on a best effort basis
2 outsource the vehicles to with company car for a
KLEZCAR for period of 2 years 1
period of 2 years
Tenure 2 Years + Option to renew 1 year + 1 year1
(6 months trial period at the beginning of term)
3 4
KLEZCAR utilise Profit sharing on Cost Maintenance, insurance and marketing costs to be deducted from
NAZA sells cars to partner rental proceeds
the vehicles for NAZA’s vehicle that
dealership after expiry of 2
its car rental generate income
5 years fleet outsourcing  Maintenance to be performed at designated NAZA service
business centers;
and management between
KLEZCAR and NAZA  NAZA to bear full insurance cost during 6 month trial period but
will be reimbursed from rental received

Profit Sharing % of profit share of net rental proceeds, i.e. after deducting
Maintenance, insurance and marketing costs
 NAZA : 70%
 KLEZCAR : 30%

Slide 3 of 11
 STRICTLY CONFIDENTIAL
Existing Arrangement : Financial Illustration
Existing arrangement lead to huge financial loss to NAZA

Assumptions for NAZA’s Existing Arrangement Illustration of Financial Impact for NAZA’s Existing Arrangement

Figures in RM M  Year 1 Year 2 Year 3 Year 4 Cumulative

Fleet Size 600
Profit and Loss Statement:
Depreciation expense (12.0) (12.0) - - (24.0)
Initial Fleet Cost RM100,00 per vehicle
Gain/Loss from Sale of Fleet - (12.0)(1) - - (12.0)
Total: (12.0) (24.0) - - (36.0)
Depreciation 5 years (RM 12M p.a.)
Cash Flow Statement:
Year 1: 50% Sale of Assets - 24.0 - - 24.0
Resell Discount to Year 2: 60%
Partner Dealership
Year 3: 70% Balance Sheet:
Book Value of Fleet 48.0 36.0 - -

 At existing arrangement, NAZA is incurring RM12.0m in depreciation expense per annum

­ RM 24.0m in total depreciation cost incurred during the 2 year period.

 NAZA then sells the fleet at significant discount after 2 year period resulting in loss in NAZA’s financial statement and receives RM 24.0M proceeds from the disposal

Notes:
(1) Assuming the fleet is sold to Partner Dealership at the end of Year 2 at RM24m and Vehicle’s Book Value is RM36m
(2) The projected figures for the fleet management operations is for illustration purposes only
Slide 4 of 11
 STRICTLY CONFIDENTIAL
Fleet Outsourcing & Management : Financial Illustration (1/2)
The potential fleet outsourcing and management between NAZA and KLEZCAR could potentially reduce NAZA’s financial loss and
provide additional income stream

Key Assumptions for KLEZCAR’s Proposal Illustration of Financial stream to NAZA from KLEZCAR’s Proposal
Fleet Size 600
Year 3
Initial Fleet Cost RM100,00 per vehicle
Figures in RM M  Year 1 Year 2 (Start of Operation) Year 4 Cumulative

Depreciation 5 years (RM 12M p.a.)

Revenue: - - 27.6 27.6 55.2
Year 1: 50%
Maintenance Cost: - - (4.1) (4.1) (8.3)
Year 2: 60%
Resell Discount to
Year 3: 70% Insurance Cost: - - (2.8) (2.8) (5.5)
Partner Dealership
Year 4: 80%
Year 5: 90% Marketing Cost: - - (2.8) (2.8) (5.5)

Avg. Daily Rental Price RM180 Profit: - - 17.9 17.9 35.9

Avg. Utilisation 70% Profit Margin (%) - - 65% 65% 65%

15% of sales based on fixed daily To NAZA - - 12.6 12.6 25.1
Maintenance Cost
rental price of RM180

Insurance 10% of revenue To KLEZCAR - - 5.4 5.4 10.8

Marketing Cost 10% of revenue
 NAZA to potentially receive annual income stream of RM 12.6M
­ Total profit sharing of RM 25.1M throughout the 2 year arrangement

Note: The projected figures for the fleet management operations is for  Furthermore, NAZA to receive additional income from maintenance fees at designated NAZA service
illustration purposes only centres
Slide 5 of 11
 STRICTLY CONFIDENTIAL
Fleet Outsourcing & Management : Financial Illustration (2/2)
The potential fleet outsourcing and management between NAZA and KLEZCAR could potentially reduce NAZA’s financial loss and
provide additional income stream

Illustration of Financial Impact from KLEZCAR’s Proposal

Figures in RM M  Year 1 Year 2 Year 3 Year 4 Cumulative

Profit and Loss Statement:
Depreciation expense (12.0) (12.0) (12.0) (12.0) (48.0)
Gain/Loss from Sale of Fleet - - - - -
Profit Share - - 12.6 12.6 25.1
Total: (12.0) (12.0) 0.6 0.6 (22.9)

Cash Flow Statement:

Sale of Assets - - - 12.0 12.0
Profit Share - - 12.6 12.6 25.1
Total: - - 12.6 24.6 37.1

Balance Sheet:
Book Value of Fleet 48.0 36.0 24.0 12.0

 NAZA continues to incur RM 12.0M in depreciation expense throughout arrangement period with KLEZCAR.
­ RM 48.0M in total depreciation cost incurred throughout 4 year period.
­ Potential RM 12.6M in recurring income during the 2 year arrangement period to offset depreciation cost.

 NAZA to gain RM 12.0M from sale of assets.

­ NAZA does not incur loss or minimal loss in its Financial Statement.
­ Loss in proceeds from sale of assets to be offset by potential income from profit share.

Note: The projected figures for the fleet management operations is for illustration purposes only
Slide 6 of 11
 STRICTLY CONFIDENTIAL
Fleet Outsourcing & Management : Potential Benefits for NAZA
Potential reduction in the loss of RM 5.9M (16.5%) and gain in cash from profit share of RM6.0m over the arrangement period

Side by Side Cumulative Comparison:

Potential reduction of
RM 13.1M (36.4%) Figures in RM M
Existing Potential Fleet Potential reduction of
Arrangement: Management: RM 13.1M (36.4%)
 Additional
Profit and Loss Statement: depreciation expense
Depreciation expense (24.0) (48.0) is offset by profit
share
Gain/Loss from Sale of Fleet (12.0) -  Minimal to no loss
from sale of fleet
Profit Share - 25.1
Total: (36.0) (22.9)

Potential RM 13.1M
Potential Cash Gain (RM M) Cash Flow Statement: gain in cash from profit
40.0 37.1 Potential gain of Sale of Assets 24.0 12.0 share with room for
35.0
RM 13.1M growth
30.0 Profit Share - 25.1
25.0 25.1 (54.6%) in Cash  Reduction in proceeds
20.0
15.0
Total: 24.0 37.1 from sale of assets to
10.0 24.0
12.0
be offset by profit
5.0
0.0 share
Cash Cash Balance Sheet:
(Fleet Management) (Current Arragement)  Increase in Cash NPV
Book Value of Fleet 36.0 12.0
Sale of Vehicles Profit Share

NAZA to potentially reduce financial loss and gain recurring income through Fleet Management with KLEZCAR

Slide 7 of 11
 STRICTLY CONFIDENTIAL
Fleet Outsourcing & Management : Breakeven Analysis
KLEZCAR will ensure on a best efforts basis that breakeven point is met

Breakeven Point on NAZA’s Profit & Loss Statement Breakeven Point on Fleet Outsourcing & Management Operations

Daily Rental Price Sensitivity on Breakeven Point Daily Rental Price Sensitivity on Breakeven Point
16.0 14,000,000.0
11,804,100.0
13.4 12,000,000.0
14.0 12.6 Min RM 33 daily rental
11.7 9,351,300.0
12.0 10.8
10,000,000.0 price to potentially
9.1
10.0 8,000,000.0 recoup direct cost 6,898,500.0
10.0
8.3 6,000,000.0 incurred 4,445,700.0
8.0
Min RM 173 daily rental price 4,000,000.0
1,992,900.0
6.0 NAZA to potentially continue to enjoy to offset additional RM 12M 2,000,000.0
4.0 loss reduction on a cumulative basis depreciation expense incurred 0.0
-459,900.0
despite lower daily rental price 10
-2,000,000.0 -2,912,700.0
30 50 70 90 110 130
2.0

0.0 -4,000,000.0
130 140 150 160 170 180 190 1 2 3 4 5 6 7

Depreciation Expense Profit Share Daily Rental Price Profit / Loss on operation

Figures in RM M  Year 1 Year 2 Year 3 Year 4 Figures in RM M  Year 1 Year 2 Year 3 Year 4

Profit and Loss Statement: Profit and Loss Statement:

Revenue - - 5.2 5.2
Depreciation expense (12.0) (12.0) (12.0) (12.0)
Maintenance Cost - - (4.1) (4.1)
Gain/Loss from Sale of Fleet - - - -
Insurance Cost - - (0.5) (0.5)
Profit Share - - 12.0 12.0 Marketing Cost - - (0.5) (0.5)
Total: (12.0) (12.0) 0 0 Total: - - 0 0

Historically, KLEZCAR has been able to achieve a daily rental price of greater than RM150 at 70% utilisation rate

Slide 8 of 11
 STRICTLY CONFIDENTIAL
Fleet Outsourcing & Management : Sensitivity Analysis
Changes in daily rental price and utilisation rate have a minimal impact on NAZA’s total loss reduction but it’s sensitive to NAZA’s Cash NPV

Daily Rental Price and Utilisation Sensitivity on Total Loss Reduction and Cash Gained

 Minimal impact on NAZA’s total loss reduction and cash

 Sensitivity in RM M Daily Rental Price gained from drop in daily rental price and utilisation rate

  120 130 140 150 160 170 180 190 200 ­ Despite a potential drop in daily rental price and
utilisation rate NAZA will be able to continue to enjoy a
loss reduction and increase in cash in their financial
50.0% -1.4 -0.2 1.0 2.3 3.5 4.7 5.9 7.2 8.4 statements by RM 2.2 – 26.5M on a cumulative basis

 KLEZCAR has historically achieved greater than RM150 daily

60.0% 0.7 2.2 3.6 5.1 6.6 8.1 9.5 11.0 12.5
Utilisation

rental price and an average of 70% utilisation rate on similar

models
70.0% 2.8 4.5 6.2 8.0 9.7 11.4 13.1 14.8 16.5 ­ KLEZCAR will ensure on a best efforts basis that NAZA’s
fleet achieves savings and increase in cash

80.0% 4.9 6.9 8.8 10.8 12.8 14.7 16.7 18.7 20.6

Slide 9 of 11
 STRICTLY CONFIDENTIAL
Value Proposition to NAZA
NAZA to potential gain financial benefits and qualitative benefits through Fleet Outsourcing & Management

 Additional income stream to NAZA from profit sharing with KLEZCAR from
rental of 600 vehicles;
 NAZA bears insurance cost initially but it can be reimbursed from KLEZCAR if
there is sufficient income generated from the rental
Recurring Income and Reduce the ­ NAZA also receives income from maintenance of fleet outsourced to
Loss on Sale of Vehicles KLEZCAR
 Positive impact to NAZA’s Profit and Loss Statement if:
­ Profit share annually > Depreciation expense annually
­ Sale of Vehicles > Book Value after expiry of arrangement

 Marketing and branding of NAZA’s vehicles in secondary market

Amplify Brand Visibility ­ Customers seeking for test drive can rent NAZA’s vehicles for an
extended period of time

Slide 10 of 11
 STRICTLY CONFIDENTIAL
Way Forward on the Proposal
KLEZCAR is requesting for details information to refine the Fleet Outsourcing & Management proposal

1) Subsequent to the execution of the NDA, NAZA to provide KLEZCAR the following information:
 Number of cars available and timeline of their availability
 Details information of the car – i.e. models, production year, current mileage, maintenance records etc.
 Financial information of the car – i.e. initial cost, current book value etc.
 Potential resale price of cars – i.e. by end of Year 2 and Year 4
 Company discount rate for resale price of cars (if any)
 Other relevant information to refine the proposal

2) KLEZCAR to refine the proposal based on information provided by NAZA

3) NAZA to get an preliminary approval for the commencement of trial period based the following key conditions:
 Contract terms: 6 months trial period with option to continue
 No cost and recourse during trial period to test market acceptance of NAZA’s vehicles
 Maintenance, insurance and marketing costs to be deducted from rental proceeds
 % of profit share of net rental proceeds, i.e. after deducting Maintenance, insurance and marketing costs
 NAZA : 30%
 KLEZCAR : 70%

Slide 11 of 11