B2 Impact Asa · OSL:B2I
B2 Impact Asa — B2Holding — Debt Investor Presentation (September 2022)
63 slides from B2 Impact Asa's debt investor presentation, Sep 12, 2022
Slide 1: Investor presentation – Senior Unsecured Bond Issue
Investor presentation Senior Unsecured Bond Issue 12 September 2022 Photo: Natalya Letunova / Unsplash
Slide 2: Important information and disclaimer (1/3)
Important information and disclaimer (1/3) This investor presentation, together with its enclosures and appendices (collectively, the other person in relation to the accuracy or completeness of any such information, and neither the "Presentation"), has been produced by B2Holding ASA (the "Company" o
Slide 3: Important information and disclaimer (2/3)
Important information and disclaimer (2/3) The merits or suitability of investing in any securities previously issued or issued in the future by The Bonds have not been, and will not be, approved by the United States Securities and Exchange the Company for any investor's particular situation must be
Slide 4: Important information and disclaimer (3/3)
Important information and disclaimer (3/3) Please see the application form for further applicable selling and transfer restrictions. Any investment in the Company involves inherent risks and is suitable only for investors who understand the risks associated with this type of investment and who can a
Slide 5: Summary of risk factors (1/3)
Summary of risk factors (1/3) Investing in bonds and other securities issued by the Company involves inherent risks, and a number of risk factors may adversely affect the Company. Potential investors should consider, among other things, the Risk Factors set out in this Presentation before making an
Slide 6: Summary of risk factors (2/3)
Summary of risk factors (2/3) RISKS RELATED TO THE BUSINESS IN WHICH WE OPERATE (CONTINUATION) – We may not be able to hire and retain enough sufficiently trained personnel to support our operations. – Increases in labour costs, potential labour disputes and work stoppages could negatively affect ou
Slide 7: Summary of risk factors (3/3)
Summary of risk factors (3/3) RISKS RELATED TO THE OFFERING AND THE BONDS – The Company is a holding company and is dependent upon cash flow from its subsidiaries to meet its obligations, in general and under the Bonds. – Risk of being unable to pay interest and principal on its indebtedness, includ
Slide 8: Agenda
Agenda 1. Transaction overview 2. Company overview 3. Market overview 4. Financial performance 5. Summary 6. Risk factors 7. Appendix
Slide 9: Transaction overview
Transaction overview B- HOLDING’
Slide 10: Transaction summary
Transaction summary Background and sources & uses Group structure and pro forma capital structure1 – B2Holding ASA (the “Issuer” or the “Company”) is a debt solutions B2H03-05 Sr. unsec. EUR 600m Joint venture provider specialized in investing in, and the recovery of, non- B2Holding ASA (Norway, Osl
Slide 11: B2Holding ASA with improved rating by Moody's and S&P
B2Holding ASA with improved rating by Moody’s and S&P – As of November 2021, upgraded outlook from both rating agencies: • S&P upgraded from Stable to Positive • Moody’s upgraded from Negative to Stable – Further improvement in rating expected should the Group succeed in: • Meeting its financial tar
Slide 12: Summary of key terms and conditions for the unsecured bond
Summary of key terms and conditions for the unsecured bond Issuer: B2Holding ASA Status of the bonds: Senior unsecured CFR (S&P / Moody’s): B+ / Ba3 Initial Issue Amount: EUR 150 million Maximum Issue Amount: EUR 300 million Purpose of the Bond Issue: Refinancing and general corporate purposes Issue
Slide 13: Today's presenters
Today’s presenters Erik Johnsen André Adolfsen Rasmus Hansson Chief Executive Officer Chief Financial Officer Head of Commercial Strategy & Investor Relations 13 B2Holding ASA Bond Investor Presentation, September 2022 Confidential
Slide 14: Investment highlights
Investment highlights Attractive industry – Attractive industry with significant barriers to entry with sound market – Expected increased supply from vendors represent growth opportunities going forward outlook – Favorable market outlook with increased demand for B2H’s services across geographies Le
Slide 15: Company overview
Company overview B- HOLDING’
Slide 16: This is B2Holding
This is B2Holding NOKm Q2’22 Q2’21 Change % Net revenues 748 756 -1% Adjusted EBIT 330 321 3% NOK Adjusted EBIT Margin 42% 43% 0% 19.9bn EBIT 139 341 -59% ERC 19,867 20,440 -3% Gross Collection 1,245 1,407 -12% #FTEs 1,919 2,102 -9% 22 platforms in Europe with varied maturity and #Claims (millions)
Slide 17: Strategic journey – New B2Holding is taking shape
Strategic journey – New B2Holding is taking shape – Detailed underwriting carried out by – Senior financing agreement with PIMCO – Closing of funding from PIMCO reputable investment firms signed – Sale of DCA Bulgaria as an – In parallel, the secured servicing team – Initiated legal segregation of a
Slide 18: Improved scalability across our markets
Improved scalability across our markets Secured markets (Veraltis Asset Management) Unsecured markets FTE development1) FTE development 18 B2Holding ASA Bond Investor Presentation, September 2022 1) FTEs for Veraltis Asset Management includes 172 FTEs from Bulgaria as Q2’22 Confidential
Slide 19: Proven ability to deliver on set targets
Proven ability to deliver on set targets Targets Achievements Strong collections1) Cash Collections (NOKm) 1,229 1,214 1,246 – Refinance RCF 1,191 1,136 – Repayment of existing ✓Improved flexibility and liquidity due to: bridge facility – PIMCO funding – Extension of maturity – RCF extension profile
Slide 20: ESG commitment showing results
ESG commitment showing results Substantially improved the ESG Risk rating from Sustainalytics, ESG Risk rating ranking us at the top of our industry and within the top 1 % of rated companies globally – B2Holding is considered to be at negligible ESG risk: 9.3 Negligible Risk • Low exposure of materi
Slide 21: Highlights Q2 2022
Highlights Q2 2022 Operations – Unsecured collections and secured recoveries above the latest forecast – Positive trend for REO sales continued Effectiveness & efficiency – In the final stages of the strategic restructuring period – Continue to improve scalability across our markets Investments – In
Slide 22: Market overview
Market overview B- HOLDING’
Slide 23: NPL industry – an important part of the economic system
NPL industry – an important part of the economic system Regulated business, EU regulators Regulators moving towards more standardized framework “Solving the problem of Non-Performing Loans is Helping consumers manage Consumers NPL Banks not just god for banks, it their debt benefits all of us” - Eur
Slide 24: Overview of the European NPL market
Overview of the European NPL market B2Holding covers ~75% of the total EU NPL market Total volume of bank NPLs in Europe exceed EUR 400bn. Three largest markets account for +60% as of Q1’22 110 NPLs (EURbn) NPL ratio(%) 81 7% 60 4% 4% 4% 4% 4% 3% 3% 3% 3% 3% 3% 30 28 2% 2% 2% 1% 2% 2% 2% 15 1% 1% 1%
Slide 25: Market activity and volumes are up
Market activity and volumes are up Active quarter with increase in number and volume of deals evaluated Significant increase in portfolios acquired versus prior quarter and same quarter last year At the end of second quarter, NOK 1bn were invested in new portfolios and NOK 350m committed for the rem
Slide 26: Financial performance
Financial performance B- HOLDING’
Slide 27: Second quarter 2022 summary
Second quarter 2022 summary Quarterly summary Comments NOKm Q2 2022 Q2 2021 %Δ H1 2022 H1 2021 LTM Q2 2022 – Strong underlying collection Cash collections 1,246 1,229 1% 2,459 2,530 4,787 performance • Unsecured collections at 106% Net revenues 748 756 -1% 1,464 1,518 2,983 • Secured collection at 2
Slide 28: Collection performance and improvements
Operational improvements Collection performance and improvements Unsecured collection performance, NOKm REOs sold, NOKm Collection Performance %1) Book Value Sales Proceeds 934 949 926 +32% 853 848 106% 239 102% 103% 102% 102% 100% 181 +34% 103 77 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q2’22 H1’22 Secured re
Slide 29: Improved cash earnings, investment capacity and deleveraging
Investments & Capital funding Improved cash earnings, investment capacity and deleveraging Cashflow Q2 2022 Additional investment capacity NOKm NOKm 758 552 516 503 225 479 949 220 237 239 226 78 -758 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Leverage Lev.ratio 394 -22 2.5x 2.4x 2.4x 2.3x 2.4x -169 225 Cash Wor
Slide 30: Strong cash collections and stable underlying cost base
Effectiveness & efficiency Strong cash collections and stable underlying cost base Cash collections (constant FX), NOKm Stable development in cost to cash revenue, NOKm – Strong collection performance in unsecured despite increased – Cash revenues and Cash EBITDA1) have remained stable over the year
Slide 31: Portfolio investments and Estimated Remaining Collections (ERC)
Portfolio investments and Estimated Remaining Collections (ERC) Cash collection, NOKm Portfolio investments in Q2 NPL REOs Cash collection Cash EBITDA Geographical distribution Asset class distribution WE SEE CE Unsecured Forward Flow 1,229 1,246 3% 1,214 0% 1,191 20% 4% 1,136 NOK 48% NE NOK 758m 75
Slide 32: New capital structure post funding
New capital structure post funding Debt maturity profile, EURm Improved flexibility and liquidity Outstanding bonds Utilised RCF Utilised SFA – Refinancing of the RCF1 was completed in Q2 Treasury bonds Unutilised RCF Unutilised SFA – Senior Financing Agreement closed I+2.9- E+4.25% E+4.75% E+6.35%
Slide 33: Financial risk management
Financial risk management Currency risk Net borrowing basket – Translational balance sheet exposure to main currencies hedged by Currency derivatives – Currency derivatives are used to: • Obtain a balanced currency basket • Designed to utilize zero interest cap in RCF NOK 9,070m – Cashflow hedging n
Slide 34: Summary
Summary B- HOLDING’
Slide 35: Key takeaways
Key takeaways Collections and Improved Increased market Strong cash flow Closed senior recoveries scalability across activity and and proven financing continue on a markets volumes ability to agreement and positive trend deleverage extended RCF 35 B2Holding ASA Bond Investor Presentation, September
Slide 36: Risk factors
Risk factors B- HOLDING’
Slide 37: Risk factors (1/9)
Risk factors (1/9) An investment in the Bonds involves risks. If any of the events described below actually occurs, our business, results of future we will be able to obtain interim funding by making other borrowings. A lack of cash flow could operations, financial condition or prospects could be ma
Slide 38: Risk factors (2/9)
Risk factors (2/9) Our operations are highly dependent upon access to, and the functioning and integrity of, our core IT applications, such as personal information of customers, including names and account numbers, locations, contact systems and infrastructure. information and other account specific
Slide 39: Risk factors (3/9)
Risk factors (3/9) The value of our existing portfolios may deteriorate, or we may not be able to collect sufficient amounts on our results of operation and financial condition. portfolios to take advantage of opportunities for portfolio purchases as they arise in the market. Failure to successfully
Slide 40: Risk factors (4/9)
Risk factors (4/9) Our senior management team members and key employees are important to our continued success and the loss of A material failure in banking systems could negatively affect our business. one or more members of our senior management team or one or more of our key employees could have
Slide 41: Risk factors (5/9)
Risk factors (5/9) Our collections may decrease and/or the timing on when we collect may be delayed if the number of consumers We are subject to prevailing tax laws in every jurisdiction we operate and there can be no assurance that our becoming subject to personal insolvency procedures increases. u
Slide 42: Risk factors (6/9)
Risk factors (6/9) We will require a significant amount of cash to meet our obligations under our indebtedness, a substantial amount We are exposed to interest rate risk. of which will mature prior to the Bonds, and to sustain our operations, which we may not be able to generate or raise. Fluctuatio
Slide 43: Risk factors (7/9)
Risk factors (7/9) RISKS RELATED TO THE OFFERING AND THE BONDS Your right to receive payments under the Bonds will be effectively subordinated to claims of our existing and future secured creditors. The Company is a holding company and is dependent upon cash flow from its subsidiaries to meet its ob
Slide 44: Risk factors (8/9)
Risk factors (8/9) The Bonds will be structurally subordinated to the liabilities and preference shares (if any) of our subsidiaries that Agreement will depend on our access to funds at such time, and we may not be able to secure access to do not guarantee the Bonds. enough cash to finance the repur
Slide 45: Risk factors (9/9)
Risk factors (9/9) Transfer of the Bonds will be restricted, which may adversely affect the value of the Bonds. and trading of the Bonds, which could have a material adverse effect on our business, financial condition and results of operations. Because the Bonds have not been, and are not required t
Slide 46: Appendix
Appendix B- HOLDING’
Slide 47: Recently renewed management and streamlined organization
Recently renewed management and streamlined organization CEO 10 yrs Erik J. Johnsen Legal & CFO Investments 9 yrs 11 yrs Compliance 3 yrs André Adolfsen Endre Solvin-Witzø Cecilie Kjelland Commercial Corporate 8 yrs Risk Strategy & IR 9 yrs Development 16 yrs Jeremi Bobowski Rasmus Hansson Maria Had
Slide 48: Pan-European exposure with large share of unsecured NPLs
Pan-European exposure with large share of unsecured NPLs1 Northern Europe Poland Western Europe Central Europe South East Europe Market position Top 3 Top 3 Top 10 Top 3 Top 3 ERC (NOK 19.7bn) NOK 7.9bn NOK 4.0bn NOK 2.3bn NOK 3.2bn NOK 2.5bn 1% 7% 10% % of ERC 34% Secured vs. 41% 59% Unsecured 66%
Slide 49: Debt collection 1.0.1
Debt collection 1.0.1 The Credit Management Services value chain Adjacent activities Portfolio Invoicing Invoice purchase 3rd party debt Credit services investments & Consumer credit Savings accounts services and financing collection collection Portfolio investments and collection/ Selected debt ven
Slide 50: One of the leading pan-European debt collectors
One of the leading pan-European debt collectors EBITDA (EURm) Cash EBITDA (EURm) 120m ERC (EURm) 761 1,268 6,590 283 N/A N/A 225 356 1,984 202 202 N/A 199 359 2,862 197 627 3,381 151 564 2,561 130 367 1,804 125 125 N/A 116 349 1,945 105 514 2,595 81 192 609 63 N/A N/A 40 N/A N/A 40 100 543 37 37 N/A
Slide 51: Committed to ESG
Committed to ESG Highlights 6 ESG strategic lines – Reviewed materiality analysis for 2020 Improvement of debtor knowledge 01 and satisfaction – Annual report 2020 included the first sustainability report based on GRI standards 02 Responsibility in our value chain – Initiated solicited ESG rating pr
Slide 52: A disciplined and interacting investment decision process
A disciplined and interacting investment decision process Transparent information for decision makers • Constant pipeline update • Available data on all portfolios Investment Decision Mandate EUR 20m + Forward looking process – starting with pipeline on day 1 BoD • Fixed weekly pipeline review day •
Slide 53: ERC development
ERC development Development in total gross ERC1) Forward 120m ERC profile by year1) NOKm NOKm 53 B2Holding ASA Bond Investor Presentation, September 2022 1)Including the Company’s share in JVs Confidential
Slide 54: Strong historical financial performance
Strong historical financial performance Gross collections1 Net revenue1 Collection Performance % Other Profit from JV Portfolios – Strong collection 6,380 performance in all asset 5,425 5,659 5,435 2,905 2,874 3,096 3,036 1,464 classes 4,106 4,034 378 497 516 582 318 – Continued revenue 2,397 48 1,6
Slide 55: Favourable development in headroom to covenants
Favourable development in headroom to covenants Comments Leverage ratio and ICR covenants Leverage ratio Interest cover ratio – B2Holding will continue to uphold a solid headroom to both earnings- 7.3x 7.5x and value-based covenants and headroom has increase significantly over the latest years 5.4x
Slide 56: Portfolio diversification
Portfolio diversification 56 B2Holding ASA Bond Investor Presentation, September 2022 ERC including the Group’s share of portfolios acquired and held in SPVs and joint ventures. Disclaimer: B2Holding ASA emphasizes that every assessment of future conditions necessarily involves an element of uncerta
Slide 57: Income statement
Income statement Income statement, NOKm 2018 2019 2020 2021 LTM Q2'22 Interest income from purchased loan portfolios 2,537 2,713 2,765 2,344 2,196 Profit from shares in associated parties/joint ventures and participation loan/notes -58 -400 -230 99 83 Net credit gain/(loss) from purchased loan portf
Slide 58: Balance sheet
Balance sheet Balance Sheet, NOKm 2018 2019 2020 2021 Q2'22 Deferred tax asset 97 189 323 279 322 Goodwill 785 778 824 787 720 Tangible and intangible assets 274 363 330 295 283 Investments in associated companies and joint ventures 12 387 349 349 352 Purchased loan portfolios 13,346 13,420 13,033 1
Slide 59: Cash flow statement
Cash flow statement Cash flow, NOKm 2018 2019 2020 2021 LTM Q2'22 Cash flows from operating activities Profit for the period before tax 808 165 411 742 522 Adjustment for non-cash items: Amortisation/revaluation of purchased loan portfolios 1,518 2,889 2,743 2,714 2,367 Repossession of collateral as
Slide 60: Share price development
Share price development Successful public listing Top shareholders1) – The shares were listed on NOTC, the Norwegian Over-The-Counter ⚫ Market in December 2014 ⚫ – In June 2016, the company listed on the Oslo Børs at a price of NOK 12.0 per share with a market cap of ca. NOK 4,400m – In December 201
Slide 61: Definitions
Definitions – Actualisation: Actualisation is the difference between actual and forecasted collections for purchased loan a measure of actual revenues (cash business) from the collection business and other business areas. Cash portfolios for the reporting period. Revenue is adjusted for Non-recurrin
Slide 62: Definitions (cont'd)
Definitions (cont’d) – Interest income from purchased portfolios: Interest income from purchased loan portfolios is the calculated projects, and material income or expenses relating to prior years. amortised cost interest revenue from the purchased loan portfolios using the credit-adjusted effective
Slide 63: IR contact
IR contact B2Holding ASA Rasmus Hansson Cort Adelers gate 30, 7th floor Head of Commercial Strategy 0254 Oslo and Investor Relations +47 952 55 842 www.b2holding.no rh@b2holding.no +47 22 83 39 50 post@b2holding.no
B2Holding — Debt Investor Presentation (September 2022) on 6ix