B2 Impact Asa · OSL:B2I
B2 Impact Asa — Debt Investor Presentation (September 2024)
53 slides from B2 Impact Asa's debt investor presentation, Sep 2, 2024
Slide 1: Investor presentation – Senior Unsecured Bond Issue
Investor presentation Senior Unsecured Bond Issue 2 September 2024
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 "Presentation"), any loss howsoever from any use of this Presentation or its contents or otherwise arising in connection has been produced by B2 Impact ASA (the "Comp
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 the United States Securities and Exchange Commission or registered under the U.S. Securities Act or any Company for any investor's particular situation
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 (1/2)
Summary of risk factors (1/2) 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 (2/2)
Summary of risk factors (2/2) 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: Agenda
Agenda 1. Transaction overview 2. Company overview 3. Financial performance 4. Risk factors 5. Appendix 7 B2 Impact Impact Credit Investor Presentation
Slide 8: Transaction overview
Transaction overview 8 B2 Impact Impact Credit Investor Presentation
Slide 9: Transaction summary
Transaction summary Background and sources & uses Group structure and pro forma capital structure • B2 Impact ASA (the “Issuer” or the “Company”) is a debt solutions provider B2I07 Sr. unsec. EUR 150m specialized in investing in, and the recovery of, non-performing unsecured and B2 Impact ASA (Norwa
Slide 10: Key terms and conditions
Key terms and conditions Issuer: B2 Impact ASA Status of the bonds: Senior unsecured CFR (Moody’s / S&P): Ba2 / BB- Bond rating (S&P): BB- (expected) Initial issue amount: EUR [200] million Maximum issue amount: EUR [350] million Purpose of the bond issue: Refinancing and general corporate purposes
Slide 11: Today's presenters
Today’s presenters Erik J. Johnsen André Adolfsen Rasmus Hansson Chief Executive Officer Chief Financial Officer Head of Investor Relations and M&A 11 B2 Impact Credit Investor Presentation
Slide 12: Company overview
Company overview 12 B2 Impact Impact Credit Investor Presentation
Slide 13: This is B2 Impact
This is B2 Impact NOKm (excluding NRIs) L12M Q2’24 L12M Q2’23 Δ Cash collections 6 062 5 463 11.0% Core unsecured markets Revenues 3 802 3 567 6.6% Secured markets (Veraltis) Opex - 1 978 - 1 861 6.3% Head office, Norway Investment office, Luxembourg EBIT 1 732 1 613 7.3% EBIT % 46% 45% 0pp Net prof
Slide 14: Positioned for growth after a period of capital discipline and strong cash flow
Positioned for growth after a period of capital discipline and strong cash flow Strategic direction Achievements Stable performance, room for growth and maintain moderate leverage ortfolio investments TM Cash BIT A TM everage ratio ✓ Refinancing NOKm – Bond refinancing in Q1’2024 – Extension of debt
Slide 15: Frontloaded collection curves creating high near-term cash generation
Frontloaded collection curves creating high near-term cash generation, enabling B2 to utilize favourable market dynamics Development in total gross ERC1,2 Forward 120m ERC profile by year NOKm NOKm Secured nsecured 23 80 23 01 4 82 23 100 22 84 22 2 2 22 04 22 21 8 21 4 21 1 1 18 3 1 2 4 2 1 1 1 1 1
Slide 16: Competitive cost level for new investments
Competitive cost level for new investments Stable opex in a high inflation environment Improved cost of debt Opex constant F Cost of debt - actual Cost of debt - forecast • Ability to increase 12% investments while 1 0 0 0 03 48 4 8 4 1 10% maintaining cost level 4 1 8% • Target significant increase
Slide 17: Positive rating trajectory on the back of credit profile momentum
Positive rating trajectory on the back of credit profile momentum Positive credit spread development compared to peers B2 Impact amongst the best rated in the industry Moody’s1 S&P1 1,200 Peer average 2 B2 Impact, Moody's B2 Impact, S&P (rhs) Ba1 BB+ 1,000 Ba2 BB 800 Ba3 BB- 600 B1 B+ 400 B2 B 200 B
Slide 18: Increasing NPL volumes supporting long term growth
Increasing NPL volumes supporting long term growth • Following a period of high interest rates, the NPL volumes Total NPL Volumes - Households excl. mortgages1 EURbn are trending up 100 – NPLs growing across the board, including our core unsecured Q1 23 markets 80 Q1 24 – Higher than average NPL rat
Slide 19: B2 Impact is uniquely positioned to capitalize on the opportunities
B2 Impact is uniquely positioned to capitalize on the opportunities Indicative returns on portfolio investments Floating euro rates ( RIBOR) • B2 Impact has room for profitable growth going forward in combination with continued prudent leverage and good headroom to covenants • Improved competitive d
Slide 20: ESG Risk Rating maintained
ESG Risk Rating maintained Solid ESG Risk rating from Sustainalytics, ranking B2 Impact within the top 1% of rated companies globally ESG Risk rating1) • Current ESG Risk Rating of 7.0 • B2 Impact is considered to be at negligible ESG risk: 7.0 Negligible Risk – Low exposure of material ESG issues s
Slide 21: Financial performance
Financial performance 21 B2 Impact Impact Credit Investor Presentation
Slide 22: Key figures Q2 2024 (NOKm)
Key figures Q2 2024 (NOKm) Cash collections nsecured performance ortfolio investments 1 38 111 33 1 13 108 Cash BIT A Adj. Net profit everage ratio 1 32 2 2 1. x 11 2 182 2. x 22 B2 Impact Credit Investor Presentation Comparable numbers for Q2 2023 below
Slide 23: Collection Performance excl. JVs
Collection Performance excl. JVs Unsecured collection performance REO sales 1 184 1 12 11 1 048 4 1 01 1 008 110 10 111 41 104 104 10 108 102 80 100 2 0 8 80 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2 24 Q2 23 Collection erformance Book value Sales proceeds Secured collections 1 1 • Improving collection perfo
Slide 24: Stable OPEX ratio and lower underlying cost base
Stable OPEX ratio and lower underlying cost base Cash revenue LTM1 Operating expenses LTM1,2 • Continued growth in unsecured collections • Personnel costs continue to trend down • Secured collections and REO sales solid in the quarter • External expenses expected to trend downwards in H2 10 3 81 81
Slide 25: Portfolio investments and Estimated Remaining Collections (ERC)
Portfolio investments and Estimated Remaining Collections (ERC) Investments 2021 to end Q2 2024 of NOK 6.7bn Portfolio investments Geographical distribution Asset class distribution 2 41 S Secured 14 5% 43 N 21 NOK Unsecured C 4 NOK 38% Forward Flow 6.7bn 6.7bn Unsecured 57% 1 80 31 ol 1) 1 202 Tota
Slide 26: Strong financial position and interest costs trending down (EURm)
Strong financial position and interest costs trending down (EURm) Debt maturity profile per Q2’2 24 Debt maturity profile after refinancing I+3.50%1 E+6.90% E+4.55% E+5.00% I+3.00%1 E+5.00% E+X.XX% 610 610 179 215 300 4312 200 395 180 150 150 0 2025 2026 2027 2028 2029 2025 2026 2027 2028 2029 26 B2
Slide 27: On track for more than NOK 200m lower run-rate cost of debt by year end
On track for more than NOK 200m lower run-rate cost of debt by year end Margin Floating edge Total • Close to 60% of target achieved 10.0 • Blended cost of debt expected around 7% – Hedging ratio maintained above 50% • Actions to reduce company specific margin – Extension of RCF completed o Maturity
Slide 28: Summary and key credit highlights
Summary and key credit highlights Lowest leverage ratio in the industry Proven track record of deleveraging capabilities and investment discipline Reduced footprint and more concentrated investment approach Expected lower cost of funding and improving interest rate environment Well positioned to gro
Slide 29: Risk factors
Risk factors 29 B2 Impact Impact Credit Investor Presentation
Slide 30: Risk factors (1/8)
Risk factors (1/8) An investment in the Bonds involves risks. If any of the events described below actually occurs, our prevent us from purchasing otherwise desirable debt portfolios or prevent us from meeting our obligations business, results of operations, financial condition or prospects could be
Slide 31: Risk factors (2/8)
Risk factors (2/8) Our operations are highly dependent upon access to, and the functioning and integrity of, our core violation of data protection laws could have a material adverse effect on our business, results of operation IT applications, systems and infrastructure. and financial condition. Our
Slide 32: Risk factors (3/8)
Risk factors (3/8) The value of our existing portfolios may deteriorate, or we may not be able to collect sufficient Failure to successfully manage our forward flow agreements or replace terminated forward flow amounts on our portfolios to take advantage of opportunities for portfolio purchases as t
Slide 33: Risk factors (4/8)
Risk factors (4/8) We may not be able to obtain or maintain adequate insurance cover. the countries we operates and on our business. At present, it is difficult to ascertain how long the outbreak of COVID-19 may last or how severe it may become. There is a risk that the COVID-19 pandemic will No ass
Slide 34: Risk factors (5/8)
Risk factors (5/8) We may purchase portfolios that contain accounts which are not eligible to be collected, and it may RISKS RELATED TO OUR FINANCIAL PROFILE not be possible for us to bring successful claims pursuant to purchase contracts or otherwise. Our substantial leverage and debt service oblig
Slide 35: Risk factors (6/8)
Risk factors (6/8) We are subject to covenants under our financing arrangements that limit our operating and Our hedging agreements may expose us to credit default risks and potential losses if our hedging financial flexibility. counterparties fall into bankruptcy. Our financing agreements contain o
Slide 36: Risk factors (7/8)
Risk factors (7/8) Risk of being unable to pay interest and principal on its indebtedness, including the Bonds hedge providers, trade creditors, and claims of preference shareholders (if any) of the subsidiary, will have priority with respect to the assets and earnings of the subsidiary over the cla
Slide 37: Risk factors (8/8)
Risk factors (8/8) An active trading market may not develop for the Bonds, in which case you may not be able to Credit ratings may not reflect all risks, are not recommendations to buy or hold securities and may resell the Bonds. be subject to revision, suspension or withdrawal at any time. There is
Slide 38: Appendix
Appendix 38 B2 Impact Impact Credit Investor Presentation
Slide 39: Experienced management team and streamlined organization
Experienced management team and streamlined organization CEO Erik J. Johnsen 10 yrs CFO Investments COO Risk, Compliance, ESG Master & Special Servicing André Adolfsen Endre Solvin-Witzø Adam Parfiniewicz Jeremi Bobowski George Christoforou 9 yrs 11 yrs 6 yrs 9 yrs 9 yrs 39 B2 Impact Credit Investor
Slide 40: New board members with strong industry experience elected on 27 December 2023
New board members with strong industry experience elected on 27 December 2023 Harald L. Thorstein Adele Bugge Norman Pran Trond Kristian Andreassen Jessica Sparrfeldt Chair of the Board New board members New board members from 27 Dec 2023 Ellen Hanetho Anders Engdahl Henrik Wennerholm 40 B2 Impact C
Slide 41: Significant deleveraging and improved performance over last 4 years
Significant deleveraging and improved performance over last 4 years 1 1 40 NOKm N R Os NIB Cash BIT A Adj. Net profit 1 32 1 140 11 2 11 0 1 01 2 32 4 34 8 2 8 3 10 10 0 1 84 8 1 1 10 1 3 1 230 14 14 1 13 8 13 13 01 13 24 13 2 13 3 12 0 13 18 13 0 13 1 8 13 1 13 31 12 1 11 88 12 28 11 0 8 10 4 10 4
Slide 42: Quarterly trends
Quarterly trends 2 22 2 22 2 22 2 22 2 23 2 23 2 23 2 23 2 24 2 24 millio Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Cash collections 1 214 1 24 1 244 14 8 1 248 1 13 14 1 0 12 3 1 38 Revenues 1 48 824 14 1 031 884 4 882 10 0 Adj. BIT 28 330 3 3 343 402 4 38 410 3 0 3 Adj. BIT 40 42 4 42 44 48 44 43 41 3 BIT 24
Slide 43: Quarterly financial performance
Quarterly financial performance Revenues Cash EBITDA Adjusted EBIT NOKm Revenues NOKm Cash BIT A Cash margin NOKm Adj. BIT Adj. BIT margin 1 40 3 1 32 1 10 0 4 1 031 11 2 11 0 4 884 882 3 0 48 44 3 43 41 4 410 38 3 0 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2 23 Q3 23 Q4 23 Q1 24
Slide 44: Collection Performance excl. JVs
Collection Performance excl. JVs Unsecured collection performance REO sales 4 213 4 202 11 41 3 3 41 3 2 110 10 10 4 4 102 103 10 100 3 3 3 0 8 80 2021 2022 2023 TM Q2 24 2023 TM Q2 24 Collection erformance Book value Sales proceeds Secured collections 2 231 2 4 4 1 4 81 1 24 1 181 8 8 23 2021 2022
Slide 45: Stable OPEX ratio and lower underlying cost base
Stable OPEX ratio and lower underlying cost base Cash revenue LTM1 Operating expenses LTM1,2 • Continued growth in unsecured collections • Personnel costs continue to trend down • Secured collections and REO sales solid in the quarter • External expenses expected to trend downwards in H2 833 1 20 20
Slide 46: Portfolio investments and Estimated Remaining Collections (ERC)
Portfolio investments and Estimated Remaining Collections (ERC) Secured ERC trending down Portfolio i vestme ts i Q2’24 NOKm N R Os Cash collection Collections Geographical distribution Asset class distribution 1 0 nsecured 4 ol Forward Flow N 1 NOK NOK 1 84 337m 337m 1 21 14 31 1 13 1 38 nsecured 1
Slide 47: Portfolio diversification
Portfolio diversification1 se ured ear RC 1 2 3 4 1 12 m RC Total RC oland 1 083 8 81 484 418 3 311 2 0 234 2 2 4 N 1 14 1 28 1 041 8 4 08 88 4 2 404 331 2 2 4 8 318 C 2 4 218 1 8 102 3 42 32 2 1 2 1 00 222 188 1 3 111 81 3 2 4 3 33 8 1 01 S 4 30 4 4 2 1 201 1 2 14 8 3 3 2 1 2 03 Total 3 3 24 1 2 1
Slide 48: Favourable development in headroom to covenants
Favourable development in headroom to covenants Comments Leverage ratio and ICR covenants 7.30x • B2 Impact will continue to uphold a solid headroom to both earnings- and Leverage ratio Interest cover ratio 6.90x value-based covenants and headroom has increase significantly over the 5.40x 5.30x late
Slide 49: Financial risk management per Q2'24
Financial risk management per Q2’24 Currency risk Net debt basket • Translational balance sheet exposure to main currencies hedged by Currency 5% derivatives 11% • Currency derivatives are used to: EUR - Obtain a balanced currency basket NOK PLN 17% 8 503m SEK - Designed to utilize zero interest cap
Slide 50: Share price development
Share price development Public listing Top shareholders2) • The shares were listed on NOTC, the Norwegian Over-The-Counter Market in # Shareholder Percentage December 2014 1 PRIORITET GROUP AB 14.36% 2 RASMUSSENGRUPPEN AS3 13.94% • In June 2016, the company listed on the Oslo Børs at a price of NOK
Slide 51: Definitions
Definitions Actualisation Cash margin Actualisation is the difference between actual and forecasted collections for purchased loan portfolios for the reporting Cash margin consists of Cash EBITDA expressed as a percentage of cash revenue. period. Cash revenue Adjusted EBIT (Adj. EBIT) Cash revenue c
Slide 52: Definitions (cont'd)
efinitions (cont’d) Operating expenses (Opex) Other cash revenues Opex consists of external expenses of services provided, personnel expenses and other operating expenses. Other cash revenues consist of Other revenues added back Cost of assets sold Net debt Other revenues Net debt consists of nomina
Slide 53: b2-impact.com
b2-impact.com IR contact Rasmus Hansson Head of Investor Relations and M&A +47 952 55 842 rasmus.hansson@b2-impact.com B2 Impact Cort Adelers gate 30, 7th floor 0254 Oslo, Norway +47 22 83 39 50 post@b2-impact.com
B2 Impact — Debt Investor Presentation (September 2024) on 6ix