B2 Impact Asa · OSL:B2I
B2 Impact Asa — B2Holding — Debt Investor Presentation (May 2019)
38 slides from B2 Impact Asa's debt investor presentation, May 15, 2019
Slide 1: Investor presentation
Investor presentation 15 May 2019
Slide 2: Important information (1/2)
Important information (1/2) IMPORTANT INFORMATION AND DISCLAIMER This investor presentation, together with its enclosures and appendices (collectively, the "Presentation"), has been produced by B2Holding ASA (the "Company" or "B2H") solely for use in connection with a contemplated offering of senior
Slide 3: Important information (2/2)
Important information (2/2) Neither this Presentation nor any copy of it may be taken or transmitted into or distributed in the United States or in Australia, Canada, Hong Kong or Japan or any other jurisdiction that prohibits the same or to any securities analyst or other person in any of those jur
Slide 4: Summary of risk factors (1/2)
Summary of risk factors (1/2) SUMMARY OF RISK FACTORS An investment in the Bonds involves a high level of risk. Several factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expre
Slide 5: Summary of risk factors (2/2)
Summary of risk factors (2/2) RISKS RELATED TO THE COMPANY'S FINANCIAL PROFILE • Risk that the Company's substantial leverage and debt service obligations could adversely affect its business and prevent the Company from fulfilling its obligations with respect to the Bonds. • Risk that the Company ma
Slide 6: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix |6
Slide 7: Summary of B2H05 bond terms
Summary of B2H05 bond terms Issuer: B2Holding ASA Status of the bonds: Senior unsecured CFR (S&P / Moody’s): BB- / Ba3 Bond ratings (S&P / BB- / B1 Moody’s): Initial amount: Min. EUR 200 million Borrowing limit: EUR 350 million Use of proceeds: Partial repayment of B2H01 and B2H02 and partial repaym
Slide 8: Credit highlights
Credit highlights ▪ Attractive market with significant strategic entry barriers Attractive industry with ▪ Stable, cash-generative industry – macroeconomic drivers are to some extent off-setting sound market outlook ▪ Favourable market outlook with increased demand for B2H’s services across geograph
Slide 9: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix |9
Slide 10: Trading update: Record strong cash collection, portfolio purchases in all regions present and ERC at NOK 21.4b
Trading update: Record strong cash collection, portfolio purchases in all regions present and ERC at NOK 21.4b Comments on Q1 2019 Gross cash collection on portfolios NOK million +61% Record strong cash collection of NOK 1,248m in Q1 2019 (+61% y-o-y) 1,169 1,248 1,032 1,022 NOK 570m in portfolio ac
Slide 11: A solid Pan-European platform
A solid Pan-European platform GROUP REGIONS Poland Northern Europe (NE) 16% NE Norway, Sweden, Denmark, 30% Finland, Latvia, Lithuania, Estonia 22.3bn Poland Total ERC (NOK)1 CE 26% Poland WE 12% Western Europe (WE) SEE Spain, Portugal, Italy, France 16% Central Europe (CE) Czech Republic, Slovenia,
Slide 12: Strong historical financial performance
Strong historical financial performance CAGR Development in total gross ERC1 Total operating revenues2 NOK millions NOK millions 22,262 2,906 +51% +39% 15,264 2,013 1,396 9,489 1,076 6,490 4,430 510 1,371 232 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Cash EBITDA EBITDA NOK millions
Slide 13: Increased diversification
Increased diversification Quarterly collection & relative distribution 60% 1,200 1,169 50% 1,000 1,032 1,022 40% 800 775 30% 723 600 604 650 556 575 20% 474 400 413 427 10% 200 0% - Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Total Northern Europe Poland Central Europe We
Slide 14: Strategic directions
Strategic directions Continue growth in a changing market Focus Areas Growth in existing markets: Focus on increasing market Continue growth by exploiting penetration and/or product expansion by taking advantage of the access to large pipeline large pipeline and access to the major NPL markets, whil
Slide 15: Aiming for operational excellence
Aiming for operational excellence Principles governing our business plans initiatives IT Software Collection strategies Pursuit of appropriate goals and doing them right High Pursuing right goals Pursuing right goals Digitalisation but inefficiently In an efficient manner (costly to execute) (High R
Slide 16: Aiming for operational excellence
Aiming for operational excellence Best Practice Case study: Scalability effect in our portfolio purchase - Practical examples of implementing efficiency programs & scale effects Development Finland 170.0 30% Efficiency program started in 2013 150.0 25% 130.0 FTE decreased to 126 110.0 20% 90.0 Book
Slide 17: Publicly traded company with a stable shareholder base
Publicly traded company with a stable shareholder base Successful public listing Top shareholders1) # Shareholder Percentage % The shares were listed on NOTC, the Norwegian Over-The-Counter Market in December 2014 1 Prioritet Group AB ⚫ 12.91 % 2 Rasmussengruppen AS 10.51 % In June 2016, the company
Slide 18: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix | 18
Slide 19: Established as one of top ten European debt collectors
Established as one of top ten European debt collectors European countries present (#) Estimated remaining collection (120m ERC, EURm) 24 5,210 23 3,474 23 3,315 14 2,985 11 2,197 10 2,167 7 1,930 6 1,956 5 1,686 1 5 1,514 Source: Company information and J.P.Morgan Credit Management Services Valuatio
Slide 20: Access to a vast opportunity set for the future
Access to a vast opportunity set for the future Coverage of 77% of the EU NPL stock across our 23 countries European bank NPL per country1 200 50% EURbn Total volume of banking NPLs in Europe exceed EUR 650bn. 180 - Italy, France, Spain and Greece, the four largest markets, account for ca. 45% 41% 6
Slide 21: Macroeconomic snapshot
Macroeconomic snapshot Private sector debt1) as % of GDP CE and SEE regions have relative lower percentage of private sector debt as % of GDP than Western Europe Trend show increased activity in credit markets towards consumers in CE and SEE regions Source: Eurostat; 2017 data. 1) Eurostat definitio
Slide 22: Highly diversified vendor base
Highly diversified vendor base Diversified set of debt vendors across the financial industries, covering banks, in-store credit, credit cards, micro loans and leasing companies, as well as other industries, including utility and telecommunication companies 31% of 2018 purchases attributable to forwa
Slide 23: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix | 23
Slide 24: Record purchase volume in 2018 of NOK 6,380m
Record purchase volume in 2018 of NOK 6,380m Portfolio purchase volumes1) Comments NOKm Record purchase volume in 2018 2014 2015 2016 2017 2018 Portfolio purchases mainly in Northern Europe 2,273 67% of purchases was unsecured portfolios 33% of purchases was secured portfolios 1,951 1,634 1,485 Key
Slide 25: Highly diversified portfolio yielding stable and predictable cash flows
Highly diversified portfolio yielding stable and predictable cash flows: Total gross ERC of approx. NOK 22.3bn (46% growth y-o-y) Development in total gross ERC1) Portfolio details (total gross ERC)1) NOKm NOKm Claims (#): Face value1) (NOK): Geography distribution Distribution by type SEE Poland ~7
Slide 26: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix | 26
Slide 27: Strong financial performance
Strong financial performance Total ERC1) and portfolio acquisitions Total revenues NOKm NOKm 814* 1,951 1,485 2,273 988 1,6342) 761 746 7%* 646 14% 6% 622 15% 3% 1% 1% 14% 16% 3% 1% 20,608 22,262 84% 83% 18,116 20,119 84% 15,264 82% 82% Q4’17 Q1’18 Q2’18 Q3’18 Q4´18 Q4’17 Q1’18 Q2’18 Q3’18 Q4´18 Tot
Slide 28: Income statement
Income statement Income statement Comments 2016 2017 2018 NOKm Rapid increase in acquired Audited Audited Audited Interest income from purchased loan portfolios 1,221 1,680 2,537 portfolios drives strong growth in Net credit gain/loss purchased loan portfolios -15 77 -58 revenue from purchased loan
Slide 29: Balance sheet
Balance sheet Balance sheet Comments 2016 2017 2018 NOKm Increase in purchased loan Audited Audited Audited Tangible and intangible assets 91 201 274 portfolios of 65 % in 2018 vs 2017 Goodwill 395 522 785 Purchased loan portfolios 4,752 8,732 13,346 Equity ratio 26.9 % at year end Other long-term f
Slide 30: Cash flow
Cash flow Consolidated cash flow Comments 2016 2017 2018 NOKm Increased operating cash flow Audited Audited Audited Profit for the period before tax 227 648 808 enables us to do record high Amortisation/revaluation of purchased loan portfolios 664 795 1,518 investments Adjustment other non-cash item
Slide 31: Financial risk management
Financial risk management The strategy of the Group is to manage and limit both currency and interest rate risk. The Group holds various derivative financial instruments with the purpose of reducing its interest rate exposure and achieving a suitable currency ratio between its assets and liabilities
Slide 32: Mature funding structure with prudent leverage
Mature funding structure with prudent leverage Strategy Successful issuance of four bonds Equity, bond and bank debt is used to get access to capital for when larger EUR millions portfolios or platform acquisition opportunities arise E+7.50% E+7.00% E+4.25% E+4.75% - Total equity raised since 2011:
Slide 33: Agenda
Agenda 1. Transaction overview 2. Company snapshot 3. Market 4. Portfolio overview 5. Financials 6. Appendix | 33
Slide 34: B2Holding is proposing to amend B2H01/B2H02 with the following
B2Holding is proposing to amend B2H01/B2H02 with the following Proposed amendments ▪ The company has announced a summons for bondholders’ meetings in 01 and 02 ▪ The amendments are to align with newer bonds – key changes are: ▪ Removal of total LTV covenant of 75% and introducing 65% secured LTV cov
Slide 35: Disciplined pricing policy across geographies, performance reporting via Group data warehouse
Disciplined pricing policy across geographies, performance reporting via Group data warehouse Board of Approve investment strategy EUR 75m+ Directors Approve allocation plan & IRR targets Chairman, BoD Rep, CEO, CFO, CIO, CCO and CLO Investment Review and monitor investment strategy EUR 20m+ Committ
Slide 36: Organisational overview
Organisational overview Olav Dalen Zahl CEO Harald Henriksen Chief Governance Officer Erik J. Johnsen Danckert Mellbye Jeremi Bobowski Harald Henriksen Thor Christian Moen Rasmus Hansson Chief Financial Chief Operation Chief Investment Chief Legal and General Counsel Director M&A & IR Officer Office
Slide 37: Key figures used in the sector
Key figures used in the sector Different portfolios with different MM and ERC but same net IRR, will have the same return on investment over time given reinvestment of the amortized amount in the same type of portfolio Secured portfolio Portfolio Characteristics 250,000 150% MM 1,5 Short curve 200,0
Slide 38: B2Holding ASA
B2Holding ASA | Stortingsgaten 22 | P.O. Box 1726 Vika | N-0121 Oslo www.b2holding.no | Tel: +47 22 83 39 50 | E-mail: post@b2holding.no | 38