Pollen Street Group Limited · LSE:POLN
Pollen Street — Honeycomb Investment Trust — Investor Presentation (April 2021)
26 slides from Pollen Street's investor presentation, April 2021
Slide 1: Private & Confidential
Private & Confidential. © Pollen Street 2020
Slide 2: NAV Returns, Consistent Dividend, Large Growing Market Opportunity
NAV Returns1 Consistent Dividend since Large, growing market inception2 opportunity Lending to non bank lenders Low volatility with 43.3%3 Increasingly crucial role in secured by portfolios of NAV generation to date supporting positive impact underlying collateral across society £1.0bn+3 pipeline of
Slide 3: Resilient HONY portfolio through Covid-19 pandemic
Despite the unprecedented challenges driven by the Covid-19 pandemic, the HONY portfolio has exhibited robust and increasingly stable NAV returns and high cash generation, facilitated by structures designed to preserve capital in the event of stress supported by deep analytics and close portfolio ma
Slide 4: Banks narrowing lending criteria creating niche lending opportunities
Post ‘07 financial crisis banks have transitioned To reduce costs, banks to narrow lending are focusing on highly criteria on commoditised scalable business lines products due to higher capital requirements Recent volatility will Pace of new technology exacerbated structural issues allows new entran
Slide 5: Specialist lending: low capital intensity focus
Low Capital Intensity¹ Specialist lending, requiring Agricultural Finance Residential Specialist Non- a high degree of expert Mortgages Conforming Working Buy-to-Let Mortgages Capital Finance knowledge and systems to Equipment source, underwrite and Prime Finance Large Consumer Point of Sale monitor
Slide 6: Asset-backed facility structure
New customer loans, where Pollen Street has control over underwriting criteria Asset Backed Facility Agreement with the non- Interest and principal payments bank lender from customers to non-bank lender Typically senior secured on assets, Terms typically 2 to 3 years1 with underlying receivables or
Slide 7: Positive societal impact of lending platforms
One of our Lending partners, Oplo, looks to support some of Pollen Street’s lending platforms have helped drive local those 10 million adults to save money, purchase a car or improve economies, jobs and living standards. their home through responsible financial inclusion and access to finance. We re
Slide 8: Pollen Street
POLLEN @ STREET
Slide 9: Investment yield and underlying NAV return for 2020
Investment yield closed the year at 9.4% per annum, down from 10.3% per annum in 2019, mainly due to: – Continued positioning into senior secured assets and reduction in direct consumer portfolio, which reduces the investment yield but with a commensurate decrease in impairments – Reduced LIBOR and
Slide 10: Investment income and costs 2020 vs 2019
Investment income closed the year at £51.7 million, 2020 2019 YoY Change (£ million) (£ million) (%) down 12% from 2019 mainly due to – Continued positioning into senior secured assets and Investment Income 1 51.7 59.0 (12%) reduction in direct consumer portfolio which reduces the gross yield but wi
Slide 11: Dividend Per Share (pence)
Cash collections on the portfolio have been strong at £291m over the course of the year, demonstrating resilience of strategy In times of stress cash collections often increase as borrowers use cash to repay facilities as opposed to generate new loans, allowing for active management and control of r
Slide 12: Net Investment Assets and net debt to equity
80% The first half of 2020 saw a very cautious approach as the 600 Net Investment Assets (£m) 70% potential effects of Covid unfolded Net Debt to Equity (%) 500 60% The second half produced many opportunities with attractive risk 50% adjusted returns 400 40% Investment assets have grown to £617 mill
Slide 13: Specialty finance resilience and forbearance exits
The specialty finance industry has exhibited resilience over the course of the pandemic, with cash collection returning to pre-pandemic levels from Q3-2020 This robust performance has been attributed to: – Regular dialogue between lending platforms and borrowers enabling rapid response in offering f
Slide 14: IFRS 9 provisioning and credit coverage
The Company calculates provisions in accordance with IFRS 9. This utilises forward-looking expected credit loss modelling Expected GDP Growth We consider historic, current and forward-looking macro economic estimates in calculating provisions. These estimates 30% have been updated throughout 2020 to
Slide 15: NAV return since inception
2019 NAV Return: 7.8% 2020 NAV Return: 7.7% 50% 40% 30% 20% 10% 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 1. Performance since inception through to 31 March 2021 In May 2017, Honeycomb concluded its third capital raise with £105m gross proceeds In January 2018, Honeycomb completed its the impleme
Slide 16: Pollen Street
POLLEN @ STREET
Slide 17: The HONY portfolio comprises 47 investments
The HONY portfolio comprises 47 investments, balanced across consumer, SME and property sub-markets. The portfolio is well-diversified, with an average exposure of £12.6m, maximum single exposure of £53.1m and the ten largest investments representing 61.4% of Net Investment Assets. Investments are s
Slide 18: Portfolio composition by seniority and product
Bonds Equity The majority of the portfolio is senior-secured (69% of Gross Unsecured Loan Portfolio Asset Value), providing strong downside protection in event of a downturn Mezz Secured Loan Portfolios make up a further 14% of the portfolio, and represent direct portfolios of second-charge consumer
Slide 19: Nucleus Cash Flow Finance CBILS facility
Founded in 2011, Nucleus is a UK-based SME focused lender Key Statistics offering financing under the Coronavirus Business Interruption Loan Scheme (“CBILS”) scheme Deal Type Structured The business has originated £1bn+ of SME loans since Structure Senior inception, and £175m+ of CBILS loans since i
Slide 20: Downing bridging and development finance
Downing offer bridging / development financing to small-to- Key Statistics midsize borrowers traditionally underserved by banks and building societies due to their size Deal Type Direct Portfolio Downing structure loans on a conservative LTGDV and LTC Structure Senior basis, with average values of 6
Slide 21: 8.3% dividend yield on current share price
Honeycomb Investment Trust offers a dividend yield of 8.3% on the current share price1 Asset-backed direct lending is an increasingly critical sector Premium returns with strong income from highly structured closely monitored portfolio Resilient performance through 2020 and we expect dividends and N
Slide 22: Contacts
Managing Partner Partner +44 20 3728 6746 +44 20 3728 6747 lindsey.mcmurray@pollencap.com matthew.potter@pollencap.com Investor Relations Director Investor Relations +44 20 3965 5081 +44 77 7058 5135 janine.phillips@pollencap.com natasha.jacobs@pollencap.com Private & Confidential 22
Slide 23: Pollen Street
POLLEN @ STREET
Slide 24: Definitions of returns metrics
Item Definition Investment Yield Interest income, less amortised acquisition costs, less third party servicing costs, over average credit assets, annualised Impairments and Includes stages 1, 2 & 3, over average credit assets, annualised Write-Offs Equity & W/C Equity & W/C shows the effect on retur
Slide 25: Important information
This confidential presentation (the “Presentation”) is provided for discussion purposes only and is not, and may not, be relied on in any manner as legal, tax, investment or accounting advice. This Presentation does not constitute an offer document or an offer of transferable securities to the publi
Slide 26: Important information (continued)
Statements in this Presentation are as of 31 March 2021 unless stated otherwise, and the delivery of this Presentation shall not under any circumstances create an implication that the information contained herein is correct as of any time after such date. The information provided herein will not be
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