B2 Impact Asa · OSL:B2I
B2 Impact Asa — B2Holding — Debt Investor Presentation (January 2023)
64 slides from B2 Impact Asa's debt investor presentation, Jan 17, 2023
Slide 1: Investor presentation – Senior Unsecured Bond Issue
Investor presentation Senior Unsecured Bond Issue 17 January 2023 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 not been, and will not be, approved by the United States Securities and Exchange Commission or 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 B2H04-06 B2Holding ASA provider specialized in investing in, and the recovery of, non-performing Sr. unsec. EUR 550m (Norway, Oslo St
Slide 11: Summary of key terms and conditions for B2H06 tap issue
Summary of key terms and conditions for B2H06 tap issue Issuer: B2Holding ASA Status of the bonds: Senior unsecured CFR (S&P / Moody’s): B+ / Ba3 Tap issue amount: EUR [●] million Initial issue amount: EUR 150 million Maximum issue amount: EUR 300 million Purpose of the bond issue: Refinancing and g
Slide 12: Today's presenters
Today’s presenters Erik Johnsen André Adolfsen Rasmus Hansson Chief Executive Officer Chief Financial Officer Head of Commercial Strategy & Investor Relations 12 B2Holding ASA Bond Investor Presentation, January 2023 Confidential
Slide 13: 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 14: Company overview
Company overview B- HOLDING’
Slide 15: Significant deleveraging and improved performance over last 3 years
Significant deleveraging and improved performance over last 3 years NOKm P V V I D ash I DA Adj. et pro t 0 3 2 32 3 5 5 0 2 5 5 0 5 3 35 3 55 2 0 3 3 05 3 3 2 5 22 5 0 0 5 2 0 03 5 2 2 3 3 35 30 2 3 15 B2Holding ASA Bond Investor Presentation, January 2023 Confidential
Slide 16: Trading update: Strong cash collection and ERC at NOK 21.7bn
Trading update: Strong cash collection and ERC at NOK 21.7bn Comments on Q4 2022 Gross cash collection on portfolios, NOKm +31% – Strong cash collections of NOK 1,492m (+31% y-o-y) 1,492 – NOK 1,194 in portfolio acquisitions, approx. NOK 2.6bn on LTM 1,229 1,191 1,214 1,246 1,244 1,136 basis (+115%
Slide 17: This is B2Holding
This is B2Holding NOKm Q3’22 9M’22 SEE 12% Net revenues 797 2 261 WE 11% NE Adjusted EBIT 373 992 41% NOK Adjusted EBIT Margin 47% 43% 19.6bn 16% CE EBIT 337 725 20% ERC 19,590 19,590 Pol Cash collections 1,244 3,704 Cash EBITDA 973 2,857 20 platforms in Europe with varied maturity and #FTEs 1,892 1
Slide 18: Improved scalability across our markets
Improved scalability across our markets Secured markets (Veraltis Asset Management) Unsecured markets 00 2 000 00 20 000 5 000 00 000 00 0 000 200 000 300 5 000 FTE development1) FTE development 2 % % 0 303 2 2 2 223 200 2 3 23 25 0 0 2 50 18 B2Holding ASA Bond Investor Presentation, January 2023 1)
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 1,244 – Refinance RCF 1,191 1,136 – Repayment of existing ✓Improved flexibility and liquidity due to: bridge facility – PIMCO funding – Extension of maturity – RCF extension p
Slide 20: Proven collection resilience
Proven collection resilience Short term support from disposable income, savings and governmental schemes Long Term Macro Trends1 Notable observations: Unemployment Rates GDB Growth y/y% Inflation (CPI y/y%) 15 – The industry has proven resilient in economic downturns 10 – Higher disposable income ha
Slide 21: ESG commitment showing results
ESG commitment showing results Substantially improved the ESG Risk rating from Sustainalytics, ESG Risk rating 8.7 ranking us at the top of our industry and within the top 1 % of rated companies globally – On December 21st 2022, the ESG Risk Rating was improved from 9.3 to Negligible Risk 8.7 – B2Ho
Slide 22: Highlights
Highlights Q3 performance – Strong unsecured collection performance of 104.4% – Growth in secured cash recoveries driven by REO sales of NOK 169m Operations – Restructuring of Secured business coming to an end with increased interest for co-investments – Improved scalability in key markets through i
Slide 23: Market overview
Market overview B- HOLDING’
Slide 24: 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 not Helping consumers manage Consumers NPL Banks just god for banks, it their debt benefits all of us” - Eur
Slide 25: 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. hree largest markets account for + 0% as of Q3’22 110 NPLs (EURbn) NPL ratio(%) 79 5% 51 4% 3% 3% 3% 3% 3% 3% 31 2% 2% 27 2% 2% 2% 1% 2% 1% 1% 14 1% 1% 1% 1% 1%
Slide 26: Maintaining capital discipline in changing market dynamics
Maintaining capital discipline in changing market dynamics 68 % increase in portfolio investments versus same quarter last year and improved returns on portfolios acquired Early signs of heightened capital discipline and prudent pricing Target returns increased to reflect current uncertainty and mar
Slide 27: Financial performance
Financial performance B- HOLDING’
Slide 28: Third quarter 2022 summary
Third quarter 2022 summary Quarterly summary Comments NOKm Q3 2022 Q3 2021 %Δ 2022 YTD 2021 YTD LTM Q3 2022 – Cash collections up 9% YoY in Cash collections 1,244 1,191 4% 3,704 3,721 4,840 constant FX • Unsecured collections at 104.4% Net revenues 797 792 1% 2.261 2,310 2,987 • Strong secured cash
Slide 29: Collection performance and improvements
Operational improvements Collection performance and improvements Unsecured collection performance, NOKm REOs sold, NOKm 1) Collection Performance % Book Value Sales Proceeds +56% 949 926 903 408 853 848 106% 103% 104% 102% 102% 100% +106% 262 169 82 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q3’22 YTD’22 Secured
Slide 30: Positive cash earnings and low leverage
Positive cash earnings and low leverage Cashflow Q3 2022 Additional investment capacity NOKm Increase Decrease otal NOKm Port. Investments Cash Earnings 758 973 -62 552 503 479 399 237 239 262 226 -399 78 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 -47 465 Stable leverage ratio Lev.ratio -203 2.4x 2.4x 2.3x 2.4x
Slide 31: Strong cash collections and stable underlying cost base
Strong cash collections and stable underlying cost base Cash collections (constant FX), NOKm Stable development in cost to cash revenue, NOKm – Total cash collections up 9% YoY – Cash revenues and Cash EBITDA1) have remained stable over the years – Total secured cash collection up 82% from last year
Slide 32: Portfolio investments and Estimated Remaining Collections (ERC)
Portfolio investments and Estimated Remaining Collections (ERC) Cash collection, NOKm Portfolio investments in Q3 NPL REOs Cash collection Cash EBITDA Geographical distribution Asset class distribution SEE 1,246 1,244 WE 11% 1,214 1,191 4% Unsecured Forward Flow 1,136 CE 34% 10% NOK NOK 399m 399m 97
Slide 33: New capital structure post funding
New capital structure post funding Debt maturity profile, EURm1 Improved flexibility and liquidity Outstanding bonds Utilised RCF Utilised SFA – Extensive refinancing completed in the quarter 2 Treasury bonds Unutilised RCF Unutilised SFA • Extension of RCF, new SFA, and a new bond I+2.9- E+4.75% E+
Slide 34: Financial risk management per Q3'22
Financial risk management per Q3’22 Currency risk Net borrowing basket1 – Translational balance sheet exposure to main currencies hedged by Currency derivatives – Currency derivatives are used to: • Obtain a balanced currency basket NOK • Designed to utilize zero interest cap in RCF 9,148m – Cashflo
Slide 35: Summary
Summary B- HOLDING’
Slide 36: Key takeaways
Key takeaways Resilient and Cost control with Increased Issued new bond Capital discipline strong collections lower operating investment in a challenging in changing and recoveries expenses vs activity with market market dynamics previous quarters higher net IRRs 36 B2Holding ASA Bond Investor Prese
Slide 37: Risk factors
Risk factors B- HOLDING’
Slide 38: 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, flow at a time when attractive debt portfolios become available. There can be no assurances that in the results of operations, financial condition or prospects could be m
Slide 39: 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 such as personal information of customers, including names and account numbers, locations, contact applications, systems and infrastructure. information and other account specific
Slide 40: 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 results of operation and financial condition. on our portfolios to take advantage of opportunities for portfolio purchases as they arise in the market. Failure to successfully
Slide 41: 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 one or more members of our senior management team or one or more of our key employees could have a material adverse effect on our business. A material failure in banking sys
Slide 42: 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 We are subject to prevailing tax laws in every jurisdiction we operate and there can be no assurance that consumers becoming subject to personal insolvency procedures increases. our u
Slide 43: Risk factors (6/9)
Risk factors (6/9) We will require a significant amount of cash to meet our obligations under our indebtedness, a may have a material adverse effect on our business, results of operation and financial condition. substantial amount of which will mature prior to the Bonds, and to sustain our operation
Slide 44: 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 45: Risk factors (8/9)
Risk factors (8/9) The Bonds will be structurally subordinated to the liabilities and preference shares (if any) of our Agreement will depend on our access to funds at such time, and we may not be able to secure access to subsidiaries that do not guarantee the Bonds. enough cash to finance the repur
Slide 46: Risk factors (9/9)
Risk factors (9/9) Transfer of the Bonds will be restricted, which may adversely affect the value of the Bonds. 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 to be, registered under the U.S.
Slide 47: Appendix
Appendix B- HOLDING’
Slide 48: 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 49: 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 19.6bn) NOK 8.1bn NOK 3.8bn NOK 2.3bn NOK 3.1bn NOK 2.3bn 1% % of ERC 4% 19% 36% Secured vs. 45% 55% Unsecured 64%
Slide 50: 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 51: One of the leading pan-European debt collectors
One of the leading pan-European debt collectors EBITDA (EURm) Cash EBITDA (EURm) 120m ERC (EURm) 513 1,265 6,623 283 N/A N/A 233 233 N/A 223 378 2,212 190 580 3,843 150 537 2,858 147 372 1,723 136 136 N/A 123 233 N/A 2,459 110 349 1,936 108 574 2,490 79 166 561 70 210 1,972 55 N/A N/A 37 37 0 33 51
Slide 52: Committed to ESG
Committed to ESG Highlights 6 ESG strategic lines Improvement of debtor knowledge – Reviewed materiality analysis for 2020 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 53: A disciplined and interacting investment decision process
A disciplined and interacting investment decision process Transparent information for decision makers • Constant pipeline update Investment Decision Mandate • Available data on all portfolios EUR 20m + Forward looking process – starting with pipeline on day 1 BoD • Fixed weekly pipeline review day •
Slide 54: ERC development
ERC development Development in total gross ERC1) Forward 120m ERC profile by year1) NOKm NOKm 23,809 4,507 23,100 22,262 4,202 20,840 20,440 Poland 19,744 19,918 19,867 19,590 18,683 15,264 2,834 NE 1,989 CE 1,401 1,055 WE 827 650 520 409 SEE 2017 2018 2019 2020 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q
Slide 55: Strong historical financial performance
Strong historical financial performance Gross collections1 Net revenue1 Collection Portfolio Acquisitions Other Profit from JV Portfolios – Strong collection 6,380 2,905 2,874 3,096 3,036 1,924 performance in all asset 5,425 5,659 5,435 classes 4,106 4,034 378 3,675 497 516 308 582 – Continued reven
Slide 56: 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- 7.5x 7.3x and value-based covenants and headroom has increase significantly over the latest years 5.4x
Slide 57: Portfolio diversification
Portfolio diversification Unsecured Year ERC 1 2 3 4 5 6 7 8 9 10 120m ERC Total ERC Poland 789 590 465 373 295 237 190 155 126 100 3 318 3 636 NE 1 505 1 217 1 006 827 682 568 471 387 319 256 7 238 8 032 CE 279 224 172 136 100 67 45 33 24 16 1 096 1 117 WE 204 159 122 97 83 61 47 40 35 33 882 939 S
Slide 58: Income statement
Income statement Income statement, NOKm 2018 2019 2020 2021 LTM Q3'22 Interest income from purchased loan portfolios 2,537 2,713 2,765 2,344 2,142 Profit from shares in associated parties/joint ventures and participation loan/notes -58 -400 -230 99 64 Net credit gain/(loss) from purchased loan portf
Slide 59: Balance sheet
Balance sheet Balance Sheet, NOKm 2018 2019 2020 2021 Q3'22 Deferred tax asset 97 189 323 279 328 Goodwill 785 778 824 787 736 Tangible and intangible assets 274 363 330 295 309 Investments in associated companies and joint ventures 12 387 349 349 407 Purchased loan portfolios 13,346 13,420 13,033 1
Slide 60: Cash flow statement
Cash flow statement Cash flow, NOKm 2018 2019 2020 2021 LTM Q3'22 Cash flows from operating activities Profit for the period before tax 808 165 411 742 498 Adjustment for non-cash items: Amortisation/revaluation of purchased loan portfolios 1,518 2,889 2,743 2,714 2,358 Repossession of collateral as
Slide 61: Share price development
Share price development Successful public listing Top shareholders2) # Shareholder Percentage – The shares were listed on NOTC, the Norwegian Over-The-Counter Market in December 2014 1 PRIORITET GROUP AB 13.18 % 2 RASMUSSENGRUPPEN AS 3) 12.80 % – In June 2016, the company listed on the Oslo Børs at
Slide 62: 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 63: Definitions (cont'd)
Definitions (cont’d) – Interest income from purchased portfolios: Interest income from purchased loan portfolios is the calculated income or expenses relating to prior years. amortised cost interest revenue from the purchased loan portfolios using the credit-adjusted effective interest rates set at
Slide 64: IR contact B2Holding ASA
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 (January 2023) on 6ix