B2 Impact ASA · OSL:B2I
B2 Impact ASA — B2Holding — Q3 2020 Earnings Presentation
32 slides from B2 Impact ASA's earnings presentation, Nov 3, 2020
Slide 1: Oslo, 3 November 2020
Oslo, 3 November 2020
Slide 2: Highlights Q3 2020
Highlights Q3 2020 Operations ▪ Business operations returned to normal levels in Q3, and prepared to meet the second wave ▪ Operating expenses in Q3 in line with cost savings targets ▪ Continued focus on IT alignment and transformation of business processes using data and analytics Effectiveness & ▪
Slide 3: Key figures Q3 2020
Key figures Q3 2020 NOKm Total revenues Gross Collections1 New Cash EBITDA2 845 1,636 932 (880) (1,448) (1,034) Net profit Portfolio purchases New Leverage ratio 128 264 3.23x (181) (1,231) (3.10x) Comparable numbers for Q3 2019 in brackets 1. Includes the Group’s share of gross collection for portf
Slide 4: Business update
Business update
Slide 5: Operations close to normal and collections better than expected
Operations close to normal and collections better than expected Low impact Medium impact High impact ▪ Solid quarter with close to normal activity in most markets - Both unsecured collections and secured recoveries ahead of revised forecast - Operational impact of Covid-19 mostly observed in South a
Slide 6: Upside potential, but also some risks going forward
Upside potential, but also some risks going forward ▪ Most existing unemployment schemes expected to end ▪ Our estimates of post-Covid NPL volumes indicate a rise of between December 2020 and March 2021 2-3x, from close to EUR 500bn to over EUR 1.2 trillion in B2Holding markets ▪ Employment levels a
Slide 7: All portfolios purchased in the quarter were forward flows
All portfolios purchased in the quarter were forward flows Committed Forward Flow contracts, Q2’20 – Q1’21 NOKm 120 ▪ In third quarter forward flows were slightly reduced compared with 110 Actual Q1-Q3 110 103 103 committed volumes 100 97 98 90 85 ▪ Around 85 % of committed forward flows next 6 mont
Slide 8: Core priorities going forward
Core priorities going forward • Utilizing leading AI technology – Program Foresight Operations • Continuous improvement and alignment in IT with a higher degree of standardisation • Cost optimization programmes The internal control and risk management functions have been developed over time and all
Slide 9: Financial performance
Financial performance
Slide 10: Third quarter 2020 summary
Third quarter 2020 summary Financial summary NOKm 2020 2019 % 2020 2019 % 2019 Q3 Q3 Change 9 months 9 months Change Full year Total revenues 845 880 -4 % 2,322 2,054 13 % 2,874 ▪ Increased revenues from third- party servicing in the third quarter Operating profit/(loss) 369 387 -4 % 869 667 30 % 95
Slide 11: Operating expenses reduced in accordance with cost saving targets
Operating expenses reduced in accordance with cost saving targets Cost savings third quarter, FX adjusted NOKm 509 6 5 ▪ In line with cost saving programme launched in Q1 39 1 ▪ Cost savings of NOK 71 million (14 %) delivered in Q3 compared to Q1 28 ▪ Increased legal activity compared to previous qu
Slide 12: Balance sheet
Balance sheet 2020 2019 % NOKm 30 Sept 30 Sept change Deferred tax asset 224 160 40 % ▪ Tangible equity ratio of 22.3 %1 Goodwill 854 776 10 % Tangible and intangible assets 349 366 -5 % Investments in associated companies and joint ventures 358 ▪ NOK 902 million of assets in portfolio co- 315 13 %
Slide 13: Capital structure
Capital structure Funding Outstanding bonds Unutilised RCF Treasury bonds Unutilised bridge facility Debt maturity profile Utilised RCF Funding structure with sound leverage levels EUR millions I+3.25- Public rating (Corporate Family Rating) E+7.50% E+7.00% I+4.50% E+4.25% E+4.75% 3.75% E+6.35% - S&
Slide 14: Capital structure: Covenants
Capital structure Covenants RCF covenants In line with original RCF covenants and expect compliance going Equity Ratio 1 Total Loan to Value2 forward Temporary Temporary covenant covenant 26.8% 77.5% 75.4% 74.2% 74.7% 22.5% 24.2% 25.2% 25.1% 25.7% 73.7% 72.1% Covenant 75 % Covenant 25 % Q3’19 Q4’19
Slide 15: Continued modest portfolio purchase in third quarter
Continued modest portfolio purchase in third quarter Portfolio purchase volumes1) Geographical distribution 2016 2017 2018 2019 2020 WE NOKm 2% SEE 2 273 19% NOK 62% CE 0% 264m 1 951 17% 1 667 Poland NE 1 634 1 485 1 231 1 120 Asset class distribution 1 054 988 827 702 570 566 491 473 NOK 448 Secure
Slide 16: ERC development
ERC development Geographical distribution Development in total gross ERC1) Forward 120m ERC profile by year1) SEE NOKm NOKm Poland 14% 15% 26,528 6,215 25,298 WE 12% 24,708 24,616 5,701 23,809 Pol 22,262 22,595 CE NE 21,434 39% 20,608 20% 20,119 18,116 NE Asset class distribution 15,264 3,345 Secure
Slide 17: Summary
Summary
Slide 18: Summary
Summary Stable operations and routines in place to ensure safe work environments Solid collections, close to normal – second wave increases uncertainty Good support from our banks with increased flexibility to position the financing for future needs Long-term upside potential in the NPL market with
Slide 19: Q&A
Q&A
Slide 20: Quarterly financial performance
Quarterly financial performance Total revenues Cash EBITDA EBITDA NOKm NOKm Cash EBITDA Cash margin EBITDA EBITDA margin NOKm 47% 47% 69% 69% 69% 67% 65% 42% 39% 36% 415 398 880 845 819 1,034 344 775 940 927 932 702 881 281 272 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q3’19 Q4’19
Slide 21: New Cash EBITDA, Q3 2020
New Cash EBITDA, Q3 2020 Collections and recoveries as starting point Revenue from external Operating profit as starting point NOKm collection NOKm 1 800 18 Net Interest income 1 800 from loan receivables 43 81 1 600 Other revenues 1 600 1 400 1 400 408 142 28 1 200 27 1 200 29 476 408 1 000 1 000 3
Slide 22: Quarterly financial performance
Quarterly financial performance NOKm 2019 2019 2019 2019 2020 2020 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total revenues 795 379 880 819 775 702 845 Operating profit/(loss) 350 -69 387 291 255 245 369 Profit/(loss) after tax 106 -270 181 90 24 34 128 Cash revenue 1,354 1,401 1,492 1,396 1,364 1,343 1,348 Cash EB
Slide 23: Diversified portfolio
Diversified portfolio UNSECURED Year Total 1 2 3 4 5 6 7 8 9 10 120m ERC ERC Pol 912 690 480 350 260 194 140 103 76 58 3,263 3,404 NE 1,675 1,427 1,198 994 826 676 557 460 378 306 8,496 9,631 CE 340 309 260 208 160 123 85 44 22 13 1,564 1,574 WE 256 218 177 136 110 84 67 43 24 3 1,118 1,120 SEE 635
Slide 24: Northern Europe (NE)
Northern Europe (NE) Norway, Sweden, Denmark, Finland, Estonia, Latvia and Lithuania NOKm 2020 Q3 2019 Q3 Change (%) Highlights & KPIs Total revenues 271 262 4% Portfolio purchase volume of NOK 163m in the quarter EBIT 169 167 1% Gross collection of NOK 481m in Q3 Profit margin (%) 62 % 64 % -2 ppt
Slide 25: Western Europe (WE)
Western Europe (WE) Spain, Italy, France and Portugal NOKm 2020 Q3 2019 Q3 Change (%) Highlights & KPIs Total revenues 132 128 3% Portfolio purchases of NOK 5m in the quarter EBIT 50 23 119 % Gross collection in Q3 of NOK 129m Profit margin (%) 38 % 18 % 20 ppt ERC 2,966 3,025 -2 % Portfolio purchas
Slide 26: Central Europe (CE)
Central Europe (CE) Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Hungary and Czech Republic NOKm 2020 Q3 2019 Q3 Change (%) Highlights & KPIs Total revenues 128 222 -42 % No portfolio purchases in the quarter EBIT 58 147 -61 % Gross collection in Q3 of NOK 534m Profit margin (%) 45
Slide 27: South East Europe (SEE)
South East Europe (SEE) Romania, Bulgaria, Greece and Cyprus NOKm 2020 Q3 2019 Q3 Change (%) Highlights & KPIs Total revenues 108 94 15 % Portfolio purchases of NOK 51m in the quarter EBIT 23 19 20 % Gross collection in Q3 of NOK 163m Profit margin (%) 21 % 20 % 1 ppt ERC 3,435 2,186 57 % Portfolio
Slide 28: Poland
Poland Poland NOKm 2020 Q3 2019 Q3 Change (%) Highlights & KPIs Total revenues 206 175 18 % Portfolio purchases of NOK 45m in the quarter EBIT 106 65 63 % Gross collection in Q3 of NOK 251m Profit margin (%) 51 % 37 % 14 ppt ERC 3,687 3,701 - Portfolio purchases Cost to Collect 122 78 74 33 % -1 ppt
Slide 29: 20 largest shareholders
20 largest shareholders # Shareholder No of shares Percentage 1 PRIORITET GROUP AB 52 913 000 12.91 % 2 RASMUSSENGRUPPEN AS1 51 873 266 12.65 % 3 VALSET INVEST AS 26 000 000 6.34 % 4 STENSHAGEN INVEST AS 18 893 376 4.61 % 5 DNB MARKETS AKSJEHANDEL/-ANALYSE 10 454 434 2.55 % 6 BRYN INVEST AS 8 676 69
Slide 30: Definitions
Definitions 120-month ERC Cash revenue Estimated remaining collection, which expresses the gross collection in face value expected to be collected in the Cash revenue consists of “Total revenues” added back amortisation and revaluation of purchased loan portfolios, future over a 120-month period fro
Slide 31: Definitions (cont'd)
Definitions (cont’d) Gross collection Gross collection is the actual cash collected and assets recovered from purchased portfolios before costs related to Other revenues collect the cash received. Other revenues includes revenue from external collection, interest on loan receivables as well as subsc
Slide 32: B2Holding ASA Stortingsgaten 22
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