B2 Impact Asa · OSL:B2I
B2 Impact Asa — Debt Investor Presentation (January 2024)
53 slides from B2 Impact Asa's debt investor presentation, Jan 18, 2024
Slide 1: Investor presentation – Senior Unsecured Bond Issue
Investor presentation Senior Unsecured Bond Issue 18 January 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. Market overview 4. Financial performance 5. Summary 6. Risk factors 7. Appendix 7 Impact Credit Investor Presentation B2 Impact
Slide 8: Transaction overview
Transaction overview 8 Impact Credit Investor Presentation B2 Impact
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 B2H05-06 Sr. unsec. EUR 500m specialized in investing in, and the recovery of, non-performing unsecured and B2 Impact ASA (No
Slide 10: Key terms and conditions
Key terms and conditions Issuer: B2 Impact ASA Status of the bonds: Senior unsecured CFR (Moody’s): Ba2 Bond rating (Moody’s): Ba3 (expected) Initial issue amount: EUR [100] million Maximum issue amount: EUR 200 million Purpose of the bond issue: Refinancing and general corporate purposes Issue pric
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 Impact Credit Investor Presentation B2 Impact
Slide 13: This is B2 Impact
This is B2 Impact NOKm 9M’23 9M’22 %∆ Cash collections 4 259 3 704 15% Core unsecured markets Net revenues 2 829 2 261 25% Secured markets (Veraltis) Adj. EBIT 1 287 992 30% Head office, Norway Adj. EBIT % 45% 43% 2 pp Investment office, Luxembourg EBIT 1 216 725 68% Adj. Net profit 378 471 -20% Cas
Slide 14: B2 Impact well positioned with low leverage, strong cash flow and substantial investment capacity
B2 Impact well positioned with low leverage, strong cash flow and substantial investment capacity ✔ Number of countries with continued operations reduced from 23 to 17 Reduce footprint ✔ 3 countries in sales process and run-off and others under review ✔ FTEs decreased by 836 since end of 2019 to 1 6
Slide 15: B2 Impact is currently among the strongest performers in the industry
B2 Impact is currently among the strongest performers in the industry Positive credit spread development compared to peers Comment bps • B2 Impact currently boasts attractive credit metrics that are 1500 among the strongest in the industry Peer average1 1300 • Expected lower cost of funding going fo
Slide 16: B2 Impact with upgraded rating despite macroeconomic challenges
B2 Impact with upgraded rating despite the current macroeconomic challenges as opposed to industry peers B2 Impact with the only rating upgrade from Moody’s in the industry over the past two years Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Rating agency CFR1 Outlook Bond Rating2 8 S Ba1 Ba2 Stable Ba3 7 Upg
Slide 17: 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 Forward 120m ERC profile by year NOKm NOKm Secured Unsecured 23 809 23 901 5 112 23 100 22 847 22 262 21 678 21 475 19 918 19 867 19 590 4 121 18 6
Slide 18: Capital discipline in combination with strong cash flow and growth in investments
Capital discipline in combination with strong cash flow and growth in investments NOKm Portfolio investments LTM Cash EBITDA LTM Leverage ratio 4 351 • B2 Impact has carried out a substantial deleveraging since 2020. In the same period: – Cash EBITDA (LTM) up 19% 3 665 – Leverage ratio down 29% – In
Slide 19: ESG commitment showing results
ESG commitment showing results Solid ESG Risk rating from Sustainalytics, ranking B2 at the top of the industry and within the top 1 % of rated ESG Risk rating companies globally • Current ESG Risk Rating of 8.7 8.7 • B2 Impact is considered to be at negligible ESG risk: Negligible Risk – Low exposu
Slide 20: Market overview
Market overview 20 Impact Credit Investor Presentation B2 Impact
Slide 21: Improving returns and back to growth for CMS players with low leverage
Improving returns and back to growth for CMS players with low leverage Indicative returns on portfolio investments Floating euro rates (EURIBOR) • B2 Impact currently boasts attractive credit metrics that are among the strongest in the industry • Expected lower cost of funding going forward as a res
Slide 22: Subdued investment capacity among industry players and increased supply expected
Subdued investment capacity among industry players and increased supply in the industry is expected to lead to attractive investment opportunities The trend in European NPL volumes has taken a turn Comment NPL volumes EUR bn • On the back of the current interest rate environment the, and the increas
Slide 23: Financial performance
Financial performance 23 Impact Credit Investor Presentation B2 Impact
Slide 24: Collection Performance excl. JVs
Collection Performance excl. JVs Unsecured collection performance REO sales Collection Performance % Book value Sales proceeds 4 081 3 698 3 641 +48% 3 562 +40% 581 103% 104% 521 102% 99% 392 372 2020 2021 2022 LTM Q3’23 2022 LTM Q3’23 Secured collections Comment Cash collections REO sales Repossess
Slide 25: Cost mitigating actions implemented to counter inflationary pressure
Cost mitigating actions implemented to counter inflationary pressure Cash collections in constant FX Total operating expenses adjusted for NRIs and FX Cash collections OPEX ratio Other OPEX Personnel expenses External expenses 5 427 1 758 1 769 CAGR 5 129 5 142 1 690 1 615 1 592 4 767 4 523 440 432
Slide 26: Portfolio investments and Estimated Remaining Collections (ERC)
Portfolio investments and Estimated Remaining Collections (ERC) Investments 2020 to end Q3 2023 of NOK 7.4bn Portfolio investments Geographical distribution Asset class distribution SEE 18% Unsecured NE 43% Forward Flow WE 41% 9% NOK NOK Unsecured 52% 7.4bn 7.4bn 2 730 3% CE 2 435 5% 28% Pol Secured
Slide 27: Trading update: Strong balance sheet and solid liquidity going into 2024
Trading update: Strong balance sheet and solid liquidity going into 2024 Comments on Q4 2023 Key figures Q4 2023 • Unsecured collection performance at 104% and keep trending above the curves, in line with previous quarters Cash collections Collection performance Portfolio investments • Strong secure
Slide 28: Debt maturity profile based on preliminary Q4'23
Debt maturity profile based on preliminary Q4’23 (EURm) Current debt maturity profile Debt maturity profile after refinancing E+6.35% I+2.9-3.75% E+6.90% E+4.55% I+2.9-3.75% E+6.90% E+4.55% E+[X.XX]% 610 610 134 184 300 300 200 476 426 180 180 100 164 180 16 0 2024 2025 2026 2027 2025 2026 2027 2028
Slide 29: Summary
Summary 29 Impact Credit Investor Presentation B2 Impact
Slide 30: Key credit highlights
Key credit highlights Well positioned to take advantage of favorable market dynamics 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 Lowest l
Slide 31: Risk factors
Risk factors 31 Impact Credit Investor Presentation B2 Impact
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: Appendix
Appendix 40 Impact Credit Investor Presentation B2 Impact
Slide 41: 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 41 B2 Impact Credit Investor
Slide 42: 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 42 B2 Impact C
Slide 43: Significant deleveraging and improved performance over last 4 years
Significant deleveraging and improved performance over last 4 years 1 NOKm NPL REOs NIBD Cash EBITDA Adj. Net profit 1 140 1 151 1 160 1 014 927 932 946 934 895 973 957 949 910 900 862 16 584 15 710 15 636 15 230 14 776 14 591 13 587 13 556 13 601 13 724 12 990 13 187 13 059 13 168 13 196 12 175 11
Slide 44: Quarterly trends
Quarterly trends 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 NOK million Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Cash collections 1 301 1 229 1 191 1 136 1 214 1 246 1 244 1 458 1 248 1 513 1 497 Net revenues 762 756 792 726 716 748 797 824 914 1 031 884 Adj. EBIT 330 321 385 297 289 330 373 343
Slide 45: Quarterly financial performance
Quarterly financial performance Net revenues Cash EBITDA Adjusted EBIT NOKm NOKm NOKm 71% 71% 71% 48% 69% 47% 65% 44% 44% 1 031 42% 496 1 140 1 151 1 160 914 884 824 973 402 797 389 900 373 343 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 45 B2 Impact Cre
Slide 46: Favourable low leverage and strong cash flow in the quarter
Favourable low leverage and strong cash flow in the quarter Cash flow Q3 2023 (NOKm) Additional investment capacity (NOKm) Portfolio investments Cash earnings 901 1 158 769 767 795 -79 399 357 262 901 399 99 -357 60 -163 701 -21 Q3’22 Q3’22 Q1’23 Q2’23 Q3’23 460 Stable underlying leverage ratio -260
Slide 47: Portfolio diversification
Portfolio diversification1) Unsecured Year ERC 1 2 3 4 5 6 7 8 9 10 120m ERC Total ERC Poland 976 785 595 469 374 300 249 208 176 149 4 281 4 813 NE 1 565 1 256 1 015 823 677 557 457 376 302 241 7 270 7 961 CE 250 195 155 118 86 65 52 39 30 24 1 014 1 061 WE 248 210 170 136 95 71 55 46 41 35 1 108 1
Slide 48: Favourable development in headroom to covenants
Favourable development in headroom to covenants Comments Leverage ratio and ICR covenants Leverage ratio Interest cover ratio • B2 Impact will continue to uphold a solid headroom to both earnings- and 7,30x 6,90x value-based covenants and headroom has increase significantly over the latest years 5,1
Slide 49: Financial risk management per Q3'23
Financial risk management per Q3’23 Currency risk Net borrowing basket • Translational balance sheet exposure to main currencies hedged by Currency 4% 11% derivatives • Currency derivatives are used to: EUR - Obtain a balanced currency basket 18% NOK PLN 9 490m SEK - Designed to utilize zero interes
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 13.67 % 2 RASMUSSENGRUPPEN AS 3) 11.12 % • In June 2016, the company listed on the Oslo Børs at a price of
Slide 51: Definitions
Definitions • Actualisation: Actualisation is the difference between actual and forecasted collections for purchased loan • Cash revenue: Cash revenue consists of Total revenues added back Amortisation and Revaluation of purchased portfolios for the reporting period. loan portfolios and adjusted for
Slide 52: Definitions (cont'd)
Definitions (cont’d) • Liquidity reserve: Cash and short-term deposits (less NOK 200 million to cover working capital) plus unutilised of cash flows divided on the weighted average number of shares outstanding in the reporting period. Operating cash credit facility lines, plus fair value of treasury
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
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