Multitude Ag · XETR:MULT
Multitude — Ferratum Capital Germany — Debt Investor Presentation (March 2019)
71 slides from Multitude's debt investor presentation, March 2019
Slide 1: Ferratum Capital Germany GmbH – Investor Presentation
Ferratum Capital Germany GmbH – Investor Presentation Contemplated Senior Unsecured Bond Issue March 2019
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) This Presentation (the "Presentation") has been produced by Ferratum Capital Germany GmbH (the "Issuer", or together with Ferratum Oyj (the "Guarantor") and their direct and indirect subsidiaries "Ferratum Group" or the "Group") solely for use in connection with the contemplated off
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) Conflict of interest The Sole Bookrunner and/or its Representatives may hold shares, options or other securities of the Group and may, as principal or agent, buy or sell such securities. The Sole Bookrunner may have other financial interests in transactions involving these securitie
Slide 4: Transaction Structure and Use of Proceeds
Transaction Structure Simplified Transaction Structure and Use of Proceeds Ferratum Oyj Guarantor Introduction Ferratum Capital Germany GmbH (“Ferratum The bonds will be guaranteed by the Capital”, the “Issuer” or the “Funding SPV”) is Guarantor Ferratum Capital Germany GmbH Operating subsidiari
Slide 5: Summary of Main Terms
Summary of Main Terms Issuer Ferratum Capital Germany GmbH Status Senior unsecured Tenor 4 years Initial issue volume Up to EUR 100 million Subsequent issue volume EUR 50 million, increasing the outstanding amount to maximum EUR 150 million Guarantor: BB- (stable), Fitch Ratings Credit rating Bo
Slide 6: Investment Highlights
Investment Highlights Nearly 14 years of experience offering credit and payment products for consumers and small business, currently active in 25 countries primarily in Europe Proven business model Specialist in online processes with a centralized technology infrastructure and sales experts with
Slide 7: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 7
Slide 8: Ferratum Group in Brief
Ferratum Group in Brief Historical Financial Development (EURm)1 CAGR: 38.9% Introduction 221.6 262.2 Revenue 154.1 EBIT Ferratum Group is an international provider of unsecured digital consumer loans 111.0 and small business loans headquartered in Helsinki, Finland 70.5 21.1 31.8 37.8 Offer cus
Slide 9: A Compelling Investment Case
A Compelling Investment Case Our business Innovation & product We provide financial services that enable and empower our diversification customers Our corporate strategy Our Mobile Financial Platform Model that allows Sustainable us and our partners to scale services globally profitable growth Our g
Slide 10: More than 13 Years of Profitable Growth
More than 13 Years of Profitable Growth Initial focus on Finland, Sweden, and the Baltic countries In 2007 and 2008 the Group expanded into Central and Eastern Europe as well as certain Western countries In 2011 and 2012, the Group decided to expand internationally and enter the markets in New
Slide 11: SME and PrimeLoan expands the offering to longer-term solutions
SME and PrimeLoan expands the offering to longer- term solutions & higher customer lifetime value Digital lending – product category evolution LOW LOAN AMOUNT HIGH PRODUCT: SOLUTION: All products are based on the same principles: Full digital setup and high user convenience, real-time, paperless LON
Slide 12: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 12
Slide 13: Fast, Efficient and Easy Application Process – 100% Online
Fast, Efficient and Easy Application Process – 100% Online Ferratum USPs 1 2 3 4 5 6 Loan Check Decision Approval Payment Repayment application Customers credit and Instant loan decision1 Loan approval by Loan payout by Invoice via post, loan and ID by Ferratum and via (online, mobile) customer (onl
Slide 14: Acquisition Strategy
Acquisition Strategy Strong Networking of Customer and Platform To attract new customers, the Group primarily employs online marketing such as: Creating Demand 4 Repeat Business 1 Search engine marketing (SEM) TV, Radio, Outdoor Branding, PR Search engine optimization (SEO) Sponsoring
Slide 15: Credit Scoring, Acceptance levels and Collection of Loans
Credit Scoring, Identification and Credit Scoring Acceptance levels and 1 2 3 Collection of Loans Digital identification based on hard facts as Effective check of the customer by means of: Credit decision within seconds: name and date of Primarily digital identification via mobile and The Group’
Slide 16: Big Data Optimizes Credit Scoring
Big Data Optimizes Credit Scoring To support the credit scoring system, the Group founded a Browser type Browsing behaviour dedicated technology company, Personal Big Data Oy, for the purposes of further researching and developing the credit scoring technology Credit assessment based on up to 10
Slide 17: Ferratum Group's Typical Customer
Ferratum Group’s Typical Customer As at December 2018, the Group had a total Employment Age customer base of 2.0 million customers1 Full-time Among the Group’s customers, a majority of 6.0% 18-25 the customers are below 40 years and are 15.0% 7.0% Other 25.0% predominantly full-time employed 26-
Slide 18: Growth driven via the Platform Model
Growth driven via the Platform Model Global scalability beyond Ferratum’s balance sheet: multiple sources of revenue Mobile Financial Platform Model White Label Partners A channel agnostic, flexible customer interface Ferratum‘s technology and licence platform and back-end data engine, supported by
Slide 19: Navigating through regulatory changes
Navigating through Case study: Introduction of interest rate cap in Estonia Index (Net sales 2014 = 100) regulatory changes Interest cap introduced in Q4 2014 26.1% 17.8% 1,089 547 18.9% Successful track record of adapting to interest cap regulation 301 9.2% 373 5.9% 219 100 105 138 128 In late 20
Slide 20: Anticipated changes in legal environment
Anticipated changes in legal environment Active monitoring and dedicated resources to adapt and respond to regulatory change SWEDEN FINLAND A new law came into force in Sweden on 1 September 2018 capping effective interest A number of amendments to the Consumer Protection Act with regards to the
Slide 21: Leverage opportunities and priorities
Leverage opportunities and priorities Management progress to improve performance Operating costs have stabilized while revenue growth is Accelerate growth of lending by improving risk & increase customer intake recovering Improve conversion rate, scoring & underwriting EUR’000 Processes for incr
Slide 22: Risk modelling review programme
Risk modelling review programme Programme is substantially completed 2018 2019 Scoring Risk & IT Risk & Marketing Intended benefits in 2019: New scorecard implementation 5 cylinder model established – improving Increase number of new customers New heads of data science and tool implemented (
Slide 23: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 23
Slide 24: Overview of Product Portfolio
Overview of Product Loan Portfolio Breakdown by Product, Dec-18 Portfolio 2.4% 9.1% Microloan 15.2% Revenue Split and Structure PlusLoan 25.3% Microloans have historically been the core product since start of operations in 2005 however, with Credit Limit banking license in place since 2012, there
Slide 25: Product Area – Credit Limit
Product Area – Credit Limit Service Offering Credit Limit - Share of Revenue The Credit Limit product was launched in Finland in June 2013 and is currently offered in 10 of Ferratum Group’s markets, including in the Nordics, Estonia, Latvia, Spain, Czech Republic, the UK and in Brazil Credit lim
Slide 26: Product Area – Microloans
Product Area – Microloans Service Offering Microloans - Share of Revenue Short-term microloans with a nominal value below EUR 1,000 have historically been the Group’s core product since it started its operations in 2005 However, the Group has decreased its focus on microloans over the last coupl
Slide 27: Product Area – PlusLoan
Product Area – PlusLoan Service Offering PlusLoan - Share of Revenue PlusLoan was included into the product offering in 2013 and serve to complement the Microloan business The product is offered to selected customer groups only and application is done separately through an online application 25.
Slide 28: Product Area – Business (SME)
Product Area – Business (SME) Service Offering Business (SME) - Share of Revenue In 2015, business lending to Small and Medium-sized Enterprises (SMEs) were introduced in Finland and Sweden Currently, Ferratum Group offers its business lending services in 9 countries, including Sweden, Finland,
Slide 29: Product Area – Mobile Bank
Product Area – Mobile Bank1 Service Offering Mobile Bank - Share of Revenue Mobile Bank includes the Group’s Mobile Banking operations (launched in 2016), FerBuy (to be discontinued), Primeloan (started in 2017) and Ferratum P2P The Group’s mobile banking offering is currently available in five
Slide 30: Product Offering per Market
Product Offering per Market Product area Microloan PlusLoan Credit Limit SME Mobile Bank Primeloan P2P Finland ✓ ✓ ✓ Northern Europe Sweden ✓ ✓ ✓ Denmark ✓ ✓ Norway ✓ ✓ France ✓ ✓ ✓ ✓ Western Germany Europe Netherlands ✓ ✓ ✓ Spain ✓ ✓ UK ✓ ✓ ✓ ✓ Bulgaria ✓ ✓ Croatia ✓ ✓ Eastern Europe Czech Republic
Slide 31: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 31
Slide 32: Asset Quality – Breakdown of Receivables
Asset Quality – Portfolio Ageing Profile (net carrying value) (EURm) Breakdown of Receivables IAS 39 IFRS 9 Non-comparable to historical figures % of current portfolio Comments 320.5 15% Due to the stringent loan application procedure and credit scoring applied by the Group, 257.4 47.0 10.0 3% Fer
Slide 33: Asset Quality – Impairment per Basket of Receivables
Asset Quality – Impairment per Basket of Receivables, December 2018 Impairment Policy and In EUR ‘000 GBV Provision for NBV Coverage Credit Losses Impairments ratio (%)1 Not overdue 205,616 (13,898) 191,718 6.8 Comments 1-90 days due 92,961 (21,127) 71,835 22.7 Overdue receivables are impaired in
Slide 34: Capital Ratio & Liquidity
Capital Ratio & Liquidity Equity Ratio Ferratum Group 63.3% 55.4% Comments Ferratum Group monitors its capital on the basis of its gearing ratio, calculated as net 39.5% debt to equity 34.5% 31.3% 28.3%30.0% 28.9% 26.9%29.9% 29.7% 28.8% 28.1% 27.9% 21.8% 24.1% As the deposit taking business has
Slide 35: Overview of Funding
Overview of Funding Weighted average cost of funding 8.62% 8.02% 5.25% Comments 3.11% 3.62% The Group’s current funding consists of customer deposits and bonds 2014 2015 2016 2017 2018 As the refinancing is completed, the Group will obtain a simpler and more streamlined capital structure In ad
Slide 36: Scope to further improve cost of capital over time
Scope to further improve cost of capital over time… …by migrating more countries under Sphere I operations SPHERE I OPERATIONS SPHERE II OPERATIONS Countries covered by Countries / operations not currently utilising Ferratum Bank p.l.c.’s EU banking licence Ferratum Bank p.l.c.’s EU banking licence
Slide 37: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 37
Slide 38: Ferratum Group Income Statement
Ferratum Group Income Statement Comments Income Statement EUR '000 2018 2017 2016 2015 2014 Revenue increased by 18% to EUR 262 million in FY 2018 from FY 2017 Revenue 262,148 221,638 154,128 111,008 70,508 Operating profit was recorded at EUR 37.8 million Other Income 241 534 64 47 157 Impair
Slide 39: Ferratum Group Balance Sheet
Ferratum Group Balance Sheet Balance Sheet EUR '000 2018 2017 2016 2015 2014 Comments Assets Non-current assets Property, plant and equipment 4,155 3,482 2,761 560 294 Intangible assets 30,227 20,037 12,736 8,232 4,383 In February 2015, the Group received net proceeds from its IPO of EUR 46.2 mill
Slide 40: Ferratum Group Cash Flow Statement
Ferratum Group Cash Flow Statement Cash flow statement Comments EUR '000 2018 2017 2016 2015 Cash flows from operating activities Profit/loss for the period 19,274 20,058 12,961 10,928 As of the end of FY 2018, the Group’s cash position stood at EUR 115.6 million, with the decrease Adjustments for
Slide 41: Summary and Outlook
Summary and Outlook Ferratum has experienced strong revenue and Outlook EBIT (EUR 000s) profitability growth over the last few years EBIT to exceed EUR 45 million Through its increasing base of customer deposits, the Group has a well funded balance > 45,000 sheet with a decreasing cost of capita
Slide 42: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 42
Slide 43: Competitive Landscape
Competitive Landscape The EU consumer credit market is highly fragmented with many new suppliers entering the small consumer loan market Segment Comments Example of key players Mobile consumer loans is the newest consumer credit market Companies principally compete with traditional banks which
Slide 44: Macroeconomic Key Figures and Forecasts
Macroeconomic Key Figures and Forecasts Decreased Consumer Credit Borrowing Rates Since the financial crisis, interest rates have decreased significantly creeping down close to zero Macroeconomic Developments in Europe and negative in some instances EU GDP growth weakened in late 2018 partly due
Slide 45: Consumer Loan Stock
Consumer Loan Stock Stable European Consumer Loan Stock Strong activity in the Nordics The consumer credit stock in the EU has been relatively stable for the past five years, although Ferratum’s core market, the Nordics, has experienced favourable growth in consumer lending in credit for consump
Slide 46: Smartphone penetration and mobile banking usage
Smartphone Global smartphone shipments (million units) penetration and mobile Forecast 1,574 banking usage 1,437 1,473 1,462 1,421 1,302 1,019 Smartphone usage has grown substantially in the last couple of years, with global shipments expected to reach 1.4 billion units in 2018 Growth in annual
Slide 47: Fintech Market Overview
Fintech Market Overview The Fintech industry is currently experiencing very beneficial market dynamics, with several Global Investments and no. of deals in Financial Technology ($bn) new technologies disrupting traditional financial market services 2,694 1,805 Fintechs are expected to have an ag
Slide 48: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 48
Slide 49: Ownership and Share Price Development
Ownership and Share Price Development Shareholder overview as at 28 February 2019 Share price and traded volume | Feb 2015 to Mar 2019 Volume (m) Price (EUR) 400,000 35 Jorma Jokela 33.82% Ferratum Oyj 350,000 30 HSBC 300,000 55.05% 25 Dorval 250,000 5.09% Free float 20 5.37% 200,000 15 150,000 0.67
Slide 50: Leadership Team & Board of Directors
Leadership Team & Board of Directors Leadership Team Board of Directors Pieter van Groos Chairman Pieter van Groos has been a member of the Board of Directors since 2015. Pieter has a strong international business leadership track record in industry, management consulting and financial services with
Slide 51: Ferratum Group Structure
Ferratum Group Structure Part of Ferratum’s operations are Jorma Jokela Free Float conducted under a banking license while the remainder of the operations do not 55.05% 44.95%1 require a banking license Credit institution license (i.e. a banking Ferratum Oyj (Guarantor) license) was granted by t
Slide 52: Legal structure
Detailed list of group companies Legal structure Name Ferratum Finland Oy Country Finland Group share of Parent company holding 100% share of holding 100% Baltic Skyways OÜ Estonia 100% 0% Ferratum Sweden AB Sweden 100% 100% Ferratum Latvia SIA Latvia 100% 100% Ferratum Czech s.r.o. Czech Republic 1
Slide 53: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 53
Slide 54: IFRS 9 diligent review and modifications
IFRS 9 diligent review and modifications Ferratum Group applied IFRS 9 as of 1 January 2018. IFRS 9 requires the recognition of loans at fair value, therefore any expected losses must be accounted for at the disbursement date Based on the initial assessments undertaken in Q1 2018, the total adjust
Slide 55: Credit portfolio before and after IFRS 9 model change
Credit portfolio before and after IFRS 9 model change 1 January 2018 IFRS 9 (1 January 2018 restated) IFRS 9 (31 December 2018) EUR ‘000 Gross AR Reserves Net AR % Gross AR Reserves Net AR % Gross AR Reserves Net AR % Not overdue 158,368 (4,695) 153,673 3.0% 158,368 (12,810) 145,558 8.1% 205,616 (13
Slide 56: Interim results after IFRS 9 model changes
Interim results after IFRS 9 model changes Based on the modifications during year end closing to the IFRS 9 based credit loss provisioning model, the subsequent credit loss calculations of the interim reports for 2018 had to be adjusted accordingly Consolidated Income Statement for thePeriod 1/1/201
Slide 57: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 57
Slide 58: Mobile Bank: The bank in your hand
Mobile Bank: The bank in your hand State-of-the-art Mobile Bank based on Mobile account opening Real-time loans Easy Multi-national Mobile Real-time Deposits Transactions Advantages for Ferratum Currencies Third-party products in future Deposits for more Open platform for Mobile features
Slide 59: Key Regulatory Requirements on Ferratum Bank
Key Regulatory Requirements on Ferratum Bank As of December 2018 Capital Requirements Depositor Compensation Scheme (DCS) Minimum CET1 ratio of 10% MFSA license condition 1 requires the Bank to hold a minimum CET1 (i.e. Core Equity Tier 1 15% of covered deposits through a pledge of eligible as
Slide 60: Ferratum Bank Income Statement
Ferratum Bank Income Statement Comments Income Statement As the Group has rolled out its bank offering across core markets, the Group’s interest EUR '000 2018 2017 2016 2015 2014 income has increased steadily with EUR 110 million in revenues recorded for 2018 Interest and similar income 110,176 90
Slide 61: Ferratum Bank Balance Sheet
Ferratum Bank Balance Sheet Comments Balance Sheet Loans and advances to customers consist of loans granted to individuals and are EUR '000 2018 2017 2016 2015 2014 principally unsecured Assets Balances with Central Bank of Malta 74,465 76,746 21,288 - - The gross book value of loans in Ferratum
Slide 62: Table of Contents
Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors 62
Slide 63: Risk Factors
Risk Factors The Issuer is a subsidiary of the Guarantor and its operations are focused on raising financing for the Group. As such and because the Bonds If the Group's risk provisions in relation to credit losses are not sufficient, the Group's results of operations and financial condition are guar
Slide 64: Risk Factors (cont'd)
Risk Factors (cont’d) The Group is subject to floating rate interest rate risks. costly than expected, this could jeopardize return on investments, reduce profitability, lead to lost investments and thus could have a material The Group is subject to cash flow interest rate risk which is the risk tha
Slide 65: Risk Factors (cont'd)
Risk Factors (cont’d) Negative public perception and press coverage of short-term unsecured consumer loans could negatively affect the Group's revenues and results of operations. A significant part of the Group's revenues stems from new customers as well as from new products introduced in recent yea
Slide 66: Risk Factors (cont'd)
Risk Factors (cont’d) Certain tax positions taken by the Group require the judgment of management and could turn to be inefficient or challenged by tax could be material. The realization of one or more damaging event for which the Group has no or insufficient insurance coverage will have a authoriti
Slide 67: Risk Factors (cont'd)
Risk Factors (cont’d) The Group's business may be challenged by consumers, consumer protection organizations, courts, or regulatory agencies in resulted in sanctions being imposed. There is a risk that the Group may be in breach of applicable laws in the future. Should such risks connection with com
Slide 68: Risk Factors (cont'd)
Risk Factors (cont’d) Failure to comply with data protection and privacy law could negatively affect the Group's reputation business and financial position. c) a bail-in is necessary in the public interest. The Group registers, processes, stores and uses personal data in the course of its business,
Slide 69: Risk Factors (cont'd)
Risk Factors (cont’d) Risk of early redemption and put option. the assets (if any) in the Issuer and the Guarantor for the amounts under or in respect of the Bonds, which means that the bondholders Under the Terms and Conditions, and as described in the term sheet for the Bonds, the Issuer will rese
Slide 70: Risk Factors (cont'd)
Risk Factors (cont’d) Benchmark Regulation. The process for determining EURIBOR and other interest-rate benchmarks is subject to a number of legislative acts and other regulations. Some of these acts and regulations have already been implemented whilst some are set to be implemented in the near futu
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