Nelly Group Ab · OMXSTO:NELLY
Nelly Group Ab — Qliro — Debt Investor Presentation (August 2019)
42 slides from Nelly Group Ab's debt investor presentation, Aug 19, 2019
Slide 1: Investor presentation
Investor presentation August 2019
Slide 2: Disclaimer
Disclaimer Background This investor presentation (this "Presentation") has been prepared by Qliro AB (the "Issuer", and together with its direct and indirect subsidiaries from time to time, the "Group") solely for use in connection with the contemplated offering of notes (the "Notes") (the "Transact
Slide 3: Disclaimer
Disclaimer Restrictions in the United Kingdom In the event that this Presentation is distributed in the United Kingdom, it shall be directed only at persons who are either (a) "investment professionals" for the purposes of Article 19(5) of the UK Financial Services and Markets Act 2000 (Financial Pr
Slide 4: Transaction overview
Transaction overview Summary of indicative terms Group structure Issuer Qliro AB Instrument Tier 2 capital (Swe: supplementärkapital) Ranking Subordinated Volume SEK 100,000,000 Qliro Group AB Denomination SEK 1,250,000 Tenor 10 years after the issue date Non-call 5 year, thereafter callable on each
Slide 5: Agenda
A G E N DA 1. Introduction to Qliro AB Carolina Brandtman Mikael Antonsson 2. Business overview CEO, Qliro AB COO and Acting CFO, Qliro AB • 20 years of experience • • 8 years of experience • 3. Asset quality, capitalisation, funding and liquidity • Most recent experience from • Previous positions a
Slide 6: Key investment highlights
Key investment highlights ✓ Able to capture significant volumes with a sophisticated technical platform as well as a strong merchant and consumer Proven business offering model with high level ✓ Low customer acquisition costs with clear cross-selling opportunities from Sales Finance to Personal Loan
Slide 7: 1. Introduction to Qliro AB
QLIRO 1. Introduction to Qliro AB
Slide 8: Brief overview of Qliro AB
Introduction to Qliro AB Brief overview of Qliro AB Qliro at a glance Qliro in numbers ▪ Qliro AB (“Qliro”) simplifies online payments by offering financial services for e-merchants and consumers across the Nordic countries Net loan book1) by business area Net loan book and unique customers SEK ▪ E-
Slide 9: Qliro has grown ~70% per annum during the last four years
Introduction to Qliro AB Qliro has grown ~70% per annum during the last four years Net loan book1), SEKm Sales Financing Personal Loans2) 1 710 1 530 1 514 527 1 246 317 1 212 423 1 055 1 019 187 245 61 827 109 754 793 714 10 538 573 509 1 213 1 182 453 1 091 994 1 025 1 001 317 910 817 258 183 Q1 '
Slide 10: Key focus areas going forward
Introduction to Qliro AB Key focus areas going forward Key initiatives ❑ Continue to strengthen the core offering in existing markets, Independent entity no new product launches in unfamiliar business segments Focus on becoming a separate independent entity or geographic markets anticipated ❑ Focus
Slide 11: 2. Business overview
QLIRO 2. Business overview
Slide 12: Two complementary business areas
Business overview Two complementary business areas Sales Financing ▪ E-merchants are offered a comprehensive check-out comprising various payments solutions such as invoice, part payment, credit Product offering by geography card and direct bank payments Business volume1) SEK 5,153m ▪ Consumer trans
Slide 13: Sales Financing overview – Proven business model that provides value for all parties
Sales Financing Personal Loans Sales Financing overview – Proven business model that provides value for all parties Overview of Qliro’s Sales Financing model 1 3 Order & delivery Merchant Consumer 2 Business Payment volumes options Qliro 1 Value for merchants 2 Value for Qliro 3 Value for consumers
Slide 14: A highly integrated e-commerce partnership with merchants enables a customised check-out
Sales Financing Personal Loans A highly integrated e-commerce partnership with merchants enables a customised check-out Qliro One – A well developed platform Offering all popular payment methods ▪ Qliro One remembers the customer across devices and Qliro’s products Product specification their prefer
Slide 15: Steady growth in business volumes drives loan book expansion and interest income
Sales Financing Personal Loans Steady growth in business volumes drives loan book expansion and ultimately interest income generation Sales Financing development ▪ The Sales Financing business segment continues to bring new merchants to the platform which adds business volume and increases the loan
Slide 16: Highly integrated relationship with merchants
Sales Financing Personal Loans Highly integrated relationship with merchants Increasing number of merchants Long contract duration Less dependency on the Qliro Group ▪ Strategy to actively approach larger merchants ▪ Typically 2-3 years contract length which are ▪ Key initiative to broaden its merch
Slide 17: Well positioned to continue benefitting from the underlying market growth of e-commerce
Sales Financing Personal Loans Well positioned to continue benefitting from the underlying market growth of e-commerce High % of the Nordic population Rapid growth of e-commerce in all of Qliro’s markets uses e-commerce services Internet retailing1), EURbn Percentage of population using e-commerce s
Slide 18: Personal Loans overview – Significant ramp-up in consumer loans since launch in 2017
Sales Financing Personal Loans Personal Loans overview – Significant ramp-up in consumer loans since launch in 2017 A strong complement to Sales Financing Product offering Cross-selling opportunities for Personal Loans from Sales ✓ Financing volumes Loan size SEK 20,000-500,0001) Loans are originate
Slide 19: Solid loan book characteristics
Sales Financing Personal Loans Solid loan book characteristics Average borrower characteristics1) Age Annual income Employment 39 years old SEK ~360,000 Permanent job Loan size Duration2) Interest rate SEK ~76,000 ~8.7 years ~8.0% p.a. Social status Geography Reason Married or cohabitee Rural Debt c
Slide 20: The credit scoring model – a data driven approach
Business overview The credit scoring model – a data driven approach Automated data-driven scoring model with real-time analysis of both internal and external data to assess the credit risk Large data set Individual insight Credit scoring process is based The applicants previous on a data set gathere
Slide 21: Experienced management team and board of directors
Business overview Experienced management team and board of directors Management team Board of directors Carolina Brandtman Mikael Antonsson Ann Ekroth Lennart Jacobsen Robert Burén CEO COO and Acting CFO Chief Risk Officer Chairman of the board Director of the board Previous experience: Managing Pre
Slide 22: 3. Asset quality, capitalisation, funding and liquidity
3. Asset quality, capitalisation, funding and liquidity
Slide 23: High asset quality
Asset quality, capitalisation, funding and liquidity High asset quality Growth of net loan book1) Credit loss ratio SEKm IAS 39 IFRS 9 1 710 1 530 4.6% 4.3% 3.9% 1 055 3.3% 3.1% 754 0.1% 3.9% 1.3% 2.9% 2.2% 509 3.0% 1.9% 1.7% 1.4% 0.6% 2015 2016 2017 2018 2019 Q2 2015 2016 2017 2018 Q2 2019 Realised
Slide 24: Strong capital position – Qliro AB
Asset quality, capitalisation, funding and liquidity Strong capital position – Qliro AB Regulatory capitalisation (as of Q2 2019) Overview of Qliro AB’s capital position Consolidated SEKm SEKm Qliro AB situation1) Own funds Risk Exposure Amount Adjusted Total Assets 1,812 2,013 Common Equity Tier 1
Slide 25: Diversified funding structure with well-matched FX profile
Asset quality, capitalisation, funding and liquidity Diversified funding structure with well-matched FX profile Overview Well-balanced funding… …with matching FX-exposure SEKm SEKm, Q2 2019 ▪ Qliro has a diversified capital structure with funding from both government-backed deposits 1 601 2% 7% 1% 7
Slide 26: 4. Financials
QLIRO 4. Financials
Slide 27: Financial snapshot – Considerable year-on-year loan book growth with improving profitability
Financials Financial snapshot – Considerable year-on-year loan book growth with improving profitability Total income1) Operating profit before tax and D&A Net income excl. group contributions SEKm 329 SEKm SEKm 295 41 2.3 Income and profitability -0.9% -1.2% 26 22 223 17 0.9% -2.0 10.5% 11.7% 12.5%
Slide 28: Well-positioned to scale on the existing cost base
Financials Well-positioned to scale on the existing cost base Net loan book1) and costs development2) Comments SEKm 1 710 ▪ Substantial investments in 26% the organisation and 21% technical platform the last years to prepare the business 1 212 18% 16% for further growth ▪ Qliro is now well-positione
Slide 29: Q2 update – Total income grew by 21% while opex by 10%
Financials Q2 update – Total income grew by 21% while opex by 10%, highlighting the scalability of the business Net loan book1) Sales Financing loan book Personal Loans loan book SEKm SEKm SEKm 41% 15% 182% 1 710 527 1 182 1 212 1 025 187 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Total income2
Slide 30: 5. Appendices
QLIRO 5. Appendices
Slide 31: Income statement
Income statement SEKm 2016 2017 2018 LTM Q2 2019 Interest income 147 220 281 310 Interest cost -8 -17 -17 -22 Net interest income 139 203 263 288 Commission income 10 8 11 18 Commission costs -3 -1 0 -3 Net result from financial transactions 0 0 0 0 Other income 12 12 21 26 Total income 158 222 295
Slide 32: Balance sheet
Balance sheet SEKm 31 Dec 2016 31 Dec 2017 31 Dec 2018 30 Jun 2019 Cash and balance to central bank - 40 65 55 Loans to credit institutions 6 71 22 59 Net loans to customers 754 1,055 1,530 1,710 Certificates and bonds - 25 132 147 Intangible assets 86 130 150 169 Tangible assets 9 12 14 20 Deferred
Slide 33: 6. Risk factors
QLIRO 6. Risk factors
Slide 34: Risk factors
Risk factors Background This document has been prepared by Qliro AB, reg. no. 556962-2441, ("Qliro" or the "Issuer") in relation to its contemplated issue of unsecured subordinated tier 2 capital notes denominated in SEK (the "Notes"). A number of risks may, if they are materialized, have a material
Slide 35: Risk factors
Risk factors Risks related to currency exposure Qliro's currency risk arises primarily in connection with recalculation from other currencies to SEK from business conducted abroad and in connection with transactions in foreign currencies. Qliro's functional currency is SEK. Part of Qliro's revenues
Slide 36: Risk factors
Risk factors Qliro operates in a highly competitive industry and may fail to compete successfully Qliro operates in the financial services industry which is characterized by a high degree of competition and fragmentation. In parallel with an increase in the demand for attractive payment solutions fo
Slide 37: Risk factors
Risk factors Risks related to regulatory requirements and regulatory changes As a Swedish credit market company, Qliro is under the SFSA's supervision with regard to, inter alia, solvency and capital adequacy, including solvency ratios and liquidity rules, as well as rules on internal governance and
Slide 38: Risk factors
Risk factors The Recovery and Resolution Directive Qliro is subject to directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms ("BRRD"). BRRD establishes a framework for the recovery and resolution of credit institutions and, inter al
Slide 39: Risk factors
Risk factors Risks related to legal proceedings, claims and disputes Qliro may from time to time be involved in disputes associated with its operations. Disputes could concern claims from consumers, private parties, regulatory authorities or governments. Disputes and claims may be time consuming, di
Slide 40: Risk factors
Risk factors Credit risks If the Issuer's financial position deteriorates it is likely that the credit risk associated with the Notes will increase as there would be an increased risk that the Issuer cannot fulfil its payment obligations under the Terms and Conditions toward noteholders. The Issuer'
Slide 41: Risk factors
Risk factors Risks related to currency exposure The Notes will be denominated and payable in SEK. If noteholders measure their investment return by reference to a currency other than SEK, an investment in the Notes will entail foreign exchange-related risks due to, among other factors, possible sign
Slide 42: Slide 42