Bff Bank Spa · MIL:BFF
Bff Bank Spa — Banca Farmafactoring — IPO Roadshow (March 2017)
33 slides from Bff Bank Spa's IPO roadshow presentation, March 2017
Slide 1: Roadshow Presentation
Roadshow Presentation March 2017
Slide 2: Disclaimer
Disclaimer • THIS PRESENTATION, WHICH HAS BEEN PREPARED BY BANCA FARMAFACTORING S.P.A. (THE "COMPANY"), IS PRELIMINARY IN NATURE, AND IS SUBJECT TO UPDATING, REVISION AND AMENDMENT. THIS PRESENTATION MAY NOT BE REPRODUCED IN ANY FORM, FURTHER DISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY
Slide 3: BFF Banking Group: A Bank Like No Other
BFF Banking Group: A Bank Like No Other Leading financial services provider to suppliers of the European Healthcare and Public Administration sectors 1 Market leader in large and underpenetrated markets €240bn market Solid and resilient business model with compelling assets and earning 2 >20% CAGR 2
Slide 4: Established presence in Italy, Spain and Portugal; expanded in CEE with Magellan
Established presence in Italy, Spain and Portugal Expanded in CEE with the acquisition of Magellan €240bn of Public Sector expenditures in the countries we operate in(1) 26% of Customer Loans outside Italy(3) 4% 14% Italy 8% Iberia Poland Other CEE 74% Established presence in Italy, 25 Spain and Por
Slide 5: Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers
Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers, to Tackle the Payment Delays From the Public Administration in Italy, Iberia and CEE Endemic Delay in Payments in the Public Sector What BFF Offers to Customer Some European countries have endemic delays
Slide 6: BFF's Services Offered
BFF’s Services Offered General Overview Focus on Non-recourse Factoring – Revenues Model Pay Purchase Price Collect Cash • Three business lines: Suppliers Debtors Sell Receivables Submit Receivables − Non Recourse Factoring (“Purchased”) (Funded business, • Healthcare + - + • Healthcare Suppliers Ma
Slide 7: Solid Business Model
Solid Business Model Suppliers Debtors Long-standing relationship with top suppliers to Long track record in dealing with Public entities the PA (leading multinational and national and deep knowledge of the payment dynamics suppliers) top 10 clients have been BFF better collection clients for more t
Slide 8: Investment Highlights
Investment Highlights 1 franchise Leading financial services supplier to the European Healthcare and PA sectors Leading Leader in a Large Market With a Solid €240bn potential market, underpenetrated Business Model... Significant recurring business from LT clients and long track record in dealing wit
Slide 9: We Operate in an Underpenetrated €240bn Market, with Leadership Position in Many Geographies
1 We Operate in an Underpenetrated €240bn Market, with Leadership Position in Many Geographies… Key Considerations BFF Positioning Total Public Expenditure in Goods and Service (€bn) Non-recourse Factoring outstandings with PA & NHS (€7.3bn) 2019E Total potential market is the 130 133 132 133 137 pu
Slide 10: ... With a Growing Business, Increasingly Diversified...
... With a Growing Business, Increasingly 2 Diversified... Key Considerations Customer Loans Evolution (€m) Significant customer loans growth with 2,499 BFF ex Magellan (€m) an higher contribution from less 447 capital intensive segments (non NHS public administration) 1,962 2,052 1,555 1,137 2,052
Slide 11: ... And with Positive Trend in Revenues
2 ... And with Positive Trend in Revenues Key Considerations Net Banking Income(1) (€m) Net banking income adjusted increased by 8% in 2016 to €175m (including Magellan and €2m financing costs): 175 Excluding − C.11% increase of net banking 162 (2) financing cost 20 157 of Magellan 20 income for BFF
Slide 12: A Solid Business Model Able to Grow Profitably through Every Storm...
A Solid Business Model Able to Grow Profitably 2 through Every Storm... Net Income (2007-2016) Credit Bubble Financial Crisis Sovereign Debt Crisis BFF with Banking License Downgrade Downgrade of Downgrade Private equity Downgrade of ofItalian ITA Gov. Gov. to BBB+ by Downgrade Downgrade ofto BBB It
Slide 13: ... Thanks to Our Fortress Balance Sheet and Low Risk Profile...
... Thanks to Our Fortress Balance Sheet 3 and Low Risk Profile... Key Considerations Breakdown of Balance Sheet YE2016 (€m) A fortress balance sheet positively geared to an Undrawn Off-balance sheet 826 credit lines increase in interest rates 361 4,735 unrecognized LPI (pre tax) 135 221 AFS 385 Com
Slide 14: ... Backed by a Strong Capital Position
3 ... Backed by a Strong Capital Position Robust capital position maintained also after the cash acquisition of Magellan, the full 2016 net income pay-out and DBRS Italian downgrade Total Capital ratio pro forma of 19.5%(1,2), +4.5% vs 15.0% company target and substantially above SREP of 10.75% Tota
Slide 15: Invested in the Business while Maintained Strong Efficiency
Invested in the Business while Maintained Strong 4 Efficiency Key Considerations Number of employee and Cost / Income ratio Cost / Income adjusted(1,2) 30% 32% 30% 32% Banca Farmafactoring heavily invested over the last three years in infrastructure and people to support growth 409 Managed to mainta
Slide 16: Diversified Funding Base with Potential for Further Funding Cost Optimization
4 Diversified Funding Base with Potential for Further Funding Cost Optimization Key Considerations Available Funding(1) (€m) A growing and diversified funding base (2x from 2013): Liquidity 351% 391% 502% Coverage Ratio(2) (4) €817m online deposits raised in Italy, Spain and 3,152 Germany as of year
Slide 17: High Visibility of Future Revenues from LPI
5 High Visibility of Future Revenues from LPI Key Considerations LPI Stock Evolution (Excl. Magellan) (€m) Cash Accounting Accrual Accounting The full impacts on BFF’s P&L originated by the LPIs and 547 LPI to be accounted in related to the significant growth of purchased receivables 460 P&L (assumi
Slide 18: High Profitability and Significant Free Capital Generation ...
High Profitability and Significant Free Capital 6 Generation ... Key Considerations Net Income adj(1,2) (€m) RoTE adjusted Almost doubled net income(1,2) in the last 4 years to €88m combined(1,2) 26% 22% 28% 37% (incl. Magellan) 88 (2) 72 (3) 10 Significantly improved return on capital thanks to an
Slide 19: ... Able to Support future Growth and Dividend
6 ... Able to Support future Growth and Dividend RoTE: 37% Total Capital ratio: 19.5% Target Total Capital ratio: 15% 1 Invested in the Significant investment in infrastructure business for and expanded employee base to support growth ... business expansion Highly capital generative model able to se
Slide 20: Management Fully Aligned With Public Market Shareholders
Management Fully Aligned With Public Market Shareholders Management have been shareholders of the business since 2006 Senior executives have been in the bank for more than 12 years Paid only if budget achieved, zero otherwise Yearly management 50% in shares or stock options bonus Multiplied up to 14
Slide 21: Key Takeaway
Key Takeaway 1 Market leader in large and underpenetrated markets €240bn market Solid and resilient business model with compelling assets and earning 2 >20% CAGR 2013-2016(1) growth 10bps Cost of Risk 3 Low risk profile coupled with solid capital position 19.5% TC ratio(2) Superior cash generation w
Slide 22: Appendix
1 2 3 4 APPENDIX
Slide 23: 2016 Net Income Reconciliation
2016 Net Income Reconciliation Key Considerations Net Income Adjusted and Combined Build-up (€m) Reported net income equal to ca. €72m, Including €1.4m including net income from Magellan (7 months financing cost (post only) tax) for Magellan (7 months) Reported net income highly impacted by extraord
Slide 24: History
History Long and Successful Track Record in a Changing Environment • Acquisition of • Established in 1985 • Spanish subsidiary • Expand funding base: • Centerbridge Magellan in • Initial investment of active since 2011 • 3yr senior bond agrees to June 2016 €260k issued on June 2014 acquire BFF • Ent
Slide 25: Magellan: The Story of a Successful Acquisition
Magellan: The Story of a Successful Acquisition Key Acquisition Highlights Execution Highlights Increased geographic diversification: 25% of 2016 BFF demonstrated a disciplined approach to acquisition outstanding amount outside of Italy vs. 11% in 2015 enabling to acquire Magellan for a total cash c
Slide 26: Traditional Business Subject to Seasonality, with Peak in Q4
Traditional Business Subject to Seasonality, with Peak in Q4 BFF excl. Magellan Key Considerations Breakdown of Volumes by Quarter(1) (€bn) 1,217 Business subject to a certain degree of seasonality, due to 1,147 955 customers’ preference in selling receivables towards the end of 2H % of total 781 73
Slide 27: Growing Loan Portfolio with Significant Contribution from Italy
Growing Loan Portfolio with Significant Contribution from Italy New Business (€m) Customer loans (€m) Key Considerations 29 85 Purchased volumes in 2016 up 5% vs. 2015 2015 1,513 940 2,481 2015 941 714 1,741 No boost from results of constitutional referendum Italy 54 +5% 105 +7% 2016 customer loans
Slide 28: Further Potential Upside from Funding Synergies on Magellan
Further Potential Upside from Funding Synergies on Magellan Magellan Funding Structure Magellan BFF Group’s strategy aims to optimise Magellan’s local blended base Cost of rate: 1.3% BFF only cost of funding to bring it in line with BFF (process 2H 2016 Funding (%) 4.8% 4.6% 4.4% 1.8% already starte
Slide 29: Assumptions as per Analyst Presentation: Purchased volumes constant
Scenario analysis: Purchased volumes always constant P&L impacts – Illustrative example Comments Y1 Y2 Y3 Y4 Y5 Y6 Y7 Scenario assumption: no growth in outstanding Purchased 100 100 100 100 100 100 100 over the period considered Assumptions as per Analyst Presentation Outstanding loans 100 100 100 1
Slide 30: Assumptions as per Analyst Presentation: Growth in year 2
Scenario analysis: Growth in purchased volumes in year 2 and flat afterward P&L impacts – Illustrative example Comments Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Scenario assumption: growth in outstanding of c. Purchased 100 130 130 130 130 130 130 130 30% in Y2 and flat afterwards Assumptions as per Analyst Presenta
Slide 31: Assumptions as per Analyst Presentation: Growth in years 2 and 3
Scenario analysis: Growth in purchased volumes in year 2 and 3, flat afterward P&L impacts – Illustrative example Comments Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Scenario assumption: growth in outstanding to Purchased 100 130 160 160 160 160 160 160 €130m in Y2 and €160m in Y3 and flat afterwards Assumptions as pe
Slide 32: Summary Profit & Loss
Summary Profit & Loss 31-Dec-2016 31-Dec-2016 Pro-forma(1) 31-Dec-2015 Reported Group Group (consolidating 12 € ‘000 31-Dec-2013 31-Dec-2014 Reported BFF only (consolidating only 7 months for Magellan and months for Magellan) excluding extr. costs) Interest Income 154,643 151,968 161,946 190,225 204
Slide 33: Summary Historical Balance Sheet
Summary Historical Balance Sheet 31-Dec-2015 € ‘000 31-Dec-2013 31-Dec-2014 31-Dec-2016 Reported BFF only Assets Cash and Cash Balances 1 3 160 149 Financial Assets Held for Trading 5 0 0 244 Financial Assets at Fair Value 0 0 0 3,401 Available-for-Sale Financial Assets 82,015 370,180 429,438 385,28