BOND INVES TORS PRES ENTATION T 28 TH AUGUS 2018 D IS CLAIMER - - PowerPoint PPT Presentation

BOND INVES TORS PRES ENTATION AUGUS T 28TH 2018

CONFIDENTIAL AND PROPRIETAR

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DIS

CLAIMER

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This presentation contains forward-looking statements within the meaning of the U.S . Private S ecurities Litigation Reform Act of 1995 and the securities laws of other j urisdictions. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes", "estimates", "aims", "targets", "anticipates", "expects", "intends", "plans", "continues", "ongoing", "potential", "product", "proj ects", "guidance", "seeks", "may", "will", "could", "would", "should" or, in each case, their negative, or other variations or comparable terminology or by discussions of strategies, plans, obj ectives, targets, goals, future events or intentions. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this presentation and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, competition in areas of our business, outlook and growth prospects, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent

• periods. For a description of important factors that could cause those material differences, we direct you to the section of our

Annual Report entitled "Risk Factors". Any forward-looking statements in this presentation are based on plans, estimates and proj ections as they are currently available to

• ur management. We undertake no obligation, and do not expect, to publicly update or publicly revise any forward-looking

statement, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this presentation and in our Annual Report.

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KEY HIGHLIGHTS FOR H1 2018

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• Solid operational and financial performance
• Robust operating performance underpinned by balanced contribution from both debt purchasing and servicing

activities

• S

trong organic Cash EBITDA growth to €33m in H1 2018 (up 20% yoy)

• Continued diversification with increasing servicing revenues contribution
• €11m of servicing revenues in H1 2018, driven by contributions from both performing and NPL servicing activities
• S

ervicing revenues represented 26%

• f Group net revenues in H1 2018
• Sustained improvement in capital structure and liquidity
• Continued deleveraging with Net Debt to LTM Cash EBITDA declining to 2.7x, as of June 2018
• S

ignificant amount of liquidity, with more than €65m of cash, readily available to seize potentially attractive investment opportunities over the rest of the year - potential debt portfolios disposals abundant in H2 18

• Acquisition of DSOgroup will create a global and integrated market player
• S

ignificantly enhances MCS ’ servicing capabilities and accelerates MCS ’ ongoing diversification towards capital- light activities

• Combined group expected to be one-stop shop for an enlarged base of clients, opening new growth avenues in

non-banking sectors (insurance, utilities, telco, etc.)

• Acquisition consideration expected to total approximately c.€180m (including significant cash on the balance

sheet)

• S

ignificant proportion of the acquisition consideration (nearly 40% ) shall comprise equity rollover by both DS Ogroup’ s and MCS ’ current shareholders while the remaining funding shall be primarily in the form of committed debt financing, which is expected to be refinanced in the high yield bond market

• Expected cost synergies of approximately €3.7m and revenue synergies of approximately €1.0m, each on a full-

year basis, with the full impact expected to be realized in 2021

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ROBUS

T ORGANIC GROWTH LEADING TO S TRONG DELEVERAGING

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Portfolio Acquisitions and 120m Gross ERC

(€m) (€m)

Cash EBITDA and Cash EBITDA Margins Net Debt / Cash EBITDA (LTM)

(€m)

83.4 93.2 97.5 8.5 18.3 22.0 91.9 111.5 119.5 2016 2017 LTM Jun-18 Gross Collect ions S ervicing S ervicing as %

• f revenue

Total Cash Revenues

12% 25%

16 16 6 H1 2016 H1 2017 H1 2018 Port folio Acquisitions 120m Gross ERC

338

4.3x 3.2x 2.7x Q2 2017 Q4 2017 Q2 2018 56.3 68.8 74.3 2016 2017 LTM Jun-18 Cash EBITDA Cash EBITDA margin

61% 62% 29% 62%

(1)

Cont inued st rict invest ment discipline

1) Cash EBITDA margin calculat ed as Cash EBITDA as a percent age of Tot al Cash Revenues.

369 347

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CONS

ER VATIVE LEVERAGE PROFILE VS. PEERS AND S IGNIFICANT S ER VICING CONTRIBUTION

Net Debt / Cash EBITDA (LTM) (1) 4.3x 2.7x 3.4x 3.9x 4.2x 4.2x 4.4x 5.2x Q2 2017 Q2 2018 B2Holding Intrum Hoist Cabot Arrow Lowell

S

• urce: Lat est company filings (Q4 2017, Q1 2018, Q2 2018 invest or report s and present at ions).

1) Net debt / Cash EBITDA and S ervicing revenue cont ribut ion as of LTM Mar-18, unless st at ed ot herwise. 2) Net debt / Cash EBITDA and S ervicing revenue cont ribut ion as of LTM Jun-18. 3) Based on FY 2017 and pro forma for acquisit ion of carve-out asset s. 4) S ervicing revenue cont ribut ion as of LTM Dec-17.

(3)

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

Prudent target leverage ratio of 2.5x – 3.5x

Servicing revenue contribution (as % of revenues)(1) 14% 9% 54% 3% 20% 23% 26%

(3)(4)

MCS 29% (1.6x)

(2) (2) (2)

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ACQUIS

ITION OF DS

OGROUP DS OGROUP AT A GLANCE

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Not e: French GAAP figures / 2017 financials are pro-forma of 100%

• f Effico.

Key Financials (€m)

18 20 28 33 55 56 4 5 6 8 11 11 22 25 34 40 66 67 2 3 5 6 11 11 2013 2014 2015 2016 2017 LTM - Mar 18 S ervicing Revenue Debt Purchasing Revenue EBITDA

• Founded in 2001, DS

Ogroup is a leading independent French debt collect ion management company focused on debt servicing and debt purchasing

• For FY2017, debt servicing and debt purchasing represents 84%

and 16%

• f revenues,

respect ively

• While DS

Ogroup st art ed out focusing on debt servicing, debt purchasing act ivit ies were int roduced in 2007 and DS Ogroup has a120m ERC of €93m, as of 31 March 2018

• DS

Ogroup has a deep and diversified client base across banks, insurers, ut ilit ies and

• t her sect ors
• The company is a pioneer in t he management of cust omer financial relat ionships and is

able t o assist it s client s across t he full billing and credit cycle t hanks t o it s t echnology, expert ise and processes

  

IT platform: a fully scalable and proprietary collection platform dedicated to collection agents, bailiffs and collection companies



Strong production capabilities: 400 employees in France and c.200 highly qualified employees in Mauritius observing rigorous compliance standards A broad network of bailiffs: c.1,000 agents and a footprint across France which allows DSOgroup to efficiently process a large volume of receivables across the French territory Wide offer: operating on the entire lifespan of receivables and billing industries through debt servicing and debt purchasing

Overview Key differentiating factors

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ACQUIS

ITION OF DS

OGROUP ENHANCING OUR VALUE PROPOS

ITION ALONG THE CMS

VALUE CHAIN

Net revenues: €73.2m(2) Net revenues: €143.5m(2)

1) Based on combined financials for MCS (IFRS account ing basis) and DS Ogroup (French GAAP account ing basis) for t he LTM-March 2018. 2) Net Revenues calculat ed as Tot al Cash Revenues less Port folio Amort izat ion.

Net revenues: €66.8m(2)

DSOgroup significantly enhances MCS’ servicing capabilities and revenue contribution, accelerating MCS’ ongoing diversification towards capital-light activities



DSOgroup’s market-leading BPO offering will strengthen MCS’ product offering and value proposition



Debt purchasing 86% Debt servicing 14%

MCS Net Revenues as of LTM-Jun-2017

Debt purchasing 75% Debt servicing 25%

MCS Net Revenues for year ended 31-Dec-17

Debt purchasing 46% Debt servicing 54%

Combined Net Revenues for LTM-Mar 2018(1)

DSOgroup’s capabilities in small, unsecured consumer debt will complement MCS’ expertise in large, secured loans, and enable further development in this market segment in coming years



DSOgroup’s advanced proprietary IT platforms, extensive bailiff network and off-shore presence in Mauritius will enhance MCS’ operational capabilities



DSOgroup’s activities are contracted with non-banking clients, resulting in greater diversification in client base and

• pening new growth avenues for MCS



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Appendix

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FINANCIAL PERFORMANCE – FIRS

T HALF 2018

Highlights

• 16%
• rganic growth in cash revenues,

up to €56m between H1 2017 and H1 2018

• S

trong backbook collections helped increase gross collections by 10% between H1 2017 and H1 2018

• S

ervicing revenues increased more than 50% (vs. H1 2017) owing to balanced contribution from both performing (including CIF contract) and non-performing servicing activities

• Professional fees and services decreased

by €0.4m in H1 2018 from comparable period, despite growth in revenues

• Committed costs increased in line with
• ur business growth but was flat as a %
• f

cash revenues in H1 2018 (vs. H1 2017)

• As a result, Cash EBITDA reached €33m

(+20% yoy growth)

• Cash EBITDA margin at 59%

Key Financials

First Semester LTM €m Jun-2017 Jun-2018 Variation(% ) Jun-2017 Jun-2018 Variation(% ) Gross Collections 41.5 45.8 10% 80.1 97.5 22% At t r. Gross collect ion 39.2 45.1 15% 75.6 95.4 26% Non At t r. Gross Collect ion 2.2 0.6 (73% ) 4.5 2.1 (53% ) Servicing Revenues 7.0 10.7 53% 11.3 22.0 95% Total Cash Revenues 48.5 56.4 16% 91.4 119.5 31% Professional fees and services (4.8) (4.3) (10% ) (9.3) (8.6) (8% ) Personnel costs (10.1) (11.6) 15% (17.4) (22.7) 31% Committed costs (6.0) (7.3) 22% (10.8) (13.9) 29% Total costs (20.8) (23.3) 12% (37.5) (45.2) 21% Cash EBITDA 27.7 33.2 20% 54.0 74.3 38% Cash distribution to S PV co- investors (1.8) (0.6) (67% ) (3.6) (1.5) (58% ) Attributable Cash EBITDA 25.9 32.6 26% 50.3 72.8 45% Cash EBITDA margin 57% 59% 59% 62%