Investor presentation Q1 2020 Results May 2020 1 Disclaimer THIS - - PowerPoint PPT Presentation

investor presentation q1 2020 results
SMART_READER_LITE
LIVE PREVIEW

Investor presentation Q1 2020 Results May 2020 1 Disclaimer THIS - - PowerPoint PPT Presentation

Investor presentation Q1 2020 Results May 2020 1 Disclaimer THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS CONFIDENTIAL AND IT IS FOR INFORMATIONAL PURPOSES ONLY. This presentation and any


slide-1
SLIDE 1

Investor presentation Q1 2020 Results

May 2020

1

slide-2
SLIDE 2

Disclaimer

2

THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS CONFIDENTIAL AND IT IS FOR INFORMATIONAL PURPOSES ONLY. This presentation and any related oral information is strictly confidential and has been prepared solely for use in this presentation. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. This presentation may include unpublished price sensitive information that may constitute “insider information” for the purposes of any applicable legislation and each recipient should comply with such legislation and restrictions and take appropriate advice as to the use to which such information may lawfully be put. We do not accept any responsibility for any violation by any person of such legal restrictions under any applicable jurisdictions. This presentation may include financial information and/or operating data and/or market information regarding our business, assets and liabilities and the markets in which we are active. Unless indicated otherwise, such financial information may not have been audited, reviewed or verified by any independent accounting firm and/or such operating information is based on management estimates or on reports prepared by third parties which we have not independently verified. Certain financial data included in this presentation consists of “non-IFRS financial measures”. These non-IFRS financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-IFRS financial measures and ratios included herein. This presentation contains various forward-looking statements. All statements other than statements of historical fact included in this presentation are forward-looking

  • statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future

performance, industry and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond

  • ur control that could cause our actual results, performance or achievements to be materially different from the expected results, performance or achievements

expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. All information in this presentation is provided as of the date of this presentation, are subject to change without notice and we assume no responsibility to update the information included in this presentation. The information contained in this presentation is not for publication, release or distribution. This presentation should not form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation does not constitute a recommendation regarding our securities. The presentation has not been prepared and is not being distributed in the context of an offering of financial securities in any jurisdiction. This presentation is not an offer for securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended, or in any other jurisdiction absent compliance with the securities laws of such jurisdiction. Any public offering of securities to be made in the United States or elsewhere would be made by means of a prospectus to be obtained from the issuer or selling security holder and that would contain detailed information about us, as well as financial statements. There is no intention to conduct a public offering of the securities in the United States or to register the

  • ffering with the United States Securities Exchange Commission.

By receiving and/or attending this presentation, you agree to be bound by the preceding limitations.

slide-3
SLIDE 3

Key Highlights of Q1 2020 results

3

Robust Cash Revenues in Q1 2020 (+11%(1) versus Q1 2019) despite first Covid-19 slowdown impacts

In Debt Purchasing, Gross collections increased by 29% in Q1 2020 versus Q1 2019 thanks to a solid Backbook performance beyond our expectations. In Debt Servicing, revenues were resilient in Q1 2020 (-6% versus Q12019) whilst we started to feel the initial impacts of COVID-19 beginning in March 2020. Costs remained under control in Q1 2020 (+4% versus Q1 2020) in spite of a robust top line growth.

Significant market activity during Q1 2020, with more expected to follow later this year

We made significant debt portfolio purchases in France in Q1 2020 (+€21 million), on the back of some transactions originated in 2019. In

  • ur Debt Servicing activity, we onboarded a new large contract with a leading bank in Italy that we expect to generate significant

revenues going forward. For both of our activities in our two core markets (France and Italy), caution should prevail given macro-uncertainty but we believe the business pipe is gaining momentum for the second half of this year.

Stable leverage, increased liquidity

Our leverage ratio on Attributable Cash EBITDA was at 3.4x(2) as of March 31, 2020, unchanged vs. the previous quarter and within guidance of 2.5 – 3.5x. As we drew €44m of residual RCF in order to be best prepared against potential COVID-19 related challenges, our liquidity reached €79m at the end of Q1 2020.

(1) Q1 2019 figures are pro forma including Sistemia (2) Ratio calculation based on iQera Q1 2020 and including full-year effect savings to be generated from 2020 from our new optimization initiatives (operations transformation – €2.7m – and support function plans – €0.7m). (3) Ratio calculation based on Q1 2020 results

“ “ “

slide-4
SLIDE 4

COVID-19 – update

4

Operational response

  • Staff protection continues to be our priority. Lockdowns have been lifted both in France and Italy since the beginning of May, which will enable our teams to
  • perate again at near-full capacity before the end of the month. However, teleworking is still the rule for our staff whenever possible, and our offices have only been

reopened on a selective basis, with appropriate security measures

  • In this context, we aim to help our staff find the right balance between work in safe conditions and personal life, empowering managers to adapt best to specific

situations

Financial impacts

  • As anticipated, the impact of the COVID-19 crisis on our business in Q1-20 was limited, given our mix of activities and geographies.
  • The effects will undoubtedly be more significant in Q2-20, as can already be felt in April and May. Our two business lines are impacted, to various degrees and for

different reasons. Although we have taken a number of mitigating measures to adjust costs to this lower revenue environment, there will be a temporary negative impact on Cash EBITDA.

  • It is too early to precisely assess the impact of the COVID-19 crisis on our ERCs, and we are currently gathering data and information to get a clearer picture by the

end of Q2. Given the focus of our Debt Purchasing business on secured loans, as well as our track-record of conservative underwriting, the most probable scenario is that potential changes will consist in cash-flow postponements, rather than cash-flow reductions.

  • Given macro-uncertainty, we drew our residual RCF in order to be best prepared against potential COVID-19 related challenges. Liquidity is therefore strong to date.

In addition, we are finalizing discussions to take out a GGL (Government Guaranteed Loan) to ensure that COVID-19 will not hinder our investment capacities in quarters to come.

slide-5
SLIDE 5

Solid P&L in Q1 2020 despite first COVID 19 slowdown impacts

5

KEY HIGHLIGHTS

  • Compared to 2019, Q1 2020 collections increased by 29% thanks to a solid performance of our

Backbook.

  • Debt Servicing revenues were impacted by the initial effects of COVID-19 in March 2020. This

impact was partially offset in Italy by the contribution of a large contract we onboarded during Q1 2020.

  • As a consequence, Cash EBITDA Margin increased by 3 p.p from 41% to 44%. Attributable Cash

EBITDA margin slightly decreased from 40% in Q1 2019 to 38% in Q1 2020 due to the significant reimbursement of co-investors debt during the last quarter.

Q1 Cash revenues(1) Q1 Cash EBITDA(1) & Margin Q1 costs(1)

(1) Q1 2019 figures are pro forma including Sistemia (2) Ratio calculation based on Q1 2020 results

34.1 35.6

Q1 2019 Q1 2020

(€m)

4%

23.1 24.5

Q1 2019 Q1 2020

Attributable Cash EBITDA

  • Attr. Cash EBITDA margin

40% 38%

(€m)

6%

28.7 37.0 28.9 27.1

Q1 2019 Q1 2020

Gross collections Debt Servicing revenues

(€m) 57.6 64.1

  • 6%

29% 11%

slide-6
SLIDE 6

116.8 158.2 121.1 119.7

LTM Q1 2019 LTM Q1 2020

Gross collections Debt Servicing revenues

(€m) 237.9 277.9

  • 1%

35% 17%

Continued progress of LTM performance (revenues and margins)

6

KEY HIGHLIGHTS

  • Compared to LTM Q1 2019, LTM Q1 2020 collections increased by 35% with two main effects: (i)

solid performance in our Backbook collections, and (ii) dynamic Frontbook collections (€40 million) following significant acquisitions in 2019.

  • Growth in Debt Servicing was resilient (-1%), with (i) strong dynamics of our Italian subsidiaries and

(ii) solid contribution by our French Debt Servicing Business partly offset by run-off contracts.

  • Attributable Cash EBITDA margin increased by almost 3 p.p. to 46% for the year ended March 31,

2020 driven by (i) synergies continuing to flow into P&L and (ii) higher contribution of Debt Purchasing activities

LTM Cash revenues(1) LTM Cash EBITDA(1) & Margin LTM costs(1)

(1) pro forma figures are pro forma including DSO, Serfin and Sistemia for both 2018 et 2019

134.2 138.6

LTM Q1 2019 LTM Q1 2020

(€m)

3%

102.5 128.3

LTM Q1 2019 LTM Q1 2020

Attributable Cash EBITDA

  • Attr. Cash EBITDA margin

43% 46%

(€m)

25%

slide-7
SLIDE 7

Debt purchasing dynamic remained strong

7

KEY HIGHLIGHTS

  • Compared to Q1 2019, Q1 2020 collections increased by 29% (+16% on Attributable Gross

Collections) with limited Covid-19 impact in March. This performance was 7% above our ERC assumptions for Q1 2020.

  • Our acquisitions increased by 13% in Q1 2020 vs Q1 2019 pursuing the acceleration

initiated in 2019 and partly on the back of some transactions originated in 2019. Despite the current context, we maintained our disciplined portfolio acquisitions standards.

  • Thanks to additional ERC generated by our new acquisitions and despite the high level of

Q1 2020 collections, 120M Gross ERC remained stable vs Q4 2019.

Q1 stock portfolio acquisitions 120M Gross ERC

19 21

Q1 2019 Q1 2020

(€m)

13%

403 400 383 398 542 543

Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

(€m) 28 28 43 49 37

  • 10

20 30 40 50 60 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020

Quarterly collections

slide-8
SLIDE 8

Resilience in Debt Servicing despite initial impacts of COVID 19 slowdown

8

KEY HIGHLIGHTS

  • In France, revenues on our Debt Servicing activity decreased, driven by both (i) activities below our expectations as some contracts were slightly delayed

and (ii) initial impacts of COVID-19 on our revenues.

  • In Italy, revenues slowed down in both Serfin and Sistemia due to COVID 19 beginning in March, which were partially offset by the onboarding of a large

new contract with a leading bank.

Quarterly Servicing revenues(1)

Servicing

59%(2)

  • f Group Net

Revenues

Q1-2020

(1) 2019 figures are pro forma including Sistemia which was acquired on July 2019 (2) Ratio calculation based on iQera LTM pro forma figures including Sistemia as of March 31, 2020

19.7 20.2 19.1 19.8 17.8 9.1 10.3 9.4 13.7 9.3 28.9 30.5 28.6 33.4 27.1

Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

France Italy Total

In €m

slide-9
SLIDE 9

Continued cost control

9

KEY HIGHLIGHTS

  • Limited cost increase (+4%) in Q1 2020 despite solid growth in revenues
  • As a consequence, C/I ratio improved by 3 p.p on the period
  • Fixed costs ratio increased by 2 p.p (€3.5 million) following 2019 recruitments.
  • Variable costs ratio improved due to a combination of economies of scale and the evolution of our business mix.
  • Now that the initial synergies between MCS&DSO have been completed - €4.9 million i.e. 105% of our

initial target, new initiatives have been launched to increase savings by another €3.4 million :

  • A transformation plan for operations including optimization of teams rotation, processes improvement, robotization and

digitalization streams (+€2.7 million);

  • Additional plans on support functions optimization (+€0.7 million).
  • FY impact of the plan is expected to be reached in 2021

105%

  • f our 2019/2020

Synergies plan secured

4%

increase in costs between Q1 2019 & Q1 2020

18% 41% 59% 12% 43% 56% 0% 10% 20% 30% 40% 50% 60% 70% Variable costs Fixed costs C/I Ratio

Cost Income ratio evolution

Q1 2019 Q1 2020

+€3.4m

  • f additional

synergies plan in France from 2020

slide-10
SLIDE 10

iQera Group consolidated cash flows – Q1 2020

10

KEY HIGHLIGHTS

  • C. €21 million of portfolio acquisitions were completed during Q1 2020.
  • Net cash from financing activities derives from an additional €44 million on our RCF partially offset by repayment of borrowings (€1.5 million)

and payment of interests on HYB and other loans (€8.4 million).

  • Given macro-uncertainty, we drew our residual RCF in order to be best prepared against potential COVID-19 related challenges.
  • In addition, we are finalizing discussions to take out a GGL (Government Guaranteed Loan) to ensure that COVID-19 will not hinder our

investment capacities in quarters to come.

€26m

Net cash flows from operating activities

Q1-2020

€79m

Net closing cash excluding restricted cash

Mar-20

€m 2020 Net cash flows from operating activities 26.0 Net cash flows for investment activities (21.8) Net cash from financing activities 33.4 Net change in cash and cash equivalents 37.6 Opening cash and cash equivalents 50.7 Closing cash and cash equivalents 88.3

  • /w restricted cash

9.0

For the first quarter ended March 31

slide-11
SLIDE 11

Capital structure & leverage position – Q1 2020

11

3.4x(3)

Leverage on Attributable Cash EBITDA incl. Synergies

Mar-20

KEY HIGHLIGHTS

Leverage Ratio on Attributable Cash EBITDA was 3.4x(3) as of March 31, 2020

  • Our leverage ratio on Attributable Cash EBITDA is stable at 3.4x. It remains among the lowest in the industry and within previous guidance of 2.5x – 3.5x
  • Since the acquisition of Sistemia, 59%(4) of our revenues come from capital light Debt Servicing activities
  • Our liquidity position was strong as of March 31, 2020 including available cash at €79m (excluding restricted cash).

(1) Includes DSO (BPI), Serfin loans, a Sistemia acquisition loan, a portfolio loan and RCF drawings for €50 million. (2) Includes profit sharing accruals and EFFICO put for €6.1 million (3) LTM pro forma Cash EBITDA includes the full-year effect savings to be generated in 2021 from our new optimization initiatives (operations transformation are expected to account for approximately €2.7 million and support function plans are expected to account for approximately €0.7 million). (4) Ratio calculation based on iQera Q1 2020

(4)

Currency: € m Mar-20 Synergies impact (3) Mar-20 with synergies

High Yield Bonds

433.7

  • 433.7

Other loans (1)

84.3

  • 84.3

Co-investors' Debt

34.9

  • 34.9

Others (2)

7.4

  • 7.4

Gross Debt (IFRS)

560.3

  • 560.3

Cash including restricted cash

88.3

  • 88.3

Restricted cash

9.0

  • 9.0

Cash and cash equivalents excL. restricted cash

79.3

  • 79.3

Net Debt (IFRS)

481.1

  • 481.1

LTM Cash EBITDA (3)

139.3 3.4 142.7

Leverage on Cash EBITDA

3.5x 3.4x

Net Debt excluding co-investors debt

446.2

  • 446.2

LTM Attributable cash EBITDA (3)

128.3 3.4 131.6

Leverage on Attributable Cash EBITDA

3.5x 3.4x

slide-12
SLIDE 12

12

Appendices

slide-13
SLIDE 13

Financial Performance iQera – Q1-2020

13

Highlights

KEY HIGHLIGHTS

  • +11% increase in total cash revenues

 +29% increase in gross collections essentially due to Backbook performance on the period  Decreasing servicing revenues with slightly increasing performance in Italy (+2% / +€0.2 million) offset by an 11% decrease in France mainly due to deferred business

  • n

some contracts.

  • +4% costs increase

 Professional fees and services decreased by +€2.3 million (-23%) essentially due to the alignment of iQera allocation rules in Italian branches (-€3.0 million impact)  Personnel costs increased by €1.2 million (+8%) less quickly than revenues growth linked to servicing activity and support staffing catch up following two years of significant growth  Committed costs increased by €2.5 million (+34%) with an impact of €3.3 million in Italy following high local development in 2019 and including an impact of allocation alignment for €3.0 million with professional fees and services. Considering

  • nly

France, committed costs decreased by 12% impacted both by a good level of cost control and the impact of our synergies plan from the beginning of 2019.

(1) 2019 figures are based on iQera pro forma figures including Sistemia

(1)

€m 2019 2020 Variation (%) Ended Q1-19 Ended Q1-20 Variation (%) Gross Collections 28.7 37.0 29% 116.8 158.2 35%

  • Attr. Gross Collection

28.4 33.0 16% 115.6 147.2 27% Non Attr. Gross Collection 0.3 4.0 1186% 1.2 11.1 827% Servicing Revenues 28.9 27.1

  • 6%

121.1 119.7

  • 1%

Total Cash Revenues 57.6 64.1 11% 237.9 277.9 17% Professional fees and services (10.3) (8.0)

  • 23%

(42.3) (32.8)

  • 23%

Personnel costs (16.4) (17.6) 8% (63.7) (68.4) 7% Committed costs (7.5) (10.0) 34% (28.1) (37.4) 33% Total costs (34.1) (35.6) 4% (134.2) (138.6) 3% Cash EBITDA 23.4 28.5 22% 103.7 139.3 34% Cash distributions to SPV co-investors (0.4) (4.0) 1013% (1.3) (11.0) 769% Attributable Cash EBITDA 23.1 24.5 6% 102.5 128.3 25% Cash EBITDA Margin 41% 44% 44% 50%

  • Attr. Cash EBITDA Margin

40% 38% 43% 46% For the first quarter ended March 31 LTM

(1)