Investors presentation 9M 2019 Results November 2019 1
Key Highlights of 9M 2019 results “ Significant growth of our LTM Sept. 30 Cash Revenues (+7% (1) ) and LTM Sept. 30 Cash EBITDA (+12% (1) ) due to strong collections and solid performance of our servicing revenues LTM Gross collections increased by 9% as of September 30, 2019 versus September 30, 2018 as the impacts of 2018 low investment are mainly offset by a solid performance of our Backbook collections and a very dynamic Front Book in 2019. Solid results in Servicing (LTM Sept. 30 Servicing revenues +6% / +€6.5m increase). The group’s revenues profile remains well balanced, with 62% (2) of the group’s revenues stemming from recurring, capital light servicing activities Our costs base excluding legal costs and other operational costs basis increase by 1% only on a LTM basis as of September 30 (+3% on total costs) LTM Q3 2019 Cash EBITDA margin slightly increase to 46% (vs. 44% on LTM Q3 2018) driven by (i) synergies acquisitions continuing to flow in our P&L and (ii) strong growth in Debt Purchasing “ Our commercial dynamics are gathering pace in France and Italy Strong debt purchasing volumes since the beginning of 2019 (€68 million during 9M 2019 only; +€35 million versus 9M 2018) with new transactions already signed early in Q4 2019 On servicing activities, French Market still robust - our pipeline remaining very high - and a very dynamic Italian market generating a greater level of opportunities and strongly contributing to the growth of revenues (LTM servicing revenues increased by 15% as of September 30). “ We reinforce our position and visibility in Italy with the finalization of Sistemia S.p.A. acquisition Perspectives on Italian market remain good and our new position with Sistemia allows us to get referenced on higher level of potential opportunities with best-in–class servicing capabilities across natures of debt Financing was structured with an additional bond note of €55 million for an acquisition price of €72 million “ Despite substantial investments made since the beginning of the year, we continue to operate with moderate leverage levels and significant liquidity Leverage ratio at 3.1x (3) within previous guidance of 2.5 – 3.5x Significant liquidity, with €72m of cash and €50m of undrawn RCF, readily available to seize attractive investment opportunities (1) Pro-forma figures including Sistemia historical accounts – LTM September 30 (2) iQera ratio proforma including Sistemia results – 9M ended September 30, 2019 (3) Net debt / Cash EBITDA ratio for iQera including Sistemia combination and synergies realization as of September 30, 2019 2
Significant growth of our LTM Cash Revenues and Cash EBITDA iQera P&L including Sistemia Total costs Total Cash revenues (€m) 254.9 +3% 238.0 (€m) 122.3 115.9 136.6 132.5 132.6 122.1 LTM Q3 2018 LTM Q3 2019 LTM Q3 2018 LTM Q3 2019 “ Gross collections Servicing revenues Cash EBITDA & Cash EBITDA Margin KEY HIGHLIGHTS • Compared to LTM Q3 2018, LTM collections increased by 9% with 3 main effects: (i) a solid performance (€m) 46% of our BB collections, (ii) exceptional cash flow due to a special portfolio acquired in July 2019 (€8.6 +12% 44% million collections during the quarter) and a solid performance of our FB collections (€12 million). Performance on a per portfolio basis is strong with over-performance of our due-diligence expectations • In parallel, solid performance of Servicing in LTM ending Q3 2019 (+6%) mainly due to the dynamism of 118.3 105.5 the Italian and French market partly offset by declining contribution of CIF contract • The group’s revenues profile remains well balanced, with 62% (1) of the group’s revenues stemming from recurring, capital light activities • LTM Cash EBITDA margin increasing by 2 p.p. driven by (i) synergies continuing to flow into P&L and (ii) LTM Q3 2018 LTM Q3 2019 higher contribution of debt purchasing activities Cash EBITDA Cash EBITDA margin (1) iQera ratio proforma including Sistemia results – 9M ended September 30, 2019 3
Dynamic portfolio acquisitions in 9M 2019 (€m) Portfolio acquisitions 120M Gross ERC +106% 68.4 403 400 398 383 33.2 9M-2018 9M-2019 Dec-18 Mar-19 Jun-19 Sep-19 “ KEY HIGHLIGHTS • Robust level of portfolio acquisitions in 9M 2019 with continued strict investment discipline • Increasing volumes of portfolio sales combined with decreasing pricing pressure continue to drive higher level of portfolio acquisitions for iQera 4
Solid revenues in Servicing with good perspectives in Italy LTM Servicing revenues per quarter 1 122.3 121.1 121.3 119.9 62% (1) 115.9 109.5 100.3 39.2 39.8 41.6 37.8 91.5 35.2 Servicing in 30.2 23.1 18.0 Group Net Revenues sept-19 80.7 82.0 82.0 81.5 80.8 79.3 77.2 73.5 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 France Italie Total 1 All figures are consolidated on a pro-forma view including Sistemia “ KEY HIGHLIGHTS We face a solid servicing performance mainly driven by: • In France, good performance under our existing clients contracts offset by the declining contribution of CIF contract. • In Italy, we are gaining new mandates thanks to joint commercial efforts between our Italian and French teams. In terms of revenues, business is growing significantly with 13% growth of servicing revenues during 9M-2019 when compared to 9M-2018 (1) iQera ratio proforma including Sistemia results – 9M ended September 30, 2019 5
Integration workstreams and synergies realizations well on track “ KEY HIGHLIGHTS Our 2020 objective continue to be to realize €3.7 million of cost synergies and €1.0 million of revenue synergies: 100% have been secured; • €1.3m of gains have flowed in our P&L in 9M 2019 (of which €0.7m in Q3), with the plan’s full impact expected to be realized end of 2020. 6
Capital structure & leverage position – 9M 2019 iQera including Sistemia combination Debt Net Synergies impact (3) Currency: € m Sep-19 Sept-19 with synergies 432.8 - 432.8 High Yield Bonds 3.2x 13.8 - 13.8 Other loans (1) Co-investors' Debt 1.3 - 1.3 Leverage on 7.5 - 7.5 Others (2) Gross Debt (IFRS) 455.4 - 455.4 Cash EBITDA 82.8 - 82.8 Cash including restricted cash incl. synergies 10.9 - 10.9 Restricted cash 71.9 - 71.9 Sept-19 Cash and cash equivalents excL. restricted cash Net Debt (IFRS) 383.4 - 383.4 118.3 3.4 121.7 LTM Cash EBITDA (3) “ 3.2x 3.1x Leverage on Cash EBITDA (1) Includes DSO (BPI), Serfin loans and an additional loan of €8.7 million for portfolio acquisition KEY HIGHLIGHTS (2) Includes profit sharing accruals and EFFICO put for €6.1m (3) Adjusted pro forma Cash EBITDA represents pro forma Cash EBITDA for the twelve months ended September 30, 2019, (4) We continue to operate with moderate leverage levels and significant adjusted to reflect the full-year effect of synergies plan figures to be generated from 2019 from which synergies liquidity despite high level of investment in portfolios (€68.4 million) and already materialized have been restated. Total synergies secured end of 9M 2019 reached €4.7m with Sistemia acquisition (€72 million) 3.2x leverage ratio, remaining among the lowest in the industry • Leverage position consistent with our guidance despite significant • M&A activity (DSO, Serfin, Sistemia) and high level of portfolio acquisitions since the beginning of 2019 Strong liquidity position: • Our available cash remains high with €72m Combined with our €50m untapped RCF, this gives us significant firepower to seize attractive investment opportunities 7
iQera Group consolidated cash flows – 9M 2019 €71m For the first 9 months Net cash flows ended Sept 30, 2019 from operating Sept. 19 (1) €m activities Net cash flows from operating activities 71.0 9M-2019 Net cash flows for investment activities (144.9) Net cash from financing activities 42.5 Net change in cash and cash equivalents (31.4) €72m Opening cash and cash equivalents 104.0 Closing cash and cash equivalents (o/w restricted cash) 72.6 Net closing cash o/w restricted cash 10.9 including Sistemia (2) Sept-19 (1) 9M-2019 is full IFRS including DSO & Serfin and excluding Sistemia “ (2) Cash excluding restricted cash and KEY HIGHLIGHTS including Sistemia and DSO Italia pro-forma cash • High cash conversion on the period • Net cash flows for investment activities impacted by dynamic portfolio acquisitions over the semester and M&A activity. The main elements for the 9 months ended September 30 are (i) Portfolio acquisitions of €68 million, (ii) Sistemia acquisition for 72m€. • Net cash flows from financing activities evolution mainly due to (i) additional HY Bond for €55 million following Sistemia acquisition, (ii) additional vendor loan for €8.7 million and (iii) of HY bonds interest expenses for €17.7 million 8
Appendix 9
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