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August 29, 2019
Investors presentation H1 2019 Results August 29, 2019 1 - - PowerPoint PPT Presentation
Investors presentation H1 2019 Results August 29, 2019 1 Disclaimer This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the securities laws of other
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August 29, 2019
2 This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the securities laws of other jurisdictions. 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", "projects", "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, objectives, 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
performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we
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
the section of our Annual Report entitled "Risk Factors". Any forward-looking statements in this presentation are based on plans, estimates and projections as they are currently available to our
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
cautionary statements referred to above and contained elsewhere in this presentation and in our Annual Report. Unless otherwise indicated, the financial information presented herein as of and for the half ended June 30, 2019 includes the impact of the DSO and the Serfin acquisitions and excludes the impact of the Sistemia acquisition. For periods prior to January 1, 2019, figures are presented on a pro forma combined basis for MCS, DSO and Serfin. Prior to their respective acquisitions, the consolidated financial statements of DSO and Serfin were prepared in accordance with French GAAP and Italian GAAP, respectively.
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Positive quarterly growth on Cash Revenues (+2%) and Cash EBITDA (+7%) in Q2 2019 (vs Q1 2019)
We ended H1 2019 with a strong performance on a per portfolio basis with over performance of our due-diligence expectations
LTM Cash EBITDA slightly below 2018 levels, as expected post lower portfolio acquisitions in 2018
The resulting LTM Cash EBITDA stands at €94 million, 5% below LTM June 2018 and growth momemtum is expected to be driven by:
already signed early in Q3 2019
As a reference, it is worth noting that the LTM H1 2019 Cash EBITDA margin remains stable at 45% (vs. 46% H1 2018)
Our commercial dynamics are gathering pace in France and Italy
revenue and €8.6 million in EBITDA in 2018
customers
We continue to operate with moderate leverage levels and significant liquidity
(1) Net debt / Cash EBITDA ratio for MCS&DSO including Serfin combination and
synergies realization and excluding the recent Sistemia acquisition
28.7 28.5 22.6 23.7
Q1 2019 Q2 2019
Gross collections Servicing revenues
(€m)
51.3 52.2 21.2 22.6
Q1 2019 Q2 2019
Cash EBITDA Cash EBITDA margin
41% 43% (€m)
30.1 29.6
Q1 2019 Q2 2019
(€m)
4
+7%
KEY HIGHLIGHTS
limited 2018 acquisition volumes on our backbook collections being partly compensated by vintage 2019 collections. Performance on a per portfolio basis remains strong with over performance of our due-diligence expectations
with both existing and new clients where we have won competitive tenders
stemming from recurring, capital light activities (vs. 52% in Q1 2019)
plan and our stronger debt purchasing (already in H1 along with new transactions signed early in Q3 2019).
Total Cash revenues Cash EBITDA & Cash EBITDA Margin
Total costs
59.0 59.6
H1 2018 H1 2019
(€m)
45.9 43.8
H1 2018 H1 2019
Cash EBITDA Cash EBITDA margin
44% 42% (€m)
59.1 57.2 45.8 46.3
H1 2018 H1 2019
Gross collections Servicing revenues
(€m)
104.9 103.5
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KEY HIGHLIGHTS
2018 acquisition volumes on backbook collections
synergies plan as presented on the three next slides
increased business with both existing and new clients where we have won competitive tenders
Total Cash revenues Cash EBITDA & Cash EBITDA Margin
Total costs
+1%
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KEY HIGHLIGHTS
We face a servicing growth momentum mainly driven by:
€1.5m over the semester. This offsets the declining contribution of CIF contract
Servicing revenues per quarter1
+58% 14.0 13.6 13.5 14.1 14.2 15.5 15.1 16.3 15.3 15.8 2.1 4.9 5.1 6.2 5.6 5.1 4.8 5.4 4.4 4.4 2.7 2.7 2.6 2.6 2.6 2.7 2.9 3.2 2.8 3.5 18.7 21.2 21.1 22.9 22.4 23.4 22.7 24.9 22.6 23.7
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 DSO MCS Serfin Total
1 Before Q1 19, all the figures are consolidated on a pro-forma view
403 383 12/31/2018 06/30/2019
120M Gross ERC
354 345 12/31/2018 06/30/2019
84M Gross ERC 16 25
H1 2018 H1 2019
Portfolio acquisitions
(€m) 7
KEY HIGHLIGHTS
Our commercial dynamics are gathering pace in France and Italy (next slide)
investment discipline
(€57 million) than new portfolio integration ERCs (€39 million)
Portfolio acquisitions 84M & 120M Gross ERC
+58%
IT Offshoring & others Overheads, purchasing &
Total cost synergies Collections Total synergies
Synergies per category
Target
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(€m)
1.6 1.1 1.0 3.7 1.0 4.7
KEY HIGHLIGHTS
since 85% have been secured to date. Note that only €0.6m of gains have flowed in our P&L in H1 2019 (of which €0.4m in Q2), since the plan’s full impact is expected to be crystallized gradually.
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KEY HIGHLIGHTS
terms of NPL
Italy, with significant cross-border presence of large corporates
Italian structure of MCS&DSO Group Complementary businesses focusing on credit & real estate Industrialized credit collection and flexible tools Successful track record of contracts wins and client satisfaction Strong performance and growth since 2016 Management team with proven track record CAGR (2016/2018) 2016 2017 2018
Servicing accounts (€bn)
4.3 6.5 9.0 45%
% growth 51% 38%
Net revenues (€m)
16.5 20.3 25.7 25%
% growth 23% 27% Operating expenses (€m) (13.1) (15.3) (17.9) 17%
EBITDA (€m)
3.9 5.7 8.6 48%
EBITDA Margin 24% 28% 33% As of and for the year ended December 31
Credit Real Estate Innovative solutions
loan analysis
due diligence
assets
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Leverage on Cash EBITDA
realizations
Jun-19
KEY HIGHLIGHTS
We continue to operate with moderate leverage levels and significant liquidity
M&A activity (DSO, Serfin)
Our available cash remains high with €86m Combined with our €50m untapped RCF, this gives us significant firepower to seize attractive investment opportunities
(1) Other loans are referring to DSO (BPI) and Serfin loans (2) Others are referring to 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 June 30, 2019, adjusted to reflect the full-year effect of synergies plan figures to be generated from 2019 from which synergies already materialized have been restated. Total synergies secured end of H1 2019 reached €4.0m (4) 3.1x leverage does not take into account the recent Sistemia acquisition Currency: € m Jun-19 Jun-19 with synergies High Yield Bonds
378.4 378.4
Other loans (1)
5.4 5.4
Co-investors' Debt
1.3 1.3
Others (2)
7.5 7.5
Gross Debt (IFRS)
392.7 392.7
Cash including restricted cash
97.8 97.8
Restricted cash
12.3 12.3
Cash and cash equivalents
85.6 85.6
Net Debt (IFRS)
307.1 307.1
LTM Cash EBITDA (3)
93.5 97.6
Leverage on Cash EBITDA
3.3x 3.1x
Debt Net
(4)
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Net cash flows from operating activities
H1 2019
Closing cash (1)
Jun-19
KEY HIGHLIGHTS
(+€36.4m) with seasonal effect on working capital
the semester. Portfolio acquisitions end of June 2019 reached €25 million
(1) excluding restricted cash
€m Jun-19 Net cash flows from operating activities 36.4 Net cash flows for investment activities (30.5) Net cash from financing activities (12.1) Net change in cash and cash equivalents (6.2) Opening cash and cash equivalents 104.0 Closing cash and cash equivalents 97.8
12.3
For the first 6months ended June 30, 2019
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Highlights
(1) Pro-forma MCS&DSO including Serfin. (1) (1) (1)
KEY HIGHLIGHTS
revenues
-3% decrease of gross collections +1% increase
Servicing revenues despite CIF servicing slowdown
Professional fees and services increased by €2.4m from comparable period due to 2018 new customers integration costs & Group alignment
accounting methodology
legal costs consideration Personnel costs increased by +4% linked to servicing activity & support staffing growth and staff optimization processes have not yet delivered effective savings Committed costs decreased by €2.9m including first synergies impacts and including Group accounting methodology alignment (counterparts effect on professional fees and personnel costs)
(2) Committed costs for the first quarter ended March 31, 2018 excluded non-recurring costs related to the setup of MC2S, an SPV owned by the Group that carries out certain of its debt servicing
(2)
€m 2018 2019 Variation (%) Ended Q2-18 Ended Q2-19 Variation (%) Gross Collections 59.1 57.2
121.6 115.7
58.5 56.8
119.5 114.6
Non Attr. Gross Collection 0.6 0.5
2.1 1.1
Servicing Revenues 45.8 46.3 1% 89.8 93.8 4% Total Cash Revenues 104.9 103.5
211.4 209.5
Professional fees and services (12.1) (14.5) 20% (24.3) (30.9) 27% Personnel costs (30.7) (31.9) 4% (59.0) (61.7) 5% Committed costs (16.2) (13.3)
(30.1) (23.4)
Total costs (59.0) (59.6) 1% (113.4) (116.0) 2% Cash EBITDA 45.9 43.8
98.0 93.5
Cash distributions to SPV co-investors (0.6) (0.6) 4% (1.5) (1.3)
Attributable Cash EBITDA 45.4 43.2
96.5 92.3
Cash EBITDA Margin 44% 42% 46% 45% For the first 6months ended June 30, 2019 LTM