Lindorff
First quarter 2017
Today’s presenters
Klaus-Anders Nysteen
CEO
Trond Brandsrud
CFO
2
Agenda
1. Operational update and key highlights
2. Financial update
3. Concluding remarks and Q&A
Operational update & key highlights
Strong delivery on strategic objectives in Q1
Strategic priorities
● Substantial growth in Debt Collection of 48%, including 9% organic growth in 3PC
Growth
● Signed deals doubling the current FY forward flow capex – expect excess of EUR 100m
Balanced business
model
Financial institutions
Profitability
Integrated
organisation
World class debt
collection
1 Excluding
Q1 2017 delivery
non-recurring items
● Maintained balanced business model with DC accounting for 54% of revenues (LTM)
● Diversification through expanded product offering and more balanced geographic mix
● Continued to expand FI client base and footprint - fastest growing NPL-market
● Preparing to offer secured asset and real estate servicing to FI’s in additional markets
● EBITDA margin1 improvement from 38% in 2016 Q1 to 39% in 2017 Q1
● Collection performance last twelve months at 105%
● Strengthened offering and sales capabilities towards international clients
● Lindorff 24 self service portal rolled-out to all major markets
● Progressing and implementing digital agenda across countries
● Harmonized operational model across markets enabling sharing of best practises
5
Double digit growth coupled with margin expansion
Net revenue
EBITDA1
EURm
EURm
+33%
+38%
179
71
51
135
Q1 2016
Q1 2017
Q1 2016
EBITDA
Margin1
1 EBITDA
and EBITDA margin are both excluding non-recurring items
38%
Q1 2017
39%
6
Maintaining a well balanced business mix
Diversified geographical revenue distribution
Revenue mix by geography (LTM)1
Revenue mix by segment (LTM)
4%
34 %
42 %
49 %
54 %
17 %
Debt Purchasing
1 Includes
Debt Collection
ten months of Aktua revenue in Spain
Other Products
Nordics
Central
Southern
7
Well-balanced and diversified growth
3PC Net revenue
Total Net revenue
+33%
+39%
+9%
+17%
+72%
+114%
+12%
+52%
Total
Q1 2016
Nordics
Central
Southern
Total
Nordics
Central
Southern
Q1 2017
8
Strong 3PC performance
Positive trend in revenue and margins
● Accelerated sales focus - winning new clients
and growing share of wallet with existing
clients
● Improved solution rates in key markets
● Successful renegotiation of contracts at
favorable terms
● Continued cost focus resulting in improved
collection efficiency
3PC Revenue (LTM)
Y/Y Growth
Q1 2017
EURm
330
39%
310
290
270
9%
250
230
Q1
Q2
Q3
Total
Q4
Q1
Organic
9
Intrum Justitia transaction update
● Background and strategic rationale for planned merger
•
Creating an industry leader with significant scale and diversification
•
Excellent strategic fit – cultural heritage, business mix, geographic footprint and sector expertise
•
Significant financial value creation through expected P&L and funding synergies
● Current status
•
Intrum Justitia EGM on December 14 approved transaction
•
Merger subject to approval by EU competition authorities – filing submitted in April
•
Target remains to close the transaction during Q2 2017, as previously communicated
● Key activities during the coming months
•
Finalizing the competition review process with the European Commission
•
Planning of future integration
•
Preparation for refinancing of current debt with Intrum and Lindorff
10
Financial update
High double digit revenue growth
Net Revenue
EURm
● Growth driven mainly by:
•
Acquisition of Aktua and additions to 3PC
business in Germany
•
Positive organic development in 3PC
+33%
179
135
● DP revenue growth at 4%
Q1 2016
Q1 2017
12
Continued profitable growth
Adjusted EBITDA1
EURm
+23%
● High margin contribution from Aktua
108
8
● EBITDA excl. NRI’s was up 38% with
margins1 increasing from 38% to 39%
88
5
37
36
63
46
Q1 2016
EBITDA
1 Excluding
non-recurring items
Amortisation and revaluation
Q1 2017
Non-recurring items
13
Strong underlying trend in Debt Collection
Net Revenue
Segment Earnings1
EURm
EURm
+75%
+48%
61
126
17
27
85
35
26
82
59
Q1 2016
External Collection
Q1 2017
Internal Collection
Q1 2016
Q1 2017
Real Estate Servicing
● Aktua main driver for revenue growth
● High margin contribution from Aktua
● Organic 3PC growth y/y of 9% in Q1
● Improved solution rates in 3PC
● Renegotiated contracts at favourable terms
1
Includes a margin on commission from Debt Purchasing
14
Debt Purchasing revenue and segment earnings
Net Revenue
Segment Earnings
EURm
EURm
+4%
+4%
73
39
41
Q1 2016
Q1 2017
2
70
1
2
2
69
66
Q1 2016
Existing portfolios
Q1 2017
New portfolios
Revaluations/other
● Growth driven by investments in Q4 2016
● Maintained high margin in a competitive market
● Signed new forward-flow deals doubling the FY level to in
excess of EUR 100m
● Collection performance of 103% - 105% LTM
15
Continued strong collection performance
Estimated Remaining Collection (ERC 180 months)
Investments in Debt Purchasing (LTM)
500
400
376
300
241
200
100
0
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
2,621
2,412
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
Collection on own portfolios vs. Forecast
Return in Debt Purchasing (LTM)
100% Performance
20 %
16 %
2,700
2,650
2,600
2,550
2,500
2,450
2,400
2,350
2,300
2,250
16 %
14 %
104 %
103 %
12 %
8%
Average:105%
4%
0%
Q1 16
Q2 16
Q3 16
Q4 16
Q1 17
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
16
Pro forma Adjusted EBITDA (LTM)
454
13
1
Adjusted EBITDA
excl. NRI’s
Pro Forma
adjustments
Aktua LTM
Pro Forma
adjustments
Other LTM2
25
467
161
268
EBITDA
1 Non-recurring
2
Portfolio
Amortization and
Revaluations
Non-Recurring
Items1
Pro-forma
Adj. EBITDA
items include restructuring costs such as site consolidation, severance pay, consultancy fees related to M&A, and transaction cost (including the planned merger with Intrum Justita)
Includes pro-forma effect for the acquisition of Cross Factor in Italy and two bolt-on M&A’s in Germany
17
Leverage Ratio
● The leverage ratio increased to 5.1x for the total
group and 5.7x for the restricted Group
● The increase NIBD is mainly due to:
•
•
Deferred payment related to a large
portfolio acquired in Q4 2016
Semi-annual interest payment on the Fixed
Rate Notes
Net Debt to Pro forma Adjusted EBITDA1 (LTM)
7.0
6.0
5.7
5.6
5.5
5.3
5.5
5.7
5.6
5.0
5.1
4.9
5.0
5.1
Q3 16
Q4 16
Q1 17
4.0
3.0
Q4 15
Q1 16
Q2 16
Restricted Group
1
Includes pro-forma effect for the acquisition of Aktua, Cross Factor , and the two bolt-on M&A’s in Germany
Including Aktua
18
RCF and available liquidity
● Available liquidity decreased from EUR 335m
to EUR 298m for the Group
•
Mainly due to a deferred payment related
to a large portfolio acquired in Q4 2016
● The RCF capacity is currently EUR 342m1
1
Calculated as 18.4% of ERC 84 months per Q1 2017
Available liquidity
Q1 2017
RCF capacity Q1 2017
- Amount drawn
- Amount allocated to guarantees
Available RCF
342
-93
-25
224
+ Cash total Group
Available liquidity total Group
73
298
- Cash Aktua Group
Available liquidity restricted Group
-27
271
19
Concluding remarks and Q&A
Concluding remarks and outlook
● Solid growth across business lines and geographies
● Strong organic growth in the 3PC business
● Healthy pipeline for DP investments and M&A
•
Small bolt-on acquisition done in Italy
subsequent to the quarter
● Continue to develop and deliver on operational
improvement programme
● Planning for combination with Intrum Justitia while
maintaining performance focus on current business
21
Q&A
Appendix
Estimated Remaining Collection of EUR 2.6bn (ERC)
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
-
0-12
13-24
25-36
37-48
49-60
61-72
73-84
85-96
97-108
109-120
121-132
133-144
145-156
157-168
169-180
24
Sustaining an attractive M-o-M multiple
Gross Money-on-Money multiples per Vintage
Portfolio Performance by Vintage
Total
Estimated
Collections
Total Gross
Cash-on-cash
Multiple
( B + C )/ A
Purchase
Price
Collections
to Date
180-Month
Gross ERC
A
B
C
Pre 2006
360
1017
163
1179
3.3x
2006-2009
266
587
117
703
2.6x
2010
221
397
228
626
2.8x
Vintage
B
+ C
Business Case M-o-M
Current M-o-M
3.3
2.9
2.8
2011
117
230
110
340
2.9x
2.6
2.7
2.7
2.5
2.3
2.3
2.32.3
2.32.3
2.0
2.0
2012
235
367
260
627
2.7x
2013
155
177
183
360
2.3x
2014
275
239
382
622
2.3x
2015
395
186
638
824
2.1x
2016
2631
63
500
563
2.1x
2017
23
2
41
43
1.9x
Total
2311
3266
2621
5887
2.5x
< 2006
Consistent Performance of Portfolio
1 Including
20062009
2.1
2.12.1
1.81.9
2010
2011
2012
2013
2014
2015
2016
Money-on-Money Multiple lift-up as Portfolios Mature2
the value of portfolios obtained through the acquisition of Cross Factor in Italy
Close to 90% of Lindorff owned portfolios are acquired from Financial Intuitions (FI). Because the ticket size is larger in FI than in Telco/Retail, we manage to establish long term payment
plans with debtors. We are consequently able to extend the ERC period beyond 180 months. This, together with our strong collection performance on old debt, drives an uplift in the Moneyon-Money multiple as portfolios mature
2
2017
YTD
25
Increasingly diversified geographic profile
3PC Revenue (LTM) 1
22 %
ERC
20 %
15 %
19 %
29 %
40 %
8%
28 %
9%
31 %
28 %
9%
70 %
61 %
Q1 2015
Nordics
1 Includes
Q1 2016
Central Europe
Aktua revenue in Spain from June 2016
51 %
49 %
Q1 2017
Q1 2015
Southern Europe
Nordics
57 %
54 %
Q1 2016
Q1 2017
Central Europe
Southern Europe
26