BOND INVES TORS PRES ENTATION T 28 TH AUGUS 2018
D IS CLAIMER 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 our 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. C ONFIDENTIAL AND P ROPRIETAR Y 2
K EY H IGHLIGHTS F OR H1 2018 1 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) 2 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% of Group net revenues in H1 2018 3 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 4 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 C ONFIDENTIAL AND P ROPRIETAR Y 3
R OBUS T ORGANIC GROWTH LEADING TO S TRONG DELEVERAGING Total Cash Revenues Cash EBITDA and Cash EBITDA Margins (€m) (€m) 12% 25% 29% 61% 62% 62% 119.5 74.3 111.5 68.8 91.9 22.0 56.3 18.3 8.5 97.5 93.2 83.4 2016 2017 LTM Jun-18 2016 2017 LTM Jun-18 of revenue (1) Gross Collect ions S ervicing S ervicing as % Cash EBITDA Cash EBITDA margin Portfolio Acquisitions and 120m Gross ERC Net Debt / Cash EBITDA (LTM) (€m) 338 347 369 4.3x Cont inued st rict invest ment 3.2x discipline 2.7x 16 16 6 H1 2016 H1 2017 H1 2018 Q2 2017 Q4 2017 Q2 2018 Port folio Acquisitions 120m Gross ERC 1) Cash EBITDA margin calculat ed as Cash EBITDA as a percent age of Tot al Cash Revenues. C ONFIDENTIAL AND P ROPRIETAR Y 4
C ONS VATIVE LEVERAGE PROFILE VS . PEERS AND S IGNIFICANT S VICING CONTRIBUTION ER ER Net Debt / Cash EBITDA (LTM) (1) Servicing revenue contribution (as % of revenues) (1) (3)(4) 14% 29% 9% 54% 3% 20% 23% 26% (1.6x) 5.2x 4.4x 4.3x 4.2x 4.2x 3.9x 3.4x 2.7x (2) (2) (2) (3) Q2 2017 Q2 2018 B2Holding Intrum Hoist Cabot Arrow Lowell MCS Prudent target leverage ratio of 2.5x – 3.5x S ource: 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. C ONFIDENTIAL AND P ROPRIETAR Y 5
A CQUIS ITION OF DS O GROUP DS O GROUP AT A G LANCE Overview Key Financials (€m) • Founded in 2001, DS Ogroup is a leading independent French debt collect ion 11 11 67 66 management company focused on debt servicing and debt purchasing 11 11 • For FY2017, debt servicing and debt purchasing represents 84% and 16% of revenues, 6 respect ively 40 5 34 • While DS Ogroup st art ed out focusing on debt servicing, debt purchasing act ivit ies were 8 25 6 int roduced in 2007 and DS Ogroup has a120m ERC of €93m, as of 31 March 2018 3 22 55 56 2 5 4 • DS Ogroup has a deep and diversified client base across banks, insurers, ut ilit ies and 33 28 ot her sect ors 20 18 • The company is a pioneer in t he management of cust omer financial relat ionships and is 2013 2014 2015 2016 2017 LTM - Mar 18 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 S ervicing Revenue Debt Purchasing Revenue EBITDA Key differentiating factors Wide offer: operating on the entire lifespan of receivables and billing industries through debt servicing and debt purchasing 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 Not e: French GAAP figures / 2017 financials are pro-forma of 100% of Effico. C ONFIDENTIAL AND P ROPRIETAR Y 6
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