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Company Presentation
Last update – 2014 Full Year Results
CERVED INFORMATION SOLUTIONS S.p.A.
Disclaimer
1
This presentation and any materials distributed in connection herewith (together, the “Presentation”) do not constitute or form a part of, and should not be construed as, an offer for sale or subscription of or solicitation of any offer to purchase or subscribe for any securities, and neither this Presentation nor anything contained herein shall form the basis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment whatsoever. The information contained in this Presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, reasonableness or correctness of the information or opinions contained herein. None of Cerved Information Solutions S.p.A., its subsidiaries or any of their respective employees, advisers, representatives or affiliates shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this Presentation. The information contained in this Presentation is provided as at the date of this Presentation and is subject to change without notice.
Statements made in this Presentation may include forward-looking statements. These statements may be identified by the fact that they use words such as “anticipate”, “estimate”, “should”, “expect”, “guidance”, “project”, “intend”, “plan”, “believe”, and/or other words and terms of similar meaning in connection with, among other things, any discussion of results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. Such statements are based on management’s current intentions, expectations or beliefs and involve inherent risks, assumptions and uncertainties, including factors that could delay, divert or change any of them. Forward-looking statements contained in this Presentation regarding trends or current activities should not be taken as a representation that such trends or activities will continue in the future. Actual outcomes, results and other future events may differ materially from those expressed or implied by the statements contained herein. Such differences may adversely affect the outcome and financial effects of the plans and events described herein and may result from, among other things, changes in economic, business, competitive, technological, strategic or regulatory factors and other factors affecting the business and operations of the company. Neither Cerved Information Solutions S.p.A. nor any of its affiliates is under any obligation, and each such entity expressly disclaims any such obligation, to update, revise or amend any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this Presentation. It should be noted that past performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of full-year results.
Table of Contents
2
2014 Business Review 3
Overview 1
Investment Case 4
2014 Results 2
Appendices 5
Source: PwC 1) No. 1 player In the non-captive market, considering pro-forma revenues in 2013 which include Recus and Tarida
2% 42%
Corporates
290 (+3.6%)
Business Information
627 (+3.9%)
721 (+8.5%)
Ce
rve
d
Po
sitio
n a
nd
Ma
rke
t Sh
are
in
20
13
359 (-4.3%)
4.2% 42.7% 7.3%1)
Financial Institutions
Consumer 321
Corporates 305
€14,7m
4% of Group
(+18.4% CAGR)
€142.7m
43% of Group
(+8.5% CAGR)
€53,3m
16% of Group
(+63.7% CAGR)
€122,0m
37% of Group
(-3.3% CAGR)
No. 9 No.1 No. 11) No.1
Ma
rke
t
20
13 D
ata
(€
m)
(CA
GR
11
-13
)
Ce
rve
d
20
14
Re
ve
nu
es
(CA
GR
1
1-1
4)
NPLs 502
Corporate receivables
219
The Italian Leader in the Credit Information Market
Credit Information Credit Management Marketing Solutions
Business Information
120
Rating & Analytics 39
Real Estate
97
Consumer Information
103
3
113 119 125 132
2011 2012 2013 2014
+5.5%
4
Consistent Growth EBITDA Growth High Cash Flows
Revenue (€m) EBITDA (€m) EBITDA – Capex (€m)
138 145 152 160
2011 2012 2013 2014
267 291
313 331
2011 2012 2013 2014
+5.7%/ +3.8%
+7.4% / 3.9%
% / % Total Growth % / Organic Growth %
Consistent Revenue, EBITDA and Cash Flow growth despite macroeconomic conditions
Note: 2011/2012 EBITDA adjusted for shareholder’s fees and 2011 for reviewing of accounting policy related the database acquisition costs
+5.1% / 3.8%
+5.6%/ +4.5% +5.2%
Consistent Growth and Cash Flow Generation
Proven Model, Bound for Growth
5
Mission-critical products and services through the cycle
Undisputed market leadership
Significant competitive advantages
High revenue visibility
Fundamental sector growth
Untapped potential within the Italian market
Cerved specific organic growth initiatives
M&A
Best-in-class EBITDA margins
Cash conversion
2 Growth
3 Cash flow
1 Resiliency
Our Growth Strategy
6
Credit Information - Consolidate position in financial institutions
Credit Information and Marketing Services - Continue to exploit the
underpenetrated corporate market
Exploit opportunities in adjacent markets
Credit Management - Grow AUM and keep focused on collection
Continue to invest in new product development and innovation
Add-on opportunities in Italy and abroad
Table of Contents
7
2014 Business Review 3
2014 Results 2
Investment Case 4
Appendices 5
Overview 1
Group Revenues
8
267,2 290,6 313,5 331,3
2011 2012 2013 2014
Revenue Bridge (2013 – 2014) – (€m)
313,5
331,3
(4,2 ) 4,5
16,7 2,0 (1,0 )
Revenues
2013
CI -
Financial Institutions
CI -
Corporates
Credit
Management
Marketing Solutions Other & Conso
clearing
Revenues
2014
Credit Information
+7.9% / +5.7%
+8.8% / +2.3%
+5.7% / +3.8%
% / % Total Growth % / Organic Growth %
Revenues (€m) and Revenue growth (%)
151,5
160,1
2,8
3,6 2,1
EBITDA
2013
Credit
Information
Credit
Management
Marketing
Solutions
EBITDA
2014
Group EBITDA
9
EBITDA Bridge (2013 – 2014) – (€m)
EBITDA (1) (€m) and EBITDA margin (%)
138,0 144,7 151,5 160,1
2011 2012 2013 2014
48.3% 49.8% 51.6% 48.3%
(1) FY 2011 EBITDA is adjusted for Database Acquisition Costs and Shareholder Fees; FY 2012 EBITDA only for Shareholder Fees
+4.7% / +4.6% +4.9% /
+2.3%
+5.6/ +4.5%
% / % Total Growth % / Organic Growth %
10
Credit Information Credit Management Marketing Solutions
134,9 127,4 126,3 122,0
111,8 128,8 138,2 142,7
247 256 264 265
2011 2012 2013 2014
Re
ve
nu
e
EB
ITD
A
132,9 136,8 139,3 142,1
2011 2012 2013 2014
12,1 25,0
36,6
53,3
2011 2012 2013 2014
2,1 4,4
7,6
11,2
2011 2012 2013 2014
8,9 9,9 12,8 14,7
2011 2012 2013 2014
3,1 3,5 4,7
6,8
2011 2012 2013 2014
34.5% 35.6%
36.5%
45.9%
Group Divisional Performance
17.1%
20.7%
21.0%
53.9% 53.4% 52.7% 53.7%
15.3%
Fin. Inst.
Corp.
% YoY Growth %
18.4%
45.5% 63.7%
2.4% 0.1%
2.3% 2.0%
17.6%
45.0% 30.2%
47.2%
75.5%
% EBITDA margin % % CAGR
121,3 119,5
151,5 145,3
135,3
(26,8) (25,4) (30,1) (32,4) (31,8)
(83,8) (82,5) (81,9) (73,3) (73,3)
10,7 11,6
40,8 40,4 31,0
2011 2012 2013 2014
Reported
2014PF
ex-M&A
Inventories Trade receivables Trade payables
Deferred revenues Net Working Capital
11
Net Working Capital
4.0% 4.0% 13.0%
NWC as % of Revenues %
(1) NWC/Revenues based on Revenues of Recus and RL Value for the entire calendar year 2014
11.7%1) 9.5%2)
(2) NWC/Revenues of 9.5% excludes Recus and RL Value acquisitions
Net Working Capital (€m)
Operating Cash Flow (€m)
Operating Cash Flow
12
(1) FY 2011 EBITDA is adjusted for Database Acquisition Costs and Shareholder Fees; FY 2012 EBITDA only for Shareholder Fees (2) Cash change in Net Working Capital exludes non recurring items, eg Trade Payables related to IPO transaction fees
€m 2011 2012 2013 2014
EBITDA(1) 138,0 144,7 151,5 160,1
Net Capex (24,8) (25,7) (26,6) (28,2)
EBITDA-Capex 113,2 119,0 125,0 131,9
as % of EBITDA 82% 82% 82% 82%
Cash change in Net Working
Capital(2)7,8 (6,1) (24,7) 8,2
Change in other assets /
liabilities(7,1) (1,9) 7,3 (13,9)
Operating Cash Flow 113,9 111,1 107,5 126,2
Financial Indebtedness
13
(1) Adjusted Net Debt is calculatd as IFRS Net Debt plus capitalised financing fees
€m 2013 H1'14 9M'14 2014
Bonds 780,0 530,0 530,0 530,0
Other financial debt 0,6 0,6 0,4 4,0
Accrued Interests 20,6 17,8 8,0 17,3
Gross Debt 801,1 548,4 538,5 551,3
Cash (50,3) (17,1) (31,1) (46,1)
Capitalized financing fees (28,6) (19,1) (18,4) (17,6)
IFRS Net Debt 722,2 512,1 488,9 487,6
Net Debt/ LTM EBITDA 4,8x 3,3x 3,1x 3,0x
Adjusted Net Debt (1) 750,8 531,3 507,3 505,2
Adjusted Net Debt/ LTM EBITDA 5,0x 3,4x 3,2x 3,2x
Net Financial Indebtedness (€m)
39
18
15 19
15
1(3)
Annual interest cost
(current capital
structure)
Full-year post-tax
interest saving from
repayment of FRN
PF interest
cost post IPO
14
Debt overview (FY2014)
Bond Redemption Cost Evolution (€m)
Impact on interest costs of Floating Rate Notes (“FRN”) %
25,5 21,5 17,5 13,5 9,6 9,6 9,6 9,6 4,8 4,8 4,8 4,8
29,6 25,7
21,7 17,8
13,8 13,8 13,8 13,8
9,2 9,2 9,2 9,2 4,6
0
20
40
60
gen-15 apr-15 lug-15 ott-15 gen-16 apr-16 lug-16 ott-16 gen-17 apr-17 lug-17 ott-17 gen-18
Senior Subordinated Senior Secured - Fixed
Facility
Used Amount
(€m)
Interest
Rate
Rating S&P /
Moody’s
Current
YTM/YTW (1)
Senior Secured
Floating Rate Notes (“FRN”) 0 Repaid - -
Senior Secured
Fixed Rate Notes 300 6.375% BB-/Ba3 5.180%/3.497%
Senior Subordinated Notes 230 8.000% B/B2 6.395%/4.695%
Bonds outstanding 530
Other financial debt(2) 21
Cash and cash equivalents (46)
Adjusted net debt 505
Undrawn RCF 75 Euribor + 4.500%
(1) Source: Bloomberg as of April 9th 2015 (2) Includes accrued interest, other minor borrowings and other current financial debt (3) RCF commitment fee of €1.350m p.a. (40% of margin)
1
2
3
1
2
3
1
Room for Capital Structure Optimisation
10,8%
8,6% 8,1%
11,3% 12,4% 12,5%
Q4
-0,6%
Q4
0,0% Q4
0,0%
50
100
150
200
5.38
13.5%
7.2%
Macro Highlights
15
Key Economic Indicators
Cerved Proprietary
Data
Italian unemployment Italian GDP New lending
% of companies paying over 60 days late versus contractual
terms
Number of proceedings (seasonally
adjusted) and growth rates versus
same quarter of previous year
All key indicators
show positive trends,
albeit at a very early
stage
Flat GDP in Q4 after 3
negative quarters
The jump in new
lending volumes in Q4
includes the renewal
and renegotiation of
existing facilities
Cerved proprietary
data also shows an
improvement in key
variables such as late
paying companies
and bankruptcy rates
The growth in NPLs
continues at a lower
pace, as expected
from numerous
sources
Growth rate compared to the
previous quarter
New lending volumes in € billions (quarterly)
Key highlights
Late paying companies Bankruptcies NPLs Key highlights
Unemployment as % of total working
population
2014
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
2014
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
3,0%
3,5% 3,7%
2014
Q1 Q2 Q3 Q4
2013
Q1 Q2 Q3 Q4
2012
Q1 Q2 Q3 Q4
Default rate on outstanding loans (Q3 and Q4 2014 are forecasts; Cerved estimates
on Bank of Italy data)
Source: ISTAT/OECD Source: ISTAT Source: Bank of Italy
Source: Osservatorio Cerved Source: Osservatorio Cerved Source: Osservatorio Cerved, Bank of Italy
2008 – 2010 – 2012 - 2014
YoY -0.4% YoY -1.7% YoY -2.8%
Table of Contents
16
2014 Results 2
2014 Business Review 3
Investment Case 4
Appendices 5
Overview 1
Operational and Strategic Update for 2014 and Key Actions for 2015
Business Review Topics
17
Business
Finance
M&A
and
IR
Credit Information - Corporate
Credit Information – Financial Institutions
Credit Management
Marketing Solutions
EBITDA & Profitability
Financial Reporting, Working Capital and
Capital Structure
Mergers & Acquisitions
Investor Relations
Revenue growth of 3.3% in 2014 impacted by weak economy, integration of Experian
Data Services (EDS) and the launch of Cerved’s new ERP system
Drivers of consumption(1) in 2014 were positive and led to 3.3% growth vs 2013: churn
declined vs 2013, new clients more than offset churn, and renewals were positive
Numerous new products are being launched or are in the pipeline
Launched a strategic project to improve sales force efficiency and effectiveness
Credit Information – Corporates
18
95
102
108
124 129
138 143
2008 2009 2010 2011 2012 2013 2014
1) Consumption of points in 2014 compared to 2013 for business information products by c. 22k corporate clients covered by the field sales network
Investing in the business to improve performance in the medium term
Lince Honyvem EDS
Consumption of Business Information Points 2014 vs 2013 (1) Corporate Revenues 2008-2014 (€m) 2)
Business
Finance
M&A and IR
Lost
Clients
Existing
Clients
New
Clients
Y-o-Y
Consumption
(4.1%)
2.0%
5.4%
3.3%
2) 2011 proforma for Honyvem
Real Estate
Rating &
Analytics
Business
Information
Credit Information – Financial Institutions
19
Tough year in 2014 with Revenues declining 3.4% due to large contract renewals coupled
with lower new bank lending
Lower pressure expected in 2015 with absence of large business information contract
renegotiations with large banks, together with improved new bank lending prospects
Banche Popolari consolidation impact should be limited and diluted over time; a
consolidation in the Italian banking system will occur in the medium to long term
682
572 517
488 463
401 395
+6
%
(16
%) (1
0%
) (6%
)
(5%
)
(13
%)
(2%
)
(20%)
(15%)
(10%)
(5%)
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014
1) Source: Bank of Italy
After a tough 2014 the environment appears less challenging in 2015
CI Financial Institutions – Breakdown 2014 Bank New Lending from 2008 (€bn) 1)
Business
Finance
Yo
Y c
ha
ng
e (%
)
M&A and IR
Banks &
Investors
Utilities &
Financials
Corporates
Legal
Services
Re-
marketing
2014 was another record year with Revenues growing 46% and EBITDA 47%
Cerved Credit Management is now the #1 independent player in Italy covering:
All credit types: personal/corporate, secured/unsecured, large/small
All client types: corporates, utilities, financial companies, banks and funds
Full value chain: caring, out-of-court settlement, legal services and re-marketing
Launched strategic project to focus on performance and integration of operations
Credit Management
20
10,3
7,8
1,8 1,3 0,5
2014 2013 2012 2011 2010
Impressive growth and diversification from 2011 to 2014 with Revenue CAGR of 64%
Credit Management Revenue Breakdown AuM Evolution (€bn)
NPLs and Problematic
Credits
Business
Finance
M&A and IR
Closing of strategic partnership with Creval to manage their NPL portfolio planned in
April 2015
Price of €21.7m reflects an EV/EBITDA multiple of 5.5x on expected 2015 EBITDA of €3.9m
Credit Management sector growth fundamentals remain solid with banks due to
increase pace of NPL disposals or outsourcing
Credit Management (cont’d)
Potential in the market to increase sale and/or outsourcing of bank portfolios
Business Map Evolution of NPL Financial Institutions – Banks (€bn)
59 78
107
125
156 183
201 216
227
2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E
Business
Finance
Source: Prometeia
7%
28%
M&A and IR
21
Ad-Hoc
Projects
Database
Industrial
and
Competitor
Analysis
Marketing
Platforms
2014 was a record year in terms of Revenue and EBITDA growth of 15% and 45% resp.
thanks to revamp of product offering and new go-to-market approach
2015 focus on launching new products and consolidating results to exploit cross-selling
opportunities while at the same time reducing cannibalisation
Searching M&A opportunities although there are few targets considering market
fragmentation and stringent regulation regarding information on private individuals
Marketing Solutions
22
8,9 9,9
12,8
14,7
3,1 3,5 4,7
6,8
2011 2012 2013 2014
Continue to exploit synergies with Corporates on database, clients and sales force
Breakdown of 2014 Revenues Revenues and EBITDA (€m)
Business
Finance
M&A and IR
Labor
Expenses
Information
Services
Sales
Agents
Accruals &
Bad Debt
Other Costs
Margin improvements in 2014 demonstrated the
operating leverage of each division
Improvement in Credit Information due to careful
cost management and impact of Experian deal
Further scope to optimise the cost base and
increase efficiency within the group
EBITDA and Profitability
23
53,9% 53,4% 52,7% 53,7%
2011 2012 2013 2014
17,0% 17,6% 20,7% 21,0%
2011 2012 2013 2014
34,5% 35,6% 36,5%
45,9%
2011 2012 2013 2014
Cerved enjoys operating leverage in each of its three divisions
Credit Information EBITDA margins Credit Management EBITDA margins Marketing Solutions EBITDA margins
Business
Finance
1) Note: financials related to Cerved Group SpA
Operating Expenses 2014 1)
M&A and IR
Financial Reporting, Working Capital, Capital Structure
Busy 2015 for the Financial Division with 3 key projects in place
Significant investment to improve and integrate management information systems of
acquired companies
Launched project to optimise Working Capital and in particular Trade Receivables
with objective of improving cash inflows
Albeit premature, we are monitoring the opportunity to refinance the €530m of
outstanding bonds in January 2016; debt market conditions currently very attractive
24
Bond Redemption Cost Evolution (€m)
25,5 21,5
17,5 13,5
9,6 9,6 9,6 9,6 4,8 4,8 4,8 4,8
29,6
25,7
21,7
17,8
13,8 13,8 13,8 13,8
9,2 9,2 9,2 9,2
4,6 0
20
40
60
jan-15 apr-15 jul-15 oct-15 jan-16 apr-16 jul-16 oct-16 jan-17 apr-17 jul-17 oct-17 jan-18
Senior Subordinated Senior Secured
Business
Finance
M&A and IR
2014 was a very busy year with 3 closed deals and 1 signed deal
Pipeline remains interesting and focused on Italy in current and adjacent sectors.
Foreign M&A only at the monitoring phase
Seeking adjacencies in which to exploit existing competitive strengths – along the lines
of the entry into the Credit Management business in 2011
Mergers & Acquisitions
25
Recus SpA 1) 80% 18.8m 15.9m 3.5m
RLValue Srl 1) 100% 1.4m 1.7m 0.4m
SpazioDati Srl 33% 1.3m n.a. n.a.
Creval Partnership 2)
100% 21.7m c. 9m c. 3.9m
1) Actual Revenues and EBITDA for the 12m period ending December 2014 2) Closing expected in April 2015; Expected EBITDA for the 12m period ending December 2015
Strategy focused on safe, bolt-on acquisitions in core and adjacent markets in Italy
Pipeline 2015
Company Stake Investment Revenues EBITDA
Deal Closed 2014 & Creval Portfolio Partnership (2015)
CI
BI CM
Adj.
MS
Foreign
Company Stake Investment
Advanced Preliminary Status
Mo
re
Less
Effo
rt
M&A Effort and Status
Business
Finance
M&A and IR
Date Event Location
Mar 25 Mid-Small Caps Conference (DB) London
Apr 1 Mid-Small Caps Conference (HSBC) Paris
May 13-14 Business Services Conference (JPM) London
Jun 10-11 Business Conference (Unicredit) Milan
Sep 16 Euro Services Conference (UBS) London
Oct 2 Italian Conference (JPM) Milan
Nov 18 Business Services Conference (DB) London
Dec 1 Pennyhill Equities (Berenberg) London
IR activity focussed on “virtuous circle” involving analyst coverage, investor meetings
and trading volumes
2015 envisages a rich agenda in terms of conferences and non-deal roadshows in
Europe and North America
Corporate website improved to include numerous new features as per best practice
Investor Relations
26
120 141
206 182
207
304
176
Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
Medium term objective is to prepare Cerved to be a Public Company
Conferences Scheduled for 2015 1) Average Daily Volumes (NOSH k) 2)
1) Tentative dates and events subject to change 2) Excluding 2, 5 and 6 January 2015 3) Up to March 11th, 2015
Business
Finance
M&A and IR
Table of Contents
27
2014 Results 2
Investment Case 4
2014 Business Review 3
Appendices 5
Overview 1
Cerved is a Systemic, Mission-Critical Asset for Italy …
28
Mission-critical for the majority of corporates
At the core of the Italian economy supporting
c.€1.5trn credit positions
700
1.455
390
365
Sto
ck o
f
mo
nito
red
len
din
g
Ne
w le
nd
ing
Co
mm
erc
ial
cre
dit
Tota
l cre
dit
sup
po
rte
d b
y
Ce
rve
d
Credit positions supported by Cerved Information (€bn)
Monitoring
Covering the full spectrum of the credit value chain
Recovery
Underwriting
Origination
c.700 c.31.200 Credit Information client base
Financial insitutions
Corporates
Credit management
Credit Information
Marketing solutions
Credit management
Decision analytics and Monitoring
Credit limit sizing
29
…in a growing market with room for increased penetration
Source: PwC 1) No. 1 player In the non-captive market, considering pro-forma revenues in 2013 which include Recus and Tarida
2% 42%
Corporates
290 (+3.6%)
Business Information
627 (+3.9%)
721 (+8.5%)
Ce
rve
d
Po
sitio
n a
nd
Ma
rke
t Sh
are
in
20
13
359 (-4.3%)
4.2% 42.7% 7.3%1)
Financial Institutions
Consumer 321
Corporates 305
€14,7m
4% of Group
(+18.4% CAGR)
€142.7m
43% of Group
(+8.5% CAGR)
€53,3m
16% of Group
(+63.7% CAGR)
€122,0m
37% of Group
(-3.3% CAGR)
No. 9 No.1 No. 11) No.1
Ma
rke
t
20
13 D
ata
(€
m)
(CA
GR
11
-13
)
Ce
rve
d
20
14
Re
ve
nu
es
(CA
GR
1
1-1
4)
NPLs 502
Corporate receivables
219
Credit Information Credit Management Marketing Solutions
Business Information
120
Rating & Analytics 39
Real Estate
97
Consumer Information
103
30
Data sourcing Data processing Products Sales
Investment of c.€40m
p.a.
16mm companies
and 20mm company-
related individuals for
>40 years
Mix of proprietary,
unofficial and official
information making it
difficult to replicate
More than 450 FTEs
who process, analyse
and check the data
More than 200 FTEs in
the IT department:
almost all of the
products are online
Broadest product
range for corporates
and financial
institutions: c.30
families and c.180
individual products
More than 30 FTEs in
the marketing
department
National sales network
of approx. 350 FTEs
− More than 300 FTEs
for corporates
− Around 45 FTEs for
financial institutions
Business Information Value Chain based on Scale
Cerved revenue Breakdown 2014
31
RMS 2013 (1)
Cerved CAGR 11-14
Cerved CAGR 11-13
Market CAGR 11-13
Source: Company information, PwC (1) Relative Market Share: Cerved’s revenue divided by revenue of No. 2 market player
Credit
Information
1.6x
2.4%
3.6%
(1.0%)
€649m
Credit Information
80%
Market size and Cerved’s market share in Credit Information 2014
41% market share
Undisputed Leader in Italian Credit Information
Crif
Infocamere
Ribes
Assicom
Visura
REAG 4
Prometeia Wise
0%
10%
20%
30%
40%
50%
60%
0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00
EB
ITD
A M
arg
in %
Relative Market Share in Credit Information (RMS)(1)
32 Sources: Company information, AIDA, PwC Estimates (1) RMS = Competitor revenue / Cerved’s revenue; except for Cerved’s RMS which is defined as Cerved’s revenue divided by the revenue of the No. 2 market player
Scale vs. profitability – Cerved vs. competitors 2013A
A bubble of this size represents €30 million in revenue
Cerved’s Market Share commands Best-In-Class Margins
29,7%
34,6%
35,1%
48,3%
33
EBITDA margin 2014A Operating cash flow margin 2014A(1)
Source: Company information for Cerved and comparables (1) Defined as (adj. EBITDA – Capex)/Revenue (2) LTM as of September 2014
26,5%
31,0%
27,0%
39,9%
(2) (2)
Compared to the Largest Publicly Listed Peers, Cerved’s Profitability is also Unmatched
Credit Information and Credit Management Markets
255 265 270 275 290
123 126 123 119 120
123 134 118 98
97
41 44
41 40
39
123 115
110 102
103
665 684
662 634
649
2009 2010 2011 2012 2013
34
Credit Information Market (€m)
(6,1)%
(1,0)%
(7,4)%
(1,0)%
2,6%
(0.6)%
Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), AIDA, Financial Reports, PwC Estimates
Consumer
Information
Banks
Rating &
Scoring Banks
Real Estate
Banks
Business
Information
Banks
Business
Information
Corporate 152 164 180 192
219
256 276
311 323
359
100
107
121
133
142
508
547
612
648
721
2009 2010 2011 2012 2013
+9.1%
10.1%
8.0%
8.1%
Bank
NPLs
Consumer
Finance
NPLs
Corporate
NPLs
CAGR
‘09-’13
CAGR
‘09-’13
Credit Management Market (€m)
Resilient Demand for Credit Information across Economic and Credit Cycles
35
Increasing need for credit checks
Increasing receivable volumes
Increasing new lending and stock of loans
Increasing economic activity
Higher scrutiny and monitoring
Increasing need for more frequent checks and credit information
Resiliency Growth
Negative macro
environment
Positive macro
environment
Increasing counterparty risk
Corporates Financial institutions Corporates Financial institutions
Resiliency
Cash flow
Growth
Increasing SME Credit Information penetration expected to continue
1.185
510 437 395 394
The SME Market represents Significant Untapped Potential for Credit Information
Large SME market
Thousands of SMEs (10-250 FTEs) 2013A
Long enforcement times
Average days to enforce a contract 2014A
34% 34% 35% 35% 37%
38% 40%
41% 43%
44%
08A 09A 10A 11A 12A 13E 14E 15E 16E 17E
(1) For companies with more than €1mm in revenue (2) For Italy, penetration represents the weighted average of: 25/35% penetration for ~170k small companies (10-49 FTEs); 60/70% penetration for ~20k medium companies (50-200 FTEs); 70/80% penetration for ~4k large companies (>200 FTEs)
Credit Information penetration 2012A (%) Credit Information penetration 2008A-17E(%)
36
Italian SMEs usage of Credit Information underpenetrated vs. UK
Resiliency
Cash flow
Growth
78%(1)
37%(2)
Source: World Bank Source: Annual Report of European SMEs 2014 – European Commission (data on 2013)
191 186 158
123
392
Source: Eurostat, Cerved Group, Interviews to industry experts Source: Eurostat, Cerved Group, Interviews to industry experts
227 216
201
183
156
125
107
78
59
2017E 2016E 2015E 2014E 2013 2012 2011 2010 2009
Market NPLs
37
12,4
10,3
7,8
1,8 1,3 0,5
2015 2014 2013 2012 2011 2010
Cerved NPLs
Captive
portfolio
purchased
prior to 2009
€0.8bn SPV corporate
/SME
€4.3bn on 3 SPVs
€1.9bn
consumer
finance
€0.9bn SPV
consumer
loan
Market Growth
Credit Management Growth in NPLs(1) Resiliency
Cash flow
Growth
(1)1) Excludes Finservice which operates on the collection of NPLs for corporates. (2)2) As of April 1st, 2015
25.4%
7.4%
CAGR 2009A–14E:
CAGR 2014E–17E:
€0.5bn
various banks
contracts
€2.1bn from
Creval
agreement
Cerved Growth
Pre-crisis level of €40-50bn
Current level of €183bn, expected to increase
to €227bn by 2017
#1 Independent Player
Growth from i) NPL growth and ii)
increased outsourcing/NPLs disposals
acted by banks
(1)Source: Prometeia Source: Company information
Market NPLS Cerved NPLs
Increasing NPL volumes
Low liquidity, low collections, higher fees
Decreasing NPL prices, outsourcing
Credit Management Model across the Economic Cycle
38
Negative economic cycle
Opportunistically intake massive portfolios
Maximize collections
Positive economic cycle
Increasing liquidity
Refinancing options for debt holders
Increasing collections
Resiliency
Cash flow
Growth
Illustrative impact of economic cycle
NPL stock
Collection rates
Time
Consolidation of core
markets
Deal Revenue
€28mm Dec 2003
€6mm Dec 2007
€67mm Dec 2008
€16mm Dec 2011
€10mm Mar 2013
n.m.
Start-up
€1mm Dec 2010
Data Services
Cerved M&A track record 2004-2014
2004
2005
2008
€14mm Mar 2012 Information Services
2012
2011
2013
2014
Illustrative M&A pipeline for 2015
Resiliency
Cash flow
Growth
Entry into adjacent
markets
M&A Track Record and Pipeline
€0.5 Dec 2013
€15.7mm Dec 2014
€8-9m in FY2015
39
CI
BI CM
Adj.
MS
Foreign
Advanced Preliminary Status
Mo
re
Less
Effo
rt
M&A Effort and Status
2015
Free Cash Flow
40
Future growth
(1) Current interest costs on €530m of outstanding bonds, net of €250m of FRNs repaid in June 2014 (2) Estimated value for the long term using an overall 34% tax rate; cash taxes in 2015 expected to be higher due to non-recurring timing effects
Resiliency
Cash flow
Growth
Illustrative 2014 Free Cash Flow Bridge excluding Non-Recurring Items (€m)
126
58
39
30
Ac
tua
l 2014
Op
era
tin
g
Ca
sh F
low
Inte
rest
on
Cu
rre
nt
Ca
pita
l
Str
uc
ture
(1)
Illu
stra
tive
Ca
sh
Taxe
s (2
)
Illu
stra
tive
Fre
e
Ca
sh F
low
Table of Contents
41
2014 Results 2
Appendices 5
2014 Business Review 3
Investment Case 4
Overview 1
Basis for Financial Information
42
Please note that Cerved Information Solutions SpA (“CIS SpA”) was
incorporated on 14 March 2014 and holds a 100% stake in Cerved Group SpA
(“CG SpA”) since 28 March 2014
In order to provide the markets with complete financial information to reflect
the CIS SpA consolidated business operations in calendar years 2013 and 2014,
the financial data contained in this presentation represents the aggregate of
the following consolidated accounts: (i.) CG SpA from 1 January to 31 March
2014 and CIS SpA from 14 March to 31 December 2014, and (ii.) Cerved
Holding SpA from 1 January to 27 February 2013 and Cerved Group SpA from 9
January to 31 December 2013
On a consolidated basis, there are minor differences between the accounts of
CIS SpA and CG SpA, mainly related to costs connected to CIS SpA’s status as
a listed company, and the costs incurred to carry out the IPO of CIS SpA
Financial information are provided to investors at two different levels: CIS SpA
(listed on the Milan Stock Exchange) and CG SpA (issuer of €530m of bonds)
134,9 127,4 126,3 122,0
111,8 128,8 138,2 142,7
246,6 256,2 264,5
2011 2012 2013 2014
Credit Information
43
132,9 136,8
139,3 142,1
2011 2012 2013 2014
1.8% 2.9%
3.9% 3.2%
52.7% 53.4% 53.9% 53.7%
Corporates:
Financial Institutions:
11.2%
(3.2%)
% EBITDA margin %
3.3%
(3.4%)
YoY Growth %
Revenues (€m) and Revenue growth (%)
EBITDA (€m) and EBITDA margin (%)
2.0%
0.1%
CAGR 2011-2013 2014
264,7
Credit Management
44
12,1
25,0
36,6
53,3
2011 2012 2013 2014
106.2% 46.4%
2,1 4,4
7,6
11,2
2011 2012 2013 2014
72.4% 112.8% 20.7%
17.6% 17.0%
21.0%
EBITDA (€m) and EBITDA margin (%)
% EBITDA margin
Revenues (€m) and Revenue growth (%)
% YoY Growth %
45.5%
47.2%
3,1 3,5 4,7
6,8
2011 2012 2013 2014
Marketing Solutions
45
8,9 9,9
12,8 14,7
2011 2012 2013 2014
29.0%
32.3%
15.1% 36.5%
35.6% 34.5%
45.9%
% EBITDA margin
EBITDA (€m) and EBITDA margin (%)
Revenues (€m) and Revenue growth (%)
11.7%
% YoY Growth %
45.0%
15.3%
Profit and Loss
46
Source: Company Information (2011 and 2012 restated financials; 2013 aggregate financials) (1) Includes ‘Other income’
€m 2011 2012 2013 2014
Total Revenues 267,2 290,6 313,5 331,3
Cost of raw material and other materials (0,6) (0,7) (2,8) (7,0)
Cost of Serv ices (79,9) (76,3) (77,6) (76,3)
Personnel costs (57,8) (67,2) (67,2) (73,7)
Other operating costs (6,4) (7,4) (8,1) (8,2)
Impairment of receivables and other provisions (4,5) (7,1) (6,4) (6,3)
EBITDA (1) 138,0 144,7 151,5 160,1
Depreciation & amortization (12,0) (16,4) (23,3) (25,1)
EBITA 126,0 128,2 128,2 135,0
PPA Amortization (49,5) (53,1) (39,4) (42,9)
EBIT 56,5 75,5 81,4 87,6
PBT 30,9 20,5 22,6 24,0
Income tax expenses (14,0) (15,4) (14,7) (12,0)
Reported Net Income 16,9 5,1 8,0 12,0
Adjusted Net Income 66,9 62,6 43,0 55,0
of which: Minorities 0,3 0,8 1,1 1,4
47
Balance Sheet
Source: Company Information (2011 and 2012 restated financials; 2013 aggregate financials) (1) Non cash item (2) Net of capitalized financing fees
€m 2011 2012 2013 2014
Intangible assets 291,5 248,7 501,1 472,4
Goodwill 275,8 275,8 708,6 718,8
Tangible assets 17,7 16,5 16,6 17,3
Financial assets 3,1 15,0 14,9 14,9
Fixed assets 588,1 556,1 1.241,3 1.223,4
Inventories 0,0 0,1 1,3 0,7
Trade receivables 121,3 119,5 151,5 145,3
Trade payables (26,8) (25,4) (30,1) (32,4)
Deferred revenues (83,8) (82,5) (83,1) (73,3)
Net working capital 10,7 11,6 39,6 40,4
Other receivables 10,3 15,4 5,8 7,1
Other payables (44,8) (53,8) (20,4) (26,1)
Net corporate income tax items (7,3) (3,0) (27,2) (18,8)
Employees Leaving Indemnity (9,8) (9,6) (10,9) (13,1)
Provisions (10,7) (10,6) (15,0) (11,1)
Deferred taxes (1) (66,9) (60,4) (119,8) (109,1)
Net Invested Capital 469,6 445,7 1.093,3 1.092,7
IFRS Net Debt (2) 297,7 280,6 722,2 487,6
Group Equity 172,0 165,1 371,1 605,1
Total Sources 469,6 445,7 1.093,3 1.092,7
48
Cash Flow
Source: Company Information (2011 and 2012 restated financials; 2013 aggregate financials) (1) Excluding ~€37mm of cash balance as of February 2013 (acquisition date) (non cash flow item)
€m 2011 2012 2013 2014
EBITDA 123,1 144,7 151,5 160,1
Net Capex (12,1) (25,7) (26,6) (28,2)
EBITDA-Capex 110,9 119,0 125,0 131,9
as % of EBITDA 90% 82% 82% 82%
Cash change in Net Working Capital (1) 7,8 (6,1) (24,7) 8,2
Change in other assets / liabilities (7,1) (1,9) 7,3 (13,9)
Operating Cash Flow 111,7 111,1 107,5 126,2
Interests paid (8,1) (6,9) (29,1) (51,7)
Cash taxes (26,4) (21,3) (18,4) (24,1)
Non recurring items (5,0) (3,9) 0,1 (3,4)
Cash Flow (before debt and equity movements) 72,1 76,8 60,1 46,9
Div idends (51,1) (13,1) (0,1) 1,0
Acquisitions / deferred payments / earnout (2) (71,5) (3,4) (509,4) (20,9)
IPO Capital Increase (net of IPO costs) - - - 220,2
Other - - - (0,1)
Debt drawdown / (repayment) (39,3) (48,0) 482,8 (254,5)
Net Cash Flow of the Period (89,8) 12,3 33,5 (7,5)
Adjusted Net Income Bridge
Source: Company Information (2011 and 2012 restated financials; 2013 aggregate financials) Note: PPA Amortization refers to business aggregation processes
49
€m 2011 2012 2013 2014
Reported Net Income 16,9 5,1 8,0 12,0
Non recurring income and expenses 5,0 (2,5) 7,4 4,5
Shareholders Fee 2,2 2,2 - -
Capitalized financing fees 3,2 3,2 4,1 3,4
Earn-out - 26,8 - -
Database costs 12,7 - - -
PPA Amortization 49,5 53,1 39,4 42,9
Financial charges non-recurring - - - 10,1
IRS termination - - - 1,0
Fiscal Impact of above components (22,7) (25,3) (15,8) (18,9)
Adjustments 50,0 57,5 35,1 43,0
Adjusted Net Income 66,9 62,6 43,0 55,0