Venture Debt FundJuly 2015
FINANCIAL RESULTS OF GK PEM FOR H1 2016
WARSAW, 18 AUGUST 2016
2
Agendap
TSR – our offer for investors
Prospects for the funds and new initiatives
Financial results H1 16
Changes in accounting policy
New investments
p
3
D I V I D E N D 2016
PLN 14.41 per share
dividend yield of 12.8%
net profit of 98%
PLN 8.00 on 15 July
PLN 6.41 on 30 September
p
4
We build value for our shareholders through dividend
distribution and share price increase
PLN 132.75
PLN 106.30
23.8 % return rate for the PEM
shareholders who acquired
shares during the IPO comes
from dividends-4.2 % return rate for the PEM
shareholders who acquired
shares during the IPO is due to
change in share price
-12.2 % – return rate for WIG index in
the same period => PEM relatively
better than the market average –
by 31.7 pp
TSR 19.6%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
30,0%
40,0%
PEM PEM TSR WIGPEM PEM TSR WIG
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0 %
-20.0 %
-30.0 %
p
5
Total value of dividends paid was PLN 159m
364
523
73
3749
mkt cap (bez dywidend) dyw. z zysku 2013 dyw. z zysku 2014 dyw. z zysku 2015 łączna wartość
159
Data in PLN million
mkt cap (without dividends) div. from 2013 profit div. from 2014 profit div. from 2015 profit total value
6
Agendap
TSR – our offer for investors
Prospects for the funds and new initiatives
Financial results H1 16
Changes in accounting policy
New investments
p
7
MCI.EuroVentures – history likes to repeat itself
Amount
invested
PLN 270m
Valuation + div.
PLN 711m
CoC
2.5-4xp
Average
maturity
4.3 years
Amount
invested
PLN 330m 3-5 years
Share of the new investments in the current structure of the MCI.EuroVentures fund is nearly 40%
ATM, Dotpay, eCard, Lifebrain – investments with a high growth potential and a high likelihood of re-occurrence of
historical returns
The fund’s historical track record is the return rate of 2.5 to 4.0x CoC; on average within 4 years =>> 25% IRR
This is the company that
earned us 46% IRR for
investors
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8
MCI.TechVentures – the fund with ‘rising stars’
Conclusion of the sales process
since 2011
since 2015
since 2012
since 2015
since 2015since 2015
Strong regional leaders Companies with a potential for rapid
growth at European level
Events that may contribute to further increase in
the business value of the companies involved in
digital economy
IPO and stock exchange valuation
Allegro UBER
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9
We are launching new investment products to reconstruct the
PEM revenue structure to achieve a larger share of a fixed
management fee
Region: PL and the Baltic countries
Up to 5m, A-B round
In contrast to Western Europe, the target area suffers from
a noticeable lack of investment capital for technology
companies that would normally be provided by
investment funds with long-term track-record in building
regional market leaders
Fintech FundBaltic Fund
The fund dedicated to companies from the fintech sector
Rapid development of the fintech sector in the field of
digital economy
PEM staff has extensive experience in the field of fintech
and banking plus cooperation with other funds
Up to EUR 10m, A-B round
Region: Europa
The fund investing in the mix of certificates:
MCI.TechVentures, MCI.EuroVentures and MCI.CreditVentures
Underlying instruments: mezzanine/venture debt,
private equity in growth and buyout models
Geographical location: PL, UK, DACH, Turkey, Russia
Business models: e-commerce, fintech, big data, IoT,
distribution, TMT
Fund of Funds MCI.CreditVentures
Extending the equity financing offer to include mezzanine
debt financing for technology and growth companies
(venture debt)
Faster and easier process, lack of excessive dilution,
improved balance sheet structure
Up to EUR 10m
Region: PL and CEE
10
Agendap
TSR – our offer for investors
Prospects for the funds and new initiatives
Financial results H1 16
Changes in accounting policy
New investments
p
11
Profit from cash transactions in H1’16 amounted to approx. PLN 10m
In H’16, PEM reported revenues of PLN 22.9m. This represents 40% of the revenue recorded for H1’15 due to the lack
of a variable fee
A fixed management fee, due to higher assets under management, increased by 13% to PLN 20.8m; with a
profitability ratio of 2.3% relative to the net asset value generating this fee
PLN'000 1H'16 1H'15 % zmiany 1Q'16 1Q'15 % zmiany
Opł. stała za zarządzanie 20 778 18 354 13% 9 936 8 548 16%
Opł. zmienna za zarządzanie 1 775 38 772 (95)% 472 16 664 (97)%
Pozostałe przychody 378 429 (12)% 170 183 (7)%
Przychody Razem 22 931 57 555 (60)% 10 578 25 395 (58)%
Koszty działalności podstawowej (4 889) (3 437) 42% (2 247) (1 199) 87%
Koszty operacyjne (10 375) (20 880) (50)% (3 153) (6 401) (51)%
Koszty finansowe netto (2 488) (1 401) 78% (850) (374) 127%
Koszty Razem (17 752) (25 718) (31)% (6 250) (7 974) (22)%
Podatki 1 359 2 237 (39)% 578 (52) n/a
Zysk netto 6 538 34 074 (81)% 4 906 17 369 (72)%
Zysk netto na akcję 1,96 zł 10,22 zł (81)% 1,47 zł 5,21 zł (72)%
% Zysk netto / Przychody z zarządzania 29,0% 59,6% n/a 47,1% 68,9% n/a
% Koszty sprzedaży / Przychody z zarządzania 21,7% 6,0% n/a 21,6% 4,8% n/a
WAN łącznie 2 158 888 1 861 452 16% 2 176 835 1 714 741 27%
WAN generujący przychody 1 924 540 1 707 332 13% 1 956 088 1 544 751 27%
% Przychody / WAN gen. przychody 2,3% p.a. 6,7% p.a. n/a 2,1% p.a. 6,5% p.a. n/a
% Koszty / WAN gen. przychody -1,8% p.a. -3,0% p.a. n/a -1,3% p.a. -2,1% p.a. n/a
% Zysk netto / WAN gen. przychody 0,7% p.a. 4,0% p.a. n/a 1,0% p.a. 4,5% p.a. n/a
PLN’000
Fixed management fee
Variable management fee
Other revenues
Total revenues
Costs of core activities
Operating costs
Net financial costs
Total costs
Taxes
Net profit
Net profit per share
% Net profit / Management revenues
% Cost of sales / Management revenues
Total NAV
NAV generating revenues
% Revenues / NAV gen. revenues
% Costs / NAV gen. revenues
% Net profit / NAV gen. revenues
H1 16 H1 15 % change Q1 16 Q1 15 % change
2.3% p.a.
-1.8% p.a.
0.7% p.a.
6.7% p.a.
-3.0% p.a.
4.0% p.a.
2.1% p.a.
-1.3% p.a.
1.0% p.a.
6.5% p.a.
2.1% p.a.
4.5% p.a.
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1 001
1 119
161
62
12
13% YoY increase in assets generating the management feep
The value of assets subject to a fixed fee in H1 increased by 13% YoY, gross assets – by 19% YoY due to organic growth and
fund inflows, which in H1 16 amounted to more than PLN 138m gross and PLN 85m net (~ an increase of PLN 55m gross
compared to H1 15)
The assets subject to a fixed fee increased by PLN 217m YoY. A very positive trend YoY was recorded for TV (+21%) and EV
(+10%) funds. After the end of the first quarter, the CV investor redeemed PLN 30m worth of excess liquidity
At the end of H1 16, NAV stood at PLN 2,159m, up 16% YoY
The funds managed by GK PEM have invested more than 275m YTD, of which more than 80% was invested by the
MCI.EuroVentures fund which is in the process of building an asset structure based on the private equity model
16%increase in NAV
(basis for fees) YTD
above PLN 138mgross certificates sold
l
PLN 2,342mgross assets under
management
Assets under management(PLN million)
1
+13%
Net Asset Value (NAV) – basis for calculating a fixed fee(PLN million)
1
43%
47%
3%
7%
754 765 782 863 833
728 748 844 835 880
178 182184 178 149
4784
8180 62
1 7071 779
1 891 1 956 1 925
2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
Buyout (EV) Growth (TV) Credit (CV) Early Stage (IV + HVP)
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Buyout (EV) Growth (TV) Credit (CV) Early Stage (IV + HVP)
13
11% growth rate for a quarterly fixed management feep
A fixed management fee of PLN 21m in H1 16
A small variable management fee in H1 16. Given the capital market situation, relatively good performance achieved by
EV and TV funds in H1 16 was not sufficient to exceed the hurdle rate of 10% p.a. In the period from 27 May 2015, which is
the date when we last collected variable fees in EV and TV Funds, to 30 June 2016 the hurdle rate stood at 11 %
All funds that we manage have significantly better growth rates than the Warsaw WIG index, which dropped by ~16 %
YoY
Revenues from a fixed management fee(PLN million)
1
Return rates for the fundsNet
1
Revenues from a variable fee(PLN million)
1
+11%
3,9 3,9 4,0 3,84,4
4,9 5,6 6,15,3
5,6
0,3
0,4 0,5
0,4
0,40,8
- 0,2
0,4
0,4
0,49,8 9,8
11,09,9
10,8
2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
Buyout (EV) Growth (TV) Credit (CV) Early Stage (IV + HVP)
11,0
10,9
0,3
1,7 0,3 0,7
22,1
0,0
1,80,5 1,3
2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
Buyout (EV) Growth (TV) Credit (CV)
1H'16 LTM
MCI.TV 4,8% 8,8%
MCI.EV 4,5% 5,1%
MCI.CV 2,8% 6,7%
od momentu ostatniego zmiennego
MCI.EV 2,1%MCI.TV 9,0%
Buyout (EV)
Buyout (EV)
Growth (TV)
Growth (TV)
Credit (CV)
Credit (CV)
Early Stage (IV + HVP)
Q2 15 Q3 15
Q3 15Q2 15
Q4 15
Q4 15
Q1 16
Q1 16
Q2 16
Q2 16
H1 16 LTM
MCI.TV
MCI.EV
MCI.CV
MCI.EVMCI.TV
since the last variable
9.8 9.811.0
9.910.8
4.9 5.6 6.15.3
5.6
4.03.93.9 3.84.4
-0.2
0.3
0.8 0.4
0.4
0.4
0.4
0.4
0.40.5
2.1%
9.0%
5.1%
6.7%
8.8%4.8%
4.5%
2.8%
22.10.3
10.9
11.0
0.01.8 0.5 1.3
1.7 0.3 0.7
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14
Assets valued at market price and 40% share of the cost of investment
(price at which the asset was bought) made it difficult to obtain the rate in
excess of the minimum rate of return
MCI.EuroVentures1
MCI.TechVentures1
NAV 27.05.15
NAV 27.05.15
NAV 27.05.15 issues management fees
2.1% rate of return
NAV Q2 16 needed to reach the variable
NAV Q2 16 Sym
NAV Q2 16 Sym
needed to reach the variable
NAV Q2 169.0% rate of return
management fees
issuesNAV 27.05.15
44
12 9 1029
35
3118 24
15
2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
Środki Pieniężne Naliczone Opłaty za Zarządzanie
15
We had PLN 44m in cash at the end of H1 16p
At the end of H1 16, PEM had PLN 29m in cash, which, combined with the management fees charged (PLN 15m),
amounted to a total of PLN 44m, i.e. PLN 13.2 per share
Net cash to EBITDA LTM ratio was 1.29x
PLN 21m net cash
1.29xnet cash/ EBITDA LTM
PLN 22m available
revolving credit
dividend payment of PLN 36.8m
Cash item(PLN million)
1
PLN'000 H1'16
Środki Pieniężne i Ekwiwalenty 29
Naliczone Opłaty za Zarządzanie 15
Razem 44Kredyty i pożyczki 0
Wyemitowane Obligacje 23
Gotówka netto 21
payment of the 1st
dividend tranche of PLN 28.6m
PLN’000 H1 16
Cash and cash equivalents
Management fees charged
Loans
Bonds issued
Total
Net cash
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Cash Management fees charged
16
Agendap
TSR – our offer for investors
Prospects for the funds and new initiatives
Financial results H1 16
Changes in accounting policy
New investments
p
17
Changes in accounting policyPurpose of the change:
ensuring that the cost of variable remuneration is more stable over time (reducing the number of one-off events) – ensuring that costs are more proportionate to revenues
increasing the relevance and transparency of financial statements by improving the comparability of data over specific reporting periods
increasing the comparability of data in financial statements of other companies engaged in similar activities
reducing the uncertainty as to the future performance of PEM in this area
systematic identification of costs related to the creation of provisions for each investment, regardless of the share in the portfolio of funds, as the value of investments over lifetime increases
The changes introduced:
provisions were created for each investment included in the portfolios of the funds managed by GK PEM
changing the starting point for identifying the event that creates an obligation to recognise a provision – provisions should be recognised, if a notional net profit is generated at the level of an individual investment (as the fair value of the investment increases)
the provision is recognised at 5% of the notional net profit, where the net profit is defined as the difference between revenues from the investments recognised as revenues generated from the sale of stocks/shares (partial exits), dividends received and other benefits of a similar nature and the fair value measurement of the investment and the expenditures incurred recognised as the capital invested to purchase the investment, including any recapitalisation of the company, as well as all additional costs associated with the acquisition of the investment and those associated with the maintenance,
management and administration of the investment, plus the expected return on investment per annum (hurdle rate)
changing the starting point for recognising a provision, i.e. inclusion of a portfolio company in the calculation upon the firstmeasurement of the investment at fair value.
Rezerwy Zobowiązania
Zmiana stanu
rezerw
do P&L
Zmiana stanu
zobowiązań
do P&L
Było w P&L
w 2015
Wpływ na
wynik
Wpływ na
kapitały
YE2012 6 605 -6 605
YE2013 16 260 -9 655
YE2014 21 099 -4 839
YE2015 24 910 -3 811 -3 449 -362
1H2016 17 974 10 014 6 936 -10 014 -3 078
TOTAL - - 3 125 -10 014 -3 449 -3 440 -21 099
SPRAWOZDANIE Z SYTUACJI FINANSOWEJ SPRAWOZDANIE Z ZYSKÓW LUB STRAT EFEKT ZMIAN
OkresPeriodProvisions Liabilities
Change in provisions for
P&L
Change in liabilities for
P&L
P&L in 2015 Impact onthe result
Impact on equity
TOTAL
2012
2013
2014
2015H1 2016
STATEMENT OF FINANCIAL POSITION STATEMENT OF PROFIT OR LOSS EFFECT OF CHANGES
18
Agendap
TSR – our offer for investors
Prospects for the funds and new initiatives
Financial results H1 16
Changes in accounting policy
New investments
p
19
The funds that we manage have invested more than PLN 275m
YTD
New investments and subsequent financing rounds
prior to the publication of the report1
FinTech Online factoring platform
Online solutions Streaming of multimedia content
Data centres Market leader for data centres with an extensive fibre-optic infrastructure
SaaSProfessional support for PR departments and communication between companies
FinTech Mobile banking and online payments
E-commerce Multi-store
FinTech Non-cash settlements of payment transactions
FinTech Currency transfers
p
20
MarketInvoice – new company from the fintech sector in the
portfolio of funds managed by PEM
MarketInvoice manages an online factoring platform.
The round of financing led by MCI.TechVentures amounted to
GBP 7.2m
The investment strengthens the position of the funds managed by PEManagers in the fintech sector,
The financing round was also joined by the Northzone fund,
The company currently operates only in the UK market, but plans to expand geographically,
Within the platform, the British companies have so far received funding of GBP 850m; the company assumes that
by the end of 2016 the amount will exceed GBP 1bn.
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21
The funds managed by GK PEM are one of the most active
technology investors in CEE
CEE
POLAND
RUSSIA
TURKEY
DACH
GLOBAL
p
22
Statement
This presentation has been prepared by PEM S.A. with due diligence, though it may still contain some inaccuracies or
omissions. This presentation cannot be regarded as a comprehensive financial analysis of the PEM S.A. Capital Group, nor
does it provide a complete view of its position and future prospects. Any person who intends to make an investment
decision regarding the shares of PEM S.A. should first consider the information disclosed in the official reports drawn up and
published in accordance with applicable law. This presentation has been prepared for information purposes only and does
not constitute an offer to buy or sell any financial instruments.
This presentation may contain forward-looking statements, which cannot, however, be treated as projections of future
performance by the PEM S.A. Capital Group. Statements regarding future and historical financial results do not guarantee
that such results will be achieved in the future. The projections of the Management Board of PEM S.A. are based on the
currently available knowledge and depend on a number of factors and variables that could cause the actual results to
differ materially from those expressed in this document.
Under no circumstances shall PEM S.A., management board members and directors be held liable for any use of this
presentation. None of the information contained in this presentation represents a commitment or representation on the part
of PEM S.A., management board members or directors. PEM S.A. has no obligation to publish corrections or update the
forward-looking statements contained in this presentation to reflect changes occurring after the date of this presentation.