Cerved Group … · 13.5% #1 credit information supplier in Italy with LTM September 2013 Sales of...

Cerved Group

10th Annual High Yield & Leveraged Finance Conference

London, January 14th 2014

Strictly Confidential – intended for the recipient only

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Joined Cerved Group in 2009 as CFO

Over 30 years of experience in Finance positions within well-renowned companies in Europe

Previous roles include CFO and IT Director of Seves

Today’s presenters

Giovanni Sartor

CFO

Cerved

1

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2 2

Agenda

2 Key Credit Strengths & Financial Performance

3 Long Term Strategy & M&A Update

1 Introduction & Capital Structure Overview

4 Questions and Answers

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Credit Information Corporate,

45.2%

Credit Information

Banks, 41.3%

Value-Added Services,

13.5%

#1 credit information supplier in Italy with LTM September 2013 Sales of € 305.7m and EBITDA of €148.9m (48.7% margin)

− c.40% market share in credit information

Serving more than 33,000(1) clients mainly through multi-year contracts with high renewal rates (>90% by revenue(2))

Highly diversified customer base comprising 17,800 SMEs, c.80% of the leading 1,000 Italian corporates and 90% of the top 50 Italian financial institutions by revenue

Unique proprietary database providing superior accuracy by linking official and unofficial sources of information over more than 35 years

#1 independent credit servicer for NPL

#1 credit rating operator by number of ratings issued

Result of the consolidation of leading and specialised brands and products such as Cerved, Centrale dei Bilanci, Lince, Databank, Consit, Pitagora, Honyvem, Finservice and Jupiter

The company employed approx. 1,200 people as of September 2013(3)

Subscription / Prepaid74.0%

Consumption26.0%

Cerved Group snapshot

3

Overview Revenues breakdown

Source: Company data and reports. (1) Active customers as presented represents subscribers under subscription-based contracts as of December 31, 2012 plus consumption-based customers who purchased our products and services at

least once during the year ended December 31, 2012. Total customers does not remove the effect of customers that are included as customers of both our credit information and value-added services segments and thus may overstate the total number of customers. (2) Annual average over the 3 years to December 31, 2012. (3) Excludes sales agents and external collaboration.

Business Information Revenues breakdown by contract type

(LTM Sept - 13A)

(2012A)

Cerved is the #1 credit information supplier in Italy serving more than 33,000 clients mainly through multi-year contracts with high renewal rates (>90% by revenue(2))

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4

Cerved Group evolution

Establishment of Jupiter

Group and acquisition of

its subsidiaries Jupiter

Asset Management

(100%), Jupiter Justitia

(100%) and RE Solution

(60%) from CIR Group. A

minority stake (40%) of

Jupiter Group was sold to

management

1974 2002 2006 2009 2011 2012

2013 2011 2010 2008 1994-1999 2004-2005

Establishment

of Cerved SpA

Cerved was

incorporated into

Cerved Business

Information SpA,

owned by Centrale dei

Bilanci (Ce.Bi.: 71%)

and Techno Holding

(29%)

Techno Holding sold

its stake in Cerved to

Ce.Bi. (reaching 85%

of Cerved’s capital)

and Coface (15%).

Acquisition of Lince

by Bain Capital

The new Cerved was

established from the

merger of Ce.Bi.,

Cerved BI and

Databank. In September

the integration process

was completed through

the incorporation of Lince,

thus establishing the new

Cerved Group

Merger of the

subsidiaries CIV

and CAI into

Cerved Group

Establishment of JV

agreement with

Experian for the

Credit Bureau

business. Cerved

holds a minority stake

(5%) in the JV vehicle,

named Experian –

Cerved Information

Services

Acquisition of

Pitagora SpA. Spin-

off of Infocamere from

Cerved SpA in 1995

Acquisition of

Consit and

Databank

Bain Capital and

Clessidra acquired a

majority stake (92%) in

Ce.Bi., and carried out the

integration process of

Cerved and Lince

Acquisition of an

additional 25%

stake in Consit by

third party

shareholders

Acquisition of Lintec

Group, then merged into

Cerved Group. The

subsidiaries Nuova

Pitagora and Caleb were

merged into Cerved Group

Acquisition of MF

Honyvem (100%)

Cerved and Lince developed

independently and gained leading

competitive positions in their respective

reference market segments

− Market leader in Business information for

financial institutions (Cerved)

− Market leader in Business information for

SMEs and Corporates (Lince)

Successful integration of businesses /

value chain and competencies with «best

of breed» approach

Synergies achieved while managing

implementation risk

Leverage on the superior platform to

− Continue growing in core business

− Expand into adjacencies

Develop new initiatives to full potential (i.e.

mortgage survey and credit collection)

Entry in new markets / geographies to

support future growth

Before 2008 2008–2011 2012 forward

2013

Acquisition of

Experian Data

Services (now Cerved

Data Services) and

Tarida (Credit collection

Servicer of small ticket

and consumer credit)

Signed a contract with

CA for 3 NPL portfolio

(€5bn face value) credit

servicing becoming the

first independent operator

in Italy

http://www.consit.net/homecc.html

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5

Capital structure overview

Strong deleveraging since pricing in January 2013

€ mSept-13 at Issuance Maturity Pricing Call Protection

Cash & Cash Equivalents (35,3) 0,0

Super Senior RCF (€75m) 0,0 0,0 Nov 18 E + 450bps

Senior Secured FRN (1) 250,0 250,0 Jan-19 E + 537.5bps NC1,101

Senior Secured Fixed Rate Notes 300,0 300,0 Jan-20 6,375% NC3,50%,25%

Net Senior Secured Debt 514,7 550,0

Senior Subordinated Notes 230,0 230,0 Jan-21 8,00% NC3,75%,50%,25%

Other third party debt 0,7 1,3

Net Total Debt 745,4 781,3

Net Debt / EBITDA 5,0x 5,5x

LTM EBITDA 148,9 141,9

(1)From July 15, 2013, EURIBOR hedged at an effective rate of 0.5516%.

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6 6

Agenda





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7 7

Key credit strengths

Undisputed leader in the Italian business

information sector

High barriers to entry

Strong and attractive market fundamentals

Diversified customer portfolio with subscription based revenues and high

renewal rates

Proven track record of strong financial

performance

Strong profitability metrics

Proven strategy with growth opportunity in

adjacent market segments

Well-regarded management team with strong Sponsor support

1

2

3

4

5

6

7

8

http://www.consit.net/homecc.html

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8

High barriers to entry into the Italian business information market

In-depth database, scale and experience are key differentiating factors and represent high barriers to entry

for potential competitors

•Volume-based business: fixed cost structure makes break-even dependent upon scale

•EBITDA margin generally increases as volumes increase

•Continuous investment in new products / innovation / cost reduction

Economies of scale and costs

•Cerved is one of the few providers that can offer value-added services based on long-term trends and historical data

•More than 30 years of database / cross-referencing information supporting accuracy

Historical data availability

•20+ years experience

•Difficult to replicate set of skills and best practices Talents and skills

•Capillary sales network, with strong coverage of SMEs

•Cerved is perceived as a trusted brand by banks and financial institutions, thanks to longstanding relationships

•Cerved’s client coverage and strong skills sales organisation hard to replicate

Sales network and customer

relationships

•Brand recognition and reputation for quality

•Track record of high renewals

•Fully integrated into banks’ internal credit process

•High switching costs

Long-lasting business

relationship

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208

266 276290

318

387

2006 2009 2010 2011 2013E 2016E

9 9

Strong and attractive market fundamentals Credit information corporate

Growing corporate market despite economic downturn due to specific local SMEs drivers

Source: German Federal Statistical Office, INSEE, INE, Altares, Databank, UK National Statistics, Eurostat, Altares quarterly report, WorldBank.

(1) Increase partially due to results of Lince and Honyvem, which were acquired during the period.

(2) SMEs with revenues between €2-50m.

(3) Average of UK, France, Germany and Spain.

Strong growth despite the recent economic downturn

Main drivers:

− Increased penetration of the client base

− Higher average spend

+6.8%

+4.7%

+4.5%

c.6.0%

+8.7%

(€ in millions)

93 131185 172

88

121

54 68119

70 84

69

(in ‘000)

(number of SMEs / € billion GDP)

9 6

28

520

10

(%)

399 331

1,210

394 515

410

(days)

High number of SMEs: 185K companies(2)

Highly fragmented SME landscape

High frequency of late payment

Long time required to enforce contracts

Italian Credit information corporate Number of SMEs(2)

Market fragmentation – ratio SMEs/GDP

Payments with more than 30 days of delays

Average days to enforce a contract

CAGR (’09-’11)

Market Cerved

+39%(1) +4.5%

(3)

(3)

(3)

(3)

.

,

.

.

.

.

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336 378 278 273 234

305

381426 431

405 391

448

2006 2009 2010 2011 2013E 2016E

Market share of top 6 banks in total assets

10 10

Strong and attractive market fundamentals Credit information banks

Well-positioned to rebound as lending activity recovers

+4% -2%

+5% -2%

+2% (€ in millions)

93 84 58 38 53

(Percent)

(€ in ‘000)

(Percent)

407 686 760

2,093

275

26 35 7 24 23

74 65 93 76 77

100 100 100 100 100

Capital markets Banks

Average loan ticket

Low concentration

High number of small and medium banks

Small average loan tickets

Banks represent the main source of financing

Italian Credit information banks

Number of banks

Average loan ticket

Corporate source of financing

CAGR (’09-’11)

Key market drivers rebounding

(€ in billions)

CAGR

Market Cerved

0% -2%

572

491 469 489

548

496

618 637 655733

51 48

36 40

53

2009A 2011A 2012E 2013E 2016E

New lending to corps Stock of lending to consumers

New residential mortgages

-7%

+4%

-3% +10%

+4%

+11%

-5%

-25%

12% 3% +3%

+4%

Source: Banque de France, Bank of Italy, Eurostat, ECB, McKinsey Global Institute, Confcommercio, team analysis.

(1) Average of UK, France, Germany and Spain.

(1)

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66,8

103,8 111,2116,4 122,8

FY09 FY10 FY11 FY12 LTM Sept -13

19,0%

39.9%41.6% 40.0%

33.0%

40.3%

Cost of services49.5%

Personnel costs42.5%

Other8.0%

(€ in millions)

11

Proven track record of strong financial performance

Revenues EBITDA(5)

Cost structure

(€ in millions) (€ in millions)

Consistent track record of Revenues and EBITDA growth despite macroeconomic conditions, benefiting from high operating leverage due to fixed cost nature of the business

88,4129,1 135,5

142,0 148,9


16,1%

49,6% 50,7% 49.7%

43,6%

48,8% 48,7%

1) Other revenues include other credit information revenues net of intersegment revenues. 2) 2009A figures prior to the consolidation of the Lince and Finservice businesses which only took effect on May 29, 2009. 3) Other includes cost of raw materials and other materials, other operating costs, impairment of receivables and other provisions. 4) % of total credit information operating costs. 5) For the years 2009-11 EBITDA ìs proforma for a database acquisition costs addback of €13.3 mm for 2009, €12.0 mm for 2010 and €12.7 mm for 2011.

CAGR

CAGR

EBITDA(5) – Capex margin

(2012A)

(2)

(3)

(1)

CAGR % of revenues

(2)

Fixed costs: 76.6%(4)

% of revenues

(2)

133,8 137,7 134,8 126,9 126,2

58,1107,1 112,0 129,7 138,310,8

15,4 20,634,4 41,3


Banks Corporate Value-added services and other

260,2 267,3

202,7

291,0

12,5% 305,8

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12

Current trading supporting selective acquisition strategy

Summary financials Quarterly revenues

(1) Other revenues include other credit information revenues net of intersegment revenues.

(€ in millions)

YTD September Revenues and EBITDA growth both 7.00%

(€ in millions)

FY

2012A 2012A 2013A

LTM

Sept 13

Credit information Corp. 129.7 92.3 100.9 138.3

Credit information Bank 126.9 93.8 93.1 126.2

Value-added and other(1) 34.4 22.8 29.7 41.2

Revenues 291.0 209.0 223.7 305.7

Y-o-Y growth 7.0%

Organic Y-o-Y growth 3.1%

EBITDA 142.0 99.3 106.2 148.9

% margin 48.8% 47.5% 47.5% 48.7%

Y-o-Y growth 7.0%

Organic Y-o-Y growth 6.1%

YTD Jan-Sep

65.072.6 72.1

1Q

2011

5,3%

2012 2013

67.374.4

82.0

2Q

2011 2012

10,4%

2013

63.2 62.069.6

3Q

2011 2012 2013

4,9%

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13

Strong Cash flow driven by limited Capex needs expected to support continued deleveraging

Summary financials

EBITDA cash conversion above 80%

(€ in millions - FYE 31/12) 2009 2010 2011 2012 LTM Sept - 13

Revenues 202.7 260.2 267.3 291.0 305.7

EBITDA(1) 88.4 129.1 135.5 142.0 148.9

% margin 43.6% 49.6% 50.7% 48.8% 48.7%

Capex - non acquisitions(1) (21.5) (25.3) (24.3) (25.6) (26.1)

% revenues (10.6%) (9.7%) (9.1%) (8.8%) (8.5%)

Operating cash flow (2) 66.9 103.8 111.2 116.4 122.8

% EBITDA 75.7% 80.4% 82.1% 82.0% 82.5%

1) For the years 2009-11 EBITDA and Capex are proforma for database acquisition costs of €13,3 mm for 2009, €12,0 mm for 2010 and €12,7 mm for 2011. These amounts are capitalised from January 1, 2012.

2) Operating cash flow defined as EBITDA –Capex

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14 14

Agenda





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15

Company strategy

Clear business strategy to drive continued growth and high profitability

Increase data quality

Continue to enhance analytical functionalities

Increase volumes per client as lending activity recovers

Continue to add new services

Increase level of services to banks

Optimisation of business processes (i.e. data purchase, IT, information management)

Simplification of organisational structure (High Performance Organization project launched in July 2012)

Capture growth in high growth segments (credit collection and marketing information)

Leverage customer relationships to increase cross-selling

Position as a value-added partner adapting to customer needs (e.g. NPLs management)

Value-added services development

to full potential

Maintain and consolidate market share in

the financial institutions segment

Rationalisation of organisational

structure and production processes

Sales effort to tackle broader market (c.60% new clients are new users)

Continuous effort to increase ARPU / active management of low revenue clients

Product line renovation (5 new offerings since 2009)

Increase marketing effort and sales network optimisation

Growth in under-penetrated

segments of SMEs and retail 1

2

4

5

6

3

Strengthen market leadership in Italy through business consolidation

Enter markets with growth potential (e.g. CEE)

International expansion and M&A

Pursue identified new growth initiatives (c.€50m potential)

Continue to invest in innovation and expand into new areas of the credit value chain

Continue to innovate and expand in

adjacent segments

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16

M&A update (2013 acquisitions)

Clear business strategy to drive continued growth and high profitability

Allows rapid scale up of Jupiter operations following intake of Credit Agricole portfolios

Brings expertise in small ticket segment

Negative consideration of €7.5 million (acquired with €13 million of cash on balance sheet)

Significant synergy potential / expected to deliver a substantial portion of budgeted revenues and EBITDA for Jupiter (now Cerved Credit Management)

Small ticket “ready to go” NPL servicer

Experian Data Services brings know how from the worldwide leader in Business Information

Acquisition value of €3.3 million

Consolidation and synergy realisation expected within Q1 2014

Further consolidation in Credit Information market

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17 17

Agenda





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Disclaimer

18

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 Group 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 Group 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.

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19

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