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Company Presentation Last update 2014 Full Year Results CERVED INFORMATION SOLUTIONS S.p.A.
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Page 1: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Company Presentation

Last update – 2014 Full Year Results

CERVED INFORMATION SOLUTIONS S.p.A.

Page 2: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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.

Page 3: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Table of Contents

2

2014 Business Review 3

Overview 1

Investment Case 4

2014 Results 2

Appendices 5

Page 4: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 5: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 6: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 7: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 8: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Table of Contents

7

2014 Business Review 3

2014 Results 2

Investment Case 4

Appendices 5

Overview 1

Page 9: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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 (%)

Page 10: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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 %

Page 11: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 12: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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)

Page 13: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 14: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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)

Page 15: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 16: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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%

Page 17: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Table of Contents

16

2014 Results 2

2014 Business Review 3

Investment Case 4

Appendices 5

Overview 1

Page 18: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 19: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 20: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 21: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 22: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 23: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 24: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 25: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 26: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 27: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 28: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Table of Contents

27

2014 Results 2

Investment Case 4

2014 Business Review 3

Appendices 5

Overview 1

Page 29: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 30: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 31: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 32: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 33: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 34: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 35: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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)

Page 36: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 37: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 38: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 39: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 40: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 41: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 42: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

Table of Contents

41

2014 Results 2

Appendices 5

2014 Business Review 3

Investment Case 4

Overview 1

Page 43: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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)

Page 44: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 45: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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%

Page 46: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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%

Page 47: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 48: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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

Page 49: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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)

Page 50: Company Presentation - Cerved Company · Company Presentation Last update ... other factors affecting the business and operations of the company. Neither Cerved Information Solutions

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


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