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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
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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
2 Key Credit Strengths & Financial Performance
1 Introduction & Capital Structure Overview
3 Long Term Strategy & M&A Update
4 Questions and Answers
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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
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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
FY09 FY10 FY11 FY12 LTM Sept -13
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
FY09 FY10 FY11 FY12 LTM Sept -13
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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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
2 Key Credit Strengths & Financial Performance
1 Introduction & Capital Structure Overview
3 Long Term Strategy & M&A Update
4 Questions and Answers
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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
2 Key Credit Strengths & Financial Performance
1 Introduction & Capital Structure Overview
3 Long Term Strategy & M&A Update
4 Questions and Answers
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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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