Lindorff Company Presentation November 06
Disclaimer IMPORTANT INFORMATION Not for distribution in or into the United States, Australia, Canada, Japan or any other jurisdiction in which such distribution would be unlawful. This presentation is not and does not form a part of any offer for sale of securities. Copies of this presentation are not being made and may not be distributed or sent into the United States, Australia, Canada, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures. This presentation is for information purposes only and does not constitute a prospectus or any offer to sell or the solicitation of an offer to buy any security in the United States or any other jurisdiction and no securities will be registered under the U.S. Securities Act of 933, as amended (the Securities Act ). This presentation is not a prospectus for the purposes of Directive 003/7/EC (together with any applicable implementing measures in any Member State, the Prospectus Directive ). Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as believe, expect, anticipate, intend, estimate, will, may, "continue," should and similar expressions. The forward-looking statements herein are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Lindorff believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied herein by such forward-looking statements. The information, opinions and forward- looking statements contained in this presentation speak only as at its date, and are subject to change without notice. The financial information herein has not been audited or otherwise reviewed by Lindorff s auditors.
Leading Credit Management Services company in Europe Lindorff highlights Geographic breadth and scale 5 Leading credit management partner for Financial Institutions (FI) in Europe Founded in Oslo in 898 with over 00 years of growth and value creation Integrated business model providing solutions throughout the CMS value chain and across multiple segments 5% Debt Collections & Others (payment services, credit analytics, etc.) 49% Debt Purchasing Leading position in the attractive, high growth FI segment FI represents 84% of Estimated Remaining Collections (as of Jun-6) Strong culture of compliance, based on highest ethical standards, fair collection and customer satisfaction 4,00 current FTE s with scaled operations in 3 countries 6% 55% 9% Northen Europe Central Europe Southern Europe Key facts and figures LTM Sep-6 (EURm) LTM LTM Q3 6 Q3 6 3 Pro forma 4 Net revenue 60 686 Adjusted EBITDA 4 evolution (EURm) 467 Adjusted EBITDA 47 467 EBITDA 6 30 EBIT 8 53 006 007 008 009 00 0 0 03 04 05 LTM Sep-06 Full Time Equivalent employees. Excluding non recurring items and impairments, Adjusted EBITDA is equivalent to Cash EBITDA and represents EBITDA adjusted for non-cash amortisation and revaluations of DP portfolios. 3 Aktua included in reported financials from Jun 06. 4 Pro forma for acquisitions reflecting full-year effect of Aktua (Spain) as well as two smaller transactions in Italy (Cross Factor) and Spain (Banco Mare Nostrum). 5 Based on YTD Q3 6 net revenues. Geographical breakdown for illustrative purposes only. Northern Europe includes Norway, Sweden, Denmark, Estonia, Finland, Latvia, Lithuania, and Russia. Central Europe includes Germany, Netherlands and Poland. Southern Europe includes Italy and Spain. Note: 006-00 as reported under Swedish GAAP and 0-06 as reported under IFRS, excludes impact of discontinued operations in 0 and 0 3
Lindorff a journey of growth and value creation 003-007 Nordic expansion 007-03 03-06 European expansion European leadership 898 00 003 005 007 009 00 0 0 03 04 05 06 x3 Founded by Eynar Lindorff x3 Growth drivers Unique track record 0 large transactions in last 5 years,350 FTEs on-boarded Trusted and preferred relationships Organic M&A New market entries Strong client relationships IT integration Service level agreement structuring and implementation Integrated operations with clients KPI reporting Existing markets New markets Secured servicing 05-06 Carve-outs Strong pipeline Co-investments 05-06 Entered into long term strategic partnership with large portfolio acquisition and subsequent forward flow. Full time equivalents on-boarded in L5Y through carve-outs. 4
Integrated business model provides clear benefits Leveraging scale and data from other sectors supports core FI purchases DC and DP are highly synergetic Trade & other segments provide data & experience which support success in the core FI segment # of claims % 3PC revenues DP ERC Origination 6% Operational scalability Database and analytics Collection strategies 43% Standardised processes 65% Tangible operational benefits from integrated DC+DP platform include de-risked portfolio origination, greater operating scale due to internal debt collection and benefits from larger data assets and analytics Data and collection experience from Debt Collection activities across client segments (incl. trade, utility and other claims) supports analytical capabilities when purchasing debt portfolios (incl. in FI) 35% 57% 84% Typically consumers hold debt across sectors (e.g. credit card, utility bills, telco or retail invoices) Based on FY 05. Trade and others Financial Institutions 5
Overview of Debt Collection Summary overview Steady Debt Collection earnings growth Third party servicing Traditional contract based servicing with long-term customer relationships Several carve-out transactions with long-term contracts and deep IT and operational integration with banking clients Internal Debt Collection Provides scale and operating efficiency across geographic platform EURm 00 50 00 50 0 8 39 Series 89 5 03 04 05 LTM Sep-6 Key segment stats LTM to Sep-06 47% contribution to group revenue 3 Geographic mix 3 Segment revenue EUR 88m Segment earnings Value of cases in stock (face value) 5 EUR 89m EUR bn 49% 47% 39% 53% Number of cases in stock 5 ~4m 4% 8% Owned portfolios, revenues eliminated in consolidation. Earnings calculated as segmental revenue less direct operating costs. 3 LTM Sep-6 revenue. 4 Real Estate Services. 5 Third party Debt Collection, includes RES. Debt Purchasing Debt Collection (incl RES) Other products 4 Northern Europe Southern Europe Central Europe 6
Growth from significant long-standing client relationships Long, stable Debt Collection relationships Carve-outs are a long-term growth accelerator Stable client base in third party servicing with Lindorff acting as a long-term trusted partner in collections In Northern Europe, some of Lindorff s largest revenue contributors and longest-dated relationships go back to the 980 s Northern Europe example: based on the tenure of Lindorff s top 0 clients in each Nordic market, the average length of client relationships in third party debt collection services is over 5 years Established carve-out expertise across geographic markets Carve-out transactions typically include entering into long-term servicing agreements with key banking clients, where Lindorff integrates into the bank s collection systems and workflow IT & operational integration and carve-out transactions create foundation for long-term business relationships with key European banks beyond contract life 3% 3% Remaining duration of Spanish carve-out contracts 0yrs 9yrs 8yrs 8yrs 8yrs 7yrs 73% 3yrs yrs < 5 years 5-0 years > 0 years Carveout Carveout Carveout 3Carveout 4Carveout 5Carveout 6 Carveout 7Carveout 8 7
Aktua acquisition rationale: new growth platform for Lindorff Transaction overview and key business highlights Key transaction benefits 430 FTEs and offices across Spain Lindorff becomes an end-to-end player which provides competitive advantage for future business in existing and new markets and geographies Santander remains a minority shareholder - key strategic pan-european relationship Balance sheet strength Access to 3 markets Large and established customer base Diversified business model Leading and independent multi-client servicer in Spain with a track record of consistent strong growth Combination of services and best practices Best-in-class bespoke technologies, protocols and data insight 3 Long duration of existing contracts providing earnings visibility Secured NPL and Real Estate Servicing Established customer base in Spain including banks and international investment funds High growth and strong pipeline 4 Strong pipeline of additional contracts to be won in Spain 5 Opportunity to expand the services and leverage unique capabilities in other geographic markets Aktua amplifies Lindorff s opportunity to grow in secured and RES across key geographic areas 8
Aktua solid performance with significant growth potential Continued growth in debt under management Strong and profitable growth Aktua s business model designed to capture new market opportunities and increase debt under management Aktua s revenue model based on running fees on managed assets, with upside potential through success fees EURbn 0 9 EURm 60 8 50 7 6 40 5 4 3 30 0 0 0 0 03 04 05 Sep-6 0 0 03 04 05 NPL RES EBITDA 9
3Q 4Q Q3 Q3 3Q3 4Q3 Q4 Q4 3Q4 4Q4 Q5 Q5 3Q5 4Q5 Q6 Q6 3Q6 Overview of Debt Purchasing Strong segment earnings growth Strong collection performance EURm 80 60 40 0 00 80 60 40 0 0 64 40 09 5 03 04 05 LTM Sep-6 0% 00% 80% 60% 40% 0% 0% 09% 04% 99% 09% 0% 03% 98% 05% 04% 0% 03% 06% 07% 04% 3% 0% 0% 05% Average actual collection as % of forecast Key segment stats LTM to Sep-6 ERC by sector 30-Sep-06 ERC by region 30-Sep-06 Segment revenue Segment earnings EUR 96m EUR 64m 3% % 7% 5% 9% Estimated Remaining Collections (ERC) Debt under management (face value) EUR.5bn EUR 9bn 6% 55% Return on Debt Purchasing 3 7% 84% Financial Institutions Telco Retail Utility Other Northen Europe Southern Europe Central Europe Earnings calculated as segmental revenue less direct operating costs. LTM Jun-6. 3 Lindorff s accounting approach. 0
Jan/ Jul/ Jan/ Jul/ Jan/3 Jul/3 Jan/4 Jul/4 Jan/5 Jul/5 Jan/6 Jul/6 Jan/7 Jul/7 Jan/8 Jul/8 Jan/9 Jul/9 Jan/0 Jul/0 Jan/ Jul/ Jan/ Jul/ Jan/3 Jul/3 Jan/4 Jul/4 Jan/5 Jul/5 Jan/6 Jul/6 Jan/7 Jul/7 Jan/8 Jul/8 Jan/9 Jul/9 Jan/30 Jul/30 Jan/3 Diversified long-term portfolio base provides visibility >,600 portfolios provide diversified and resilient asset base ERC by vintage Portfolio layering built over more than 0 years provides inherent diversification and stability EURm 3% 6% 8% 0% 3% % 3% % 9% 6% Pre-007 007 008 009 00 0 0 03 04 05 50 45 40 35 30 5 0 5 0 5 0 <000 000 00 00 003 004 005 006 007 008 009 00 0 0 03 04 05 Series 06 Resilience from granularity of cash flows >m accounts ~8m unique customers EUR 3,077 avg. claim size EUR 09 avg. monthly payment 3 ERC as of Jun-06. Excluding one off re-adjustment of Dutch book in Feb-04. 3 Excluding payments >EUR,500 as proxy for large one-off full payments.
Northern Europe Region snapshot Key regional highlights Key statistics Robust historical footprint with long established customer relationships Proven ability to leverage Debt Collection relationships to acquire portfolios EUR 335m,403 Operational efficiency and digitalisation key commercial success factors, providing added value for clients Focus on expansion in value added services and payment services. Several new partnerships established Revenue (LTM Sep-6) Number of FTEs in region Contribution to group revenue (LTM Sep-6) Business mix (LTM Sep-6 revenue) Revenue L3Y EURm 5% 8% 375 300 305 309 306 335 45% 5 4% 0% 6% 55% 47% 50 75 Norway ECE¹ Sweden Denmark Debt Purchasing Other Products Debt Collection - 03 04 05 LTM Sep-6 Consists of Finland, Russia, Latvia, Estonia and Lithuania.
Central Europe Region snapshot Key regional highlights Key statistics Strong footprint in Germany through two historical acquisitions and a carve-out from a large European Bank EUR 9m 870 Dutch footprint initially established through two carve-outs of a large Dutch bank and leading retailer Recent entry in Poland through acquisition of Casus Finanse Revenue (LTM Sep-6) Number of FTEs in region Contribution to group revenue (LTM Sep-6) Business mix (LTM Sep-6 revenue) Revenue L3Y % 6% 0% % EURm 40 0 00 80 97 9 5 9 9% % 79% 60 40 Germany Netherlands Poland Debt Purchasing Debt Collection (incl. RES) Other 0-03 04 05 LTM Sep-6 3
Southern Europe Region snapshot Key regional highlights Key statistics Exceptionally large market opportunity with in excess of EUR 600bn NPLs (incl. foreclosed assets) across Spain and Italy Track record of growth and consolidation in Spain through landmark bank carve-outs (Santander, Banco Mare Nostrum, Banco Sabadell) Proven valuation capabilities across secured and unsecured asset classes Ability to follow the assets Lindorff manages the NPLs but also provide real estate services for banks on foreclosed assets Solid platform to capitalise on the large Italian opportunity Replicate successful Spanish model in Italy EUR 60m Revenue (LTM Sep-6),594 Number of FTEs in region Contribution to group revenue (LTM Sep-6) Business mix (LTM Sep-6 revenue) Revenue L3Y 6% % 0.5% EURm 80 60 5% 9% 50 0 4 7% 90 60 45 74 30 Spain Italy Debt Purchasing Debt Collection (incl. RES) Other - 03 04 05 LTM Sep-6 4
Pro forma Adjusted EBITDA LTM Sep-6 (EURm) Aktua s reported LTM EBITDA to Sep-6 of EUR 65m (05 EBITDA: EUR 5m) 4 months included of EUR 8m Resulting pro forma adjustment for 8 months of EUR 47m Actual performance for Aktua has exceeded management expectations Reflects the full year impact of Cross Factor acquisition and BMN carve-out 56 467 47 30 6 Reported EBITDA Excl. NRIs Full year impact of Aktua Full year impact of Cross Factor and BMN Pro Forma EBITDA Excl. NRIs Portfolio Amortisation & Revaluation Pro Forma Adjusted EBITDA Equivalent to Cash EBITDA. 5