LINDORFF SECOND QUARTER 2015
PAGE 1/30
Q2
QUARTERLY REPORT
2016
PAGE 2/30
LINDORFF SECOND QUARTER 2015
LINDORFF SECOND QUARTER 2016
PAGE 3/30
Financial highlights Q2
– Net revenue of EUR 165m, up 29% y/y (31% in constant currency)
– Adj. EBITDA excl. NRIs of EUR 118m in Q2, up 34% y/y
– ERC of EUR 2,493m, up 27% y/y
– Successful closing of the Aktua acquisition in Spain, adding new
capabilities and strengthening Lindorff’s market position
Adjusted EBITDA
ERC
Investments (LTM)
Up 34%
Up 27%
EUR398m
Adj. EBITDA (excl. NRIs)
ERC 180 month
EURm
EURm
150
3,000
118
88
100
2,500
Investments in Debt
Purchasing LTM
EURm
500
2,493
2,000
300
1,500
50
100
,500
,0
0
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
202
200
1,000
0
398
400
1,964
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Apr-Jun
2016
Apr-Jun
2015
Change %
Jan-Jun
2016
Jan-Jun
2015
Change %
Jan-Dec
2015
165
128
29 %
300
258
16 %
534
575
72
48
50 %
118
87
36 %
186
217
44 %
37 %
39 %
34 %
35 %
38 %
78
52
50 %
130
97
33 %
205
237
Adjusted EBITDA
111
84
33 %
194
154
26 %
331
370
Adjusted EBITDA excl. NRIs
118
88
34 %
205
164
25 %
350
391
NIBD
NIBD / Proforma Adjusted
EBITDA (LTM)*
2,345
1,741
35 %
2,345
1,741
35 %
2,063
2,345
5.1
5.1
5.1
5.1
5.7
5.1
ERC, end of period
Investments in Debt
Purchasing
Return in Debt Purchasing
(LTM)
Gross collection in Debt
Purchasing
Average number of FTEs
2,493
1,964
27 %
2,493
1,964
27 %
2,442
2,493
51
29
74 %
74
71
5%
395
398
16.9 %
15.6 %
16.9 %
15.6 %
14.9 %
16.9 %
EURm unless otherwise
stated
Net revenue
EBITDA
EBITDA margin (%)
EBITDA excl. NRIs
* See definition on page 28.
LTM
119
96
23 %
224
187
20 %
408
445
3,731
3,269
14 %
3,694
3,202
15 %
3,380
3,617
LINDORFF SECOND QUARTER 2016
PAGE 4/30
Operational and Market update
Sustained double digit growth in revenue and earnings
Lindorff delivered strong performance in Q2, with Net
revenue of EUR 165m representing an increase of 29%
compared to the same quarter last year. The increase
was 31% in constant currency. The growth was driven by
significant investments in Debt Purchasing over the last
twelve months, improved collection efficiency, as well as
the acquisition of Aktua in Spain. When adjusting for the
Aktua acquisition, Net revenue was up 21%.
The Q2 Adjusted EBITDA excluding NRIs was up 34%
compared to the same quarter last year, coming in at
EUR 118m. The EBITDA excl. NRIs was up by 50%
compared to Q2 2015.
Investments in Debt Purchasing amounted to EUR 51m
in Q2 2016 compared to EUR 29m in Q2 2015. Over the
last twelve months investments in Debt Purchasing
amounted to EUR 398m. Collection performance on
Lindorff owned debt continued to be strong, delivering
113% of the forecast in Q2 2016.
For the first six months of 2016 Net revenue and
Adjusted EBITDA excluding NRIs were EUR 300m and
EUR 205m, representing an increase compared to last
year of 16% and 25% respectively. The increase in
constant currency was 19% and 27%. Investments in
Debt Purchasing amounted to EUR 74m for the first six
months of 2016 with a collection performance of 108%,
compared to EUR 71m invested last year.
Strengthened service offering and footprint
The supply of NPLs available for sale continues to be
strong. Lindorff will continue to utilize its size and
footprint to find the most attractive opportunities in the
market. Lindorff has also made two significant
acquisitions during the first half of 2016 by acquiring
Aktua in Spain and Cross Factor in Italy.
The acquisition of Cross Factor was an additional step in
expanding Lindorff’s Italian footprint. Aktua is an
important step towards further strengthening Lindorff’s
servicing platform and maintaining a balanced mix
between servicing and purchasing debt.
Debt Collection made up 48% of Net revenue in Q2 while
Debt Purchasing business accounted for 48%. Aktua was
included in Net revenue from June. Including twelve
months of Net revenue from Aktua, the Debt Collection
business would have made up the largest part of the
business mix. The business mix consequently remains
balanced when taking into account the investments
Lindorff has done in the Debt Purchasing segment.
Aktua is a servicing company providing mainly secured
NPL servicing and Real Estate Servicing (RES) for its
clients. Aktua’s servicing business is built on long term
contracts with leading financial institutions in Spain,
offering high transparency and visibility in cash flows. For
Lindorff this acquisition strengthens the servicing abilities
of secured debt, which is the largest portion of the total
NPL market. It also expands Lindorff’s product offering
into RES where Aktua has industry leading skills and
know-how.
In summary, Lindorff continued to grow the business at a
strong pace and was also able to deliver profitable
growth despite tough competition in the market. The
positive development was mainly driven by improved
underlying collection efficiency, operational improvement
initiatives and good cost control. New important business
has been secured both organically and through M&A.
The company was pleased to see that these additions
were accretive to the business and had a de-leveraging
effect. Together with investments in Debt Purchasing,
this provides Lindorff with a strong platform for continued
delivery of profitable growth.
LINDORFF SECOND QUARTER 2016
PAGE 5/30
Financial review Q2 2016
Lindorff Group
Net revenue
Lindorff Group consists of Lock Lower Holding AS,
Corporate Identity Number 913 741 110, as parent
company with subsidiary Lock AS together with Lindorff
AB and its subsidiaries. Subsidiaries are consolidated
from acquisition date. Lindorff S.A. in Poland (former
Casus Finanse S.A.) was acquired 18 August 2015,
Italian entity Cross Factor S.p.A 10 May 2016 and 94% of
the Spanish group Aktua Soluciones Financieras
Holdings was acquired 1 June 2016.
175
Aktua group is organised as unrestricted subsidiaries
according to the indentures governing the outstanding
notes of Lock Lower Holding AS and Lock AS as well as
Lock AS’s revolving credit facility.
Due to reporting requirements in current bond package,
separate figures for restricted Group are presented in
Note 7. Throughout the report the terms Lindorff and
Lindorff Group mean Lock Lower Holding AS and all
subsidiaries.
In July the ownership of Aktua decreased to 85% as
minority interest shareholder Banco Santander acquired
additional 9% of Lindorff’s shares.
Lindorff has established a company in Ireland for the
purpose of acquiring portfolios through multiple coinvestment options with large institutional and other
professional investors. Different models for profit/loss
sharing agreements are being evaluated. Lindorff’s local
subsidiaries will source and service the relevant nonperforming loans on an arm’s length terms. The Irish
entity will be inside the restricted Group.
Net revenue
Net revenue was EUR 165m in Q2 2016. This represents
an increase of 29% compared to EUR 128m in Q2 2015.
In constant currency the growth rate was 31%. The
increase in Net revenue was mainly driven by the
investments in Debt Purchasing, strong collection
performance and the acquisition of Aktua in Spain.
Net revenue in H1 2016 was EUR 300m, representing an
increase of 16% compared to H1 2015. In constant
currency the increase was 19%.
EURm
165
150
128
125
100
75
50
Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Earnings
The reported Adjusted EBITDA amounted to EUR 111m
in Q2 2016 compared to EUR 84m in Q2 2015. Excluding
NRIs, the Adjusted EBITDA was EUR 118m in the
second quarter, up 34% compared to last year. The
EBITDA increased from EUR 48m to EUR 72m due to the
increase in revenue, restructuring initiatives and positive
margin contribution from new investments.
The EBITDA margin has increased from 37% in Q2 2015
to 44% in Q2 2016. Adjusting for NRIs the Q2 EBITDA
was EUR 78m, up 50% compared to last year. Lindorff is
continuously focused on operational improvements
through for example sharing of best practice,
standardizing IT and utilizing the Group’s shared service
center in Vilnius.
The Adjusted EBITDA in H1 2016 was EUR 194m
compared to EUR 154m in H1 2015. Excluding NRIs, the
Adjusted EBITDA was EUR 205m in H1 2016, up 25%
from EUR 164m in H1 2015.
Adjusted EBITDA (reported)
EURm
111
120
100
84
80
60
40
20
0
Q2 15
Q3 15
Q4 15
Q1 16
Q2 16
Operating expenses
Total operating expenses excluding depreciation and
amortisation amounted to EUR 93m in Q2 2016, up from
EUR 80m in Q2 2015. Total operating expenses for the
LINDORFF SECOND QUARTER 2016
first six months of 2016 were EUR 182m, up from EUR
171m last year.
In Q2 2016 employee benefit expenses amounted to
EUR 49m, up from EUR 43m in Q2 2015. For the first six
months of 2016 employee benefit expenses were EUR
99m compared to EUR 90m in H1 2015. The increase is
mainly due to increased number of FTEs resulting from
the acquisitions of Aktua this quarter and Casus Finanse
in Poland in Q3 2015.
Legal fee cost amounted to EUR 12m in Q2 2016, up
from EUR 8m in Q2 2015. For the first six months of 2016
legal fee cost was EUR 23m compared to EUR 18m in
H1 2015. The increase is related to increased activity to
secure future revenue.
Other operating costs increased by EUR 3m in the
second quarter 2016 from EUR 24m in 2015 to EUR
27m. The increase is mainly related to consulting fees
and commission to external agencies.
For the first six months of 2016 other operating costs
decreased 8%, from EUR 54m in H1 2015 to EUR 50m in
H1 2016. The decrease is mainly related to contracted
labour and restructuring costs in Denmark previous year.
NRIs were EUR 11m in H1 2016 compared to EUR 10m
in H1 2015. Out of the EUR 11m NRIs, EUR 6m was
reported in Q2. The EUR 6m are mainly consultancy fees
related to M&A and restructuring costs.
Depreciation and Amortisation
Depreciation and amortisation (excl. portfolio
amortisation) increased from EUR 9m in Q2 2015 to EUR
12m in Q2 2016, and from EUR 18m in H1 2015 to EUR
22m in H1 2016. The increase was mainly due to
amortisation of the collection contract acquired in Spain
in Q4 2015.
SG&A and IT
SG&A and IT costs increased by 31%, from EUR 20m in
Q2 2015 to EUR 26m in Q2 2016. The increase is mainly
related to growth in the business, through additions in
Poland, Italy and Spain. SG&A/Net revenue ratio
increased from 9% in Q2 2015 to 10% in Q2 2016, while
IT cost/Net revenue ratio decreased from 7% in Q2 2015
to 6% in Q2 2016.
For H1, SG&A and IT costs increased from EUR 46m in
2015 to EUR 50m in 2016. The increase is mainly related
to growth of the business, but offset by lower
restructuring costs. SG&A/Net revenue ratio decreased
from 11% in H1 2015 to 10% in H1 2016, while IT
cost/Net revenue ratio decreased from 7% in H1 2015 to
6% in H1 2016.
PAGE 6/30
Net financial items
Net financial costs decreased slightly from EUR 40m in
Q2 2015 to EUR 39m in Q2 2016, and from EUR 76m in
H1 2015 to EUR 70m in H1 2016. The decrease is mainly
related to a combination of lower interest rates and
unrealized positive foreign currency exchange effects,
partly offset by increased level of outstanding debt.
Investments and cash flow
Investments in Debt Purchasing were EUR 51m in the
second quarter compared to EUR 29m in Q2 2015. For
the first six months, investments in Debt Purchasing
increased from EUR 71m in 2015 to EUR 74m in 2016.
Investments in subsidiaries of EUR 113m in the second
quarter include cash payments net of acquired cash
related to acquisition of Aktua and Cross Factor.
Cash flow from operating activities was EUR 84m in Q2
2016 compared to EUR 57m in Q2 2015. Increase in
cash flow is mainly attributable to the increase in
EBITDA.
In the first six months of 2016 cash flow from operating
activities was EUR 102m compared to EUR 16m in the
same period last year, mainly caused by higher EBITDA
and a one-off tax claim of EUR 22m paid in Q1 2015.
Tax
The income tax expense for the quarter was EUR 9m.
Lindorff Group has certain tax disputes related to the
deductibility of interest expense on Group internal loans
in Finland and Norway. The total tax exposure including
penalties of these disputes is estimated at EUR 43m. Out
of this total, EUR 34m has been paid during 2015 and
2016. The remaining estimated cash tax exposure as at
30 June 2016 is EUR 9m.
In May 2016 the Finnish Supreme Administrative Court
(Finnish SAC) published two verdicts against other tax
payers in similar cases and in June the Helsinki
Administrative court decided against Lindorff Group ABs
Finnish branch. Lindorff has identified significant
differences in the factual circumstances and has filed an
appeal to the Finnish SAC. This case represents EUR
33m of the total claims.
No provisions have been recorded as Lindorff believes
that our arguments are strong. Accordingly, the amounts
paid, EUR 34m are included in deferred tax assets.
Funding
Lindorff Group is funded through a Super Senior RCF of
EUR 329m (whereof EUR 25m allocated to guarantees),
Senior Secured Notes of EUR 1,463m equivalent (issued
in EUR and NOK) and Senior Notes of EUR 446m
equivalent (issued in EUR and SEK).
LINDORFF SECOND QUARTER 2016
The average interest rate on the notes is approximately
7% with an average duration of 5.0 years. The
multicurrency RCF is priced at a margin of 3.5% with a
commitment fee equivalent to 35% of the applicable
margin on any undrawn amount. At the end of Q2 2016,
the RCF draw amounted to EUR 270m (excluding a draw
for unfunded guarantees of EUR 21m).
A new financing model for the payment services set up
with Nordea went into production in the beginning of July,
freeing up EUR 30m in available cash.
Available liquidity
EURm
RCF capacity at the end of period
In addition to the above mentioned borrowings, Aktua has
senior facilities totalling EUR 131m, a Mezzanine facility
totalling EUR 42m, a VAT credit line of EUR 14m and a
PIK loan of EUR 30m. Lindorff S.A. in Poland (previously
Casus Finanse S.A.) has remaining bond debt totalling
EUR 1m. This debt will be repaid in full during 2016.
At end of Q2 2016 the Net interest bearing Debt (“NIBD”)
was EUR 2,345m, which implies 5.1x NIBD/Adjusted
EBITDA excluding NRIs (LTM) and including pro-forma
effect for the BMN carve-out from Q4 2015 and the
acquisitions of Casus Finanse, Cross Factor and Aktua.
Leverage has remained stable compared to Q2 2015 due
to the increase in pro forma adjusted EBITDA excluding
NRIs.
PAGE 7/30
- amount drawn
- amount allocated to guarantees
30 Jun 2016
329
-270
-25
Available RCF
34
+ Cash total Group
52
Available liquidity total Group
86
- Cash Aktua group
19
Available liquidity restricted Group
67
Goodwill
Consolidated goodwill amounted to EUR 1,565m at the
end of Q2 2016, and increased by EUR 181m from EUR
1,384m at the end of December 2015. The main reason
for the increase was the acquisition of Aktua Soluciones
Financieras Holdings, S.L. in Spain.
LINDORFF SECOND QUARTER 2016
PAGE 8/30
Operating segments
Revenue mix in Q2 2016
Segment Earnings
EURm
120
4%
Debt
Purchasing
2
100
80
1
48%
Debt
Collection
55
Other
60
Debt Collection
41
48%
40
Debt Purchasing
Other
20
46
32
0
Q2 15
Q2 16
Debt Collection
Debt Purchasing
Net revenue in Q2 2016, excluding intersegment revenue
of EUR 27m from collection on Lindorff owned portfolios,
amounted to EUR 79m, compared to EUR 62m in Q2
2015. This represents an increase of 26%. The increase
was mainly driven by the acquisitions of Aktua in Spain
and Casus Finanse in Poland, as well as improved
collection efficiency in the third party collection business.
Net revenue in Q2 2016 amounted to EUR 79m
compared to EUR 61m in Q2 2015, representing an
increase of 30% as a result of investments and continued
strong collection performance at 113% of forecast.
With the acquisition of Aktua, Lindorff strengthened the
Debt Collection segment by adding RES to its range of
services, which contributed with revenues of EUR 5m in
Q2 2016.
The Segment Earnings increased 33% from EUR 41m in
Q2 2015 to EUR 55m in Q2 2016. The increase was
mainly related to the increase in revenue compared to
last year, and operational improvements.
The Debt Collection segment, excluding intersegment
revenue, accounted for 48% of the Group Net revenue
and 53% of the Group Segment Earnings in Q2 2016.
For the first six months of 2016 net revenue increased
7% from EUR 129m in H1 2015 to EUR 138m in H1
2016. Segment Earnings increased 14% from EUR 78m
in H1 2015 to EUR 90m in H1 2016. The Earnings margin
increased from 43% to 47% in the same period.
The Segment Earnings came in at EUR 46m in Q2 2016
compared to EUR 32m in Q2 2015, mainly driven by the
strong revenue growth. The earnings margin increased
from 52% in Q2 2015 to 58% in Q2 2016.
Total investment in Debt Purchasing during the second
quarter was EUR 51m compared to EUR 29m in Q2
2015. Total investments last twelve months amounted to
EUR 398m.
Debt Purchasing accounted for 48% of Group Net
revenue and 45% of Group Segment Earnings in Q2
2016. In H1 2016 net revenue increased 23%, from EUR
122m in H1 2015 to EUR 149m. The increase was driven
by investments and high collection performance at 108%
of forecast.
Segment Earnings increased 33% from EUR 64m in H1
2015 to EUR 86m in H1 2016. The Earnings margin
increased from 53% to 58% in the same period.
Return in Debt Purchasing for H1 2016 (LTM) was 16.9%
compared to 15.6% for H1 2015 (LTM). Estimated
Remaining Collections (ERC) on Lindorff’s own portfolios
were EUR 2,493m at 30 June 2016, up 27% from EUR
1,964m at 30 June 2015.
LINDORFF SECOND QUARTER 2016
PAGE 9/30
ERC, next 180 months
EURm
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0-12
13-24
25-36
37-48
49-60
61-72
73-84
2016
85-96
97-108 109-120 121-132 133-144 145-156 157-168 169-180
2015
Other Services
Other services consist of invoicing, payment services and
other income. Revenue in Q2 2016 was EUR 6.8m,
compared to EUR 4.4m in Q2 2015. Other services
continue to be important for Lindorff to drive growth in the
core collection business.
Total Segment Earnings for Other Services increased
with EUR 1.2m from EUR 0.9m to EUR 2.0m.
In H1 2016 net revenue increased 51%, from EUR 8.4m
in H1 2015 to EUR 12.8m. Segment Earnings increased
from EUR 1.6m to EUR 3.3m in the same period.
Payment services is showing a strong development, and
will continue to be an important growth area for Lindorff
going forward. Revenue from payment services
increased with EUR 2.2m from EUR 0.6m in Q2 2015 to
EUR 2.7m in Q2 2016.
Summary of Operating Segments
Apr-Jun
2016
Apr-Jun
2015
Change %
Jan-Jun
2016
Jan-Jun
2015
Change %
Jan-Dec
2015
LTM
Debt Purchasing
79
61
30 %
149
122
23 %
267
294
Debt Collection
79
62
26 %
138
129
7%
248
258
Other
7
4
54 %
13
8
51 %
19
23
Total
165
128
29 %
300
258
16 %
534
575
Debt Purchasing
46
32
46 %
86
64
33 %
140
161
Debt Collection
55
41
33 %
90
78
14 %
151
163
Other
2
1
133 %
3
2
102 %
6
8
Total
103
74
40 %
179
144
24 %
297
331
EURm
Revenue per segment
Earnings per segment
LINDORFF SECOND QUARTER 2016
Significant risk and
uncertainties
The Group’s and parent company’s risks include, among
other things, strategic risks related to economic
development and acquisitions, regulatory changes,
possible errors and omissions and financial risks such as
market risk, funding risk and credit risk inherent in
purchased loans and receivables and counter party risk
for third party business.
Tax
Lindorff has ongoing discussions with tax authorities in
some countries mainly related to the deductibility of
interest on Group internal loans.
Financial risk
The financial position of the parent company and Group
is strong. The company has through its interest rate
policy minimized the risk of adverse effects from changes
in the market’s interest rates on the Group’s cash flow.
The Group’s currency exposure is limited through a
natural alignment of Lindorff’s interest-bearing loans
relative to operational cash flows denominations. The
Group is exposed to transaction risks on
acquisitions/disposals and other transactions involving
foreign currency. The currency exposure is in EUR, NOK,
SEK, DKK and PLN.
The risks are described in more detail in the Board of
Directors report, and Note 3 and 4 in Lock Lower Holding
AS consolidated 2015 Annual report.
PAGE 10/30
Share and shareholders
The company’s shareholder is Lock Upper Holding AS
(100%).
Parent company
The parent company is a holding company with 1
employee per 30 June 2016. Net result for Q2 2016 was
EUR -0.2m. Net result for H1 2016 was -0.05m.
Events after the end of the
period
In July the ownership of Aktua decreased to 85% as
minority interest shareholder Banco Santander acquired
additional 9% of Lindorff’s shares.
A new financing model for the payment services set up
with Nordea went into production in the beginning of July,
freeing up EUR 30m in available cash.
LINDORFF SECOND QUARTER 2016
PAGE 11/30
Consolidated Income Statement
Apr-Jun
2016
Apr-Jun
2015
Jan-Jun
2016
Jan-Jun
2015
Jan-Dec
2015
Net revenue
165
128
300
258
534
Employee benefit expense
-49
-43
-99
-90
-187
Legal fee cost
-12
-8
-23
-18
-43
-5
-4
-9
-9
-18
Other operating costs
-27
-24
-50
-54
-100
Depreciation and amortisation
-12
-9
-22
-18
-37
60
39
97
70
150
-39
-40
-70
-76
-172
22
-1
26
-7
-23
Income tax expense
-9
-1
-14
-4
6
Profit (loss) for the period
12
-1
12
-11
-16
12
-1
12
-11
-16
EURm
Phone, postage and packaging
Results from operating activities (EBIT)
Net financial items
Profit (loss) before tax
Profit (loss) attributable to:
Owners of the Company
Non-controlling interests
-0
0
-0
0
0
Profit (loss)for the period
12
-1
12
-11
-16
Consolidated Statement of comprehensive income
Apr-Jun
2016
Apr-Jun
2015
Jan-Jun
2016
Jan-Jun
2015
Jan-Dec
2015
12
-1
12
-11
-16
1
0
0
0
3
3
-1
3
4
-2
16
-2
15
-7
-15
Owners of the Company
16
-2
15
-7
-15
Non-controlling interests
0
0
0
0
0
16
-2
15
-7
-15
EURm
Profit for the period
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit
obligations
Items that may be subsequently reclassified to
profit or loss
Currency translation differences
Total comprehensive income for the period
Attributable to:
Total comprehensive income for the year
LINDORFF SECOND QUARTER 2016
PAGE 12/30
Consolidated Statement of financial position
EURm
ASSETS
Fixtures and furnitures
30 Jun 2016
30 Jun 2015
31 Dec 2015
15
13
14
446
311
327
Goodwill
1,565
1,389
1,384
Loans and receivables
1,090
820
1,070
Deferred income tax assets
68
48
71
Other long-term assets
10
11
12
3,195
2,591
2,878
Trade receivables
37
25
21
Current tax receivable
15
5
5
104
40
73
Client funds
38
23
38
Cash and cash equivalents
52
56
53
245
148
191
3,440
2,739
3,069
Intangible assets
Non-current assets
Other short-term receivables
Current assets
Total assets
EQUITY
Share capital
Share premium
Retained earnings
Equity attributable to owners of the Company
Non-controlling interests
Total equity
9
10
9
740
782
715
56
7
66
806
798
789
1
0
0
806
798
789
Liabilities
Liabilities to credit institutions
Bonds
Other long-term liabilities
Pension liabilities
Deferred income tax liabilities
Financial derivatives
Non-current liabilities
177
0
0
1,864
1,643
1,860
30
1
1
8
13
7
64
45
47
0
3
0
2,142
1,705
1,915
Trade payables
23
20
19
Short-term loan
342
135
242
Client liabilities
38
23
38
Current tax liabilities
11
1
5
Other short-term liabilities
77
57
58
Financial derivatives
1
0
2
492
236
365
Total liabilities
2,634
1,941
2,280
Total equity and liabilities
3,440
2,739
3,069
Current liabilities
LINDORFF SECOND QUARTER 2016
Consolidated Statement of changes in equity
EURm
Beginning balance, 1 January
Net income for the period
Jan-Jun 2016
Jan-Dec 2015
789
805
12
-16
Remeasurements of post-employment benefit obligations
0
3
Currency translation differences
3
-2
Other comprehensive income
3
1
15
-15
Capital increase
1
0
Non-controlling interest
1
0
806
789
Total comprehensive income
Ending balance
PAGE 13/30
LINDORFF SECOND QUARTER 2016
PAGE 14/30
Consolidated Statement of cash flow
AprJun 2016
AprJun 2015
JanJun 2016
JanJun 2015
JanDec 2015
Results from operating activities (EBIT)
60
39
97
70
150
Amortisation, depreciation and impairment
12
9
22
18
37
Amortisation and revaluation of Purchased Debt
39
36
76
67
144
EURm
Operating activities:
Interest received
0
0
0
0
1
-20
-14
-78
-82
-152
Corporate Income tax paid
-3
-4
-4
-27
-36
Cash flow from operating activities before changes in working capital
89
66
112
46
144
Interest paid
Cash flow from changes in working capital:
Decrease(+) / increase(-) in accounts receivable
-11
-5
-19
-11
-8
Decrease(+) / increase(-) in other receivables
0
4
3
-6
-39
Decrease(-) / increase(+) in accounts payable
-2
-2
3
-1
-2
8
-6
3
-11
-4
84
57
102
16
90
-33
Decrease(-) /increase(+) in other current liabilities
Cash flow (used in)/from operating activities
Investment activities:
Acquisition of subsidiary, net of cash acquired
-113
0
-113
0
Acquisition of tangible fixed assets
-1
-1
-1
-3
-5
Acquisition of intangible fixed assets
-4
-4
-9
-7
-40
Proceeds from sale of shares
Acquisition of loans and receivables
Cash flow (used in)/from investing activities
0
0
0
0
1
-50
-33
-72
-70
-396
-167
-38
-195
-79
-472
Financing activities:
Proceeds from new debt
167
7
211
92
671
Retirement of debt
-80
-20
-119
-70
-327
Loan to group companies
0
0
0
0
-2
Other financial expenses
-1
0
-2
0
-8
Cash flow (used in)/from financing activities
86
-13
90
22
334
3
5
-3
-41
-48
Cash flow for the period
Currency effect
-2
-3
1
-2
2
Cash and cash equivalents at the beginning of the period
51
53
53
99
99
Cash and cash equivalents at end of period
52
56
52
56
53
LINDORFF SECOND QUARTER 2016
PAGE 15/30
Income Statement Parent Company
Apr-Jun 2016
Apr-Jun 2015
Net revenue
0
0
1
Other operating costs
0
0
-1
Results from operating activities (EBIT)
0
0
0
EURm
Finance income
Jan-Dec 2015
10
10
41
-10
-10
-41
Net finance costs
0
0
0
Profit before tax
0
0
0
Income tax expense
0
0
0
Profit for the period
0
0
0
Finance costs
LINDORFF SECOND QUARTER 2016
PAGE 16/30
Statement of financial position Parent Company
30 Jun 2016
30 Jun 2015
31 Dec 2015
Investment in subsidiaries
750
792
724
Long-term receivables
447
450
451
1,197
1,242
1,175
Other short-term receivables
11
11
13
Current assets
11
12
13
1,208
1,254
1,188
Share Capital
9
10
9
Total restricted capital
9
10
9
740
782
715
0
0
0
Total non-restricted capital
740
782
715
Total equity
749
792
723
446
451
451
1
0
2
448
451
453
Other short-term liabilities
11
11
12
Current liabilities
11
11
12
459
462
465
1,208
1,254
1,188
750
792
724
EURm
ASSETS
Non-current assets
Total assets
EQUITY
Share Premium
Retained earnings
LIABILITIES
Bonds
Other long-term liabilities
Non-current liabilities
Total liabilities
Total equity and liabilities
Pledged assets (shares in subsidiaries)
LINDORFF SECOND QUARTER 2016
PAGE 17/30
Notes
Note 1 – Accounting Principles
Lock Lower Holding AS consolidated financial statements
for Q2 and H1 2016 has been prepared in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the European Union, as well as the
Norwegian Annual Accounts Act.
The consolidated financial statements have been
prepared in accordance with the cost method, and
derivative instruments are measured at fair value through
profit or loss.
The parent company’s financial statements have been
prepared in accordance with the Norwegian Annual
Accounts Act as well as NGAAP.
This interim report has been prepared in accordance with
IAS 34, Interim Financial Reporting. The accounting
policies adopted are consistent with those of the previous
financial year for Lock Lower Holding AS (see
consolidated Financial Statements of Lock Lower Holding
AS 2015).
The Parent Company’s reporting currency is euro (EUR),
which is also the reporting currency for the Group. The
consolidated financial statements are presented in EUR
and all values are rounded to the nearest million (EURm)
except when otherwise indicated. The consolidated and
parent company accounts pertain to 1 January to 30 June
for income statements and 30 June for items on the
statements of financial position.
LINDORFF FOURTH QUARTER 2015
PAGE 18/30
Note 2 – Business combination
Cross Factor S.p.A
The acquisition price for Cross Factor was EUR 16m.
Purchase price was allocated to assets and liabilities at
fair value.
On 10 May 2016, Lindorff acquired Cross Factor S.p.A,
an Italian company within Credit Management Services
(CMS). With this acquisition Lindorff established a
management organization for operations in Italy. Cross
Factor S.p.A has been in the Italian NPL market since
1992.
There is always some uncertainty associated with future
cash flow and collection cost estimates as basis for fair
value estimation as at acquisition date. The purchase
price allocation is to be considered as a preliminary
assessment and may be reallocated within 12 months
after the acquisition.
10 May 2016
EURm
Fair value
Book value
Assets
22
12
2
2
24
14
Receivables
2
6
Cash and cash equivalents
0
1
Current assets
3
7
26
20
Long term liabilities
7
3
Non-current liabilities
7
3
Trade payables
1
1
Other short-term liabilities
3
7
Current liabilities
3
8
Total liabilities
10
11
Net assets value
16
9
Loans and receivables
Deferred income tax assets
Non-current assets
Total assets
Liabilities
EURm
10 May 2016
Purchase price of Cross Factor
16
Fair value of acquired net assets
16
Goodwill
0
LINDORFF SECOND QUARTER 2016
Aktua Soluciones Financieras
Holdings, S.L
On 1 June 2016, Lindorff acquired 94% of the Spanish
collection group Aktua Soluciones Financieras Holdings.
Aktua is a leading multi-client servicer focused on secured
debt and real estate assets in Spain offering end-to-end
services across the entire NPL and RES value chain,
including loan servicing, real estate services as well as
investment advisory of financial institutions and
international investors. The group was founded in 2008 and
has a staff of more than 400 employees and a network of
22 offices and field collection teams across the country.
1 June 2016
The company holds long term contracts with leading
financial institutions in Spain, and gives Lindorff a strong
platform in the RES market and brings new capabilities to
pursue further growth in the secured non-performing loans
area in Spain and subsequently in other markets.
The acquisition price for Aktua group was EUR 134m
including deferred and contingent consideration. Purchase
price allocated to assets and liabilities at fair value led to
goodwill at EUR 127m.
There is always some uncertainty associated with future
cash flow and cost estimates as basis for fair value
estimation as at acquisition date. The purchase price
allocation is to be considered as a preliminary assessment
and may be reallocated within 12 months after the
acquisition.
Fair value
Book value
1
1
130
130
41
41
1
1
173
173
Trade receivables
36
36
Cash and cash equivalents
22
22
Current assets
57
57
230
230
8
8
Long term liabilities
152
152
EURm
Non-current liabilities
161
161
Book value at start of period
Trade payables
2
2
Short-term loan
37
37
Other short-term liabilities
22
22
Current liabilities
61
61
222
222
Net assets value
8
8
Net assets acquired 94%
7
Non-controlling interest
1
EURm
Assets
Fixtures and furnitures
Intangible assets
Goodwill
Loans and receivables
Non-current assets
Total assets
PAGE 19/30
Revenue and EBITDA for
combined entity
Information related to revenue and profit or loss for the
combined entity according to IFRS 3 B.64 for Q2 and H1
2016 as if all business combinations had occurred at 1
January 2016 is impractical to report. Part of the business
combinations was an asset acquisition with no previous
separate financial reporting available.
Liabilities
Deferred tax libilities
Goodwill reconciliation
Goodwill at acquisitions
Total liabilities
EURm
Purchase price of Aktua 94%
Fair value of acquired net
assets
Goodwill
1 June 2016
134
7
127
Net fx change
Book value at end of period
Mar-Jun
2016
Jan-Jun
2016
1,391
1,384
168
168
6
13
1,565
1,565
LINDORFF SECOND QUARTER 2016
PAGE 20/30
Note 3 – Operating
segments
Revenues
Sales between segments are carried out at arm’s length.
Net revenue from external parties reported to
management is measured in a manner consistent with
that in the income statement. The following table
presents a reconciliation of the reportable segments’
main captions from profit and loss to the entity’s profit
and loss before tax.
Management has determined the operating segments
based on information reviewed by management for the
purpose of allocating resources and assessing
performance. Management considers the performance
from a product perspective and separately considers the
Debt Purchasing and Debt Collection segments. Both
segments meet the quantitative thresholds required by
IFRS 8 for reportable segments. Management assesses
the performance of the operating segments based on a
measure of Segment Earnings which is Net revenue
minus direct operating expenses.
EURm
Net revenue from external customers
Debt Purchasing
Debt Collection
Other
Total
Inter- segment revenue
Debt Collection
Elimination
Earnings per segment
Debt Purchasing
Debt Collection
Other
Total
Apr-Jun
2016
Apr-Jun
2015
Jan-Jun
2016
Jan-Jun
2015
Jan-Dec
2015
79
79
7
61
62
4
149
138
13
122
129
9
267
248
19
165
128
300
258
534
27
27
53
52
110
-27
-27
-53
-52
-110
46
55
2
32
41
1
86
90
3
64
78
2
140
151
6
103
74
179
144
297
-16
-10
-5
-12
-8
-6
-31
-19
-11
-28
-18
-11
-54
-36
-21
186
Unallocated cost
SG&A
IT
Other not allocated expenses
EBITDA
72
48
118
87
-12
-9
-22
-18
-37
60
39
97
70
150
Net financial Items
-39
-40
-70
-76
-172
Profit before tax
22
-1
26
-7
-23
1,061
826
1,070
809
809
-40
1
51
22
0
-4
-36
1
29
0
0
1
-78
3
74
22
-1
0
-68
1
71
0
-1
7
-149
5
395
21
-1
-9
Ending value
1,090
820
1,090
820
1,070
Average carrying value of purchased debt
1,076
823
1,080
815
940
16.9 %
15.6 %
16.9 %
15.6 %
14.9 %
Depreciation and amortisation
EBIT
Purchased loans and receivables
Beginning value
Amortisation
Revaluation
Portfolio acquisitions
Investment in portfolios through acquisitions
Divestment and disposals
Effect of change in FX rates
Return in Debt Purchasing (LTM)
LINDORFF SECOND QUARTER 2016
PAGE 21/30
Note 4 – Reconciliation of income to Adjusted EBITDA
Apr-Jun
2016
Apr-Jun
2015
Jan-Jun
2016
Jan-Jun
2015
Jan-Dec
2015
Net revenue from Debt Purchasing
79
61
149
122
267
Amortisation and revaluation
39
36
76
67
144
Gross revenue from Debt Purchasing
119
97
225
188
411
Revenue from Debt Collection and Other
Services
86
67
151
137
267
Employee benefit expense
-49
-43
-99
-90
-187
Legal fee cost
-12
-8
-23
-18
-43
-5
-4
-9
-9
-18
Other operating costs
-27
-24
-50
-54
-100
Adjusted EBITDA
111
84
194
154
331
EURm
Phone, postage and packaging
LINDORFF SECOND QUARTER 2016
PAGE 22/30
Note 5 – Fair value of financial assets and liabilities
Book value
Fair value*
30 Jun 2016
30 Jun 2016
FV hierarchy
Loans and receivables
1,090
1,090
3
Other long-term assets
10
10
3
Trade receivables
37
37
3
Other short-term receivables
80
80
3
Cash and cash equivalents
52
52
1
1
2
1,864
1,952
1
177
177
3
EURm
Financial assets at amortised cost
Financial liabilities at fair value through
profit or loss
Financial derivatives
Financial liabilities at amortised cost
Bonds
Long-term loan
Trade payables
23
23
3
Short-term loan
342
342
2
77
77
3
2,484
2,572
Other short-term liabilities
Total
* See Annual Report Lock Lower Holding AS 2015 for description of calculation of fair value.
LINDORFF SECOND QUARTER 2016
PAGE 23/30
Note 6 – Borrowing
Revolving Credit Facility
(RCF)
EURm
Limit*
Security
Super Senior
secured
329
Maturity
Interest
Margin
06.04.2020
Floating
EURIBOR+3.50%
Participants
Nordea, DNB, SEB,
NYK
* Total RCF facility is EUR 329m, whereof EUR 25m is allocated to guarantees. As at 30 June 2016 EUR 270m was drawn, excluding EUR 21m in guarantees.
Bonds
Issue
Security
Maturity
Interest
Coupon
Issuer
EURm
Issue Date
06.08.2014
253
Senior secured notes
15.08.2020
Floating
3m EURIBOR+5.50%
Lock AS
EURm
07.11.2014*
100
Senior secured notes
15.08.2020
Floating
3m EURIBOR+5.50%
Lock AS
EURm
10.09.2015**
200
Senior secured notes
15.08.2020
Floating
3m EURIBOR+5.50%
Lock AS
NOKm
06.08.2014
1,680
Senior secured notes
15.08.2020
Floating
3m NIBOR+5.75%
Lock AS
EURm
06.08.2014
550
Senior secured notes
15.08.2021
Fixed
7.0 %
Lock AS
EURm
07.11.2014*
150
Senior secured notes
15.08.2021
Fixed
7.0 %
Lock AS
EURm
10.09.2015**
30
Senior secured notes
15.08.2021
Fixed
7.0 %
Lock AS
EURm
06.08.2014
250
Senior notes
15.08.2022
Fixed
9.5 %
Lock Lower Holding AS
SEKm
06.08.2014
1,850
Senior notes
15.08.2022
Floating
3m STIBOR+8.775%
Lock Lower Holding AS
Total (EURm)***
1,909
* Interest accrued from 06.08.2014
** Interest accrued from 15.08.2015
*** Total is in EURm equivalent based on closing rates 30 June 2016. Book value of long term liabilities is net of capitalised fees.
Lock Lower Holding AS Senior notes are on-lent to Lock AS at the same interest conditions as the issuer has.
Aktua facilities
PIK facility
EURm
Senior facility
EURm
Mezzanine facility
EURm
Senior facility (Kite)
EURm
VAT Credit Line
EURm
Limit
30
Security
Guarantee from
Nordic
Maturity
Interest
Margin
Participants
01.05.2023
Floating
EURIBOR+3.75%
DNB
Participants
Deutsche, Santander,
Sabadel and BankInter
Limit
Security
Maturity
Interest
Margin
83
Senior secured
05.06.2022
Floating
EURIBOR+3.00%
Limit
Security
Maturity
Interest
Margin
Participants
42
Secured
05.06.2022
Floating
EURIBOR+9.00%
Deutsche Bank
Limit
Security
Maturity
Interest
Margin
Participants
48
Senior secured
10.03.2022
Floating
EURIBOR+7.00%
Deutsche Bank
Limit
Security
Maturity
Interest
Margin
Participants
14
VAT refunding
12.02.2017
Floating
EURIBOR+2.50%
Bankinter
LINDORFF SECOND QUARTER 2016
PAGE 24/30
Note 7 – Restricted Group
With reference to the indentures governing the outstanding notes of Lock Lower Holding AS and Lock AS as well as Lock
AS’s revolving credit facility, the companies in the Aktua Group are organised as unrestricted subsidiaries. A separate
disclosure of Lindorff Group excluding the Aktua Group is presented in this note.
EURm unless otherwise stated
Net revenue
EBITDA
EBITDA margin (%)
EBITDA excl. NRIs
Apr-Jun
2016
Apr-Jun
2015
Change %
Jan-Jun
2016
Jan-Jun
2015
Change %
Jan-Dec
2015
155
128
21 %
290
258
12 %
534
566
67
48
41 %
114
87
30 %
186
213
43 %
37 %
39 %
34 %
35 %
38 %
72
52
39 %
124
97
27 %
205
232
366
LTM
Adjusted EBITDA
107
84
28 %
190
154
23 %
331
Adjusted EBITDA excl. NRIs
112
88
27 %
199
164
21 %
350
385
NIBD
NIBD / Proforma Adjusted
EBITDA (LTM)*
2,148
1,741
23 %
2,148
1,741
23 %
2,063
2,148
5.5
5.1
5.5
5.1
5.7
5.5
ERC, end of period
2,493
1,964
27 %
2,493
1,964
27 %
2,442
2,493
51
29
74 %
74
71
5%
395
398
16.9 %
15.6 %
16.9 %
15.6 %
14.9 %
16.9 %
119
96
23 %
224
187
20 %
408
445
3,624
3,269
11 %
3,632
3,202
13 %
3,380
3,584
Investments in Debt Purchasing
Return in Debt Purchasing (LTM)
Gross collection in Debt
Purchasing
Average number of FTEs
* See definition on page 28.
LINDORFF SECOND QUARTER 2016
EURm
ASSETS
Fixtures and furnitures
30 Jun 2016
30 Jun 2015
PAGE 25/30
31 Dec 2015
14
13
14
318
311
327
Goodwill
1,395
1,389
1,384
Loans and receivables
1,090
820
1,070
Deferred income tax assets
68
48
71
Other long-term assets
93
11
12
2,977
2,591
2,878
28
25
21
7
5
5
Other short-term receivables
81
40
73
Client funds
36
23
38
Cash and cash equivalents
33
56
53
Intangible assets
Non-current assets
Trade receivables
Current tax receivable
Current assets
Total assets
185
148
191
3,162
2,739
3,069
EQUITY
Share capital
Share premium
Retained earnings
Total equity
9
10
9
740
782
715
55
7
66
805
798
789
Liabilities
Bonds
1,864
1,643
1,860
Other long-term liabilities
2
1
1
Pension liabilities
8
13
7
55
45
47
Deferred income tax liabilities
Financial derivatives
Non-current liabilities
0
3
0
1,928
1,705
1,915
Trade payables
20
20
19
Short-term loan
306
135
242
Client liabilities
36
23
38
6
1
5
61
57
58
Current tax liabilities
Other short-term liabilities
Financial derivatives
1
0
2
429
236
365
Total liabilities
2,357
1,941
2,280
Total equity and liabilities
3,162
2,739
3,069
Current liabilities
LINDORFF SECOND QUARTER 2016
PAGE 26/30
Note 8 – Events after the end of the period
In July the ownership of Aktua decreased to 85% as minority interest shareholder Banco Santander acquired additional
9% of Lindorff’s shares.
A new financing model for the payment services set up with Nordea went into production in the beginning of July, freeing
up EUR 30m in available cash.
LINDORFF SECOND QUARTER 2016
PAGE 28/30
Definitions and abbreviations
Definitions
Adjusted EBITDA – EBITDA adjusted for amortisation and revaluation of portfolios of purchased loans and receivables
Direct opex – Operational expenses related to collection activities, excluding SG&A and IT cost
ERC – Estimated Remaining Collections next 180 months on purchased loans and receivables in Debt Purchasing
Intersegment Revenue
- Commission to the Debt Collection segment from the Debt Purchasing segment
Investments in Debt Purchasing – Acquisitions of non-performing loans and receivables (may differ from acquisition of
loans and receivables in the cash flow statement due to actual payment of the acquisition may be due in another period)
NIBD/Proforma Adjusted EBITDA (LTM) – Net interest bearing debt divided by Adjusted EBITDA LTM (Leverage ratio is
adjusted for proforma effect of acquisitions in the given period. Not including investments in Debt Purchasing).
Portfolio revaluation – Change in carrying value of purchased loans and receivables due to changed collection forecasts
Restricted Group – Lock Lower Holding AS and all its subsidiaries subject to the restrictive covenants of the Senior
Secured Notes, Senior Notes and RCF indenture
Return in Debt Purchasing – Last Twelve Months (LTM) segment earning in % of average book value of purchased loans
and receivables for the last twelve months
Segment earnings – Segment EBITDA excluding SG&A and IT cost
Segment earnings Debt Collection – Includes earnings from collection on own portfolios and third party debt as well as
Real Estate Servicing
Abbreviations
3PC – Third Party Collection
IDC – Internal Debt Collection
CAGR – Compounded Annual Growth Rate
Constant Currency – Fixed currency rates for comparable reporting periods
EBITDA – Earnings Before Interest Tax Depreciation and Amortisation
FTE – Full Time Equivalent employees
IRR – Internal Rate of Return
NIBD – Net Interest Bearing Debt
NPL – Non-performing Loan
NRIs – Non-recurring Items
LTM – Last Twelve Months
RES – Real Estate Servicing
LINDORFF SECOND QUARTER 2016
Other information
Contact info
Visiting Address Headquarters:
Lindorff Group
Hoffsveien 70b
0377 Oslo
Norway
Switchboard: +47 2321 1000
Investor Contacts
André Adolfsen
Director Investor Relations
Phone: +47 24 16 26 26
E-mail: [email protected]
PAGE 29/30
LINDORFF SECOND QUARTER 2016
PAGE 30/30