pwc strategy march 2014 market vision · market vision credit information ... normative band ......

Market Vision

Credit information and credit collection markets in Italy

March 2014 PwC Strategy

1 Credit information 1

1.1 Market assessment 4

1.2 Market figures 12

1.3 Competitive landscape 21

1.4 International overview 30

2 Credit collection 36

2.1 Market assessment 39

2.2 Market figures 49

2.3 Competitive Landscape 57

Contents

PwC

Credit information Section 1

1

PwC

Executive summary – Market assessment

Section 1 – Credit information

2

Market assessment

The CI market recorded a negative trend 2009-2012 (CAGR 09-12 -1,6%), with a decline in the banking segment (-4,4% p.a., mainly due to price pressure) only partially offset by growth in Corporate (+2,6% p.a.) …

OK … that will show a positive outlook (CAGR 13-17 +3,7%)

• The Credit Information Market (€634M in Sales in 2012) presents 2 major Client Segments:

− CI Corporate embracing the supply of Business Information (e.g. financial and RE) to support companies' decision making process

− CI Banks embracing the supply of a wider range of information supporting Real Estate verifications, Credit Risk assessments and Credit Worthiness checks

• From 2009 to 2012, the CI Market recorded a negative trend (CAGR 09-12 -1,6%), mainly driven by price pressure in the banking segment:

− Overall flat CI Market in real/volume terms, presenting some resilience to negative economic cycle

• Corporate appears the most attractive segment, given under-penetration (~35% of Italian SMEs vs. 78% in the UK) and increasing the need of VA information to support companies' decision making processes

• GDP recovery and increasing granting of lending and mortgages from Financial Institutions expected in the next years (IMF) will likely improve Companies spending propensity and Banks' need of information

• The CI expected growth (CAGR 13-17 +3,7%) will be primarily driven by Corporate (+5,7%) and Real Estate Segments (+2,6%) while Credit Bureau will show a lower growth mainly due to a price pressure

OK Expected economic recovery will have a positive impact on CI market …

… nevertheless presenting some resilience to economic cycle (real GDP CAGR 07-12 -1,5%)

OK

~

PwC

Executive summary – Competitive landscape

Section 1 – Credit information

3

Competitive landscape

Very concentrated

supply structure with Cerved and Crif as dominant Players …

~

• The Credit Information Industry, for both Corporate and Financial Institutions, is characterised by the presence of 2 dominant Players, Cerved and Crif together covering ~70% of the market, presenting a wide/complete offer portfolio:

- Cerved (RMS 1,6x and ~50% EBITDA) is the Market Leader in Italy

- Crif (RMS 0,6 and ~30% EBITA) has successfully implemented a internationalisation strategy with over 30% of Sales generated outside of Italy

• The Credit Information Corporate Industry is a "volume based business" presenting high capital intensity (Capex/Sales) and high operating leverage (Fixed Costs/Opex), and requires relevant IT investments and technical integration with clients.

• Profitability in Credit Information appears mainly driven by experience/scale economies, presenting a "thin and steep" Normative Band

• Cerved and Crif present similar "apparent strategies" influencing the entire industry:

- Further industry consolidation through an aggressive M&A/growth-through-acquisition strategy, and

- Continuous product innovation (e.g. service features, bundle/ package, client fruition/experience) aiming to off-set product commoditisation, increase clients' switching costs and balance price pressure (mainly in the banking segment)

Profitability potentially effected by some price pressure and product commoditisation, … but overall balanced by offer innovation (e.g. VA services)

… given high entry barriers represented by fixed costs/capex (and sales force in Corporate Segment) and intense

M&A

OK

~

PwC

Market assessment Section 1.1

4

PwC

Credit Information is crucial both for Corporate and Financial Institutions to support the decision-making process…

Section 1.1 – Market assessment

5

Description

Main Products

Credit Information Banks Credit Information

Corporate

Business Information* Business

Information Real Estate Credit Bureau

Rating & Analytics

• Supply of Financial Information on counterparties to support company decision-making and optimise credit risk management policies

• Supply of Financial Information on counterparties to support company decision-making and optimise credit risk management policies

• VIPO**: verification of real estate assets owned by companies or individuals

• Mortgage Survey: real estate property appraisal

• Credit risk assessment and consulting services for the development of internal rating sy stems

• Supply of credit worthiness information on consumer lending clients

• Standardised and basic Financial Information, information on consumer payment history, financial analysis

• Dossier and reports with elaborated Financial Info

• VIPO**: Verification of existence of real estate assets, mortgages and monitoring of properties

• Mortgage Survey: Banks support in assessing value of mortgage collateral

• Provide a rating & analytics system and a model for credit risk assessment

• Facilitation of credit worthiness checks

Clients Segment

• Large Corporate, SMEs and professionals, Corporate, other institutions

• Large banks, regional banks, other Financial Institutions, other banks

Note: (*) Business Information Corporate also include other products like Real Estate VIPO (**) VIPO = Visure Ipocatastali /Ipotecarie-Catastali (Mortgage/Cadastral Certificates)

PwC

BI Providers play a key role in the Value Chain, aggregating and elaborating raw data, with limited disintermediation risk from backward Players (e.g. Infocamere, Telemaco, Agenzia del Territorio) up to date


6

End-users (Financial Institutions, Corporates, SMEs, Professionals and PA)

Associations and Others

Public Administration

Business Information Providers Telemaco (retail distribution platform)

AICA*** (wholesale distribution

platform)

Credit Bureau Unofficial

Sources Official

Sources Infocamere

(Chambers of Commerce**, Registro delle Imprese)

Agenzi a delle Entrate*

(Catasto, Conservatoria)

Regi stro delle Imprese

Primary Sources

• Pr ess Release • Su rvey

• Su ppliers/Clients • Web

• Pr ofessional r eg isters

• . . .

Court Archives • La n d r egister • Pr operty registers

• …

Others

Note (*): Agenzia delle Entrate incorporated Agenzia del Territorio in 2012; CCIA = Camera di Commercio, Industria, Artigianato e Agricoltura;

(***) AICA = Associazione Italiana per l 'informatica e il Calcolo Automatico

PwC

Credit Information providers realise, through data processing, different value-added, customised products for professionals, Corporate, SMEs or Financial Institutions


7

Data Sourcing

Data Processing Products Sales &

Distribution Customers

Official Data

Raw Data (reselling)

Combined Products

Value-added products

Customized Products

Data matching

Doubt resolution

Rating & Analy tics

Database creation

Interview integration

Data update

Unofficial Data

Account managers Corporates

Salesmen

Web

Dedicated networks

SMEs & Profess.

Financial Institutions

Other Institutions

Proprietary Data

In focamere, Telemaco

Cerved, Crif, Assicom

• Companies covering different phases of the value chain

Credit Information Value Chain

PwC

Major market trends in CI include growing adoption/penetration in Corporates and SMEs and increasing demand for Value-Added products…


8

• Corporate decision-makers progressively use detailed business Information to support key decisions (e.g. credit assessment of customers, competitive intelligence, rely on rating & analytics data)

Adoption of Intelligence

Tools

Impact Relevance

2

5

%

Risk Analysis Description

OK

• Risk of disintermediation from Data Sources, improving offer from Raw Data to VA Services:

- Infocamere (managing raw data of Chambers of Commerce) markets products to end-users through Telemaco

- Agenzia del Territorio started sale of VIPO products

! Disinter-

mediation Risks

• Increasing demand for Value Added and Quality Products including Scoring Models, investigative and unofficial/off-the-record information, data base cross-checking

Demand for VA/Quality

Products

OK

Trends

Increasing consolidation

~

2

5

%

• The Credit Information market has high entry barriers mainly represented by the fact that it is a "volume based business" that requires strong IT investments and technical integration with clients (especially for the BI business both for Corporate and Financial Information). The Real Estate business is less complex and shows a strong competition between small players

PwC

…whose quality, within the Rating & Analytics segment, could be also certified through the obtainment of certifications from European Supervisory Authorities (ESAs)


9

CRAs (Credit Rating Agencies) were introduced for the first time the 7 December 2009 by the EU Regulation 1060/09

Credit Rating Agency (CRA)

CRA are enabled to assigns credit ratings about the debtor's ability to pay back the debt and of the likelihood of default. An

agency may rate the credit worthiness of companies but not of individual consumers.

The award of CRA issued by ESMA* ensure that the operator meets high standards of organisational and corporate governance,

the integrity, objectivity and transparency of the rating process

ECAIs (External Credit Assessment Institutions) were first introduced by the "New Regulations for the Prudential Supervision

of Banks" (Circular no. 263 of 27 December 2006) in Europe

External Credit Assessment Institutions (ECAI)

ECAIs must be formally recognised by the relevant ESAs - European Supervisory Authorities (EBA*, ESMA*, EIOPA*) for the euro area Countries in which they will be used in line with

the CRD (Requirements Directive )

Ratings provided by ECAI could be use to determine Bank's capital requirements for credit risk in the standardised

approach.

Obtainment of CRA and ECAI certifications allow companies to offer certificated services with more value for clients

Note (*): ESMA = European Securities and Market Authority; EBA = European Banking Authority; EIOPA = European Insurance and Occupational Pension Authority

PwC

The penetration of Business Information within Italian SMEs (~35%) is far below those of more developed UK market (78%)


10

Business Information penetration on Corporates (2012, percentage, K units)

Source: Eurostat, Cerved Group

25/35%

60/70%

70/80%

30/40%

78%

0%

20%

40%

60%

80%

100%

Small Co.(10 - 49 FTE)

Medium Co.(50 - 200 FTE)

Large Co.(>200 FTE)

Companies>10 FTE

Companies >€ 1M

Italy UK

Number of Companies

~170 K ~20 K ~4 K ~194 K ~300 K

PwC

Info Quality and Completeness appears to be the critical Key Buying Factors for customers of Credit Information Corporate


11

Key Buying Factor of Clients (index 1-5)

“Quality and Online Credit Information services are the key features that oriented our purchasing decision.”

Sales Manager – Metal Processing Co

“We are very sensitive to Price, Readiness and Completeness of Information in a provider. We continuously receive and consider offers from other players”

Credit Manager – Food &Wine Co

“We would be so much interested in a Data Bank with Updated and Complete Information on our clients. We take advantage of Investigative Service Agencies both for Credit Information as well as Credit Information Services”

Admin & Finance Chief – Bottling Water Co

5,0 5,0

4,5

4,0

2,0

1,0

0

1

2

3

4

5

InfoQuality

infoComple-

teness

InfoReadi-

ness

Pricing BundleCredit Info/

Collection

Brand

Source: Interviews with Industry Experts and Corporate Clients

PwC

Market figures Section 1.2

12

PwC

While Credit Information services for Corporates comprises only Business Information, Banks require a wider variety of products like Credit Bureau and Real Estate VIPO and Mortgage Surveys

Section 1.2 – Market f igures

13

Credit Information Market (2012, €M, percentage)

Source: Annual reports, Aida, Web, PwC Estimate

275 359 CI Market:

€634M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CI Corporate CI Banks

Business Information Corporate,

Business Information Banks

Real Estate Banks

Rating & Analytics Banks

Credit Bureau Banks

Credit Information Market by products (2012, €M, percentage)

394

98

102

634

0

50

100

150

200

250

300

350

400

450

500

550

600

650

2012

Business Information

Real Estate

Rating & Analytics, 40

Credit Bureau

PwC

From 2012 to 2009, Credit Information Market recorded a slightly declining trend with positive growth of Credit Information segment (+2,6%) and negative growth of the Banking segment (-4,4%)


14

Evolution of Credit Information Market (€M, percentage)

Source: Annual reports, Aida, Web, PwC Estimate

CAGR 09-12

-1,6%

-7,4%

-1,0%

+2,6%

-1,0%

-6,1%

255 265 270 275

123 126 123 119

123 134 118 98

41 44

41 40

123 115

110 102

665 684

662 634

0

100

200

300

400

500

600

700

800

2009 2010 2011 2012

BI Corporate BI Banks RE Banks R&S Banks CB Banks

CI Banks

-4,4%

PwC

CI market outlook, both for Corporate and Financial Institutions, will be primarily affected by four key drivers regarding penetration, volume per client, price and mix effect


15

Nu mber of Com panies/

Fin ancial In stitutions

Penetration

Number of Clients

1

Volume per Client

3

Mix Effect

2

Price Effect

4

Average Revenue

per Account (ARPA)

Credit Information

Market

Ma r ket drivers

x

x

• Spen ding per client

Banks Corporate

Banks Corporates

Banks Corporates

Banks Corporates

Ou tlook 13-17

Bu siness Fundamentals

Banks

• Lending stock/new

• Mortgages stock/new

• # Real Estate transactions

Corporate

• Days of payment

• M&A volume

• Lending new

• GDP

• N u mber of active companies

PwC

Overall, Credit Information market for Corporate shows higher potential compared to CI Banks, especially in terms of penetration and possibility of price increase


16

Volume per Client

Mix Effect

Price Effect

Penetration

Banks Corporates

• Cu rrent client base of Bu siness Information pr oducts is still l imited especially among SMEs

(2 012 penetration ~35%)

• Ex pected GDP recovery in n ext years (according to IMF est imates) will likely improv e companies

spending propensity

• Econ om ic recovery w ill a lso improve # of M&A a ct ivities and new lending increasing companies'

need of information

• Im prov ed products' offer and increasing a wa reness a bout the relevance of value added

pr oducts perceived as a KBF

• Poten tial n egative impact from low spending of a dditional new clients

• Lim ited price increase is expected due to the dev elopment/introduction of v alue added

pr oducts

• Pen etration level among Financial In stitutions rea ched a lmost 100% leaving almost n o room

for improv ement

• Fu r thermore, con solidation trend among m ajor Financial In stitutions may lower clients'

pen etration

• Econ omic recov ery followed by an increase in new lending, # of r eal estate transactions and

new m ortgages will likely increase Bank's n eed of Cr edit In formation

• Increasing attention of Ba nks to the entire credit process with the subsequent need of m ore

v a lue a dded information especially for Credit Bu r eau and Rating & A nalytics products

• Hig h pressure on price is expected considering th e low level of Ba nks resources

• Ex pected economic recovery should partially

m itigate this n egative effect

1

3

2

4

Ou tlook 13-17

PwC

Consolidation trend among Financial Institutions and reduction of active companies within the Italian market partially lowered the number of potential customers of CI services…


17

5.316 5.284 5.282 5.276 5.240 5.186

0

1.000

2.000

3.000

4.000

5.000

6.000

2008 2009 2010 2011 2012 2013

Number of Active Companies in Italy (percentage, K units)

799 788

760 740

706 690

34,1 34,0

33,7 33,6

32,9

31,9

30

31

32

33

34

35

600

640

680

720

760

800

2008 2009 2010 2011 2012 2013

Ba

nk

Bra

nc

he

s in

Ita

ly (

K u

nit

s)

Nu

mb

er

of

Ba

nk

s in

Ita

ly (

un

its

)

Number of Banks and Bank Branches in Italy (percentage, units, K units )

Source: Infocamere, Banca d'Italia

CAGR

08-13

-0,5%

CAGR

08-13

-1,3%

-2,9%

PwC

…while GDP and M&A activity positive outlooks will have a favourable impact on Credit Information Corporate market…


18

0,4%

-2,4%

-1,8%

0,7%

1,1%

1,4% 1,4%

-2,5%

-2,0%

-1,5%

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2011 2012 2013 2014E 2015E 2016E 2017E

1.390 1.365 1.375 1.390 1.409 1.429 GDP

(€B)

GDP Growth – Constant prices (percentage)

M&A Transactions (units, percentage) CAGR

11-13

-2,1%

CAGR

14-17

+1,3%

+3,3% +3,5% +1,3% +2,6% +3,1% +1,8% YoY

growth

CAGR

11-13

+3,4%

CAGR

14-17

+2,5%

Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), PwC estimate

329

340

352

357

366

377

384

300

310

320

330

340

350

360

370

380

390

2011 2012 2013 2014E 2015E 2016E 2017E

1.424

PwC

…as the increase in stock lending and residential mortgages will drive Credit Information Banks growth


19

1.510

1.470

1.408 1.414

1.444

1.486

1.530

1.000

1.100

1.200

1.300

1.400

1.500

1.600

2011 2012 2013 2014E 2015E 2016E 2017E

-2,6% -4,3% +0,5% +2,1% +2,9% +2,9% YoY

growth

Lending Stock – Retail & Corporate (€B, percentage)

Residential Mortgages (€B, percentage)

CAGR

11-13

-3,4%

CAGR

14-17

+2,7%

-0,5% -0,5% +4,0% +6,5% +6,2% +5,8% YoY

growth

368 366 364

379

403

428

453

150

200

250

300

350

400

450

500

2011 2012 2013 2014E 2015E 2016E 2017E

CAGR

11-13

-0,5%

CAGR

14-17

+6,2%

Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), PwC estimate

PwC

Credit Information Market growth will be primarily driven by Business Information Corporate segment (CAGR 13-17 +5,7%)


20

CAGR 13-17E

+3,7%

+2,6%

+1,6%

+5,7%

+2,4%

+1,3%

287 303 320 339 359

114 113

115 118

121 91

92 94

97 101

36 37

37 39

40 95

95 97

98 100 623

640 664

692 721

0

100

200

300

400

500

600

700

800

2013 2014E 2015E 2016E 2017E

CI Corporate BI Banks RE Banks R&S Banks CB Banks

CI Banks

Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), AIDA, Financial Reports, PwC estimate

CI Banks +1,9%

Evolution of Credit Information Market (€M, percentage)

PwC

Competitive landscape Section 1.3

21

PwC

Cerved and Crif are the Market leaders in Italy with sales in €300M range…

Section 1.3 – Competitive landscape

22

Sales of Major Players* (2012, €M)

Sources: Corporate Website, Annual Report, AIDA

Note (*): Total Sales embracing both CI, CC and other Businesses

291

197

151

98

54

30 29 23 20 20 10 4

1

88

0

50

100

150

200

250

300

Cerved Crif Prelios Infocamere Prometeia Assicom Ribes REAG Praxi Experian Visura Eagle & Wise Tecnit@lia

Focus on Asset

Management

CI ~25%

of Sales

Focus on both CI

and CC

Experian and

Cerv ed created a

JV to operate

within Credit

Bureau market

(sales €13M)

Focus on

Macroeconomic

Research and

Analysis

Market Leaders

Sales generated

abroad Italy

285

Globa l Bu siness Information Players

• D&B: sold Ita lian operations to Crif in 2009 (a greement to use D&B br and and

commercialize D&B pr oducts) • Equ ifax: sold Italian operations to Experian in

1 994 • Experian: present in Italy since 1992, limited

m arket share. Acquisition of Equ ifax Italia in 1 994. JV with Cerved in Credit Bureau in 2012

PwC

… and presenting a wide/complete portfolio while other players appears to be more focused


23

Cerved

Credit Information Market

Credit Information Ba nks Credit Information

Corporate

Bu siness Information* Bu siness

Information Real Estate

Credit Collection Market

Credit Bu reau

Rating & A nalytics

Banking N PL

Consu mer Finance

Financial Institution Serv icing Corporate

Serv icing

Other

Crif

Prelios

Infocamere

Prometeia

Assicom

Ribes

RAEG

Praxi

Experian

Eagle & Wise

Tecnit@lia

Databank: Marketing

inf ormation

Lince Cerved Cerved Centrale Bilanci

Cerv ed-Experian JV

Cerv ed Credit Management

Finserv ice Cerv ed Credit Management

Cribis D&B

Crif Serv ices

Crif Teleserv ice

Crif Teleserv ice

Marketing Serv ices

Asset Management

Market Statistics

Macroeconomic research

Adv isory

Real Estate Management

Adv isory

Cerv ed-Experian JV

Adv isory, marketing

Intelligence

Prelios Credit Serv icing

Crif Dec. Solutions Crif Spa Crif Spa

Visura Certif ied email

Real Estate Specia lists

Note: (*) Business Information Corporate also include other products like Real Estate VIPO

PwC

Profitability in Credit Information appears mainly driven by experience/scale economies (captured by RMS), presenting a "thin and steep" Normative Band


24

Scale and Profitability of Major Players (2012, €M, percentage)

€30M

Sales

Source: AIDA, Financial Reports, Corporate Website, PwC estimate

Cerved

Crif

Infocamere

Ribes

Assicom

Visura

REAG 4

Prometeia

Eagle & Wise

0%

10%

20%

30%

40%

50%

60%

0,02 0,03 0,06 0,13 0,25 0,50 1,00 2,00

EB

ITD

A

%

Relative Market Share (RMS)

PwC

Over 2009-2012 period, Cerved and Assicom appear as outperformers in terms of Sales growth and Profitability improvement


25

Sales and EBITDA growth of major Players* (2012, percentage)

Sources: AIDA, Financial Reports

Notes (*): Prelios and Tecnit@lia were non included in the analysis because they recorded a negative EBITDA during FY12

€100m

Sales 2012

Cerved

Crif

Infocamere

Assicom

Ribes

REAG 4

Eagle & Wise

Praxi

Prometeia

Experian Holding

Visura

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-20% -10% 0% 10% 20% 30% 40%

CA

GR

09

-12

EB

ITD

A

CAGR 09-12 Sales

Increasing

EBITDA%

Decreasing

EBITDA%

PwC

Industry consolidation in Italy mainly driven by Crif (D&B, Cypress Software System, Recom and Teledata) and Cerved (growth-through-acquisitions), with relevant internationalization process of Crif


26 Source: Public Information, MergerMarket

• 2005: acquisition of CCB - Czech Credit Bureau and SCB - Slovak Credit Bureau

• 2006 - 2009: M&A Activity in Slovakia, Poland, US

• 2009: acquisition of D&B Italy, creation of Cribis D&B distributing D&B branded products and solutions (Business Information, credit management, direct marketing, credit collection, supply management)

• 2010: acquisition of APRO Systems from Equifax. APRO systems is leader of loan origination and account opening in the US

• 2011: acquisition of Cypress Software Systems; the company offers a wide variety of software and services for supporting the automation of Financial Institutions

• 2012: CRIF established a JV with Neal & Massy for offering credit bureau services in Jamaica and Caribbean

• 2014: acquisition of Recom, leader company of Credit Collection in Turkey.

• 2014 : Acquisition of Teledata, Switzerland based credit and Business Information service provider, from Axon Active AG

• 2004: control acquisition of Consit (mortgage and lend register information)

• 2005: acquisition of Databank (firm competitive position and business sector analysis)

• 2005: integration of Pitagora (IT services to control complex structured processes)

• 2008: merge with Lince and Finservice

• 2011: acquisition of Jupiter (non-performing loans) and MF Honyvem (database and Business Information)

• 2012: Joint venture with Experian in Credit Bureau Services (SIC – Sistema di Informazioni Creditizie)

• 2013: Cerved Agrees to acquire Experian Data Services.

• 2013: Acquisition of Tarida (Credit Collection consumer finance) from Gruppo Delta Spa

Cerved

CRIF

PwC

Quite concentrated Supply Structure, with Crif and Cerved covering ~70% of Credit Information Market


27

Market Share of Credit Information (2012, percentage, €M)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012

Cerved

42%

Crif

26%

Infocamere 4%

Ribes 4%

Assicom 3%

Others

21%

€634M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cerved (Lince, Cerved), 54%

Crif (Cribis D&B, Crif Spa), 15%

Infocamere, 7%

Assicom, 4%

Visura, 3%

Ribes, 1%

Others, 16%

Business Information Real Estate Rating &

Analytics

Credit

Bureau

Cerved

(Cerved) 26%

Ribes 21%

Crif

(Crif Services) 16%

REAG 8%

Tecnit@lia 1%

Others 19%

Prelios 4%

Eagle & Wise 4%

Cerv ed (Centrale

Bilanci) 39%

Crif (Crif Decision

Solutions) 36%

Prometeia 19%

Others 5%

Crif (Crif Spa) 76%

Cerved

(JV Experian) 12%

Others 12%

98 40 102 395

PwC

While BI Market value remained almost steady, Real Estate Market dropped (-17,2% from 2011 to 2012) mainly due to Crif negative performance (-3,4pp) with Cerved and Ribes gaining share


28 Source: AIDA, Financial Reports, Corporate Website, PwC estimate

Cerv ed Group (Lince, Cerved)

55%

Cerv ed Group (Lince, Cerved)

54%

Crif (CRIBIS D&B, Crif Spa)

15%

Crif (CRIBIS D&B, Crif Spa)

15%

Inf ocamere 7%

Inf ocamere 7%

Assicom; 4% Assicom; 4%

Visura Spa; 3% Visura Spa; 3% Ribes; 1% Ribes; 1%

Others 17%

Others 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

Real Estate – Market Shares Evolution (percentage, €M)

Cerv ed Group (Cerv ed)

24%

Cerv ed Group (Cerv ed)

26%

Crif (Crif Serv ices)

19%

Crif (Crif Serv ices)

16%

Ribes 19%

Ribes 21%

REAG 4 ; 7% REAG 4 ; 8%

Prelios, 6% Prelios, 4%

Others 19%

Others 19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

118 98

Var. 11-12

+0,0%

-1,5pp

+0,6pp

+2,5pp

-3,4pp

+1,7pp

+0,7pp

-0,6pp

Business Information – Market Shares Evolution (percentage, €M)

393 395

Var. 11-12

-0,3%

+0,5pp

-0,5pp

+0,4pp

-0,4pp

-0,1pp +0,3pp

PwC

Credit Bureau and Rating & Analytics segments are led by Crif (Group "core business"), leveraging on a wide offer portfolio (including IT-based and consulting services) and the Consumer focus


29

Credit Bureau – Market Shares Evolution (percentage, €M)

Crif (Crif Spa) 76%

Crif (Crif Spa) 76%

Cerv ed Group (JV Experian)

12%

Cerv ed Group (JV Experian)

12%

Others 12%

Others 12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

110 102

Var. 11-12

+0,0pp

+0,0pp

-0,0pp

Rating & Analytics – Market Shares Evolution (percentage, €M)

Cerv ed Group (Centrale Bilanci)

42%

Cerv ed Group (Centrale Bilanci)

39%

Crif (Crif Decision

Solutions) 34%

Crif (Crif Decision

Solutions) 36%

Prometeia 19% Prometeia 19%

Others 5% Others 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

41 40

Var. 11-12

+0,0pp

+0,5pp

+2,5pp

-3,0pp


• Initial focus on ECAI

(insourced by Banks)

• Recent launch on new

products (e.g.

Corporate Rating,

Advisory)

PwC

International overview Section 1.4

30

PwC

Information Industry reached 720 billion dollars in global worldwide revenues in 2012. The industry grew in aggregate by 3,4% in 2012 and is forecasted to continue growing at c. 4% (CAGR13-15)

Section 1.4 – International overview

31

Global Information Industry YoY Growth Rate (percentage)

2,2%

-6,4%

2,5%

3,6% 3,4%

4,1%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2008 2009 2010 2011 2012 2013-2015

CAGR

B2B Trade

Publishing 4%

Education &

Human Capital Management

7% Credit &

Financial Information

7%

Education &

Training 9%

HR Information

1%

Legal, tax &

Regulatory 3%

Market & IT

Research 6%

News Providers

& Publishers 11%

Scientific,

Technical & Medical

Information 4%

Search,

Aggregation & Syndication

10%

Yellow pages &

Directories 3%

Consumer

Books 11%

Marketing

Services & Analytics

18%

Others

6%

Global Information Industry (2012, percentage, US$ B)

720 B US$

Global Credit & Financial Information Industry grew by 1,8% (CAGR10-12) and is expected to

grow at 2,2% rate in the next years (CAGR13-15)

Source: Outsell’s Information Industry Database, 2013

PwC

Global Financial and Credit Information market is characterized by an increasing competition, to a different degree for each business lines


32

Competition

• In the pure information segment, local firms face additional competition from consultancies, local analytical firms, and university spinoffs that offer similar services. Internet services as Google and Yahoo offer also business information. Due to the high competition in business information services, the prices have significantly dropped .

• For scoring services, the global competitors are international companies operating through local acquisitions, although their market share is relatively small. Private credit bureaus that offer scoring as an additional service are also considered competitors., as well as new “low-cost” companies with pure online business. These companies have built their business from scratch using advanced IT technology (e.g. CreditSafe). They used to serve a niche market segment that has not been closed to traditional scoring companies, which are offering online services to very small businesses for a comfortable price. Now, they have expanded their business and serve a wider group of clients in different countries. Information that these companies gather is synthetically merged and automatically processed; scoring is derived from pure mathematical/statistical models.

• Play ers that have a CRA licence and offer credit ratings in addition to scorings, face only a limited competition from the big three international rating agencies, as they operate in different market segments (the big three CRAs serve large multinationals, while the others serve mid-caps and large mid-size companies) under different modalities.

Key global Financial and Credit Information Market Trends Relevance Impact

2

5

%!

OK

~

• Creating and delivering software and tools which are tightly integrated with content, and deeply embed the information provider into its customers’ workflow, is the key for publishers in a range of information segments

Increasing

Integration OK

PwC

Price pressure, together with the networked nature of Internet has increased the value of partnerships especially for players that wants to cover wider markets


33

• Heavy price discounting is now a regular feature of the market (mainly within the banking sector)

• Many customers review their suppliers every 1 or 2 years and often change suppliers to obtain a lower price

• Information supplied is perceived as basically the same information from all the providers so price and other services such as good client relationships become more important

Price

2

5

%!

OK

~


• Play ers try to cover wider markets in two ways: (i) by building networks and (ii) by establishing strategic partnerships:

− Networks: several BI & Scoring providers are organised in networks in order to exchange information in an integrated fashion, using explicit identification for each company.

− Scores – which usually differ between BI & Scoring providers in different countries are mapped, so that collaboration in a network allows a member to receive information for a specific enterprise from all member countries in a seamless and comparable fashion. There are currently two big networks in Europe, BigNet and D&B167

− Strategic arrangements and partnerships: for players that have not joined a network, strategic partnerships with similar entities operating in foreign markets are essential and remain the way forward to expand their business in the future.

Networks & Partnerships

2

5

%!

OK

OK

PwC

In few countries, such US and UK, the market is mature and exposed to pricing pressure resulting from new entrants competing with low-price strategies


34

Diversification into

Niches and New

Services

• Credit Information suppliers suffer the explosive growth in online data. New online data mining firms are growing exponentially. These new entrants are offering low-cost access to company financials

• Traditional players are loosing sales since other Business Information companies are offering broader choice of company information: for many end-users (particularly researchers in City institutions) general services such as Alacra, Factiva, LexisNexis are used as the main source of company financial and related information

• Considering distribution channels, larger players (i.e. D&B and Experian) have a direct sales force focused on targeting all large companies and more and more medium sized companies while the online channel is more to be used by smaller businesses spending less

• Larger players have responded to new low-cost entrants by launching their own services for SMEs, (i.e. findoutinfo.com from Equifax, Busibody from Experian, OneSourceExpress UK)


OK

~

2

5

%

!

• Credit Information providers tend to move into new geographic markets through either alliances or acquisitions

• The BI & Scoring industry has seen in the last ten years several mergers between the major competitors. There is a strong ongoing concentration in many Member States, with two or three large companies possessing over 90% of the market share.

Geographical Expansion

~

OK

2

5

%

2

5

%~

PwC

Limited presence of the Top Global Players in the Italian market


35

Sales of Global Players (2012, percentage, US$ M)

Source: Annual Report, company Sec fi lings

Note (1): Year ended 31 March 2013, (2): Year ended 31 December 2012 (3): 30 September 2012, (*) US only

• Experi an has strong positions in each of its main markets. In the US credit information market, there is a benign ol igopoly of Experian, Transunion and Equifax

• In the UK, Experian leads the market, with a significant gap to Equ ifax and CallCredit

4,713

2,160

1,663

1,140 1,099 48%

83%

74% 85%* 87%*

61%*

52%

17%

26%

15% 13%

39%

0

1.000

2.000

3.000

4.000

5.000

Experian Equifax D&B TransUnion Acxiom FICO

Other Regions

North America

2 1

676

1 2 2 3

• Equi fax offers data, scoring, marketing and consu mer direct services. Revenues still come from Consumer Credit in the core US market, and the growth story is about increasing new services (marketing, scoring, etc.) and new geographies.

• D&B offers databases and analytics services, m arketing solutions, but focu ses on the US com m ercial information segment. It also offers bu siness information pu bl ishing.

• D&B has recently sold m any of its international operations to franchisees bu t will continue to own and operate businesses in selected markets including the US and UK

• TransUnion maintains one of the largest databases of consu mer credit information for the United States, Pu erto Rico, the US V irgin Islands and Canada

• Acxi om is a provider of marketing services to bu sinesses based on a database of consumer information

• It also provides analytical tools for processing this data, ru nning digital m arketing campaigns as wel l as traditional direct mail services

• FICO i s the leading global provider of scoring solutions in the N orth American market.

• It is focu sed on the US (70% of revenues) and financial services (65% of revenues)

Globa l Bu siness Information Players in Italy

• D&B: sold Ita lian operations to Crif in 2009 (a greement to use D&B br and and commercialize

D&B pr oducts) • Equ ifax: sold Italian operations to Ex perian in

1 994 • Experian: present in Italy since 1992, limited

m arket share. Acquisition of Equ ifax Italia in 1994. JV w ith Cerved in Credit Bureau in 2012

PwC

Credit collection Section 2

36

PwC

Executive summary – Market assessment

Section 2 – Credit collection

Market Assessment

• Credit Collection market refers to the management and collection of non performing receivables of Corporate and Financial Institutions, both consumer finance and banking NPLs, through judicial and extra - judicial procedures

• Main market drivers are:

− Increasing demand from Corporates and Banks to outsource credit collection activities

− Growing trend of the number of transfer agreements of NPLs from Banks to CC Agencies

• Credit Collection market experienced a positive growth in the last years (CAGR 09-12 +8,8%) in all market Segments: Corporate, Consumer Finance and Banking NPLs

• CC market is expected to record a relevant growth in the future (CAGR 13E-17E + 12,6%) driven by:

− Acquisition of new clients resulting in higher penetration in the Corporate segment

− Increase of volume per client mainly due to the growth of the amount of receivables handled by Third Party Agencies

− Price Increase given a higher bargaining power of TP Collectors due to NPL stock increase and saturation of Bank internal staff

OK Growing use of external agencies for credit collection procedures

OK CC market recorded a positive trend over the period 2009-2012 …

OK … also for the future trend growth is expected over performing historical rate thanks to the increase of volume per client

37

PwC

Executive Summary – Competitive Landscape

Section 2 – Credit collection

38

Few Specialised Collecting Agencies competing with big Banking Groups … … benefitting from progressive NPL outsourcing to Third Parties of Financial Institutions

~

Competitive Landscape

NPL Specialist

• Banking NPLs segment is characterised by the presence of few "not captive" NPLs Servicers competing with the "captive" Credit Management Units of Banking Groups created to hold non performing assets ("Bad Banks") and the internal Credit Division of Banking Groups

• Italfondiario is the market leader, with 35% of market and 34,2 €B of Asset Under Management in 2012 followed by Guber (21%), Cerved Credit Management (11%) and Prelios (10%)

Debt Collection Agencies

• Credit Collection market for Corporates and Consumer Finance is highly fragmented with a "long tail" of small companies with potential for consolidation and without a clear market leader

• In Corporate Servicing, Maran and Guber represents the main Players with 12% of market share each.

− Other relevant Players are: Euro Service, Assicom, Cerved (Finservice) and Recus Italia.

• In Consumer Finance Servicing, the major Players are Creditech (7% of MS), Maran (7%) and Cribis Teleservice (4%).

− Cerved entered the CC for Consumer Finance market in 2013 with the acquisition of Tarida (4% of MS in 2012)

Several medium/small Player competing in the Corporate and Consumer Finance segments … … resulting in highly fragmented industries with consolidation opportunities

~

PwC

Market assessment Section 2.1

39

PwC

Credit Collection Market refers to services of management and collection of non performing credits for Corporate, Banks and Consumer Finance operators


40

Corporate Servicing

Financial Institution Servicing

Consumer Finance Banking NPLs

Corporate Utilities & Telco

Small Tickets* "Bad Banks" Captive

Managed Internally

NPL Servicers

Corporate receivables collection and management services

Credit management in retail channel and collection for utilities

Description

• High value + low volume of receivables

• Flat fee + commission

• Labour intensive

• High volume + small value of receivables

• Commission based

• Labour Intensive

Business Model

Main operators

• Finservice • Assicom • Intrum Justitia • Cribis Teleservice

• Cerved Credit Management

• Geri HDP • Maran • Fire • AT Credit

Management

Credit management and collection for consumer finance institutions

Credit management units of Banking groups created to hold non-performing assets

• High volume + small value of receivables

• Labour Intensive

• Maran • Cribis Teleservice • Creditech • AT Credit

Management

• Unicredit Credit Management Bank

• BCC Gestione Crediti

• Intesa Sanpaolo • UBI • BPER • Veneto Banca • Cariparma • Carige • Banco Popolare • …

• Italfondiario • Guber

• Cerved Credit

Management

• Prelios Credit Serv icing

• FBS

• CAF

Internal credit collection division of Banking groups

• NPL management and collection

• NPL acquisition and securitisation

• Low volume + high value of receivables

Note (*) Amount below €10K

PwC

Credit Collection could be performed through a Judicial or Extra- Judicial procedure on the basis of the typology of credit to recover


41

Order Execution

Issue of Invoice

Expired Invoice/ Bad Debt

CC Corporate*

Performing Credit

Past Due

Stand- still

NPL

• Starting of a legal action if th ere is a t itle which enables

th e creditor to initiate ex ecution of proceedings

• Leg a l assistance

• Con stant monitoring of the ca ses

Note (*) Judicial Recovery process is progressively increasing also in the Corporate and Consumer Finance sectors especially trough identified actions with low

cost for the collectors

CC Banks

Credit Value Chain Collection Process

Extra Judicial Recovery

Judicial Recovery

• Telephone or field collection of ou tstanding credits

• Dem and letter

• Per sonalised procedures for different category of credits

• In cr easing deterrence a ct ivities

• Ev a luation of the convenience

to sta rt a legal action

Relevance High

Low

PwC

Major market trend in CC include outsourcing/transfer of receivables, shifting to Judicial services and Collector professionalisation


42

Impact Relevance

Risk Analysis Trend Description

Note: (*) NCP = Negoziatore Crediti Problematici, OTC = Operatore Tutela del Credito issued by UNIREC/EBITEC (**)TULPS = Testo Unico delle Leggi di Pubblica Sicurezza (***) TUB = Testo Unico Bancario

• Increasing demand from Corporates and Banks to outsource Credit Collection activities

• Credit Collection suppliers covering entire supply chain (extra- judicial, per-judicial and judicial)

OK Outsourcing

of Credit Collection

• Tighter professional rules (e.g. ethics, reputation) to obtain/maintain Collector License/Certification (e.g. NCP/OTC*):

- respect of Privacy Law

- training and “professional credits”

- Obtain a Licence to operate as a credit collection agency (Art. 115 TULS** ) and/or the Licence of financial intermediaries to operate in the transfer of receivable (Art 106/107 TUB***)

• Marginalisation (and potential exit from the market) of non-compliant Collects

OK

Licence/ Certification of Collectors

• Offer evolution with sophistication of collection techniques/processes according to debtor category (e.g. Corporate vs. Banks, Industrial Sector, Geographical Presence)

• NPL Specialists are 100% focused in the recovery of secured and unsecured non performing loan

Specialization of CC Offer

2

5

%

2

5

%

• Increasing demand for Judicial Services (vs. Extra-Judicial) from Corporate/SME purchasers aiming to recover the outstanding debt despite the risk to lose the debtor as client

Demand for Judicial Services

OK

~

Transfer of Receivables

• Increasing trend of the number of transfer agreements of NPL from Banks/Financial Institutions to credit collection agencies

OK

C / B

B

C / B

C / B

C

B = Ba n ks C = Cor porate

PwC

Although in September 2013 the gross NPL stock reached the highest recorded level of €145 B with a net NPL ratio of 4.5% …


43 Source: PwC analysis on ABI and Bank of Italy Data –as per ABI Monthly Outlook, Feb 2014

42 59

78

107 125

145

31

49

53

58

76

91

1,4%

2,3%

2,8%

3,5%

3,8%

4,5%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 Q3 2013

Gross NPL stock Watch list Restructured Past due Net NPLs / Loans to customers (%)

Evolution of Doubtful Loans and net NPL Ratio in Italy (€B, percentage)

PwC

… the asset quality assessment of 15 Italian Banks still showed a low NPL coverage ratio (51,8%)


44 Source: PwC analysis on September 30, 2013 B/S, with the exception of Cariparma and BNL which data refer to June 30, 2013

Bubble size:

Gross NPL value

UCG

ISP

BMPS

UBI

BP

Iccrea BPER Mediobanca

Veneto Banca

BPM

BP Vicenza

Carige

CreVal BP Sondrio

CREDEM

30%

35%

40%

45%

50%

55%

60%

65%

70%

0% 1% 2% 3% 4% 5% 6% 7% 8%

Net NPLs / Loans to Customers

NP

L C

ove

rage R

atio

T op 15 Banking Group's NPL analysis (2013, percentage)

Avg

NPL Ratio

Avg

Coverage

Ratio

PwC

Increase of Debt handled by TP Collectors in the last 5 years (CAGR 08-12 +10,7% in volume, +10,0% in value), with reduction of Recovery Rate and increase of Unit File Value (€1,1/1,2K per file)


45

Debt Handled by Third Party Collectors (Flow) (€B, percentage)

Source: UNIREC (Unione Nazionale Imprese a Tutela del Credito)

19,5

29,2

30,9

37,8

42,9

47,2

0

5

10

15

20

25

30

35

40

45

50

2008 2009 2010 2011 2012 2013E

Files Handled by Third Party Collectors (Flow) (M Files, percentage)

23,2

27,6

31,4 32,8

34,7 37,2

0

10

20

30

40

2008 2009 2010 2011 2012 2013E

Unit Value of File Handled by Third Party Collectors (Flow) (€ per File)

844

1.061 983

1.152 1.237 1.256

0

200

400

600

800

1.000

1.200

1.400

2008 2009 2010 2011 2012 2013E

Recovery

Rate% 51% 46% 53% 53% 52%

Recovery Rate%

29% 27% 26% 24% 22%

CAGR

08-12

21,7%

CAGR

08-12

10,7%

CAGR

08-12

10,0%

19%

44%

Recovery

Rate% 56% 59% 49% 45% 42% 44%

PwC

In Credit Collection business, Collection Effectiveness and the offer of Judicial and Extra Judicial services jointly appears to be the critical KBFs


46

5,0 5,0

4,5

2,0 2,0

1,0

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

ResultOn/Off

RecoveryRate

FullRange

Extra-Jud/Jud

BundlleCredit

Info/Collection

Pricing Brand

Key Buying Factor of Clients (index 1-5)

“We need a full range of services from the same supplier, from extra-judicial to judicial phases, to guarantee the best practices management and constantly monitor the progress of each position”

Admin & Finance Chief – Bottling Water Co

" The majority of the players in Credit Collection market, such as Italfondiario, Guber, Jupiter, CAF, Prelios, Fire, Maran and Assicom, guarantee each phases of the recovery procedure with an average of 20-40% of receivables managed through Extra Judicial process and the 60-80% managed through Judicial Process"

Industry Expert

Source: Interviews to Industry experts and Corporate Clients

PwC

Use of external Credit Collection Agency in UK is significantly higher than in the other European Countries, with a growing adoption


47

UK Credit Collection Market

• The most mature market in Europe.

• High level of outsourcing – 48% of credit

collected from external Debt Collection Agencies (DCAs) and a growing trend observed compared with the past.

• 500 Credit Collection Agencies on the market. Of the UK companies using their assistance, 63%

cooperated just with one, while the rest used 2 or more simultaneously.

• Key Players: - 1st Credit, €34,2 m revenue - Lowell Group, €101,1 m

- Robinson Way, €30,7 m - Moorcroft, €46,4 m - Wescot, €41,3 m - Aktiv Kapital, €21,0 m

• Key Buying Factors: ‘Success rate’ the most important followed with significant gap by ‘Price’ and ‘Reputation’

47%

50%

57%

31%

48%

33%

47%

37%

42%

21% 19%

15%

0%

10%

20%

30%

40%

50%

60%

Italy UK Europe

Used internal resources for collecting Used external DCA*

Used law office/attorney Sold debts

How companies have dealt with overdue invoices (2013, percentage)

Source: Atradius

Note: DCA = Debt Collection Agency

PwC

NPL Special Servicers apply a fixed fee per position and a variable fee from depending on the type of credit recovered instead External Recovery agencies apply different fees on the basis of the phases of the recovery procedure


48

4%

7%

8%

10%

0%

2%

4%

6%

8%

10%

12%

Secured Unsecured

Fees for NPL Special Service (2013, percentage, €/file)

Fixed Fees (€/file)

30-80 € 30-80 €

5%

7%

16%

7%

10%

22%

0%

5%

10%

15%

20%

25%

Mailing / PhoneCollection

Home collection Further HomeCollection

Fees for Corporate % Consumer Finance External Recovery agencies (2013, percentage)

PwC

Market figures Section 2.2

49

PwC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 20% 40% 60% 80% 100%

Financial Institutions represent the main clients for Credit Collection services especially in the Consumer Finance segment while Corporates account only for c. 20% of the market


50

Consumer Finance

" Bad Banks" Captive

NPL Servicer

Corporate Servicing Financial Institutions Servicing

Consumer Finance

Banking NPLs

180

Corporate

310 253 CC Market: €744M

Credit Collection Market (2011, €M, percentage)

Source: Annual Reports, UNIREC (Unione Nazionale Imprese a Tutela del Credito), PwC estimate

CC

Corporate Reference Market: €612M

PwC

Over the period 2009-2012, the Credit collection Market experienced a positive growth (CAGR 09-12 +8,8%) especially in the Banking – NPL sector


51

152 164 180 192

256 276

311 323

100

107

121

133

0

100

200

300

400

500

600

700

2009 2010 2011 2012

CC Corporate CC Banks - Consumer Finance CC Banks - NPL

Evolution of Credit Collection Market (€M, percentage)

508

547

612

648

CAGR 09-12

+ 8,8%

+ 10,1%

+ 8,0%

+ 8,1%

YoY

Growth +7,7% +11,9% +5,9%

Source: UNIREC (Unione Nazionale Imprese a Tutela del Credito), PwC Estimate

CC Banks +8,6%

PwC

CC market outlook will be primarily affected by the penetration of new Corporate clients, the increase of volume per client and a positive price effect


52

Nu mber of Com panies/

Fin ancial In stitutions Number of

Clients

Bu siness Fundamentals

Banks

• N PLs stock/new

• Share of Debt handled by Third Parties/ AUM

• Recovery Rate

• GDP

Corporate

• Days of payments

• Bad Debts stock

• Share of Debt handled by Third Parties/ AUM

• GDP

Penetration

1

Mix Effect

2

Volume per Client

3

Price Effect

4

Average Revenue

per Account (ARPA)

Credit Collection

Market

Ma r ket drivers

x

x

• Spen ding per client

Banks Corporate

Banks Corporate

Banks Corporate

Banks Corporate

Ou tlook 13-17

PwC

Major drivers for future evolution of Credit Collection Market will be the increase of the Volume per Clients primarily thanks to the growth of the percentage of credit outsourced


53

Mix Effect

Volume per

Client

Price Effect

Penetration

Banks Corporate

• Mix of pr oducts offered in the CC market a lready m eets the needs of the Banking sector

• No increase in demand for more value a dded

products is expected considering the current level of Ba n k resources

• No m ix effect is expected also considering that no v alue a dded products will be introduced in the

pr oduct offering for CC market

• Use of ex ternal Credit Collection agency in Italy is st ill limited with r espect of other EU Countries within

th e SMEs segments (2012 penetration ~28%)

• Con sidering that Italian market is mainly based on SMEs, big r oom of improvement still exist

• Pen etration level among Financial In stitutions rea ched a lmost 100% leaving almost n o room

for improv ement

• Ex pected growth of the percentage of Credit Collection outsourced will be the main driver of the

in crease in the amount of receivables managed by CC A g ency

• Th is positive effects will be mitigated by the decrease

of th e day of payments and the allowance for doubtful a ccounts linked to the economic recovery

• Growt h of NPLs stock and the recovery rate for ecasted for the next years will increase the

u n derlying market for Credit Collection

• Ex pected growth of the percentage of NPLs h a ndled by third parties in next y ears will also

in crease the amount of receivables managed by CC A g ency

1

2

3

4 • Lim ited Price Increase is expected due to

in creasing stock of A UM (asset under management )

to be managed in a context of limited capacity of the ex isting players in the markets

• Lim ited Price Increase is expected due to in creasing stock of A UM (asset under management )

to be managed in a context of limited capacity of the ex isting players in the markets

Ou tlook 13-17

PwC

Strong increase in NPLs and in Stock of Debts handled by third parties recorded in the last years will continue also in the future but with lower growth rate


54

107

125

153

173

190

204

216

50

70

90

110

130

150

170

190

210

230

2011 2012 2013E 2014E 2015E 2016E 2017E

Evolution of NPLs (€B, percentage) CAGR

11-13

+ 19,4%

CAGR

13-17

+9,1%

YoY

Growth +16,8% +22,1% +13,1% +9,9% +7,3% +6,3%

Source: Prometeia, Unirec, PwC estimate

37,8

42,9

47,2

52,0

55,9

58,8

61,4

20

25

30

35

40

45

50

55

60

65

2011 2012 2013 2014E 2015E 2016E 2017E

Evolution of Debt Handled by Third Parties (€B, percentage) CAGR

11-13

+11,7%

CAGR

13-17

+6,8%

YoY

Growth +13,5% +10,0% +10,2% +7,5% +5,3% +4,5%

Note(*) Data includes both Banks NPlL and Corporate Bad Debts. The analysis refers only to

CC servicers associate to Unirec ( 200 companies covering the 87% of Italian Market)

PwC

Economic recovery will bring to a decrease in the amount of allowance for doubtful accounts and the days of payments between Corporates


55

8,6

8,9 8,9

8,6

8,3

7,9

7,6

3

4

5

6

7

8

9

10

2011 2012 2013E 2014E 2015E 2016E 2017E

Evolution of Allowance for Doubtful Accounts (€B, percentage)

83,3 85,5

89,2 87,9

86,1

83,8

81,5

40

50

60

70

80

90

100

2011 2012 2013 2014E 2015E 2016E 2017E

Evolution of Days of Payment (Day s, percentage) CAGR

11-13

+ 1,8%

CAGR

13-17

-4,0%

CAGR

11-13

+3,5%

CAGR

13-17

-2,2%

YoY

Growth +3,2% +0,4% -3,2% -4,1% -4,4% -4,2%

YoY

Growth +2,6% +4,3% -1,4% -2,1% -2,7% -2,7%

Source: Cerved Group, Mediobanca, PwC estimate

PwC

Credit Collection Market is expected to grow double digit (CAGR 13-17 +12,6%) in both Corporate and Banking segments aligned to historical growth (CAGR 09-12 +8,8%)


56

218 248 273 296 318

380

451

515 575

633 152

183

208

233

256

0

200

400

600

800

1.000

1.200

1.400

2013 2014 2015 2016 2017

CC Corporate CC Banks - Consumer Finance CC Banks - NPL

Evolution of Credit Collection Market (€M, percentage)

750

882

CAGR 13E-17E

+ 12,6%

+ 13,9%

+ 13,6%

+ 9,9%

1103

Sources: PwC estimate

996

1.206

CC Banks + 13,7%

PwC

Competitive Landscape Section 2.3

57

PwC

Supply structure include two type of players: NPL Specialists covering NPLs only (Financial Intermediaries ex Art. 106/107 TUB) and Debt Collection

Agencies covering both Corporate and Consumer Finance services

Section 2.3 – Competitive Landscape

58

Credit Information Market

Credit Information Ba nks Credit Information

Corporate

Bu siness Information* Bu siness

Information Real Estate

Cerved

Credit Collection Market

Credit Bu reau

Rating & A nalytics

Consu mer Finance

Banking N PL

Fin ancial In stitution Serv icing Corporate

Serv icing

Other

Crif

Fire

Italfondiario

Guber

Commercial Inf ormation

Assicom

Creditech Adv isory

Prelios Asset Management

Euroservice

Assets Remarketing

Databank: Marketing

inf ormation Lince Cerved Cerved

Centrale Bilanci

Cerv ed-Experian JV

Cerv ed Credit Management

Finserv ice Cerv ed Credit Management

Cribis D&B

Crif Serv ices

Crif Teleserv ice

Crif Teleserv ice

Marketing Serv ices

Crif Decision

Solutions

Crif Spa Crif Spa

Maran Assets remarketing

AT Credit Management

Adv isory

GeRi

Debt Collection A gencies (DCA s)

Prelios Credit Serv icing

NPL Specia lists

Note: (*) Business Information Corporate also include other products like Real Estate VIPO

PwC

Italfondiario

Cerved

Fire

Guber

Maran

GeRi

Creditech

Crif

Euro Service

Recus Italia

Prelios Credit

Servicing

Assicom

AT Credit

Management

CSS

Intrum Justitia

Archon

Group Italia

FBS CAF

-5%

0%

5%

10%

15%

20%

25%

30%

0,06 0,13 0,25 0,50 1,00

EB

ITD

A%

Relative Market Share (RMS)

Profitability in Credit Collection appears partially driven by experience/ scale economies (captured by RMS), presenting a "large and flat" Normative Band and several Players over-/under-performing the average


59

Scale and profitability of Major Players (2012, €M, percentage)

€10M Sales/

Intermediation Margin

Sources: PwC estimate, Aida, Annual report

PwC

Fire and Maran are the main players in the Credit Collection market in Italy; the market is characterised by a number of small companies with potential for consolidation


60

Sales of major Players (2012, €M)

36 36

30

25 23

18 17 15 15 15 14

12 11 9

0

5

10

15

20

25

30

35

40

Fire Maran Assicom GeRiGestione

Risparmio

Creditech AT CreditManagement

CribisTeleservice

(Crif)

EuroService

CSS RecusItalia

Jupiter(Cerved)*

Tarida(Cerved)

Finservice(Cerved)

IntrumJustitia

Focus both on

Credit Information /

Credit Collection

Sources: Corporate website, Annual Report, press releases, AIDA

Note (*): Jupiter's Sales expected to increase in the next years thanks to the acquisition of a portfolio of receivables (~5 €B) from Credit Agricole previously managed by Prelios

Acquired by

Cerved Group in

2013

Cerved Credit

Management

9,5 €B of Assets

Under Management

in 2013

DCA

PwC

Increase of sales recorded by the major player in CC Corporate in the last three years is positively correlated with an improvement of profitability


61

EBITDA and Sales growth of major Players (2009-2012, percentage, €M)

Note:(*) Creditech EBITDA refer to 2011-2012;

€10M

Sales 2012

Sources: website, Annual Report, press releases, AIDA

Fire

Maran

Assicom

GeRi

Creditech

AT Credit Management

Cribis Teleservice (Crif)

Euro Service

CSS

Recus Italia

Finservice (Cerved)

Intrum Justitia

Tarida (Cerved)

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

EB

ITD

A C

AG

R 0

9-1

2

Sales CAGR 09-12

DCA

PwC

Credit Collection market for Corporates and Consumer Finance is highly fragmented and characterized by a large product offering in both Judicial and Extra–judicial services


62

Fire

Maran

Cribis

Teleservice

AT Credit

Management

Finservice

Intrum Justitia

• Focus on extra–judicial credit collection for Corporate and consumer finance Financial Institutions

• Business Line: Telecommunication, Retail, Utilities, Public Administration, Banking (Pre and Post write-off) and credits related to purchase or securitisation operations

• Part of Crif Group

• Focus on judicial and extra – judicial recovery of consumer finance receivables

• Full range of services for the outsourced management of each stage of credit collection for Corporates, Insurances and Public Administration

• Focus on extra – judicial recovery for Corporate through the services of monitoring of invoices and phone collection

• Judicial recovery services for Corporate and Financial Institutions

• Part of Cerved Group

• Focus on collection of outstanding payments for Corporates

• Extra – judicial recovery consist of phone collection and legal assistance in connection with credit collection procedure

• Focus on credit collection, business and individuals

• Oriented to small medium enterprise

• A wide range of online services in the portal “Intrum Justitia”

• Serv ices: extra – judicial recovery, legal services, Commercial Information and Car repossession

• Main Clients: Consumer Finance & Factoring, Banks, Telecommunications, Utilities, PA and Leasing & Renting Agency

Sources: website, Annual Report, press releases

DCA

PwC

Italian Credit Collection market for NPL Specialist is characterised by few large provider; Italfondiario and Guber represent the two mayor players in terms of Intermediation Margin


63

Intermediation Margin* of major Players (2012, €M)

47,2

36,7

14,7

11,6

8,4

4,3

0,9

0

5

10

15

20

25

30

35

40

45

50

Italfondiario Guber Prelios Credit

Servicing

SGC - Archon

Group Italia

FBS CAF Società Italiana

Gestione Crediti

Note (*): Intermediation Margin = Income from Net Fee & Commission Income + Income from Financial Services net interest incom e and other financial items

(**) 2013 Figures

NPL Specialist

GBV AUM** (€B)

34,2 2,8 7,7 3,6 2,1 2,3 na

PwC

Over the period 2009-2012 Guber recorded the best performance both in terms of EBITDA and Intermediation Margin with respect to the other major players in the NPL's Credit Collection market


64

Operating Profit and Intermediation Margin Growth of Major Players (2009-2012, percentage, €M)

€10M Intermediation

Margin 2012

Sources: website, Annual Report, press releases, AIDA

NPL Specialist

Note (*): Operating Profit = Intermediation Margin – Value Adjustment of Financial Assets – Administrative Expenses – Amortization & Depreciation

Italfondiario

Prelios Credit

Servicing

Guber

SGC –

Archon Group Italia

FBS CAF

Società Italiana

Gestione Crediti

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-60% -40% -20% 0% 20% 40% 60% 80%

Op

era

tin

g P

rofi

t %

09-1

2

Intermediaton Margin CAGR 09-12

PwC

Credit Collection market in Banking sector is characterised by few players with standardised services


65 Sources: website, Annual Report, press releases

Italfondiario

Guber

Prelios Credit Servicing

Cerved Credit Management

• Focus on extra–judicial and judicial credit collection of secured and unsecured NPLs

• Remarketing of Real Estate assets as collateral for loans

• Services of securitisation of receivables

• Focus on management and collection of portfolios of secured NPLs, mainly mortgage, through judicial and extra - judicial procedures

• Main clients: SPV and Banks

• Focus on credit management & workout of residential and commercial mortgage and small business and Corporate loans

• Judicial and extra – judicial procedures (mainly low cost legal workout)

• Credit valuation

• Real Estate and Goods & Equipment Remarketing

• Focused on credit management and credit collection of secured and unsecured NPLs coming from Banks and Financial Institutions

• Financial Intermediary enabled to purchase non performing receivables (Art. 106 TUB)

NPL Specialist

PwC

Corporate and Consumer Finance segments appears fragmented, while Banking NPL segment is almost concentrated (C4 = 78%)


66

193

323

133

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fire 12%

GeRi 12%

Euro Serv ice 8%

Assicom 7%

Cerv ed (Finservice) 6%

Recus Italia 5%

Intrum Justitia 4%

Maran 3%

AT credit management 3%

Crif (Cribis Teleservice) 2%

Others 40%

Creditech 7%

Maran 7%

Crif (Cribis teleservice) 4%

Cerv ed (CCM) 4%

Fire 3%

CSS 3%

Italf ondiario 35%

Guber 21%

Cerv ed (CCM) 11%

Prelios Credit Servicing 11%

Archon Group Italia 6%

FBS 4%

CAF 3%

Others 11%

Others 67%

Italf ondiario 7%

Cerv ed 6%

Fire 5%

Guber 4%

Maran 4%

GeRi 4%

Others 66%

Creditech 4%

Market Share of Credit Collection (2012 percentage, €M)

€648M

Consumer Finance Banking NPLs Corporate CC Market


PwC

Credit Collection market for Corporate is characterised by a large number of small companies accounting for 40% of the market


67

Fire 12%

Fire 12%

GeRi 12% GeRi 12%

Euro Serv ice 9%

Euro Serv ice 8%

Assicom 6%

Assicom 7%

Cerv ed (Finservice) 6 %

Cerv ed (Finservice) 6 %

Recus Italia 5% Recus Italia 5%

Others 40%

Others 40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

Cribis Teleservice 2%

AT credit Management 3%

Maran 3%

Intrum Justitia 4%

180 193


AT credit Management 3%

Maran 4%

Intrum Justitia 4%

Credit Collection Corporate – Market Share Evolution (percentage, €M)


+ 0,2 pp

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- 0,2 pp

-0,5 pp

+0,5 pp

+ 0,1 pp

+ 0,0 pp

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- 0,6 pp

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Var 11-12

PwC

Credit Collection market for Consumer Finance is highly fragmented with the Top 10 players representing almost the 45% of the market


68

311 323

Creditech 7%

Creditech 7%

Maran 8%

Maran 7%



Cerv ed (CCM) 5%

Cerv ed (CCM) 4%

Fire 3% Fire 3%

CSS 3% CSS 3%

Others 65%

Others 67%

2011 2012

10%

20%

30%

40%

50%

100%

Intrum Justitia 1%

GeRi 1%

AT Credit Management 2%

Recus Italia 2%

Intrum Justitia 1%

GeRi 1%

AT Credit Management 1%

Recus Italia 2%

Credit Collection Consumer Finance – Market Share Evolution (percentage, €M) Var

11-12


+ 2,1 pp

+ 0,3 pp

- 1,3 pp

+ 0,5 pp

- 1,9 pp

+ 0,2 pp

- 0,2 pp

+0,2 pp

- 0,1 pp

+ 0,0 pp

+0,0 pp

PwC

Credit Collection market for Financial Institutions NPLs is consolidated around few large operators with the top 5 players accounting for more than 80% of market


69

Italf ondiario 42%

Italf ondiario 35%

Guber 21%

Guber 21%

Cerv ed (CCM) 3%

Cerv ed (CCM) 11%

Prelios credit Servicing 9%

Prelios credit Servicing 10%

Archon 8% Archon 6%

FBS 4% FBS 4%

Other 10%

Other 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012

121 133

Società Italiana

Gestione Crediti 2%

CAF 1%

Società Italiana

Gestione Crediti 1%

CAF 3%

Credit Collection Banks– Market Share Evolution (percentage, €M)

Var 11-12


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- 0,2 pp

+ 1,5 pp - 0,8 pp

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