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Cabot Credit Management Investor Presentation September 2012 Disclaimer This document and its contents are confidential and shall be used by the recipient for the sole purpose of evaluating the transaction contemplated herein. In addition, this document may not be forwarded, reproduced, redistributed, published or passed on to any other person, directly or indirectly, in whole or in part, for any purpose. If this presentation has been received in error it must be returned immediately to Cabot Credit Management Limited (the “Company” and, together with its subsidiaries, “CCM”). This document is being presented solely for informational purposes. In addition, no representation or warranty, express or implied, is or will be made in relation to, and no responsibility is or will be accepted by the Company, J.P. Morgan Securities Ltd. or any other initial purchaser or any of their respective affiliates, advisors or representatives (together, the “Parties”) as to the fairness, correctness, accuracy or completeness of the information or opinions contained in this document, and nothing in this document shall be deemed to constitute such a representation or warranty. None of the Parties or their respective shareholders, agents, directors, partners and employees accept any liability whatsoever (in negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection therewith and no reliance should be placed on the information or statements made herein. The information contained in this document is provided as at the date of this document and is subject to change without notice. notice This document does not constitute or form part of and should not be construed as an offer or invitation for the sale or subscription of any securities of CCM, and neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. The information contained herein shall be superseded in its entirety in the event that the Company makes an offer or invitation for the sale or subscription of any securities of CCM by way of an offering memorandum. This presentation does not purport to be all-inclusive or to contain all the information that a person considering the purchase of securities may require to make a full analysis of the matters referred to herein. Each recipient of this presentation must make its own independent investigation and analysis of the securities and its own determination of the suitability of any investment, and seek advice from its own legal, accounting and tax advisers. advisers This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation of such jurisdiction or which would require any registration or licensing within such jurisdiction. The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America, Canada, Japan, Australia, France or Italy. Any failure to comply with these restrictions may constitute a violation of the laws of other jurisdictions. This presentation must not be acted on or relied on by persons who are not eligible to invest in the securities. Any investment or investment activity to which this presentation relates is available only to persons eligible to invest in the securities and will be engaged in only with such persons. The information contained in this presentation has not been subject to any independent audit or review. A significant portion of the information contained in this document, including all market data and trend information, is based on estimates or expectations of the Company, and there can be no assurance that these estimates or expectations are or will prove to be accurate. In addition, past performance of the Company is not indicative of future performance. The future performance of the Company will depend on numerous factors which are subject to uncertainty. Certain statements contained in this document that are not statements of historical fact, including, without limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “expects,” “aims,” “intends,” “may,” “anticipates,” “would,” “could” or similar expressions or the negative thereof, constitute forward-looking statements, notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forwardlooking statements. Examples of forward-looking statements include, but are not limited to: (i) statements about the benefits of any contemplated offering of securities, including future financial and operating results; (ii) statements of strategic objectives, business prospects, future financial condition, budgets, projected levels of production, projected costs and projected levels of revenues and profits of the Company or its management or board of directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and outside of the control of the management of the Company. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters and attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above. Forward-looking statements speak only as of the date on which such statements are made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated u a c pa ed e events. e s The presentation and the information contained herein are not an offer of securities for sale in the United States and may not be viewed by persons within the United States or transmitted to U.S. persons (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) except to “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act) (“QIBs”)). The securities described herein have not been and will not be registered under the U.S. Securities Act, or any state securities laws, and, in the event that the Company determines to make an offer or invitation for the sale or subscription of any securities of CCM by way of an Offering Memorandum, may not be offered or sold in the United States except to QIBs in reliance on Rule 144A or pursuant to another exemption from, or transaction not subject to, the registration requirements of the U.S. Securities Act. presentation is onlyy directed at p persons who ((i)) are outside the United Kingdom g or ((ii)) have p professional experience p in matters relating g to investments ((being g investment p professionals falling g within Article 19(5) ( ) This p of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, (the “Financial Promotion Order”)); (iii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Promotion Order (all such persons together being referred to as “relevant persons”); or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This presentation is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 3 Offering Summary Amount £265m (GBP only) Issue Senior Secured Notes Ranking Pari Passu with all present and future senior secured indebtedness of the Issuer Issue Ratings BB/B1 (S&P/Moody’s) Maturity 7 years Call protection NC 3, 35% equity claw-back, Gilts+50 bps make whole during non-call period S Security i Secured S db by a fifirst-ranking ki lilien over allll shares h and d substantially b i ll allll material i l assets off the h IIssuer and d the h Guarantors. Security to be shared with Super Senior Secured RCF Use of proceeds Repayment of the Existing Senior Facilities Agreement and (part) repayment of Shareholder Loans Ch Change off control t l I Investor t putt @ 101 % ((subject bj t tto lleverage ttestt – no CoC C C if LTV<50% prior i tto 18 months th ffrom iissue d date) t ) Key covenants Incurrence covenants customary to HY offering; basket for super senior secured debt is the higher of £50m or 10% of ERC Distribution RegS/144A (no registration rights) 4 Transaction Overview Proposed refinancing transaction Sources & uses Sources Notes offered hereby £m - Issue £265m Senior Secured bond 265.0 - Refinance existing banking facility and distribution to CCM to allow partial repayment of Shareholder Loan Notes Total sources Uses R Repayment t off nett senior i facility f ilit outstanding t t di 265.0 £m - £50m revolving Credit Facility - Provides incremental liquidity and financial flexibility to 160 9 160.9 Fees 14.1 Repayment of shareholder loans 90.0 Total uses New revolving Credit Facility (RCF) 265.0 acquire portfolios Rationale for refinancing - Longer term financing – more appropriate given longer term nature of the assets - Additional operational flexibility - Appropriately leveraged business 5 Transaction Overview (cont’d) Illustrative debt to ERC analysis (£m) Pro forma capitalization table as at 30-Jun-12 £m x Adj. EBITDA1 (18) (0.2)x Undrawn - New senior secured notes 265 2.7x Net debt 247 2.5x Facility Cash Super senior RCF 1 PF 6014 1503 4513 LTM Company Consolidated Adj. EBITDA of £97.0m as at 30-Jun-12 Conservative 2.7x Gross Debt to Company Consolidated Adj EBITDA1 Adj. – 265 2.5x Net Debt to Company Consolidated Adj. EBITDA Significant asset over collateralisation with gross 84-month ERC2 226% of the Issue at closing – Ill t ti nett ERC3 is Illustrative i 170% off th the iissue Significant embedded cash flow beyond 84 month ERC – We will typically collect approximately 20% of the total cash we collect on a portfolio after the initial 84-month period High level of available liquidity Bond 84 Month Gross ERC 25% Cost of Collections 3 Illustrative net 84 Month ERC High Yield issuance is 44% of 84 month ERC 1 Adjusted EBITDA represents cash inflow from operating activities adjusted to exclude the effects of working capital adjustments including foreign exchange loss on investments, Apex integration costs and loan portfolio acquisitions. Adjusted EBITDA also represents profit/(loss) on ordinary activities after taxation adjusted to exclude the effects of tax on profit/(loss) on ordinary activities, interest receivable and similar income, interest payable and similar charges, depreciation and goodwill amortization, fair value movements on loan portfolios (including related amortization), ), gain g on settlement of loan notes and related interest liability, y, Apex p integration g costs,, and the impairment p of g goodwill 2 Estimated remaining collections, which represents the expected gross cash proceeds of our purchased assets over an 84-month period 3 25% represents an illustrative assumption of the full cost of collections over a 7 year period, which is used to calculate the net 84 month ERC shown above 4 ERC was £618m as at 31-Jul-12 6 Corporate and financing structure AnaCap Calcium L.P. Calcium Holdings S.à r.l. Cabot Management B loan notes Cabot Credit Management Limited (“Parent”) Restricted group £265mm senior secured Notes A loan notes Cabot Financial Limited (“Company”) Cabot Financial Holdings G Group Limited Li it d Cabot Financial (Luxembourg) S.A. Cabot Credit Management Group Limited £50mm New Senior Credit Facilities Cabot Financial Debt Recovery Services Limited Apex Credit Management g Limited Cabot Financial (Europe) Limited Cabot Financial (UK) Limited Proceeds loan Financial Investigations and Recoveries ((Europe) p ) Limited Other Subsidiaries Guarantors 7 Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 8 Management Team Representatives 801 years of collective sector experience. Management2 owns 23% of Cabot Credit Management Neil C Clyne y CEO Glen Crawford Managing Director Joined Apex Credit Management as Chief Executive Officer in November 2007 and assumed the same role for Cabot Credit Management following the merger in April 2011 30 years of financial services experience – previously Global Auto Director of GE Money with responsibility for 30 business units across the world Under Neil’s leadership, Apex was recognised by the Sunday Times “Buyout Track 100” for businesses with the fastest growing profits and the Sunday Times “Top 100 Best Companies to Work For” as well as achieving Investors in People Gold status Founding director of Cabot Financial in April 1998 Retained role as Managing Director with CCM following merger of Cabot Financial with Apex. Led successful MBO’s of Cabot Financial in 2004 and 2006 as well as multiple refinancings Over 10 years previous experience as a corporate lawyer Chris Ross-Roberts CFO Recently recruited to the Board of CCM Previously Group Finance Director of BPP Holding PLC PLC, a former FTSE 250 company that was successfully sold to Apollo Global Inc in August 2009 Over 17 years of Board level experience working both in the listed environment and with Private Equity, including a period as CEO of Alexander Mann A chartered accountant, Chris spent 9 years at Arthur Andersen Steve Mound COO Joined Apex Credit Management as Chief Operating Officer in May 2008 28 years financial services experience – previously with Co-operative Bank and Littlewoods Shop Direct Group Significant operational experience running collections and recoveries operations and has been involved in numerous debt sale transactions, acting as both buyer and seller Board member of the Debt Buyers & Sellers’ Group within the CSA Roger Davis Non-Exec Chairman 1 2 Previously CEO of Barclays UK Retail Banking operation and a member of the Board of Barclays PLC Joined Cabot Credit Management as Non-Executive Chairman in October 2011 Currently Chairman of GEM Diamonds and NED of Experian PLC, where he also chairs the Remuneration Committee Combined years of financial services experience for executive directors Management refers to combined executive team, not only the persons presented on this slide 9 The Cabot Credit Management Story1 13 Year unbroken track record of steady, profitable growth 1998 Cabot Financial founded in 1998 and one of the first entrants into the UK debt purchase h market k t 2006 MBO of Cabot Financial completed, backed by Nikko Principal Investments 2004 MBO of Cabot Financial completed, backed by BPE and Vision Capital 2000 Apex Credit Management founded as a DCA 2011 Cabot Credit Management (‘CCM’) formed through merger of Cabot Financial and Apex Credit Management 2007 Apex Credit Management acquired by funds advised by AnaCap Financial Partners Acquired Irish business (Cabot Financial Ireland) 1998 2004 2000 2006 2007 2011 (£ in millions) £128 Pro-forma UK Debt Purchasing Collections £0 £2 £8 £13 1998 1999 2000 2001 £34 £21 2002 2003 £42 2004 £57 2005 £67 2006 £80 2007 £90 2008 £103 £107 2009 2010 £142 LTM £68 YTD 2011 30-Jun-12 Source: CCM 1 Pro forma including Apex collections pre Cabot acquisition 10 Cabot Credit Management The U.K.’s #1 acquirer and manager of defaulted consumer debt from financial services firms based on value of debt portfolios on balance sheet • • 3.3m purchased accounts under management • Unmatched U t h d track t k record d off 13 years off purchasing h i and d collections ll ti experience Well established and focused business model driven by analytical rigor and operational excellence • Purchasing activities focused on semi semi-performing performing & primary financial services debt in the UK Market • Extensive investment in best-in-class operations, analytics and compliance • Unblemished regulatory and compliance record Substantial Asset underpinning and cash flow generation • £6.7bn face value of UK debt acquired to date comprised of 905 portfolios sold by a wide variety of sellers (in excess of 50) and acquired for an aggregate investment of £586m (8.7% average Acquisition Price) £601m 84-month ERC (£618m as at 31-Jul-2012) Complementary DCA expertise providing increased proprietary deal flow, broader collections experience (thereby improving propensity models), reinforcement of compliance standards and additional economies of scale and operational flexibility Collections and Revenues split 2011 Collections: £209 million1 Overseas, £20.5m (9.8%) UK Contingency Collections, £52.6m (25.2%) UK Debt Purchase, £135.6m (65.0%) 2011 Revenues: £148 million1 O Overseas, UK Contingency, £6.1m (4.1%) £7.4m (5.0%) UK Debt Purchase, £134.4m (90.9%) Note: All figures as at 30-Jun-12, unless otherwise stated 1 14 month period to 31-Dec-11 including Apex from April-11 11 Market Leader in UK Financial Services Focus on Financial Services debt... ...which is increasingly semi performing... Portfolio investments by sector type Portfolio investments by underlying portfolio type Last three years3 Since inception Other1 Primary P i £170m (29.0%) £11m £11 (1.9%) Primary £ £15m (9.7%) Semi p performing g £215m (36.7%) Secondary and Tertiary £45m (29 9%) (29.9%) Financial Services £574m (98 1%) (98.1%) Semi performing £91m (60 4%) (60.4%) Secondary and Tertiary £201m2 (34 3%) (34.3%) 1 Other Total = £586m incl. Catalog and Telecoms 2Includes £6m of non-standard Total = £151m 3Based on Cabot spend, excludes assets purchased by Apex ...drives ERC4 (£m) 124 108 Year 1 4 Represents Year 2 £601m 84 month ERC as at 30-Jun-12 94 Year 3 81 Year 4 72 Year 5 64 58 Year 6 Year 7 Backbook forecast to generate £232mm of cash over the next 24 months 12 Profitable and highly cash generative business model Illustration of Cabot’s business model - Based on semi-performing portfolio Face value 100p p X Purchase price 11 6 ¹ 11.6p¹ Collections multiple X 23 ² 2.3x² - Full servicing cost 25%³ = Net collections 20.1p Gross cash on cash multiple over 10year is 2.9x Cabot Credit Management typically experiences significant collections outside of the 7-year period shown in this illustration. Building long-term payment solutions with customers is at the core of our business model. We focus on maximizing the total collected income over the lifetime of the debt, rather than on short-term collections potential 1 Average price paid for all semi-performing portfolios acquired in the 12 months period ended 30-Jun-09. Over a 84 month period. 3 25% represents an illustrative assumption of full cost of collections. The marginal collection costs of semi-portfolios is lower at 8%. 2 13 Largest UK debt purchaser by portfolio size (£m) (£ in millions) FV of Loans on Balance Sheet £m ERC £m 275 601 185 384 77 n.a. 73 n.a. 55 n.a. … with unrivalled scale in financial services1 £6.5bn face value of U.K. financial services debt acquired with +£573m acquisition spending Over 827 portfolios acquired +2 8 million accounts with high average customer balances of £2.3k +2.8 £2 3k Extensive, long-standing relationships with multiple vendors across the sector c.15% lead share of market 1 Full portfolio: £6.7bn face value of UK debt acquired, comprised of 905 portfolios with average balance of £2.0k and acquired for an aggregate investment of £586m Lowell as of 30-Nov-11, Marlin as of 31-Dec-11, 1st Credit as of 31-Dec-11, CapQuest as of 31-Mar-11 Note: FV of loans on balance sheet and ERC for other comparable p companies p from p public reports p 14 Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 15 Overview of Key Credit Strengths 1 Strong asset backing, cash generative book • • • • 2 Exceptional access to desirable market exhibiting growth characteristics • • • 3 Focus on lower risk, semi-performing portfolios producing stable cash flow £601m 84-month 84 month ERC backbook forecast to generate £232m of cash over the next 24 months Strong backbook providing strength and resilience, which is supported and maintained by continued portfolio purchases Significant additional cash flow embedded post 84-month ERC Significant supply anticipated Strong relationships with key vendors in its core UK market segments Professionalism in relationship management and execution augments origination capabilities Di i li d acquisitions Disciplined i iti approach h • • • • Quantitative, objective approach to pricing based on collections and returns expectations Highly automated and predictive pricing models benefiting from a wealth of cross-cycle collections data Pricing committee with significant market knowledge, experience and expertise Pricing models demonstrate high level of accuracy 4 “Best in-class” collections platform 5 • Significant scale and operational flexibility • State-of-the-art technology platform optimises collections and contact strategies • Sophisticated collections flow maximises customer contact Exemplary compliance control and governance • Strong compliance track-record that provides competitive advantage in portfolio origination Note: All figures as at 30-Jun-12 16 Agenda Key Credit Considerations 1 Strong g asset backing, g, cash generative g book 2 Exceptional access to desirable market exhibiting growth characteristics 3 Disciplined acquisition approach 4 “Best-in-class” collections platform 5 Exemplary compliance control and governance 17 1 Strong asset backing, cash generative book Focus on Establishing Long-Tail Payment Plans Which Improve Predictability of Collections Portfolio “layering” effect creates stable, diversified cash flows – back book has 84 month ERC of £601m - Over £232m of cash projected to be generated from current portfolios over the next 24 months High degree of predictability given large proportion of set-up arrangement plans and predictable payment methods - 80% of annual collections in for the twelve months ended June 30, 2012 were through arrangements Monthly historical cash generation by vintage Monthly estimated remaining collections by vintage 84 month collection history to June 2012 (£m / month) 84 month estimated collections as at June 2012 (£m / month) 2002 and p prior 2004 2006 2008 2010 2012 14 12 10 2003 2005 2007 2009 2011 Apex 2002 and p prior 2004 2006 2008 2010 2012 14 12 10 8 8 6 6 4 4 2 2 0 2003 2005 2007 2009 2011 Apex 0 0 12 24 36 48 60 72 84 0 12 24 36 48 60 72 84 Focus on setting up long-tail payment plans generates strong annuity streams Source: CCM management accounts 18 Strong asset backing, cash generative book 1 High Cash Flow Conversion Based upon 2011 example (£m) Cash conversion1 (56.7) 97.3% 0.4 (2.5) 147.9 89.0 40 0 40.0 Turnover Overheads Capex Other items Cash before debt and tax service 2 Portfolio investment to maintain ERC status quo Cabot’s existing portfolio book generates significant cash collections at low servicing costs: – 62% Adj. EBITDA margin (after all servicing costs) – 97% average conversion i iinto t cash h fl flow b before f d debt bt service i and d ttax d during i llastt ttwo fifiscall years 1 (Adjusted EBITDA less capital expenditures and other items) / Adjusted EBITDA £40m figure is an approximation as this is dependent on the type of portfolio acquired, the phasing of portfolio purchases and the collections being achieved on all portfolios 2 The 19 1 Strong asset backing, cash generative book Significant Additional Cashflow Embedded Post 84 Months ERC Money multiples by vintage (1998–2004)1 Below 84 months 3.70x 3.20x 2.70x 3 34 3.34x 3.30x 0.72x 0.55x Over 84 months 3.09x 2.91x 2.91x 0.36x 0.47x 0.61x 2.92x 0.26x 2.20x 1.93x 0.08x 1.70x 1.20x 2 30x 2.30x 2.62x 2.74x 2.44x 2.74x 2.66x 1.85x 0.70x 0.20x -0.30x 1998 1999 2000 2001 2002 2003 2004 % collected after month 84 21% 22% 17% 16% 12% 9% 4% 11% off our collections ll ti iincome for f the th 12 months th tto 30-Jun30 J 12 was derived from accounts that were over 84 months old at 30-Jun-11 We will W ill typically t i ll collect ll t approximately i t l 20% off the th total t t l cash h we collect on a portfolio after the initial 84-month period ¹ All vintages with full 84 months history 20 Agenda Key Credit Considerations 1 Strong g asset backing, g, cash generative g book 2 Exceptional access to desirable market exhibiting growth characteristics 3 Disciplined acquisition approach 4 “Best-in-class” collections platform 5 Exemplary compliance control and governance 21 2 Exceptional access to desirable market exhibiting growth characteristics The UK Non-Performing Loan Market is in a Phase of Market Recovery Growth Face value of non-performing debt sold (£bn) 14 (£bn) 12 Reduced Activity Explosive growth 10 7.7 8 7.0 5.0 3.9 4 2 8.7 6.0 6 1.9 1.5 1.5 2001 2002 2003 Return to Growth 8.22 31 3.1 YTD 3.9 2.3 0 2004 2000-2008 Explosive growth Fourfold increase of volumes sold from £1.9bn to £8.7bn per annum resulted – Increasing competition by new entrants from 20012008 – Cheap funding driving prices up YTD as of 30-Jun-12 2006 2007 2008 2009 2008-2009 Reduced activity 2 2005 Reduced demand: – Limited funding availability and increased cost of funding – Reduced competition with surviving players successfully perform in establishing niche – Underperformance of back-book back book and increasing use of long-term settlements (Set-ups) Reduced supply: – Sellers delaying sale in favour of outsourced debt-collection first Market halved from £8.7bn p peak in 2008 to £3.9bn in 2009, with lower prices from peak to trough 2010 2011 2012F 2010 onwards Return to growth Lenders actively re re-considering considering sale due to price stabilisation Requirement for banks to clear backlog of debt for sale subsequent to hiatus from the summer of 2008 to early 2010 Increasing demand, mainly on paying / semi semiperforming and tertiary segments Funding becoming more available, primarily to established players Increased regulatory scrutiny Competition p not expected p to return to 2006/2007 levels due to increased barriers: – Funding – Compliance 22 2 Exceptional access to desirable market exhibiting growth characteristics Strong Relationships with Key Vendors in its Core UK Market Banks undergo complex due diligence and compliance processes before selling debt to a debt purchaser, hence have strong preference for maintaining stable and long-standing relationships with debt purchasers with whom they are comfortable f t bl CCM’s best-in class origination and acquisition processes are well recognized and appreciated by key vendors Vendor concerns Comments CCM’s experience Financial stability Sellers conduct financial due diligence on buyers to determine their sustainability Accredited for CSA Collector Accreditation Initiative Reputational p risk is at the forefront in the minds of the vendors During 2011, CCM’s clients spent 67 days auditing the group’s compliance and governance model Due diligence / Compliance Business practices and ease of interaction Originators typically conduct due diligence prior to entering into a debt sale relationship Vendors are seeking to maintain relationships with a smaller number of DPs Having a reputation for being able to transact purchases on a sustainable basis and a track record of regulatory compliance li iis a kkey consideration id ti ffor certain t i vendors d and d may represent a considerable challenge for new entrants Active engagement with external bodies such as the Credit Services Association, the Debt Buyers and Sellers Group, the g Association and the Finance and Leasing Money Advice Liaison Group (which multiple regulators are part of) to promote best practices Established, long-standing relationships with over 50 financial services firms and other vendors Reputation validation by other vendors is often a part of any bidding process and CCM benefits from outstanding references from both its supplying and its lending banks 23 Agenda Key Credit Considerations 1 Strong g asset backing, g, cash generative g book 2 Exceptional access to desirable market exhibiting growth characteristics 3 Disciplined acquisition approach 4 “Best-in-class” collections platform 5 Exemplary compliance control and governance 24 3 Disciplined acquisition approach Robust and Disciplined Acquisition Process Priced Through Sophisticated Analytical Model Augmented with Extensive Experience Quantitative and objective approach to pricing based on collections and returns expectations p driven by ya highly automated Pricing Suite • Individual customer pricing drives the two core models Outputs of core models validated by additional analysis • Related asset model – substantial competitive advantage as 3.3m account database means typically CCM has interaction with 10-25% of customers in a new portfolio CCM’ CCM’s P Pricing i i S Suite i iis d deployed l d with i h commercial i l iinputs and overlays agreed by the pricing committee (which prices every acquisition, regardless of purchase value) • Significant depth in organisation and experience of pricing portfolio • 4 executive directors with over 24 years combined pricing experience • 6 professionals in origination and pricing have over 42 yyears of experience p Vendor Data Received Quick Data Analysis Final Bid Initial Pricing Pricing Committee Post Pricing Analysis Post Pricing Analysis Pricing Committee Revised Pricing Vendor Due Diligence Initial Bid Latest Pricing Suite validated and tested in 2010 before its promotion to live model in 2011 Robust and predictive pricing process utilising highly sophisticated data-driven Pricing Suite that is regularly updated p and consistently y monitored 25 3 Disciplined acquisition approach Actual Collections vs. Pricing Model Collections Show High Level of Accuracy 2009 Actual vs vs. Pricing Model Actual 2010 Actual vs vs. Pricing Model Pricing Model 25 Actual Pricing Model Actual 35 40 30 35 20 Pricing Model 30 25 15 2011 Actual vs vs. Pricing Model 25 20 20 15 10 15 10 10 5 5 5 116.8% of PM 0 99.9% of PM 103.5% of PM 0 0 4 8 12 16 20 24 28 32 36 40 0 0 4 8 12 16 20 24 28 0 4 8 12 16 Note: Each graph shows cumulative actual collections since acquisition vs. collections predicted by the pricing model during same period Source: CCM management information 26 Agenda Key Credit Considerations 1 Strong g asset backing, g, cash generative g book 2 Exceptional access to desirable market exhibiting growth characteristics 3 Disciplined acquisition approach 4 “Best-in-class” collections platform 5 Exemplary compliance control and governance 27 4 “Best in-class” collections platform Significant Scale and Operational Flexibility Call centre operations Other support functions Kings Hill Collections (200 FTE), Stratford-Upon Avon Collections (202 FTE), Trace (39 FTE) Dialler and telephony support Support operations 3rd party management Quality Assessment Team Customer Assurance (complaints team) Hardship (3rd party debt advice) Dublin 50-seat call center Outsourced processes Other Outsourcing Stratford-Upon Avon 300-seat call center Stralfors — Mail & Printing Grant Thornton – IVA Management Phillips & Cohen – deceased collections “Specialised” external agents Litigation Pre-approved panel of door-to-door collection agencies Pre-approved panel of agents for the service of statute barred accounts Internal Audit responsible for auditing all external agent suppliers – Doorstep collections – Trace & Collect Processes are rigorously reviewed to ensure they are efficient and compliant Daily processing of files to external agents to maximize efficiency Kings Hill, Hill Kent 400-seat call center 28 4 “Best in-class” collections platform State-Of-The-Art Technology Platform Optimises Collections and Contact Strategies Proprietary collection ll ti platform l tf Proprietary collections system based on fully-integrated communications system incorporating predictive di li and dialing d IInteractive t ti V Voice i M Messaging i Data warehouse h Currently introducing an integrated data warehouse across CCM DCA and DPA business driving performance f reporting ti Low cost collections model: Currently investing in rolling out SAS Analytics and Business Intelligence platform deployment throughout the business First adopter of Nexidia speech analytics in the UK collections sector to retain first mover advantage Uplift in internal productivity benchmarks since system was adopted in Cabot platform SAS Analytics & Business Intelligence Integrated telephony platform and speech analytics CCM’s technology has been recognised through industry awards on multiple occasions The Customer Contact Innovation award for Integrated Outbound was awarded to Apex Credit Management Ltd for the way in which their use of SAS and speech analytics have transformed debt collection strategies and data segmentation — Professional Planning Forum Awards, 2011 29 4 “Best in-class” collections platform Sophisticated Collections Flow Maximises Customer Content Sophisticated collections flow with trace interventions at all key decision points Collections that reach litigation phase are now outsourced TRACE Highly structured collection process supported by extensive data set LITIGATION CABOT COLLECTIONS BOOK ON New Business–Non Payers Account Management–Payers F.I.R.E.1 External Agents NON STANDARD COLLECTIONS Hardship Bankruptcy & IVA Probate Trace Points Maximising customer contact at each stage of collections life cycle is the key to CCM’s low cost collection strategy 1 Financial Investigations and Recoveries (Europe) Ltd 2 Cumulative 30 Agenda Key Credit Considerations 1 Strong g asset backing, g, cash generative g book 2 Exceptional access to desirable market exhibiting growth characteristics 3 Disciplined acquisition approach 4 “Best-in-class” collections platform 5 Exemplary compliance control and governance 31 5 Exemplary compliance control and governance Widely Recognized as an Industry Leader in Compliance Track record of excellence with regulators Company of reference within the industry for its highly regarded compliance framework Impeccable track record – no requirements imposed by any regulator 3.3m customer telephone contacts and 400,000 customer letters issued per month (as of June 2012) − 1 Very low number of FOS and ICO complaints p g under 0.003% of total accounts with 11 representing cases resolved in favour of plaintiff in 2011 1 Reasons for compliance success Rigorous approach to recruitment - comprehensive process including qualification requirements, interviews, skill testing Comprehensive training programs – 4 weeks in Training R Room and d 8 weeks k on th the C Collections ll ti Fl Floor ((regular l interactive refresher training sessions and tests) Comprehensive quality control procedures including: − Compliance Analytics: Dedicated teams monitor and analyse adherence / investigate customer complaints − Regulatory Interactions: Contact with regulators takes place via active collaboration (e.g. board representation at CSA & Debt Buyers and Sellers Group). All licenses are up to date − Regular Audits: internal audit conducted on external agents, service suppliers and internal operations. Consensual collections approach focussed on maximizing collections over natural life of portfolio 14 month period to 31-Dec-11 including Apex from April-11 32 Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 33 Financial Results Summary Consolidated Historical Revenues (£m) Compelling business model – Specialise in UK Financial Services, largest section of UK market – Focus on semi performing financial debt with long annuity streams and lower volatility Strong revenue and EBITDA growth – Scale benefit driving operational efficiency – Pricing discipline ensuring strong revenue gains Highly cash generative – Generated £93.6m of cash 2 for the year to 3030 Jun-12 Strong ERC growth – Business requires only £40m of purchases to maintain ERC3 Key growth drivers – Large stocks of defaulted unsecured stock on b kb bank balance l sheets h – Banks managing down their risk weighted assets – Limited funding availability Consolidated Apex & Cabot 89.1 88.3 FY2009 1 FY20101 147.9 150.3 14 months to Dec-11 12 months to Jun-12 Adj t d EBITDA (£m) Adjusted (£ ) 56.5 91.5 96.3 14 months to Dec-11 12 months to Jun-12 51.9 1 FY2009 FY2010 1 84-month ERC – Net debt ((£m)) 84 month ERC Net debt 120 month ERC 740.6 636.4 102.9 1 FY2009 1 600.7 378.9 349.7 93.5 1 FY2010 135.1 110.6 14 months to Dec-11 12 months to Jun-12 Fiscal year ending 31-Oct; 2 Cash = adjusted EBITDA less capex and other items; 3 ERC is a projection and based on historical and current data, trends and assumptions and such cannot be guaranteed - £40m figure is highly dependent on phasing and yield assumptions 34 Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 35 Investment Highlights 1 Strong g asset backing g and highly g y cash g generative book 2 Clear market leader in UK debt purchasing with unrivalled scale 3 Favourable market conditions exhibiting growth characteristics 4 Excellent access to market 5 Disciplined pricing approach Long-term, term, ethical collections approach 6 Long 7 Best-in-class compliance control and governance 8 Strong financial profile 36 Agenda Transaction Summary Company Overview Key Credit Considerations Financials Investment I t t Highlights Hi hli ht Appendices 37 AnaCap Financial Partners - Specialist Financial Services Sponsor Introduction to AnaCap Specialist private equity firm advising its dedicated funds on investing in European financial services • Founded in 2005 by Joe Giannamore and Peter Cartwright, each with 20+ years experience in financial services as owners/ operators and investors. Partners collectively have over 100 years of experience in European Financial Services • Credit Opportunities Strategy launched in 2010 to invest in diversified portfolios of performing and nonperforming consumer and SME debt, debt including mortgages, mortgages NPLs, NPLs leases, leases trade and other receivables As of July 31, 2012, €1.7bn of capital committed across the Private Equity and Credit Opportunities strategies • Team of 28 investment professionals with direct experience in financial services operations, consulting, corporate and structured finance Operationally p y engaged g g g growth investor utilising g operational, p , risk and liability y management g expertise p to actively y engage portfolio companies post-acquisition Selected Investments 38 Basic Business Model Return dynamics of a hypothetical semi-performing portfolio (illustrative purposes only) Face Value of portfolio purchased £8.6m Purchase Price £1.0m 1 Aggregate Gross Collections over 84-month period £2.3m Gross cash-on-cash Multiple 2.3x 2 Months to break even on investment 31 1 Note that we typically experience significant collections outside of the 84-month period shown in this illustration. 2 Assumes Ass mes marginal ser servicing icing costs of 8 8.0% 0% for a semi semi-performing performing portfolio as described above. abo e If we e applied the full f ll servicing ser icing costs of o ourr entire book book, which hich were ere appro approximately imatel 25% for 6 months ending 30-June-2012, the months to break even on investment would be 41. Cash conversion Twelve months to 30-Jun-12 Adjusted EBITDA1 LTM (£’000) 96 339 96,339 Normalised Bond Interest Payments2 3 Normalised Tax Payments 4 Normalised Long Term Capital Expenditure 27,825 7,135 2,000 Interest Tax and Capital Expenditure 36 960 36,960 Adjusted EBITDA less tax, interest and capital expenditure 59,379 Portfolio Purchases to Maintain 84-month ERC5 40,000 Surplus cash generation to grow business without use of RCF or further debt 19,379 1 Assumes fair value movements of £39,240. 2 Assumes that the interest on the Notes is fully tax deductible. 3 Assumes that the interest on the Notes offered hereby is fully tax deductible. We also assume a tax rate of 25%. 4 We expect our capital expenditures in 2012 to be unusually large, due to costs relating to the Apex integration. The above illustration represents our typical long-term average capital expenditure costs going forward, excluding such Apex integration costs. 5 Approximate value dependent on phasing and mix of portfolios acquired. 39 Financial Results Summary Cash flow from operating activities Years ended 31-Oct (£ in thousands) Net cash inflow/(outflow) from operating activities Returns on investments and servicing of finance Taxation Capital expenditure and financial investment Acquisitions and disposals C h iinflow/(outflow) Cash fl /( tfl ) before b f use off financing Financing Increase/(decrease) in cash in the period Fourteen months ended 31-Dec Twelve months ended 30-Jun 2009 2010 2011 2012 30,548 14,976 (11,889) 23,631 (6,768) 131 (5,801) 1,554 (8,601) (159) (8,531) (5,053) (1,662) — (1,333) — (2,774) 3,821 (4,677) — 22,249 (22,593) 9,396 (9,298) (19,602) 31,092 5,570 486 (343) 98 11,490 5,856 Fourteen months ended 31-Dec Twelve months ended 30-Jun Reported UK Loan Portfolio purchases Years ended 31-Oct (£ in thousands) Reported UK Loan Portfolio purchases 2009 27,292 2010 37,784 2011 101,378 2012 68,322 40 Glossary, Terms and Abbreviations Adjusted EBITDA Represents net cash inflow/(outflow) from operating activities adjusted to exclude the effects of working capital adjustments, Apex integration costs, loan portfolio acquisitions and non-cash retranslation adjustments. Adjusted j EBITDA also represents p p profit/ ((loss)) on ordinary y activities after taxation adjusted to exclude the effects of tax on profit/(loss) on ordinary activities, interest receivable and similar income, interest payable and similar charges, depreciation and goodwill amortization, fair value movements on loan portfolios, gain on settlement of loan notes and related interest liability, loss on sale of fixed asset investment, Apex integration costs, and the impairment of goodwill. Backbook All debt portfolios owned at the relevant point in time CCM Cabot Credit Management CSA UK Credit Services Association Customer A consumer who has defaulted on a credit account that was purchased from a vendor by a DP (as defined below) DCA Debt Collection Agency Debt Purchase The purchase of debt portfolios at a discounted price ICO UK Information Commissioners Office OFT Office of Fair Trading RVM Proprietary revaluation model SAS A business intelligence, data mining and automation product Settlement Payment against an outstanding debt balance not defined as a set-up arrangement Set-Up arrangement Monthly repayment plan agreed with a Customer with more than three repayments Trace or Tracing The action of attempting to find the correct contact details of a customer. Tracing is based on significant information analysis Vendors/Clients Financial institution or other organisation which sells debt to Debt Purchasers Debt portfolio definitions DP 84-Month ERC FOS Debt Purchaser Estimated remaining collections on out purchased Loan Portfolios over an 84-month period, which represents the expected future gross cash collections of our purchased Loan Portfolios (as defined in the offering memorandum) over an 84 month period. Note that figures represent UK Portfolios only. UK Financial Ombudsman Service Semi-performing / paying Debt portfolios in which over 50% of accounts have made a payment in the last three or four months immediately prior to the portfolio purchase Primary or fresh debt Debt portfolios in which the weighted length of time from default to purchase is less than 12 months Secondary and Tertiary Debt portfolios in which the weighted length of time from default to purchase is more than 12 months Non-standard Specific cases, including IVAs 41