bond investor presentation - cabonline · 2020-05-04 · this presentation is for information...

Strictly private and confidential

Bond investor presentation

May 2020

Disclaimer

2

Important information

This presentation (the “Presentation”) has been produced by Cabonline Group Holding AB (publ) (the “Company” or the “Issuer” and, together with its direct and indirect subsidiaries, the “Group”) solely for use in connection with discussions with holders of the bonds of the Issuer (the “Bonds).

This Presentation is for information purposes only. By attending a meeting where this Presentation is presented, or by reading the Presentation slides, you agree to be bound by the following terms, conditions and limitations.

All information provided in this Presentation has been obtained from the Group or through publicly available material. Moreover, the information contained in this Presentation has not been independently verified and the Issuer assumes no responsibility for, and no warranty (expressly or implied) or

representation is made as to, the accuracy, completeness or verification of the information contained in this Presentation.

This Presentation is dated May 2020. Neither the delivery of this Presentation nor any further discussions of the Group with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Group since such date. The Group does not

undertake any obligations to review or confirm, or to release publicly or otherwise to investors or any other person, any revisions to the information contained in this Presentation to reflect events that occur or circumstances that arise after the date of this Presentation.

The content of this Presentation is not to be construed as legal, credit, business, investment or tax advice. Each recipient should consult with its own legal, credit, business, investment and tax advisers to receive legal, credit, business, investment and tax advice.

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Forward Looking Statements

Certain information contained in this presentation, including any information on the Group’s plans or future financial or operating performance and other statements that express the Group’s management’s expectations or estimates of future performance, constitute forward-looking statements (when used in this document,the words “anticipate”, “believe”, “estimate” and “expect” and similar expressions, as they relate to the Group or its management, are intended to identify forward-looking statements). Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, aresubject to significant business, economic and competitive uncertainties. The Group cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Group to be materially different from the Group’s estimated futureresults, performance or achievements expressed or implied by those forward-looking statements.

Audit Review of Financial Information

Certain financial information contained in this Presentation has not been reviewed by the Group’s auditor or any other auditor or financial expert. Hence, such financial information might not have been produced in accordance with applicable or recommended accounting principles and may furthermore contain errors and/ormiscalculations.

3

Today’s presenters

Strictly private and confidential

Content

Previous experience includes:

CEO, MTR Nordic AB

COO, Scandinavian Airlines

Peter ViinapuuCEO


CFO EVP and Deputy CEO, Acando AB (publ)

CFO EVP, Proffice AB (publ)

CFO, Cybercom AB (publ)

Anneli LindblomCFO


Managing Director, H.I.G. Head of UK&IRE, BLX, Nordics

Leadership roles at Hg Capital and Apax Partners

Several Board Member assignments, including for multiple Nordic businesses

Carl HarringH.I.G. Representative &

Board Member

Executive summary

Business update

Cabonline is well prepared for a recovery

Cabonline after the pandemic

Potential amendments

Appendix – supporting material

Executive summary

4Source: Company Information

Covid-19 has had an unprecedented impact on the

taxi industry

• The Nordic countries have implemented restrictions and/or recommendations regarding travel, arrangements in groups, social distancing and in some cases complete lockdowns. Although there have been differing approaches to tackling the spread of the virus across countries, a marked reduction in travel has been consistent across all regions

• Depending on the level of public trips undertaken, taxi drivers are frequently said to be experiencing declines in trip volumes of 60-80 % and having to wait for hours between rides

Cabonline considers itself to be in a stronger position than many

of its competitors, but the Company is nevertheless

affected

An action plan has been swiftly implemented to

avoid liquidity concerns

Cabonline believes it has passed though the bottom and

the outlook from here is steadily improving

However, there is of course a transient virus-driven impact on net leverage and as such

Cabonline is seeking amendments to the covenants

• Cabonline has been able to materially withstand these market headwinds by virtue of the differentiated proposition, benefiting from: i) diversity of customer segments and demand dynamics across both B2P (42% of transport revenue) and B2C/B (58% of transport revenue); ii) an underlying revenue model that achieves ~70% of income from fixed fees and only ~30% from fees that vary directly with trip demand; and iii) an efficiently run operation, sufficiently well capitalised to manage through inherent cash swings from working capital movements

• However, the financial position and outlook has still been negatively impacted by the effects of Covid-19

• Cabonline management was swift to respond to the outbreak and was able to put in place a number of initiatives to mitigate the negative effects of the virus through drastically reducing the cost base, postponing non-critical investments and utilising the government support packages to the fullest extent permissible

• The overarching priority is to carefully manage cash flow. Cabonline is able to run its business as usual and fulfil all of its payment obligations without any need of additional external liquidity for the foreseeable future

• Cabonline believes that it has passed through the bottom as a distinct positive trend in the trip volume data over the last two weeks has been noted following a number of easings of restrictions in all of Cabonline’s core markets

• Cabonline is the leading taxi company in the Nordic region with 3,000 connected taxi firms and a fleet of approximately 5,700 vehicles. Cabonline have strong presence in all customer categories, including a meaningful position in the critical to society B2P segment that is insulated by long-term contracts. Cabonline sees no long-term effect from Covid-19 on the business and is well-prepared for a strong recovery

• Despite a strong liquidity position, the effects of Covid-19 will have a direct impact on the financial result and delay the EBITDA growth, cash generation and de-levering profile – predominantly due to a weaker near-term growth outlook, the halting of transformation initiatives planned to deliver streamlining efficiencies, and the set-back to the recovery in Finland

• We are therefore looking to i) paus the maintenance leverage test for 6 quarters (and replace with an alternative measurement ratio in the interim period) and re-set the covenant ratio in the remaining test periods; and ii) be granted a waiver and a broad consent to deliver the optimal solution for Finland for the financial health of the group

5

Agenda

Executive summary

Business update




Appendix – Supporting material

Covid-19 has had a significant impact on the taxi industry in recent months

BUSINESS UPDATE

Covid-19 has had a major impact on society generally But had a particularly acute impact on the taxi industry

“At the moment there is a 60-70 per cent taxi revenue decline…Latest I heard Fardtjanst trips have declined 40 per cent, but that may be much worse by now” – Kuriren,

March 12th

“The taxi industry, like many other industries, has been impacted by corona. Taxi driver Josef David has lost nearly 80 per cent of his customers in the midst of Corona” – SVT

March 31st

“Most of society is dead quiet. Airports are shut, restaurants and bars are shut, people are not moving around…it is almost pointless to work. We have no customers” – NRK

March 19th

“Fewer taxi journeys are made to and from Arlanda. An underlying factor is believed to be concern for the corona virus. ‘I can wait four hours for a drive,’ says taxi driver Baland Tarek Amin.” – SVD

March 10th

“Situation is getting more and more acute with each passing day. . . . ‘Now most people are sick and others are kept at home at risk of infection.. . . . The majority of [Svenska Taxiförbundet] union members testify to up to 80 per cent loss of income, some even 100. . . . ‘We hear about members who usually generate revenue of SEK 100,000 per month and car, and in March have only generated SEK 3,500.” – Aftonbladet

March 26th

March 16• Swedish emergency package

worth SEK300bn is announced.Norway close their borders

March 21• Norwegian emergency package

worth NOK100bn is announced

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

05/04/2020 19/04/202026/01/2020 09/02/2020 22/03/202023/02/2020 08/03/2020 03/05/2020

Confirmed cases of coronavirus in the Nordics

March 11 - 13• Denmark, Finland and Norway

close all schools

March 17• Sweden close most higher

education and universities

March 31• Revised Norwegian emergency funding

package is announced

April 8• Sweden extends recommendation against

all non-essential travel to June

March 25• Sweden announces additional

emergency package worth [SEK150bn]

April 20• International press takes interest in

Sweden and its relatively relaxed approach to Covid-19 outbreak.

April 6• Norway announces they believe the

spread of the virus to be under control

April 11-13• Norway and Denmark announce the gradual

re-opening of schools and kindergartens

May 7 • Norway allows public events with up to 50 guests

6

April 20• Denmark and Norway re-opens society

phase 1 including hairdressers, clinics and other one-on-one businesses

April 30• Govt. support package for transportation sector in Sweden

High share of trip volume coming from B2P yields strong recovery as societies reopen in April

BUSINESS UPDATE

Exposure to both B2P and B2C/B(1) Trip volumes in the B2P segment have fared significantly better than B2C/B

7Sources: Transport Analysis Sweden; Statistics Finland; Norwegian Ministry of Transport and Communication; Statistics Finland; Danmarks Statistik; annual reports; Management information; company websites; company call centres; company apps; industry interviews; press searchNotes: (1) Estimated share of transport revenue excluding fines 2019 (3) Trip volume numbers are for Sweden and Norway, i.e. excluding Finland and Denmark. (2) Represents 3 days (Monday-Wednesday).

B2C/B58%

Cabonline 2019 Transport Revenue

B2P42%

SEK6,490m• B2P trips comprise ~50% of taxi revenues across the Nordics• These are seen as critical infrastructure, enabling the mobility

of: i) people with health issues / the elderly; ii) school children living remotely or with disabilities; and iii) people living remotely

• Although Covid-19 has dampened B2P trip volumes, some B2P trips must still be made – for example the transport of those with health issues to/from hospitals. The government has also stipulated that these rides can no longer be shared, now requiring multiple trips where previously just one trip was sufficient

• With 42% of transport revenue coming from the B2P segment, Cabonline benefits from this baseline of demand

• B2C/B comprises the remaining ~50% of taxi revenues in the Nordics

• These trips are more discretionary in nature, being linked to business, retail and leisure activities

• Although a slight improvement in demand was seen during the early stages of Covid-19 outbreak (believed to be due to the added safety and privacy afforded by taxi travel vs. alternatives), trip volumes in this segment then saw sharper declines

• This is linked to government recommendations to work from home if possible, to close non-essential shops, and discourage gatherings

• Fewer trips in this segment are deemed essential and it has therefore underperformed the B2P segment

• With 58% of transport revenue coming from the B2C/B segment, Cabonline is partially affected by these dynamics

B2P

B2C/B

Significantly less impact on volumes in the B2P segment compared to the B2C/B segment with clear recovery in trip data following easing of restrictions in the Nordics (over half of B2P trip volume reductions have now been recovered)

-73%

26-Apr

-22%

1-Mar 8-Mar 19-Apr15-Mar 22-Mar 29-Mar

-79%

5-Apr 12-Apr

-71% -71%

2-May(3)

Decline in # of trips compared to the same period in 2019(2)

Decline in # of trips compared to the same period in 2019(2)

Significant recovery in the past few weeks

-50%

-7%

-2%

8-Mar1-Mar 15-Mar

-18%

22-Mar

-55%

29-Mar

-55%

5-Apr

-68%

12-Apr

-49%

19-Apr

-45%

26-Apr

-37%

2-May(3)

Cabonline’s public rides experienced far lower reductions

and a faster bounce back

+31 p.p.

Cabonline is in a stronger position than competitors

BUSINESS UPDATE

Revenue model insulates against short term trip volatility… …but is still exposed to medium term changes in demand

8

SOFTWARE, SERVICESAND BRANDS

SEK ~8,000per month and car

~3% commission on trip fares

~30% of total fees(1)

~70% of total fees(1)

Customers pay trip fares via Cabonline platform

END CUSTOMERS

Cabonline transfers trip fares net of fees to the transporter

TRANSPORTERS (“CAR OWNERS”)

Transporters pay salaries to drivers

TAXI DRIVERS

Volatility example:

Reduction in demand causes fares to fall by

SEK100

Cabonline loses its ~3% commission on

those fares

Underlying revenue declines by ~SEK3

Transporters and drivers do not

receive the SEK100 fares or pay the

~SEK3 commission

Transporter income declines by SEK97

Notes: (1) Total fees during 2019 excluding discounts

• Short term trip volatility is predominantly absorbed by the transporters and drivers who receive all of the higher / lower fare income (net of commissions)

• As 70% of fee income are fixed monthly payments, short term volatility has a muted impact on Cabonline

• However, if there is a medium term reduction in demand and trip volumes remain deflated for a prolonged period, there would be an increased risk of transporters going bankrupt

• Transporters and drivers require their total monthly trip fares to exceed a certain minimum threshold in order to avoid bankruptcy and for it to be economically viable for them to pay fixed fees

• Cabonline’s revenue model minimises credit risk towards transporters (due to the timing of payments), even though bankruptcies would have a short term impact on underlying revenue as the fixed fee of SEK ~8,000 per month and car would cease

• Further, since a high proportion of the trips dispatched through Cabonline’splatform are from the more stable B2P segment of the market, Cabonline is considered to be an attractive partner for transporters and drivers

We have taken swift actions to address impacts caused by Covid-19 (state supported cost reduction)

BUSINESS UPDATE

SEK117m improvement in 2020 cash flow from initiatives supported by the government

9

Issue Action Details ProgressEstimated 2020 cash

flow impact

Greater staff capacity than needed for current activity levels, reducing cost efficiency

Participating in government ‘temporary layoff’ schemes

• Governments across the Nordics have introduced ‘temporary layoff’ schemes whereby companies are permitted to drastically reduce staff hours and have the government cover salary costs for the hours an FTE is ‘temporarily laid off’

• For example, in Sweden, the government will fund up to 90% of the salary cost for reduced hours, whilst reductions in hours are capped at 60% i.e. the Swedish government will fund up to 54% of total salary for an FTE that works 40% of their hours

• This avoids staff redundancies whilst simultaneously enables companies to right-size their cost base and match wages to activity levels

• Cabonline is participating in these schemes in Sweden, Norway and Finland across all possible functions – most notably in: i) the customer service centres, where reduced call and trip volumes require fewer individuals to manage dispatch operations; and ii) IT, where near term development work has been delayed

SEK ~65m

Monthly instalments required for government taxes, limiting ability to manage cash through the year

Participating in government schemes to defer salary taxes and social security charges until 2021

• Governments across the Nordics have also introduced initiatives to defer 3-4 months’ worth of salary taxes and social security charges until 2021

• Cabonline is participating in this scheme to the fullest extent possible

Included in below

Monthly instalments required for VAT, similarly limiting ability to manage cash through the year

Participating in government schemes to defer VAT until 2021

• Similar to the deferral of salary taxes and social security charges, governments have also introduced schemes to defer VAT payments for 3-4 months until 1H 2021

• Cabonline is also participating in these schemes

SEK ~52m

Total 2020 cash flow impact SEK ~117m

Issue Action Details ProgressEstimated 2020 cash

flow impact

Planned transformation projects can be cash intensive

Transformation projects and all non-critical capex spending has been paused

• Cabonline had planned to undertake significant transformation projects during 2020 in order to further improve service quality and operational efficiency

• In light of the current market environment and resulting need to prioritise near-term cash management over longer-term growth, these transformation projects have been paused temporarily and interim resources supporting implementation have been removed

• These projects can be easily re-launched at the appropriate time, due to the extensive planning, documentation and general preparation undertaken throughout the work to date

SEK ~80m

Consultants used for overflow capacity in on-going operations are more expensive than FTEs

All on-going consulting resources have been removed

• Cabonline uses consultants both on a temporary basis for transformation projects (as above) and on an on-going basis to support operations across a variety of functions (most notably finance and IT) where capacity amongst FTEs is insufficient or a permanent hire has not yet been made. These on-going consultants have all been removed in line with currently reduced activity levels

SEK ~15m

Historical levels of spending on ‘other costs’ exceed that needed for the current environment

Spending on ‘other costs’ has been drastically reduced

• For example, reduction of spending across travel, PR and advertising, and costs related to the roll out of planned growth initiatives

SEK ~21m

Standard supplier terms can prevent flexible cash management

Renegotiating payment terms with all meaningful suppliers

• Management continue to negotiate with key suppliers (for example, premises rent and vehicle leases) to extend payment terms

n.a.

Potential delays in draw-downs Fully drawn down RCF• Cabonline’s SEK125m super senior RCF has been fully drawn down

• No clean down clausen.a.

Total 2020 cash flow impact SEK 116m

We have taken swift actions to address impacts caused by Covid-19 (other cost reduction)

BUSINESS UPDATE

SEK117m improvement in 2020 cash flow from other cost out initiatives

10

Issue Action Details Progress

Reduction in B2P trip volumes

Negotiating for continued payment of fares at normalised volume levels under B2P contracts

• The Swedish government has agreed to continue paying for expected wheelchair trips in Stockholm despite lower volumes

• Cabonline will retain 3.5% and distribute the remainder to transporters

• Negotiations for similar support on other contracts are ongoing

Reduction in B2P trip volumes

Negotiating to provide additional transport services to government entities tackling Covid-19

• Recently [won contract] to supply hospitals and hospital workers with Covid-19 tests

• Negotiations for similar support in other areas are ongoing; including lobbying the Norwegian government to allow the fixed fees paid by transporters to Cabonline to be eligible for state support

Reduction in B2C/B trip volumesAccessing alternative sources of trip demand

• For example, Cabonline has negotiated with retailers and grocers to deliver parcels and food to customers on their behalf

Weaker transporter economicsFixed fee deferral for transporters and telephone support line

• Cabonline has deferred ~SEK3k of the ~SEK8k per car per month fixed fee for a period of 2 months (to be recouped later in the year) for transporters in Sweden to alleviate fixed cost pressures in the interim

• Telephone support line for transporters to receive assistance in how to apply for and take advantage of government support packages

We have taken swift actions to address impacts on transporters caused by Covid-19

BUSINESS UPDATE

Helping transporters to manage through the crisis

11

BUSINESS UPDATE

121) Denmark was acquired in May 2019 and the full year effect is therefore not included in the numbers

▪ Cabonline had a strong start to the year with Q1 revenues of SEK ~1,040m and adj. EBITDA of SEK ~50m for January and February

▪ The rapid spread of Covid-19 and the restrictions and lockdown that followed in the Nordic countries had a direct effect on Cabonline’s sales and profitability

▪ However, as mentioned above and illustrated to the left, the underlying operations prior to the outbreak of Covid-19 were strong and performing well and in line with expectations

▪ Business model of high share of fixed fees vs. variable, as well as swiftly implemented cost reduction initiatives resulted in a lower EBITDA decline compared to revenues

▪ The impact from Covid-19 is not fully represented in March as the effect begun in mid-March, i.e. not the entire month

CommentsRevenue and Adj. EBITDA development in Q1 2020

LTM, SEKm Gross revenues

Cabonline initiatives helped safeguard EBITDA and cash flow in Q1 2020

Adj. EBITDABy mid March, Norway, Denmark and Finland had imposed restrictions and/or lockdowns of their respective countries, which led to a clear reduction in revenues for Cabonline

Strong start to 2020 with both revenue and adj. EBITDA on track for the year

519 518

372

Feb-20Jan-20 Mar-20

-28%

25 2521

-14%

The impacts felt in Q1 were evident across all regions (1/2)

BUSINESS UPDATE

13Note: Gross revenue excluding eliminations and adjustments. The costs for the Swedish finance function has been moved from segment “Central” to segment “Sweden” in 2020, thus, the historical figures have been restated for comparability.

Group Sweden Norway

• Profitability improving in Sweden and Norway, which is offset by temporary loss in Finland

• 40 procurement contracts won during the course of 2019 that have helped support growth

• Growth supported by entering in Denmark

• Stepped out of unprofitable contracts during 2018 and have gradually replaced them with new attractive ones that came into effect in 2019

• Successfully re-tendered the Stockholm Färdtjänstcontract, worth SEK 3bn over 4 years which started in April, 2019

• Continued work to integrate acquired businesses and optimise for efficiency across the organization

• Recent acquisition of Taxi Västerås, adding 148 cars, to strengthen the position in Mälardalen

• Optimisation of the B2P contract portfolio with new contracts as well as successful re-tendering of old unhealthy contracts

• Successfully re-tendered the Oslo PT contract, worth SEK 106m over 3 years, started in March, 2019

• Acquired Miljotaxi in Stavanger with 46 cars in November

322 299 311 307 292

6,3556,149

Q2-19Q1-19 Q3-19 Q4-19 Q1-20

6,200

6,490 6,401

Gross revenues Adj. EBITDALTM, SEKm

398 389 396 396 385

5,018

Q4-19Q1-19 Q2-19 Q3-19 Q1-20

5,012 4,994 5,0134,878

Gross revenues Adj. EBITDA

11 11 16 16 19

Q4-19

801803 796

Q1-19 Q2-19 Q3-19 Q1-20

796

770

Adj. EBITDAGross revenuesLTM, SEKm LTM, SEKm

The impacts felt in Q1 were evident across all regions (2/2)

BUSINESS UPDATE

Finland

14Notes: Gross revenue excluding eliminations and adjustments. The costs for the Swedish finance function has been moved from segment “Central” to segment “Sweden” in 2020, thus, the historical figures have been restated for comparability. (1) Denmark was acquired in May 2019 and the full year effect is therefore not included in the numbers

Denmark(1) Central

• Driver shortages following deregulation temporarily impacted driver utilization and financials

• Driver recruitment is improving utilization and the shift in business model to external transporters is well underway

• New CEO of Finland, Kati Rajala, hired, with strong focus on improving profitability through enhanced driver utilisation and driver recruitment

• Market entry into Denmark in Q2 2019 with the successful acquisition of Taxi 4x27, adding 300 cars, 240 transporters and 550 drivers, further strengthening Cabonline’s position as the Nordic market leader

• Growth shown in graph is due to recent consolidation of the Danish business into the group accounts

• Central capabilities have historically been strengthened to enable entry into further markets, increase the speed of technology development and improve tendering competencies

0

(13)(9) (11) (12)

Q4-19Q1-19 Q2-19 Q3-19 Q1-20

334330

337

346

336

Gross revenues Adj. EBITDA

76

1

-1

n/a 0

Q4-19Q1-19 Q2-19 Q3-19 Q1-20

n/a

196

312

0

392

Adj. EBITDAGross revenues

269

208

150

82 84

(108) (113) (119) (122)(99)

Q1-19 Q2-19 Q3-19 Q4-19 Q1-20

Gross revenues Adj. EBITDALTM, SEKm LTM, SEKm LTM, SEKm

• After deregulation, the Finnish business experienced challenges with driver retention, new market entrants and teething issues with a new IT system

• Prior to Covid-19, the management team had been delivering in line with a closely monitored (weekly at a Board level) turnaround plan to return the business to growth

• Travel restrictions and more limited government support in Finland are now negatively impacting the business and creating a set-back to the recovery, despite increased focus on streamlining measures to reduce cash consumption

• Market fundamentals are changing as one competitor has been reported bankrupt due to the effects of Covid-19, and more might follow. This can turn out to be an opportunity, but in order to best solve the situation Cabonline’s involvement in Finland needs reorganisation

• The four possible scenarios are to 1) achieve recovery and continue as-is, 2) accelerate recovery through a combination with a competitor, 3) source a buyer and divest of the operations in Finland or 4) halt subsidisation from the parent and allow insolvency proceedings

• The alternative to these scenarios is that Finland will affect the Group EBITDA negatively with ~SEK10m and the Group cash generation by ~SEK40m, which is not viable in the long term

Finland is underperforming compared to the other regions and an accelerated cost base restructuring is now ongoing

Background and development

15

Illustrative growth in adj. EBITDA in Finland

…

Q3-

19 …

Q4-

18

Q1-

19

Q2-

19 ……

Q2-

19

Q1

-19 …

Q4-

18

Q3

-19 … … …

set-back

Pre-Covid-19 crisis Post-Covid-19 crisis

Key facts

~40% of fleet ~60% of fleet

Two core brands, spanning all price points from value/mass-market to business/premium

B2P

B2C/B

25%

75%

IndicativeRevenue Split

Coverage of consumer, business, and public sector customers

Present in both the Greater Helsinki Area and Oulu, with ~350 cars being serviced from a single site (HQ and dispatch centre) in Helsinki

BUSINESS UPDATE

16

Agenda

Executive summary

Business update





This is having a clear impact on our trip volumes

17Source: BBC, Sveriges Radio (Radio Sweden), VG, The Local, company informationNote: Trip volume numbers are for Sweden and Norway, i.e. excluding Finland and Denmark.

Cabonline believes it has reached the bottom and expect a gradual recovery from now

Countries across the Nordics are now gradually reopening

2020

2020 - Number of trips (’000) 2019 - Number of trips (’000) Delta between 2020 and 2019

▪ As the timeline below shows, Norway, Denmark and Finland recently launched initiatives to reopen their respective societies

▪ Further, not mentioned in the timeline below, is the next initiatives in Norway (to be announced May 7th) and Denmark (to be announced May 10th) which, if followed through on, will reopen the societies even further, including churches, libraries and shopping centres, as well as children up to 16 years old returning to school. Additionally, Finland will announce further guidelines including reopening schools on May 14th

▪ Sweden has a different approach to the pandemic than other Nordic countries, and has not imposed any material restrictions (except for larger social gatherings), but rather guidelines regarding social distance, travel and working from home. Restaurants, bars, and other businesses are still open for business, but provides a materially lower demand for taxi services as there is a social distancing recommendation that is largely being followed

Norway – 20 AprilReopening phase one incl. kindergartens

Norway – 27 AprilReopening phase one incl. kindergartens

234 230179

100 88 83 67 74 9263

242273 273

189

248

139

15-Mar-20

-4%

1-Mar-20

-16%

275

-34%

12-Apr-208-Mar-20

-63%

22-Mar-20

-68%

29-Mar-20

-69%

5-Apr-20

-75%-61%

19-Apr-20

-63%

26-Apr-20

-55%

2-May-20

264268 272

Denmark – 11 March Announced national lockdown

Norway – 12 March Announced national lockdown

Denmark – 15 AprilReopening phase one incl. schools level 0 - 5

▪ Trip volumes and travel limitations/restrictions are clearly highly correlated

▪ As lockdowns and limitations on free movement was implemented in the Nordics in March, Cabonline saw a significant drop in number of trips conducted (to as much as 75% compared to 2019, as seen in the graph below in the week of April 12th)

▪ However, as some of the countries begun to re-open their respective societies (starting on April 15th with Denmark and followed by Norway on April 20th), Cabonline immediately saw a recovery in trip volume. This trend is expected to continue as the societies re-open even further

Finland – 18 March Closed schools and several industries

Represents 6 days (Monday-Saturday)

Clear correlation between the launched reopening initiatives and the trip volumes

First cases confirmedNorway – 26 FebDenmark – 27 FebSweden – 27 FebFinland – 29 Feb

CABONLINE IS WELL PREPARED FOR A RECOVERY

CommentsTrip volume assumptions

• Cabonline has assumed a slow recovery in trip volumes the forthcoming months. Trip activity is assumed to be at low levels until the end of summer, with a gradual recovery during the fall as the pandemic enters a new, less critical phase, with less restrictions on travel and social distancing

• Despite significant decline in trip volumes compared to last year, the liquidity position is expected remain solid throughout 2020 and sufficient to cover working capital swings and deferred tax and interest payments

• Should trip volumes continue to be severely depressed for a prolonged period of time, as opposed to the base case, a need of external capital would eventually appear, in which H.I.G. would be supportive

• Cabonline have a high degree of comfort in the Base Case and is currently trending above the Base Case. Newly presented government support package in Sweden directed towards taxi drivers along with announcement of easing in restrictions and re-openings in all the Nordic countries is indicating a continuance of the trending above the Base Case

18

A solid liquidity position is expected be maintained throughout the year in the base case scenario

Forecast monthly ending cash balance (SEKm)

0

50

100

150

200

250

300

350

400

2020 actuals Base case

Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Trip

vo

lum

e, d

elt

a (%

) to

20

19

Source: Company informationNote: Trip volume numbers are for Sweden and Norway, i.e. excluding Finland and Denmark.

-80

-70

-60

-50

-40

-30

-20

-10

0

May-20Apr-20 Sep-20

-45%

Jun-20Mar-20

-68%

-57%

-51%-48%

Jul-20 Aug-20

-40%

-32%-27%

Oct-20

-21%

Nov-20

-16%

Dec-20

5-Apr 12-Apr 19-Apr 26-Apr 2-May

-49%-55%-68%

-45%-37%

B2P - Trip volume, delta (%) to 2019

+ 31 p.p.

Actual 2020Base case scenario Critical level

Performance slightly above the base case

scenario

For a liquidity issue to materialise, trip volumes for the year need to be down 70%, which is ~20-40% lower than

the base case scenario from May to AugTrip volumes from mid April significantly

better than the base case


Cabonline has sufficient liquidity to run the business as usual with no change in strategic direction


Swift and decisive actions taken by Cabonline

19

Management’s swift and decisive actions during the onset of the Covid-19 outbreak have positioned the business well to manage through this pandemic

✓ Several cost saving initiatives implemented to adapt the organisation to the current market situation and expected revenue generation going forward

✓ Government support packages have been utilised to the fullest extent permissible

• As a result of the operational actions and government aid packages, Cabonline deem to have a sufficient liquidity position to navigate through the crisis, including the coverage of any intra-day working capital swings and repayment of deferred tax payments

• The acceleration of parts of the cost savings programme (earlier planned for 2021 and 2022) will further strengthen Cabonline’s cash flow

• Furthermore, the liquidity forecast shows no warning signs of Cabonline not being able to implement the previously announced IT investment programme once the pandemic is over and hence there is no need for external capital to strengthen liquidity at this stage

• Positive trend in trip data since mid-April following a number of easingsGrowing momentum in market recovery

✓ Easing of government restrictions, including travel bans, social gatherings and re-opening of schools, across the Nordics drives the demand for taxi services

✓ Recently announced government support package in Sweden directed to, among other, transporters in the taxi industry

Sufficient funds for the foreseeable future

Sweden (Latest update end of April)

• Businesses can receive support for fixed costs

• Revenue losses support which varies between 22.5%-75% of the company’s fixed costs

Norway (Latest update mid March)

• Self-employed workers are guaranteed 80% of average income over the last three years(2)

• VAT reduced from 12% to 8%

• Cash support for fixed fees for companies between NOK 10-20bn per month

Denmark (Latest update mid March)

• Self-employed workers can receive 75% of their lost income, and laid off workers receive 75%-90% of salaries(3)

• SMEs can receive between 25%-80% in cash support for fixed fees, given more than 40% decrease in revenues

Finland (Latest update beginning of April)

• Self-employed workers can apply for support for fixed costs

• Small businesses can receive support for laid off workers from day 1

• A new support package was launched in Sweden 30th of April in which transporters are expected to receive financial support for paying their fixed fees

• The company provides support in explaining to transporters how to find and apply for Government support packages available to them

• The transporters can also apply for a deferral of the fixed monthly fees to Cabonline

20Notes: (1) Extract, not complete; (2) Up to NOK 600,000; (3) up to DKK 23,000 per month

Potential liquidity upside as new government initiatives continue to be announced

Support package to help transporters pay fixed fees announced Apr 29th

Overview of government support packages(1) available


21

Agenda

Executive summary

Business update





✓ Strong brand portfolio with highly recognised brands

✓ Proven business model with high degree of fixed fees

✓ Market leading position with the largest fleet in the Nordics

✓ Strong B2P contract portfolio providing non-discretionary long-term revenue

22

We are well prepared for a strong recovery

Excellent position with a strong market

position and underlying capabilities to

recover well following the reopening of

the societies and restoration of the

economic activities in the Nordics

CABONLINE AFTER THE PANDEMIC

23

As majority owner, H.I.G. is fully committed to supporting the company’s next growth phase

High level of engagement Cornerstone investment

H.I.G. Capital has been a fully committed owner with a high level of engagement since 2015

– Daily phone calls, weekly catch ups, monthly Board and quarterly reviews

– H.I.G. and management have continuously focused on pursuing a wide array of tangible growth initiatives (e.g. building on the investments made in technology to drive growth in B2B/B2C, further optimisation of the B2P contract portfolio, integrating the newly acquired brands whilst continuing to pursue a long list of M&A targets)

– H.I.G. Capital has used its extensive network to assist with specific transformation initiatives (e.g. leveraging its network of senior advisers to help refine the strategy for specific projects, like the IT transformation work)

Flexible hold period

Hold period 2015 – present

2009 – 2018Highly successful realised deal

2012 – present

2011 – present 2011 – present

Cornerstone investment

>20

investments

Illustrative

Current European Fund

~60

investments

All European Funds

…and top 5

investments

in Europe in

history

Cabonline is one

of H.I.G.’s top 3

holdings in the

current European

fund…

Cabonline is one of the top 3 largest investments in the current fund and is one of the top 5 largest investments in all European funds to date

H.I.G. Capital have a long-term, responsible and sustainable approach to ownership and are not restricted by fixed ownership periods, having held some investments for almost a decade

CABONLINE AFTER THE PANDEMIC

24

Agenda

Executive summary

Business update





Despite a strong liquidity position, Covid-19 will impact Cabonline’s ability to comply with the leverage maintenance test

POTENTIAL AMENDMENTS

Background Proposal of revised maintenance covenant track

25

Period

Maintenance covenant

Leverage maintenance test

Proposed amended maintenance test

31 December 2019 7.00:1 7.00:1

31 March 2020 7.00:1 7.00:1

30 June 2020 7.00:1 Alternative measurement

30 September 2020 7.00:1 Alternative measurement

31 December 2020 6.75:1 Alternative measurement

31 March 2021 6.50:1 Alternative measurement

30 June 2021 6.25:1 Alternative measurement

30 September 2021 6.00:1 Alternative measurement

31 December 2021 5.75:1 7:00:1

31 March 2022 5.50:1 7:00:1

30 June 2022 5.25:1 6.75:1

30 September 2022 5.00:1 6.50:1

• Cabonline reacted swiftly to the outbreak with several actions implemented at an early stage. Cabonline’s overarching priority is to carefully manage cash flow by continue to adapt costs after the prevailing market situation and expected revenue generation

• With the government support packages and operational actions taken so far, Cabonline is able to run its business as usual and fulfil all of its payment obligations

• Despite a strong liquidity position to manage through the crisis, the business’ financial result will still be materially affected by the virus and Cabonline is therefore seeking to amend the maintenance covenant test

• Given the uncertainty around the overall timing of a recovery Cabonline would like to pause leverage maintenance covenant tests, and replace with an alternative measurement, for the 6 quarters starting Q2 2020 including a delay of the 0.25x step-downs in the Leverage Ratio

Alternative measurement

• Under the current market circumstances, the leverage ratio does not accurately capture the underlying performance of Cabonline’s business and the expected recovery will be weighed down by historical figures

• Movement in the liquidity position is deemed to be the best indicator of the performance of the business as it immediately reflects any improvement or deterioration in trip activity and ultimately revenue generation

• With the currently strong liquidity and continued performance in line with the base case, there is no immanent need of additional external liquidity

Approval to take a pragmatic approach to the challenges faced in Finland

POTENTIAL AMENDMENTS

We are seeking a broad approval to restructure the involvement in Finland

26

Spectrum of potential approaches to addressing challenges in Finland

Achieve recovery and continue as-is (market conditions permitting)

• As described, prior to Covid-19, the management team had been delivering in line with a closely monitored turnaround plan

• Despite an increased focus on streamlining measures, the impact of Covid-19 is expected to delay the recovery

• The extent of the delay will depend on the life of the virus

• Should market conditions improve as expected, the Finnish operations will be able to continue as-is

Given the range of potential outcomes in Finland, Cabonline is seeking a package of approvals to restructure the involvement in Finland as appropriate

1 2 3 4

In order of descending preference

Accelerate recovery through a combination with a competitor

• If current market conditions persist or even worsen, the ‘as-is’ operation in Finland will not be viable

• Given other competitors in the market are facing similar challenges, there may be a possibility to structure a transaction to acquire or merge with a competitor for no cash consideration, in a manner that improves the delevering profile, and which delivers significant synergies to achieve a recovery sooner than otherwise possible

Source a buyer and divest of the operations in Finland

• If it is not possible to structure a transaction with a competitor and a deterioration in the market renders the current operations unviable, then Cabonline would have to look at options to divest of the operations

• Although this would be a set-back to the pan-Nordic ambitions, this approach would halt the cash consumption in Finland and should also free the parent of any surviving Finnish liabilities

Halt subsidisation from the parent and allow insolvency proceedings

• In the event the Finnish operations are no longer viable, structuring an attractive (cash-free) deal with a competitor is not possible and Cabonline is unable to source a buyer for the Finnish business, Cabonline will be forced to pursue a bankruptcy

• This would then halt the cash consumption, improve the leverage profile, and protect the parent and core operations in Sweden, Norway and Finland

No approval required Approval potentially required (depending on structure)

Approval required given impact on security package

Approval required given Event of Default otherwise triggered

27

Agenda

Executive summary

Business update




Appendix – Financial statements

28Note: Reported EBITDA defined as Operating profit before amortisation and depreciation of fixed assets and impairment of goodwill

Income statement

APPENDIX – FINANCIAL STATEMENTS

2019 2018 2019 2018 Amounts in MSEK Oct-Dec Oct-Dec Jan-Dec Jan-Dec

Total Revenue 1,789 1,654 6,490 6,217

Capitalised development costs 7 6 26 25

Transport expenses -1,449 -1,300 -5,211 -4,875

Other external expenses -145 -161 -514 -561

Personnel expenses -163 -140 -577 -548

Other operating expenses -3 -1 -4 -5

Amortisation and depreciation of fixed assets -64 -53 -244 -223

Impairment of goodwill 0 -152 -124 -152

Total operating expenses -1,816 -1,801 -6,648 -6,338

Operating profit (EBIT) -27 -148 -158 -121

Financial income 0 9 17 13

Financial expenses -57 -35 -137 -107

Profit/loss from financial items -57 -26 -120 -94

Profit/loss before tax -84 -174 -278 -216

Income tax 4 -4 19 2

Net profit/loss for the period -80 -178 -259 -214

Profit/loss attributable to:

The Parent Company’s shareholders -80 -178 -260 -214

Non-controlling interests -0 0 1 1

Net profit/loss for the period -80 -178 -259 -214

29

Balance sheet (1/2)


Amounts in MSEK 31/12/2019 31/12/2018

Fixed assets

Intangible fixed assets 1,537 1,693

Tangible fixed assets 192 173

Ownership interests in associated companies 1 3

Deferred tax assets 6 9

Long-term interest-bearing receivables 12 -0

Other financial assets 7 10

Total fixed assets 1,755 1,889

Current assets

Inventories 4 4

Accounts receivable 271 264

Other receivables 61 41

Short-term interest-bearing receivables 29 20

Tax assets 14 24

Prepaid expenses and accrued income 119 77

Short-term investments 2 -

Cash and bank balances 357 85

Total current assets 856 515

TOTAL ASSETS 2,612 2,404

30Note: Negative shareholders equity includes goodwill impairment costs of SEK 124m (Q2 2019) and SEK 152m (Q4 2018)

Balance sheet (2/2)


Amounts in MSEK 31/12/2019 31/12/2018

Shareholders Equity

Share capital 4 4

Other contributed capital 386 386

Reserves 6 4

Retained earnings, including result for the period -670 -412

Total shareholders equity attributable to the parent company’s shareholders; -275 -18

Non-controlling interests 5 6

Total shareholders equity -269 -12

Provisions and Long-term liabilities

Long-term interest-bearing liabilities 2,009 1,607

Deferred tax liabilities 62 84

Other long-term liabilities 51 12

Total provisions and long-term liabilities 2,122 1,705

Short-term liabilities

Short-term interest-bearing liabilities 62 73

Accounts payable 102 107

Current tax liabilities 21 26

Other liabilities 106 105

Accrued expenses and prepaid income 468 401

Total short-term liabilities 759 711

TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 2,612 2,404

31

Cash flow


2019 2018 2019 2018Amounts in MSEK Oct-Dec Oct-Dec Jan-Dec Jan-DecOperating activitiesOperating profit -27 -148 -158 -121Adjustments for items not included in the cash flow 65 211 369 375Interest paid -41 -22 -112 -98Interest received 1 0 2 2Taxes paid -2 -0 -16 -20Cash flow from operating activities before -4 41 85 137changes in working capital

Change in working capital -9 37 -9 12

Cash flow from operating activities -12 78 76 149

Investment activitiesReceived Payments - Sublease of Vehicles 5 - 26 -Acquisition of business operations -12 -0 -25 -2Additional paid contingent consideration 0 -25 -9 -84Investments in tangible and intangible fixed assets -33 -11 -75 -45Acquisition of financial assets - - - -1Disposal of fixed assets 3 - 8 -Cash flow from investment activities -38 -36 -75 -132

Financing activitiesRepayment of leasing liabilities- Vehicles -9 -7 -42 -40Repayment of leasing liabilities- Rent -4 - -22 -Change in other loans 6 -4 7 -13Change in utilisation of overdraft facility 125 - 125 -Repayment of overdraft facility -19 -11 -30 30New bond financing 575 - 575 -Repaid bonds -344 - -344 -Cash flow from financing activities 330 -22 269 -23

Cash flow for the year 281 21 270 -6Cash and cash equivalents at the beginning of the year 75 66 85 91Exchange rate differences in cash and cash equivalents 1 -2 1 1Cash and cash equivalents at end of the period 357 85 357 85

bond investor presentation - cabonline · 2020-05-04 · this presentation is for information...

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