Slide 1: Axactor Q3 2021
AXACTOR Q3 2021 27 October 2021
Slide 2: Agenda
Agenda Company introduction 1 Highlights 2 Financials 3 Outlook 4 2
Slide 3: Axactor is an established European debt collection company
Axactor is an established European debt collection company that has grown rapidly in targeted markets A leading European debt collector Operating in a few, stable and well developed markets Share of revenue1 • Established in Q4 2015 with headquarters in Oslo, Non- Norway, and is one of Europe’s top-
Slide 4: Strategic focus has shifted from growing scale to growing return on equity
Strategic focus has shifted from growing scale during the start-up phase to growing return on equity Start-up (2016-2020) Established player (2021-2024) Steady state (2025→) Grow scale Grow return on equity Grow presence • Aggressive growth • Grow size in existing markets • Steady state • Market ent
Slide 5: Niche strategy to disrupt the industry on cost-to-collect
Axactor is pursuing a niche strategy to disrupt the industry on cost-to-collect NPL Cost-to-Collect for selected peers in 20201 (EURm) • Axactor incepted to disrupt the industry on 86% 59% cost-to-collect 48% • Continued innovation and growing economies 45% 43% of scale to fuel further improvements
Slide 6: Agenda
Agenda Company introduction 1 Highlights 2 Financials 3 Outlook 4 6
Slide 7: Key financial highlights Q3 2021
Key financial highlights Q3 2021 - Seasonally weak quarter further impacted by society re-opening All numbers in EUR -6% -25% -66% • Debtors prioritizing private consumption over repayment 78m 47m 10m • Q3 2020 was relatively strong driven by Gross revenue Total income EBITDA rebound after Covid-19
Slide 8: Weak quarterly result can be explained by two main factors
Weak quarterly result can be explained by two main factors Illustration of main challenges for the quarter (EUR million) • Debtors are prioritizing private EBITDA reported 10.4 consumption over repayment in a quarter of society re-opening NPL collection underperformance 1 7.7 compared to active fore
Slide 9: Strengthening the 3PC-position in Italy through acquisition of Credit Recovery Service
Axactor strengthening the 3PC-position in Italy through the acquisition of Credit Recovery Service • Successful bid to secure 100% of the shares in the Italian debt collection agency Credit Recovery Service (CRS) • Top-5 independent 3PC-player in the Italian bank and finance segment with headquarter
Slide 10: Axactor placed a new bond in Q3 and is strengthening the financial position
Axactor placed a new bond in Q3 and is strengthening the financial position • New 5-year rated bond of EUR 300m at EURIBOR + 5.35% successfully placed in Q3 • Reducing interest rate by 1.65%-points compared to the bond placement in December 2020 • Axactor is strengthening the financial position • 32
Slide 11: NPL investments significantly above previous quarters
NPL investments significantly above previous quarters and slightly above replacement CAPEX NPL investments (EUR million) 149 • NPL investments in 2021 expected to be in the region of EUR 150m, given attractive prices 95 90 85 • Replacement CAPEX of EUR 126m next twelve 69 62 months • EUR 86m already
Slide 12: Currently acquiring portfolios at attractive rates
Axactor is currently acquiring portfolios at attractive rates - Expect current book gross IRR to improve over time Gross IRR on NPL1 (% and EUR million) +46% 25.9% 23.2% 23.5% 22.0% • Gross IRR on signed forward flow contracts 15.8% 16.1% 46% higher than on the current book • Expect prices to stabil
Slide 13: Expect IRR to converge to historic average
Expect IRR to converge to historic average - Significantly above historic IRR for Axactor Estimated IRR development 2016 - 2023 Comments • Declining IRR’s throughout 2021, but significantly above historic IRR for Axactor • High number of deals, but smaller volumes due to lower 2020 and 2021 vintages
Slide 14: Cost reduction program ahead of plan
Cost reduction program ahead of plan Cost reduction program, annualized1) (EUR million) 5.6 5.1 0.5 • Realized higher savings than estimated in Q3 3.9 • Site consolidation in Norway • Higher impact of previously implemented initiatives 2.3 5.1 • Various smaller improvement initiatives • Cost reducti
Slide 15: Agenda
Agenda Company introduction 1 Highlights 2 Financials 3 Outlook 4 15
Slide 16: Gross revenue impacted by a seasonally weak quarter
Gross revenue impacted by a seasonally weak quarter with vacation period in Europe and society re-opening Gross revenue (EUR million) 99 -6% 95 91 91 92 87 85 83 79 78 71 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 16
Slide 17: NPL segment with seasonally weak quarter and negative revaluations
NPL segment with a seasonally weak quarter and net negative portfolio revaluations NPL Gross Revenue and CM1% (EUR million and %) 80% 79% 77% 75% 77% 73% 69% 78% 66% 64% 69 66 54 61 62 63 1 59 • Portfolio amortization rate of 43% 54 54 0 9 52 50 6 1 28 27 21 24 • CM1 margin impacted by top line 17 2
Slide 18: Decline in debtors' willingness to pay yielded collections below forecast
A sharp decline in debtors' willingness to pay yielded collections below active forecast in Q3 NPL unsecured active forecast versus collection • Unsecured collection performance in Q3 2021 of 89% • Sharp decline in debtor willingness to repay in Q3 during society re-opening in Europe • Reduced short
Slide 19: 3PC development
3PC development - Margins are improving. Structuring organization to be positioned for volume ramp-up 3PC total income and CM1% (EUR million and %) 16 16 -4% 14 13 14 13 12 • Market is improving with increasing pipeline 11 12 11 10 • Negative impacts related to Covid-19 continue, 50% 40% 44% particu
Slide 20: REO development (run-off segment)
REO development (run-off segment) - Good sales momentum on a declining asset base, but with negative margins REO total income and CM1% (EUR million and %) 25 25 20 21 • Revenue upheld on a good level despite declining asset base and vacation period -22% 13 • Inventory down 42% since Q3 2020 12 12 10
Slide 21: Summary: A soft quarter, but Cash EBITDA upheld
Summary: A soft quarter, but Cash EBITDA upheld on a reasonable level despite challenges and low NPL investments in 2021 Total Income EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) 49% -9% 36% 32% 29% 34% 75 -25% 30% 31% 32% 25% 67 74 72 22% 65 66 66 59 60 61 64
Slide 22: Positive trend on depreciations, financial cost and tax, but losses after tax
Positive trend on depreciations, financial cost and tax, but ending the quarter with losses after tax D&A1, Net financials and tax Net profit after tax (EUR million) (EUR million) 24 7 • Positive development in net financial 3 17 21 20 5 5 items YoY 18 3 3 18 5 4 2 16 17 14 • Interest expense of EUR
Slide 23: Volatile RoE to shareholders during the pandemic
Volatile RoE to shareholders during the pandemic Return on Equity excl. non-controlling interest per quarter (annualized) Covid-19 • Expect short term fluctuations in RoE 15% 11% driven by seasonality, Covid-19 and 9% 9% 9% business performance 10% 7% 7% 5% 7% 5% 4% 7% 7% • Expect RoE to improve ove
Slide 24: Agenda
Agenda Company introduction 1 Highlights 2 Financials 3 Outlook 4 24
Slide 25: Outlook
Outlook • Reduced short-term visibility on collection performance following a sharp decline in debtors' willingness to pay as societies re-opened • 3PC volume expected to return to pre-pandemic levels over time as societies re-open and default rates increases again • Increasing market activity for b
Slide 26: Supporting information
Supporting information
Slide 27: NPL portfolio Q3 2021
NPL portfolio Q3 2021
Slide 28: NPL segment with seasonally weak quarter and negative revaluations
NPL segment with a seasonally weak quarter and net negative portfolio revaluations NPL Gross Revenue and CM1% (EUR million and %) 80% 79% 77% 75% 77% 73% 69% 78% 66% 64% 69 66 54 61 62 63 1 59 • Portfolio amortization rate of 43% 54 54 0 9 52 50 6 1 28 27 21 24 • CM1 margin impacted by top line 17 2
Slide 29: Declining collection performance after a weak Q3
Declining collection performance after a weak Q3 Actual collection vs. active forecast1 (LTM, rolling) 112% 108% 106% • Q3 collection performance of 89% 100% 101% 101% 98% 97% 96% 98% 98% 95% 92% 93% • LTM collection performance of 95% • Long term average performance expected to fluctuate around 100
Slide 30: NPL investment commitments of EUR 86m next 12 months
NPL investment commitments of EUR 86m next 12 months - Prioritizing high IRR portfolios, and expecting significant volumes to be offered in Q4 2021 Quarterly NPL investments (EUR million) 149 • Expect significant one-off 95 volumes to be offered in Q4 90 85 2021 69 62 • Commitments decrease towards
Slide 31: ERC decreasing by 1% YoY
ERC decreasing by 1% YoY due to low NPL investment levels and net negative revaluations Estimated ERC development Forward ERC profile by year (EUR million) (EUR million) -1% 2,153 2,160 2,169 2,159 2,119 2,130 285 2,038 2,052 1,877 253 1,721 225 1,473 197 176 157 139 125 113 102 92 84 74 57 50 Q1-19
Slide 32: ERC split on estimated yield and amortization
ERC split on estimated yield and amortization - Axactor uses the IFRS industry standard, the effective interest method, to calculate amortization ERC next four quarters ERC next 15 years (EUR million) (EUR million) 79 285 69 71 253 66 225 42 158 197 39 140 176 40 38 157 123 139 108 125 94 113 82 102
Slide 33: 3PC Q3 2021
3PC Q3 2021
Slide 34: 3PC development
3PC development - Margins are improving. Structuring organization to be positioned for volume ramp-up 3PC total income and CM1% (EUR million and %) 16 16 -4% 14 13 14 13 12 • Market is improving with increasing pipeline 11 12 11 10 • Negative impacts related to Covid-19 continue, 50% 40% 44% particu
Slide 35: 3PC volumes by geographic region
3PC volumes by geographic region 3PC total income split by geographic region 4% 2% 23% • Spain generate majority of 3PC income Q3’21 • Nordics accounting for 20% of revenue Total income EUR 10.9m 5% 52% 15% FIN DEU ITA NOR ESP SWE 35
Slide 36: REO portfolio (run-off segment) Q3 2021
REO portfolio (run-off segment) Q3 2021
Slide 37: REO development (run-off segment)
REO development (run-off segment) - Good sales momentum on a declining asset base, but with negative margins REO total income and CM1% (EUR million and %) 25 25 20 21 • Revenue upheld on a good level despite declining asset base and vacation period -22% 13 • Inventory down 42% since Q3 2020 12 12 10
Slide 38: REO portfolio moving towards the tail
REO portfolio moving towards the tail REO book value* REO # of units* (EUR million) 7,388 223 200 6,703 6,323 198 187 181 6,161 5,773 157 162 5,130 4,612 148 4,825 129 120 4,024 3,740 3,489 89 84 3,076 2,694 79 2,391 2,039 68 55 46 1,773 8 521 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 20
Slide 39: REO statistics
REO statistics* (EUR million) Current book Asset class # assets % of total Book value % of total • Housing represent >50% of current book value Housing 677 38 % 23.6 51 % Parking, annex etc. 605 34 % 2.1 5% Land 227 13 % 3.7 8% Commercial 264 15 % 17.8 39 % • Average book value per remaining asset E
Slide 40: Covenants Q3 2021
Covenants Q3 2021
Slide 41: Bond covenants (1/2)
Bond covenants (1/2) Loan-to-value1 - Covenant ≤75% Secured Loan-to-value1- Covenant ≤65% (Total portfolio book value divided by net interest-bearing debt) (Total portfolio book value divided by secured net interest-bearing debt) 74% 74% 75% 75% 74% 75% 70% 72% 71% 71% 69% 69% 65% 56% 54% 58% 58% 52
Slide 42: Bond covenants (2/2)
Bond covenants (2/2) Leverage ratio1 - Covenant ≤4.0x Interest coverage ratio1- Covenant ≥4.0x (Net interest-bearing debt divided by LTM Pro-forma adjusted EBITDA (Pro-forma adjusted cash EBITDA divided by net interest expenses) 7.3 7.4 6.7 6.5 3.9 4.0 5.8 4x 3.6 3.7 5.2 5.2 5.2 3.3 3.3 4.9 3.0 3.1
Slide 43: Appendix
Appendix
Slide 44: P&L statement
P&L statement EUR thousand Interest income from purchased loan portfolios For the quarter end 30 Sep 2021 41,238 30 Sep 2020 41,497 Year to date 30 Sep 2021 124,915 30 Sep 2020 121,335 Net gain/(loss) purchased loan portfolios -13,305 -624 -17,425 -37,530 Other operating revenue 18,797 21,457 66,128
Slide 45: Balance sheet statement
Balance sheet statement EUR thousand 30 Sep 2021 30 Sep 2020 Full year 2020 EUR thousand 30 Sep 2021 30 Sep 2020 Full year 2020 ASSETS EQUITY AND LIABILITIES Intangible non-current assets Share Capital 158,150 97,040 97,040 Intangible Assets 18,426 20,885 19,989 Other paid-in equity 269,900 236,502
Slide 46: Legal organization September 2021
Legal organization September 2021 Axactor SE (Norway) 50%* Axactor Holding S.r.l. Axactor Platform Holding AB Axactor Portfolio Holding AB Reolux Holding S.à r.l. (Italy) (Sweden) (Sweden) (Luxembourg) (to be moved below Axactor Platform) Axactor Finland Axactor Sweden Axactor Capital Holding Oy Axa
Slide 47: Terms and abbreviations
Terms and abbreviations Abbreviations 3PC Third-Party Collection APM Alternative Performance Measures ARM Accounts Receivable Management B2B Business to Business B2C Business to Consumer BoD Board of Directors BS Consolidated Statement of Financial Position (Balance Sheet) Terms CF Consolidated Stat
Slide 48: axactor.com
axactor.com AXACTOR
Slide 49: Slide 49