Slide 1: Financial targets and preliminary Q4-financials
Financial targets and preliminary Q4- financials 11 January 2023
Slide 2: Q4 business update, Strategy, Market outlook, Financial targets
Q4 business update Strategy Market outlook Financial targets
Slide 3: Q4 business update
Q4 business update • Axactor is delivering on the promised strategy of growth • NPL investments increasing to EUR 93m for the quarter and EUR 288m for the year - 2.7x replacement capex • 5% growth on 3PC revenue in the fourth quarter compared to last year • Axactor is delivering on the promised stra
Slide 4: Strategy
Q4 business update Strategy Market outlook Financial targets
Slide 5: Axactor is pursuing a strategy based on three strategic levers
Axactor is pursuing a strategy based on three strategic levers 1 Accretive investments • Invest in accretive portfolios with attractive gross IRR driving margin expansion on NPL • Target of reaching total backbook Gross IRR above 20%. Currently experiencing Gross IRR of 22+% on newly signed acquisit
Slide 6: Accretive investments - NPL gross IRR on the total book is steadily increasing
1 Accretive investments - NPL gross IRR on the total book is steadily increasing Gross IRR on the total NPL book1… …and per vintage 24% Gross IRR on total NPL book gradually 22% 21.3% 21.4% increasing, up 1.6pp last 7 quarters Medium term average expected to stabilize at 18-22% 20% Committed investm
Slide 7: Cost leadership
2 Cost leadership - Axactor was incepted to create the most cost-efficient debt collection company in Europe Key levers to obtain cost leadership • Started with practically “clean sheets” • One common cloud-based IT-platform • Significant investments in data-driven collection • Fostered a strong cos
Slide 8: Cost leadership - Axactor is probably the most cost-efficient debt collector in Europe
2 Cost leadership - Axactor is probably the most cost-efficient debt collector in Europe NPL cost-to-collect selected peers 20211 EBITDA selected peers YTD Q3 2022 Cost leadership creates a 44% Axactor 50% strategic tangible competitive advantage 49% Peer 1 20% Negative one-time effect reducing EBIT
Slide 9: Cost leadership - becoming even more data-driven in operations
2 Cost leadership - The next “big thing” on cost is to become even more data-driven in operations An example of what we do on data Where to go from here on cost? • Debt collection is all about understanding which cases to • Investing heavily in machine learning scorecards work on and how to work the
Slide 10: Best at what we do - Following a niche strategy
3 Best at what we do - Following a niche strategy to become best at what we do NPL book values per industry NPL book values per debt type Markets (%) (%) 0% 5% Bank and finance Unsecured Other industries Secured 100% 95% Why bank and finance? Why unsecured? Why our six markets? • Larger claims perfe
Slide 11: Market outlook
Q4 business update Strategy Market outlook Financial targets
Slide 12: Current market affected by several macro factors
Current market affected by several macro factors Increased cost of funding1 • Interest rates are increasing but expected to be fully offset by the interest rate hedge in Q1 2023 compared to Q4 20222 Mixed outlook on backbook collections • Rising inflation and interest rates might put pressure on deb
Slide 13: Axactor expects interest expenses on borrowings to be flat in Q1 2023
Axactor expects interest expenses on borrowings to be flat in Q1 2023 compared to Q4 2022 Quarterly interest expense on borrowings (EUR million) ESTIMATE - Q4 2022 16.1 • Estimated based on the interest rates set for Q4 and based on the draw per 30 September 20221 Estimated changes in Q1 0.0 • Inter
Slide 14: We expect IRR's to increase significantly in 2023
We expect IRR’s to increase significantly in 2023 - Many similarities between the financial crisis and the current market turmoil for the industry Illustration of perceived market IRR (2008-2022) Financial crisis Industry over-establishment Normalization Pandemic Inflation (2008-2010) (2011-2017) (2
Slide 15: We expect low transaction volumes in 2023 and a reopening in 2024
We expect low transaction volumes in 2023 and a reopening with attractive prices in 2024 2023 2024 2025 • Sellers and buyers are unable to agree • The market is slowly • The “new normal” is Market coming back to established and the sentiment • Uncertainty regarding normalization again market is back
Slide 16: Financial targets
Q4 business update Strategy Market outlook Financial targets
Slide 17: Axactor has set realistic targets which outline a clear direction
Axactor has set realistic targets which outline a clear direction going forward Dimension Targets 2023 Targets 2024 and beyond • Axactor will deleverage until NPL investments of Growth market prices stabilizes • NPL investments of EUR 200 – 300 million EUR 100 - 150 million1 with normalized volumes
Slide 18: Compared to historical performance, all 2023 targets are perceived as realistic
Compared to historical performance, all 2023 targets are perceived as realistic NPL investments Return on equity Dividends1 Leverage2 290 9% 4.0 9% 50% 3.6 3.4 3.5x 208 150 114 20% 100 -6% -9% 0% 0% 0% 2020 2021 2022e 2020 2021 2022 2020 2021 2022e 2020 2021 2022 YTD Q3 YTD Q3 Actual/estimate Target
Slide 19: Where are we heading beyond 2023?
Where are we heading beyond 2023? - Current business performance and portfolio prices indicates an ROE uplift Illustration - return on equity to shareholders (%) ROE YTD Q3 2022 9% Run-off discontinued • Book values of only EUR 13m remaining ultimo Q3 2022 operations • Expected to be fully divested
Slide 20: Axactor will deleverage in 2023 to prepare for refinancing of ACR02
Axactor will deleverage in 2023 to prepare for refinancing of ACR02 and await stabilization of NPL and bond markets Facility Facility type size1 Maturity profile Refinancing strategy Banks - Strong relationship with the banks. Refi. process initiated and expected to be finished before the summer Ban
Slide 21: Disclaimer
Disclaimer - Cautionary note regarding forward-looking statements The statements contained in this presentation may include forward-looking statements, such as statements of future expectations. These statements are based on the management’s current views and assumptions and involve both known and u
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