Slide 1: Q3 2020
AXACTOR Q3 2020 28 October 2020
Slide 2: Agenda
Agenda 1 Highlights 2 Financials 3 Summary & Outlook 2 4 Q&A
Slide 3: Axactor continued the normalization trend from June
Axactor continued the normalization trend from June -Recovery in Spain and Italy, stable performance in the Nordics and Germany Gross revenue (EUR million) 30 29 27 27 27 • Normalization of performance in all markets in 26 24 Q3 22 21 • REO with higher volume and better than expected price achieveme
Slide 4: All business segments improved in Q3
All business segments improved in Q3 - Legal and court systems back to full operation NPL Gross revenue 3PC Gross revenue REO’s Gross revenue (EUR million) (EUR million) (EUR million) 22.2 21.6 20.9 17.7 18.1 18.4 17.3 18.1 16.4 4.5 4.5 4.5 4.4 3.9 4.0 4.1 3.8 3.5 3.7 3.4 3.1 3.2 3.0 2.7 3.0 2.7 0.9
Slide 5: REO performance in Q3 triggered accrual reversal
REO performance in Q3 triggered accrual reversal - Final impairment still pending REO book value (EUR million) 115 • Released EUR 5.1 million of the impairment 26 accrual booked in Q2 89 • Price and volume above expectation in Q3 84 10 5 • Healthy sales pipeline for the next quarters • EUR 1.7 milli
Slide 6: Highest EBITDA margin ever recorded for Axactor
Highest EBITDA margin ever recorded for Axactor EBITDA margin development 60% 49% • Record-high EBITDA margin enabled by 36% • Continued cost discipline with both permanent and 40% 29% 32% 41% temporary initiatives 26% 25% 20% 20% • Continued normalization of revenue 20% 6% 30% 31% 17% 21% • Operati
Slide 7: Reducing risk through lower forward flow commitments
Reducing risk through lower forward flow commitments - Available cash flow after interest expense exceeds committed capex going forward NPL investments and Cash EBITDA development (EUR million) 149 • Cash EBITDA less interest expense expected to continue to improve through 2020 and into 2021 • Forwa
Slide 8: Axactor expects a potential second Covid-19 wave to have less negative business impact than in Q2
Axactor expects a potential second Covid-19 wave to have less negative business impact than in Q2 “First wave” “Second wave” Society Country wide shutdowns Local shutdowns Legal systems Closed Open “Over night” – majority of Axactor is prepared Axactor employees on home office ~400 employees at home
Slide 9: Investing in people and systems to secure operational excellence
Investing in people and systems to secure operational excellence Area Description Comments • New operational blueprint for NPL segment Continuous focus on • Improved KPIs on telephony operational improvements • Winning benchmarks on 3PC, using analytics and automated solutions Operational in combina
Slide 10: Agenda
Agenda 1 Highlights 2 Financials 3 Summary & Outlook 10 4 Q&A
Slide 11: Record high margins in the quarter primarily driven by cost efficiency combined with income recovery
Record high margins in the quarter primarily driven by cost efficiency combined with income recovery Total income development EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) 60 55 50 49% 36% 31% 32% 50% 29% 30% 41%* 45 40 21% 25% 30 35 74 75 30 72 0% 68 25 26 25*
Slide 12: NPL – Improving collection performance in Q3
NPL – Improving collection performance in Q3 Actual collection vs. active forecast* (LTM, rolling) 112% 108% 106% 101% • Q3 collection performance of 101% 100% 101% 98% 97% 94% 95% 95% 97% 92% 93% • LTM collection performance increased to 97% 90% • Supported by curve revisions implemented in Q2 • Lo
Slide 13: 3PC – Increasing volumes in a traditionally slow third quarter
3PC – Increasing volumes in a traditionally slow third quarter Total income 3PC • 3PC volumes picking-up, although still not back at (EUR million) 18 pre Covid-19 level 16 16 • Q3 seasonally weak, but 2020 will deviate normal seasonality 16 15 • Gradual return of suspended volumes in Italy and Spain
Slide 14: REO – Market activity improving quicker than anticipated
REO – Market activity improving quicker than anticipated REO total income development • 2/3 of all REO assets acquired now sold (EUR million) • Accumulated sales of approximately two thirds of 7,388 30 8 000 all REO assets acquired 7 000 6,323 5,773 6 000 • Higher volume and better prices than expec
Slide 15: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement (EUR thousand) For the quarter end Year to date • Total net financial items of EUR 15.4 million EUR thousand 30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019 EBIT 27,710 17,405 6,650 61,027 • Interest cost of EUR 14.0 million Financial reven
Slide 16: Balance sheet items
Balance sheet items Assets Equity and Liabilities (EUR million) (EUR million) 1 600 0 00 1,343 1,343 1 400 0 00 1,291 1,291 • Portfolios represent the vast majority of asset base 1 200 0 00 1 000 0 00 • Debt has increased following portfolio 874 925 acquisitions 800 000 600 000 1,112 1,200 • Equity
Slide 17: Agenda
Agenda 1 Highlights 2 Financials 3 Summary & Outlook 17 4 Q&A
Slide 18: Axactor – becoming an established player
Axactor – becoming an established player - Entering new phase with focus on profitability and operational excellence Start-up (2016-2020) Established player (2021-2024) Steady state (2025→) Grow revenue & scale Grow return on equity Grow presence Aggressive growth Grow size in existing markets Stead
Slide 19: Covid-19 delaying Axactor ROE growth by one year
Covid-19 delaying Axactor ROE growth by one year Drivers Q3 2020 Covid-19 impact Outlook • Portfolios acquired at attractive Positive • Improved IRR levels to be blended • NPL portfolio prices IRRs in the Nordic market in over time • Significant increase in combined Positive over time • Leveraging o
Slide 20: Summary & Outlook
Summary & Outlook • Q3 financials show a normalization of activity levels for all business areas after a weak Q2 (Covid-19) • NPL collection performance above 100% in Q3 • Net reversal of EUR 5 million REO impairment accrual • Axactor more resilient than in Q2 towards a potential second Covid-19 wav
Slide 21: Agenda
Agenda 1 Highlights 2 Financials 3 Summary & Outlook 21 4 Q&A
Slide 22: Supporting information
Supporting information
Slide 23: Q3 2020 Financial highlights
Q3 2020 Financial highlights Total income EBITDA and margin Cash EBITDA NPL ERC (EUR million) (EUR million) (EUR million) (EUR million) ,70 ,0 -3% +51% -6% +15% ,60 ,0 ,50 ,0 ,40 ,0 ,30 ,0 49% ,20 ,0 ,10 ,0 31% 64 62 20 30 60 56 1 877 2 160 - Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q
Slide 24: NPL portfolio
NPL portfolio Q3 2020
Slide 25: Continue to hold back on new investments
Continue to hold back on new investments NPL collection on own portfolios Quarterly NPL investments (EUR million) (EUR million) 61 62 54 54 54 52 95 50 90 85 40 62 25 35 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 ESP NOR DEU SWE IT
Slide 26: Improving collection performance in Q3
Improving collection performance in Q3 Actual collection vs. active forecast* (LTM, rolling) 112% 108% 106% 101% • Q3 collection performance of 101% 100% 101% 98% 97% 94% 95% 95% 97% 92% 93% • LTM collection performance increased to 97% 90% • Supported by curve revisions implemented in Q2 • Long ter
Slide 27: Portfolio acquisitions focused on Nordic forward flows
Portfolio acquisitions focused on Nordic forward flows Portfolio capex distribution per country* • 84% of YTD 2020 capex invested in the Nordics Share of total (EUR million) • Shift from Spain towards the Nordic countries 561 399 187 • Attractive IRR development through 2019 and into 2020 • Primaril
Slide 28: Forward flow outlook
Forward flow outlook Estimated FF investments from signed contracts (EUR million) • Total investment of EUR ~175m in forward flow contracts so far in 2020 25 • Estimated Q4 forward flow capex of EUR ~ 25m 21 • No new contracts signed in Q3 • Continued trend of reducing commitments for the 12 12 14 c
Slide 29: ERC increase following continued forward flow acquisitions
ERC increase following continued forward flow acquisitions ERC development Forward ERC profile by year (EUR million) (EUR million) 2 500 300 275 2 153 2 160 256 275 2 038 2 052 250 1 877 2 000 225 218 200 194 1 500 174 175 158 143 130 150 118 107 1 000 125 97 88 80 100 75 69 500 52 50 25 0 0 Q3 2019
Slide 30: 3PC Q3 2020
3PC Q3 2020
Slide 31: Increasing volumes in a traditionally slow third quarter
Increasing volumes in a traditionally slow third quarter Total income 3PC • 3PC volumes picking-up, although still not back at (EUR million) 18 pre Covid-19 level 16 16 • Q3 seasonally weak, but 2020 will deviate normal seasonality 16 15 • Gradual return of suspended volumes in Italy and Spain 14 14
Slide 32: Strategic goal to increase 3PC market share in all regions
Strategic goal to increase 3PC market share in all regions 3PC total income split by geographic region FIN; 3% SWE; 1% • Strong performance on benchmark contracts across all countries ITA; 5% • Germany increasing its relative share of 3PC revenue YoY DEU; 22% Q3’20 • Aim to increase the Nordic 3PC b
Slide 33: REO portfolio Q3 2020
REO portfolio Q3 2020
Slide 34: Market activity improving quicker than anticipated
Market activity improving quicker than anticipated REO total income development • 2/3 of all REO assets acquired now sold (EUR million) • Accumulated sales of approximately two thirds of 7,388 30 8 000 all REO assets acquired 7 000 6,323 5,773 6 000 • Higher volume and better prices than expected 20
Slide 35: REO portfolio moving towards the tail
REO portfolio moving towards the tail REO book value* REO # of units* (EUR million) 223 7,388 198 200 6,703 187 181 6,161 6,323 5,773 157 162 5,130 148 4,825 4,612 129 120 4,024 3,740 3,489 89 84 3,076 8 521 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2017 2018
Slide 36: REO statistics
REO statistics* (EUR million) Current book Asset class # assets % of total Book value % of total • Housing represent 55% of current book value Housing 1,258 41 % 46.2 55 % • Limited exposure to commercial assets Parking, annex etc. 1,112 36 % 3.4 4% Land 249 8% 5.2 6% Commercial 457 15 % 30.9 37 % E
Slide 37: Financials Q3 2020
Financials Q3 2020
Slide 38: Contribution per segment
Contribution per segment Contribution per segment* Total: (EUR million) - Excluding unallocated overhead cost • Record-high contribution margin in Q3 39 34 35 36 NPL: 31 3 2 29 1 1 5 3 6 25 • Portfolio amortization and revaluation of EUR 21.0 million (23.1) 5 4 8 1 1 18 4 5 Contribution margin of 78
Slide 39: Minority shareholders in both NPL and REO
Minority shareholders in both NPL and REO Total book value exposure (EUR million) 1 200 • Axactor has approximately 40% of the total 84 7.0% exposure for REO 957 • Minority shareholders in both Reolux and its subsidiaries 34 3.5% • Axactor’s share of REO amounts to approximately 3.5% of its total po
Slide 40: Axactor targets improved ROE over time
Axactor targets improved ROE over time Return on Equity* Drivers Q3 2020 Outlook (Annualized, %) • NPL portfolio prices • Portfolios acquired at • Improved IRR levels to be attractive IRRs in the blended in over time Nordic market • Economies of scale • Record-high EBITDA, • Volume growth through in
Slide 41: Axactor funding structure
Axactor funding structure - Aim for deleveraging over next quarters EUR million 50 Bond 200 Axactor Invest 1, senior debt 120 75 Revolving Credit Facility 425 Reolux/Nomura REO financing 31 Axactor Invest 1, mezzanine 140 Option 31.12.2019 30.12.2020 30.12.2021 30.12.2022 • EUR 365m equity, 27% equi
Slide 42: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement (EUR thousand) For the quarter end Year to date • Total net financial items of EUR 15.4 million EUR thousand 30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019 EBIT 27,710 17,405 6,650 61,027 • Interest cost of EUR 14.0 million Financial reven
Slide 43: Appendix
Appendix
Slide 44: P&L statement
P&L statement For the quarter end Year to date EUR thousand 30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019 Interest income from purchased loan portfolios 41,497 35,828 121,335 97,292 Net gain/loss purchased loan portfolios -624 -5,089 -37,530 93 Other operating revenue 21,457 32,714 62,679 112,061
Slide 45: Balance sheet statement
Balance sheet statement EUR thousand 30 Sep 2020 30 Sep 2019 Full year 2019 EUR thousand 30 Sep 2020 30 Sep 2019 Full year 2019 ASSETS EQUITY AND LIABILITIES Intangible non-current assets Equity attributable to equity holders of the parent Intangible Assets 20,885 20,098 21,486 Share Capital 97,040
Slide 46: Legal organization September 2020
Legal organization September 2020 Axactor SE (Norway) Axactor Incentive AB Axactor Invest 1 S.à r.l.* 50% (Sweden) (to be discontinued) (Luxembourg) 50% Axactor Platform Holding AB Axactor Portfolio Holding AB Axactor Italy Holding S.r.l. Reolux Holding S.à r.l. (Italy) (Sweden) (Sweden) Axactor Fin
Slide 47: Terms and abbreviations
Terms and abbreviations APM / KPI definition Terms and abbreviations EBITDA adjusted for calculated cost of share option program, portfolio amortizations and revaluations, REO cost of Cash EBITDA sales and REO impairments 3PC Third-party collection CM1 Margin Total operating expenses (excluding SG&A
Slide 48: axactor.com
axactor.com AXACTOR
Slide 49: Slide 49