Slide 1: Q2 2020
AXACTOR Q2 2020 23 July, 2020
Slide 2: April and May significantly impacted by Covid-19, strong pick-up in June expected to continue
April and May significantly impacted by Covid-19, strong pick-up in June expected to continue Gross revenue (EUR million) 27.4 26.5 26.0 26.6 2.7 4.4 3.5 3.7 22.5 20.9 3.0 6.7 0.9 6.6 7.4 7.1 4.2 4.6 18.1 15.6 15.1 15.9 15.8 14.9 Jan Feb Mar Apr May Jun All markets Spain excl. REO Spain REO 2
Slide 3: Aligning costs with market activity
Aligning costs with market activity Actions to align • Temporary workforce reductions of ~400 employees during Q2 costs to activity • Executive team salary reductions in Q2 extended through Q3 level • Temporary price reductions from IT vendors Site consolidation • Norwegian operation reduced from fi
Slide 4: NPL revaluation in Q2 of -2.4%
NPL revaluation in Q2 of -2.4% NPL book value EUR million • Net negative revaluation of EUR 27m of NPL portfolio 1,134 1,107 27 -2.4% • Extensive review of all portfolios in all countries • Based on estimated short-term financial impact of Covid-19 • Expected overall collection from 2021 onwards rem
Slide 5: REO impairment in Q2 of 22.7%
REO impairment in Q2 of 22.7% REO book value EUR million • Estimated impairment of EUR 26m on REO assets 115 • Based on updated commercial analysis taking prudent 26 -22.7% view of current trends in the market 89 • Impairment test with external valuation support to be conducted in the second half 20
Slide 6: Covenant update
Covenant update 1 Waiver obtained to exceed the leverage ratio covenant for Q2 and Q3 on the main bank facility 2 In compliance on all loan agreements as of Q2 2020 with waiver 3 Reopening of markets and improving collection significantly reduces risk of covenant breach for the second half 2020 6
Slide 7: Covid-19 country update
Covid-19 country update • Significant impact from legal systems being closed first half of the second quarter Spain • Gradual ramp-up from mid May expected to continue into Q3 • Significant impact from legal systems being closed first half of the second quarter Italy • Lock-down restrictions reduced
Slide 8: Ramping up activity levels as markets reopen
Ramping up activity levels as markets reopen • Nordics less impacted than expected • Gradual ramp-up in Spain and Italy • Increasing 3PC sales expected in H2 as sales processes HQ normalize • Expects shift towards positive cash flow after investments during H2 due to lower investments and higher Cas
Slide 9: Financials
Financials Q2 2020
Slide 10: Lockdowns and impairments significantly affected Q2 financials
Lockdowns and impairments significantly affected Q2 financials Total revenue development EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) 60 55 90% 50 45 67 40 41%** 65 36% 35 75 29% 30% 31% 32% 59 60 74 25% 30 40% 72 20% 21% 68 25 26 64 20 22 24 23** 20 20 48 45
Slide 11: NPL – Capex mainly deployed in Nordic forward flow deals
NPL – Capex mainly deployed in Nordic forward flow deals NPL collection on own portfolios Quarterly NPL investments (EUR million) (EUR million) 61 149 54 54 54 52 50 40 95 85 90 31 62 25 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 E
Slide 12: More balanced cash flow in second half of 2020
More balanced cash flow in second half of 2020 NPL investments and Cash EBITDA development • Growth fueled by high investments over the last (EUR million) years 149 • Commitments dropping significantly in Q3 2020 and onwards 95 90 • Cash EBITDA expected to pick-up in H2 – as long 85 as countries con
Slide 13: 3PC – temporary suspensions to collection services
3PC – temporary suspensions to collection services Total revenue 3PC 18 • 3PC negatively affected by Covid-19 situation in Q2 (EUR million) • Temporary collection suspension in Italy and Spain 16 16 16 14 15 • Temporary suspension of field services in Germany 13 14 13 • Weakened NOK causes negative
Slide 14: REO – Disruption from lockdown in Spain
REO – Disruption from lockdown in Spain REO total revenue development • Revenue shortfall in the quarter (EUR million) • REO segment particularly affected as closure of public notary 7 388 offices postponed completion of REO sales 30 8 000 • Most REO revenue stems from sales signed in the first 7 00
Slide 15: Contribution per segment
Contribution per segment Contribution per segment* Total: (EUR million) - Excluding unallocated overhead cost • Negative contribution margin in Q2 35 36 31 34 2- 1 1 NPL: 3 29 6 25 5 4 8 1 1 • Portfolio amortization and revaluation of EUR 42.1m (18.8) 20 18 4 5 Contribution margin of 33% (80%) 2 2 4
Slide 16: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement (EUR thousand) EUR thousand For the quarter end 30 Jun 2020 30 Jun 2019 Year to date 30 Jun 2020 30 Jun 2019 • Total net financial cost of EUR 14.4m EBIT -32 577 23 748 -21 060 43 622 • Interest cost of EUR 13.9m Financial revenue 201 29 9
Slide 17: Outlook and Summary
Outlook and Summary Q2 2020
Slide 18: Outlook
Outlook Gross revenue NPL & 3PC Increasing long-term opportunities: (LTM, EUR million) 275 276 274 + Lower prices and higher IRRs for future NPL portfolio 253 acquisitions, due to increased NPL supply and buyside 224 capital restraints 203 + 3PC volumes expected to increase once normal banking 169 o
Slide 19: Summary
Summary • Q2 2020 significantly impacted by Covid-19 in all business areas • Improving markets with strong pickup in June expected to continue • Revaluation and impairment of EUR 53 million to portfolios • Waiver for leverage ratio covenant which together with re-openings and improved collections si
Slide 20: Supporting information
Supporting information
Slide 21: Q2 2020 Financial highlights
Q2 2020 Financial highlights Total revenue EBITDA and margin Cash EBITDA NPL ERC (EUR million) (EUR million) (EUR million) (EUR million) ,80 .0 30 ,70 .0 -60% 26 -32% +25% 20 23** ,60 .0 36% 56* 10 ,50 .0 ,40 .0 0 2 153 ,30 .0 -10 1 721 ,20 .0 -20 -105% ,10 .0 72 29 -30 65 44 -30 - Q2 2019 Q2 2020 Q
Slide 22: H1 2020 Key highlights
H1 2020 Key highlights Total revenue EBITDA and margin Cash EBITDA NPL ERC (EUR million) (EUR million and %) (EUR million) (EUR million) 160 .0 60 150 .0 50 140 .0 130 .0 -42% 40 -25% +25% 120 .0 110 .0 30 100 .0 33% 90.0 20 80.0 70.0 10 48 2 153 1 721 60.0 0 50.0 40.0 -10 -16 30.0 20.0 146 84 124 9
Slide 23: NPL portfolio
NPL portfolio Q2 2020
Slide 24: Capex mainly deployed in Nordic forward flow deals
Capex mainly deployed in Nordic forward flow deals NPL collection on own portfolios Quarterly NPL investments (EUR million) (EUR million) 61 149 54 54 54 52 50 40 95 85 90 31 62 25 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 ESP NOR
Slide 25: Collection performance impacted by Covid-19 measures
Collection performance impacted by Covid-19 measures Actual collection vs. active forecast* • Slight increase in collection performance despite (LTM, rolling) ongoing Covid-19 measures: 112% • Measures in place during the full quarter 108% 106% 100% 101% 101% • Italy and Spain most affected 97% 94%
Slide 26: Portfolio acquisitions focused on Nordic forward flows
Portfolio acquisitions focused on Nordic forward flows Portfolio capex distribution per country* • 81% of H1 2020 capex invested in the Nordics Share of total (EUR million) • Shift from Spain towards the Nordic countries 561 399 152 • Attractive IRR development through 2019 and into 2020 • Primarily
Slide 27: Forward flow outlook
Forward flow outlook Estimated FF investments from signed contracts • Total investment of EUR ~140m in forward flow (EUR million) contracts during H1 2020 • Estimated H2 forward flow capex of EUR 65-70m 30 • Reduced commitments drastically, albeit from a high level 26 25 25 • NPL portfolio investmen
Slide 28: ERC increase despite negative revaluation in the quarter
ERC increase despite negative revaluation in the quarter ERC development Forward ERC profile by year (EUR million) (EUR million) 2 500 300 2 153 263 259 2 052 275 2 038 2 000 1 877 250 1 721 225 219 200 196 1 500 173 157 175 150 143 129 117 107 1 000 125 97 88 80 100 75 71 500 54 50 25 0 0 Q2 2019 Q
Slide 29: 3PC
3PC Q2 2020
Slide 30: Temporary suspensions to collection services
Temporary suspensions to collection services Total revenue 3PC 18 • 3PC negatively affected by Covid-19 situation in Q2 (EUR million) • Temporary collection suspension in Italy and Spain 16 16 16 14 15 • Temporary suspension of field services in Germany 13 14 13 • Weakened NOK causes negative transl
Slide 31: More diversified geographical exposure
More diversified geographical exposure 3PC total revenue split by geographic region FIN; 4% SWE; 1% • Increasing the Nordic 3PC business • Synergies to be extracted from cross-border deals ITA; 6% • Nordics accounted for 26% in the quarter DEU; 23% Q2’20 ESP; 45% • Specialized value chain propositio
Slide 32: REO portfolio
REO portfolio Q2 2020
Slide 33: Disruption from lockdown in Spain
Disruption from lockdown in Spain REO total revenue development • Revenue shortfall in the quarter (EUR million) • REO segment particularly affected as closure of public notary 7 388 offices postponed completion of REO sales 30 8 000 • Most REO revenue stems from sales signed in the first 7 000 6 16
Slide 34: REO portfolio moving towards the tail
REO portfolio moving towards the tail REO book value* REO # of units* EURm 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 8 8 528 521 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2017 2017 2018 2018 2
Slide 35: REO statistics
REO statistics* EURm Current book Asset class # assets % of total Book value % of total • Housing represent more than 55% of current book Housing 1,416 41 % 51.0 58 % value Parking, annex etc. 1,326 38 % 4.1 5% • Limited exposure to commercial assets Land 262 8% 5.3 6% Commercial 485 14 % 30.0 34 %
Slide 36: Financials
Financials Q2 2020
Slide 37: Contribution per segment
Contribution per segment Contribution per segment* Total: (EUR million) - Excluding unallocated overhead cost • Negative contribution margin in Q2 35 36 31 34 2- 1 1 NPL: 3 29 6 25 5 4 8 1 1 • Portfolio amortization and revaluation of EUR 42.1m (18.8) 20 18 4 5 Contribution margin of 33% (80%) 2 2 4
Slide 38: Minority shareholders in both NPL and REOs
Minority shareholders in both NPL and REOs Total book value exposure (EUR million) 1 196 • Axactor has approximately 40% of the total 89 7.4% exposure for REO 953 • Minority shareholders in both Reolux and its subsidiaries 37 3.9% • Axactor’s share of REO amounts to approximately 4% of its total por
Slide 39: Axactor targets improved ROE over time
Axactor targets improved ROE over time Return on Equity* Drivers Q2 2020 Outlook (Periodic, %) • NPL portfolio prices • Portfolios acquired at • Improved IRR levels to be attractive IRRs in the blended in over time 1.7% Nordic market • Economies of scale • EBITDA margin significantly • Volume growth
Slide 40: Axactor funding structure
Axactor funding structure - Expects to start deleveraging going into 2021 EUR million 50 Bond 200 Axactor Invest 1, senior debt 120 75 Revolving Credit Facility 425 Reolux/Nomura REO financing 37 Axactor Invest 1, mezzanine 140 Option 31.12.2019 30.12.2020 30.12.2021 30.12.2022 • Equity ratio of 27%
Slide 41: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement (EUR thousand) EUR thousand For the quarter end 30 Jun 2020 30 Jun 2019 Year to date 30 Jun 2020 30 Jun 2019 • Total net financial cost of EUR 14.4m EBIT -32 577 23 748 -21 060 43 622 • Interest cost of EUR 13.9m Financial revenue 201 29 9
Slide 42: P&L statement
P&L statement For the quarter end Year to date EUR thousand 30 Jun 2020 30 Jun 2019 30 Jun 2020 30 Jun 2019 Interest income from purchased loan portfolios 40,511 32,475 79,838 61,464 Net gain/loss purchased loan portfolios -28,147 -1,188 -36,906 5,182 Other operating revenue 16,219 41,088 41,222 79,
Slide 43: Balance sheet statement
Balance sheet statement EUR thousand 30 Jun 2020 30 Jun 2019 Full year 2019 EUR thousand ASSETS EQUITY AND LIABILITIES Intangible non-current assets Equity attributable to equity holders of the parent Intangible Assets 21 184 19 678 21 486 Share Capital 97 040 81 338 81 338 Goodwill 54 087 56 288 56
Slide 44: Governance
Governance Q2 2020
Slide 45: New Executive Team in place
New Executive Team in place Johnny Tsolis (CEO) Arnt André Dullum Vibeke Ly Robin Knowles Teemu Alaviitala Kyrre Svae (COO) (Chief of Staff) (Chief Investment Officer) (CFO) (Chief of Strategy & IR) [Start 1st of August] [Start 1st of August] 45
Slide 46: Legal organization July 2020
Legal organization July 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 Reolux Holding S.à r.l. S.r.l. (Italy) (Sweden) (Sweden) Axactor Finland
Slide 47: Appendix
Appendix
Slide 48: 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 3PC Third-party collection Cash EBITDA sales and REO impairments ARM Accounts receivable management Contribution Mar
Slide 49: axactor.com
axactor.com AXACTOR
Slide 50: Slide 50