Slide 1: Investor Presentation
Investor Presentation 9 December, 2020
Slide 2: Important Information and Disclaimer
Important Information and Disclaimer IMPORTANT INFORMATION AND DISCLAIMER THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS, AUSTRALIA, CANADA, JAPAN, HONG KONG O
Slide 3: Summary of risk factors (I/II)
Summary of risk factors (I/II) SUMMARY OF KEY RISK FACTORS Investing in the Company involves inherent risks and is suitable only for investors who can afford a loss of all or part of the investment. The below summary of certain risks and uncertainties are not the only ones facing the Company. Please
Slide 4: Summary of risk factors (II/II)
Summary of risk factors (II/II) Risk related to IT instability, information security incidents and poor application availability reduce availability to collect which affects the financial results, may cause reputational damage and fines from authorities and loss of clients Financial risks • A failur
Slide 5: Transaction overview
1 T R A N S AC T I O N OV E RV I E W 2 C O M PA N Y I N T RO D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 6: Comprehensive refinancing transaction, securing a stronger and cleaner financial profile
Comprehensive refinancing transaction, securing a stronger and cleaner financial profile and enabling future growth Elements of the proposed transaction Key highlights and impact of the proposed transaction 1 2 • Simplifying the corporate structure and increasing financial transparency • Securing ne
Slide 7: Key transaction elements
Key transaction elements Simplification Maturity Improved Element Key details of structure improvement investment capacity • An equity issue of EUR 30 million executed as a private placement at the launch of the transaction, New equity issue subject to completion of the bond issue ✓ • A subsequent o
Slide 8: Refinancing structure
Refinancing structure Simplifying financing structure while providing the basis for a resilient long term funding profile Current structure Proposed new structure EUR 55 m equity AXACTOR02 from Axactor Invest 2024 - EUR 160-200m acquisition2 AXA01 2021 - EUR 200m Axactor SE Axactor SE Mezzanine EUR
Slide 9: All maturities refinanced to 2024 ensuring a robust debt maturity schedule
All maturities refinanced to 2024 ensuring a robust debt maturity schedule Current maturity profile1 New maturity profile1 EUR million EUR million 1000 1000 Mezzanine, 140 Mezzanine 140 900 900 Axactor Invest RCF, Axactor 800 800 75 120 Invest2 700 700 75 600 600 RCF, Axactor Group4 500 500 RCF, Axa
Slide 10: AXA01 amendment to ensure full refinancing with AXACTOR02
AXA01 amendment to ensure full refinancing with AXACTOR02 AXA01 amendment proposal Pro forma capital structure and credit metrics • In connection with the comprehensive transaction, Axactor is proposing an amendment to the AXA01 bond agreement to allow for a full early redemption of AXA01, to be ref
Slide 11: Key bond terms
Key bond terms Issuer: Axactor SE Status of the bonds: Senior unsecured Initial amount: EUR [160-200] million Borrowing limit: EUR [300] million Use of proceeds: The net proceeds shall be used to a) Refinance the Issuer’s outstanding unsecured bond AXA01; and b) general corporate purposes Issue pric
Slide 12: Robust cash flow expected going forward
Robust cash flow expected going forward, supporting growth ambitions as well as providing downside protection Quarterly Cash EBITDA less interest expenses Comment EURm60,00 • Axactor comes with low risk – opportunity to repay bondholders in full 53 50,00 52 48 (EUR 200m) over 4 quarters1 by stopping
Slide 13: Key credit highlights
Key credit highlights - the credit profile of Axactor and AXACTOR02 will benefit substantially from the proposed transaction A leading European debt • Since inception in 2015, Axactor has grown to become one of the largest debt collectors in Europe with an ERC of EUR 2.16bn 1 1 collector built on a
Slide 14: 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 15: Refinancing support ROE drivers positively
Refinancing support ROE drivers positively and secure the basis for taking advantage of the attractive market outlook Covid-19 impact Refinancing Outlook and impact from Drivers Q3 2020 (from Q3) impact refinancing • New equity and structural • NPL portfolio • Portfolios acquired at attractive Posit
Slide 16: Key financials for Axactor Invest and terms for the roll-up
Key financials for Axactor Invest and terms for the roll-up Transaction terms Key financials Axactor Invest (50% basis) • Axactor will acquire the equity interest in Axactor Invest held by EURm 2019 YTD '20 Q3 '20 Geveran for a consideration of 50 million shares to be issued at a share price of NOK
Slide 17: Financial impact of the proposed transactions
Financial impact of the proposed transactions Financial effects and key assumptions Pro forma financial impact • As Axactor Invest is currently fully consolidated in Axactor’s EURm 2019 YTD '20 Q3 '20 financial accounts, the impact from the roll-up will materialize as a Net income 21.0 -34.4 6.5 red
Slide 18: Company introduction
1 T R A N S A C T I O N O V E RV I E W 2 C O M PA N Y I N T R O D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 19: Axactor is a leading European debt collection firm
Axactor is a leading European debt collection firm that has grown rapidly in a few attractive markets A leading European debt collector Building scale in a few, stable and well developed markets • Established in Q4 2015 with headquarters in Oslo, Norway, and has since Non-Performing Loans Share of r
Slide 20: Axactor has become a European top 10 debt collector in 4 years
Axactor has become a European top 10 debt collector in 4 years and has built a solid platform for driving continued profitable growth Establishment Gaining scale Profitable growth Creating a strong platform built on structure, people, systems Leverage strong foundation to scale up trough strong part
Slide 21: Axactor positioned in the value chain from default to recovery
Axactor is attractively positioned in the value chain from debtor default to surveillance and recovery Outside Axactor scope Axactor focus area Account Credit Invoice Amicable Legal Surveillance Factoring receivable information admin. collection collection and recovery management • Collecting and •
Slide 22: Axactor operates three segments
Axactor operates three segments within acquisition, management and collection of debt Non-Performing Loans (NPL) Third-party collection (3PC) Real Estate Owned (REO) • Acquires defaulted debt at discount to face value • 3PC performs debt collection services on behalf of • During 2017-18, Axactor acq
Slide 23: Industry challenger rising to Europe's top 10 in 4 years
Industry challenger rising to Europe’s top 10 in 4 years on the back of substantial revenue growth and margin expansion Total income EBITDA and EBITDA margin Record-high EBITDA margin in Q3’20 (EUR million) (quarterly EBITDA margin in % of total income, EUR million) (Quarterly EBITDA margin in % rev
Slide 24: Uniquely equipped for further growth through the One Axactor Program
Uniquely equipped for further growth and value creation having successfully aligned the organization through the ‘One Axactor Program’ Axactor Competitor 2 Competitor Intrum 1 Hoist Competitor B2H 3Axactor 80% Bigger does not necessarily scale better – platform more important than size 75% Cost-to-i
Slide 25: Strategic levers for value creation and risk reduction
Strategic levers for value creation and risk reduction Target mature markets with further growth potential • Large and growing markets • Regulatory stability and well-established banking systems • Good risk/reward relationship Focus on low-risk banking segment • High average claims – similar process
Slide 26: Well positioned to drive profitable growth
Axactor is well positioned to drive profitable growth from doing more of the same, focusing on operational scale and growth in NPL and 3PC I Increased scale in operations II Acquisition of NPLs at attractive IRR III Entering new growth phase • Axactor has focused on efficient scaling and on • A sign
Slide 27: Business segments and key figures
1 T R A N S A C T I O N O V E RV I E W 2 C O M PA N Y I N T RO D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 28: NPL
NPL Group revenue LTM Q3’201 62% 1) Adjusted for NPL revaluation
Slide 29: EUR ~2.2bn NPL ERC of mainly unsecured loans
EUR ~2.2bn NPL ERC of mainly unsecured non-performing loans, with increasing Nordic exposure NPL ERC development (EURm) Comments 2,038 2,052 2,153 2,160 • Collection of non-performing loans is the backbone of 1,877 1,721 Axactor’s operations, representing 62% of LTM Group 1,473 1,388 revenue1 726 72
Slide 30: Continued revenue growth in 2020 while investments reduced
Continued revenue growth in 2020 while investments have been reduced to safeguard liquidity during the Covid-19 pandemic NPL investments (EURm) Comments LTM 462 484 615 632 398 419 • Strong track record of profitable growth through 333 187 158 220 282 portfolio investments across the six focus geogr
Slide 31: Collection performance picking up again
Collection performance picking up again after temporary decline in H1 2020 driven by Covid-19 Actual collection vs. active forecast Comments LTM • Strong focus on collection performance is a key success factor 120 % 112% 108% 106% 100% 101% 101% Average: 100% 97% • Leveraging data from both NPL and
Slide 32: Continued focus on reducing forward flow commitments
Continued focus on reducing forward flow commitments Estimated FF investments from signed contracts Comments EURm • Forward flow agreements is a key focus area within NPL, enabling increased knowledge about portfolios while discussing larger one-off NPL acquisitions 25 • The NPL investments in 2020
Slide 33: 3PC
3PC Group revenue 19% LTM Q3’201 1) Adjusted for NPL revaluation
Slide 34: Asset-light third-party collection business has seen steady growth
Asset-light third-party collection business has seen steady growth over the last years – volumes picking up again after Covid-19 Gross revenue 3PC (EURm) Comments LTM 50 52 54 57 57 58 58 51 50 • 3PC represents an important share of Axactor’s business, 47 44 contributing to improved collection perfo
Slide 35: Strategic goal to increase 3PC market share in all regions
Strategic goal to increase 3PC market share in all regions 3PC revenue split by geography Comments • Strong performance on benchmark contracts across all countries FIN; 3% SWE; 1% • Stronghold established in Spain, with customer relationships with all top 12 banks as well as with leading ITA; 5% ins
Slide 36: REO
REO 19% Group revenue LTM Q3’201 1) Adjusted for NPL revaluation
Slide 37: Consistently reducing exposure to non-core REO operations
Consistently reducing exposure to non-core REO operations – 2/3 of all assets acquired are sold REO total income development Comments EURm • Axactor entered the Spanish REO market in 2017 through several portfolio acquisitions and partnerships 30 8 000 7,388 • In total EUR 286m of investments1 with
Slide 38: Net book value exposure of EUR 34m as of Q3'20 - REO
Net book value exposure for Axactor of EUR 34m as of Q3’20 - REO portfolio moves towards the tail Gross REO book value1,2 Comments EURm • 5,536 assets out of in total 8,612 assets acquired1 have 223 200 now been sold – proceeds invested into high performing 198 187 181 162 NPL business 148 129 120 •
Slide 39: Key financials
1 T R A N S A C T I O N O V E RV I E W 2 C O M PA N Y I N T RO D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 40: Contribution per segment
Contribution per segment Contribution per segment1 Total: (EUR million) - Excluding unallocated overhead cost • Record-high contribution margin in Q3’20 39 (Q3’19 numbers stated in parenthesis for reference) 34 35 36 3 31 3 2 29 1 1 5 NPL: 5 4 8 6 25 1 1 18 4 5 • Portfolio amortization and revaluati
Slide 41: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement • Total net financial items of EUR 15.4 million (EUR thousand) • Interest cost of EUR 14.0 million For the quarter end Year to date • Average blended interest costs of approx. 5% excl. amortised EUR thousand 30 Sep 2020 30 Sep 2019 30 Sep 2
Slide 42: Minority shareholders in both NPL and REO
Minority shareholders in both NPL and REO Total book value exposure Total book value exposure (EUR million) Pro forma Q3 (EUR million) • Axactor has approximately 40% of the total exposure for REO 1,200 1,200 • Minority shareholders in both Reolux and 7.0% 1,150 its subsidiaries 957 • Axactor’s shar
Slide 43: Balance sheet items
Balance sheet items Assets Equity and Liabilities Equity and Liabilities (EUR million) (EUR million) Pro forma Q3’20 (EUR million) 1,343 1,343 1,343 1,343 1,291 1,291 • Portfolios represent the vast majority of asset base 895 875 • Debt has increased following 874 925 portfolio acquisitions 1,112 1,
Slide 44: Market and outlook
1 T R A N S A C T I O N O V E RV I E W 2 C O M PA N Y I N T RO D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 45: Attractive market opportunity
Attractive market Estimated Axactor IRR improved from around opportunity 10%, to: Large volumes of NPL coming to market 12-14% 12-14% HQ NPL price levels down – IRRs up 3PC & ARM growth – new products emerging 12-14% Industry consolidation 11-12% 12-14% 45
Slide 46: Summary & Outlook
Summary & Outlook • The comprehensive refinancing will strengthen Axactor’s financial profile and support future growth • Substantial uplift in shareholder returns and earning per share through the accretive contribution from Axactor Invest Roll-up and improved financing terms. Short term, Axactor e
Slide 47: Appendix
1 T R A N S A C T I O N O V E RV I E W 2 C O M PA N Y I N T RO D U C T I O N 3 BUSINESS SEGMENTS AND KEY FIGURES 4 KEY FINANCIALS 5 MARKET AND OUTLOOK 6 APPENDIX
Slide 48: P&L statement
P&L statement For the quarter end YTD EUR thousand 31 Dec 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018 Interest income from purchased loan portfolios 37,239 22,289 134,531 74,536 Net gain/loss purchased loan portfolios -412 10,751 -319 10,599 Other operating revenue 36,865 34,994 148,926 121,774 Other r
Slide 49: Balance sheet statement
Balance sheet statement EUR thousand 31 Dec 2019 31 Dec 2018 EUR thousand 31 Dec 2019 31 Dec 2018 ASSETS EQUITY AND LIABILITIES Intangible non-current assets Equity attributable to equity holders of the parent Intangible Assets 21 487 19 170 Share Capital 81,338 81,115 Goodwill 56 170 55 577 Other p
Slide 50: Legal organization December 2020
Legal organization December 2020 Axactor SE (Norway) 50% Axactor Invest 1 S.à r.l.* (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 Axactor Germany Axactor España, Axactor Sweden
Slide 51: Risk factors
Risk factors IMPORTANT INFORMATION AND DISCLAIMER INVESTING IN THE COMPANY INVOLVES INHERENT RISKS. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE RISK FACTORS SET OUT IN THIS SECTION BEFORE MAKING AN INVESTMENT DECISION IN RESPECT OF THE BONDS OR SHARES (COLLECTIVELY THE "
Slide 52: Risk factors
Risk factors The availability of debt collection contracts, and debt portfolios and Collection Platforms for purchase depends on several factors which are outside of the Group's control Factors that have an impact on the availability of debt collection contracts, debt portfolios and Collection Platf
Slide 53: Risk factors
Risk factors The Group relies on third-party service providers The Group uses external lawyers and solicitors and other third-party service providers in the debt collection process. There is a risk that any failure by these third parties to adequately perform such services for the Group will materia
Slide 54: Risk factors
Risk factors The statistical models and analytical tools used by the Group may prove to be inaccurate The Group uses statistical models and other data analysis tools in its operations. There is a risk that the Group will not be able to achieve the recoveries forecasted by the models used to value th
Slide 55: Risk factors
Risk factors FINANCIAL RISK Funding and liquidity risk The Group's ability to obtain funding in the future will depend on several factors which are outside of the Group's control, including economic conditions when acquisition opportunities arise and banks' willingness to lend to the Group. There is
Slide 56: Risk factors
Risk factors The Group may be subject to credit risks There is a risk that a counterparty will not meet its obligations under a financial contract or customer contract, leading to a financial loss. The Group are exposed to credit risk from its operating activities, primarily related to cash and cash
Slide 57: Risk factors
Risk factors Shareholders that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own name The Shares are traded in NOK and any investor outside of Norway that wishes to invest in the Shares, or to sell Shares
Slide 58: Risk factors
Risk factors RISK FACTORS RELATED TO THE BONDS The Issuer's indebtedness under the Bonds Following the issuance of the Bonds, the Issuer will have substantial indebtedness which could have negative consequences for the bondholders as: i. the Issuer may be more vulnerable to general adverse economic
Slide 59: axactor.com
axactor.com AXACTOR