Slide 1: Q2 2019 presentation
Q2 2019 presentation 24 July, 2019
Slide 2: Q2 2019 - Key highlights
Q2 2019 - Key highlights Gross revenue EBITDA and margin Cash EBITDA ERC 100 (EUR million) (EUR million and %) (EUR million) (EUR million) +37% +146% 1 939 90 36% +61% +98% 217 80 70 60 979 50 20% 250 1 721 40 30 729 20 67 91 11 26 41 65 10 0 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q
Slide 3: First half 2019 - Key highlights
First half 2019 - Key highlights Gross revenue EBITDA and margin Cash EBITDA ERC (EUR million) (EUR million and %) (EUR million) (EUR million) 33% +69% 1 939 +189% +112% +98% 217 979 19% 250 1 721 729 108 182 17 48 59 124 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 NPL REO • Sign
Slide 4: Attractive market development
Attractive market development • EUR 149m of NPL Portfolio acquisitions in Q2 • Attractive opportunities in all Axactor markets – trading at solid IRRs • Forward flow agreements renegotiated on more favourable terms - or cancelled • New forward flow clients expected to come onboard on healthy terms i
Slide 5: Three key enablers of value creation
Three key enablers of value creation People Systems Funding Attract and retain high Standardize systems across collection Secure diverse, competitive financing quality employees platforms - driving low cost base, high and attractive co-investments efficiency and no legacy 5
Slide 6: Revenue growth and margin improvement
Revenue growth and margin improvement Gross revenue development EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) 36% 91 91 26 30% 29% 65 75 22 59 67 20 21% 20% 57 45 41 33 11 10 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 201
Slide 7: Balancing the geographical footprint
Balancing the geographical footprint REO portion declining over time REO; 11% REO; 27% ESP; 31% FIN; 10% ESP; 32% Q2-2019 Q2-2019 Gross revenue ITA; 9% ERC FIN; 6% EUR 91.3m EUR 1,938.5m ITA; 5% NOR; 12% SWE; 13% NOR; 13% SWE; 7% DEU; 11% DEU; 12% 7
Slide 8: Year-on-year growth in all areas
Year-on-year growth in all areas Gross revenue development • NPL collection up 60% from Q2’18 (EUR million) • 3PC up 19% from Q2’18 91 91 • 3PC and ARM combined with effect from Q2’19, 3PC & historic figures restated 75 ARM 67 • REO sales up 14% from Q2’18 57 REO portfolios NPL portfolios Q2 2018 Q3
Slide 9: NPL portfolio
NPL portfolio AXACTOR
Slide 10: NPL – Slight Q2/Q1 decline - growth set to resume in Q3
NPL – Slight Q2/Q1 decline - growth set to resume in Q3 NPL gross revenue development (EUR million) • Slight decline from Q1 • Q1 revenue effect from one-off payments and strong initial 52 collection on Axactor Invest 1 portfolios acquired in Q4’18 50 • Negative Easter-effect in Q2 this year 40 • Se
Slide 11: Continued solid collection performance
Continued solid collection performance Actual collection vs. active forecast • Changed reporting from ‘business case’ to (LTM, rolling) ‘active forecast’ – in line with industry standards • Active forecast reflects changes made to the 112% ERC curves on an ongoing basis 108% 106% • Active forecast i
Slide 12: NPL: Investment uptick
NPL: Investment uptick Quarterly NPL investments • Acquired several new portfolios in Q2: (EUR million) • Three Spanish NPL portfolios with combined 329 outstanding balance of EUR 717m • Acquired one-off portfolio from existing forward flow client in Sweden, with principal value of EUR 26m • Investe
Slide 13: NPL: Forward flows
NPL: Forward flows Estimated FF investments from signed contracts • Total estimated forward flow volume of EUR (EUR million) 274m from signed contracts in 2019, o/w EUR 27 28 127m in 2H’19 25 25 23 22 23 22 22 22 • More selective approach given the upwards trend 19 in IRRs 16 • Contracts are renegot
Slide 14: NPL: Increasing and balanced portfolio
NPL: Increasing and balanced portfolio ERC development Forward ERC profile by year (EUR million) (EUR million) 2 000 300 1 800 1 721 275 256 250 1 473 220 1 600 1 388 225 1 400 181 200 1 200 175 165 1 000 150 139 821 120 800 729 125 108 96 100 86 600 77 69 75 61 54 48 40 400 50 200 25 0 0 Q2 2018 Q3
Slide 15: 3PC
3PC AXACTOR
Slide 16: Growing the third-party collection business
Growing the third-party collection business Gross revenue 3PC • 3PC & ARM sales up 19% y/y (EUR million) • 3PC platforms established in all six markets – ARM 18 gradually being rolled out in more markets • Increasing synergies with the NPL business 16 16 15 • Product synergies in business originatio
Slide 17: Strengthening the Nordic 3PC business
Strengthening the Nordic 3PC business 3PC revenue split by geographic region • The finance sector accounts for three quarters of the 3PC revenue • Strong position in Spain DEU/ITA; • 9 of the top 10 banks as clients 20% • Sharpening the focus on the Nordic bank/finance market • Synergies to be extra
Slide 18: Standardization across markets generating scale benefits
Standardization across markets generating scale benefits Axactor Efficiency Client Innovation & Model 2.0 (Operations & IT) Relationships Digitalization • New debtor portal launched in Spain and Italy, launch in remaining markets in Q3 • Standard dialer implemented in all markets with centralized tr
Slide 19: REO portfolio
REO portfolio AXACTOR
Slide 20: Stable REO sales on declining asset base
Stable REO sales on declining asset base REO gross revenue development • Revenue +2% from Q1 - on a lower asset base (EUR million) 8 000 • Change in sales mix with more parking and storage 7 388 30 spaces sold in Q2 6 323 7 000 6 161 • No. of units sold: Up from 555 in Q1 to 657 in Q2 5 773 6 000 20
Slide 21: REO: Remaining ERC of EUR 217m per Q2
REO: Remaining ERC of EUR 217m per Q2 REO: ERC profile • Remaining ERC lowered by EUR 2m (~ 1%) (EUR million) • 50% of the REO ERC is expected to be realized over 109 120 the next 12 months 100 • REO represents 11% of Group ERC, and declines 80 74 rapidly 60 • Axactor has approximately 40% of the to
Slide 22: Financials
AXACTOR a mss) we) Cc o = ic
Slide 23: Contribution per segment
Contribution per segment Contribution per segment1 (EUR million) - Excluding unallocated overhead cost • NPL: • Stable gross collection from previous quarter with slightly higher portfolio amortization 5 4 3 8 • 80% contribution margin 2 4 • 3PC: 4 2 2 26 27 25 • Strong sales improvement: y/y and q/
Slide 24: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement • Total net financial cost of EUR 13.9m (EUR thousand) • Interest cost of EUR 13.0 For the quarter end YTD • Average blended interest costs of 5% 30 Jun 30 Jun 30 Jun 30 Jun EUR thousand 2019 2018 2019 2018 Full year 2018 • Warrant cost EUR
Slide 25: Balance sheet structure
Balance sheet structure Assets Equity and Liabilities (EUR million) (EUR million) 69 47 32 82 43 71 1 072 26 82 929 Cash Other Other 832 39 IB debt 121 737 19 Intangibles 80 Equity Portfolios 407 539 376 314 328 Q2-19 Q2-18 YE 2018 Q2-19 Q2-18 YE 2018 25
Slide 26: Q2 2019 – Funding structure
Q2 2019 – Funding structure Revolving Credit Facility, EUR 350m Option Axactor Invest 1, EUR120m senior debt facility Axactor Invest 1, EUR 140m mezzanine Bond, EUR 200m + EUR 50m tap option Reolux/Nomura REO financing EUR 75m 31.12.2018 31.12.2019 30.12.2020 30.12.2021 30.12.2022 • Net interest bea
Slide 27: Scale and maturity drives efficiency, profitability and ROE
Scale and maturity drives efficiency, profitability and ROE Revenue, Local SG&A and IT&Group costs • Growth strategy focused on scale benefits, (LTM) business synergies and standardization 300 25% • Margins improving as opex ratios come down 250 21% • Financing costs and lower tax rates set to 200 1
Slide 28: Summary and outlook
Summary and outlook
Slide 29: Q2 Summary
Q2 Summary • Solid y/y NPL growth, and healthy growth in a more active 3PC market • Strong margin improvement & Earnings Before Tax of EUR 10 million • ERC doubling the last 12 months • Continuing to drive efficiency and cost improvement through ‘One Axactor’ • Healthy 2H NPL Pipeline
Slide 30: Outlook
Outlook • Attractive opportunities in the NPL market – lower portfolio prices/ increasing IRRs • Clients more focused on Total Value Chain Partnership “opening up” the 3PC market • Axactor maintaining 2019 capex estimate of EUR 400-450 million • Our collection profiles point towards continued profit
Slide 31: Axactor
AXACTOR
Slide 32: Appendix
AXACTOR Appendix
Slide 33: P&L statement
For the quarter end YTD 30 Jun 30 Jun 30 Jun 30 Jun P&L statement EUR thousand Interest income from purchased loan portfolios 2019 32 475 2018 16 061 2019 61 464 2018 34 466 Full year 2018 74 536 Net gain/loss purchased loan portfolios -1 188 2 998 5 182 232 10 599 Other operating revenue 41 132 35
Slide 34: Balance sheet statement
Balance sheet statement EUR thousand 30 Jun 2019 30 Jun 2018 31 Dec 2018 EUR thousand ASSETS EQUITY AND LIABILITIES Intangible non-current assets Equity attributable to equity holders of the parent Intangible Assets 19 678 19 300 19 170 Share Capital 81 338 80 842 81 115 Goodwill 56 288 54 470 55 57
Slide 35: Legal organization July 2019
Legal organization July 2019 Axactor SE (Norway) 50% Axactor Incentive AB Axactor Invest 1 S.à r.l.* (Sweden) (Luxembourg) (to be discontinued) 50% Axactor Italy Holding Axactor Platform Holding AB Axactor Portfolio Holding AB S.r.l. Reolux Holding S.à r.l. (Sweden) (Sweden) (Italy) Axactor Finland