Slide 1: Presentation Q4 2023
AXACTOR Presentation Q4 2023
Slide 2: Q4 and full year highlights, Financial update, Financial targets, Q&A
Q4 and full year highlights Financial update Financial targets Q&A
Slide 3: Financial highlights for the quarter on continuing operations
Financial highlights for the quarter on continuing operations Gross revenue declining by 4% y-o-y • On the back of a challenging macro situation, moderate investments in 2023 and currency headwind Healthy EBITDA margin of 53% • EBITDA of EUR 34m, up from EUR 31m last year Annualized return on equity
Slide 4: Axactor business model developing positively
Axactor business model developing positively - EBITDA is up 24% and the EBITDA-margin is up with 5pp last 8 quarters EBITDA and EBITDA-margin (EUR million and %) +24% 34 34 33 30 30 31 30 28 50% 49% 49% 54% 53% 48% 51% 50% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ’22 ’22 ’22 ’22 ’23 ’23 ’23 ’23 4
Slide 5: 2023 in perspective
2023 in perspective - Another material step in the right direction on key financials Gross revenue EBITDA Cash EBITDA (EUR million) +23% (EUR million, %) (EUR million, %) 44% 50% 51% 62% 63% 62% 65% 64% 337 344 33% 52% 308 32% 280 289 26% 119 132 218 221 16% 88 30% 174 181 192 153 44 52 40 80 99 -18
Slide 6: NPL value drivers steadily improving
NPL value drivers Gross IRR on the total NPL book (%, end of period) steadily improving 18.1% 17.3% Acquiring portfolios with higher returns… 16.3% 16.0% 15.8% 15.7% ’18 ’19 ’20 ’21 ’22 ’23 NPL cost-to-collect (%) 48% 45% 44% 43% …and collect on the portfolios with lower cost 39% 37% ’18 ’19 ’20 ’21
Slide 7: Discontinued operations (REO) is now fully run off in accordance with the guidance
Discontinued operations (REO) is now fully run off in accordance with the guidance Total income and net profit Book value discontinued operations Comments (EUR million) discontinued operations1 (EUR million and %) Total Income Net profit 8 27 5 4 21 • Satisfying total income in Q4 of 3 EUR 2m 2 2 2
Slide 8: After successful refinancing in 2023 there are no maturities until June 2026
After successful refinancing in 2023 there are no maturities until June 2026 Facility Facility Current type size1 draw2 Maturity profile Bank 545m 473m RCF Bond 300m 281m ACR03 Bond 205m3 205m3 ACR04 2024 2025 2026 2027 8 1) EUR 2) Draw on RCF, Bonds equals nominal value less treasury bonds owned by
Slide 9: Q4 and full year highlights, Financial update, Financial targets, Q&A
Q4 and full year highlights Financial update Financial targets Q&A
Slide 10: Group: Gross revenue is down 4% y-o-y driven by the NPL segment
Group: Gross revenue is down 4% y-o-y driven by the NPL segment Gross revenue (EUR million) +13% -4% 89 91 87 84 85 82 83 13 79 78 15 15 13 13 13 13 15 • Gross revenue is down 4% y-o-y 14 • NPL gross revenue declining by 6% y-o-y • 3PC gross revenue growth of 3% y-o-y 73 74 78 72 64 65 69 70 70 • Es
Slide 11: NPL segment: A soft quarter on NPL with pressure on both total income and margins
NPL segment: A soft quarter on NPL with pressure on both total income and margins NPL Total income and CM% (EUR million, and %) NPL Total income CM % +3% • Total income and margins down q-o-q on the 52 52 50 back of macroeconomic headwinds 48 49 44 46 46 • Collection performance of 99% for the quart
Slide 12: 3PC segment: A solid quarter on 3PC with growth in both total income and margins
3PC segment: A solid quarter on 3PC with growth in both total income and margins 3PC Total income and CM% (EUR million and %) +5% +3% 15 15 15 • 3PC total income growth of 3% y-o-y 14 13 13 13 13 13 • Growth driven by Southern Europe • Organic growth of 4% if we exclude Sweden and Finland 47% 46% 41
Slide 13: Group: Growth y-o-y on both total income and EBITDA
Group: Growth y-o-y on both total income and EBITDA. Cash EBITDA with headwind on currency and macro Total income EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) +3% 50% 51% 65 65 48% 49% 49% 50% 54%53% 63 64 -4% 62 +18% 60 59 33 34 34 57 30 30 31 30 60 28 58 58
Slide 14: ROE upheld at 8% on continuing operations last twelve months
ROE upheld at 8% on continuing operations last twelve months – despite increased cost of funding Return on equity to shareholders (%) 9% 8% Continuing operations 1% 6% 7% ROE to shareholders 1% 2% -6% -6% -9% 2016 2017 2018 2019 2020 2021 2022 2023 14
Slide 15: Update on interest rate hedge
Update on interest rate hedge Q4 was the last quarter with an interest rate hedge in place from a cash flow perspective In the profit and loss statement, Axactor will still have positive effects from the hedge1 • EUR 1.0m per quarter in 2024 • EUR 0.8m per quarter in 2025 Going forward Axactor will
Slide 16: Q4 and full year highlights, Financial update, Financial targets, Q&A
Q4 and full year highlights Financial update Financial targets Q&A
Slide 17: Financial targets 2023
Financial targets 2023 Dimension Targets 2023 Actuals 2023 Growth • NPL investments of EUR 100 - 150 million • NPL investments of EUR 116 million Profit • Minimum 9% ROE • 8% ROE • Proposal to be announced in connection with Returns • 20 - 50% dividend pay-out ratio publication of the annual report
Slide 18: Launching financial targets for 2026
Launching financial targets for 2026 Dimension Financial targets 2026 Growth • NPL investments of EUR 100 – 200 million annually Profit • Minimum 12% ROE1 Returns • 20 - 50% dividend pay-out ratio annually Leverage2 • Maximum leverage of 3.5x 18 1) Assuming EURIBOR and STIBOR of 2.0% and NIBOR of 2.
Slide 19: 2024 – is the tide turning?
2024 – is the tide turning? • Interest rates start to decline? • Improving bond market? • Reduced inflation? • Investment volumes gradually coming back? • Portfolio prices stabilizing at attractive levels? 19
Slide 20: Q4 and full year highlights, Financial update, Financial targets, Q&A
Q4 and full year highlights Financial update Financial targets Q&A
Slide 21: Supporting information
Supporting information
Slide 22: NPL investment commitments of EUR 8m next 12 months
NPL investment commitments of EUR 8m next 12 months Quarterly NPL investments (EUR million) 93 80 69 54 Additional forward 47 flow agreements and 40 one-off acquisitions 33 expected to further increase NPL 24 19 investments 5 2 1 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ’21 ’22 ’22 ’22 ’22 ’23 ’23 ’
Slide 23: ERC increasing by 3% last twelve months
ERC increasing by 3% last twelve months ERC development Forward ERC profile by year (EUR million) (EUR million) +19% +3% 2,545 2,523 2,563 2,586 2,620 315 308 2,367 284 2,259 2,279 2,141 260 225 196 176 159 143 129 113 94 82 73 65 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13
Slide 24: 3PC volumes by geographic region
3PC volumes by geographic region 3PC Total income split by geographic region 4% 0% 9% Q4’23 20% • Spain accounting for 56% of total income on 3PC Total income EUR 15.5m 56% • Segment closed down in Finland and Sweden, with no active clients per year-end 2023 10% FIN DEU ITA NOR ESP SWE 24
Slide 25: Bond covenants (1/2)
Bond covenants (1/2) Loan-to-value - covenant ≤80% Secured Loan-to-value - covenant ≤60% (Net interest-bearing debt divided by total portfolio book value) (Secured net interest-bearing debt divided by total portfolio book value) 60% 80% 73% 73% 73% 37% 38% 39% 72% 73% 73% 35% 72% 72% 72% 35% 35% 33%
Slide 26: Bond covenants (2/2)
Bond covenants (2/2) Leverage ratio - covenant ≤4.0x Interest coverage ratio - covenant ≥3.0x (Net interest-bearing debt divided by LTM Pro-forma adjusted cash EBITDA (Pro-forma adjusted cash EBITDA divided by net interest expenses) 4.0 3.9 5.4 3.8 3.8 5.3 5.2 5.2 3.8 5.0 4.6 3.7 4.2 3.6 3.6 3.8 3.5
Slide 27: Terms and abbreviations
Terms and abbreviations Abbreviations 3PC Third-party collection AGM Annual general meeting APM Alternative performance measures ARM Accounts receivable management B2B Business to business Terms B2C Business to consumer Active forecast Forecast of estimated remaining collection on NPL portfolios BoD
Slide 28: Slide 28