Slide 1: Q4 & FY 2019
AXACTOR Q4 & FY 2019 12 February, 2020
Slide 2: Secured new funding to deliver on profitable growth strategy
Secured new funding to deliver on profitable growth strategy 1 Axactor’s scalable model proven with doubling of the 2019 EBITDA and 430% YoY growth in Earnings Before Tax 2 Attractive NPL market development with price levels down and IRRs up 3 Equity issue of EUR 51 million in Q1’20 to deliver on pr
Slide 3: Growth strategy to drive scale benefits, profits and ROE
Growth strategy to drive scale benefits, profits and ROE Group revenue 12 months rolling 368 (EUR million) 344 313 288 • Industry challenger rising to Europe’s top 10 in 4 years 239 • People, systems and funding 199 enablers of the 2015-2019 growth 166 • 2020: People and systems in place 126 105 – s
Slide 4: Built a next-generation debt management company
Built a next-generation debt management company • Axactor is an industry challenger providing innovative, cost efficient and IT powered debt management solutions • Debt purchase, debt collection and accounts receivables management are the main business activities • Operations in six sound markets on
Slide 5: Q4 2019 - Key highlights
Q4 2019 - Key highlights Gross revenue EBITDA and margin Cash EBITDA ERC (EUR million) (EUR million and %) (EUR million) (EUR million) 110 100 2 189 90 +32% 20 +22% +50% +32% 151 80 1 663 274 70 60 2 038 50 10 40 29% 32% 30 1 388 20 75 99 20 24 45 67 10 0 0 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4
Slide 6: 2019 - Key highlights
2019 - Key highlights Gross revenue EBITDA and margin Cash EBITDA ERC (EUR million) (EUR million and %) (EUR million) (EUR million) ,30 5 2 189 ,29 5 80 ,28 5 ,27 5 151 ,26 5 ,25 5 ,24 5 +54% 70 +99% +84% +32% ,23 5 ,22 5 ,21 5 ,20 5 60 1 663 274 ,19 5 ,18 5 50 ,17 5 ,16 5 ,15 5 ,14 5 40 2 038 ,13 5
Slide 7: Growth and margin improvement
Growth and margin improvement Gross revenue development EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) 36% 99 91 91 31% 32% 87 30% 26 29% 65 67 24 75 22 59 60 67 20 20 21% 20% 57 17% 45 41 41 33 11 10 6 18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 8: Growth in all three business areas
Growth in all three business areas Gross revenue development Strong YoY revenue growth FY 2019: (EUR million) • Total 54% 99 91 91 • NPL +86% 87 • 3PC +11% 75 67 • REO +31% 57 41 Continued YoY growth Q4 2019: • Total 32% • NPL +54% • 3PC +6% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4
Slide 9: NPL portfolio
NPL portfolio Q4 2019
Slide 10: QoQ NPL growth – capex mainly deployed in forward flow
QoQ NPL growth – capex mainly deployed in forward flow NPL gross revenue development Quarterly NPL investments (EUR million) (EUR million) 329 61 52 54 50 40 149 31 25 95 86 21 69 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 ESP NOR DEU SWE
Slide 11: Collection performance below expected long-term average
Collection performance below expected long-term average Actual collection vs. active forecast* (LTM, rolling) • Negative effect from one-offs in the quarter: 112% 108% 106% • Postal strike in Finland during seasonally strong December 100% 101% 101% 97% 94% 95% 95% 98% • Delays in collection from the
Slide 12: Unsecured NPL claims accounts for vast majority of total
Unsecured NPL claims accounts for vast majority of total Share of secured and unsecured (%) • Focus on unsecured consumer loans ERC • Opportunistic approach to secured NPL 3% • Currently less than 6% of total NPL book value consist of secured NPL claims • Average claim size in secured NPL book is ap
Slide 13: Forward flow outlook
Forward flow outlook Estimated FF investments from signed contracts • Total estimated forward flow volume of EUR 190m (EUR million) in 2020 (at reporting date) • Selective approach given upwards trend in IRRs 27 • Renegotiating and discontinuing existing contracts 24 23 22 23 23 • Focusing on combin
Slide 14: NPL: Increasing and balanced portfolio
NPL: Increasing and balanced portfolio ERC development Forward ERC profile by year (EUR million) (EUR million) 2 500 300 258 275 2 038 243 2 000 1 877 250 1 721 225 207 1 473 200 183 1 500 1 388 175 158 144 131 150 119 1 000 125 109 100 92 100 85 78 71 75 60 500 50 25 0 0 Q4 2018 Q1 2019 Q2 2019 Q3
Slide 15: Increased Nordic exposure to benefit from attractive market opportunity
Increased Nordic exposure to benefit from attractive market opportunity NPL ERC (EUR million, % of total) 2 500 2 038 2 000 • EUR ~400m invested in 2019 in NPL 1 388 1 500 54% portfolios • EUR 234m invested in Nordic forward flows from major consumer banks during 2019 1 000 65% 46% 500 35% 0 Q4 2018
Slide 16: 3PC
3PC Q4 2019
Slide 17: Growing asset-light 3PC business
Growing asset-light 3PC business Gross revenue 3PC • +11% YoY growth in 2019 (EUR million) 18 • Focus on combined forward flow and 3PC deals 16 • Product synergies in business origination, collection execution 16 and data generation 16 14 15 • Expecting more forward flow agreements with initial 3PC
Slide 18: Building for the future of debt management
Building for the future of debt management 3PC revenue split by geographic region FIN; 3% • Increasing the Nordic 3PC business • Synergies to be extracted from cross-border deals ITA; 6% • Seeking combined 3PC and forward flow deals to improve collection performance and profitability DEU; 17% Q4’19
Slide 19: REO portfolio
REO portfolio Q4 2019
Slide 20: Maintained high REO revenue on declining asset base
Maintained high REO revenue on declining asset base REO gross revenue development (EUR million) • Revenue up 5% compared to Q4’18 on lower asset base 7 388 30 8 000.0 • Large bulk sale accounting for EUR 2.3 million (106 assets) 6 703 6 323 7 000.0 6 161 • 595 units sold in Q4, 12% up from Q3 5 773
Slide 21: Book value of EUR 129m at year-end 2019
Book value of EUR 129m at year-end 2019 REO: ERC profile (EUR million) 80 75 • ERC decreased by 22% in the quarter Total ERC: • ERC adjusted to reflect expected discount level going forward 70 EUR 151m 61 • EUR 5m discount vs ERC in Q4 • EUR 16m reduction of future ERC 60 • REO represents 7% of Grou
Slide 22: Financials
Financials Q4 2019
Slide 23: Contribution per segment
Contribution per segment Contribution per segment* Total: (EUR million) - Excluding unallocated overhead cost • Contribution margin of 48% in Q4, compared to 45% last year 35 35 36 NPL: 2 1 1 31 3 29 • Contribution margin of 75% (80%) 6 5 4 8 1 • Portfolio amortization and revaluation of EUR 24.0m (
Slide 24: Net finance, tax and net profits
Net finance, tax and net profits Condensed Income statement (EUR thousand) EUR thousand For the quarter end 31 Dec 2019 31 Dec 2018 31 Dec 2019 YTD 31 Dec 2018 • Total net financial cost of EUR 12.5m EBIT 20,998 17,885 82,025 40,298 • Interest cost of EUR 13.9 Financial revenue 526 58 2,787 453 Fina
Slide 25: Minority shareholders in both NPL and REOs
Minority shareholders in both NPL and REOs - Axactor REO exposure down to ~3% of total ERC Total ERC exposure (EUR million) • Axactor has approximately 40% of the total exposure for REO 2 189 151 7% • Minority shareholders in both Reolux and its 1 771 subsidiaries 3% 60 • Axactor’s share of REO amou
Slide 26: Axactor's growth yields scale benefits and higher profits
Axactor’s growth yields scale benefits and higher profits Local SG&A, IT & corporate expenses % of net revenue vs EBITDA (LTM, EUR million) 29.8 % 100 30 % 92 million 20 % 14.5 % 50 10 % 0 0% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 EBITDA Local SG&A, IT and corporate cost % Net revenue 26
Slide 27: Axactor's growing profitability to improve ROE over time
Axactor’s growing profitability to improve ROE over time Return on Equity* Drivers 2019 2020 (%) • NPL portfolio prices • IRR increased during the • Improved IRR levels to be year blended in over time • Economies of scale • EBITDA margin up 10 • Stabilizing while awating 5.8 % percentage points YoY
Slide 28: Funding has supported a fast-growing asset base
Funding has supported a fast-growing asset base Assets Equity and Liabilities (EUR million) (EUR million) • Portfolios represent the vast majority of the asset 40% 150 0 1,372 1,372 base 1,108 1,108 35% 100 0 • Debt has increased following portfolio acquisitions 30% 30% • Expect equity ratio at appr
Slide 29: Current funding structure
Current funding structure EUR million 75 Revolving Credit Facility 425 50 Bond 200 Axactor Invest 1, senior debt 120 Reolux/Nomura REO financing 53 Axactor Invest 1, mezzanine 140 Option 31.12.2019 30.12.2020 30.12.2021 30.12.2022 • Net interest bearing debt of EUR 858 million • Increased funding by
Slide 30: Outlook & Summary
Outlook & Summary Q4 2019
Slide 31: Attractive market opportunity
Attractive market Axactor IRR improved from around 10%, to: opportunity Large volumes of NPL coming to market 12%-14% HQ NPL price levels down – IRRs up 3PC & ARM growth – new products emerging 11%-13% Industry consolidation 11%-12% 11%-13% 31
Slide 32: Summary
Summary • YoY growth in all three business areas • Growth drives scale benefits, profits and ROE • Earnings before tax growth of 430% • People, systems and funding enablers of growth • Secured new equity funding of EUR 51 million to deliver on profitable growth strategy • Attractive market opportuni
Slide 33: Appendix
Appendix
Slide 34: 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 35: 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 36: Legal organization February 2020
Legal organization February 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 Finl
Slide 37: axactor.com
axactor.com AXACTOR
Slide 38: Slide 38