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Axactor SE
Earnings Release • Feb 15, 2024
3549_rns_2024-02-15_67b5af8d-7b3c-462f-828e-67e816958531.pdf
Earnings Release
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Axactor helps people and society to a better future
We are passionate, proactive and act with integrity
/ Highlights1
Fourth quarter 2023
- Total income growth of 3% from the fourth quarter 2022, to EUR 65.1 million (63.0). In constant currency, the growth was 6%
- EBITDA of EUR 34.3 million, up 10% from EUR 31.2 million in 2022. The EBITDA margin ended at a satisfying 53% (49%)
- Gross revenue ended at EUR 85.2 million, down 4% from the corresponding quarter 2022, or down 2% in constant currency (89.0)
- Cash EBITDA ended at EUR 55.0 million, down from EUR 57.5 million in the fourth quarter 2022
- Annualized return on equity for the quarter of 9% for continuing operations (10%), and 7% in total for the shareholders (9%)
- NPL investments in the quarter of EUR 24.1 million (93.0), with average gross IRR for the total NPL book increasing to 18.1% (17.3%)
- Improved NPL cost to collect further, ending the year at 37% (39%)
- Continuous advancements within information security, with ISO 27001 certification now in place in both Spain and Italy
- Great Place To Work certified across all Axactor geographies: Axactor Spain received the certification for the first time, whilst the other five countries maintained their certifications
- Ørjan Svanevik appointed as member of the board by an extraordinary general meeting on 17 November
Full Year 2023
- Annualized return on equity of 8% for continuing operations (10%), and 7% in total for the shareholders (9%)
- EBITDA of EUR 131.8 million (119.0), with further margin expansion to 51% (50%)
- Total income growth of 7% from 2022 to EUR 256.6 million (239.7). Constant currency growth was 10%
- Gross revenue growth of 2% to EUR 343.7 million (336.9). Constant currency growth was 5%
- Cash EBITDA ended at EUR 221.1 million, up from EUR 218.1 million in 2022
- NPL investments for the year amounted to EUR 116.1 million (288.1), compared to a replacement capex of EUR 113.5 million
- Refinanced the RCF agreement at satisfactory terms and successfully placed a NOK 2,300 million bond loan to refinance the ACR02 bond loan. Per the end of 2023, Axactor has no loan maturities until June 2026
- Maintained focus on cross-border cooperation and improved utilization of resources across countries, especially within the Nordic countries
- Continued improvements within digital collection and self-sevice solutions, as well as increased use of machine learning to both boost efficiency within operations and to improve portfolio valuation
1 The highlights section refers to Axactor's continuing operations, unless explicitly stated otherwise. For more information, please refer to note 11 Discontinued operations
Key figures presented are for continuing operations unless otherwise stated. See note 11 for more information on discontinued operations. Key figures that cannot be directly found in the Group's consolidated statements are reconciled in the APM tables.
| For the quarter end | ||||
|---|---|---|---|---|
| EUR million | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Gross revenue | 85 | 89 | 344 | 337 |
| Total income | 65 | 63 | 257 | 240 |
| EBITDA | 34 | 31 | 132 | 119 |
| Cash EBITDA from continuing operations | 55 | 58 | 221 | 218 |
| Net profit/(loss) after tax from continuing operations | 9 | 10 | 34 | 41 |
| Return on equity to shareholders, annualized 1 | 7% | 9% | 7% | 9% |
| Return on equity, continuing operations, annualized | 9% | 10% | 8% | 10% |
| Equity ratio | 29% | 29% | 29% | 29% |
| Acquired NPL portfolios | 24 | 93 | 116 | 288 |
| Book value of NPL portfolios | 1,265 | 1,253 | 1,265 | 1,253 |
| Estimated remaining collections (ERC) | 2,620 | 2,545 | 2,620 | 2,545 |
| Number of employees (FTEs) | 1,255 | 1,301 | 1,255 | 1,301 |
| Price per share, last day of period (NOK) | 5.08 | 5.88 | 5.08 | 5.88 |
| Market capitalization (NOK million) | 1,535 | 1,777 | 1,535 | 1,777 |
-4% y/y
Return on equity
53% margin
Cash EBITDA EUR million 55
Equity ratio
1 Return on equity to shareholders includes continuing and discontinued operations
/ Operations
The fourth quarter of 2023 concluded another solid year for Axactor, despite macroeconomic headwinds and unfavorable regulatory changes across multiple markets. The NPL segment achieved a collection performance of 99% both for the fourth quarter and the full year of 2023, with gross revenue of EUR 69.7 million for the quarter (74.0). Reducing costs, both indirect expenses as well as costs directly related to collection activities, has been given a high priority in an effort to compensate for the tougher macroeconomic climate. The industry-leading cost position has been confirmed, as the NPL cost-to-collect ratio ended at 37% for 2023, down from 39% in 2022. For the 3PC segment the total income amounted to EUR 15.5 million, a 3% increase versus the corresponding quarter last year (15.0).
Volume inflow in the NPL segment has been lower in 2023 compared to last year, but still enough to secure growth. The total estimated remaining collections increased 3% during the year, with NPL investments in 2023 of EUR 116.1 million (288.1). The investments have been spread across five of the Axactor countries, with the Swedish market still being considered too competitive to achieve attractive returns on investments.
The 3PC segment has been characterized by a keen focus on efficiency in 2023. The previously announced review of all 3PC contracts is still ongoing, with several low-margin contracts already renegotiated or cancelled. As part of this process, both Sweden and Finland closed the last active 3PC clients during the fourth quarter and there will be no 3PC activities in these two countries in 2024. As a part of the scale-down and reorganization of the Finnish entity,
the Jyväskylä site was closed down and all activities in the Finnish market are now operated out of the Helsinki office.
To increase utilization of available resources, more cross-border roles have been established. The new setup focuses primarily on closer cooperation between the Nordic countries and Group functions, particularly regarding administrative functions and business analytics. The new setup is expected to retain scale effects despite scaling down the 3PC operations, and further improve Axactor's cost position for 2024.
IT efficiency
The IT cost ratio (including capitalized expenses) versus total income ended at 6% for the full year 2023, a 0.6 percentage point reduction compared to 2022 (7%). This is a result of Axactor's clear strategy from inception, of building a uniform system landscape across all markets. Multiple initiatives were launched during 2023 to further reduce cost to compensate for inflation and the everincreasing requirements for information security.
Further cost efficiency measures are always being considered. In December, a request-for-proposal (RFP) process for the groupwide infrastructure was initiated. Axactor has used the same infrastructure provider since 2016, and the RFP aims to secure an optimal platform for the business operations going forward, both in terms of cost and quality. The RFP process will be conducted with assistance from an external advisor, and is scheduled to be completed within the second quarter of 2024.
Information security continuously on the radar
The information security area is continuously under improvement. Examples of improvement initiatives implemented during the fourth quarter include technical measures to mitigate email impersonation of Axactor employees (CEO-fraud), enhancements within safe internet browsing for employees, and improved control of information sharing towards external vendors.
Axactor Spain successfully attained the ISO 27001 Information Security Certification during the fourth quarter. The certification serves as an assurance that the certified organization has implemented best-practice information security processes.
Attaining the ISO 27001 certification is a significant milestone for the Spanish organization, symbolizing a steadfast commitment to maintaining the highest standards of information security and trust, and thereby ensuring the confidentiality, integrity, and availability of our critical data assets. The same certification is also held by Credit Recovery Service S.r.l (CRS) in Italy.
Even though the certification only applies to certain Spanish and Italian entities, it is a confirmation that Axactor's investments in information security and data privacy yields results. More specifically it means that the group-wide information security management system, including policies, procedures, and partners satisfies the stringent requirements of the ISO 27001 standard. The certification will also increase Axactor's value proposition in the Spanish market.
AI-assisted portfolio valuation
Axactor's data scientist team has launched a variety of machine learning scorecards during the last three years, utilizing big data to assist operations with valuable insights to improve decision making. The result has been both an increase in collection and a reduction of cost. The latest addition from the team is machine learning based valuation models. They have been trained in valuation on Axactor's NPL portfolios. The machine learning valuations will be a supplement to existing valuation models and provide an improved basis for investment decisions.
Renewed customer trust
The results from the annual customer satisfaction survey for 2023 conclude that Axactor performs well in all markets. Axactor achieved a total average of 8.8 out of 10, an increase from 8.5 last year. The customers show a high degree of satisfaction with the services Axactor provides, and find Axactor to be professional, knowledgeable, and easily accessible. The response rate was 66%, with 81 responses received from the 123 invited. The customer survey gave a net promoter score (NPS) of 62, which is considered excellent.
Employees and the Axactor culture
The positive operational results would not have been possible without the dedication of Axactor's employees, acting passionately, proactively and with integrity. The results of the annual employee satisfaction survey, as reported last quarter, evidence that Axactor's investments in its people pays off. Axactor was certified as a great place to work in all countries in 2023, with Axactor Spain receiving the certification for the first time. Axactor is happy to observe that its employees have a very high level of satisfaction over-all, and that they are treated fairly and without bias. After careful review of the survey results, certain improvement areas have also been identified, and several workshops have been conducted during the quarter to process the identified improvement areas. The human resources development KPIs show improved gender balance, reduced pay-gap between genders, and sick-leaves remaining at an acceptable level despite significant ongoing reorganization initiatives.
CRS in Italy has also renewed their ISO 45001 certification during the quarter, related to providing a safe and healthy workplace by preventing work-related injuries and ill health, and by proactively improving its occupational safety and health performance and workers' wellbeing.
Governance and risk management
As part of the annual risk and internal control management processes, a successful second line verification of the group internal controls and a deep-dive risk assessment were conducted across the group. The Board has reviewed and approved all Groupwide policies to reflect changes in laws and regulations, and to mitigate risks identified since the last update.
Having control of the data processing is an essential element to ensure sustainable operational processes. During the year, Axactor has reviewed its data processing activities and made an action plan to close identified risks and weaknesses.
Employees have during the fourth quarter received the annual training to raise awareness in key areas such as ethical behavior, anti-money laundering, privacy and security, sexual harassment, good debt collection practices, and anti-fraud and anti-corruption.
All business continuity plans have been reviewed and desktop crisis management exercises have been held in Spain and Italy.
Continued environmental focus
During the quarter, the annual climate risk assessment of Axactor's locations has been conducted, still showing limited climate related risks associated with the company's locations. A survey of all employees' commuting habits has been performed as part of mapping the company's scope 3 emissions. The company has also reviewed the number of company cars at the different locations throughout the quarter. The aim is to change to low- or zeroemission cars where there are still strong arguments to maintain the company car programs.
Regulatory developments in the EU
As of the fourth quarter of 2023, EUs implementation of Directive (EU) 2021/2167, known as the Non-Performing Loans (NPL) directive, has seen certain delays in implementation across the Member States. The NPL directive came into effect on 28 December 2021, and set a deadline for implementation in all Member States by 29 December 2023. By the end of the quarter, only Germany and Sweden out of the six Member States in which Axactor operates, have implemented the directive on time. In the Member States which have implemented the directive, Axactor positively notes that the implementation is in line with previous expectations, and largely in correspondence with each other (at least across the two current Member States in which the directive has been implemented).
/Financials
Axactor's operations is split into two business segments: NPL and 3PC. The portfolios of purchased real estate (REO) have been in a run-off mode and treated as discontinued operations effective from the fiscal year 2022. During the fourth quarter 2023, the remaining book value of the REO assets were written down to zero, and Axactor will no longer report on any discontinued operations in 2024 and onwards. All comments and numbers in the following text refer to continuing operations unless explicitly stated otherwise. This also applies to figures for previous periods.
Revenue
Total income for the fourth quarter grew 3% from the fourth quarter 2022, to EUR 65.1 million (63.0), while gross revenue for the quarter
Total income Gross revenue
ended at EUR 85.2 million (89.0). The main growth driver for total income was the accretive investments into new NPL portfolios during 2022 and 2023. The total income and gross revenue were affected by adverse currency movements of NOK and SEK against EUR. Excluding currency effects, the growth rate was 6% for total income and -2% for gross revenue.
The NPL segment delivered a total income of EUR 49.7 million in the quarter, up from EUR 48.0 million in the fourth quarter 2022. Gross revenue ended at EUR 69.7 million (74.0), with a collection performance of 99% (99%). The NPL amortization rate fell from 34% to 29%, partially explained by increased average IRR on the portfolios, and also partially explained by prolonged cash flow
estimates due to higher share of collections from payment plans versus full settlements. Additionally, net NPL revaluations and changes in fair value forward flow commitments of combined EUR -0.1 million were recognized during the fourth quarter (-1.3).
The 3PC segment total income ended at EUR 15.5 million, up 3% from the fourth quarter 2022 (15.0). The previously communicated close-down of Axactor's 3PC business in Sweden and Finland was finalized during the quarter, and by the end of the year there are no active clients in neither of the two countries. The total income for the quarter includes positive one-off impacts of EUR 0.5 million from the close-down. The organic growth (i.e. excluding Finland and Sweden) was 4%.
For the full year 2023, total income grew 7% to EUR 256.6 million (239.7), while gross revenue grew 2% to EUR 343.7 million (336.9). The NPL segment contributed with EUR 202.6 million of the total income (183.8) and EUR 289.6 million of the gross revenue (281.0), while the 3PC segment contributed with EUR 54.0 million (55.8).
Operating expenses
Total operating expenses before depreciation and amortization was EUR 30.8 million for the fourth quarter, down from EUR 31.8 million in the corresponding quarter last year. The lower cost level is mainly a result of cost saving initiatives within SG&A, IT and corporate cost. For the full year 2023, total operating expenses
before depreciation and amortization amounted to EUR 124.8 million, up 3% from EUR 120.7 million in 2022. The operating expenses as a percentage of gross revenue remained flat at 36% both for the fourth quarter and the full year.
Depreciation and amortization – excluding amortization of NPL portfolios – was EUR 2.2 million for the quarter (2.4). For the full year 2023, depreciation and amortization ended at EUR 9.1 million, slightly up from EUR 8.9 million in 2022.
Operating results
EBITDA and EBITDA margin
Total contribution margin from the business segments was EUR 44.4 million for the quarter, compared to EUR 42.2 million in the fourth quarter last year. The contribution margin over total income thus ended at 68%, a slight increase from the fourth quarter 2022 (67%).
5 10 15 20 25 30 35 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 EUR million and % 31 30 33 49% 49% 50% 34 53% 34 54%
The NPL segment delivered a contribution margin of EUR 37.3 million in the fourth quarter, up from EUR 36.1 million in the same quarter last year. The total operating expenses for the NPL segment ended at EUR 12.3 million (11.9), including EUR 0.6 million in cost of repossessed assets sold (0.2). The margin over total income ended at 75%, the same level as for the fourth quarter 2022.
The contribution margin for the 3PC segment was EUR 7.1 million, up from EUR 6.1 million in the fourth quarter 2022. Operating expenses for the segment decreased by 6% to EUR 8.4 million (8.9). The margin over total income thus improved to 46% (41%).
EBITDA for the quarter ended at EUR 34.3 million, 10% higher than in the same quarter last year (31.2). The increase is primarily a result of the total income growth, combined with several cost efficiency initiatives. The EBITDA margin thus increased to 53%, from 49% during the fourth quarter 2022.
The difference between contribution margin and EBITDA is comprised of unallocated SG&A, IT and corporate costs, which amounted to EUR 10.1 million for the quarter. This compares to EUR 11.0 million in the corresponding quarter 2022.
Cash EBITDA amounted to EUR 55.0 million for the fourth quarter, down from EUR 57.5 million in the corresponding quarter last year. The reduction was mainly driven by the decrease in gross revenue, partly offset by improved cost efficiency. Adding EUR 1.1 million in contribution from discontinued operations (2.4), cash EBITDA was EUR 56.2 million (59.9). 0 amounted to EUR 81.6 million (57.9) and net foreign exchange
Operating profit (EBIT) was EUR 32.1 million for the fourth quarter, compared to EUR 28.8 million in the fourth quarter last year.
For the full year 2023, EBITDA amounted to EUR 131.8 million, up from EUR 119.0 million in 2022. Contribution from the business segments ended at 174.2 million (161.5), of which NPL contributed EUR 154.7 million (140.4) and 3PC contributed EUR 19.5 million (21.2). Unallocated SG&A, IT and corporate cost decreased from EUR 42.6 million in 2022 to EUR 42.4 million in 2023. Cash EBITDA for 2023 ended at EUR 221.1 million for continuing operations (218.1), and at EUR 223.9 million including discontinued operations (229.4). The operating profit (EBIT) grew 12% from 2022, ending at EUR 122.8 million (110.1).
Net financial items
Total net financial items for the fourth quarter were negative EUR 22.5 million (negative 15.6). The main part of the financial items was made up of interest expense on borrowings of EUR 22.8 million (16.1). The increase from the fourth quarter last year is mainly attributable to the significant increases in EURIBOR, NIBOR and STIBOR during 2023, but also to the higher margin on the ACR04 bond issued in the third quarter 2023 compared to the former ACR02 bond. Axactor has hedged parts of its interest expenses through an interest rate cap, limiting the effect of the increased interest rates in 2023.
For the full year 2023, total net financial items were negative EUR 81.4 million (55.9), of which interest expense on borrowings impacts amounted to EUR -0.8 million (0.6). Other financial expenses ended at EUR 2.3 million (1.2), including EUR 1.6 million in early repayment fee related to the refinancing of the ACR02 bond loan. Other financial income amounted to EUR 2.9 million for 2023 (0.1), including a EUR 1.9 million modification gain related to the renewal of the RCF agreement with DNB and Nordea, and a EUR 0.9 million gain in market value of the Group's hedging instruments. Axactor purchased own outstanding bonds with a face value of EUR 13.5 million during 2023 (49.5), at sub-par prices. This resulted in a gain on purchase of treasury bonds of EUR 0.1 million in 2023, compared to EUR 2.3 million in 2022.
Discontinued operations
Discontinued operations is comprised of the portfolios of real estate assets acquired during 2017 and 2018. It is the operating segment formerly reported as REO, but excluding repossessed assets from Axactor's secured NPL portfolios. Total income for the discontinued operations ended at EUR 1.6 million for the quarter (3.0), while EBITDA ended at EUR -2.8 million (-2.5). The net profit was EUR -2.8 million, compared to EUR -2.6 million in the fourth quarter 2022. The remaining stock of secured assets was impaired in the fourth quarter, and there are no balance values left associated with the discontinued operations.
For the full year 2023, discontinued operations delivered a total income of EUR 4.3 million (14.1), an EBITDA of EUR -5.6 million (-7.0) and a net profit of EUR -6.0 million (-8.1).
Earnings and taxes
Earnings before tax ended at EUR 9.5 million for the fourth quarter (13.2), while net profit ended at EUR 9.2 million (10.4). The effective tax rate was thus 3% for the quarter (22%). The reason for the low effective tax rate was utiliziation of previously unrecognized tax losses carried forward. Adding discontinued operations, the net profit was EUR 6.4 million (7.7).
The net profit including discontinued operations for the fourth quarter ended at EUR 7.3 million for shareholders of the parent company (9.4), and at EUR -0.9 million for non-controlling interests (-1.7). The resulting earnings per share was thus EUR 0.024 both on a reported basis and fully diluted (0.031), based on the average number of shares outstanding in each period.
For the full year 2023, earnings before tax ended at EUR 41.4 million (54.2) while the net profit amounted to EUR 33.6 million (40.6), resulting in an effective tax rate of 19% (25%). The net profit including contribution from discontinued operations was EUR 27.6 million for 2023 (32.6), of which EUR 30.8 million were attributable to shareholders of the parent company (36.8) and EUR -3.2 million were attributable to non-controlling interests (-4.2). The resulting earnings per share was EUR 0.102 both on a reported basis and fully diluted, based on the average number of shares outstanding in each period (0.122).
Cash flow
The following text regarding cash flow includes contribution from both continuing and discontinued operations.
Net cash flow from operating activities, including NPL investments, amounted to EUR 27.1 million (-38.1) for the quarter, of which the amount paid for NPL portfolios was EUR 21.7 million (93.8). The deviation between the investment in NPL portfolios and the cash paid for NPL portfolios in the period relates to deferred payments on certain portfolios. Excluding portfolio investments, the cash flow from operating activities fell to EUR 48.8 million, from EUR 55.8 million in the fourth quarter 2022. The decrease is partially attributable to a EUR 1.3 million reduction in the cash EBITDA from discontinued operations, while the cash EBITDA from continuing operations decreased by EUR 2.5 million. Taxes paid during the quarter amounted to EUR 6.8 million, compared to EUR 5.2 million in the fourth quarter last year. Additionally, an increase in the net working capital of EUR 0.6 million was recognized in the quarter (reduction of 1.1).
For the full year 2023, total net cash flow from operating activities, including NPL investments, amounted to EUR 84.9 million (-71.0), of which the amount paid for NPL portfolios was EUR 120.0 million (290.8). Excluding the portfolio investments, net cash flow from operating activities fell to EUR 205.0 million, from EUR 220.0 million in 2022. Cash EBITDA from continuing operations increased by EUR 3.0 million to EUR 221.1 million (218.1), but was offset by a EUR 8.5 million reduction in cash EBITDA from discontinued operations. Taxes paid was EUR 11.6 million in 2023, an increase from EUR 10.7 million last year. Net working capital increased by EUR 7.3 million during the year, compared to a decrease in working capital of EUR 1.3 million in 2022.
Total net cash flow from investments, not including investments in NPL portfolios, was EUR -0.9 million for the fourth quarter, slightly less in absolute terms compared to the corresponding quarter 2022 (-1.0). For the full year 2023, the net cash flow from investments was EUR -3.5 million, down from EUR -7.7 million in 2022. The main reason for the reduced cash outflow is a EUR 3.1 million payment related to the acquisition of Credit Recovery Service in 2022.
Total net cash flow from financing activities was EUR -40.0 million for the quarter (53.3). Axactor recognized a net repayment on credit facilities of EUR 21.1 million for the quarter (net drawdown of 69.4). Interests paid increased from EUR 15.2 million in the fourth quarter last year, to EUR 17.7 million in the fourth quarter 2023. The lower interest paid compared to the interest cost in the net financial items is related to timing differences on recognition of proceeds from the interest rate cap. A total of EUR 0.4 million of loan fees relating to refinancing processes and the amendment of the ACR03 bond terms were paid during the quarter (0.0).
For the full year 2023, net cash flow from financing activities ended at EUR -85.8 million, compared to EUR 75.9 million in 2022. Net drawdown on credit facilities was EUR 1.4 million, down from EUR 132.1 million last year. Interest paid was EUR 67.7 million, up 33% from EUR 51.1 million in 2022. Total loan fees paid during 2023 was EUR 15.4 million, mainly related to the refinancing of the RCF agreement and the issue of the ACR04 bond loan (0.1).
Total net cash flow was thus EUR -13.9 million for the quarter (14.2) and EUR -4-4 million for the year (-2.9), leaving total cash and cash equivalents at EUR 34.4 million at the end of 2023 (39.7). This includes EUR 2.6 million in restricted cash (7.0).
Equity position and balance sheet considerations
Total equity for the Group was EUR 423.5 million at the end of the year (410.6), including non-controlling interests of EUR -9.7 million (-5.4). The main reason for the increased equity compared to last year is the profits recognized during 2023. The resulting equity ratio at the end of 2023 was 29%, the same as per the end of 2022.
Return on equity
Annualized return on equity for shareholders, including discontinued operations, ended at 7%, slightly down from 9% in the fourth quarter last year. The annualized return on equity for continuing operations ended at 9% (10%). The main driver of the lower return is the increased interest expenses compared to last year. Simultaneously, the improved EBITDA and reduced tax expense limits the reduction. The return on equity for the full year 2023 ended at 7% in total for shareholders (9%), and at 8% for the continuing operations (10%).
Looking forward, Axactor will aim for further improvements of key drivers such as improved cost efficiency, changes in the business mix, and accretive portfolio investments. At the same time, the current interest rate environment will continue to put negative pressure on the return on equity development for the near term.
Capital expenditure and funding
Axactor invested EUR 24.1 million in NPL portfolios during
the fourth quarter (93.0). The invested amount was above the replacement capex and the estimated remaining collections grew by 1% from the third quarter 2023, to EUR 2,620.4 million (2,545.4). The total NPL investments in 2023 ended at EUR 116.1 million, compared to EUR 288.1 million in 2022. The estimated NPL investment commitments at the end of the fourth quarter stand at EUR 7.5 million, with further agreements signed in January increasing the total estimated commitments for 2024 to EUR 17.1 million.
Axactor has two outstanding bond loans per the end of 2023. The EUR 300 million bond with ticker ACR03 matures in September 2026, and adjusting for treasury bonds the outstanding face value of the bond is EUR 281.1 million. The NOK 2,300 million bond with ticker ACR04 was placed during the third quarter 2023, with a maturity in September 2027. The proceeds from the ACR04 issue was primarily used to repay the former EUR 200 million bond loan with ticker ACR02.
Axactors multi-currency revolving credit facility (RCF) was renewed during the second quarter 2023 and has a total size of EUR 545 million, of which EUR 472.7 million were drawn per the end of 2023 (510.0). The maturity of the RCF agreement is 30 June 2026, with an option for a further two-year extension contingent on separate credit approval.
Total interest-bearing debt including capitalized loan fees amounted to EUR 939.1 million at the end of 2023 (941.1). Axactor is in compliance with all loan covenants as per the end of the fourth quarter 2023.
Financial targets
In January 2023, Axactor announced four financial targets for 2023 to the market: 1. NPL investments of EUR 100-200 million, 2. Minimum 9% return on equity, 3. 20-50% dividend pay-out ratio, and 4. Maximum leverage of 3.5x at year-end. The NPL investments for 2023 ended at EUR 116.1 million, well within the target range. The interest rate increases during 2023 has hit harder than expected at the start of the year, and return on equity came in just shy of the target, at 8%. A recommendation on whether to pay dividends or not will be made by the Board in connection with the publishing of the 2023 Annual report, while the final decision will be made by the general meeting. In addition to higher interest cost, Axactor has also seen delays in collections during 2023. Debtors are, in certain markets, opting for longer payment plans at the expense of large settlements. Although this does not mean that the lifetime return for Axactor is adversely affected, it does affect
short-term cash flow. As a result, Axactor was not able to meet the leverage ratio target of 3.5x by the end of 2023, ending the year at 3.9x.
With the closing of 2023, new financial targets are set. In 2026, Axactor aim to deliver at least 12% return on equity1, in addition to paying annual dividends amounting to 20-50% of the reported net profit. This will be achieved through annual investments of EUR 100-200 million in accretive NPL portfolios. The resulting leverage ratio at the end of 2026 is expected to be 3.5x or less.
Outlook
Market prices for NPL portfolios are adjusting down towards what Axactor consider fair levels given the increased funding cost for the industry. Average gross IRR on the most recent deals is north of 30%, compared to an average for Axactor's back book of 18%. The estimated replacement capex for 2024 is approximately EUR 106 million, and the target of EUR 100-200 million in
investments should thus secure a relatively stable or growing book value throughout the year.
The Swedish and Finnish 3PC businesses have been closed down during 2023. This will limit the top-line growth for the segment in 2024, but also contribute positively on margins. The 3PC segment is expected to see continued growth in the Italian and Norwegian market, while the full review of low-margin contracts continues.
Axactor has now delivered two consecutive years of stable earnings. The near-term future will continue to be impacted by the recent interest rate increases and macroeconomic uncertainty, but Axactor aim to continue to deliver stable earnings during these turbulent times. Potential upsides could arise from interest rates and inflation falling faster than the current consensus, an improving bond market, and higher investment volumes at sustained attractive price levels. The executive management and Board continue to closely monitor the general macroeconomic situation and its potential business impacts.
/Interim condensed consolidated financial statements
| Interim condensed consolidated statement of profit or loss | 14 |
|---|---|
| Interim condensed consolidated statement of comprehensive income | 15 |
| Interim condensed consolidated statement of financial position | 16 |
| Interim condensed consolidated statement of cash flows | 17 |
| Interim condensed consolidated statement of changes in equity | 18 |
| Notes to the interim condensed consolidated financial statements | 19 | |
|---|---|---|
| Note 1 | Reporting entity and accounting principles | 19 |
| Note 2 | Financial risks | 19 |
| Note 3 | Operating segments | 21 |
| Note 4 | Financial items | 24 |
| Note 5 | Income | 25 |
| Note 6 | Purchased loan portfolios | 27 |
| Note 7 | Interest-bearing loans and borrowings | 29 |
| Note 8 | Leases | 32 |
| Note 9 | Fair value of forward flow commitments | 33 |
| Note 10 | Issued shares and share capital | 34 |
| Note 11 | Discontinued operations | 35 |
Interim condensed consolidated statement of profit or loss
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Continuing operations | |||||
| Interest income from purchased loan portfolios | 5, 6 | 53,801 | 50,363 | 211,289 | 187,490 |
| Net gain/(loss) purchased loan portfolios | 5, 6 | -4,760 | -2,722 | -13,082 | -8,185 |
| Revenue from sale of repossessed assets | 5 | 594 | 368 | 2,587 | 4,526 |
| Other operating revenue | 15,512 | 14,992 | 55,843 | 55,846 | |
| Other income | - | - | - | 15 | |
| Total income | 3, 5 | 65,146 | 63,002 | 256,637 | 239,692 |
| Cost of repossessed assets sold, incl impairment | 5 | -582 | -292 | -1,759 | -1,496 |
| Personnel expenses | -16,792 | -16,337 | -66,576 | -64,655 | |
| Other operating expenses | -13,472 | -15,190 | -56,454 | -54,587 | |
| Total operating expenses | -30,847 | -31,820 | -124,789 | -120,738 | |
| EBITDA | 34,299 | 31,182 | 131,848 | 118,955 | |
| Amortization and depreciation | -2,236 | -2,357 | -9,050 | -8,895 | |
| Operating profit | 32,063 | 28,825 | 122,797 | 110,060 | |
| Financial revenue | 4 | 516 | 963 | 3,389 | 3,194 |
| Financial expenses | 4 | -23,060 | -16,544 | -84,750 | -59,061 |
| Net financial items | -22,544 | -15,581 | -81,360 | -55,867 | |
| Profit/(loss) before tax from continuing operations | 9,519 | 13,244 | 41,437 | 54,193 | |
| Income tax expense | -303 | -2,884 | -7,874 | -13,549 | |
| Net profit/(loss) after tax from continuing operations | 9,216 | 10,360 | 33,563 | 40,644 |
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Discontinued operations | |||||
| Net profit/(loss) after tax from discontinued operations | 11 | -2,788 | -2,627 | -5,969 | -8,066 |
| Net profit/(loss) after tax | 6,428 | 7,733 | 27,594 | 32,578 | |
| Attributable to: | |||||
| Non-controlling interests: | |||||
| Net profit/(loss) after tax from continuing operations | 616 | -183 | 182 | 489 | |
| Net profit/(loss) after tax from discontinued operations | -1,531 | -1,493 | -3,418 | -4,668 | |
| Net profit/(loss) after tax | -915 | -1,677 | -3,235 | -4,179 | |
| Shareholders of the parent company: | |||||
| Net profit/(loss) after tax from continuing operations | 8,600 | 10,544 | 33,381 | 40,156 | |
| Net profit/(loss) after tax from discontinued operations | -1,257 | -1,134 | -2,551 | -3,399 | |
| Net profit/(loss) after tax | 7,343 | 9,410 | 30,830 | 36,757 | |
| Earnings per share: | |||||
| From continuing operations, basic and diluted: | 0.028 | 0.035 | 0.110 | 0.133 | |
| From continuing and discontinued operations, basic and diluted: | 0.024 | 0.031 | 0.102 | 0.122 | |
Interim condensed consolidated statement of comprehensive income
| For the quarter end | Year to date | ||
|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
| 6,428 | 7,733 | 27,594 | 32,578 |
| -48 | 238 | -48 | 238 |
| - | 16 | - | 16 |
| 2,534 | -1,968 | -10,495 | -11,343 |
| - | 198 | - | 9,876 |
| -744 | -245 | -3,569 | -245 |
| 1,743 | -1,761 | -14,112 | -1,458 |
| 8,171 | 5,972 | 13,482 | 31,120 |
| -915 | -1,677 | -3,235 | -4,179 |
| 9,086 | 7,648 | 16,718 | 35,299 |
Interim condensed consolidated statement of financial position
| For the quarter end / YTD | |||||
|---|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 | 31 Dec 2022 | ||
| Assets | |||||
| Non-current assets | |||||
| Intangible assets | |||||
| Goodwill | 59,799 | 61,069 | |||
| Deferred tax assets | 8,502 | 5,356 | |||
| Other intangible assets | 15,116 | 16,617 | |||
| Tangible assets | |||||
| Property, plant and equipment | 2,036 | 2,372 | |||
| Right of use assets | 8 | 11,604 | 11,757 | ||
| Financial assets | |||||
| Purchased loan portfolios | 6 | 1,265,327 | 1,252,642 | ||
| Other non-current assets | 2,495 | 607 | |||
| Total non-current assets | 1,364,879 | 1,350,420 | |||
| Current assets | |||||
| Repossessed assets | 2,664 | 3,230 | |||
| Accounts receivable | 6,636 | 6,376 | |||
| Other current assets | 27,196 | 29,021 | |||
| Restricted cash | 2,613 | 7,026 | |||
| Cash and cash equivalents | 31,826 | 29,045 | |||
| Total current assets | 70,935 | 74,699 | |||
| Assets classified as held for sale | 11 | - | 12,660 | ||
| Total assets | 1,435,815 | 1,437,778 | |||
| For the quarter end / YTD | ||||
|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 | 31 Dec 2022 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 10 | 158,369 | 158,369 | |
| Other paid-in equity | 270,831 | 270,381 | ||
| Retained earnings | 27,082 | -3,699 | ||
| Other components of equity | -23,080 | -9,016 | ||
| Non-controlling interests | -9,667 | -5,441 | ||
| Total equity | 423,534 | 410,593 | ||
| Non-current liabilities | ||||
| Interest-bearing debt | 7 | 939,104 | 445,590 | |
| Deferred tax liabilities | 10,549 | 6,143 | ||
| Lease liabilities | 8 | 8,969 | 9,404 | |
| Other non-current liabilities | 2,740 | 3,423 | ||
| Total non-current liabilities | 961,361 | 464,561 | ||
| Current liabilities | ||||
| Accounts payable | 4,057 | 7,141 | ||
| Interest-bearing debt | 7 | - | 495,537 | |
| Taxes payable | 12,243 | 17,578 | ||
| Lease liabilities | 8 | 3,194 | 2,835 | |
| Other current liabilities | 31,425 | 28,913 | ||
| Total current liabilities | 50,919 | 552,005 | ||
| Liabilities directly associated with assets classified as held for sale | 11 | - | 10,619 | |
| Total liabilities | 1,012,281 | 1,027,185 | ||
Interim condensed consolidated statement of cash flows
| For the quarter end | Year to date | |||||
|---|---|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Operating activities | ||||||
| Profit/(loss) before tax from continued operations | 9,519 | 13,244 | 41,437 | 54,193 | ||
| Profit/(loss) before tax from discontinued operations | 11 | -2,788 | -2,627 | -5,969 | -8,066 | |
| Taxes paid | -6,773 | -5,242 | -11,616 | -10,713 | ||
| Adjustments to reconcile profit before tax to net cash flows: | ||||||
| Net financial items, continuing operations | 4 | 22,544 | 15,581 | 81,360 | 55,867 | |
| Net financial items, discontinued operations | 11 | - | 169 | 348 | 1,059 | |
| Portfolio amortizations and revaluations | 20,059 | 25,977 | 88,840 | 97,218 | ||
| Change in fair value of forward flow commitments | -19 | - | -1,805 | - | ||
| Cost of repossessed assets sold, incl impairment | 582 | 292 | 1,759 | 1,496 | ||
| Cost of REOs sold, incl impairment | 11 | 3,908 | 4,836 | 8,422 | 18,318 | |
| Depreciation and amortization | 2,236 | 2,357 | 9,050 | 8,895 | ||
| Calculated cost of employee share options | 126 | 96 | 450 | 462 | ||
| Change in working capital | -639 | 1,127 | -7,318 | 1,291 | ||
| Cash flow from operating activities before NPL and REO | ||||||
| investments | 48,755 | 55,811 | 204,959 | 220,019 | ||
| Purchase of loan portfolios | 6 | -21,701 | -93,832 | -119,987 | -290,816 | |
| Purchases related to REO/repossessed assets | -2 | -80 | -73 | -227 | ||
| Net cash flow from operating activities | 27,051 | -38,100 | 84,898 | -71,025 |
| For the quarter end | Year to date | |||||
|---|---|---|---|---|---|---|
| EUR thousand | Note | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Investing activities | ||||||
| Investment in subsidiaries, net of cash acquired | - | - | - | -3,085 | ||
| Purchase of intangible and tangible assets | -1,097 | -1,068 | -3,874 | -4,862 | ||
| Interest received | 147 | 45 | 385 | 203 | ||
| Net cash flow from investing activities | -949 | -1,023 | -3,489 | -7,744 | ||
| Financing activities | ||||||
| Proceeds from borrowings | 7 | 1,452 | 93,971 | 343,274 | 354,051 | |
| Repayment of debt | 7 | -22,505 | -24,548 | -341,873 | -222,001 | |
| Interest paid | -17,749 | -15,176 | -67,737 | -51,067 | ||
| Loan fees paid | 7 | -359 | -1 | -15,376 | -83 | |
| Lease payments, principal amount | 8 | -854 | -835 | -3,143 | -2,755 | |
| Repayments to non-controlling interests | -25 | -138 | -992 | -2,238 | ||
| Net cash flow from financing activities | -40,040 | 53,274 | -85,847 | 75,907 | ||
| Net change in cash and cash equivalents | -13,940 | 14,152 | -4,438 | -2,861 | ||
| Cash and cash equivalents at the beginning of period, incl. restricted cash |
48,444 | 26,202 | 39,679 | 43,953 | ||
| Currency translation | -65 | -675 | -802 | -1,413 | ||
| Cash and cash equivalents at end of period, incl. restricted cash |
34,439 | 39,679 | 34,439 | 39,679 |
Interim condensed consolidated statement of changes in equity
| Equity attributable to the shareholders of the parent company | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR thousand | Restricted | Non-restricted | |||||||
| Share capital | Other paid in equity | Retained earnings Translation reserve | Cash flow hedge reserve |
Other reserves | Total | Non-controlling interest |
Total equity | ||
| Balance on 31 Dec 2021 | 158,150 | 269,919 | -40,475 | -7,074 | -230 | -16 | 380,273 | 976 | 381,249 |
| Result of the period | 36,757 | 36,757 | -4,179 | 32,578 | |||||
| Other comprehensive income of the period | 238 | -11,343 | 9,630 | 16 | -1,458 | -1,458 | |||
| Total comprehensive income for the period | - | - | 36,995 | -11,343 | 9,630 | 16 | 35,299 | -4,179 | 31,120 |
| Repayments to non-controlling interests | - | -2,238 | -2,238 | ||||||
| Share-based payment | 462 | 462 | 462 | ||||||
| Bonus issue | 219 | -219 | - | - | |||||
| Balance on 31 Dec 2022 | 158,369 | 270,381 | -3,699 | -18,417 | 9,401 | - | 416,033 | -5,441 | 410,593 |
| Result of the period | 30,830 | 30,830 | -3,235 | 27,594 | |||||
| Other comprehensive income of the period | -48 | -10,495 | -3,569 | -14,112 | -14,112 | ||||
| Total comprehensive income for the period | - | - | 30,782 | -10,495 | -3,569 | - | 16,718 | -3,235 | 13,482 |
| Repayments to non-controlling interests | - | -992 | -992 | ||||||
| Share-based payment | 450 | 450 | 450 | ||||||
| Balance on 31 Dec 2022 | 158,369 | 270,831 | 27,082 | -28,912 | 5,832 | - | 433,202 | -9,667 | 423,534 |
Notes to the interim condensed consolidated financial statements
Note 1 Reporting entity and accounting principles
The parent company Axactor ASA (the Company) is a company domiciled in Norway. These condensed consolidated interim statements ("interim financial statements") comprise the Company and its subsidiaries (together referred to as "the Group"). The Group is primarily involved in debt management, specializing on both purchasing and collection on own portfolios and providing collection services for third-party owned portfolios. The activities are further described in note 3.
This unaudited interim report has been prepared in accordance with IAS 34. The accounting principles applied correspond to those described in the Annual report 2022. This interim report does not contain all the information and disclosures available in the annual report and the interim report should be read together with the Annual report 2022.
In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual result may differ from these estimates.
Accounting policies and significant judgements, estimates and assumptions are more comprehensively discussed in the Annual report 2022. The significant judgements made by management applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements. Management continues to assess the data and information available at the reporting date.
Note 2 Financial risks
All economic activities are associated with risk. Axactor's risks are managed within the Group in accordance with the policies established by the Board. For more information on financial risks and risk management, one is referred to note 3 of the Group's financial statements in the Annual report 2022.
Interest rate and currency risk
The Group´s interest rate risk management objective is to apply cash flow hedge accounting for interest rate risk to mitigate the effect of increasing interest rates on issued loans and therefore limit the impact on the Group´s interest expenses. The Group's long-term strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. The Group intends to gradually implement the strategy in line with new portfolio investments.
The Group aims to reduce currency risk by keeping interest bearing debt in the same currencies as the Group's assets. In September 2023 the Group refinanced its EUR 200 million bond (ACR02) by issuing a new 4-year unsecured bond of NOK 2,300 million (ACR04). On the same date, the NOK debt previously held through the RCF was exchanged to EUR and the Group entered into two cross currency interest rate swaps, swapping NOK to EUR. The maturity date of the swaps corresponds to that of the NOK bond.
Liquidity risk
The Group monitors its risk of a shortage of funds using cash flow forecasts regularly. On 31 December 2023, the Group had an unused part of the RCF agreement of EUR 72.3 million, in addition to unrestricted cash and cash equivalents of EUR 31.8 million. The Group had positive cash flow from operating activities before NPL investments of EUR 205.0 million in 2023, and cash flows from operating activities in 2023 amounted to EUR 84.9 million.
The table of contractual maturities analyses non-derivative financial liabilities of the Group into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The contractual maturity is based on the earliest date on which the Group may be required to pay. The amounts disclosed in the table are the contractual undiscounted cash flows of liabilities. For NPL investment commitments, expected cash flows are presented.
The maturity calculation is made under the assumption that Axactor has a constant revolving credit facility draw in the period. The table includes both interest and principal cash flows. The loan repayment amounts presented are subject to change dependent on changes in variable interest rates. To the extent that interest flows are floating rate, the undiscounted amount is derived from the interest rate curves at the end of the reporting period.
The Group's estimated remaining collections from purchased loan portfolios for the next 15 years are presented below the table of contractual maturities (see also note 6).
Axactor was compliant with all covenants in 2023.
| EUR thousand | Contractual maturities per 31 Dec 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1-24 | Q2-24 | Q3-24 | Q4-24 | 1-2 years | 2-4 years | 4+ years | Total | |
| NPL investment commitments, non-cancellable 1 | 4,678 | 1,901 | 962 | - | - | - | - | 7,540 |
| Revolving credit facility | 8,351 | 8,120 | 7,523 | 7,039 | 28,156 | 486,776 | - | 545,965 |
| Bond ACR03 (ISIN NO0011093718) | 6,520 | 6,380 | 6,017 | 5,760 | 23,041 | 298,331 | - | 346,050 |
| Bond ACR04 (ISIN NO0013005264) | 6,432 | 6,410 | 6,184 | 6,029 | 24,117 | 246,904 | - | 296,076 |
| Other non-current liabilities | - | - | - | - | 1,000 | - | 1,740 | 2,740 |
| Accounts payable | 4,057 | - | - | - | - | - | - | 4,057 |
| Lease liabilities | 968 | 964 | 958 | 948 | 3,598 | 4,469 | 1,962 | 13,866 |
| Other current liabilities | 24,649 | 5,970 | - | 807 | - | - | - | 29,541 |
| Total contractual maturities | 55,655 | 29,744 | 21,644 | 20,583 | 79,911 | 1,036,480 | 3,701 | 1,247,718 |
1 Expected cash flows based on the last three months' actual deliveries. Per 31 December 2023, cash flows are limited to EUR 54.5 million by contracted capex limits
| ERC per 31 Dec 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| EUR thousand | Q1-24 | Q2-24 | Q3-24 | Q4-24 | 1-2 years | 2-4 years | 4+ years | Total |
| Estimated remaining collections (ERC) | 78,153 | 82,732 | 75,102 | 78,689 | 308,058 | 543,117 | 1,454,566 | 2,620,416 |
Note 3 Operating segments
Axactor delivers credit management services and the Group's revenue is derived from the following two operating segments:
• Non-performing loans (NPL)
• Third-party collection (3PC)
The NPL segment invests in portfolios of non-performing loans, presented as 'Purchased loan portfolios' in the consolidated statement of financial position. Subsequently, the outstanding loans are collected through either amicable or legal proceedings.
The 3PC segment's focus is to perform debt collection services on behalf of third-party clients. The operating segment applies both amicable and legal proceedings to collect the non-performing loans, and normally receive a commission for these services. Other services provided include, amongst others, helping creditors to prepare documentation for future legal proceedings against debtors, handling of invoices between the invoice date and the default date and sending out reminders. For these latter services, Axactor normally receives a fixed fee.
Axactor reports its business through reporting segments which correspond to the operating segments. Segment profitability and country profitability are the two most important dimensions when making strategic priorities and deciding where to allocate the Group's resources. Segment revenue reported represents revenue generated from external customers.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 1. Segment contribution margin represents contribution margin earned by each segment without allocation of management fee, central administration costs, other gains and losses and financial items. The measurement basis of the performance of the segment is the segment's contribution margin.
For the quarter end 31 Dec 2023
| Eliminations/ | |||||
|---|---|---|---|---|---|
| EUR thousand | NPL | 3PC | Not allocated | Total | |
| Collections on own portfolios | 69,100 | - | - | 69,100 | |
| Portfolio amortization and revaluation | -20,059 | - | - | -20,059 | |
| Revenue from sale of repossessed assets | 594 | - | - | 594 | |
| Other operating income: | |||||
| Change in fair value forward flow commitments | 19 | - | - | 19 | |
| Other operating revenue and other income | - | 15,493 | - | 15,493 | |
| Total income | 49,653 | 15,493 | - | 65,146 | |
| Cost of repossessed assets sold | -582 | - | - | -582 | |
| Impairment repossessed assets | - | - | - | - | |
| Direct operating expenses | -11,763 | -8,400 | - | -20,163 | |
| Contribution margin | 37,308 | 7,093 | - | 44,401 | |
| SG&A, IT and corporate cost | -10,102 | -10,102 | |||
| EBITDA | 34,299 | ||||
| Amortization and depreciation | -2,236 | -2,236 | |||
| Operating result | 32,063 | ||||
| Total operating expenses | -12,345 | -8,400 | -10,102 | -30,847 | |
| Contribution margin (%) | 75.1% | 45.8% | na | 68.2% | |
| EBITDA margin (%) | 52.6% | ||||
| Opex ex SG&A, IT and corporate cost / Gross revenue | 17.7% | 54.2% | na | 24.4% | |
| SG&A, IT and corporate cost / Gross revenue | 11.9% |
For the quarter end 31 Dec 2022
| EUR thousand | NPL | 3PC | Eliminations/ Not allocated |
Total |
|---|---|---|---|---|
| Collections on own portfolios | 73,618 | - | - | 73,618 |
| Portfolio amortization and revaluation | -25,977 | - | - | -25,977 |
| Revenue from sale of repossessed assets | 368 | - | - | 368 |
| Other operating income: | ||||
| Change in fair value forward flow commitments | - | - | - | - |
| Other operating revenue and other income | - | 14,992 | - | 14,992 |
| Total income | 48,010 | 14,992 | - | 63,002 |
| Cost of repossessed assets sold | -227 | - | - | -227 |
| Impairment repossessed assets | -65 | - | - | -65 |
| Direct operating expenses | -11,589 | -8,896 | - | -20,485 |
| Contribution margin | 36,129 | 6,096 | - | 42,225 |
| SG&A, IT and corporate cost | -11,043 | -11,043 | ||
| EBITDA | 31,182 | |||
| Amortization and depreciation | -2,357 | -2,357 | ||
| Operating result | 28,825 | |||
| Total operating expenses | -11,881 | -8,896 | -11,043 | -31,820 |
| Contribution margin (%) | 75.3% | 40.7% | na | 67.0% |
| EBITDA margin (%) | 49.5% | |||
| Opex ex SG&A, IT and corporate cost / Gross revenue | 16.1% | 59.3% | na | 23.4% |
| SG&A, IT and corporate cost / Gross revenue | 12.4% |
Year to date 31 Dec 2023
| EUR thousand | NPL | 3PC | Eliminations/ Not allocated |
Total |
|---|---|---|---|---|
| Collections on own portfolios | 287,046 | - | - | 287,046 |
| Portfolio amortization and revaluation | -88,840 | - | - | -88,840 |
| Revenue from sale of repossessed assets | 2,587 | - | - | 2,587 |
| Other operating income: | ||||
| Change in fair value forward flow commitments | 1,805 | - | - | 1,805 |
| Other operating revenue and other income | - | 54,039 | - | 54,039 |
| Total income | 202,598 | 54,039 | - | 256,637 |
| Cost of repossessed assets sold | -1,759 | - | - | -1,759 |
| Impairment repossessed assets | - | - | - | - |
| Direct operating expenses | -46,186 | -34,492 | - | -80,678 |
| Contribution margin | 154,653 | 19,547 | - | 174,200 |
| SG&A, IT and corporate cost | -42,352 | -42,352 | ||
| EBITDA | 131,848 | |||
| Amortization and depreciation | -9,050 | -9,050 | ||
| Operating result | 122,797 | |||
| Total operating expenses | -47,945 | -34,492 | -42,352 | -124,789 |
| Contribution margin (%) | 76.3% | 36.2% | na | 67.9% |
| EBITDA margin (%) | 51.4% | |||
| Opex ex SG&A, IT and corporate cost / Gross revenue | 16.6% | 63.8% | na | 24.0% |
| SG&A, IT and corporate cost / Gross revenue | 12.3% |
Year to date 31 Dec 2022
| EUR thousand | NPL | 3PC | Eliminations/ Not allocated |
Total |
|---|---|---|---|---|
| Collections on own portfolios | 276,524 | - | - | 276,524 |
| Portfolio amortization and revaluation | -97,218 | - | - | -97,218 |
| Revenue from sale of repossessed assets | 4,526 | - | - | 4,526 |
| Other operating income: | ||||
| Change in fair value forward flow commitments | - | - | - | - |
| Other operating revenue and other income | - | 55,846 | 15 | 55,861 |
| Total income | 183,831 | 55,846 | 15 | 239,692 |
| Cost of repossessed assets sold | -1,430 | - | - | -1,430 |
| Impairment repossessed assets | -65 | - | - | -65 |
| Direct operating expenses | -41,980 | -34,674 | - | -76,654 |
| Contribution margin | 140,356 | 21,172 | 15 | 161,543 |
| SG&A, IT and corporate cost | -42,588 | -42,588 | ||
| EBITDA | 118,955 | |||
| Amortization and depreciation | -8,895 | -8,895 | ||
| Operating result | 110,060 | |||
| Total operating expenses | -43,475 | -34,674 | -42,588 | -120,738 |
| Contribution margin (%) | 76.4% | 37.9% | na | 67.4% |
| EBITDA margin (%) | 49.6% | |||
| Opex ex SG&A, IT and corporate cost / Gross revenue | 15.5% | 62.1% | na | 23.2% |
| SG&A, IT and corporate cost / Gross revenue | 12.6% |
Note 4 Financial items
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Financial revenue | |||||
| Interest on bank deposits | 147 | 45 | 385 | 203 | |
| Net foreign exchange gain 1 | 325 | 853 | - | 550 | |
| Gain on purchase of bonds in own bond loans (note 7) | - | 26 | 115 | 2,349 | |
| Other financial income | 44 | 40 | 2,889 | 91 | |
| Total financial revenue | 516 | 963 | 3,389 | 3,194 | |
| Financial expenses | |||||
| Interest expense on borrowings 2 | -22,810 | -16,075 | -81,594 | -57,902 | |
| Net foreign exchange loss 1 | - | - | -811 | - | |
| Other financial expenses | -249 | -469 | -2,341 | -1,158 | |
| Total financial expenses | -23,060 | -16,544 | -84,750 | -59,061 | |
| Total net financial items | -22,544 | -15,581 | -81,360 | -55,867 |
1 Foreign exchange gains and losses are presented net as either financial revenue or financial expenses, depending on the net position. The amount includes changes in fair value of currency derivatives.
2 Interest expense on borrowings includes net interest paid on overdrafts in the Group's cash pool
The Group started with hedge accounting at the end of 2021, related to the hedging of EUR 200 million in floating rate issued loans for a duration of three years. At the end of 2022, the Group changed the amount and duration of the hedge. The hedge agreements hedged EUR 573 million in floating rate issued loans for a duration of one year, maturing 15 December 2023.
As the Group started applying hedge accounting at the end of 2021, and the material part of the hedged future cash flows are still expected to occur, the Group is required to apply hedge accounting for the material part of the original amount and duration of the agreement, even though the duration was changed. This causes a mismatch between interest paid and interest expensed for the hedge accounting period. In 2023, the hedging reduced interest paid with EUR 13.3 million and interest expensed with EUR 4.6 million. There is hence a timing difference from hedge accounting, where interest expensed on borrowings is reduced by EUR 8.7 million less than interest paid on borrowings in 2023.
A modification gain of EUR 1.9 million related to the renewal of the revolving credit facility in June 2023 is included in the line item 'Other financial income'.
Other financial expenses include an early repayment fee of EUR 1.6 million related to repayment of ACR02 in September 2023.
Note 5 Income
The Group delivers credit management services in six European countries: Finland, Germany, Italy, Norway, Spain and Sweden. Axactor also owns some portfolios through entities based in Luxembourg.
The Group's income from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.
The information in the table presented is based on the location of the debtors and the country of the company performing the collection (which correspond). This is not necessarily the same as the country owning the portfolio. The same principle is used for the allocation of the non-current assets. Non-current assets presented in the table consists of intangible assets, goodwill, property, plant and equipment and right of use assets.
Total income
| For the quarter end | ||||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Finland | 3,702 | 3,822 | 14,425 | 16,100 |
| Germany | 9,956 | 8,965 | 40,759 | 35,112 |
| Italy | 10,600 | 8,240 | 38,438 | 28,574 |
| Norway | 10,731 | 8,705 | 41,088 | 40,862 |
| Spain | 23,452 | 26,975 | 100,498 | 91,029 |
| Sweden | 6,706 | 6,296 | 21,428 | 28,016 |
| Total income | 65,146 | 63,002 | 256,637 | 239,692 |
Non-current assets
| Book value | |||
|---|---|---|---|
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 | |
| Finland | 3,017 | 3,747 | |
| Germany | 15,903 | 15,894 | |
| Italy | 15,825 | 16,039 | |
| Norway | 30,186 | 33,068 | |
| Spain | 20,299 | 19,883 | |
| Sweden | 3,325 | 3,185 | |
| Total assets | 88,555 | 91,816 |
Portfolio revenue
Portfolio revenue consists of interest income from purchased loan portfolios, net gain/(loss) from purchased loan portfolios and revenue from sale of repossessed assets. Net gain/(loss) from purchased loan portfolios is split into collections above/(below) collection forecasts and net present value of changes in collection forecasts.
For the quarter end 31 Dec 2023
| EUR thousand | Finland | Germany | Italy | Norway | Spain | Sweden | Total |
|---|---|---|---|---|---|---|---|
| Interest income from purchased loan portfolios | 3,929 | 9,322 | 7,461 | 9,142 | 17,679 | 6,268 | 53,801 |
| Collections above/(below) forecasts | -466 | -235 | -123 | -388 | -3,382 | -4 | -4,598 |
| NPV of changes in collection forecasts | -348 | -566 | 91 | 425 | -138 | 373 | -162 |
| Net gain/(loss) purchased loan portfolios | -814 | -800 | -32 | 38 | -3,521 | 369 | -4,760 |
| Sale of repossessed assets | 594 | 594 | |||||
| Total portfolio revenue | 3,114 | 8,521 | 7,430 | 9,180 | 14,752 | 6,637 | 49,634 |
| EUR thousand | Finland | Germany | Italy | Norway | Spain | Sweden | Total |
|---|---|---|---|---|---|---|---|
| Interest income from purchased loan portfolios | 15,713 | 37,520 | 26,730 | 36,345 | 69,649 | 25,332 | 211,289 |
| Collections above/(below) forecasts | -1,654 | -2,774 | 296 | -3,274 | 3,696 | -2,295 | -6,004 |
| NPV of changes in collection forecasts Net gain/(loss) purchased loan portfolios |
-779 -2,433 |
-861 -3,635 |
335 631 |
338 -2,935 |
-2,915 781 |
-3,196 -5,491 |
-7,078 -13,082 |
| Sale of repossessed assets | 2,587 | 2,587 | |||||
| Total portfolio revenue | 13,280 | 33,885 | 27,361 | 33,409 | 73,017 | 19,841 | 200,793 |
For the quarter end 31 Dec 2022
| EUR thousand | Finland | Germany | Italy | Norway | Spain | Sweden | Total |
|---|---|---|---|---|---|---|---|
| Interest income from purchased loan portfolios | 3,914 | 8,577 | 5,238 | 9,785 | 16,140 | 6,709 | 50,363 |
| Collections above/(below) forecasts | -362 | -920 | 143 | -1,046 | 1,399 | -650 | -1,435 |
| NPV of changes in collection forecasts | 88 | -825 | 73 | -1,517 | 1,157 | -263 | -1,286 |
| Net gain/(loss) purchased loan portfolios | -274 | -1,745 | 216 | -2,563 | 2,556 | -913 | -2,722 |
| Sale of repossessed assets | 368 | 368 | |||||
| Total portfolio revenue | 3,641 | 6,832 | 5,455 | 7,222 | 19,065 | 5,796 | 48,010 |
Year to date 31 Dec 2022
Year to date 31 Dec 2023
| EUR thousand | Finland | Germany | Italy | Norway | Spain | Sweden | Total |
|---|---|---|---|---|---|---|---|
| Interest income from purchased loan portfolios | 14,962 | 29,700 | 19,081 | 39,464 | 56,266 | 28,017 | 187,490 |
| Collections above/(below) forecasts | 463 | -3,784 | -33 | -3,130 | 1,023 | -88 | -5,550 |
| NPV of changes in collection forecasts | -15 | 790 | 239 | -1,847 | 685 | -2,487 | -2,635 |
| Net gain/(loss) purchased loan portfolios | 448 | -2,994 | 206 | -4,976 | 1,708 | -2,576 | -8,185 |
| Sale of repossessed assets | 4,526 | 4,526 | |||||
| Total portfolio revenue | 15,410 | 26,705 | 19,287 | 34,487 | 62,500 | 25,442 | 183,831 |
Note 6 Purchased loan portfolios
Purchased loan portfolios consists of portfolios of delinquent consumer debts purchased significantly below nominal value, reflecting incurred and expected credit losses, and thus defined as credit impaired. For purchased loan portfolios, timely collection of principal and interest is no longer reasonably assured at the date of purchase. Purchased loan portfolios are recognized at fair value at the date of purchase. Since the loans are measured at fair value, which includes an estimate of future credit losses, no allowance for credit losses is recorded on the day of acquisition of the loans. The loans are subsequently measured at amortized cost according to a credit adjusted effective interest rate.
Since the delinquent consumer debts are a homogenous group, the future cash flows are projected on a portfolio basis except for secured portfolios, for which cash flows are projected on a collateral asset basis. The majority of the purchased loan portfolios are unsecured, whereas approximately 6% of the book value of the loans are secured by a property object per 31 December 2023.
The carrying amount of each portfolio is determined by projecting future cash flows discounted to present value using the credit adjusted effective interest rate as at the date the portfolio was acquired. The total cash flows (both principal and interest) expected to be collected on purchased credit impaired loans are regularly reviewed. Changes in expected cash flows are adjusted in the carrying amount and are recognized in the profit or loss as income or expense in 'Net gain/ (loss) purchased loan portfolios'. Interest revenue is recognized using a credit adjusted effective interest rate, included in 'Interest revenue from purchased loan portfolios'.
The estimation of future cash flows is affected by several factors, including general macro factors, market specific factors, portfolio specific factors and internal factors. Axactor has incorporated into the estimated remaining collections the effect of the economic factors and conditions that is expected to influence collections going forward. Scenarios have been used to consider possible non-linear relationships between macroeconomic factors and collections.
For more information on accounting principles and a description of significant accounting judgments, estimates and assumptions related to purchased loan portfolios, see note 2.12.2 and note 4 in the Group's Annual report 2022.
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Balance at start of period | 1,253,619 | 1,191,969 | 1,252,642 | 1,095,789 | |
| Acquisitions during the period | 24,079 | 93,016 | 116,118 | 288,052 | |
| Collections | -69,100 | -73,618 | -287,046 | -276,524 | |
| Interest income from purchased loan portfolios | 53,801 | 50,363 | 211,289 | 187,490 | |
| Net gain/(loss) purchased loan portfolios | -4,760 | -2,722 | -13,082 | -8,185 | |
| Repossessions | -455 | -1,241 | -1,123 | -1,925 | |
| Deliveries on forward flow contracts | 514 | - | 1,435 | -409 | |
| Currency translation differences | 7,630 | -5,124 | -14,905 | -31,646 | |
| Balance at end of period | 1,265,327 | 1,252,642 | 1,265,327 | 1,252,642 |
Acquisitions during the period can be split into nominal value of the acquired portfolios and expected credit losses at acquisition as follows:
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Nominal value acquired portfolios | 124,007 | 542,600 | 3,659,615 | 2,429,169 | |
| Expected credit losses at acquisition | -99,928 | -449,584 | -3,543,497 | -2,141,117 | |
| Credit impaired acquisitions during the period | 24,079 | 93,016 | 116,118 | 288,052 |
The payments during the period for investments in loan portfolios presented in the consolidated statement of cash flow will not correspond to acquisitions during the period due to deferred payments.
The book value per market is presented in the table below:
| 31 Dec 2023 | 31 Dec 2022 | |||
|---|---|---|---|---|
| EUR thousand | Book value | % of total | Book value | % of total |
| Finland | 118,453 | 9% | 121,300 | 10% |
| Germany | 189,308 | 15% | 179,654 | 14% |
| Italy | 165,929 | 13% | 147,678 | 12% |
| Norway | 240,989 | 19% | 243,468 | 19% |
| Spain | 349,715 | 28% | 357,137 | 29% |
| Sweden | 200,932 | 16% | 203,405 | 16% |
| Total book value | 1,265,327 | 100% | 1,252,642 | 100% |
The ERC represents the estimated gross collections on the purchased loan portfolios. ERC, amortization, and interest income from purchased loan portfolios per year are specified below (year 1 means the first 12 months from the reporting date):
| EUR thousand | Estimated remaining collections (ERC), amortization and interest income from purchased loan portfolios per year | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | Total ERC |
| 31 Dec 2023 | ||||||||||||||||
| ERC | 314,676 | 308,058 | 283,589 | 259,528 | 225,064 | 195,895 | 176,394 | 158,644 | 143,318 | 129,194 | 112,964 | 93,850 | 81,633 | 72,962 | 64,648 | 2,620,416 |
| Amortization | 105,653 | 120,186 | 118,013 | 116,194 | 102,024 | 89,571 | 83,946 | 79,066 | 75,868 | 73,397 | 68,420 | 59,450 | 56,796 | 57,606 | 59,135 | 1,265,327 |
| Interest income | 209,023 | 187,871 | 165,575 | 143,334 | 123,040 | 106,323 | 92,448 | 79,578 | 67,450 | 55,797 | 44,544 | 34,400 | 24,838 | 15,356 | 5,513 | 1,355,089 |
| 31 Dec 2022 | ||||||||||||||||
| ERC | 310,027 | 305,914 | 271,347 | 237,417 | 212,308 | 185,750 | 168,327 | 152,172 | 137,607 | 124,971 | 113,833 | 99,900 | 84,323 | 74,817 | 66,705 | 2,545,419 |
| Amortization | 113,530 | 130,485 | 118,518 | 103,930 | 95,595 | 83,424 | 78,622 | 74,325 | 71,027 | 69,190 | 68,662 | 65,230 | 59,403 | 59,493 | 61,207 | 1,252,642 |
| Interest income | 196,496 | 175,428 | 152,829 | 133,487 | 116,714 | 102,326 | 89,705 | 77,847 | 66,581 | 55,781 | 45,171 | 34,670 | 24,921 | 15,324 | 5,498 | 1,292,778 |
Note 7 Interest-bearing loans and borrowings
The Group's total loans and borrowings are as follows:
| EUR thousand | Currency | Facility limit | Nominal value | Treasury bonds | Carrying amount, EUR | Interest coupon | Maturity |
|---|---|---|---|---|---|---|---|
| Facility | |||||||
| Bond ACR03 (ISIN NO0011093718) | EUR | 300,000 | -18,950 | 277,229 | 3m EURIBOR+535bps | 15.09.2026 | |
| Bond ACR04 (ISIN NO0013005264) | NOK | 204,700 | 202,986 | 3m NIBOR + 825bps | 07.09.2027 | ||
| Total bond loans | 504,700 | -18,950 | 480,215 | ||||
| Revolving credit facility | EUR | 322,325 | 308,516 | EURIBOR+ margin | 30.06.2026 | ||
| (multi-currency facility) | NOK | 1,438 | 1,438 | NIBOR+ margin | 30.06.2026 | ||
| SEK | 148,935 | 148,935 | STIBOR+ margin | 30.06.2026 | |||
| Total credit facilities | 545,000 | 472,698 | 458,889 | ||||
| Total interest-bearing loans and borrowings at end of period | 977,398 | -18,950 | 939,104 |
Of the total borrowings per 31 December 2023, EUR 939.1 million is classified as non-current and EUR 0 million is classified as current. The Group has reclassified accrued interest from short term interest-bearing debt to other current liabilities, resulting in a reclassification in the opening balance between the two line items in the consolidated statement of financial position of EUR 4.2 million.
Change in loans and borrowings from financial activities
| EUR thousand | Bond loans | Credit facilities 1 | Total Borrowings |
|---|---|---|---|
| Balance on 1 Jan | 445,590 | 505,784 | 951,374 |
| Proceeds from loans and borrowings | 200,340 | 142,934 | 343,274 |
| Repayment of loans and borrowings | -169,522 | -172,352 | -341,873 |
| Loan fees | -3,367 | -12,009 | -15,376 |
| Total changes in financial cash flow | 27,451 | -41,427 | -13,975 |
| Amortization of capitalized loan fees | 2,930 | 4,316 | 7,246 |
| Currency translation differences | 4,360 | -7,903 | -3,543 |
| Other non-cash movements | -116 | -1,882 | -1,998 |
| Total interest-bearing loans and borrowings at end of period | 480,214 | 458,889 | 939,104 |
1 Proceeds and repayments on the credit facilities include currency exchanges between NOK and EUR, which are reported gross
Maturity
The maturity calculation is made under the assumption that no new portfolios are acquired, and the revolving credit facility draw is constant to maturity date.
| EUR thousand | Estimated future cash flow within | ||||||
|---|---|---|---|---|---|---|---|
| Currency | Carrying amount | Total estimated future cash flow |
6 months or less | 6-12 months | 1-2 years | 2-5 years | |
| Bond ACR03 (ISIN NO0011093718) | EUR | 277,229 | 346,050 | 12,900 | 11,778 | 23,041 | 298,331 |
| Bond ACR04 (ISIN NO0013005264) | NOK | 202,986 | 296,076 | 12,842 | 12,214 | 24,117 | 246,904 |
| Total bond loan | 480,215 | 642,126 | 25,742 | 23,991 | 47,158 | 545,235 | |
| Revolving credit facility (multi-currency facility) | EUR/NOK/SEK | 458,889 | 545,965 | 16,472 | 14,562 | 28,156 | 486,776 |
| Total credit facilities | 458,889 | 545,965 | 16,472 | 14,562 | 28,156 | 486,776 | |
| Total interest-bearing loans and borrowings at end of period | 939,104 | 1,188,090 | 42,214 | 38,553 | 75,313 | 1,032,011 |
Revolving credit facility DNB/Nordea
The revolving credit facility consists of EUR 545 million in a multi-currency facility. The loan carries a variable interest rate based on the interbank rate in each currency with a margin. The maturity date for the facility is 30 June 2026.
The following financial covenants apply:
- NIBD ratio to pro-forma adjusted cash EBITDA ≤ 3:1 (secured loans (RCF) less cash to pro-forma adjusted cash EBITDA L12M)
- Portfolio loan to value ratio ≤ 60% (NIBD to total book value of loan portfolios)
- Portfolio collection performance ≥ 90% (actual portfolio performance L6M to active forecast L6M)
- Parent loan to value ≤ 80% (total loans for the Group less cash to total book value of all loan portfolios and REOs)
All subsidiaries of the Group, except Reolux Holding S.à r.l. and its subsidiaries, are part of the security package for this facility. The subsidiaries that are part of the security package have granted a share pledge, and except for Axactor Italy SpA and the subsidiaries of Axactor Portfolio Holding AB, the subsidiaries are also guarantors and have granted a bank account pledge.
Bond loans
ACR03 (ISIN NO0011093718)
The bond was placed at 3m EURIBOR + 5.35% interest, with maturity date 15 September 2026. The bond is listed on Oslo Børs. On 31 December 2023, the Group holds treasury bonds in ACR03 with a nominal value of EUR 19.0 million.
ACR04 (ISIN NO0013005264)
In September 2023, the Group issued a 4-year unsecured bond of NOK 2,300 million (ACR04). The bond is listed on Oslo Børs. The bond was placed at 3m NIBOR + 8.25% interest, with maturity date 7 September 2027.
The following financial covenants apply to both bond loans:
- Interest coverage ratio: ≥ 3.0x (Pro-forma adjusted Cash EBITDA to net interest expenses)
- Leverage ratio: ≤ 4.0x (NIBD to pro-forma adjusted cash EBITDA)
- Net loan to value: ≤ 80% (NIBD to total book value all loan portfolios and REOs)
- Net secured loan to value: ≤ 60% (secured loans less cash to total book value all loan portfolios and REOs)
Trustee: Nordic Trustee
Note 8 Leases
Right of use assets
| EUR thousand | Buildings | Vehicles | Other | Total |
|---|---|---|---|---|
| Right of use assets on 31 Dec 2021 | 10,247 | 475 | 46 | 10,768 |
| Additions | 4,293 | 339 | 69 | 4,701 |
| Depreciation | -2,668 | -386 | -19 | -3,073 |
| Disposals | -298 | -24 | - | -322 |
| Currency translation differences | -310 | -3 | -3 | -317 |
| Right of use assets on 31 Dec 2022 | 11,263 | 401 | 93 | 11,757 |
| Additions | 2,881 | 752 | 53 | 3,685 |
| Depreciation | -3,034 | -331 | -44 | -3,409 |
| Disposals | -232 | -31 | - | -264 |
| Currency translation differences | -167 | 2 | - | -165 |
| Right of use assets on 31 Dec 2023 | 10,711 | 792 | 101 | 11,604 |
| Remaining lease term | 1-8 years | 1-3 years | 2-4 years | |
| Depreciation method | Linear | Linear | Linear |
Lease liabilities
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Lease liabilities on 1 Jan | 12,239 | 11,051 |
| Net new leases | 3,237 | 4,241 |
| Lease payments, principal amount | -3,143 | -2,755 |
| Currency translation differences | -171 | -297 |
| Lease liabilities at period end | 12,163 | 12,239 |
| Current | 3,194 | 2,835 |
| Non-current | 8,969 | 9,404 |
The future aggregated minimum lease payments under lease liabilities are as follows:
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Undiscounted lease liabilities and maturity of cash outflows | ||
| < 1 year | 3,837 | 3,441 |
| 1-2 years | 3,598 | 3,015 |
| 2-3 years | 3,232 | 2,620 |
| 3-4 years | 1,237 | 2,464 |
| 4-5 years | 700 | 822 |
| > 5 years | 1,261 | 1,745 |
| Total undiscounted lease liabilities | 13,866 | 14,106 |
| Discounting element | -1,703 | -1,866 |
| Total lease liabilities | 12,163 | 12,240 |
Note 9 Fair value of forward flow commitments
Changes in the fair value of forward flow commitments are shown below. For additional information, see note 2.12.2 in the Group's Annual report 2022.
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Balance on 1 Jan | - | -409 |
| Value change | 1,805 | - |
| Deliveries | -1,435 | 409 |
| Currency translation differences | -58 | - |
| Balance at period end | 311 | - |
The changes in fair value of forward flow commitments are included in 'Other current assets' in the consolidated statement of financial position;
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Fair value of forward flow commitments (asset) | 311 | - |
| Balance at period end | 311 | - |
Note 10 Issued shares and share capital
Issued shares and share capital
| Number of shares | Share capital (EUR) | |
|---|---|---|
| On 31 Dec 2021 | 302,145,464 | 158,149,942 |
| Bonus issue | 218,961 | |
| On 31 Dec 2022 | 302,145,464 | 158,368,902 |
| On 31 Dec 2023 | 302,145,464 | 158,368,902 |
Shares owned by the Board and Group executive management on 31 Dec 2023
| Name | Shareholding | Share % |
|---|---|---|
| Latino Invest AS 1 | 1,040,000 | 0.3% |
| Terje Mjøs Holding AS 2 | 700,000 | 0.2% |
| Johnny Tsolis Vasili 1 | 670,000 | 0.2% |
| Vibeke Ly 3 | 203,750 | 0.1% |
| Arnt Andre Dullum 3 | 200,000 | 0.1% |
| Karl Mamelund 3 | 175,000 | 0.1% |
| Nina Mortensen 3 | 160,000 | 0.1% |
| Brita Eilertsen 2 | 19,892 | 0.0% |
1 CEO/related to the CEO of Axactor ASA
2 Member of the Board/controlled by member of the Board
3 Member of the Group executive management
20 largest shareholders on 31 Dec 2023
| Name | Shareholding | Share % |
|---|---|---|
| Geveran Trading Co Ltd | 150,385,439 | 49.8% |
| Torstein Ingvald Tvenge | 10,000,000 | 3.3% |
| Skandinaviska Enskilda Banken AB | 5,500,000 | 1.8% |
| Skandinaviska Enskilda Banken AB (Nominee) | 5,279,467 | 1.7% |
| Verdipapirfondet Nordea Norge Verdi | 4,454,162 | 1.5% |
| Nordnet Livsforsikring AS | 2,889,071 | 1.0% |
| Spectatio Finans AS | 2,781,621 | 0.9% |
| Endre Rangnes | 2,017,000 | 0.7% |
| Gvepseborg AS | 1,832,826 | 0.6% |
| Alpette AS | 1,661,643 | 0.5% |
| Klotind AS | 1,532,704 | 0.5% |
| Stavern Helse og Forvaltning AS | 1,500,000 | 0.5% |
| Velde Holding AS | 1,259,931 | 0.4% |
| Andres Lopez Sanchez | 1,177,525 | 0.4% |
| David Martin Ibeas | 1,177,525 | 0.4% |
| Latino Invest AS | 1,040,000 | 0.3% |
| Verdipapirfondet Nordea Avkastning | 1,035,709 | 0.3% |
| Vardfjell AS | 919,372 | 0.3% |
| AS Clipper | 900,000 | 0.3% |
| Verdipapirfondet Storebrand Norge | 899,169 | 0.3% |
| Total 20 largest shareholders | 198,243,164 | 65.6% |
| Other shareholders | 103,902,300 | 34.4% |
| Total number of shares | 302,145,464 | 100% |
| Total number of shareholders | 8,944 |
Note 11 Discontinued operations
In 2022, the Board resolved to dispose of the Group's portfolios of purchased real estate. The majority of the assets in the portfolios of purchased real estate classified as held for sale in 2022 were sold per 31 December 2023. An impairment of 1.1 million was recognized in the fourth quarter of 2023. No assets were classified as held for sale per 31 December 2023.
The results of the discontinued operations, which have been included in net profit/(loss) after tax, were as follows:
| For the quarter end | Year to date | ||||
|---|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| Other operating revenue | 1,552 | 2,979 | 4,296 | 14,113 | |
| Total income | 1,552 | 2,979 | 4,296 | 14,113 | |
| Cost of REOs sold, incl impairment | -3,908 | -4,836 | -8,422 | -18,318 | |
| Other operating expenses | -432 | -601 | -1,495 | -2,803 | |
| Total operating expenses | -4,340 | -5,437 | -9,917 | -21,121 | |
| EBITDA | -2,788 | -2,458 | -5,621 | -7,008 | |
| Amortization and depreciation | - | - | - | - | |
| Operating profit | -2,788 | -2,458 | -5,621 | -7,008 | |
| Financial expenses | - | -169 | -348 | -1,059 | |
| Net financial items | - | -169 | -348 | -1,059 | |
| Profit/(loss) before tax | -2,788 | -2,627 | -5,969 | -8,066 | |
| Income tax expense | - | - | - | - | |
| Net profit/(loss) after tax | -2,788 | -2,627 | -5,969 | -8,066 | |
| Attributable to: | |||||
| Non-controlling interests | -1,531 | -1,493 | -3,418 | -4,668 | |
| Shareholders of the parent company | -1,257 | -1,134 | -2,551 | -3,399 | |
| Earnings per share: basic and diluted | -0,004 | -0,004 | -0,008 | -0,011 |
The major classes of assets and liabilities comprising the operations classified as held for sale were as follows:
| The net cash flows incurred by the operations classified as held for sale were as follows: | |||||
|---|---|---|---|---|---|
| -------------------------------------------------------------------------------------------- | -- | -- | -- | -- | -- |
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Current assets | ||
| Stock of secured assets | - | 8,418 |
| Accounts receivable | - | 116 |
| Other current assets | - | 518 |
| Cash and cash equivalents | - | 3,607 |
| Total current assets | - | 12,660 |
| Assets classified as held for sale | - | 12,660 |
| Current liabilities | ||
| Interest-bearing debt | - | 10,247 |
| Other current liabilities | - | 373 |
| Total current liabilities | - | 10,619 |
| Liabilities directly associated with assets classified as held for sale | - | 10,619 |
| Net assets classified as held for sale | - | 2,041 |
| Year to date | ||||
|---|---|---|---|---|
| 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
|
| 1,120 | 2,378 | 2,801 | 11,310 | |
| - | - | - | - | |
| -2,129 | -1,325 | -6,409 | -12,220 | |
| -3,607 | -910 | |||
| -1,009 | For the quarter end 1,053 |
/ Alternative performance measures
Alternative performance measures (APMs) used in Axactor
| APM | Definition | Purpose of use | Reconciliation IFRS |
|---|---|---|---|
| Gross revenue | Total income plus portfolio amortizations and revaluations, and change in fair value of forward flow commitments |
To review the revenue before split into interest and amortization (for own portfolios) |
Total income from consolidated statement of profit or loss plus portfolio amortizations and revaluations in the consolidated statement of cash flows and change in fair value of forward flow commitments |
| Cash EBITDA from continuing operations | EBITDA adjusted for calculated cost of share option program, portfolio amortization and revaluation, change in fair value of forward flow commitments and repossessed assets cost of sale and impairment |
To reflect cash from continuing operating activities, excluding timing of taxes paid and movement in working capital |
EBITDA from continuing operations (total income minus total operating expenses) in consolidated statement of profit or loss adjusted for specified elements from the consolidated statement of cash flows |
| Cash EBITDA | Cash EBITDA from continuing operations plus EBITDA from discontinued operations, adjusted for REO cost of sale, including impairment |
To reflect cash from continuing and discontinued operating activities, excluding timing of taxes paid and movement in working capital |
EBITDA from continuing operations (total income minus total operating expenses) in consolidated statement of profit or loss plus EBITDA from discontinued operations according to note 11, adjusted for specified elements from the consolidated statement of cash flows |
| Estimated remaining collections (ERC) | Estimated remaining collections express the expected future cash collections on purchased loan portfolios in nominal values, over the next 180 months. The ERC does not include sale of repossessed assets if the assets are already repossessed |
ERC is a standard APM within the industry with the purpose to illustrate the future cash collections including estimated interest income and opex |
Purchased loan portfolios in the consolidated statement of financial position, plus estimated operating expenses for future collections at time of acquisition and estimated discounted gain |
| Net interest-bearing debt (NIBD) | Net interest-bearing debt means the aggregated amount of interest-bearing debt attributable to both continuing and discontinued operations, less aggregated amount of unrestricted cash and cash equivalents, on a consolidated basis |
NIBD is used as an indication of the Group's ability to pay off all of its debt |
Non-current and current portion of interest-bearing debt and cash and cash equivalents from the consolidated statement of financial position and as attributable to discontinued operations according to note 11, with adjustments to get to nominal value of the debt, less treasury bonds |
| Return on equity to shareholders, annualized | Net profit/(loss) after tax from continuing and discontinued operations attributable to shareholders divided by average equity for the period attributable to shareholders, annualized |
Measures the profitability in relation to shareholders' equity | Net profit/(loss) after tax attributable to shareholders of the parent company from the consolidated statement of profit or loss and equity attributable to shareholders from the consolidated statement of changes in equity |
| Return on equity, continuing operations, annualized |
Net profit/(loss) after tax from continuing operations divided by average total equity for the period, annualized |
Measures the profitability of continuing operations in relation to total equity |
Net profit/(loss) after tax from continuing operations from the consolidated statement of profit or loss and total equity from the consolidated statement of changes in equity |
Gross revenue
| For the quarter end | Year to date | |||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Total income | 65,146 | 63,002 | 256,637 | 239,692 |
| Portfolio amortizations and revaluations | 20,059 | 25,977 | 88,840 | 97,218 |
| Change in fair value of forward flow commitments | -19 | - | -1,805 | - |
| Gross revenue | 85,186 | 88,979 | 343,672 | 336,911 |
Estimated remaining collections (ERC)
| For the quarter end | Year to date | |||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Purchased loan portfolios | 1,265,327 | 1,252,642 | 1,265,327 | 1,252,642 |
| Estimated opex for future collections at time of acquisition | 369,720 | 363,858 | 369,720 | 363,858 |
| Estimated discounted gain | 985,368 | 928,920 | 985,368 | 928,920 |
| Estimated remaining collections (ERC) | 2,620,416 | 2,545,419 | 2,620,416 | 2,545,419 |
EBITDA and Cash EBITDA
| EUR thousand | For the quarter end | Year to date | |||
|---|---|---|---|---|---|
| 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
||
| Total income | 65,146 | 63,002 | 256,637 | 239,692 | |
| Total operating expenses | -30,847 | -31,820 | -124,789 | -120,738 | |
| EBITDA from continuing operations | 34,299 | 31,182 | 131,848 | 118,955 | |
| Calculated cost of share option program | 126 | 96 | 450 | 462 | |
| Portfolio amortizations and revaluations | 20,059 | 25,977 | 88,840 | 97,218 | |
| Change in fair value of forward flow commitments | -19 | - | -1,805 | - | |
| Cost of repossessed assets sold, incl. impairment | 582 | 292 | 1,759 | 1,496 | |
| Cash EBITDA from continuing operations | 55,047 | 57,548 | 221,092 | 218,130 | |
| EBITDA from discontinued operations | -2,788 | -2,458 | -5,621 | -7,008 | |
| Cost of REOs sold, incl. impairment | 3,908 | 4,836 | 8,422 | 18,318 | |
| Cash EBITDA | 56,167 | 59,926 | 223,894 | 229,440 | |
| Taxes paid | -6,773 | -5,242 | -11,616 | -10,713 | |
| Change in working capital | -639 | 1,127 | -7,318 | 1,291 | |
| Cash flow from operating activities before NPL and REO investments | 48,755 | 55,811 | 204,959 | 220,019 |
Net interest-bearing debt (NIBD)
| For the quarter end | Year to date | |||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 |
31 Dec 2022 |
31 Dec 2023 |
31 Dec 2022 |
| Non-current portion of interest-bearing debt from financial position | 939,104 | 445,590 | 939,104 | 445,590 |
| Current portion of interest-bearing debt from financial position | - | 495,537 | - | 495,537 |
| Interest-bearing debt, discontinued operations | - | 10,247 | - | 10,247 |
| Total interest-bearing debt | 939,104 | 951,374 | 939,104 | 951,374 |
| Capitalized loan fees and other adjustments | 19,344 | 9,144 | 19,344 | 9,144 |
| Cash and cash equivalents from financial position | 31,826 | 29,045 | 31,826 | 29,045 |
| Cash and cash equivalents, discontinued operations | - | 3,607 | - | 3,607 |
| Net interest-bearing debt (NIBD) | 926,622 | 927,865 | 926,622 | 927,865 |
Return on equity to shareholders, annualized
| For the quarter end | Year to date | |||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
| Net profit/(loss) after tax attributable to shareholders of the parent company | 7,343 | 9,410 | 30,830 | 36,757 |
| Average equity for the period related to shareholders of the parent company | 428,596 | 412,162 | 419,074 | 399,433 |
| Return on equity to shareholders, annualized | 6.8% | 9.1% | 7.4% | 9.2% |
Return on equity, continuing operations, annualized
| For the quarter end | Year to date | |||
|---|---|---|---|---|
| EUR thousand | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
| Net profit/(loss) after tax from continuing operations | 9,216 | 10,360 | 33,563 | 40,644 |
| Average total equity for the period | 419,398 | 407,628 | 411,350 | 397,163 |
| Return on equity, continuing operations, annualized | 8.7% | 10.1% | 8.2% | 10.2% |
/ Glossary
Terms
| Active forecast | Forecast of estimated remaining collections on purchased loan portfolios |
|---|---|
| Board | Board of Directors |
| Cash EBITDA margin | Cash EBITDA as a percentage of gross revenue |
| Chair | Chair of the Board of Directors |
| Contribution margin (%) | Total operating expenses (excluding SG&A, IT and corporate cost) as a percentage of total income |
| Collection performance | Gross collections on purchased loan portfolios in relation to active forecast, including sale of repossessed assets in relation to book value |
| Cost-to-collect | Cost to collect is calculated as segment operating expenses plus a pro rata allocation of unallocated operating expenses and unallocated depreciation and amortization. The segment operating expense is used as allocation key for the unallocated costs |
| Equity ratio | Total equity as a percentage of total equity and liabilities |
| Forward flow agreement | Agreement for future acquisitions of loan portfolios at agreed prices and delivery |
| Gross IRR | The credit adjusted interest rate that makes the net present value of ERC equal to the book value of purchased loan portfolios, calculated using monthly cash flows over a 180-months period |
| Group | Axactor ASA and all its subsidiaries |
|---|---|
| NPL amortization rate | Portfolio amortization divided by collections on own portfolios for the NPL segment |
| NPL cost-to-collect ratio | NPL cost to collect divided by NPL total income excluding NPV of changes in collection forecasts and change in fair value of forward flow commitments |
| One off portfolio acquisition | Acquisition of a single loan portfolio |
| Opex | Total operating expenses |
| Recovery rate | Portion of the original debt repaid |
| Replacement capex | Amount of acquisitions of new loan portfolios needed to keep the book value of purchased loan portfolios constant compared to last period |
| Repossession | Taking possession of property due to default on payment of loans secured by property |
| Repossessed assets | Property repossessed from secured loan portfolios |
| SG&A, IT and corporate cost | Total operating expenses for overhead functions, such as HR, finance and legal etc |
| Solution rate | Accumulated paid principal amount for the period divided by accumulated collectable principal amount for the period. Usually expressed on a monthly basis |
Abbreviations
| 3PC | Third-party collection |
|---|---|
| AGM | Annual general meeting |
| APM | Alternative performance measures |
| ARM | Accounts receivable management |
| B2B | Business to business |
| B2C | Business to consumer |
| BoD | Board of Directors |
| BS | Consolidated statement of financial position (balance sheet) |
| CF | Consolidated statement of cash flows |
| CGU | Cash generating unit |
| CM | Contribution margin |
| D&A | Depreciation and amortization |
| Dopex | Direct operating expenses |
| EBIT | Operating profit/Earnings before interest and tax |
| EBITDA | Earnings before interest, tax, depreciation and amortization |
| ECL | Expected credit loss |
| EGM | Extraordinary general meeting |
| EPS | Earnings per share |
| ERC | Estimated remaining collections |
| ESG | Environmental, social and governance |
| ESOP | Employee stock ownership plan |
| FSA | The financial supervisory authority |
| FTE | Full time equivalent |
|---|---|
| GHG | Greenhouse gas emissions |
| HQ | Headquarters |
| IFRS | International financial reporting standards |
| LTV | Loan to value |
| NCI | Non-controlling interests |
| NPL | Non-performing loan |
| OB | Outstanding balance, the total amount Axactor can collect on claims under management, including outstanding principal, interest and fees |
| OCI | Consolidated statement of other comprehensive income |
| P&L | Consolidated statement of profit or loss |
| PCI | Purchased credit impaired |
| PPA | Purchase price allocations |
| REO | Real estate owned |
| ROE | Return on equity |
| SDG | Sustainable development goal |
| SG&A | Selling, general & administrative |
| SPV | Special purpose vehicle |
| VIU | Value in use |
| VPS | Verdipapirsentralen/Norwegian central securities depository |
| WACC | Weighted average cost of capital |
| WAEP | Weighted average exercise price |
Highlights Key figures Operations Financials APM Glossary
