Axactor SE

Investor Presentation • Feb 15, 2024

Q4 and full year highlights

Financial update

Financial targets

Q&A

Financial highlights for the quarter on continuing operations

• Gross revenue declining by 4% y-o-y
  • On the back of a challenging macro situation, moderate investments in 2023 and currency headwind

• Healthy EBITDA margin of 53%
• EBITDA of EUR 34m, up from EUR 31m last year

• Annualized return on equity of 9%
  • Driven by EBIT-growth and positive one-time effects on tax

Discontinued operations (REO) fully run off

Axactor business model developing positively - EBITDA is up 24% and the EBITDA-margin is up with 5pp last 8 quarters

EBITDA and EBITDA-margin (EUR million and %)

4

2023 in perspective

- Another material step in the right direction on key financials

5 Comment: Stated numbers are for continuing operations. 2021 numbers are fully restated in company financial statements. 2016-2020 figures are estimated without considering certain intercompany eliminations and consolidation effects

NPL value drivers steadily improving

Gross IRR on the total NPL book (%, end of period)

Acquiring portfolios with higher returns…

…and collect on the portfolios with lower cost

Discontinued operations (REO) is now fully run off in accordance with the guidance

Total income and net profit discontinued operations¹ (EUR million and %) 8 5 4 3 Total Income Net profit

Book value discontinued operations (EUR million)

Comments

• Satisfying total income in Q4 of EUR 2m
• Impairment of EUR 1m in Q4 as part of fully exiting the segment
• Consequently, Axactor will not report discontinued operations as of Q1 2024

After successful refinancing in 2023 there are no maturities until June 2026

Q4 and full year highlights

Financial update

Financial targets

Q&A

Group: Gross revenue is down 4% y-o-y driven by the NPL segment

Gross revenue

(EUR million)

• Gross revenue is down 4% y-o-y
  • NPL gross revenue declining by 6% y-o-y
  • 3PC gross revenue growth of 3% y-o-y
• Estimated gross revenue decline of 2% y-o-y with constant currency

NPL segment: A soft quarter on NPL with pressure on both total income and margins

NPL Total income and CM% (EUR million, and %)

• Total income and margins down q-o-q on the back of macroeconomic headwinds
• Collection performance of 99% for the quarter and for the year
  • Satisfactory collection in southern Europe
  • Debtors in Nordics and Germany opt for longer payment plans with lower monthly installments

3PC segment: A solid quarter on 3PC with growth in both total income and margins

3PC Total income and CM% (EUR million and %)

• 3PC total income growth of 3% y-o-y
  • Growth driven by Southern Europe
  • Organic growth of 4% if we exclude Sweden and Finland
• Margins up driven by strict cost control and yearend bonuses
• Positive one-time effect on total income from exiting Sweden and Finland of EUR 0.5m

Group: Growth y-o-y on both total income and EBITDA. Cash EBITDA with headwind on currency and macro

Total income (EUR million)

EBITDA and EBITDA-margin (EUR million and %)

Cash EBITDA (EUR million)

ROE upheld at 8% on continuing operations last twelve months – despite increased cost of funding

Return on equity to shareholders (%)

Update on interest rate hedge

Q4 was the last quarter with an interest rate hedge in place from a cash flow perspective

In the profit and loss statement, Axactor will still have positive effects from the hedge¹

• EUR 1.0m per quarter in 2024
• EUR 0.8m per quarter in 2025

Going forward Axactor will aim at hedging each vintage of NPL investments with a matching interest rate hedge

Q4 and full year highlights

Financial update

Financial targets

Q&A

Financial targets 2023

Dimension	Targets 2023
Growth	• NPL investments of EUR 100 - 150 million
Profit	• Minimum 9% ROE
Returns	• 20 - 50% dividend pay-out ratio
Leverage1	• Maximum leverage of 3.5x at year-end

Actuals 2023

• NPL investments of EUR 116 million

• 8% ROE
• Proposal to be announced in connection with publication of the annual report
• Leverage of 3.9x at year-end

Launching financial targets for 2026

Dimension	Financial targets 2026
Growth	• NPL investments of EUR 100 – 200 million annually
Profit	ROE1 • Minimum 12%
Returns	• 20 - 50% dividend pay-out ratio annually
Leverage2	• Maximum leverage of 3.5x

18 1) Assuming EURIBOR and STIBOR of 2.0% and NIBOR of 2.9% in 2026. The target is excluding any possible one-time financial cost related to refinancing 2) Leverage = (net interest-bearing debt / pro-forma adjusted cash EBITDA). As defined in the bond covenants

2024 – is the tide turning?

• Interest rates start to decline?
• Improving bond market?
• Reduced inflation?
• Investment volumes gradually coming back?
• Portfolio prices stabilizing at attractive levels?

Q4 and full year highlights

Financial update

Financial targets

Q&A

Supporting information

NPL investment commitments of EUR 8m next 12 months

Quarterly NPL investments (EUR million)

Additional forward flow agreements and one-off acquisitions expected to further increase NPL

ERC increasing by 3% last twelve months

ERC development (EUR million)

Forward ERC profile by year (EUR million)

3PC volumes by geographic region

3PC Total income split by geographic region

• Spain accounting for 56% of total income on 3PC
• Segment closed down in Finland and Sweden, with no active clients per year-end 2023

Bond covenants (1/2)

Loan-to-value - covenant ≤80%

(Net interest-bearing debt divided by total portfolio book value)

Secured Loan-to-value - covenant ≤60%

(Secured net interest-bearing debt divided by total portfolio book value)

Bond covenants (2/2)

Leverage ratio - covenant ≤4.0x

(Net interest-bearing debt divided by LTM Pro-forma adjusted cash EBITDA

Interest coverage ratio - covenant ≥3.0x (Pro-forma adjusted cash EBITDA divided by net interest expenses)

Terms and abbreviations

Abbreviations

		3PC	Third-party collection
		AGM	Annual general meeting
		APM	Alternative performance measures
		ARM	Accounts receivable management
		B2B	Business to business
Terms		B2C	Business to consumer
		BoD	Board of Directors
Active forecast	Forecast of estimated remaining collection on NPL portfolios	BS	Consolidated statement of financial position (balance sheet)
Board	Board of directors	CF	Consolidated statement of cash flows
Cash EBITDA margin	Cash EBITDA as a percentage of gross revenue	CGU	Cash generating unit
Chair	Chair of the board of directors	CM	Contribution margin
Contribution margin (%)	Total operating expenses (excluding SG&A, IT and corporate cost) as a percentage	D&A	Depreciation and amortization
	of total income	Dopex	Direct operating expenses
Collection performance	Gross collection on NPL portfolios in relation to active forecast, including sale of	EBIT	Operating profit/Earnings before interest and tax
	repossessed assets in relation to book value
Cost-to-collect	Cost to collect is calculated as segment operating expenses plus a pro rata	EBITDA	Earnings before interest, tax, depreciation and amortization
	allocation of unallocated operating expenses and unallocated depreciation and	ECL	Expected credit loss
	amortization. The segment operating expense is used as allocation key for the	EGM	Extraordinary general meeting
	unallocated costs	EPS	Earnings per share
Equity ratio	Total equity as a percentage of total equity and liabilities	ERC	Estimated remaining collection
Forward flow agreement	Agreement for future acquisitions of NPLs at agreed prices and delivery	ESG	Environmental, social and governance
Gross IRR	The credit adjusted interest rate that makes the net present value of ERC equal to	ESOP	Employee stock ownership plan
	NPL book value, calculated using monthly cash flows over a 180-months period	FSA	The financial supervisory authority
Group	Axactor ASA and all its subsidiaries	FTE	Full time equivalent
		GHG	Greenhouse gas emissions
NPL amortization rate	NPL amortization divided by collection on own NPL portfolios	IFRS	International financial reporting standards
NPL cost-to-collect ratio	NPL cost to collect divided by NPL total income excluding NPV of changes in	LTV	Loan to value
	collection forecasts and change in fair value of forward flow commitments	NCI	Non-controlling interests
One off portfolio acquisition	Acquisition of a single portfolio of NPLs	NPL	Non-performing loan
Opex	Total operating expenses	OB	Outstanding balance, the total amount Axactor can collect on claims under
Recovery rate	Portion of the original debt repaid		management, including outstanding principal, interest and fees
Replacement capex	Acquisitions of new NPLs to keep the same book value of NPLs from last period	OCI	Consolidated statement of other comprehensive income
Repossession	Taking possession of property due to default on payment of loans secured by	P&L	Consolidated statement of profit or loss
	property	PCI	Purchased credit impaired
Repossessed assets	Property repossessed from secured non-performing loans	PPA	Purchase price allocations
		REO	Real estate owned
SG&A, IT and corporate cost	Total operating expenses for overhead functions, such as HR, finance and legal etc	ROE	Return on equity
Solution rate	Accumulated paid principal amount for the period divided by accumulated	SDG	Sustainable development goal
	collectable principal amount for the period. Usually expressed on a monthly basis	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

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