Axactor SE

Annual Report (ESEF) • Mar 31, 2023

Untitled Annual report 2022   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   We are passionate, proactive and act with integrity Axactor helps people and companies to a better future Axactor Annual report 2022Axactor Annual report 2022 22   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK / Contents This is Axactor Axactor at a glance 4 Strategy and financial targets 5 Letter from the CEO 8 Key events 2022 10 Highlights of the year 11 Key figures 12 Sustainability Introduction and highlights 13 Building a viable financial system for people and society 17 People 27 Environment 38 Governance Group executive management 41 Board of Directors 43 Board of Directors’ report 45 Corporate governance report 56 Remuneration report 65 Auditor’s assurance report 78 Financials Consolidated financial statements 80 Financial statements of Axactor ASA 128 Responsibility statement 148 Auditor’s report 149 Alternative performance measures 153 Appendices Glossary 156 GRI content index 158 Axactor Annual report 2022Axactor Annual report 2022 33   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK / Axactor at a glance Axactor is a European based company, investing in non-performing loan portfolios and offering services within debt collection. Axactor believes that the debt management and collection business fulfill an important role in society. The purpose is all about helping people and companies to a better future. The company’s continuous focus on innovations, digital and state-of-the-art solutions for managing non-performing loans, together with cost leadership and extensive industry knowledge, has placed Axactor as one of the main players in the European debt-collection industry. Axactor’s vision is to be the industry benchmark. Passion We are passionate about everything we do Trust We act with integrity, create trust, and build long-term relationships Proactive We are proactively looking for things to improve Axactor Annual report 2022Axactor Annual report 2022 44   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Axactor at a glanceThis is Axactor | Axactor at a glance / Strategy and financial targets Axactor has a narrow focus on handling own and third-parties’ non-performing loans originated within the bank and finance industry. With digital operations and streamlined systems and organizations, Axactor’s main competitive advantage is its industry-leading cost position. After a period of aggressive growth during the first years after inception, Axactor spent 2020-2021 securing the foundation for future profitability. 2022 marked a return to growth, with double-digit return on equity in this first year of the value creation phase. Estimated remaining collections EUR million 317 633 1,388 2,038 2,169 2,141 2,545 Value generation Establish platform Secure foundation 2025202420232022202120202019201820172016 • Aggressive growth • Market entries • Establish IT and operations • New strategy • Stabilize operations • Exit non-core segments • Grow size in existing markets • Operational excellence • Initiate dividend payments Return on equity to shareholders (%) -6% 1% 2% 6% -6% -9% 10% Value generation Establish platform Secure foundation 2025202420232022202120202019201820172016 9% 9+% ROE to shareholders Continuing operations Axactor Annual report 2022Axactor Annual report 2022 55   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Strategy and financial targetsThis is Axactor | Strategy and financial targets Axactor has set financial targets which outline a clear direction going forward Dimension Targets 2023 Targets 2024 and beyond Growth NPL investments of EUR 100–150 million NPL investments of EUR 200 – 300 million Profit Minimum 9% ROE To be announced towards end of year Returns 20–50% dividend pay-out ratio  1 20–50% dividend pay-out ratio Leverage 2 Maximum leverage of 3.5x at year-end Maximum leverage of 3.5x 1 Based on FY2023 results and onwards 2 Leverage = (net interest-bearing debt / pro-forma adjusted cash EBITDA). As defined in the bond covenants Axactor Annual report 2022Axactor Annual report 2022 66   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Strategy and financial targetsThis is Axactor | Strategy and financial targets To deliver on the financial targets Axactor has a holistic approach to where we want to be and how to get there Axactor’s strategy consists of three levers. Each lever is supported by three KPIs which are outlined below. Growth to continue to harvest economies of scale and strengthen the market position. Furthermore, Axactor has been able to secure more attractive prices during recent years which makes growth even more attractive to increase return on equity.To monitor the development the Group is closely monitoring three KPIs: 1) Development in 3PC contribution margin, 2) Gross IRR on new NPL portfolios and 3) NPL investment level Cost leadership is the competitive advantage of Axactor. The Group was incepted to disrupt the industry on cost-to-collect and is believed to possess a position as industry leading today. This has been possible through starting with “clean sheets” and investing in cloud based unified IT-infrastructure, optimized processes and a strong cost culture. To excel further Axactor is currently investing extensively in data-driven valuation and operation. To monitor the development the Group is closely monitoring three KPIs: 1) NPL cost-to-collect, 2) Employee satisfaction and 3) Debtor treatment score Bank & finance is the core industry for Axactor. The claims are perfectly suited for the operational set-up of Axactor and the Group invests significantly in competence and processes to be the best partner for the Bank & finance industry. To monitor the development the Group is closely monitoring three KPIs: 1) Benchmark performance, 2) ESG rating and 3) Customer survey score Values Passion | Trust | Proactive Strategy Purpose Growth Cost leadership Bank & finance “Helping people and companies to a better future” “Industry benchmark” Vision Axactor Annual report 2022Axactor Annual report 2022 77   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Strategy and financial targetsThis is Axactor | Strategy and financial targets Letter from the CEO / Hard work pays off 2022 has been all about doing more of the things we do well. We have worked relentlessly over the past years to position the company for sustainable value creation. This is the first year where I really feel this is visible also in our financial statements. We continue our strategy of being best on cost, maintaining a strict pricing discipline and building scale. The result of our efforts is the most profitable year in the history of Axactor. Skill through innovation and data driven operations Enhancing our collection efficiency is one of the keys to our success. We believe in building high-quality processes, utilizing advanced analytics and the high competence of our employees. We will continue to invest in Group wide business intelligence and machine learning solutions, combined with local expertise and knowledge. We encourage new and innovative ideas to maintain our industry-leading cost-to-collect position. A long-lasting trend is the increased level of self-service through digital solutions. We have seen sharp increases in the usage of our debtor portal in 2022, in particular in the Nordic countries. As we make more and more options available for the debtors to service themselves, not only do we make their lives easier—we also free up time in our contact centers to handle the more complex cases, helping people in a vulnerable situation to find a way out of their financial difficulties. As we move further into digitalization of our collection processes, information security becomes increasingly important. With this in mind, we strive to protect privacy and the data we process in the best possible way every day. Still, we must also focus on how to minimize the consequences of a potential successful unlawful attempt at entering our databases. In 2022 we implemented a complete network segmentation, drastically reducing the amount of data that potential successful intruders would be able to access. The Axactor family Our hard-working employees are the backbone of our business. Taking good care of and investing in our high performers is one of the most important tasks for me and our leaders. This year’s employee satisfaction survey shows an overall improvement. All the five countries that were certified as a Great Place To Work in 2021 maintained their certification, while Spain edged closer to the level required for certification. Nonetheless, we also identified several areas with improvement potential. In 2023, we will continue our work to secure the wellbeing of our most important assets. Early this year, we welcomed 150 new employees to the Axactor family when we acquired the Italian company Credit Recovery Service. This acquisition has significantly increased our presence in the Italian 3PC market and has delivered well above expectations this year. The balanced business model with both 3PC and NPL offerings remain at the heart of our business, creating synergies in terms of both cost efficiency, deal origination and workforce flexibility. Volatile markets Looking ahead, we are expecting continued macroeconomic turbulence. These are undeniably troubling times for many of our debtors, and we are here to help them find sustainable solutions to honor their obligations. So far, we have seen limited impacts of the worsened economic situation on our collection. With continued low unemployment rates, we expect collection to hold up well also going forward. However, times like these have historically resulted in fewer large settlements with more debtors opting for payment plans. Axactor Annual report 2022Axactor Annual report 2022 88   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Letter from the CEOThis is Axactor | Letter from the CEO From a business perspective, challenging times tend to create opportunities. We invested substantially in new NPL portfolios at favorable prices in 2022, and we expect the price level to remain attractive in 2023. We remain patient, with flexibility to act when attractive opportunities arise, be it high-IRR portfolios, valuable 3PC clients, or low-cost funding options. We aim for continued stability in 2023 and will stick to our newly announced financial targets. We expect to deliver at least 9% return on equity for our shareholders, and to distribute 20–50% of our 2023 result as dividends. At the same time, we will work to reduce our leverage ratio to a maximum of 3.5x at the end of the year. With the best result in the history of Axactor under our belt, we will keep doing more of the things we do well, also in 2023. The result of our efforts is the most profitable year in the history of Axactor Johnny Tsolis, CEO I would like to take this opportunity to reiterate our continued commitment to the UN Global Compact initiative. We present our second “Communication of progress” incorporated into our Sustainability report. Axactor Annual report 2022Axactor Annual report 2022 99   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Letter from the CEOThis is Axactor | Letter from the CEO / Key events 2022 2022 2023 CRS acquisition closed IR newsletter launch NPS score: 62 Customer Satisfaction survey Kristian Melhus elected Chair of the Board Initiated bond re-purchase Great Place To Work certified in 5/6 countries Axactor ASA converted from an SE company Cost and compliance review of vendors, stricter procurement procedure Full network segmentation Financial targets announced Axactor Annual report 2022Axactor Annual report 2022 1010   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Key events 2022This is Axactor | Key events 2022 • 2022 marked a return to profit with the best result in the history of Axactor • Return on equity for continuing operations of 10% (-6%), and return on equity to shareholders of 9% (-9%) • Collection performance stabilized close to 100% • Substantial investment level of EUR 288 million in accretive NPL portfolios (114), securing profitable growth also for 2023 • Continued investments in business intelligence and advanced analytics drove further improvements in cost ratios in 2022, as evidenced by an EBITDA margin of 50% (26%) and an NPL cost-to-collect of 39% (44%) • Acquired debt collection service provider Credit Recovery Service (CRS), significantly strengthening Axactor’s position in the Italian 3PC market • Full network segmentation implemented, substantially reducing the amount of data at risk in the event of a successful cyber attack • Publicly listed parent company converted from a Societas Europaea (SE) company to a Norwegian Allmennaksjeselskap (ASA) • A total of EUR 50 million of own bonds re-purchased at an average price below par • Annual customer satisfaction survey shows consistent strong results, with an average score of 8.5/10, and a net promoter score of 62 (50) • Five countries maintained Great Place To Work certification, while Spain edged closer to certification requirement • Hedging instruments covering 60% of the Group’s current gross debt in place for 2023, limiting impact of increased interest rates on financial expenses / Highlights of the year Axactor Annual report 2022Axactor Annual report 2022 1111   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Highlights of the yearThis is Axactor | Highlights of the year / Key figures Key figures presented are for continuing operations unless otherwise stated. Comparative information has been re-presented to show continuing operations only, see note 32 for more information on discontinued operations. Key figures that can not be directly found in the Group’s consolidated statements are reconciled in the APM tables. EUR million 2022 2021 Gross revenue 337 308 Total income 240 158 EBITDA 119 40 Cash EBITDA from continuing operations 218 192 Net profit/(loss) after tax from continuing operations 41 -25 Return on equity to shareholders  1 9% -9% Return on equity, continuing operations 10% -6% Equity ratio 29% 29% Acquired NPL portfolios 288 114 Book value of NPL portfolios 1 253 1 096 Estimated remaining collection (ERC) 2 545 2 141 Number of employees (FTEs) 1 301 1 096 Price per share, last day of period (NOK) 5.88 7.55 Market capitalization (NOK million) 1 777 2 281 1 Return on equity to shareholders includes continuing and discontinued operations Gross revenue EUR million 337 10% y/y ERC, NPL EUR million 2,545 19% y/y Return on equity 10% continuing operations EBITDA EUR million 119 50% margin Cash EBITDA EUR million 218 Equity ratio 29% Axactor Annual report 2022Axactor Annual report 2022 1212   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK This is AxactorThis is Axactor | Key figuresThis is Axactor | Key figures / Sustainability report 2022 Axactor’s purpose is to help people and companies to a better future, not only by ensuring that they get paid, but also by being an aid to the companies and people with financial difficulties, offering sustainable solutions – enabling further investments and economic growth. Axactor recognizes that business has a role to play in solving social challenges through responsible investments, by supporting and developing the skills of the employees, and by offering innovative products that cater to customers’ needs. This combined with faster payments and respectful treatment of debtors, brings down outstanding credits, secures a stronger financial market, and increases quality of life for many people in financial difficulties. Axactor Annual report 2022Axactor Annual report 2022 1313   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Introduction and highlightsSustainability | Introduction and highlights Responsible operations are essential for the license to operate and an enabler of long-term value creation. Sustainability begins from within the organization, and a clear tone from the top is crucial. To increase the transparency in its sustainability reporting, Axactor reports according to GRI. Axactor believes that its reporting is in accordance with GRI’s reporting principles in all material respects as defined by the GRI Universal Standards (2021). See Axactor’s GRI content index. At Axactor, everyone is accountable for conducting business in an ethical, sustainable, environmentally, and socially responsible manner. Axactor practices good corporate governance, respect internationally recognized human rights principles and supports the UN Sustainable Development Goals (“SDGs”), emphasizing especially its commitment to the goals 5, 8, 13 and 16, which underpins the results of the materiality analysis. In 2021, Axactor became a signatory to the UN Global Compact, which further emphasized this and solidified Axactor’s commitment to the ten principles of the UN Global Compact, in each of the four areas: Human rights, labour, environment, and anti-corruption. To update its stakeholders and society on its progress in implementing the ten principles, Axactor needs to annually communicate on its progress about its efforts in a “Communication of Progress”. This report also incorporates Axactor’s second Communication on Progress (“COP”). The ten principles are all reflected in Axactor’s various Board approved policies, being the cornerstone of Axactor’s governance structure. The success of Axactor’s business is dependent on the confidence earned from its stakeholders. Credibility is gained by adhering to the given commitments, displaying honesty and integrity, and reaching company goals solely through honorable conduct. Further information about Axactor’s corporate governance can be found in the Corporate governance report included in the Annual report 2022 page 56. Human rights Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2 make sure that they are not complicit in human rights abuses. Labour Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 the elimination of all forms of forced and compulsory labour; Principle 5 the effective abolition of child labour; and Principle 6 the elimination of discrimination in respect of employment and occupation. Environment Principle 7 Businesses should support a precautionary approach to environmental challenges; Principle 8 undertake initiatives to promote greater environmental responsibility; and Principle 9 encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery. Axactor Annual report 2022Axactor Annual report 2022 1414   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Introduction and highlightsSustainability | Introduction and highlights Sustainability highlights Sustainability is of high importance to Axactor and has been an integral part of the company since the foundation in 2015. In 2022, Axactor made numerous improvements to its sustainability performance. A summary of the key achievements made during the year and key focus areas for 2023 are listed in the table and explained in further detail throughout this sustainability report. Key achievements 2022 Key focus areas 2023 Environment • Implemented GHG measurement tool • Improved Group GHG inventory (climate accounts) • Supported local initiatives to reduce waste and/or emissions • Set specific emission reduction targets with a clear strategy towards 2035 • Reduce number of company cars and transition to hybrid/zero emission cars where there is a business need • Support local initiatives to reduce paper consumption, waste management, use of second-hand furniture etc. • Implement more comprehensive environmental considerations in procurement Social • Improved debtor complaint management • Increased number of scorecards for fairer and more efficient operations • Continued targeted efforts to improve gender equality and diversity • Renewed certification of 5/6 countries as a Great Place to Work and improved score for Spain • Improved reporting on employee training hours • New human rights policy • Chat solution launched in Norway, Sweden and Finland • Reduce voluntary employee turnover • Improve diversity and gender equality • Continue to improve stakeholders’ satisfaction • Improve measurement of employee training hours and set targets • Improve measurement of ethical debt collection • Additional initiatives to reduce gender pay-gaps i.e., awareness among leaders, improve process for salary adjustment, automatize reporting and connecting local payroll systems with the centralized reporting system. • Publish a human rights impact assessment • Increased focus on purpose Governance • Strengthened information security incl. network segmentation and mobile device policy • Improved regulatory watch • Increased knowledge-sharing • Expanded measurement model for portfolios of non-performing loans (NPL) with more input variables capturing current and future macroeconomic conditions and use of scenarios • Continued to simplify the legal structure • Strengthened preventive and detective measures to combat financial crime • Updated dawn raid manual • Updated procurement and vendor management processes and procedures • New tax policy • Increase risk maturity • Increase visibility of ESG measures in the financial performance • Implement further information security measures i.e., improved cyber security awareness trainings • Continue to improve vendor management • Introduce ESG metrics in portfolio valuation • Continue to reduce complexity in legal structure Axactor Annual report 2022Axactor Annual report 2022 1515   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Introduction and highlightsSustainability | Introduction and highlights Material issues and stakeholder engagement Axactor has updated the materiality analysis during the year, to ensure the continuous relevance of the material sustainability aspects identified. These are the areas considered to be the most important for Axactor and its long-term value creation. The materiality analysis defines the challenges and issues that Axactor and its stakeholders perceive as most important, and where impact on society and the environment is considered most decisive. The materiality analysis is based on feedback from external and internal stakeholders who have responded to and provided comments on a questionnaire based on relevant topics inspired by the GRI standards, either by survey or through interviews. External stakeholders have included customers, partners, regulators, suppliers, investors, and lenders. Internal stakeholders have included representatives of the Board, the Group executive management, and employees. The survey covers key factors for Axactor’s daily operations and long-term value creation related to governance, people, and the environment. The focus areas and associated issues are presented in the materiality matrix below. The results of the materiality analysis have been substantially the same for the last three years, which further confirms what the stakeholders believe Axactor should focus on going forward. In addition to the feedback provided by the stakeholders, Axactor has also illustrated certain societal trends in the matrix, which also impacts the Group’s focus, when setting targets and priorities. These trends are illustrated in yellow in the matrix. Reporting boundaries Defining consistent boundaries for sustainability reporting is challenging due to the complexity of ownership and operational arrangements in six different countries, including, among others different regulatory requirements. Axactor strives to be consistent and transparent about variations in boundaries and provide a complete report in line with industry practice. Implementation of common reporting systems and development of common definitions and reporting standards have raised the quality of the report, but there are still improvements to be made i.e., to be able to report correctly on incidents year over year. Historic numbers are sometimes also adjusted due to changes in reporting principles, changes of calculation factors used by authorities, or re-classification of incidents after investigations. Importance to company Importance to stakeholders • Ethical business behavior • Ethical collection by treating debtors fairly • Data security • Debtor privacy • Preventing financial crime and corruption • Diversity, non-discrimination and equal opportunities • Talent attraction and retention • Responsible selection of clients and portfolios • Working conditions • Responsible value chain and partnerships • Relationships with regulators and organizations • Innovative and efficient product offering • Sound economy for our clients • Increase financial literacy in society • Environmental footprint Axactor Annual report 2022Axactor Annual report 2022 1616   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Introduction and highlightsSustainability | Introduction and highlights / Building a viable financial system for people and society The objectives of the Axactor Group are to engage efficiently, responsibly, and profitably for investors, customers, debtors, partners, and employees. Axactor assists in improving cash flows, increasing liquidity, and minimizing the risk for its customers, while also helping debtors get out of debt through fair debt collection practices. Axactor builds trust and confidence through transparency. Strong ethical values promoting fair treatment of debtors and other stakeholders protects the Group’s reputation and contributes to its success. The Group’s corporate principles are reflected in policies and procedures, which describes how to make decisions, act, and prioritize. Axactor sets clear responsibilities and expectations for its managers, employees, and partners. Employees and representatives of Axactor shall always: • respect human rights, respect the rights of employees, protect the environment, enable fair competition, and combat financial crime • balance potential benefits of actions, against the consequences to society • incorporate profitable business with social, ethical, and environmental goals and actions • clearly communicate its demands and expectations regarding corporate responsibility and ethical conduct to employees and business partners • have corporate responsibility as a defining factor when developing and managing products and services • have a transparent management structure in line with national and international standards for good corporate governance • have a strong compliance and internal control culture • only cooperate with customers, business partners and suppliers who operate in compliance with laws and regulations, good business practices and who maintains high ethical and environmental standards • ensure that all shareholders and other financial market players are treated and informed equally, and that the information is consistent, reliable, available, and not misleading UN Sustainable Development Goal #16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable, and inclusive institutions at all levels Why is this important? Axactor’s focus on responsible and sustainable investment is in the larger picture aimed at achieving good long-term returns with a limited level of risk, while at the same time contributing to complete avoidance of the violation of fundamental rights. Axactor Annual report 2022Axactor Annual report 2022 1717   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Effective governance structures further allow the Group to work smoothly by ensuring that everyone has a clear understanding of the distribution of roles, responsibilities, rights, and accountability. The corporate governance of Axactor complies with statutory regulations and generally accepted best practices as further outlined in the Corporate governance report included in the Annual report 2022 page 56. All new employees are introduced to the Code of Conduct as part of their on-boarding and signs a declaration confirming that this is read and understood. This committment shall be re-confirmed during their employment. Axactor also has in place a Supplier Code of Conduct, that the Group’s suppliers are required to sign, to acknowledge that they, and any of their affiliates, agents and suppliers, fully comply with applicable laws, and adhere to internationally recognized environmental, social, and corporate governance standards. Each supplier’s commitment is reaffirmed through regular compliance questionnaires and/or through use of Axactor’s audit rights. The Supplier Code of Conduct includes a link to a whistleblower channel, which may be used to report actual or potential breaches to the Supplier Code of Conduct on the part of the supplier or Axactor. Ethical debt collection is an essential part of a well-functioning credit market The markets Axactor operates in have local varieties in the way collection processes are performed, but the main principles of the collection activities are quite aligned. This enables Axactor to set common group wide operational targets and KPIs relevant for all jurisdictions in which the Group operates. Axactor is handling volumes at many stages of the credit lifecycle throughout the different markets, from invoicing and pre-collection to legal collection and long-time surveillance. Coupled with the element of debt purchase, Axactor is truly an integrated part of the European credit market. The debt collection industry enables banks, financial institutions, and companies to provide credit. Axactor believes that this responsibility should not be taken lightly, which is reflected in the operational policy, where Axactor commits to providing services in line with the highest ethical standards, and always compliant with principles of good collection practices. In most of the countries where Axactor operates, debt collection is strictly regulated through specific debt collection acts and regulations, requiring a license to operate. Many of the financial supervisory authorities and/or associations have additional certification requirements for both debt collection companies and their employees. Axactor has all mandatory certifications and licenses in place, and proactively seeks to certify employees within the debt collection profession. Further, Axactor is actively engaged in the local debt collection associations and was in 2022 represented in various committees working on specific topics, such as new legislation and fair debt collection practices. The engagement is motivated by protecting its own and the industry’s interests, but always with integrity and through transparent means. Axactor or its employees shall never mislead or try to obtain information dishonestly, or through inappropriate lobbying. In Finland, the application process to become a member of the local debt collection association “Suomen Perimistoimistojen Liitto» is underway, and expected to be finalized during 2023. Country Debt collection association Membership Norway Virke inkasso and Finans Norge Yes Sweden Svenska inkassoforeningen Yes Germany Federal Association of German Debt Collectors (BDIU) Yes Italy UNIREC Yes Spain ANGECO Yes Finland Suomen Perimistoimistojen Liitto In process KPIs As a listed company, Axactor reports to the market on a quarterly basis. Adding to the financial numbers, Axactor has also set measurements to ensure that the Group’s objectives are met in view to ethical and sustainable debt collection, something which Axactor considers to be closely linked to the economic value creation. Axactor is happy to report that the Group has a strong performance on both stakeholders’ satisfaction and operational KPIs during 2022, underlining the fact that the Group is able to deliver on its economic targets – in a sustainable manner. Axactor Annual report 2022Axactor Annual report 2022 1818   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Stakeholder KPIs In understanding key stakeholders’ satisfaction with Axactor’s debt collection services, the following KPIs have been identified: debtor, employee, and customer satisfaction. The feedback from these three stakeholders is of the utmost importance to ensure that Axactor is delivering on its ambitions and promises. The overall results from the surveys listed below gives Axactor confidence that the commitment to ethical debt collection is visible both externally and internally. Axactor also positively notes the development year-over-year, where the Group has improved on all KPIs from overall already satisfactory levels. Axactor aims to remain at stable high levels in 2023 (and beyond). Aggregated group score Development last yearKPIs 2022 2021 2019  1 Debtor satisfaction 4.56 4.53 - +0.03 Customer satisfaction ((Net Promoter Score (“NPS”)) 62.0 50.3 37.6  1 +11.7 Employee satisfaction (%) 73 72 67  1 +1 1 Surveys measuring the customer- and employee satisfaction were not conducted in 2020 due to Covid-19. The method measuring employee satisfaction was changed for 2021 onwards Debtor satisfaction The debtor satisfaction survey is conducted via phone after the debtor has been talking with a collection advisor. The survey is 100% automized with no human interaction from Axactor’s side. The debtor is asked three questions related to the service provided in the previous call and is asked to rate Axactor’s services on a scale from one to five, where five is the highest score. Throughout 2022 all countries have remained stable at high levels. Axactor also monitors complaints received to Axactor directly or through local supervisory authorities to ensure adherence to its business practice principles. The results will in turn be used to improve Axactor’s debt collection services. Axactor is committed to continue providing excellent service to all debtors. Customer satisfaction The customer satisfaction survey is a valuable measurement of the satisfaction from executives at Axactor’s customers. In addition to this annual survey, Axactor measures customers’ satisfaction on a more regular basis through other local initiatives. The NPS is a proxy for measuring a combination of the customer’s loyalty and satisfaction with the Axactor brand. The NPS ranges on a scale from -100 to +100. A score above zero is positive, and a score of 50 or more is excellent. When comparing the results for Axactor to statistics from the supplier, the results show that Axactor has enthusiastic customers across all markets, which is an important step towards the Group’s vision of becoming the industry benchmark. Employee satisfaction To measure employees’ satisfaction, Axactor has over the last two years coupled with Great Place to Work. In 2022, Axactor managed to certify five out of six countries as a “Great Place to Work”. Over-all, the level of employee satisfaction is high throughout the organization, and importantly, on an aggregated Group level the score has improved since last year. Read more about the results of the employee satisfaction survey below, under People. Axactor Annual report 2022Axactor Annual report 2022 1919   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Operational KPIs To trace performance and adherence to its business practice principles over time, Axactor also measures on specific operational KPIs. In understanding its adherence to these principles, Axactor has identified the following KPIs: Inbound service level and nuisance rate (outbound) for phone collection, quality of payment agreements (payer-to-payer ratio), and use of digital self-service solutions. Axactor is performing at stable high levels and aims to continue this trend going into 2023. The use of digital self-service is on the rise, in all markets, and expected to further increase as markets mature. Aggregated group score KPI Target (%) 2022 (%) 2021 (%) 2020 (%) Inbound service level 95 96.90 97.70 95.67 Nuisance rate (outbound) <1 0.40 0.48 0.65 Payer-to-payer ratio - 74.39 75.80 74.20 Average number of logins per month Development last year (%)KPI 2022 (#) 2021 (#) Log-ins debtor portal 9,804 7,775 26 Phone collection Axactor has an obligation not only to its investors, customers, and employees, but also to society and most importantly to each individual debtor. To ensure that Axactor meets its obligations, Axactor has set group-wide targets for its contact centers on inbound service level and nuisance rate. The inbound service level measures Axactor’s availability to debtors proactively trying to get in touch with Axactor by phone. Where a debtor reaches out to find solutions to get out of debt, it is Axactor’s responsibility to be available to assist. In view of this, Axactor has defined a group-wide target to achieve an average service level of answering 95% of all incoming calls to the contact centers. Additionally, all contact centers have an automatic call- back function, to call back all debtors who does not get through to the collection advisors - to ensure that all debtors are serviced even where incoming calls are lost. The second measurement is the nuisance rate (calls lost when performing outbound calling activities). Axactor shall have a cautious and conscious approach to its outbound collection activities and shall have available collection advisors to answer the debtors when the predictive dialers call the debtors. The overall target is that the abandoned call rate should not exceed 1%. Continued investments in state-of-the-art contact center technology and the resource capacity-planning, ensured that Axactor delivered ahead of the internal targets in 2022. Payer-to-payer ratio Another important KPI is the quality of payment agreements and how sustainable the agreements are for the individual debtor. The payer-to-payer ratio measures how many of the debtors that paid the previous month and paid the following month. This is a good measurement over time to ensure that payment agreements are not made on terms that are not possible to fulfil. The payer-to-payer ratio has gradually improved over the previous years and have stabilized at a satisfactory high level. It shows that Axactor’s investments in training and education of employees continues to yield positive results. Digital collection Axactor has debtor portals in place for all markets to ensure efficiency and availability for the debtors. Offering digital payment solutions enables more efficient settlements, with the ability to settle debt being available 24/7. Investing in digital services are also well aligned with the Group’s sustainability ambitions, giving the debtors’ freedom of choice in their dialogue with Axactor, as well as being less resource intensive, something that supports the Group’s goals to reduce its environmental footprint. In 2022, Axactor also launched a chat solution in Norway, Sweden and Finland offering an additional communication channel to ease the debtors’ ability to get into contact with Axactor. The use of the debtor portals continued to increase with 26% during 2022 compared to 2021, and a continued increase is expected in 2023. In addition to the self-service portals, a payment solution called QuickPay is offered in all six markets. This is an easy-to-use payment channel where payment information in the official correspondence from Axactor may be used to pay outstanding debt. Axactor Annual report 2022Axactor Annual report 2022 2020   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Personalized collection through use of advanced analytics In 2022, Axactor continued the use of advanced analytics and business intelligence to build predictable scorecards for more efficient collections and fairer debtor treatment. By the end of the year, machine learning models are incorporated into daily operations in all countries. A minimum of three machine learning models are in production in each geography, supporting operations and valuation. Using insights from the machine learning models, Axactor has successfully improved collection efficiency, whilst at the same time been able to take educated and more personalized approaches to each debtor. By analyzing each debtor’s situation and adapting the collection process thereafter, Axactor ensures that that the collection activities do not cause undue pressure or unnecessary inconvenience to the debtors. Continued learning and development Employees are also provided with training that gives them the tools with which they can give customers and debtors a positive experience, for instance through in-depth knowledge of the relevant collection processes they work with, and comprehensive communication training. Employees are also offered various e-learning courses throughout the year, some of which are mandatory. Read more about this below under People. Axactor Annual report 2022Axactor Annual report 2022 2121   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Sustainable value chains Ethical debt collection is also about the value chain of debt collection and ensuring that customers, debt portfolio sellers, and vendors used by Axactor, are acting responsibly and in compliance with applicable laws, and adheres to internationally recognized environmental, social, and corporate governance standards. Axactor works to ensure that the selection of its partners is based on transparent and objective criteria, free from personal interests. Contracts shall contain warranties of compliance to relevant laws, regulations and business practice principles, hereunder ethical obligations. Axactor is committed to responsible product offering, which includes regular reviews of vendors and partners, with a specific focus on social risks and impacts – especially given the nature of the industry in which Axactor operates. Responsible investments Axactor’s strategy is to purchase non-performing unsecured consumer debt mainly originated from loans and credits provided from regulated banks and financial institutions. The sellers are chosen primarily due to the quality of the claims, as the sellers are operating under strict regulations and supervision from authorities. This way, Axactor limits the risk of purchasing, and collecting on debt not in accordance with its ethical and business practice requirements. A “know-your-counterparty” (“KYC”) check shall always be conducted before entering a contract. Axactor shall not purchase portfolios from sellers that represents an unacceptable reputational or compliance risk. Information on good debt collection practices, requirements to the collection process related to information, transparency, guidance, interest rates etc. are investigated during any due diligence, to verify adherence to good debt collection practices throughout any prior debt collection process. Management shall ensure responsible investments, and no portfolios which include use of unethical lending terms, aggressive sales methods, or which does not meet the Group’s ethical standards shall be purchased. Responsible product offering Axactor has structured procurement processes and sourcing strategies in place to ensure that the services and goods acquired are aligned with ethical business practice principles and of high quality. In 2022 Axactor reviewed and updated its group-wide procurement procedures, adapting them to meet the future expectations of its stakeholders. Axactor shall continue to ensure that suppliers both directly and indirectly involved in the debt collection process, ranging from field collectors to facility cleaning service providers, commit to Axactor’s Supplier Code of Conduct. Additionally, specific requirements are in place for certain suppliers, i.e., requirements for technical or organizational measures to be applied for those suppliers that process personal data on behalf of Axactor, or that the Group only engage collection agents through Axactor Annual report 2022Axactor Annual report 2022 2222   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society the acknowledged organization LIC, when performing international collection. Axactor shall during the contractual period review the quality and quantity of goods or services received regularly, to verify that the suppliers deliver according to what has been invoiced. Similarly, as with Axactor’s investments, Axactor shall also perform KYC checks of potential customers. Customers who represent an unacceptable reputational or compliance risk shall not be accepted. Axactor has in place mutual contractual obligations relating to ethics and compliance requirements with its customers. Information on good debt collection practices, requirements to the collection process related to information, transparency, guidance, interest rates etc. are provided to the customers to ensure compliance and high quality throughout the debt collection process. Axactor also perform regular reviews and audits of its customers. If weaknesses or errors are discovered in the customer’s process, advice and instructions are given promptly to the relevant customer, to always ensure good debt collection practices are followed. Oppositely, Axactor’s customers also perform regular audits and reviews of Axactor’s operations, to ensure that Axactor is compliant with their contractual commitments, regulatory obligations, and the advertised business practice principles. In most countries, Axactor is subject to supervision by the authorities, which oversees Axactor’s regulatory compliance, as further outlined in the Corporate governance report on page 56, and the Board of Directors’ report on page 45, of the Annual report 2022. Complaints and deviation management To deliver on its ambitions, Axactor needs to ensure continuous improvement in all aspects of its business. Therefore, Axactor has continued to invest in efficient complaints handling during the year, in particular by the implementation of a new group-wide complaints and deviations management system, launched in January 2023, and replace the previous country-specific solutions. This system shall help the Group to identify opportunities for improvement of processes, ensuring compliance to policies and procedures, eliminate the root cause of complaints and deviations to stop problems from happening again, avoid losses and extra cost by discovering deviations at an early stage, and eventually improve the company image, as well as employee, debtor, and customer’ satisfaction. Through the existing debtor complaints processes, only a limited number of complaints were received during 2022, and none were considered critical. All complaints were handled in accordance with applicable local procedures; investigated, answered, errors (if any) corrected, reported, and filed. Whistleblowing Axactor also has an independent whistleblower channel open to anyone that wishes to report censurable, illegal, or unethical conduct by Axactor or any of its employees or representatives. The channel allows for reporting 24/7 at various levels – including directly to external counsel. The whistleblowing channel is easily accessible through the Group’s website, the “intranet”, and through a link in the Code of Conduct and the Supplier Code of Conduct. The channel handles reported cases in local language with integrity, respect, and confidentiality, also ensuring the protection of anyone reporting in good faith. Full anonymity is offered if opted for allowing users to engage in written dialogue and exchanging information without losing their anonymity. Whistleblower reports are processed in accordance with the company’s procedures and in compliance with applicable data privacy regulations. The Board is informed of all cases reported, the types of misconduct and measures taken. In 2022 Axactor updated its whistleblower procedures, to align with new regulatory requirements, and the portal to improve visibility and control. During the year, a limited number of reports were submitted. Five reports were rejected as groundless from a whistleblower perspective and followed up by human resources. One case was resolved through labor court procedures. Another related to collection advisors claiming discrimination in the internal case distribution process and performance evaluation process. Restricted access to internal communication channels has been questioned in one report. One sexual harassment incident was also reported. One report registered was a continuation of a closed whistleblower report from 2021. No material breaches have been identified through the investigations, but some recommendations for improvements to operational procedures made to i.e. increase objectivity and transparency in the case distribution processes. One employee got a warrant notice. All reports submitted have been followed up in line with protocol, appropriately investigated and improvements proposed based on the findings. No. of whistleblower reports 2022 2021 2020 Group total 10 5 6 Axactor Annual report 2022Axactor Annual report 2022 2323   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Data privacy Axactor is committed to respecting the right to privacy of all individuals whose data is being processed by or on behalf of Axactor – acting in compliance with all applicable data privacy regulations in the jurisdictions in which it operates. Different types of personal data are processed in different ways and situations, depending on whether a person is the representative of a customer, vendor or public authority, debtor, employee, job applicant, visitor, etc. A robust data privacy framework is required when handling vast amounts of data, including sensitive data related to individual’s financial and, in many cases, vulnerable situations. Protecting the fundamental rights and dignity of all data subjects of which Axactor process personal data, is of the utmost importance to Axactor, and codified in the Group data protection policy, as approved by the Board. Appropriate technical and organizational measures are implemented in accordance with the GDPR and local data protection laws, as well as requiring the same of vendors processing data on behalf of Axactor. No. of inquiries from the data supervisory authority No. of data breaches reported to the data supervisory authority No. of fines or corrections by the data supervisory authority 2022 2021 2022 2021 2022 2021 Group total 11 12 5 7 0 0 During 2022 Axactor has updated various data privacy related procedures and processes, to ensure that they remain relevant and updated taking into consideration regulatory developments and heightened expectations from stakeholders, including data subjects and data supervisory authorities. The Group has also established a common group-wide reporting tool to ensure better alignment between the various countries in reporting on inquiries from the data supervisory authorities, breaches, and administrative fines. There were no major breaches during the year, and Axactor has not been subject to any administrative fines by any of the data supervisory authorities in the jurisdictions where it operates. Information security As a listed company and with great respect for the trust given by partners and investors, Axactor also place significant focus on safeguarding confidential information and trade secrets to which Axactor has access. The IT and information security policy sets out detailed procedures and clear roles and responsibilities applicable for all employees within the Group and is approved by the Board annually. The information security procedures below have also been reviewed and where necessary updated. The group CISO, the security committees, and the data protection officers, monitor risks, govern compliance, manage incidents and government data requests, and report on a regular basis to management and the Board. • IT information assets inventory • Backup • Secure software development • Remote access • Best practice guidelines for IT & information security • Data encryption and communication • Access control and administration • Security incident • Antivirus security • Information classification • Vulnerability management • Data migration Building a good security culture requires continuous work through regular improvements, trainings, and awareness campaigns. In 2022 Axactor continued its investments in cyber- and information security, by various initiatives and trainings. In addition to the regular awareness trainings, the Group also performed several waves of extensive phishing campaigns and penetration testing through external vendors. The results show good improvements in all countries, in particular with regards to the reporting rate for suspicious emails, where the rate of reported emails has doubled since last year. Axactor is very satisfied with this result, and it gives a comforting affirmation that the Group is steadily improving. In 2022, internal audit has also audited the physical security of several locations, and certain improvements have been made in line with the recommendations. Axactor is continuously adapting its information security measures to the risk picture present at all times. On the more technical side, Axactor also implemented full network segmentation across the Group’s IT infrastructure during the first half of 2022, in order to improve control over network traffic, optimize performance, and most importantly to reduce risk and potential consequences of generalized malware attacks. Preventing financial crime and corruption Each year, millions of transactions pass through Axactor, which entails an inherent risk for financial crime. Axactor is committed to comply with all applicable laws and regulations to combat fraud, anti-money laundering, bribery, and corruption in the jurisdictions in which Axactor operates, and to prevent Axactor from being used for any illegal activity. This also includes complying with all relevant trade sanctions regulations. Axactor has a zero-tolerance attitude. Axactor Annual report 2022Axactor Annual report 2022 2424   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society Non-compliance with policies to prevent financial crime may result in criminal or civil penalties which will vary according to the offence. Axactor prohibits facilitation payments, kickbacks, or other improper payment for any reason. Employees are not permitted to give or receive any gifts or other benefits that endanger any decision-making process, which should be based on sound financial principles and/or strategic decisions. Legitimate charitable contributions may be given, but adequate measures shall be taken to prevent misuse before entering into such agreements. All donation requires approval from the Group management. Charitable contributions to political parties shall never be approved, and no such contributions have been made during the lifetime of Axactor. This also precludes Axactor’s engagement in political lobbying. Axactor has strict rules for cash management and accounting. No invoices, customer, or vendor who lack documented legal foundation shall be approved. Cash payments should be avoided, and when exceptionally used, strict procedures must be followed. Axactor has detailed policies regulating different preventing and mitigating actions. These Board approved policies are updated annually to reflect the risks identified through the annual risk assessments. During the year, Axactor has further simplified its legal and ownership structure to increase transparency, i.e., by finalizing the liquidation of the Baltic entities and merging of two Norwegian legal entities. Additionally, the overall structure remains subject to further review and simplifications where possible, in 2023. Axactor has also codified its tax policy into an independent instrument, which has been approved by the Board. Axactor shall be a responsible taxpayer. This is recognized by the tax policy, which establishes Axactor Annual report 2022Axactor Annual report 2022 2525   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society a clear and robust Group approach based on openness and transparency in tax reporting and compliance. Axactor regularly evaluate systems, internal control mechanisms and procedures, to ensure that they are effective and efficient. In addition, appropriate measures are taken to correct any identified deficiencies. All transactions must be executed in accordance with management’s general or specific authorization. Accurate books and records that fairly document all financial transactions, risk assessments and due diligence shall be maintained and available in case of audits. Financial authorities across the jurisdictions in which Axactor operates are interested in Axactor’s efforts to combat financial crime, and Axactor has an open and active dialogue with the regulators. Employees are encouraged to report of any suspicions of violations through one of the many reporting channels. Axactor is committed to follow up all reports of suspicious acts and take appropriate action. During the last three years, including 2022, there have been no cases of confirmed fraud and/or corruption within the Group. No. of reported whistleblower cases regarding fraud and/or corruption No. of confirmed cases of fraud and/corruption which have been reported to the authorities 2022 2021 2020 2022 2021 2020 Group total 0 0 0 0 0 0 Part of the internal audit work is to provide the Board with reasonable assurance that controls are present and functioning, also from a fraud prevention perspective. Internal audit has during the year had focus on risk of misuse of funds and evaluation of the internal control structure, by evaluating the transactions in the collection system vs. accounting, auditing the payment process, audit of NPL portfolio post-sale implementation, physical security, evaluation of AML processes and procedures and follow-up on observations from 2021. The results of the internal audits are reported to the Board, which also follows up on any risks identified to ensure appropriate management and mitigation. No material findings were reported by Group internal audit in 2022. Corporate citizenship Part of Axactor’s strategy is to be close to the community where it operates, where the country organizations are the hub of the customer relationships, based on knowing local regulations and market conditions for customers and debtors. In addition to its economic and financial responsibilities towards its investors, Axactor also recognizes its social, cultural, and environmental responsibility in the local communities where it operates. Empowering the local organizations to adapt an interactional approach to corporate citizenship, based on mutual trust and transparency. The goal is to produce higher standards of living and quality of life for the communities that surrounds them. Axactor believes that this cannot be achieved strictly by transactional contributions. Success requires proximity, expertise, and local engagement. Even more so now, than in the last decade, the above holds true. In the aftermaths of the Covid-19 pandemic and Russia’s full- scale invasion and war of aggression against Ukraine, geopolitical instability has caused shortage of goods and inflation rates to rise across the globe. Because of this, the communities in which Axactor operates have also seen rising interest costs and spikes in unemployment rates furthering already prevalent economic challenges. In a time where local communities need to rebuild their economies, Axactor’s mission has become even more relevant. Axactor’s purpose is to help people and companies to a better future, not only by ensuring that they get paid, but also by being an aid to the companies and people with financial difficulties, offering sustainable solutions. Axactor Annual report 2022Axactor Annual report 2022 2626   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | Building a viable financial system for people and societySustainability | Building a viable financial system for people and society / People The positive operational results would not have been possible without the dedication of Axactor’s employees, acting passionately, proactively and with integrity. Axactor’s strategy is clear. “PEOPLE” – the employees – is one of Axactor’s pivotal pillars on the path towards meeting its financial goals. Axactor aims to meet its financial goals and at the same time be perceived as an employer who “walk the talk” and live its values – trust, passion and proactive. With the expertise and dedication of its employees, Axactor can meet all stakeholder’s expectations. Axactor strives to ensure that it remains an attractive workplace for its 1,458 employees by providing a healthy work environment with meaningful work through fostering a culture that empowers everyone to learn and grow. Clear expectations are set for all leaders to act as role models promoting the core values, and inspiring employees to succeed by working with dedication. Everyone that come into contact with Axactor shall be treated with trust and respect and provided with professional and ethical advice based on their individual situation. The positive feedback received in the employee satisfaction survey shows that Axactor’s dedication to its employees yields results. At Axactor, responsible business conduct has always been at the core of its operations. Strategic goals, policies and procedures coupled to recruiting, development and succession of employees are issued at Group level. Ability to act in accordance with these principles combined with understanding and managing the risk of human rights impacts, regulations related to labour law, work environment and collective bargaining agreements, are fundamental preconditions for Axactor’s operations. The Group has always respected internationally recognized human rights and rights at work, which are reflected in our various policies and the Code of Conduct. This includes commitment to comply with the ten principles of the UN Global Compact, actively support the UN Sustainable Development Goal #5 and #8, as well as the Norwegian Transparency Act. The ongoing proposals regarding mandatory environmental and human rights due diligence legislation from the European Union and the proactiveness of the Norwegian legislator are welcomed developments. Axactor’s activities do not cause, contribute, or is linked to adverse impacts to any individuals’ fundamental rights. Considering the Norwegian Transparency Act, Axactor has established a separate Human Rights policy, codifying these commitments to ease interested parties’ ability to educate themselves on human rights at Axactor. Axactor requires its UN Sustainable Development Goal #8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all Why is this important? Sense of achievement and contribution to a bigger whole are fundamental to many individuals’ well-being. Contributing to decent work for all individuals regardless of any variable that adds to their uniqueness is a strategic focus at Axactor. The benefits of a diverse and inclusive workplace are manyfold, not least to business performance. UN Sustainable Development Goal #5 Achieve gender equality and empower all women and girls Why is this important? Gender equality at all levels in the organization is pivotal to Axactor’s working environment, corporate culture, skill set, decision-making, as well as debtor and customer service. The benefits of a conscious gender balance throughout the organization adds indisputable value, and Axactor aims to have a gender balance in all managerial teams, within a range of 40%–60%. Axactor Annual report 2022Axactor Annual report 2022 2727   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People suppliers to comply with human rights through the Supplier code of conduct. A dedicated email address to which interested parties may ask questions about how Axactor addresses actual and potential impacts on fundamental human rights has been created. Diversity Axactor rejects all forms of discrimination in hiring and employment. At Axactor, diversity is not simply a matter of complying with legal requirements. Axactor believes that the strength lies in the differences between the employees, which is one of the key factors to the Group’s success. Their varied skills, perspectives and experiences form the basis of innovation and help Axactor to better understand the needs of customers and debtors. Axactor is committed to treat everyone equally and with respect, regardless of gender, nationality, disability, marital status, religion, or sexual orientation, and are committed to equal opportunities for all employees. Employees are encouraged to voice their opinions or concerns when something is not right or does not feel right. Different opinions shall always be respected, and people are encouraged to question the decisions of others. The Ethical council, management at group and local level as well as the Board, discuss measures to further these objectives. The employees have through the employee satisfaction survey confirmed that they are treated fairly, regardless of their age, race or ethnic origin, gender, and sexual orientation. Axactor will not rest on its laurels and will continue ensuring a respectful and inclusive culture also in the future. Axactor has a strong spread between employees’ age, skills, gender, cultural backgrounds, and perspectives. A variety of languages are spoken which eases communication and the ability to assist many debtors. Axactor strives for objectivity in its recruitment process. Job listings for vacant positions shall be written in an inclusive manner. Job opportunities are offered to individuals with disabilities. In 2022, 9 employees equal to 1.3% of Axactor’s employees in Spain were employees with a disability grade of more than 33% and 7% in Italy were employees with a disability grade of more than 46%. All offices are universally designed to accommodate employees with disabilities. Age distribution Group total Number of employees per age 0 50 100 150 200 250 300 65+60-6455-5950-5445-4940-4435-3930-3425-2920-2415-19 2022 2021 2020 Axactor Annual report 2022Axactor Annual report 2022 2828   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People Hiring students provides young academics access to relevant work experience and increases employment in groups that find themselves on the outside of today’s labour market. By end of 2022, 75 employees in Axactor were under the age of 24 years, an increase of 41% compared to 2021. Axactor offers students different job training opportunities in all countries where it operates, full-time as an internship or part-time besides studying. Several students are offered jobs at Axactor, while others gain a valuable experience for their CVs. Axactor facilitates for older employees to stay in work-life also after retirement age. This retains important competence within the company. Older employees educate youngers with their experiences and younger employees contributes with fresh perspectives and drives innovation. Social aspects of keeping employees in active work should not be underestimated. Measures vary between countries, but includes the possibility of reduced working hours, extra holidays, and adjusted work tasks. Out of Axactor’s 1,458 employees, 42 are over the age of 60 years, an increase of 31% from 2021. Gender equality In 2022 the overall gender balance improved to 65% women and 35% men, despite hiring 54% more women. Due to the nature of Axactor’s operations, a higher female ratio is expected. Axactor aims to have an even gender balance in all managerial levels, where genders are represented within a range of 40%–60%. To increase efficiency, Axactor implemented several organizational changes in 2022. A benchmark comparing the local organizations was conducted to identify best practices and potential performance improvements. The total number of employees increased Gender balance, management % 0 20 40 60 80 100 Other management levels Country management 2 Country managers 1 Group executive management 1 Board of Directors Women Men Target 40 50 33 37 56 60 50 67 63 44 2022 2021 2020 Level Headcount Women (%) Men (%) Headcount Women (%) Men (%) Headcount Women (%) Men (%) Board of Directors 5 40 60 6 50 50 7 43 57 Group executive management  1 6 33 67 12 42 58 13 31 69 Country managers  1 6 50 50 - - - - - - Country management  2 30 37 63 39 41 59 43 37 63 Other management levels 162 56 44 160 57 43 - - - All Group employees 1,458 65 35 1,243 66 34 1,235 65 35 1 Group executive management include country managers for the year 2021 and 2020, but not for 2022 2 Country management does not include country managers who are reported on separately Axactor Annual report 2022Axactor Annual report 2022 2929   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People year-over-year with 17% including 461 new hires and 150 new employees from the acquisition of Credit Recovery Services S.R.L. At the same time the numbers of leaders are stable promoting a leaner organization. The increased employee versus leader ratio was enabled by extensive focus on leadership development over the course of 2022, with particular focus on middle-management. The employee satisfaction survey points toward a successful re-organization, with employees reporting increased satisfaction in their relations with management, their job, and their colleagues. The gender balance managerial ratio of 43% women and 57% men is still within the overall target, but not for the Group executive management with 33% women (stable from 2021), nor for the country management teams having 37% women (a reduction from 41% compared to the previous year). Axactor is continuously working to achieve a more balanced gender distribution across all levels and functions, through focus on encouraging, developing, and promoting women into leadership positions. Measures includes requirement for female candidates in all recruitment processes, performance management, leadership development, mentorship, role models and work-life balance initiatives to accommodate for staying in work life. In Spain, this has resulted in 10 women being promoted internally to leadership positions. Axactor is working systematically to ensure equal pay for equal work or equal valued work, and to rectify unwanted pay gaps between women and men. An extensive mapping of remuneration for all employees at all levels has been conducted in all countries and corrective measures implemented where appropriate. Leaders are requested to ensure fair and equal pay, and to raise awareness and ensure that correct salary levels are set. To support identification of comparable roles, competences, and expectations, the job framework is continuously developed. The result after this year’s wage settlement shows an overall fairer balance but should still be improved as the gender pay-gap in several areas, though to a lower extent, favours men. The annual base salaries pay-gap difference has decreased to -27% overall, compared to -28% in 2021. Base salary pay-gap 2022 2021 2020 Norway incl. HQ -28 -26 - Sweden -23 -16 - Finland -24 -30 - Germany -16 -24 - Italy -45 -46 - Spain -25 -28 - Group total country average -27 -28 - Base salary pay-gap managerial level 2022 2021 2020 Board of Directors -29 -19  - Group executive management -16 -19 -22 Country managers (CM) -22 -18 -18 Country management (excl. CM) -14 -18 - All other managers -20 -24 - The overall pay-gap difference is due to the largest group of employees being collection advisors with lower salary levels consisting of more women than men. More women than men work more part-time, which also affects the comparable salary. Market price for specialist roles explains other differences. Salary levels cannot be raised just to equal out historical differences. Managerial positions have higher salaries and consist of more men. As an example, in Italy the salary gap is of -45% in favour of men. The country management team consist of 6 men and 1 woman. 72% of the employees overall are women, mainly working as collection advisors and mostly part-time. If country management is excluded from the analysis, the pay gap is fairer, at -5.9%. Gender balance country level 2022 2021 2020 Country Headcount Women (%) Men (%) Headcount Women (%) Men (%) Headcount Women (%) Men (%) Norway incl. HQ 114 51 49 130 53 47 136 54 46 Sweden 50 70 30 70 71 29 48 65 35 Finland 47 68 32 48 67 33 63 76 24 Germany 190 65 35 183 67 33 225 66 34 Italy 304 72 28 120 80 20 123 76 24 Spain 753 65 35 692 65 35 640 64 36 Group total 1,458 65 35 1,243 66 34 1,235 65 35 Axactor Annual report 2022Axactor Annual report 2022 3030   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People The work to further reduce the gender pay-gap will continue. The above-mentioned initiatives to improve gender balance is expected to affect the gender pay-gap positively. Certain work-life balance initiatives to retain and attract women to managerial position may however have an opposite effect. Axactor will continue to comply with the collective bargaining agreements, but challenge principles of fixed percentage for salary increases as it worsens already identified differences. In Spain, 68% of the salary increase in this year’s wage settlement were given to women, resulting in an improved gender pay-gap of base salaries from -28% to -25%. Additional initiatives include ensuring awareness among all leaders, improve processes for salary adjustment, automatizing reporting and connecting local payroll systems to the centralized reporting system. Remuneration and benefits The main purpose of the company’s remuneration is to encourage a strong and sustainable performance-based culture which supports growth in shareholder value over time, based on responsible business practices and aligned with company values. The remuneration must be aligned with efficient and responsible risk management, Axactor’s values and applicable regulations. The targets set must motivate responsible operations and business conducted in an ethical, sustainable, environmentally, and socially responsible manner, ensuring that good corporate governance is practiced, and internationally recognized fundamental rights principles are respected. Remuneration may differ based on market, achievements, competences, abilities, and behaviour, but shall never discriminate on gender, sexual orientation, age, ethnicity, religion, marital status, or any other identity. This is stated in the Group’s remuneration policy, determined by the Board, and approved by the general meeting available at www.axactor.com. To attract and retain employees, Axactor offers competitive employment terms in line with local market conditions. To avoid bias and ensure fairness, the grand-father principle is applied when setting or adjusting terms. Remuneration is adapted to local market terms. Collective bargaining agreements are entered in Sweden, Finland, Norway, Italy, and Spain covering 87% of all employees. Employees in Germany have voluntarily chosen not to sign up for such agreements. Axactor commits to the International Labour Conventions on the freedom of association and the right to collective bargaining among its employees. Axactor collaborates well with the unions and facilitates their work by offering use of Axactor’s offices and equipment for union-related work. Balancing the improvement of benefits and working conditions for the employees against the importance of having a sustainable and competitive employer is challenging, both for the company as well as for the unions’ representatives. The constructive discussions and collaboration with the unions are important, and highly appreciated. Salary difference CEO vs. average base salary of all employees 2022  1 2021  2 2020 CEO salary in NOK 4,131,000 4,050,000 - CEO salary comparable in EUR 380,052 405,000 - Avarage all employees in EUR 31,143 37,434 - Median base salary in EUR 20,893 24,000 - Annual total compensation ratio 18.19 16.88 - 1 FX rates applied for 2022: NOK EUR: 0.092; SEK EUR: 0.089 2 FX rates applied for 2021: NOK EUR: 0.102; SEK EUR: 0.094 Axactor Annual report 2022Axactor Annual report 2022 3131   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People Work-life balance Axactor recognizes the importance of work-life balance, which is supported through various initiatives, i.e., accommodating for a substantial number of part-time employees. To Axactor’s knowledge, all part-time work is voluntary and is largely related to students working in combination with studies, employees with reduced capacity, and mothers with younger children requesting part-time work after maternity leave. In Italy, the amicable and field collection advisors work part-time, 6 hours per day. This has been part of a restructuring project since 2018, where the affected employees voluntarily accepted the part time reduction. However, in accordance with its commitment to the SDG #5, Axactor aims to reduce part-time work. The form of employment is expected to be a topic in appraisal talks. Leaders are encouraged to work with part- time employees to find other accommodations that can contribute to minimizing the need for part-time work. As an example, to increase possibility of working full-time in Spain discount agreements with day-care centres and nurseries are entered, shift hours have been adapted, and more flexible working-hours given. In Axactor, home-office is not offered as a general benefit. Although efficient communication solutions are available, Axactor believes that home-office disconnects one from the workplace and reduces the facetime which creates the passion, good solutions through discussions and knowledge sharing, innovation, compliance and proactiveness driving the great results. For many, this also results in a disproportionate work-life balance. Further it challenges the responsibility for a healthy and safe work environment mentally and physically, gender balance, leadership, and personal development. Flexible solutions are offered on an individual level when needed, considering work-tasks, responsibilities, personal needs etc. However, it is noted through the feedback in the employee satisfaction survey, exit-interviews, and dialogue with the unions that more flexibility specifically through use of home-office is desired. Holidays, sick-leave, parental leave, flexible working hours and other forms of regulations of working hours follow regulations, collective bargaining agreements and best practices in each country. Axactor shall offer a working environment where it is possible to combine work, career, family life and spare time. An important element is the possibility to take parental leave. Norway and Sweden offer parental leave benefits greater than the statutory requirement. The parental leaves were taken without any restrictions or consequences for the remuneration, benefits, or work tasks of the individual employee. In Italy, parents are offered the possibility to work from home until the first year of the child. Germany is offering a holiday entitlement for its employees that higher than legally required and some days Employees by form of employment 2022 2021 2020 Number Women (%) Men (%) Number Women (%) Men (%) Number Women (%) Men (%) Regular employment Full time 992 62 38 863 63 37 920 63 37 Part time 212 83 17 204 80 20 237 78 22 Temporary employment 254 66 34 176 63 38 78 - - Group total 1,458 - - 1,243 - - 1,235 - - Parental leave 2022 2021 2020 Country Maternity leave No. of women No. of weeks of maternity leave Paternity leave No. of men No. of weeks of paternity leave Maternity leave No. of women No. of weeks of maternity leave Paternity leave No. of men No. of weeks of paternity leave Norway 10 266 5 70 9 223 3 25 - Sweden 5 377 3 77 11 138 2 2 - Finland 3 187 0 0 6 167 2 7 - Germany 9 248 0 0 8 293 2 12 - Italy 23 316 3 4 14 248 2 2 - Spain 20 249 14 214 21 241 13 99 - Group total 70 1,643 25 365 61 1,017 22 135 - Axactor Annual report 2022Axactor Annual report 2022 3232   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People of special leave for certain events in the employee´s personal life. With reference to the statistics presented, Axactor considers itself compliant with the reporting requirements pursuant to the Norwegian Equality and Anti-Discrimination Act section 26. Talent attraction and retention It is important for Axactor to attract and retain skilled employees. A professional recruitment process through different channels is practised to be able to reach diversified types of candidates fit for the different tasks. In 2022, Axactor recruited 461 new employees in addition to internal mobility. Job vacancies are also advertised internally as it is important for Axactor to invest in and develop high-performing employees. Leaders encourage employees to actively apply for new positions in the Group, and Axactor’s internal mobility program helps to retain crucial expertise, promote Axactor’s culture, and contribute to internal career development. Succession planning is a key factor to ensure, identify, encourage, and develop new leaders and specialists. The employees are the company’s best ambassadors and a solid source of reference for new recruitments. Team spirit, passion, proactivity, mutual trust and a respectful attitude are cornerstones of the Group’s success. Management shall lead by example. Workshops have been held in all management teams clarifying expectations and what the values and leadership principles mean in practice. One common HR system is used cross the Group to monitor and ensure competence development, performance management, appraisal talks, and succession planning. In accordance with the performance management process at Axactor, performance appraisals, including the establishment of new development goals, are conducted annually between all employees and their immediate leaders. The completion rate of these performance reviews is close to 100% at all levels of the organization. Employee’s motivation, development and continuous feedback are also secured through structured and regular “check-ins”. Thorough analysis and continuous improvement of the different elements of the employee journey at Axactor is conducted regularly to strengthen retention of its valuable employees. New recruitments incl. gender balance 2022 2021 2020 Country Headcount Women (%) Men (%) Headcount Women (%) Men (%) Headcount Women (%) Men (%) Norway 18 44 56 27 48 52 - - - Sweden 5 40 60 28 21 79 - - - Finland 11 55 45 8 50 50 - - - Germany 54 56 44 26 62 38 - - - Italy 69 68 32 36 22 78 - - - Spain 304 62 38 270 41 59 - - - Group total employee average 461 54 46 395 40 60 - - - Axactor Annual report 2022Axactor Annual report 2022 3333   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People Despite these efforts, Axactor had a turnover rate in 2022 of 28%, a decrease from 2021 of 31%, Axactor is continuously optimizing its operations to keep the competitive advantage of cost leadership and adapting the organization to operational needs. Due to reduced numbers of portfolio purchases and 3PC volumes, automatization of processes and reduction in SG&A, certain positions have been downsized which explains the high turnover increase in Sweden from 9% to 42%. Restructuring processes are performed in compliance with local law and regulations and internal restructuring procedures. For the voluntary leavers, main reasons given are lack of home-office, salaries, and career development opportunities. In addition, Axactor have several internship and temporary workers who have not renewed, or gotten its engagement renewed and some who have not successfully passed the trial period. Competence development Correct, easily accessible and comprehensible information is vital to stay compliant and have efficient operations. Axactor is continuously focusing on new and effective ways to communicate, learn and share information to ensure that the right decisions are taken and that employees continue to develop their competencies. All employees have the right and obligation to perform training and competence development. Axactor Academy, the Group’s centre for learning and development, provides the organization with a streamlined structure and a variety of courses to manage competence development for all employees. In addition, Axactor motivates its employees to prove their competences through certification, something i.e., most collection advisors in Sweden have achieved. All employees need to conduct mandatory trainings to secure compliance to relevant laws and regulations such as debt collection regulations, and financial regulations, anti-fraud and anti-corruption, data privacy, information security, anti-money laundering and terror financing and other business ethical standards. Employees are also provided with training that gives them the tools with which they can give customers or debtors a positive experience, for instance through in-depth knowledge of the relevant collection Employee turnover incl. gender balance 2022 2021 2020 Country Total (%) Women (%) Men (%) Total (%) Women (%) Men (%) Total (%) Women (%) Men (%) Norway 27 33 20 28 27 28 16 - - Sweden 42 40 46 9 16 5 22 - - Finland 30 22 47 43 26 50 12 - - Germany 25 22 33 32 48 24 10 - - Italy 6 6 6 31 49 26 12 - - Spain 35 33 38 33 42 28 10 - - Group total 28 26 32 31 40 27 11 - - 1 Employee turnover refers to the proportion of permanent employees who have left the company during the year in relation to the number of employees by the beginning and end of the year including voluntary turnover, retirement, death, dismissals, organizational changes, and efficiency Total number of courses offered, and average training hours recorded per employee 2022 2021 Country No. of courses offered Average time (h) spent on training per employee No. of courses offered Average time (h) spent on training per employee Norway 55 12.4 52 6.5 Sweden 42 5.4 57 18.0 Finland 84 23.6 49 6.8 Germany 73 14.1 70 9.6 Italy 127 10.3 101 19.8 Spain 64 6.0 129 16.3 Group total 289  1 8.46  2 338  1 14.2  2 1 Excluding duplicates for different language versions 2 Adjusted for number of employees per country Axactor Annual report 2022Axactor Annual report 2022 3434   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People processes they work with, and comprehensive communication training. Statistics from number of e-learning courses offered through the Group HR system and the time spent per employee on e-learning courses are recorded. Competence development is also offered through on-the-job-training, sharing of best practices and knowledge, classroom training and mentorship programs. Learning and development objectives for both leaders and employees are linked to Group-wide organizational objectives and values. Health and work environment Axactor regularly addresses risks and opportunities related to the workforce and discuss these with relevant stakeholders to sustain a workplace that is healthy and safe – both physically and psychologically. Axactor does not engage in and expressly prohibits any kind of forced-, compulsory- or child labour in all its operations, including those serviced by suppliers. A continuous trust-based dialogue between leaders and their employees makes it possible to detect early signs of poor health and to ensure the work situation is sustainable in the long run. This is done systematically across the Group through structured annual appraisal talks, anonymous employee satisfaction surveys, and regular “check-ins”. Working actively to facilitate a positive work environment, Axactor encourages employees to be physically active and take care of their health. Different local initiatives are promoted, i.e., initiatives to facilitate cycling to work, sponsoring of health club memberships, common training for groups of employees, physiotherapist availability in the office on a regular basis, football games, culture and value events dedicated to physical and mental health, in addition to local health insurances and health checks. Axactor Annual report 2022Axactor Annual report 2022 3535   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People Axactor does not accept any form of sexual harassment. Specific focus to raise awareness is given through i.e., the digital ethical e-learning courses mandatory for all employees to conduct. Axactor has received one whistle-blower report on an incident of sexual harassment which resulted in a warning notice to the employee. The employee suffering the insult was cared for and offered appropriate assistance. The result from the employee satisfaction survey confirms that this is not a challenge within Axactor. No. of whistle-blower reports concerning sexual harassment No. of reported cases resulting in disciplinary and/or criminal sanctions 2022 2021 2020 2022 2021 2020 Group total 1 0 0 1 0 0 All leaders have access to tools to be able to act upon early signs of ill-health among employees and increase the work attendance rate through proactive wellness initiatives. Furthermore, Axactor closely monitors sick-leave trends, through local HR processes. Sick-leave % Country 2022 2021 2020 Norway 7.0 5.0 - Sweden 5.7 3.2 - Finland 4.8 - - Germany 7.4 4.2 - Italy 3.0 1.3 - Spain 6.9 7.8 - Group total 5.0 - - Quality, health, and safety are integral aspects of Axactor’s operations. Systems are in place to monitor and follow up accidents and/or incidents. Axactor’s business is by nature non-hazardous. Employee satisfaction Investing in the employees is key for Axactor’s success. 92.4% of the employees in Axactor have given their feedback anonymously on whether Axactor is a workplace where you trust the people you work for, have pride in what you do, and enjoy the people you work with. The feedback from the employees show that Axactor is an effective, rational, and competent organization with a clear strategy. The management set clear expectations and the employees have high trust in management. There is an open dialogue where straight answers are given. The systematic work to develop the organization and culture has paid off with improvements in several areas emphasized by the employees in the 2022 survey. Leaders and employees are more involved in decision making, achievements are celebrated more, investments in facilities have contributed to a better work environment, it is easy to be yourself in the workplace, and people are social and friendly, treated fairly and you can count on your colleagues. Axactor has worked systematically to develop its organization and culture, and hard work pays off. Norway, Sweden, Finland, Germany, and Italy renewed their certifications as a Great Place to Work. Spain improved their result from last year. Due to the change of company form from a European Company (SE) to a public limited liability company (ASA), the European Works Council was terminated. Different networking and affinity groups across the organization, communication channels etc. are ensuring the continuous involvement of and knowledge-sharing between the employees cross the group. Axactor will continue to build on their strengths going into the next year and strives to continuously improve as an employer. Together with its employees, each leader is obliged to plan how to improve identified weaknesses within their respective departments, such as No. of workplace injuries recorded No. of serious or fatal workplace injuries recorded No. of commuting injuries recorded Country 2022 2021 2020 2022 2021 2020 2022 2021 2020 Norway 0 0 0 0 0 0 0 0 0 Sweden 0 0 0 0 0 0 0 0 0 Finland 0 0 0 0 0 0 0 0 1 Germany 1 0 0 0 0 0 5 0 0 Italy 0 0 0 0 0 0 4 1 0 Spain 3 0 0 0 0 0 14 13 7 Group total 4 0 0 0 0 0 23 14 8 Axactor Annual report 2022Axactor Annual report 2022 3636   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People the need to review the way of communicating important issues and changes. Progress shall be discussed regularly. Most people are treated fairly, regardless of gender, age, race, ethnic origin, or sexual orientation, but having zero tolerance for discrimination, Axactor should not have any signs of discrimination. Further, not everyone feels that Axactor is a psychologically and emotionally safe place to work. This is not acceptable, and the reasons will be analyzed further, and appropriate measures will be taken. The industry Axactor operates within is demanding, especially for the collection advisors having to manage difficult calls and debtors with different destinies during a day. This is one of the reasons the Italian operations in 2018 together with the employees decided to reduce working hours to 6 hours a day. Higher salaries cannot be offered in all instances, and alternative measures contributing to i.e., greater work-life balance and other types of remuneration and benefits are considered where feasible. There is also a need to continue to focus on the purpose, making everyone understand why they make a difference and increase the pride each employee takes in their work. The people at Axactor makes a difference by helping people and companies to a better future. Not only by helping people pay their bills and make sustainable payment plans to get out of debt, but by taking social responsibility for their colleagues’ well-being and through local engagement. In 2022, the local organizations have engaged in a wide array of initiatives, including amongst others, supporting the victims of the war in Ukraine, and collecting toys to children. Survey score by country Scale of 0-100%, share of respondents answering almost always, or often true to 60 statements +1% 0 20 40 60 80 100 TotalHQSwedenSpainNorwayItalyGermanyFinland 2022 2021 Certification limit Axactor Annual report 2022Axactor Annual report 2022 3737   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | PeopleSustainability | People / Environment Axactor shall have a cautious and conscious approach to its environmental impact, and the environmental and climate impact from business operations is of ever-increasing importance for stakeholders and society. Axactor’s operations are by nature low-polluting and relatively harmless to the environment. At the same time, Axactor recognizes that the responsibility to combat climate change is shared, and the company has since its foundation worked actively to minimize its environmental footprint. Axactor’s environmental commitments follows from its environmental policy, which is adopted annually by the Board. The principles set out in the environmental policy are also reflected throughout the corporate governance structure, and relevant Group policies. Axactor’s risk management system requires the group to identify, assess and document environmental risks and opportunities. An environmental risk assessment is conducted annually with high risks expected to be mitigated through the ordinary risk management process, and opportunities are elevated to the Group executive management for further evaluation. Additionally, an internal climate risk assessment of Axactor’s locations have been conducted, showing limited climate-related risks associated with its locations. This risk is further mitigated in the aftermath of the Covid-19 pandemic, learning from the experiences and emergency preparedness capacities, i.e., with respect to the ability to leverage home office solutions if necessary. Measures During 2022, Axactor has had significant group-wide awareness campaigns, addressing environmental issues and the Group’s impact in this respect. With the improvement of the Group’s GHG inventory all countries have been actively involved in the collection of activity data, and in determining better ways of measuring and calculating their emissions. With the updating of the Group’s procurement routines, increased emphasis has been put on making sure that services and goods acquired are provided from suppliers with acceptable environmental standards. Axactor shall aim to only use products and services that represent the lowest total impact on the environment. Axactor further ensures its suppliers’ commitments to its environmental expectations, through the prerequisite to sign Axactor’s Supplier code of conduct. Axactor anticipates that environmental considerations will be subject to closer scrutiny in the years to come, especially as the market matures with respect to associated reporting requirements and stakeholder expectations. UN Sustainable Development Goal #13 Take urgent action to combat climate change and its impacts Why is this important? Axactor’s business is low-polluting, and not associated with any significant environmental impact. Despite this, Axactor recognizes that climate change is one of the biggest challenges of our generation. In recognition of this, Axactor actively takes steps towards reducing its operational emissions and promoting environmentally friendly behavior amongst employees. Axactor Annual report 2022Axactor Annual report 2022 3838   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | EnvironmentSustainability | Environment Axactor is well prepared when this happens, both as provider of services, and as a purchaser. In addition to the group-wide initiatives, there has also been several local initiatives, aimed at raising awareness and reducing emissions, i.e., through reducing paper and plastic, improved recycling, etc. GHG inventory Global trends and initiatives are driving actions towards better accountability and transparency on greenhouse gas (GHG) emissions, together with increased climate ambition towards reaching a low carbon future. As reported on last year, Axactor recognizes the need to improve its practices on emissions’ data collection and reporting as an important first step towards having a high-quality GHG inventory that could trigger strategies for climate action with a clear understanding of the main sources and issues to be addressed, and the best mitigations available. Together with climate mitigation consultants, Axactor has spent the year developing an inventory tool for Axactor’s scope 1, 2 and 3 GHG emissions in accordance with the GHG Protocol Corporate Standard requirements. The inventory is developed following an operational control approach, which estimates GHG emissions coming from operated assets. The results are provided by business unit, specific GHGs (CO 2 e, CO 2 , CH 4 , N 2 O, HFCs, PFCs, SF6 and NF3) and over time. Values are reported in CO 2 equivalents. Emissions Compared to previous years, the total emissions show a significant increase during 2022, because the reporting from previous years were limited to the data available at the time. With the improved inventory, Axactor has sought to cover all relevant emissions associated with its operations. Where no data has been available for specific activities, emissions have been conservatively estimated. In 2023, Axactor will continue working on improving the quality of the data and try to obtain data where estimations have previously been necessary. In terms of absolute emissions, Axactor expects that comparability to peers will increase in the years to come once the various upcoming sustainability reporting regulations enter into force. Category % of total emissions (2022) 2022 (tCO 2 e) 2021  1 (tCO 2 e) 2021  1 (tCO 2 e) Scope 1 15 368.5 240.2 203.9 Scope 2 11 269.1 467.2 291.2 Scope 3 75 1882.1 144.0 175.3 Total emissions (1-2-3) 100 2519.7 851.5 670.5 1 Emissions for full year 2021 and 2020 only cover company cars (scope 1), electricity usage (scope 2) and flights and hotels nights (scope 3) Axactor’s emissions in Scope 1 and 2 are primarily from company cars, and electricity and heating/cooling purchases in Axactor’s offices. Axactor has limited use of company cars and incentivizes the choice of low emission vehicles. It is mandatory to select models/specifications that have a lower-than-average fuel consumption and emission for its class, according to the World Light Vehicle Test Procedures (“WLTP”), however it is strongly encouraged to choose an electrical vehicle. Axactor aims to use renewable energy where possible, and 100% of the power usage from the Group’s common IT infrastructure provider is guaranteed renewable energy. Several of Axactor’s offices are also set up with Axactor Annual report 2022Axactor Annual report 2022 3939   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | EnvironmentSustainability | Environment district heating, that further reduces the need to use electricity for heating. All Axactor offices have systems for smart controlling and monitoring of ventilation, heating/cooling, and lights. No relocations or reconstruction of existing offices shall lead to higher energy consumption per square meter. The biggest part of Axactor’s emissions is found in Scope 3, which is indirect emissions linked to the activities of Axactor. As a service company, Axactor purchases goods needed in office spaces, receives and sends significant number of letters, and generates waste. Its employees are travelling on business trips and commuting to work. Further, the emission split per country shows expected coherence in terms of size of operations and geographical location. Axactor has invested in efficient tele-/video conferencing equipment, strives to lower the travel ratio and aims to choose less emission intensive travels where possible. Axactor also works actively to identify and utilize opportunities to reduce the use of paper through opportunities for electronic communication, as opposed to physical letters etc. within its room of possibility pursuant to legal requirements in the countries where Axactor operates. Reducing emissions The work that Axactor has done during the year is an important step towards understanding its impact on the environment, and necessary preparations to start addressing climate reduction in its own operations. By having a comprehensive GHG inventory in place, Axactor has laid the foundation to implement an ambitious emissions reduction strategy, and to keep meeting the future expectations of both its stakeholders, and society. Axactor’s vision to become the industry benchmark not only stipulates that the Group needs to meet its financial targets, but just as much delivering on this through sustainable economic growth. True to this vision, Axactor aims to formulate a plan to reduce emissions linked to its operations significantly by 2035. During 2023, Axactor will continue working with climate mitigation consultants to formulate a strategy and a plan to achieve this goal, and to set specific emission reduction targets, including by way of science-based targets. Emission split per country and scope – absolute amount tCO 2 e 0 500 1,000 1,500 2,000 2,500 3,000 TotalHQSwedenSpainNorwayItalyGermanyFinland Scope 1 Scope 2 Scope 3 Axactor Annual report 2022Axactor Annual report 2022 4040   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK SustainabilitySustainability | EnvironmentSustainability | Environment / Group executive management Johnny Tsolis Chief Executive Officer Mr. Tsolis is a co-founder of Axactor and has previously held positions as Chief Financial Officer and Chief of Strategy & Projects within the company. He has vast industry experience having worked several years as a management consultant focusing on PMI/cost, productivity improvement, post-merger acquisition processes, funding, corporate finance, and M&A. He also has extensive international experience managing projects abroad, primarily in the US and Europe. Prior to joining Axactor, his work experience includes positions as a partner in Cardo Partners AS, a partner in DHT Corporate Services, Handelsbanken Capital Markets, and Arkwright. Mr. Tsolis holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian Business School, BI. Nina Mortensen Chief Financial Officer Ms. Mortensen has extensive experience in financial governance and transformations, financial operations, managing IPOs and M&A processes. She has held several financial leadership positions within TietoEVRY, among others interim CFO for the EVRY group and Head of Corporate Controlling and Finance Operations. She also has several years’ experience from Audit & Assurance within Deloitte. Ms. Mortensen holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian School of Economics (NHH). She is also a certified public accountant (CPA) from the Norwegian Business School, BI. Arnt André Dullum Chief Operating Officer Mr. Dullum has broad operational and management experience within credit management services across Europe. He was previously responsible for the operational and compliance team within the Norwegian organization, and is now responsible for Operations, IT and Data & Analytics for the Axactor Group. Prior to joining Axactor, he held multiple roles in the Lindorff Group within operations, project management and finance. The international experience includes longer periods as an expatriate working out of Spain and the Netherlands, and multiple projects within M&A, greenfield start-ups, offshoring- and efficiency improvement projects. Mr. Dullum holds a bachelor’s degree from BI Norwegian Business School (BI) and an MBA from Norwegian School of Economics (NHH). He is also a certified Project Management Professional (PMP®) certified by the Project Management Institute (PMI) and has a personal debt collection license authorized by the Norwegian Financial Supervisory Authority (FSA). Axactor Annual report 2022Axactor Annual report 2022 4141   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Group executive managementGovernance | Group executive management Vibeke Ly Chief of Staff Ms. Ly is responsible for corporate legal affairs, compliance, sustainability, internal audit, HR, and marketing & communications. She has broad experiences in building solid risk management and corporate governance structures, driving sustainability initiatives, managing IPOs and M&A processes, contract management and data privacy. Prior to joining Axactor, she served as a group corporate lawyer and compliance officer in Intrum group, Lindorff group and EVRY group, as an associate in the Norwegian law firm Grette, and as a legal advisor in the Justice Department. Ms. Ly holds a Master of Laws from the University of Oslo (UiO), in addition to international law from Université libre de Bruxelles (ULB), and law and prosecution rights from University of Bergen (UiB). Kyrre Svae Chief of Strategy and IR Mr. Svae has extensive experience from working as a management consultant focusing on strategy development, operational improvement, and M&A. He also previously held the position as Interim CFO of Axactor. His former work experience includes positions as founder and managing partner of Breidablikk Consulting AS, and as a partner in Cardo Partners AS. Mr. Svae holds an MSc from Copenhagen Business School, with part of the degree from Harvard University and China Europe Int. Business School. Robin Knowles Chief Investment Officer Mr. Knowles has broad industry experience across Europe, including positions in Lindorff Group, Aktiv Kapital (PRA), Cabot Financial, and Morgan Stanley. His former work experience includes investment banking with Barclays Bank and container shipping with P&O Nedlloyd. Mr. Knowles holds a bachelor’s degree from the University of Plymouth and is a qualified accountant with Chartered Institute of Management Accountants (CIMA). Axactor Annual report 2022Axactor Annual report 2022 4242   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Group executive managementGovernance | Group executive management / Board of Directors Kristian Melhuus Chair Member of the Remuneration Committee and the Investment Committee. Mr. Kristian Melhuus is partner in Sandwater AS, an impact venture capital fund and deputy chair of the Board of Mowi ASA. Before partnering up with Sandwater he held the position as director of Seatankers Management Norway AS, Investment Director in HitecVision, CFO/COO of Liquid Barcodes and analyst at ABG Sundal Collier. Mr. Melhuus holds an MSc in Industrial Economics and Technology Management from the Norwegian University of Science and Technology (NTNU), and has also studied Finance, Derivatives, and Econometrics at the University of Karlsruhe. Kathrine Astrup Fredriksen Board member Ms. Kathrine Astrup Fredriksen is currently employed by Seatankers Services (UK) LLP working closely with its investment advisory company. She serves as a member of the board of SFL Corporation Ltd, of MOWI AS, Avance Gas and Norwegian property ASA. Fredriksen’s previous directorships include Seadrill Ltd, Frontline Ltd and Golar LNG. Ms. Fredriksen was educated at the European Business School in London. Brita Eilertsen Board member Chair of the Investment Committee and Chair of the Audit Committee. Ms. Brita Eilertsen has vast experience from investment banking and consulting institutions like SEB Enskilda, Orkla Finans and Touche Ross Mgmt Consultants (Deloitte). She has held various board positions for several listed and private companies in different industries since 2005. Current directorships outside Axactor are Pareto Bank, Klaveness Combination Carriers ASA, Novelda ASA and C WorldWide. Previous directorships last five years outside Axactor are NRC Group, Unifor, Next Biometrics, Anders Jahres Fond til vitenskapens fremme and Fjord1 ASA. Ms. Eilertsen holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian School of Economics (NHH) and is a Certified Financial Analyst (AFA). Axactor Annual report 2022Axactor Annual report 2022 4343   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of DirectorsGovernance | Board of Directors Terje Mjøs Board member Member of the Audit Committee and Chair of the Remuneration Committee. Mr. Terje Mjøs has broad operational experience as former CEO of Visolit AS, EVRY ASA and ErgoGroup AS, from senior positions in Hydro IS Partner AS and as a senior advisor to Apax Partners (private equity). Previous directorships and senior management positions last five years outside Axactor is Solid Media Group (Chair) and Visolit group (CEO and Board member in several of their companies). Mr. Mjøs has a Cand. Scient. Degree in Computer Science from the University of Oslo, and an MBA in Economics and Business Administration from Norwegian Business School BI. Lars Erich Nilsen Board member Member of the Investment Committee. Mr. Lars Erich Nilsen is the Managing Director and the Chair of the Board of Seatankers Management Norway AS. He is a portfolio manager with experience as investment and equity analyst from Fearnley Advisors AS and Fearnley Securities AS. Current directorships and senior management positions outside Axactor are Norwegian Property ASA (Board member), Bulk Infrastructure Holding AS (Board member) and FP Bolig Holding AS (Board member). Previous directorships and senior management positions last five years outside Axactor is Seatankers Management Norway AS (Chairman and CEO). Mr. Nilsen holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian Business School, BI. Axactor Annual report 2022Axactor Annual report 2022 4444   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of DirectorsGovernance | Board of Directors / Board of Directors’ report 1. Market development The market for sale of non-performing loans remained at a high level throughout 2022. Volumes that were withheld during the Covid-19 pandemic were put up for sale, and consumer lending increased. Although there has definitely been competition in the bidding processes, the substantial volumes available meant that Axactor was able to acquire new NPL portfolios for close to EUR 300 million at accretive IRR levels in 2022. The 3PC market varied more between geographies in 2022. In Spain, the market for servicing unsecured claims has been characterized by consolidation in the banking industry, meaning volumes have been temporarily kept from the market or re-distributed. As a counter measure, Axactor has built a team to service secured claims, where competition has been less fierce. In Italy, the market remained quite active, with the addition of Credit Recovery Service to the Axactor family contributing positively to the market position. In Germany and the Nordic markets, the activity has been lower, as banks have preferred to offload debt from their balance sheets as opposed to outsource servicing. Looking ahead, the increased interest rates, and thus funding cost for the industry, are expected to improve the market prices for NPL portfolios, to Axactor’s benefit. Adding an expected increase in default rates following the worsened macroeconomic climate, 2023 is poised to be a buyer’s market. The uncertainty lies first and foremost in how long it will take before prices adjust enough to fully offset the increased funding cost. There is a risk that there will be a hiatus of a few months where buyers and sellers will struggle to agree on prices. With increasing volumes and reduced prices, some banks might opt for outsourcing rather than portfolio sales. This means the market outlook for the 3PC segment is positive as well. 2. Strategy Axactor was incepted on the notion that the debt collection industry was inefficient. As a young challenger without legacy, Axactor could disrupt the market in terms of cost-to-collect. This remains the Group’s key competitive advantage today. Axactor continue to invest in data driven operations. Through advanced analytics and business intelligence, resources can be directed to the cases where the likelihood of payment is highest. At the same time, efforts to collect where the likelihood of payment is low can be avoided. This saves time and money for the front offices, as well as reducing the burden on the debtors. Further development of machine learning capabilities will remain a key focus area going forward. There are two main segments in Axactor’s product portfolio: acquisition of non-performing loans (NPL) and third-party debt collection services (3PC). By combining the two product offerings, Axactor both diversifies its income stream and leverages synergies Total income per country % 17% 15% 7% 12% 38% 12% Norway Sweden Spain Italy Germany Finland NPL book value per country % 29% 19% 14% 16% 12% 10% Norway Sweden Spain Italy Germany Finland Axactor Annual report 2022Axactor Annual report 2022 4545   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report between the business segments in terms of business origination, collection execution and data generation. In addition, the combined product offering improves scale benefits for both business segments. The business strategy entails a narrow focus on the core competence of Axactor: fresh unsecured consumer debt originated within the regulated financial sector in carefully selected markets. Axactor performs debt collection services well suited for the typical size and complexity of these claims. Furthermore, this segment is perceived by Axactor as having the best risk/reward relationship. To maximize profits, Axactor focuses primarily on this core competence. Having dedicated and motivated employees with great industry knowledge is crucial to deliver on the strategy. To attract, retain and develop the best talents, attention is directed towards making Axactor an attractive employer with career opportunities. The Axactor Academy program offers a wide variety of courses to increase the employees’ skill sets. Promising talents are given the opportunity to participate in a mentorship program, where senior staff members provide personal guidance and learning opportunities for the participants. These initiatives are in place to enable the desired performance culture that characterizes Axactor. To enable the employees to achieve their potential, they need efficient tools to perform their work. Axactor has had a clear strategy from day one of having modern, standardized and efficient common IT solutions for the Group. As a young company with limited legacy, Axactor has had the opportunity to design and build its IT environment from scratch. The result is an IT platform with low maintenance cost combined with a high level of efficiency and security. Another important benefit of having common systems and setup on both the IT and the organizational side, is improved cross-border cooperation. It eases communication between countries, which in turn enables sharing of best practices and innovations. Cyber security is continuously growing in importance. A benefit of Axactor’s strategy is that the modern and streamlined IT environment by default is up to the best current security standards. Working with large amounts of personal data, the employees of Axactor have a continuous focus on cyber security in their everyday operations. Training sessions and stress tests are performed on a running basis to be prepared for potential attacks. A major milestone in the cyber security work in 2022 was the implementation of a full network segmentation. This means that in the event hostile individuals should succeed in breaking in, the amount of information at stake would be limited. Axactor strives to be a transparent, reliable and trustworthy company with focus on fair treatment of debtors, clients and employees alike. As a part of this ambition, Axactor has joined the United Nations Global Compact and adheres to the United Nations sustainable development goals with specific focus on 5 Gender equality, 8 Decent work and economic growth, 13 Climate action and 16 Peace, justice and strong institutions. This ambition is inherent in Axactor’s DNA and affects all parts of the Group’s business and decisions. Axactor sees working in a sustainable matter as an obvious goal in itself, and it is also an increasingly important factor for banks and financial institutions when they select their business partners. The debt collection industry has been criticized for being difficult to interpret from an investor perspective. As a response, Axactor is striving to disclose more information and key performance indicators through the notes in the financial statements, in publicly available presentations, and through educational videos on www.axactor.com. Through being transparent, Axactor hope to both earn trust from investors, and to push the whole industry into becoming more transparent and open. Axactor was founded during a time of historically high NPL prices. This means the back book has a lower average gross IRR than some competitors. In 2022, Axactor lifted the profitability on the total NPL book substantially, through EUR 288 million of accretive investments. The average gross IRR for all portfolios owned has increased to 17.3% at the end of 2022. This compares to 15.7% at the end of 2020, and 16.3% at the end of 2021. The uplift is the result of sticking to the strategy of well-known debt from reliable sellers, and a strict price discipline. Accretive investments remain an important factor for Axactor to further increase profitability going forward. With an established skilled, scalable, lean, and passionate organization, Axactor is well positioned to continue the growth journey. To deliver profitable growth, Axactor will continue to improve operational performance, show investment discipline, and grow the capital light part of the business. The Group will further intensify the investor relations work with banks, bond market, equity market and other sources of capital. Finally, Axactor will continue Axactor Annual report 2022Axactor Annual report 2022 4646   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report to pursue fair debtor treatment, high customer satisfaction and dedicated and motivated employees. 3. Operations Both the non-performing loans (NPL) and third-party collection (3PC) business segments had solid collections and great cost control in 2022, resulting in the highest EBITDA in the history of Axactor. The NPL portfolio investments were consistent throughout the year, and ended at EUR 288.1 million for 2022. Together with NPL portfolios of EUR 1,095.8 million going into the year, the operational units had large volumes to process through both amicable and legal actions during the year. In total, Axactor had close to 1.4 million NPL cases under management per the end of 2022. The NPL performance was close to 100% for the year. Gross revenue for the NPL segment increased from EUR 258.0 million in 2021 to EUR 281.0 million for the year. In 2022, the whole organization has focused on maintaining a high loyalty rate on existing payment plans and setting up new payment plans on claims with no prior agreements. Through this approach, Axactor saw a positive development in the number of paying cases in the NPL segment across all countries. The focus on sustainable payment plans is a key strategy in achieving Axactor’s purpose of helping people and companies to a better future. In total, the average number of paying cases per month increased more than 9% from 2021 to 2022. The 3PC segment achieved a total income growth of 13% in 2022, ending at EUR 55.8 million. The main growth drivers were increased income from existing clients in Spain, and the acquisition of Credit Recovery Service (CRS) in Italy. The CRS acquisition was closed in January 2022 and marked a substantial improvement of Axactor’s 3PC servicing capabilities in Italy. With efficient operations and a solid base of banks and financial institutions as clients, all 3PC clients in Italy are now serviced through the CRS platform to achieve scale advantages and increased collection efficiency. The organic 3PC growth in Spain was driven by exceptional results in benchmarking contests, where Axactor was rated as number one in the majority of benchmarks. During the year, a second German operational site was established in Saarbrücken. The new contact center will run in parallel with the existing center in Heidelberg, supporting future growth and vastly improving Axactor’s servicing capabilities in the German market. The debtor portal took big steps in 2022, becoming an easily accessible platform for debtors in a cost-efficient manner. By adding fully digital payment solutions for all countries, the number of successful transactions through the portal increased by 10% in 2022. The total number of debtors logging in to the self-service portal increased with 26% compared to 2021, as close to 10,000 debtors logged in every month. Live chat functionality has also been enabled to give debtors more contact opportunities, and simultaneously increase cost efficiency. In 2022, Axactor completed an innovation project, delivering a cloud-based enterprise data warehouse, an insight and analytical framework and new digital solutions. The project has enabled reliable group-wide analytics across all Axactor markets, providing a competitive advantage. The project got financial support from the Norwegian state as an approved SkatteFUNN project. Axactor launched a major ramp-up of the advanced analytics team during 2022 to utilize the results of the project. The ramp-up has supported more ambitious targets for improving collection strategies, and as a result increased efficiency for the collection processes. By year-end Axactor reached a new milestone with machine learning models being incorporated into the daily operations for all countries of operations. Axactor now has machine learning models to support key decision points throughout the lifecycle of a claim. Through a combination of efficiency measures, Axactor was able to reach an industry leading NPL Cost-to-collect ratio of 39% for 2022, a 5 percentage point improvement from 2021. This was possible through a combination of efficient processes, the skills and competence of the employees, and strong analytical capabilities, as well as a series of restructuring initiatives. 2022 was a year with multiple initiatives to strengthen information security. Axactor successfully implemented full network segmentation across the complete IT infrastructure in the first half of 2022. This was a major step to improve the security layer and reduce the risk and consequences of a potential malicious malware strike against the company. In addition, several enhancements were implemented towards end-users. From technical solutions to discover vulnerabilities, detection and alert towards threats and malware, to mobile device management and multifactor authentication. This implementation was in combination with several digital nano learning courses and physical training covering security and GDPR related topics for employees. Axactor Annual report 2022Axactor Annual report 2022 4747   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report Results from simulated phishing campaigns in 2022 show higher awareness and understanding of cybersecurity threats among all employees. The work to raise awareness will continue to be a part of the information security exercises and planning. Axactor was faced with one incident in relation to security where an internal employee was victim of a phishing attempt related to the Office365 platform. The attempt was promptly mitigated, and no consequences or data leakage were identified. To ensure continued growth in the 3PC segment, Axactor always strives to maintain good client relationships. The results from the annual customer satisfaction survey for 2022 conclude that the customers are very satisfied with Axactor’s services and deliverables in all six countries, with an overall net promoter score (NPS) of 62. The positive operational results in 2022 would not have been feasible without the dedication of Axactor’s employees, acting passionately, proactively and with integrity. Investing in competent high-performing employees is key for Axactor’s success. Axactor retained its Great Place To Work certification for 2022 in Finland, Germany, Italy, Norway and Sweden, while the results in Spain edged closer to the level required for certification. 4. Corporate social responsibility The objective of Axactor is to create and perform sound, sustainable, responsible and competitive business conduct – creating long-term value and returns for our stakeholders. To effectively achieve such objectives and to have a well-run business, effective corporate governance is indispensable. This means that Axactor shall comply with all applicable laws and regulations in the jurisdictions in which it operates, as well as general rules of ethical business conduct. Axactor is committed to creating value in an ethical, sustainable, environmental, and socially responsible manner, practice good corporate governance, and respect internationally recognized human- and workers- rights. To safeguard compliance and support the effectiveness of these board level commitments, an open and ongoing dialogue on these issues, shall be maintained. The company has since 2021 been a signatory to the UN Global Compact, supporting the UN Sustainable Development Goals, placing specific focus on: 5. Gender equality; 8. Decent work and economic growth; 13. Climate action; 16. Peace, justice and strong institutions. Axactor’s values and corporate policies support these goals. The sustainability report describes Axactor’s work on ESG, including the company’s reviews of working environment, gender equality, and the Group’s effects on its external environment. 5. Financial performance Axactor’s operations is split into two business segments: NPL and 3PC. The portfolios of purchased real estate (REO) are in a run-off mode and treated as discontinued operations effective from the fiscal year 2022. Repossessed assets from Axactor’s secured NPL portfolios are defined as a part of the continuing operations and reported under the NPL segment. All comments and numbers in the following text refer to continuing operations unless explicitly stated otherwise. This also applies to figures for previous year. Total income Total income for 2022 ended at EUR 239.7 million, up from EUR 158.3 million in 2021. The main driver for the increase was increased collection on NPL portfolios, improved gross IRRs and solid investment level during 2022. 2021 was also weighed down by net negative revaluations of EUR 44.1 million, compared to net negative revaluations of EUR 2.6 million in 2022. Gross revenue from the NPL segment increased by 9% to EUR 281.0 million in 2022 (258.0). The growth is supported by improved collection performance and significant investments in new NPL portfolios during 2022. The NPL amortization rate fell from 41% in 2021 to 34% for the year 2022, contributing positively on the total income development. Out of the 7 percentage point reduction, approximately 2 percentage points relate to improved collection performance, while the rest relates to improved average IRR and timing of collections. 2021 was impacted by EUR 44.1 million in Total income by segment EUR million 0 50 100 150 200 250 2022202120202019 165 197 158 240 NPLPortfolios 3PC Other/Not allocated Axactor Annual report 2022Axactor Annual report 2022 4848   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report net negative revaluations, compared to net negative revaluations of EUR 2.6 million in 2022. NPL total income ended at EUR 183.8 million for 2022 (108.6), representing 77% of the Group’s total income (69%). Estimated remaining collection (ERC) on the NPL portfolios stood at EUR 2,545.4 million at the end of 2022, an increase of 19% compared to the end of 2021. Out of the total ERC, EUR 310.0 million is expected to be collected in 2023. Axactor invested EUR 288.1 million in new NPL portfolios in 2022, up from EUR 114.0 million in 2021. The investments done in 2022 supports a solid profitable growth for 2023. In addition, a total estimated EUR 68.1 million of investments are committed in signed contracts for 2023 per the end of 2022. Axactor expects to deploy in total EUR 100-150 million in NPL portfolios during 2023, including the already committed amount. Axactor continues to follow the established strategy with an intensified focus on the core competence of the Group. This means a strict capital discipline with investments directed at fresh unsecured non-performing consumer loans from known sellers. This reduces risk, leverages customer relationships in both the 3PC and NPL segments, and ensures Axactor invests only in attractively priced high-quality portfolios. The strategy is evidenced by a significantly higher gross IRR on acquisitions in 2022 compared to the average for the back book. The 3PC business reported total income of EUR 55.8 million for 2022, up 13% from 2021 (49.6). The main growth driver was the acquisition of Credit Recovery Service (CRS) in Italy in January 2022. 3PC continue to be an important business segment for Axactor, providing a capital light income stream and providing important synergies with the NPL segment. The 3PC total income corresponded to 23% of total income for the Group in 2022 (31%). Operating expenses Total operating expenses for 2022 amounted to EUR 120.7 million (117.8), excluding depreciation and amortization. Personnel costs accounted for EUR 64.7 million in 2022 (61.3) and is the single most important input factor in Axactor’s operations. The increase is supported by higher number of FTEs, driven by the acquisition of CRS, and the accretive investments made in 2022. Cost of repossessed assets sold amounted to EUR 1.5 million, compared to EUR 2.1 million in 2021. Other expenses amounted to EUR 54.6 million (54.4), and is mainly related to IT/ infrastructure costs and legal fees. Contribution by segment The total contribution margin amounted to EUR 161.5 million in 2022, up from EUR 85.1 million in 2021. The contribution margin reflects the segments’ contribution to EBITDA, before local SG&A, IT and corporate cost. Please see Note 5 for more details. The contribution margin from the NPL segment was EUR 140.4 million in 2022 (69.7). The main driver for the increase in profitability was improved collection performance and continued strict cost control, as well as the large negative revaluations in 2021. The NPL contribution margin ended at 76% of total income, up from 64% in 2021. The contribution margin from 3PC was EUR 21.2 million (15.4), corresponding to 38% of total income (31%). The margin in 2021 was impacted by costs related to a restructuring program. The saving initiatives gained full effect in 2022, supporting the higher margin. Local SG&A, IT and corporate cost amounted to EUR 42.6 million for 2022 (44.6). EBITDA EBITDA for 2022 ended at EUR 119.0 million, up from EUR 40.5 million in 2021. The increased profitability level is due to the growth in total income, combined with strict cost control. The EBITDA margin ended at 50% for the year (26%). Cash EBITDA ended at EUR 218.1 million in 2022, up from EUR 192.1 million in 2021. 0 20 40 60 80 100 120 2022202120202019 EBITDA and EBITDA margin EUR million and % 119 88 52 40 50% 44% 32% 26% Axactor Annual report 2022Axactor Annual report 2022 4949   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report Operating profit (EBIT) Some of the investments in the collection platforms during the initial years of the Group’s history have been fully depreciated or amortized. After some years of stabilizing investments, depreciation and amortization – excluding amortization of NPL portfolios – fell to EUR 8.9 million in 2022 (9.6). Operating profit (EBIT) was hence EUR 110.1 million for 2022 (30.9). Net financial items Net financial items were negative EUR 55.9 million in 2022 (51.0), comprising financial revenue of EUR 3.2 million (0.1) and financial expenses of EUR 59.1 million (51.0). Interest expenses on borrowings accounted for EUR 57.9 million in 2022, up from EUR 49.1 million in 2021. The increase is driven by increased interest rates during second half of 2022 and a higher debt level following the accretive investments made during the year. Axactor increased the interest rate hedge ratio at the end of 2022, in order to reduce the financial expenses going into 2023. Axactor has during 2022 purchased own outstanding bonds with a total face value of EUR 49.5 million. The purchases were made at prices significantly below par, resulting in a positive net gain of EUR 2.3 million. The net foreign exchange impact included in net financial items for 2022 was positive EUR 0.6 million, compared to a net negative impact in 2021 of EUR 1.5 million. 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 14.1 million in 2022 (36.8). EBITDA ended at EUR -7.0 million (-16.8), including a EUR 0.8 million write-down of book values following the annual impairment review (5.9). The net profit for 2022 ended at EUR -8.1 million (-20.6). Profits and tax The profit before tax was EUR 54.2 million in 2022 (-20.1), and the net profit was EUR 40.6 million (-25.4). Axactor recorded a tax expense of EUR 13.5 million in 2022 (5.3), resulting in an effective tax rate of 25% (-26%). Axactor expects to trend towards a normalized average effective tax rate of approximately 27% over time. Including discontinued operations, the net profit for 2022 was EUR 32.6 million, up from EUR -46.0 million in 2021. The net profit attributable to shareholders was EUR 36.8 million for 2022 (-32.8), whereas the net profit to non-controlling interests was EUR -4.2 million (-13.2). Total comprehensive income was EUR 31.1 million for 2022 (-37.3), with the deviation from reported net profit/(loss) after tax mainly explained by currency translation differences from foreign operations and fair value changes on cash flow hedges. EUR 35.3 million of the total comprehensive income was attributable to shareholders of the parent company (-24.1) and EUR -4.2 million to non-controlling interests (-13.2). Earnings per share totaled EUR 0.122 both on an ordinary and on a diluted basis (-0.112). Financial position Total assets amounted to EUR 1,437.8 million at the end of 2022, up from EUR 1,293.2 million at the end of 2021. Total non-current assets amounted to EUR 1,350.4 million at the end of 2022 (1,196.7), including purchased NPL portfolios of EUR 1,252.6 million (1,095.8). Intangible assets accounted for EUR 83.0 million (87.5) reflecting goodwill and other intangible assets acquired since inception, as well as deferred tax assets of EUR 5.4 million (13.7). Return on equity to shareholders % -12 -8 -4 0 4 8 12 2022202120202019 ROE to shareholders Continuing operations -9% -6% 6.0% 9% 10% Axactor Annual report 2022Axactor Annual report 2022 5050   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report Current assets amounted to EUR 74.7 million (96.5), including cash and cash equivalents of EUR 29.0 million (38.2) and EUR 7.0 million in restricted cash (5.8). Assets classified as held for sale amounted to EUR 12.7 million at the end of 2022. Total interest-bearing debt stood at EUR 945.3 million at the end of 2022, up from EUR 838.3 million at the end of 2021. The increase in interest-bearing debt is related to the investments in NPL portfolios during 2022. Total equity amounted to EUR 410.6 million (381.2), including non-controlling interests of EUR -5.4 million (1.0). The equity ratio was 29% at the end of 2022, same as at the end of 2021. Supervision of financial reporting As communicated in a press release on 13 December 2021, Axactor ASA received a conclusion from the Norwegian Financial Supervisory Authority (FSA) in accordance with the preliminary conclusion as stated in the press release of 2 September 2021. The conclusion imposed Axactor to change its future accounting practice for subsequent measurement of expected credit losses for acquired portfolios of non-performing loans (NPL) with effect from the reporting of the annual accounts for the financial year 2022. The subsequent measurement shall apply current and future macroeconomic factors as input and use more than one scenario. Axactor has in 2022 implemented an expanded revaluation model that applies current and future macroeconomic factors as input and use of scenarios. For more information, please refer to note 4 to the consolidated financial statements. 6. Cash flow and financing The following text regarding cash flow includes contribution from both continuing and discontinued operations. Net cash flow from operating activities, before NPL and REO investments, amounted to EUR 220.0 million in 2022 (224.7). The amount paid for NPL portfolios was EUR 290.8 million in 2022, up from EUR 115.4 million in 2021. The difference between the amount paid and total NPL investments for the year is related to deferred payments on certain contracts. Including investments in NPL portfolios, cash flow from operating activities was EUR -71.0 million (109.6). The difference between cash EBITDA and cash flow from operating activities before NPL investments relates to taxes paid of EUR 10.7 million (3.3) and a decrease in net working capital excl. forward flow commitments of EUR 1.3 million (4.2). Net cash outflow from investing activities was EUR 7.7 million in 2022 (4.7), whereof EUR 3.1 million was related to the acquisition of CRS in Italy in January 2022. The remaining amount primarily represents investments related to IT and infrastructure, and setting up new office facilities in Spain and Germany. Net cash flow from financing activities was EUR 75.9 million in 2022 (-112.4). Net proceeds from borrowings were EUR 132.1 million after debt repayments (-86.2). There were no new share issues in 2022, while Axactor had EUR 49.3 million in net proceeds from new share issues in 2021. Repayments to non-controlling interests amounted to EUR 2.2 million for 2022 (6.6). Interest payments, loan fees and lease payments represented a cash outflow of EUR 53.9 million in 2022 (68.9). Funding Axactor has two sources of credit; bond loans and a revolving credit facility from DNB and Nordea. All legal entities except Axactor ASA and the Reolux structure are inside the ringfenced structure that is funded by the revolving credit facility (RCF). The RCF matures on 22 December 2023 and is classified as current interest-bearing debt in the consolidated financial statement at the end of 2022. The company expects the refinancing of the RCF to be completed during the first half of 2023. Axactor has two outstanding bonds loans; ACR02 and ACR03. ACR02 is an unrated bond, with a carrying amount of EUR 170.6 million and a floating interest rate of EURIBOR +700bps. The ACR03 is a rated bond with a carrying amount of EUR 279.1 million and a floating interest rate of EURIBOR +535bps. The ACR02 bond is maturing 12 January 2023, while the ACR03 bond is maturing 15 September 2026. 7. Reported alternative performance measures Axactor uses alternative performance measures (APM) such as gross revenue, EBITDA, cash EBITDA, estimated remaining collection, net interest-bearing debt and return on equity, to better reflect its operational business performance and to enhance comparability between financial periods. These alternative performance measures are reported in addition to, but not as a substitute for, the performance measures reported in accordance with IFRS. For definition and reconciliation tables of the used APMs, see page 154. Axactor Annual report 2022Axactor Annual report 2022 5151   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report 8. Proposed allocation of the company’s result The parent company, Axactor ASA, had a net negative result after tax of EUR 14.9 million in 2022, compared to negative EUR 16.4 million in 2021. The result available for disposal of the Annual General Meeting is as follows: EUR thousand Distribution from other paid in capital 14,950 8. Statement on transparency Axactor will publish its statement regarding the Norwegian transparency act (“Åpenhetsloven”) on www.axactor.com no later than 30 June, 2023. 9. Corporate Governance The governance structure of Axactor ASA complies with Norwegian corporate law and Norwegian securities legislation and stock exchange regulations. The shares of Axactor are freely negotiable. There are no restrictions on owning, trading, or voting for shares in the Articles of Association. The shares in the company are not subject to any transfer restrictions. The Board has approved guidelines for good corporate governance in accordance with the Norwegian Code of Practice for corporate governance issued by the Norwegian Corporate Governance Board (NCGB and NUES), last revised on 14 October 2021. Axactor is fully compliant with the NUES recommendations. A detailed description of the corporate governance principles and reporting for 2022 can be found in the Corporate governance report. Axactor has relevant group-wide insurance policies in place, covering; general liability and professional indemnity, directors’ and officers’ insurance, crime, and cyber. The company’s directors’ and officers’ insurance covers the directors of the Board, the CEO, and any employee acting in a managerial capacity which includes wholly owned subsidiaries. Coverage does not include grossly negligent or willful acts in which directors have obtained illegal remuneration or acted for personal profit. 10. Risk review Axactor’s regular business activities entail exposure to various types of risk that separately, or in combination could affect its operational and financial performance. Risk management is an integral part of the Group’s business activities and decisions. The Board has the overall responsibility to define expectations and oversee the Group’s risk management, including monitoring key risks and implementing mitigating actions as outlined below. Axactor Annual report 2022Axactor Annual report 2022 5252   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report Risk Description Mitigations Strategic risks Macroeconomic Lower disposable income for debtors, as a result of a worsened macroeconomic climate, might affect their ability to settle their debts. In the event of postponed payments, the value is not necessarily lost, but realization of the value could be spread out over a longer period. Recent company studies show limited correlations between macroeconomic factors and the likelihood of payment. If debtors are unable to pay large settlements, they are guided to entering longer installment plans. Competitiveness Competitors may have or develop competitive advantages that the Group is unable to match. Additionally, the inability to enter new contracts, inability to purchase portfolios at profitable prices, or acquisitions of portfolios based on incorrect assumptions, may adversely affect the Group’s competitiveness. Reputational damage suffered due to unforeseen events may affect the ability to attract and retain customers, employees and investors, or eligibility to purchase portfolios from favorable sellers. If these risks are to materialize the business and ability to implement the business plan may be materially adversely affected. The Group continuously works to improve collection and cost efficiency through data driven operations, reduced funding costs, improved procurement processes, as well as to focus on employer branding. Financial risks Currency The Group reports figures, and has its majority of operations and borrowings, in EUR. The Group is exposed to NOK and SEK through borrowings and operations in Norway and Sweden. Movements in these currency exchange rates could have an effect on the Group’s financial figures. The Group aims to reduce currency risk by keeping interest- bearing debt in the same currencies as the Group’s assets. Interest rate The interest rate risk relates to the variable rates on the Group’s interest-bearing debt, which amounted to EUR 955.5 million per 31 December 2022. An annualized increase/decrease of 100 basis points would increase/ decrease profit before tax by EUR 4.0 million, given the debt and hedging level at the end of 2022. The Group has a strategy to hedge 50-70% of total outstanding gross debt with a duration of three to five years. The strategy is under implementation, and the Group has currently hedged 60% of total outstanding gross debt, with a duration until December 15, 2023. Axactor is committed to the strategy and expects full implementation over time. Credit (not including NPLs) Counterparties under a financial or customer contract may be unable to meet their obligations towards Axactor, leading to a financial loss. The Group is exposed to credit risk from its operating activities, primarily related to trade receivables and from its financing activities, including deposits with banks. Credit risk is managed subject to established policies, procedures and controls relating to customer credit risk management. The credit risk is not considered to be a material risk in Axactor. Liquidity The Group has financial obligations in terms of NPL forward flow commitments, interest expenses on borrowings, running salary expenses and external costs. If the cash inflow is not sufficient to support these obligations, there is a risk that the Group may be unable to meet them. The liquidity level at the end of 2022 is perceived as satisfying. The Group is maintaining a balance of financial assets and unutilized credit lines to meet the cash requirements of its operations and investments for the next 12-24 months. Axactor Annual report 2022Axactor Annual report 2022 5353   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report Risk Description Mitigations Funding In the event that new credit is not possible to obtain, the Group’s growth potential could be adversely affected. If the Group should fail to secure new funds or a re-financing of the current agreements before the maturity dates, there is a risk that the Group could default on its debt obligations. A default could also occur as a result of a significant drop in financial and/or operational performance, through the breach of covenants tied to the credit facilities. Axactor complies with all loan covenants as per the end of 2022, and given the current financial position, cash flow projections and investment outlook, the Board consider the headroom as satisfactory. The Group diversifies its funding through two main sources of credit: a revolving credit facility (RCF) and bond loans. The Group aims to refinance credit lines well ahead of maturity. Operational and financial performance is continuously monitored, and covenant headroom is an important part of business decisions. Operational risks Performance Weaknesses in operational processes, or application of the processes, could cause lower collection on own portfolios. Failure to employ and retain skilled personnel is also likely to contribute to lower performance. The cumulated effects may have material adverse effects on the Group’s performance. The Group seeks to mitigate these risks through active employee management, and frequent operational reviews. Additionally, the Group is investing in technology to increase automation, continuing to enhance its processes where possible. IT and information security The Group faces risks related to IT stability, application availability, as well as information security and data processing. As the Group is dependent on third-party outsourcing providers, there is also a risk associated with failure to maintain successful third-party relationships. The cumulated consequences of which are difficult to concretize but can be severe if left unmitigated. Additionally, the Group has seen an increase in attempted cyber- and phishing attacks recently, which can have adverse financial consequences if successful. The Group seeks to mitigate these risks through partnerships with certified infrastructure, hardware and software providers and strict internal control including vendor management. Technical mitigations such as network segmentation have also been implemented, to reduce potential consequences of attempted cyber- and phishing-attacks. Regulatory Increased regulatory scrutiny and level of fines issued by the authorities continues to be a risk. This trend is coupled with more consumer-friendly debt collection legislation and practices across the countries in which the Group operates, having various consequences such as lower (regulatory) collection fees and more lenient debt forgiveness arrangements. Additionally, close attention is being paid to the stricter and more comprehensive sustainability related disclosure- and reporting requirements. Failure to comply with applicable regulations in relevant jurisdictions may materially adversely affect the financial position due to severe fines, or inability to operate due to loss of license in respective jurisdictions. Mitigations include continuous monitoring of regulatory changes both on an EU level and in the various jurisdictions in which the Group operates, i.e., through dialogue with peers, regulators, and participation in local debt collection associations. The Group’s processes and compliance programs are also subject to regular oversight through internal controls and internal audits. Relevant trainings are frequently provided to employees at all levels tailored to their roles and responsibilities. Axactor Annual report 2022Axactor Annual report 2022 5454   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report 11. Going concern Based on the review of Axactor ASA’s financial statement, the Board of Directors confirms that the annual financial statements for 2022 have been prepared on the basis of a going concern assumption, and that this assumption has been made in accordance with Section 3-3a of the Norwegian Accounting Act. 12. Outlook The increasing interest rates and macroeconomic uncertainty will have an impact on Axactor’s markets in the coming year. With increasing funding costs for the industry, NPL prices must adjust to compensate for the increased cost of capital. Axactor sees indications that prices are already adjusting but expects there will be a transition period in which sellers and buyers of NPL portfolios will struggle to find common ground. Combined with an expected increase in default rates, Axactor is confident that a new and fair price level will be reached, but it might take some months to reach this new equilibrium. As a response, Axactor expect to scale down investments to EUR 100–150 million for 2023. The NPL segment will nonetheless see significant revenue growth in 2023 on the back of the high investment level in 2022. The replacement capex for 2023 is estimated to be EUR 114 million, and the estimated investment level is thus enough to secure a stable NPL book value. Continued organic growth is expected for the 3PC segment in 2023. The debt originators typically choose between outsourcing or selling off their NPLs, and the servicing volume thus depends on how quickly NPL prices adjust, and how determined debt originators are to offload their balance sheets. Axactor has two loan maturities in 2023 and 2024 respectively; the RCF and the ACR02 bond. Negotiations to renew the RCF are ongoing and expected to close during the first half of the year. The high cash generation from Axactor’s operations will be used to reduce leverage through 2023. Axactor remains opportunistic regarding refinancing in the bond market if market conditions improve, within the limits of the leverage ratio target of 3.5x or less at the end of 2023. In order to reduce financial expenses, Axactor has increased its interest rate hedge position for 2023. Based on the current base interest rates and keeping the gross debt level constant from the end of 2022, the hedge position is expected to fully offset the impact of increased base interest rates in the first quarter 2023. However, the gross debt increased towards the end of the fourth quarter, meaning the estimated average debt for the first quarter is higher. Estimated interest expenses for the first quarter 2023 with these assumptions is thus EUR 1.0 million higher than the prior quarter. The sensitivity on interest expenses from a further one percentage point increase in base interest rates is approximately EUR 1.0 million per quarter. Axactor’s operations saw limited impacts on collection from the high inflation and increasing interest rates in 2022. There were some indications in certain markets of fewer large one-off payments, and debtors asking for longer payment plans with lower monthly installments or payment deferrals towards the end of the year. Going into 2023, bailiffs in several countries are reserving higher amounts to cover debtors’ cost of living, meaning legal cash flow to creditors will be somewhat reduced. The executive management and Board continue to closely monitor the general macroeconomic situation and its potential business impacts. Oslo, 30 March 2023 Kristian Melhuus Chair Brita Eilertsen Board member Terje Mjøs Board member Lars Erich Nilsen Board member Kathrine Astrup Fredriksen Board member Johnny Tsolis CEO Axactor Annual report 2022Axactor Annual report 2022 5555   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Board of Directors’ reportGovernance | Board of Directors’ report / Corporate governance report Axactor ASA is a Norwegian Public Limited Liability Company (Allmennaksjeselskap) listed on Oslo Børs and bases its corporate governance structure on Norwegian legislation and recommended guidelines. Axactor is committed to good corporate governance standards which contributes to optimizing the value creation over time and strengthens the stakeholders’ trust and confidence in the company. The company’s corporate governance framework regulates the division of roles, responsibilities and accountability between shareholders, the Board, CEO, and the other members of the Group executive management, to ensure that the company’s resources are applied in an efficient and sustainable manner. The Board has the ultimate responsibility for ensuring that good corporate governance is practiced. Confidence in Axactor and its business activities is essential for the Group’s competitiveness. Axactor is committed to openness and transparency about its principles and procedures for how the Group is managed. 1. Implementation and reporting on corporate governance The company adheres to the Norwegian Code of Practice for corporate governance (“Code”), last revised 14 October 2021, issued by the Norwegian Corporate Governance Board (“NUES”). The principles and implementation of corporate governance are subject to annual reviews and discussions by the Board, last revised and approved by the Board 15 December 2022. The current corporate governance policy is available on the company’s website. This report addresses Axactor’s main corporate governance policies and practices and how Axactor has complied with the Code in the preceding year. Application of the Code is based on the “comply or explain” principle and any deviation from the Code is explained under each item. By the company’s own assessment, Axactor has not had any deviations from the Code during 2022 and is fully compliant with all sections of the Code. 2. Business activity The company’s business as set out in the articles of association is: “to directly or indirectly through subsidiaries or investment partnerships, conduct debt collection work, financial and administrative services, legal services, invoicing services, debt acquisition and other investment activities, as well as therewith associated activities”. To create value over time, the Board has developed clear objectives, strategies, and a risk profile for the business. Axactor’s commitment to sustainable development is codified in the quality policy. The company will continue to pursue the following main strategies to reach its overall objective: • Being a profitable company with organic and sustainable growth through targeted focus to becoming best at what we do within current markets • Invest in accretive portfolios with attractive gross IRR driving margin expansion based on accountable investments • Putting emphasis on loyal and satisfied customers within the bank and finance sector through responsible product offering • Being an innovative player with a strong cost culture to achieve competitive advantages through cloud based unified IT-infrastructure, optimized processes, and data-driven valuation and -operation • Being an attractive employer, with a focus on creating an Axactor Annual report 2022Axactor Annual report 2022 5656   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report environment for professional and personal growth, with respect and regard for each employee • Helping hard working companies get paid and debtors solving their financial commitments through fair debt collection practices A description of the key risk factors and risk management can be found in the Board of Directors’ report on page 45. During 2022, the company has reviewed its policies and procedures providing business practice guidance on environmental, social and governance matters including but not limited to human resources, human rights, legal and compliance, data privacy, information security, anti-money laundering, corporate social responsibility, code of conduct and anti-fraud and anti-corruption. A separate report on how these policies and procedures are integrated with the company’s activities and how they relate to value creation for the company’s stakeholders can be found in the sustainability report integrated in the annual report 2022 page 13. At the AGM on 21 April 2022, the general meeting resolved to change the company form from a European SE-company (Societas Europaea) to a Norwegian Public Limited Liability company (an allmennaksjeselskap), in accordance with the proposal of the Board. Consequently, certain changes were also made to the company’s articles of association. For supplementary information, see the minutes of the AGM held on 21 April 2022, and the conversion proposal and report, available at www.axactor.com. The company’s objectives, strategies and risk profile are subject to regular review by the Board throughout the year. Deviations from the Code: None 3. Equity and dividend The Board aims to maintain a responsible equity ratio, considering the company’s financial targets, strategy, and risk profile. This to ensure that the company has an appropriate balance between equity and other sources of financing. On 31 December 2022, the Group had an equity ratio of 28.6% and a debt-to-equity ratio of 2.5x. The Board considers the current capital structure as appropriate. The Board has committed a dividend policy forming the basis for the Board’s proposals to the general meeting on cash dividend payments or authorization for payment of dividend or share buy-back programs on one or several occasions based on the last audited financial accounts. Axactor targets a distribution to its shareholders for a financial year of 20–50% of profit after tax on a consolidated basis through either cash distribution or share buy-back programs of treasury shares. Distributions through dividends or share buy-back programs can only be initiated by the Board based on an authorization from the general meeting applicable for one or several occasions limited to the framework of the latest annual report. At the AGM on 21 April 2022, it was resolved to increase the share capital of the company through a bonus issue in connection with the change in company form, to reduce the number of decimals in the company’s nominal share value, in accordance with the proposal from the Board. Because of the change in company form, cf. Section 2 above, the share capital of the company was converted from EUR to NOK (Norwegian Kroner). • The nominal value of issued shares was increased by NOK 0.007037424125127 per share, in total NOK 2,126,325.78 • The bonus issue was carried out by transferring NOK 2,126,325.78 to the share capital from the unrestricted equity • The company’s share capital was increased from NOK 1,535,794,085.98 to NOK 1,537,920,411.76. This resulted in an increase in the nominal share value from NOK 5.082962575874870 to NOK 5.09 At the AGM on 21 April 2022, three authorizations to increase the company’s share capital were granted to the Board: • Authorization to increase the share capital by issuing new shares with a total nominal value of up to NOK 153,792,041, equal to 30,214,546 shares, each with a nominal value of NOK 5.09 in connection with acquisitions of assets within the company’s core areas of expertise • Authorization to increase the share capital by issuing new shares or acquire own shares with a total nominal value of up to NOK 27,995,000, equal to 5,500,000 shares, each with a nominal value of NOK 5.09 in connection with the performance share units allocated under LTI 2022 which is an incentive program for the CEO, other members of the Group executive management and key personnel • Authorization to increase the share capital by issuing new shares or acquire own shares with a total nominal value of up to NOK 35,023,496, equal to 6,880,844 shares, each with a nominal value of NOK 5.09 in connection with the share options allocated under ESOP 2019 and ESOP 2020 (also named ESOP 2020-B) which are incentive programs for the CEO, other members of the Group executive management and key personnel Axactor Annual report 2022Axactor Annual report 2022 5757   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report All three authorizations are valid until the AGM in 2023, and no later than 30 June 2023. As of 31 December 2022, neither authorization have been used. There was a separate vote on each of the authorizations. All three authorizations have a limited overall amount by which the Board is permitted to increase the share capital. For supplementary information, see the minutes of the AGM held on 21 April 2022 available at www.axactor.com. Deviations from the Code: None 4. Equal treatment of shareholders The Board, CEO, and other members of the Group executive management are committed to treat all shareholders equally, unless there exists a factual basis for deviation from this principle, justified by the common interests of the company and the shareholders. In the event of a capital increase based on authorization from the general meeting, where the pre-emptive rights of shareholders are set aside, the company shall provide reasons for the action in the stock exchange release in which the capital increase is announced. Any transactions the company carries out in its own shares shall be carried out either through the stock exchange or at prevailing stock exchange prices. If there is limited liquidity in the company’s shares, other ways to ensure equal treatment of all shareholders shall be considered. There were no transactions in treasury shares in 2022. The instruction issued by the Board states how the company shall manage agreements with closely related parties. For significant transactions with closely related parties, Axactor will use valuations and statements from an independent third party. There were no such significant transactions in 2022. For other transactions with related parties, reference is made to the servicing agreement with Seatankers Management Co. Ltd. (a company controlled by Geveran) entered 17 February 2020, as reported in the annual report 2021. Secondly, the general meeting approved the option agreement with Andrés López Sánchez (Country Manager, Spain), dated 18 May 2021 to secure his retention, as reported in the annual report 2021. The agreement with Aston AS (a company controlled by Kristian Melhuus), for advisory services to the company and as reported on in the annual report 2021, expired on 21 April 2022. All three agreements were entered on an arms-length basis and are not considered significant. For further details, see note 29 to the financial statements for 2022. Deviations from the Code: None 5. Shares and negotiability Axactor has one class of shares, and each share carries equal voting rights. The shares are freely negotiable. There are no restrictions on owning, trading, or voting of shares in the articles of association. Deviations from the Code: None 6. General meetings The general meeting is the company’s ultimate corporate body. The Board strives to ensure that the general meeting is an effective forum for communication between shareholders and the Board. All registered shareholders have the right to participate in the general meetings, which exercise the highest authority of the company. To attend, nominee-registered shareholders must be registered in the VPS by the close of business the day before the general meeting. Notices of general meetings are made available on newsweb.no and on the company’s website and are sent to all shareholders no later than three weeks in advance of the meeting. The articles of association stipulate that the supporting documents handling matters to be considered at a meeting can be made available on the company’s website rather than being sent to shareholders by post. However, shareholders are still entitled to receive the documents by post upon request if they so wish. The general meetings in 2022 were conducted as hybrid meetings with registration deadline CET 12:00 (noon) on the prior business day. When attending the online general meetings shareholders were able to listen to a live audiocast of the meeting, see the presentation, submit questions relating to the items on the agenda and cast their votes in the real time poll. Identification of the shareholders was secured. The notices included information providing the shareholders with sufficient detail for the shareholders to assess all the matters to be considered as well as all relevant information regarding attendance and voting procedures including a proxy form with and without voting Axactor Annual report 2022Axactor Annual report 2022 5858   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report instructions that permitted separate votes for each item up for consideration in the general meetings and each candidate up for election. Advanced votes and proxies were required to be provided the last business day prior to the general meetings by electronic means, in writing or by use of written proxy forms. The Chair declared the general meetings opened. The person chairing the general meetings was elected by the general meeting and was considered independent of the company and the Board. Representatives of the Board, CEO and other members of the Group executive management, the company’s auditor, and the Chair of the nomination committee were present at the AGM. For the EGM only the Chair and CEO were present which was deemed sufficient given the items treated. In 2022, Axactor held its AGM on 21 April 2022 with 50,55% of the shares represented. In addition, an EGM was held on 21 February 2022 to elect Kristian Melhuus as Chair of the Board, with 50,43% of the shares represented. The minutes from general meetings are published on newsweb.no and on the company’s website. Deviations from the Code: None 7. Nomination committee The company has established a nomination committee, ref. articles of association article 8. It consists of 2 members: • Anne Lise E. Gryte (Chair) • Magnus Tvenge (member) Both were elected by the AGM in 2022 for a period of 2 years, until the AGM in 2024, and are considered independent of the Board, CEO and other members of the Group executive management. Efforts are made to ensure that the nomination committee comprises of persons with the necessary expertise and understanding of the shareholders’ interests. The general meeting elected the Chair of the nomination committee and determined the remuneration to the members based on the nature of the duties performed and the time invested. The duties and responsibilities of the nomination committee are regulated by the guidelines to the nomination committee approved by the general meeting in 2022. The main responsibilities are to propose candidates for election to the Board, and to advice on the remuneration of the Board members. Grounds for recommendations are provided when nominees are presented to the general meeting, at latest at the time of the notice of the general meeting. All shareholders are entitled to nominate candidates to the Board, and information on whom to contact can be found on the company’s website. The nomination committee monitors the need for any changes in the composition of the Board through dialogue with the shareholders, board members, and executive management. The nomination committee has also reviewed the Board of Direcors’ report on its own performance as outlined in Section 9 below. Deviations from the Code: None 8. Board of Directors Composition The Board shall constitute of 3 to 7 directors, as regulated in the articles of association article 5. The Board was elected by the general meeting. On 31 December 2022, the Board consisted of the following 5 directors (see table below). All members of the Board are elected until the next AGM and may be re-elected. The composition of the Board is based on broad representation of the shareholders, as well as the company’s need for competence, capacity, and ability to form balanced decisions. Information on each Board member’s expertise and capacity can be found in the Annual report 2022 on page 43 and on the company’s website. Axactor Annual report 2022Axactor Annual report 2022 5959   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report Name Role Age Considered independent of main shareholders Served since Term expires Participation Board meetings 2022 Share ownership in Axactor as of 31 December 2022 (direct/indirect) Kristian Melhuus Chair 41 Yes 21.02.22 as Chair (from 15.04.21–21.02.22 as personal deputy for Kathrine Astrup Fredriksen) AGM 2023 14 as Chair 2 as personal deputy for Kathrine Astrup Fredriksen 0 Brita Eilertsen Director 60 Yes 20.01.17 AGM 2023 19 19.892 Lars Erich Nilsen Director 41 No 04.05.18 AGM 2023 19 0 Kathrine Astrup Fredriksen Director 39 No 01.04.20 AGM 2023 15 0 Terje Mjøs Director 61 Yes 20.01.17 AGM 2023 19 500.000 Independence The nomination committee has evaluated the independency of the Board members in relation to the Group executive management, and material business contacts. 3 out of 5 board members are regarded as independent of the main shareholders. Deviations from the Code: None 9. The work of the Board The Board has the primary responsibility for overseeing and supervising the CEO and the other members of the Group executive management and daily operations. The Board has adopted written instructions which describes the responsibilities and duties of the Board, including how the Board should handle agreements with related parties, and regulate the allotment of work between the CEO and the Board. The instructions also regulate work related to the Board committees. The Board’s primary responsibilities include: (i) participating in the development and approval of the strategy and budget, (ii) performing necessary monitoring functions, and (iii) acting as an advisory body to the CEO and the other members of the Group executive management. The Board’s duties may change over time, depending on the company’s ongoing needs. The Board has prepared an annual plan for its work with special emphasis on goals, strategy, and implementation, to ensure that, (i) the operation of the company complies with the company’s values, ethical guidelines and corporate social responsibility, (ii) that the business and assets are well-managed, and (iii) that the risk management and the financial reporting is carried out in a satisfactory manner. The Board has also established rules on conflicts of interest to ensure that any potential conflicts are identified and handled in a professional manner. If the Board is to consider material matters in which the Chair, or has been, personally involved, the meeting in which the matter is considered shall be chaired by another board member. There were no such cases in 2022. The Chair ensures that the Board’s work is performed in an effective and correct manner. It is the Board’s responsibility to ensure that that the company is managed with clear distribution of responsibilities and duties. The Board appoints the CEO, which is responsible for the day-to-day operations of Axactor Group and for ensuring that the Board receives accurate, relevant, and timely information, sufficient for the Board to carry out its duties. The duties, responsibilities and delegated authorities for the CEO are stated in the CEO instruction issued by the Board. All members of the Board regularly receive information about the operational and financial development. The company’s strategies are regularly subject to review and evaluation by the Board. The Board holds regular physical meetings, at least every second month, where the members may elect to attend either physically or virtually. Extraordinary Board meetings are held when necessary and may be conducted as telephone conferences or, in exceptional circumstances, the Board may take its decisions based on circulating documents. In 2022, the Board held 19 board meetings whereof 8 ordinary and 11 extraordinary. Out of the ordinary meetings 4 were held in relation to the interim reporting and the others mainly devoted to strategy discussions, budget, business, operational and financial updates, risk and internal control, ESG discussions, portfolio assessments, remuneration and employee related matters, review of polices and instructions etc. The extraordinary board meetings were held to discuss budget, claim settlement, change of the Board’s composition, bond buy-back, long- term incentive programs and portfolio purchases. Axactor Annual report 2022Axactor Annual report 2022 6060   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report The members of the Board have also visited all of Axactor’s local business operations. The CEO has been present in all Board meetings, except during the board deep-dives locally and when the Board is discussing the CEO compensation and performance. The Board has also discussed without CEO and other members of the Group executive management present in all ordinary board meetings and held separate discussions with the auditor without CEO and other members of the Group executive management present. The Board’s work, constitution of the Board committees and review and approval of the Board’s instructions were discussed in the constitutional Board meeting following the AGM. The Board has conducted an annual assessment of its performance and expertise. The assessment of the year 2022 was conducted in December 2022 and discussed in the Board meeting 16 January 2023.The results has been presented to the nomination committee. In addition, the nomination committee has discussed the performance with each Board member. Board committees The Board has established an audit committee, an investment committee, and a remuneration committee to provide subject matter advice to and preparation for the full Board. The audit committee’s main responsibilities are to ensure the integrity of the Group’s financial reporting, to supervise the Group’s internal control and risk management system, to ensure the auditor’s independency, to inform the Board of the results of the statutory audit, and to ensure that the annual accounts give a fair picture of the Group’s financial results and financial condition in accordance with generally accepted accounting principles. The audit committee works as the Board’s risk committee, reviews the procedures for risk management, and assess the risks and financial controls related to the Group’s business activities. The audit committee ensures that the company has sufficient focus on ESG to contribute to sustainable development and appropriate risk management to minimize negative impact of the operations. The committee follow-up on regulatory changes, compliance matters that may have a material impact on the financial statements or policies, monitor material external investigations, sanctions, claims, litigations, substantial authority contact, licenses issues and follow up security incidents and whistle blower reports. The audit committee also receives reports on the work of the internal and the external auditor and the results of the audits. As of 31 December 2022, the audit committee consisted of the following members: • Brita Eilertsen (Chair) • Terje Mjøs All of the members are independent of the Group executive management, and have qualifications within accounting. The audit committee held 6 meetings in 2022. The investment committee oversees the financial investment process and proposals to ensure that the relevant investments meet the requirements with respect to expected return, responsible investments and due diligence prior to commitment of funds. Further, the investment committee reviews the re-evaluations of portfolios regularly assess the risks of the market from a micro and macro perspective and evaluate and implement necessary mitigations to reduce the risks through monthly reporting and quarterly meetings. As of 31 December 2022, the Investment Committee consisted of the following members: • Brita Eilertsen (Chair) • Lars Erich Nilsen • Kristian Melhuus The investment committee held 21 meetings in 2022. The remuneration committee develops the philosophy, policy and guidelines for remuneration that creates the link between remuneration levels, business performance and return to shareholders and makes proposals to the Board on the employment terms and total remuneration of the CEO and approve the terms and remuneration for the other members of the Group executive management which are communicated to the general meeting. These guidelines create precedence for remuneration throughout the organization. Further, the committee oversees that the company has an appropriate succession plan, monitor employee satisfaction, and assess and follow-up other material employment issues related to executive personnel. As of 31 December 2022, the remuneration committee consisted of the following members: • Terje Mjøs (Chair) • Kristian Melhuus Axactor Annual report 2022Axactor Annual report 2022 6161   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report The remuneration committee held 5 meetings in 2022. Deviations from the Code: None 10. Risk management and internal control The Board is responsible for ensuring that the company has sound internal control and systems for risk and compliance management appropriate to the extent and nature of the company’s activities. In 2022 Axactor has continued to build on the advancements made on the ESG performance, further strengthening the value for the stakeholders and society. Sustainability is an integral part in the company’s vision to become the industry benchmark, as also anchored in the quality policy. This is further outlined in the outlined in the sustainability report, cf. Annual report 2022 page 13. The company’s systems and procedures related to risk management and internal control contributes to efficient operations, timely and correct financial reporting, and compliance with applicable laws and regulations. These systems form an integral part of the management’s decision-making process. The internal control and risk management system cover the organizational structure, managerial responsibilities for compliance, policies and procedures, training, customer and supplier due diligence, monitoring through financial reviews and internal audits, incident investigations and corrective actions as well as reporting. The Code of Conduct and Group policies are reviewed and approved by the Board annually. All policies have designated owners within the executive management, responsible for developing and monitoring compliance with their respective areas. To each policy a set of procedures are established e.g., the Legal and compliance policy has a procedure for managing internal control and risk management. The risk management framework shall ensure that the business operations comply with applicable laws and regulations, commitments to sustainable operations, and business ethics, as well as ensuring profitability, efficiency, and continuity. The company operates a structured risk management process that includes relevant categories of risk, such as strategic, financial, operational, and regulatory risks. A top-down/bottom-up risk assessment is conducted annually. Key risks are monitored through monthly business reviews with the Group executive management, and through quarterly reporting to the Board. All employees are trained regularly, and annually as a minimum, through trainings on inter alia business ethics, anti-fraud and anti-corruption, good debt collection practices, GDPR and anti- money laundering and customized training within their area of Group policies • Quality • Operations • Corporate governance • Delegation of authority • IT and Infosec • Physical security • Code of conduct • CSR • Procurement • Environmental • Finance • Debt purchase • Treasury • Data protection • Hedging • Insider • Tax • Anti-fraud and anti-corruption • Dividend • Anti-trust • Communication • Trade sanctions • HR • Human rights • Legal and compliance Corporate governance structure Board of Directors 1 st line of defense Supervisory authority 2 nd line of defense 3 rd line of defense Internal monitoring and oversight functions Internal audit Operational management CEO / Executive management BIC RCAC External audit Axactor Annual report 2022Axactor Annual report 2022 6262   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report responsibility. Compliance with the Code of Conduct is another key component in the Group’s internal control system. The company has established an independent whistle-blowing channel for all employees and vendors to report any concerns related to illegal or unethical conduct. Internal controls are conducted throughout the Group annually, at defined intervals which vary between departments. The legal and compliance functions, locally and at group level, follow up on the performance of the controls, as well as any deviations and necessary mitigations. The results are reported to the Board regularly. Axactor’s internal auditor conduct audits recommended by the Board and reports its findings to the Board quarterly. Axactor’s separate entities prepares its financial statements within a standard financial accounting system which is consolidated into the Group’s results. Impairment testing of NPLs is conducted on a quarterly basis, and goodwill at least on an annual basis. These processes are reviewed by the external auditor. The external auditor presents a review of the internal control procedures, including identified weaknesses and proposals for improvement, to the Board at least once a year. The audit committee monitors the financial reporting and internal controls regularly. Under Norwegian securities laws, the Norwegian Financial Supervisory Authorities (FSA) oversees that the financial reporting of issuers of transferable securities which are quoted or for which admission to quotation has been requested on a regulated market within the EEA, is compliant with relevant laws and regulations. As communicated in a press release on 13 December 2021, the company has received a conclusion from the Norwegian Financial Supervisory Authority (FSA) regarding the review of certain accounting practices and their implications for the Annual report 2019 and half-year report 2020. Further information about the FSA process can be found in Board of Directors’ report page 45 and in note 4 in the Annual report 2022. The Board accounts for the main features of the internal control and risk management systems in the annual report. Deviations from the Code: None 11. Remuneration of the Board of Directors The remuneration of Board members is stipulated annually by the AGM based on the nomination committee’s recommendation. The remuneration reflects the Board’s responsibilities, work, time invested, and the complexity of the company. The remuneration of board members is not performance based and no share options are granted to board members. The Chair receives a higher compensation than the other board members, and work in board committees provides for additional compensation. The Board shall be informed if any board members perform other tasks for the company than exercising their role as board members. None of the members of the Board has taken on specific assignments for the company in addition to their appointment as a member of the board. However, prior to being elected Chair, Kristian Melhuus was during 2022 compensated by the company for advisory services under the agreement with Aston AS, cf. Section 4. Further details about the remuneration of the Board can be found in note 8 to the Annual report, and in the Remuneration report, on page 65 of the Annual report 2022. Deviations from the Code: None 12. Salary and other remuneration of executive management The Board decides the salary and other compensation paid to the CEO. The CEO’s salary and bonus are based on an evaluation with emphasis on specific factors determined by the Board. Each year, the Board carries out an assessment of the salary and other remuneration to the CEO and revise the total compensation and remuneration criteria without any executive manager present. The CEO proposes the remuneration of the other members of the Group executive management for approval by the Board’s remuneration committee. The Board has issued guidelines for the remuneration of the CEO and the Group executive management which has been presented and approved by the AGM and published on the company’s website. The salary level ensures that the company can attract and retain executive employees with the desired expertise and experience without harming the company’s reputation or exceeding the norm in comparable companies. Performance related salary in the form of performance share units or share options, bonus schemes or the like is linked to value creation for shareholders or the earnings performance over time. The bonus scheme for the CEO is limited to 75% of the annual base salary and 50% of the annual base salary for the other members of the Group executive management. Axactor Annual report 2022Axactor Annual report 2022 6363   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report The Board’s statement regarding remuneration of the executive management can be found in note 8 to the Annual report, and in the Remuneration report, on page 65 of the Annual report 2022. Deviations from the Code: None 13. Information and communication The company complies with the relevant recommendations and market practices for reporting financial and other Investor Relation (“IR”) related information. The Board, CEO and the other members of the Group executive management prioritize to give shareholders quick, relevant, and current information about the company and its activity areas, while ensuring equal treatment. The Board has adopted an insider policy to increase awareness of the responsibility entailed by the possession of inside information and the consequences of misusing such information and to ensure that Axactor itself fulfills its responsibilities. The Board has also adopted a communication policy which regulates spokespersons on behalf of the company and disclosure of information to the market and investor community in a transparent, honest, consistent, reliable, and timely manner. The CEO and the Chief of IR and strategy are the main contact persons in such respects. Contact details of the IR representatives are available at the company website to facilitate the dialogue between the company and its shareholders. Financial information is published by producing quarterly reports, annual reports, and other relevant information, as well as stock exchange notices, in accordance with Oslo Børs’ recommendations. The Board shall keep itself updated on matters of special importance to the shareholders. The Board shall therefore ensure that the shareholders are given the opportunity to make known their points of view at and outside the general meeting. Deviations from the Code: None 14. Take-over bids There are no restrictions in the articles of association to hinder the acquisition of shares in Axactor. Guidelines have been prepared for how the Board shall respond to any takeover bids. The guidelines are in accordance with the Code. Deviations from the Code: None 15. Auditor The auditor has attended one meeting with the Board at which the company’s management was not present to review the company’s financial reporting, accounting principles, risk areas, internal control routines etc. The Board’s audit committee has met 4 times with the auditor during 2022 where the auditor presented a plan for the implementation of the audit work, observations, risks etc. The auditor has confirmed in writing to the Board and the audit committee that independence and objectivity requirements are met. The auditor is only used as a financial advisor to the company if such use of the auditor cannot influence or call into question the auditors’ independence and objectiveness in its capacity as auditor for the company. The Board has established guidelines in respect of the use of the auditor for services other than the audit. The breakdown between the audit fee and fees for other services for 2022 is described in note 9 to the Annual report 2022. At the AGM, the Board presented a review of the compensation paid to the auditor for audit work required by law and remuneration for other concrete assignments. In connection with the auditor’s presentation to the Board of the annual work plan, the Board also reviewed the work and performance of the auditor. The Board arranges for the auditor to attend all AGMs and EGMs when deemed necessary depending on item treated. The company’s auditor is PwC and considered independent from the company and the Board. Deviations from the Code: None Axactor Annual report 2022Axactor Annual report 2022 6464   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Corporate governance reportGovernance | Corporate governance report / Remuneration report The purpose of the remuneration report is to provide an open account of remuneration to members of the Board and the Group executive management and show that variable remuneration is closely linked to Axactor’s long-term interests and sustainable value creation. The report explains how remuneration earned and paid in 2022 complies with Axactor’s policy for remuneration of Group executive management as approved by the AGM on 21 April 2022. The report includes the remuneration of the members of the Board and the Group executive management for the financial year 2022 and describes how the remuneration policy approved by the AGM in 2022 has been implemented in practice. This report will be presented at the AGM in 2023 for an advisory shareholder vote. All amounts in the remuneration report are stated in NOK thousand unless otherwise specified. The company’s financial results 2022 ended as the most profitable year in Axactor’s history, with a return on equity from continuing operations of 10%. The result comes from a continued focus on the strategy: Narrow focus on bank and finance claims, low cost through efficient and digital operations, and maintaining a strict price discipline. Axactor returned to growth in 2022, and the gross revenue increased EUR 29.3 million from 2021. EBITDA increased EUR 78.5 million, resulting in an EBITDA margin improvement from 26% in 2021 to 50% in 2022. Including contribution from the discontinued operations, the net profit to shareholders for the year ended at EUR 36.8 million. Changes in the Board and Group executive management during 2022 Kristian Melhuus was elected Chair of the Board in February 2022. Prior to that he was a personal deputy board member for board member Kathrine Astrup Fredriksen. Merete Haugli and Hans Harén left their positions as a board member in April 2022. There has been no changes in Group executive management during 2022. Remuneration The annualized fixed fees for the board members were increased in line with the recommendation from the Nomination committee, approved by the AGM 21 April 2022. The annualized fixed fee for the Chair was increased by 45% from NOK 550 thousand to NOK 800 thousand. For the other board members, the annualized fixed fee was increased with 25% from NOK 350 thousand to NOK 437.5 thousand. Any further changes of total actual remuneration at an individual level in 2022 is due to additional committee responsibilities that the individual member has taken on during the reporting year. Further information on the remuneration of the Board is detailed in the section ‘Remuneration - Board of Directors’. The Group executive management received an increase in the annual base salary during 2022 of two percent. The increase is in line with the overall average salary increase for non-executives in Axactor. The bonus pay-out is determined based on the company’s performance and individual performance. This resulted in a bonus between 20% and 30% of the Group executive manager’s individual base salary for 2022. Remuneration committee (RC) The RC continuously monitors prevailing market practice and developments in remuneration in Europe and within its group of peers. Axactor values ongoing dialogue with shareholders, institutional investors, and other stakeholders to ensure that Axactor’s remuneration policy is aligned with market practice and helps drive execution of the company’s strategy. In 2022, the RC has focused on the following key areas: • Reviewing the remuneration and benefits strategy including Axactor Annual report 2022Axactor Annual report 2022 6565   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report short- and long-term incentive plans to ensure it continues to fit business needs. • Maintaining a close dialogue with shareholders, gathering their feedback and having subsequent discussions on their views about Axactor’s remuneration arrangements. • Assessing and recommending for the Board’s approval the overall remuneration, the composition between fixed and variable pay, pensions and other employment conditions for the CEO. • Reviewing the performance of the Group executive management versus the adopted objectives. Summary of remuneration policy The key objectives of Axactor’s remuneration policy are to support business needs by guiding the development of an appropriate total remuneration level that has a clear link to the business strategy and with shareholders’ interests. The remuneration policy applicable to the Board and the Group executive management approved at the AGM in April 2022 is compliant with the requirements following The Norwegian Public Limited Liability Companies Act, section 6-16a. This report is made according to the requirements in section 6-16b of the Norwegian Public Limited Liability Companies Act and Axactor’s remuneration policy. The report is based on the guidelines under Directive 2007/36/EC. Axactor has had no exceptions or deviations from the approved remuneration policy during 2022. The remuneration policy, including the purpose and key aspects of each of the remuneration elements, is summarized in the following table. Remuneration policy summary Component Purpose and link to strategy Size of the award Board Fixed fee Attracts individuals with a broad range of experience and skills, rewards the Board members for setting strategy and overseeing its implementation. Fixed fees are set to reflect market practice and the role of each member of the Board in terms of efforts and responsibilities. Shareholding Aligns the interests of the Board members and shareholders. The share purchasing is at the Board members’ own account. Group executive management Base salary (inclusive of pension) Recognizes market value, the nature of the role in terms of scale, complexity and responsibility and the executive members’ experience, sustained performance and contribution. Subject to annual remuneration review, it may change in the context of the individual’s long- term performance, market pay positioning and consideration of the wider employee group. Short-term incentive Rewards the achievement of annual company goals guided by Axactor’s strategy plan. Up to 100% of base salary at maximum performance. Long-term incentives Link executive remuneration to the achievement of long-term shareholder value creation and support the retention of the executives. Delivered through the stock options plans. Benefits Provide for the executive management members’ health and welfare needs. As per the respective benefits policy and may vary at individual level. Axactor Annual report 2022Axactor Annual report 2022 6666   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Remuneration of the Board The members of the Board receive an annual fixed fee as compensation for their services. The Chair’s fee is higher than the other board members, reflecting the difference in role and responsibilities. Board members serving in the Board’s different committees receive an additional annual compensation based on their participation in the respective committees. Each committee’s Chair receives a higher annual fixed compensation than the other committee members, following the same logic as for the Chair of the Board. An overview of the members of the Board is available at Axactor’s website (www.axactor.com) Fixed fee Name 2022 2021 Current members Kristian Melhuus, Chair  1 841 100 Terje Mjøs, Board member 576 465 Brita Eilertsen, Board member 598 480 Lars Erich Nilsen, Board member 488 415 Kathrine Astrup Fredriksen, Board member 432 415 Former members Merete Haugli, Board member 2 94 546 Hans Olov Haren, Board member 104 415 Glen Ole Rødland, Chair - 277 1 Kristian Melhuus was appointed Chair of the Board 21 February 2022, prior to this he was deputy board member for Kathrine Astrup Frederiksen 2 Merete Haugli was Interim Chair of the Board from 31 May 2021 to 21 February 2022 Axactor Annual report 2022Axactor Annual report 2022 6767   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Remuneration of the Group executive management Remuneration of the Group executive managers shall support business needs with a clear link to the business strategy and share- holders’ interests. Members of the Group executive management do not receive any additional remuneration from other internal Board positions within Axactor. Group executive remuneration All numbers in NOK thousand Name / position Year Salary Benefits Bonus  5 Pension Total  6 Fixed pay Variable pay Group executive management Johnny Tsolis, CEO 2022 4,281 12 2,736 361 7,389 63% 37% 2021 4,169 15 889 351 5,423 84% 16% Nina Mortensen, CFO  2 2022 2,152 12 1,119 177 3,460 68% 6% 2021 938 6 200 50 1,194 83% 17% Arnt Andre Dullum, COO 2022 2,082 12 927 152 3,172 71% 29% 2021 1,899 15 178 164 2,256 92% 8% Vibeke Ly, Chief of Staff 2022 2,069 12 941 149 3,171 70% 30% 2021 2,025 15 295 143 2,479 88% 12% Kyrre Svae, Chief of strategy and IR  3 2022 2,045 12 923 149 3,129 70% 30% 2021 1,876 15 497 143 2,532 80% 20% Robin Knowles, Chief Investment Officer  4 2022 2,480 - 1,000 16 3,495 71% 29% 2021 2,737 - 285 36 3,058 91% 9% Former Group executive management  1 Endre Rangnes, CEO 2022 - - - - - n.a n.a 2021 - - 44 - 44 - 100% Oddgeir Hansen, COO 2022 - - - - - n.a n.a 2021 469 - 1,350 5 1,824 26% 74% Teemu Alaviitala, CFO 2022 - - - - - n.a n.a 2021 604 3 - 15 622 100% - 1 Salary in last year of employment is based on employment period in the year plus severance pay if agreed 2 Nina Mortensen was appointed CFO from 1 August 2021. Nina Mortensen received a sign-on fee of NOK 200 thousand presented as bonus 3 Kyrre Svae held the position as interim CFO from January 2021 to 31 July 2021 4 Remuneration to Robin Knowles is denominated in GBP, an exchange rate of 11.84 (2021: 11.90) is used to convert to NOK 5 Bonuses are paid in one payment. Bonus for 2021 is paid bonus. Bonus for 2022 is accrued bonus 6 There are no extraordinary items paid to Group executive management The following information is not included in the table above as its not applicable for Axactor: board fees, multiple year bonus, extraordinary items. Axactor Annual report 2022Axactor Annual report 2022 6868   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Long-term incentive plan The long-term incentive plan is divided into several share option programs based on the year of award. The long-term incentive program for 2022 (ESOP 2022) are based on performance share units, strike set at average share price last 30 days prior to grant, and vesting conditional upon service conditions and specific performance criteria to ensure commitment to common goals. There are no significant differences between the earlier share option programs, beside strike price and the dates for vesting and exercise (applicable for ESOP2017, ESOP2019 and ESOP2020). After the awarding date there are no other conditions to be met other than that the Group executive manager needs to be employed in Axactor on the vesting date (applicable for ESOP2017, ESOP2019 and ESOP2020). There is no lock up period on the shares once the options are exercised. Granted share options in the reporting period Name/position Plan Performance period Award date Vesting date Exercise period Strike price (NOK) Awarded at period start Granted in period Vested in period Subject to a performance condition period end Awarded and unvested period end Johnny Tsolis, CEO ESOP 2017 28.08.2017 01.06.2018 01/06/2018–15/07/2022 30.00 75,000 - - - - 28.08.2017 01.06.2019 01/06/2019–15/07/2022 32.00 75,000 - - - - 28.08.2017 01.06.2020 01/06/2020–15/07/2022 35.00 75,000 - - - - 28.08.2017 01.06.2021 01/06/2021–15/07/2022 37.50 75,000 - - - - ESOP 2019 25.04.2019 25.04.2020 25/04/2020–25/04/2024 24.50 77,485 - - - - 25.04.2019 25.04.2021 25/04/2021–25/04/2024 26.50 77,485 - - - - 25.04.2019 25.04.2022 25/04/2022–25/04/2024 28.00 77,486 - 77,486 - - ESOP 2020 26.06.2020 26.06.2021 26/06/2021–26/06/2025 28.00 125,000 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 22.00 75,000 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 17.25 50,000 - - - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 28.00 125,000 - 125,000 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 22.00 75,000 - 75,000 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 17.25 50,000 - 50,000 - - 26.06.2020 26.06.2023 26/06/2023–26/06/2025 28.00 125,000 - - - 125,000 26.06.2020 26.06.2023 26/06/2023–26/06/2025 22.00 75,000 - - - 75,000 26.06.2020 26.06.2023 26/06/2023–26/06/2025 17.25 50,000 - - - 50,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 333,333 - 333,333 333,333 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 333,333 - 333,333 333,333 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 333,334 - - 333,334 Axactor Annual report 2022Axactor Annual report 2022 6969   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Name/position Plan Performance period Award date Vesting date Exercise period Strike price (NOK) Awarded at period start Granted in period Vested in period Subject to a performance condition period end Awarded and unvested period end Nina Mortensen, CFO ESOP 2020 04.08.2021 02.08.2022 02/08/2022–01/08/2025 28.00 62,500 - 62,500 - - 04.08.2021 02.08.2022 02/08/2022–01/08/2025 22.00 37,500 - 37,500 - - 04.08.2021 02.08.2022 02/08/2022–01/08/2025 17.25 25,000 - 25,000 - - 04.08.2021 02.08.2023 02/08/2023–01/08/2025 28.00 62,500 - - - 62,500 04.08.2021 02.08.2023 02/08/2023–01/08/2025 22.00 37,500 - - - 37,500 04.08.2021 02.08.2023 02/08/2023–01/08/2025 17.25 25,000 - - - 25,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,666 - 91,666 91,666 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - 91,667 91,667 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - - 91,667 Arnt André Dullum, COO ESOP 2017 06.06.2018 01.06.2018 01/06/2018–15/07/2022 30.00 18,750 - - - - 06.06.2018 01.06.2019 01/06/2019–15/07/2022 32.00 18,750 - - - - 06.06.2018 01.06.2020 01/06/2020–15/07/2022 35.00 18,750 - - - - 06.06.2018 01.06.2021 01/06/2021–15/07/2022 37.50 18,750 - - - - ESOP 2019 25.04.2019 25.04.2020 25/04/2020–25/04/2024 24.50 38,742 - - - - 25.04.2019 25.04.2021 25/04/2021–25/04/2024 26.50 38,742 - - - - 25.04.2019 25.04.2022 25/04/2022–25/04/2024 28.00 38,744 - 38,744 - - ESOP 2020 26.06.2020 26.06.2021 26/06/2021–26/06/2025 28.00 62,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 17.25 25,000 - - - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 28.00 62,500 - 62,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 22.00 37,500 - 37,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 17.25 25,000 - 25,000 - - 26.06.2020 26.06.2023 26/06/2023–26/06/2025 28.00 62,500 - - - 62,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 22.00 37,500 - - - 37,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 17.25 25,000 - - - 25,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,666 - 91,666 91,666 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - 91,667 91,667 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - - 91,667 Axactor Annual report 2022Axactor Annual report 2022 7070   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Name/position Plan Performance period Award date Vesting date Exercise period Strike price (NOK) Awarded at period start Granted in period Vested in period Subject to a performance condition period end Awarded and unvested period end Vibeke Ly, Chief of Staff ESOP 2017 19.11.2018 01.06.2018 01/06/2018–15/07/2022 30.00 12,500 - - - - 19.11.2018 01.06.2019 01/06/2019–15/07/2022 32.00 12,500 - - - - 19.11.2018 01.06.2020 01/06/2020–15/07/2022 35.00 12,500 - - - - 19.11.2018 01.06.2021 01/06/2021–15/07/2022 37.50 12,500 - - - - ESOP 2019 25.04.2019 25.04.2020 25/04/2020–25/04/2024 24.50 38,742 - - - - 25.04.2019 25.04.2021 25/04/2021–25/04/2024 26.50 38,742 - - - - 25.04.2019 25.04.2022 25/04/2022–25/04/2024 28.00 38,744 - 38,744 - - ESOP 2020 26.06.2020 26.06.2021 26/06/2021–26/06/2025 28.00 62,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 17.25 25,000 - - - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 28.00 62,500 - 62,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 22.00 37,500 - 37,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 17.25 25,000 - 25,000 - - 26.06.2020 26.06.2023 26/06/2023–26/06/2025 28.00 62,500 - - - 62,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 22.00 37,500 - - - 37,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 17.25 25,000 - - - 25,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,666 - 91,666 91,666 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - 91,667 91,667 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - - 91,667 Kyrre Svae, Chief of Strategy and IR ESOP 2020 01.08.2020 01.08.2021 01/08/2021–01/08/2025 28.00 62,500 - - - - 01.08.2020 01.08.2021 01/08/2021–01/08/2025 22.00 37,500 - - - - 01.08.2020 01.08.2021 01/08/2021–01/08/2025 17.25 25,000 - - - - 01.08.2020 01.08.2022 01/08/2022–01/08/2025 28.00 62,500 - 62,500 - - 01.08.2020 01.08.2022 01/08/2022–01/08/2025 22.00 37,500 - 37,500 - - 01.08.2020 01.08.2022 01/08/2022–01/08/2025 17.25 25,000 - 25,000 - - 01.08.2020 01.08.2023 01/08/2023–01/08/2025 28.00 62,500 - - - 62,500 01.08.2020 01.08.2023 01/08/2023–01/08/2025 22.00 37,500 - - - 37,500 01.08.2020 01.08.2023 01/08/2023–01/08/2025 17.25 25,000 - - - 25,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,666 - 91,666 91,666 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - 91,667 91,667 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 91,667 - - 91,667 Axactor Annual report 2022Axactor Annual report 2022 7171   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Name/position Plan Performance period Award date Vesting date Exercise period Strike price (NOK) Awarded at period start Granted in period Vested in period Subject to a performance condition period end Awarded and unvested period end Robin Knowles, Chief Investment Officer ESOP 2017 28.08.2017 01.06.2018 01/06/2018–15/07/2022 30.00 31,250 - - - - 28.08.2017 01.06.2019 01/06/2019–15/07/2022 32.00 31,250 - - - - 28.08.2017 01.06.2020 01/06/2020–15/07/2022 35.00 31,250 - - - - 28.08.2017 01.06.2021 01/06/2021–15/07/2022 37.50 31,250 - - - - ESOP 2019 25.04.2019 25.04.2020 25/04/2020–25/04/2024 24.50 38,742 - - - - 25.04.2019 25.04.2021 25/04/2021–25/04/2024 26.50 38,742 - - - - 25.04.2019 25.04.2022 25/04/2022–25/04/2024 28.00 38,744 - 38,744 - - ESOP 2020 26.06.2020 26.06.2021 26/06/2021–26/06/2025 28.00 62,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2021 26/06/2021–26/06/2025 17.25 25,000 - - - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 28.00 62,500 - 62,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 22.00 37,500 - 37,500 - - 26.06.2020 26.06.2022 26/06/2022–26/06/2025 17.25 25,000 - 25,000 - - 26.06.2020 26.06.2023 26/06/2023–26/06/2025 28.00 62,500 - - - 62,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 22.00 37,500 - - - 37,500 26.06.2020 26.06.2023 26/06/2023–26/06/2025 17.25 25,000 - - - 25,000 ESOP 2022 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 41,666 - 41,666 41,666 15/06/2022–15/06/2025 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 41,667 - 41,667 41,667 15.06.2022 15.06.2025 15/06/2025–15/06/2027 6.07 - 41,667 - - 41,667 Oddgeir Hansen, former COO ESOP 2017 28.08.2017 01.06.2018 01/06/2018–15/07/2022 30.00 75,000 - - - - 28.08.2017 01.06.2019 01/06/2019–15/07/2022 32.00 75,000 - - - - 28.08.2017 01.06.2020 01/06/2020–15/07/2022 35.00 75,000 - - - - ESOP 2019 25.04.2019 25.04.2020 25/04/2020–25/04/2024 24.50 51,657 - - - - Axactor Annual report 2022Axactor Annual report 2022 7272   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Performance measures and outcomes for 2022 short-term incentive The Group executive management is measured on a combination of financial targets for the Group and individual targets relating to the development according to Axactor’s strategy and ESG targets. Each member of the Group executive management has between two and five individual targets with respective sub targets. Axactor can claw back granted and paid bonuses from beneficiaries on certain conditions, pursuant to the remuneration policy. There has been no claw back of granted and paid bonuses in Axactor for the financial year 2022. Name position Value driver Weighting Min performance (%) Min remuneration Max performance (%) Max remuneration Actual performance (%) Actual remuneration Johnny Tsolis, CEO Financial performance 70% - - 100% 2,169 97.6% 2,116 Other 30% - - 100% 929 66.7% 620 Nina Mortensen, CFO Financial performance 70% - - 100% 803 97.6% 784 Other 30% - - 100% 344 97.2% 335 Vibeke Ly, Chief of Staff Financial performance 70% - - 100% 706 97.6% 689 Other 30% - - 100% 302 83.3% 252 Arnt Andre Dullum, COO Financial performance 70% - - 100% 803 97.6% 697 Other 30% - - 100% 344 66.7% 230 Kyrre Svae, Chief of strategy and IR Financial performance 70% - - 100% 705 97.6% 688 Other 30% - - 100% 302 77.8% 235 Robin Knowles, Chief Investment Officer Financial performance 70% - - 100% 824 97.6% 804 Other 30% - - 100% 353 55.6% 196 Axactor Annual report 2022Axactor Annual report 2022 7373   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Annual changes in remuneration and company result The annual change in remuneration to the Group executive management is a combination of increase in base salary and decrease in short-term incentive payment and pension contribution. The base salary for the Group executive management was increased with 2% to compensate for the general cost level increase in Norway. The decrease in short-term incentive payment was a result of weaker financial results for the financial year 2021. The changes in remuneration are in line with the remuneration policy. Change in remuneration and percent change Name / position 2018 2019 2020 2021 2022 Current Group executive management Johnny Tsolis, CEO Remuneration  1 3,696 4,472 4,845 5,423 7,389 Change in NOK 1,121 776 374 578 1,966 Change in % 44% 21% 8% 12% 36% Nina Mortensen, CFO Remuneration  1 - - - 2,250 3,460 Change in NOK - - - - 1,210 Change in % - - - - 54% Arnt Andre Dullum, COO Remuneration  1 - - 1608 2,256 3,172 Change in NOK - - - 648 916 Change in % - - n.a 40% 41% Vibeke Ly, Chief of Staff Remuneration  1 1,728 1,753 2,273 2,479 3,171 Change in NOK - 25 519 206 692 Change in % - 1% 30% 9% 28% Kyrre Svae, Chief of strategy and IR Remuneration  1 - - 2,412 2,532 3,129 Change in NOK - - - 120 597 Change in % - - n.a 5% 24% Robin Knowles, Chief Investment Officer Remuneration  1 2,362 3,467 3,795 3,343 3,495 Change in NOK 300 1,106 328 -452 152 Change in % 15% 47% 9% -12% 5% Axactor Annual report 2022Axactor Annual report 2022 7474   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Name / position 2018 2019 2020 2021 2022 Former Group executive management  2 Endre Rangnes, CEO Remuneration  1 9,350 10,372 11,095 - - Change in NOK 3,351 1,022 723 - - Change in % 56% 11% 7% - - Oddgeir Hansen, COO Remuneration  1 3,180 5,040 7,400 - - Change in NOK 910 1,860 2,360 - - Change in % 40% 58% 47% - - Siv Farstad, EVP HR Remuneration  1 2,246 2,689 4,502 - - Change in NOK -1,383 443 1,813 - - Change in % -38% 20% 67% - - Teemu Alaviitala, CFO Remuneration  1 - - 2,250 - - Change in NOK - - - - - Change in % - - - - - Geir Johansen, CFO Remuneration  1 4,090 - - - - Change in NOK 1,412 - - - - Change in % 53% - - - - 1 Remuneration is grossed up to full year if Group executive has been employed only for a part of the year 2 Salary in last year of employment is based on employment period in the year plus severance pay if agreed Axactor Annual report 2022Axactor Annual report 2022 7575   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Group result Amounts in EUR million 2018 2019 2020 2021 2022 Net result to shareholders of the parent company 4,492 16,326 -18,131 -32,797 36,757 Annual change net result to shareholders of the parent company 1,875 11,834 -34,456 -14,666 69,554 Annual change net result to shareholders of the parent company % 72% 263% -211% -81% 212% ROE to shareholders 0.6% 6.0% -6.1% -8.5% 9.2% Annual change ROE -40.0% 900.0% -201.7% -39.3% 208.2% EBITDA 46.3 92.1 32 23.7 119.0 Annual change EBITDA 31.5 45.8 -60.1 -8.3 95.3 Annual change EBITDA % 213% 99% -65% -26% 402% Gross revenue 238.8 368.1 325.2 344.5 336.9 Annual change gross revenue 134.1 129.3 -42.9 19.3 -7.6 Annual change gross revenue % 128% 54% -12% 6% -2% Axactor average remuneration The average remuneration presented is excluding Group management remuneration. Amounts in NOK thousand 2018 2019 2020 2021 2022 Employees in Axactor ASA  1 Average total salary 1,101 1,039 1,199 1,136 1,128 Change in NOK 96 -62 160 -63 -8 Change in % 10% -6% 15% -5% -1% Employees in Norwegian Axactor companies  1 Average total salary 657 596 649 674 644 Change in NOK - -61 53 25 -30 Change in % - -9% 9% 4% -4% 1 Reduction in salary relates to differences in paid bonus and new employees in 2022 The remuneration report for 2021 was approved by 94% of the votes on the annual general meeting 21 April 2022. Axactor Annual report 2022Axactor Annual report 2022 7676   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report Statement by the Board of Directors The remuneration report is prepared in accordance with section 6-16b of the Norwegian Public Limited Liability Companies Act. The Board has considered and adopted the remuneration report of Axactor ASA for the financial year 2022. The remuneration report will be presented for an advisory vote at the Annual General Meeting on 3 May 2023. Oslo, 30 March 2023 Kristian Melhuus Chair Brita Eilertsen Board member Terje Mjøs Board member Lars Erich Nilsen Board member Kathrine Astrup Fredriksen Board member Axactor Annual report 2022Axactor Annual report 2022 7777   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Remuneration reportGovernance | Remuneration report To the General Meeting of Axactor ASA Independent auditor’s assurance report on report on salary and other remuneration to directors Opinion We have performed an assurance engagement to obtain reasonable assurance that Axactor ASA report on salary and other remuneration to directors (the remuneration report) for the financial year ended 31 December 2022 has been prepared in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation. In our opinion, the remuneration report has been prepared, in all material respects, in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation. Board of directors’ responsibilities The board of directors is responsible for the preparation of the remuneration report and that it contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and for such internal control as the board of directors determines is necessary for the preparation of a remuneration report that is free from material misstatements, whether due to fraud or error. Our Independence and Quality Management We are independent of the company as required by laws and regulations and the International Ethics Standards Board for Accountants’ Code of International Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We apply the International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, and accordingly, maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor’s responsibilities Our responsibility is to express an opinion on whether the remuneration report contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and that the information in the remuneration report is free from material misstatements. We conducted our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial information”. We obtained an understanding of the remuneration policy approved by the general meeting. Our procedures included obtaining an understanding of the internal control relevant to the preparation of the remuneration report in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. Further we performed procedures to ensure completeness and accuracy of the information provided in the remuneration report, including whether it contains the information required by the law and accompanying regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Oslo, 30 March 2023 PricewaterhouseCoopers AS Anne Lene Stensholdt State Authorised Public Accountant (This document is signed electronically) Axactor Annual report 2022Axactor Annual report 2022 7878   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK GovernanceGovernance | Auditor’s assurance reportGovernance | Auditor’s assurance report Consolidated financial statements 80 Financial statements of Axactor ASA 128 Responsibility statement 148 Auditor’s report 149 Alternative performance measures 153 / Financial statements Axactor Annual report 2022Axactor Annual report 2022 7979   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials Financials / Consolidated financial statements Consolidated statement of profit or loss 81 Consolidated statement of comprehensive income 82 Consolidated statement of financial position 83 Consolidated statement of cash flows 84 Consolidated statement of changes in equity 85 Notes to the consolidated financial statements 86 Note 1 Corporate information 86 Note 2 Significant accounting policies 86 Note 3 Risk management 92 Note 4 Significant accounting judgements, estimates and assumptions 95 Note 5 Operating segments 96 Note 6 Income 98 Note 7 Employee remuneration 99 Note 8 Executive remuneration 100 Note 9 Other operating expenses 101 Note 10 Leases 102 Note 11 Financial items 103 Note 12 Income tax 103 Note 13 Earnings per share 105 Note 14 Intangible assets 106 Note 15 Goodwill and intangible assets with indefinite useful lives 107 Note 16 Property, plant and equipment 108 Note 17 Fair value measurement 109 Note 18 Purchased loan portfolios 111 Note 19 Hedge accounting 113 Note 20 Shares in subsidiaries 114 Note 21 Accounts receivable and other current assets 115 Note 22 Cash and cash equivalents 115 Note 23 Issued shares and share capital 116 Note 24 Share-based payments 117 Note 25 Interest-bearing loans and borrowings 119 Note 26 Post-employment benefits 122 Note 27 Other non-current liabilities 122 Note 28 Other current liabilities 123 Note 29 Related party transactions 123 Note 30 Purchase price allocations 124 Note 31 Pledged assets 125 Note 32 Discontinued operations 125 Note 33 Events after the reporting period 127 Axactor Annual report 2022Axactor Annual report 2022 8080   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Consolidated statement of profit or loss EUR thousand Note 2022 2021  1 Continuing operations Interest income from purchased loan portfolios 6, 18 187,490 168,421 Net gain/(loss) purchased loan portfolios 6, 18 -8,185 -62,013 Revenue from sale of repossessed assets 6 4,526 3,018 Other operating revenue 5 55,846 48,858 Other income 15 15 Total income 5, 6 239,692 158,298 Cost of repossessed assets sold, incl impairment -1,496 -2,136 Personnel expenses 7, 8 -64,655 -61,313 Other operating expenses 9 -54,587 -54,350 Total operating expenses -120,738 -117,800 EBITDA 118,955 40,498 Amortization and depreciation 10, 14, 16 -8,895 -9,616 Operating profit 110,060 30,882 Financial revenue 11 3,194 51 Financial expenses 11 -59,061 -51,030 Net financial items -55,867 -50,979 Profit/(loss) before tax from continuing operations 54,193 -20,097 Income tax expense 12 -13,549 -5,296 Net profit/(loss) after tax from continuing operations 40,644 -25,393 EUR thousand Note 2022 2021  1 Discontinued operations Net profit/(loss) after tax from discontinued operations 32 -8,066 -20,599 Net profit/(loss) after tax 32,578 -45,992 Attributable to Non-controlling interests Net profit/(loss) after tax from continuing operations 489 -952 Net profit/(loss) after tax from discontinued operations -4,668 -12,242 Net profit/(loss) after tax -4,179 -13,194 Shareholders of the parent company Net profit/(loss) after tax from continuing operations 40,156 -24,440 Net profit/(loss) after tax from discontinued operations -3,399 -8,357 Net profit/(loss) after tax 36,757 -32,797 Earnings per share From continuing operations, basic and diluted 13 0.133 -0.083 From continuing and discontinued operations, basic and diluted 13 0.122 -0.112 1 Comparative figures have been re-presented due to a discontinued operation, see note 32 Axactor Annual report 2022Axactor Annual report 2022 8181   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Consolidated statement of comprehensive income EUR thousand Note 2022 2021 Net profit/(loss) after tax 32,578 -45,992 Items that will not be reclassified subsequently to profit and loss Remeasurement of pension plans 238 -4 Net gain/(loss) on equity instruments designated at fair value through OCI 16 -16 Items that may be reclassified subsequently to profit and loss Foreign currency translation differences - foreign operations -11,343 8,924 Fair value net gain/(loss) on cash flow hedges during the period 19 9,876 -230 Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss 19 -245 - Other comprehensive income/(loss) after tax -1,458 8,675 Total comprehensive income/(loss) 31,120 -37,317 Attributable to Non-controlling interests -4,179 -13,194 Shareholders of the parent company 35,299 -24,123 Axactor Annual report 2022Axactor Annual report 2022 8282   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Consolidated statement of financial position EUR thousand Note 2022 2021 Assets Intangible non-current assets Goodwill 6, 14, 15 61,069 55,960 Deferred tax assets 12 5,356 13,700 Other intangible assets 6, 14 16,617 17,824 Tangible non-current assets Property, plant and equipment 6, 16 2,372 2,290 Right of use assets 6, 10 11,757 10,768 Financial non-current assets Purchased loan portfolios 17, 18 1,252,642 1,095,789 Other non-current assets 607 366 Total non-current assets 1,350,420 1,196,698 Current assets Stock of secured assets - 29,310 Repossessed assets 3,230 - Accounts receivable 21 6,376 7,060 Other current assets 21 29,021 16,154 Restricted cash 22 7,026 5,798 Cash and cash equivalents 22 29,045 38,155 Total current assets 74,699 96,476 Assets classified as held for sale 32 12,660 - Total assets 1,437,778 1,293,175 EUR thousand Note 2022 2021 Equity and liabilities Equity Share capital 23 158,369 158,150 Other paid-in equity 270,381 269,919 Retained earnings -3,699 -40,475 Other components of equity -9,016 -7,320 Non-controlling interests -5,441 976 Total equity 24 410,593 381,249 Non-current liabilities Interest-bearing debt 17, 25 445,590 834,411 Deferred tax liabilities 12 6,143 6,144 Lease liabilities 10 9,404 8,866 Other non-current liabilities 26, 27 3,423 1,994 Total non-current liabilities 464,561 851,415 Current liabilities Accounts payable 7,141 7,282 Interest-bearing debt 17, 25 499,709 3,845 Taxes payable 17,578 20,259 Lease liabilities 10 2,835 2,185 Other current liabilities 28 24,741 26,941 Total current liabilities 552,005 60,511 Liabilities directly associated with assets classified as held for sale 32 10,619 - Total liabilities 1,027,185 911,925 Total equity and liabilities 1,437,778 1,293,175 Axactor Annual report 2022Axactor Annual report 2022 8383   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Consolidated statement of cash flows EUR thousand Note 2022 2021 Operating activities Profit/(loss) before tax from continuing operations 54,193 -20,097 Profit/(loss) before tax from discontinued operations -8,066 -20,599 Taxes paid 12 -10,713 -3,261 Adjustments for: Net financial items, continuing operations 11 55,867 50,979 Net financial items, discontinued operations 32 1,059 3,796 Portfolio amortization and revaluation 5, 18 97,218 148,542 Cost of repossessed assets sold, incl impairment 1,496 2,136 Cost of REOs sold, incl. impairment 32 18,318 48,379 Depreciation and amortization 10, 14, 16 8,895 9,654 Calculated cost of employee share options 24 462 180 Change in working capital 1,291 4,991 Cash flow from operating activities before NPL and REO investments 220,019 224,700 Purchase of loan portfolios 18 -290,816 -115,402 Sale of loan portfolios - 450 Purchases related to REO/repossessed assets -227 -193 Net cash flow from operating activities -71,025 109,555 EUR thousand Note 2022 2021 Investing activities Investment in subsidiaries, net of cash acquired 30 -3,085 - Purchase of intangible and tangible assets 14, 16 -4,862 -4,718 Interest received 203 5 Net cash flow from investing activities -7,744 -4,712 Financing activities Proceeds from borrowings 25 354,051 542,496 Repayment of debt 25 -222,001 -628,681 Interest paid -51,067 -42,050 Loan fees paid 25 -83 -24,033 Lease payments, principal amount 10 -2,755 -2,812 Repayments to non-controlling interests -2,238 -6,625 New share issues - 50,792 Cost related to share issues - -1,460 Net cash flow from financing activities 75,907 -112,373 Net change in cash and cash equivalents -2,861 -7,531 Cash and cash equivalents at the beginning of period, incl. restricted cash 43,953 50,725 Currency translation -1,413 759 Cash and cash equivalents at end of period, incl. restricted cash 22 39,679 43,953 Axactor Annual report 2022Axactor Annual report 2022 8484   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Consolidated statement of changes in equity Equity related the shareholders of the parent company Restricted Non-restricted EUR thousand Share capital Other paid in equity Retained earnings Translation reserve Cash flow hedge reserve Other reserves Total Non-controlling interest Total equity Balance at 31 Dec 2020 97,040 236,562 -16,036 -15,999 - - 301,566 74,113 375,680 Result of the period -32,797 -32,797 -13,194 -45,992 Other comprehensive income of the period -4 8,924 -230 -16 8,675 8,675 Total comprehensive income for the period - - -32,802 8,924 -230 -16 -24,123 -13,194 -37,317 Repayments to non-controlling interests - -6,625 -6,625 Acquisition of remaining 50% of Axactor Invest 1 7,319 8,363 15,682 -53,317 -37,635 New share issues 61,110 27,318 88,427 88,427 Cost related to share issues -1,460 -1,460 -1,460 Share-based payment 180 180 180 Balance at 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 at 31 Dec 2022 158,369 270,381 -3,699 -18,417 9,401 - 416,033 -5,441 410,593 Oslo, 30 March 2023 Kristian Melhuus Chair Brita Eilertsen Board member Terje Mjøs Board member Lars Erich Nilsen Board member Kathrine Astrup Fredriksen Board member Johnny Tsolis CEO Axactor Annual report 2022Axactor Annual report 2022 8585   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Notes to the consolidated financial statements Note 1 Corporate information The parent company Axactor ASA (“Axactor”) is a Norwegian public limited liability company (Allmennaksjeselskap), domiciled in Norway. The registered address is Drammensveien 167, 0277 Oslo. The company’s shares are traded in Norway on Oslo Børs. The principal activities of the Company and its subsidiaries (the Group) are debt management, specializing on both purchasing and collection on own loan portfolios and providing collection services for third-party owned portfolios. The activities are further described in note 5. The Annual Report and Parent Company Report for Axactor ASA were adopted by the Board of Directors on 30 March 2023 and will be submitted for approval to the Annual General Meeting on 3 May 2023. Note 2 Significant accounting policies 2.1 Basis for preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU) and effective as of 31 December 2022. Axactor also provides additional disclosures in accordance with requirements in the Norwegian Accounting Act. The parent company’s functional currency is euro (EUR) and this is also the reporting currency for the Group. All amounts in the financial reports are stated in EUR thousand unless otherwise specified. As a result of rounding adjustments, the figures in one or more columns may not add up to the total of that column. Preparation of financial statements including note disclosures requires management to make estimates and assumptions that affect amounts reported. Actual outcomes may deviate from management’s estimates. The most important accounting principles that have been applied are described below. These principles have been applied consistently for all years presented, unless otherwise specified. 2.2 Consolidation principles The Group’s consolidated financial statements comprise Axactor ASA and entities in which Axactor ASA has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. There is a presumption that if the Group has the majority of the voting rights in an entity, the entity is considered a subsidiary. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over the entity, including ownership interests, voting rights, ownership structure and relative power, as well as options controlled by the Group and shareholder’s agreement or other contractual agreements. The assessments are done for each individual investment. The Group re-assesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control. Business combinations are accounted for by using the acquisition method. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the shareholders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Axactor Annual report 2022Axactor Annual report 2022 8686   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Non-controlling interests are presented separately under equity in the Group’s consolidated statement of financial position. Change in ownership interest without loss of control A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. The consideration is recognized at fair value and the difference between the consideration and the carrying amount of the asset is recognized against the equity attributable to the parent. Loss of control In cases where changes in the ownership interest of a subsidiary lead to loss of control, the consideration is measured at fair value. Assets and liabilities of the subsidiary and non-controlling interest at their carrying amounts are derecognized at the date when control is lost. Differences between the consideration and the carrying amount of the asset are recognized as a gain or loss in profit or loss. Investments retained, if any, are recognized at fair value, and surplus or deficits, if any, are recognized in profit or loss as a part of gain/loss on subsidiary disposal. Amounts included in other comprehensive income are recognized in profit or loss or directly as equity depending on their prior classification in other comprehensive income. 2.3 Functional currencies and presentation currency The financial statements are presented in EUR, which is also the functional currency of Axactor ASA. For the purposes of presenting this consolidated financial statement, the assets, and liabilities of the Group’s non-euro operations (i.e. Sweden and Norway) are translated to EUR using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for each month. All group transactions and group unsettled matters, and profit and losses for transactions between group companies, are eliminated.. 2.4 Business combinations Business combinations are accounted for using the acquisition accounting method. Acquisition costs incurred are expensed and included in operating expenses. When the Group acquires a business, it assesses the identifiable assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances, and relevant conditions at the acquisition date. The acquirer’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognized at their fair values at the acquisition date, except for non-current assets that are classified as held for sale and recognized at fair value less cost to sell, and deferred tax assets and liabilities which are recognized at nominal value. Goodwill arising from an acquisition is recognized as an asset measured at the excess of the sum of the consideration transferred, the fair value of any previously held equity interests and the amount of any non-controlling interests in the acquire over the net amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in the net fair value of the acquirer’s identifiable assets, liabilities and contingent liabilities exceeds the total consideration of the business combination, the excess is recognized in profit or loss immediately. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized in profit or loss as financial income or expense. If the contingent consideration is classified as equity, it will not be remeasured, and subsequent settlement will be accounted for within equity. If the business combination is achieved in stages, the fair value of the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. 2.5 Segment reporting The Group derives its revenues from the following two operating segments: Non-performing loans (NPL) and Third-party collection (3PC). The Group 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. For management purposes, the Group is additionally organized into business units based on geographical locations. The internal reporting provided to the Board, which is the Group’s chief decision maker, is in accordance with this structure. 2.6 Revenue and revenue recognition Revenue from purchased loan portfolios is recognized according to IFRS 9 Financial Instruments using the effective interest rate method, while revenue from 3PC is recognized according to IFRS 15 Revenue from Contracts with Customers. The recognition of revenues from purchased loan portfolios is described in detail in 2.12.1. The Group can sell a loan portfolio to another debt collector. The revenue will be recognized at the time the portfolio is transferred to an external buyer. 3PC revenue is derived from a combination of fixed fees paid by Axactor’s customers for services provided and commissions for solved cases and/ or fees paid by the debtors to an Axactor entity. Revenue from 3PC is recognized in ‘Other operating revenue’ in the consolidated statement of profit or loss. Revenue from repossessed assets is recognized at the point of time where the ownership of the property has been transferred to an external buyer. Revenue from repossessed assets is recognized in line item ‘Revenue from sale of repossessed assets’ in the consolidated statement of profit or loss. Axactor Annual report 2022Axactor Annual report 2022 8787   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements 2.7 Employee benefits 2.7.1 Pension obligations The Group’s pension obligations vary between countries depending on the local legislation and different pension systems, see notes 7, 8, 26 and 27 for further descriptions. Defined contribution retirement plans are retirement plans where the company’s payment obligations are limited to the fixed contributions and where the fees already have been undertaken. The retirement benefits for the individual employee are dependent on the contributions paid to the retirement plan or an insurance company by the employer, and the return of capital invested in the retirement fund. Consequently, it is the employee that holds the risk of return (that the return will be lower than expected) and the risk of the investment (the risk that the invested pension provision will not be sufficient to cover expected retirement compensation in the future). The obligations of the Group related to payments of defined contribution retirement plans are expensed in profit or loss as they are earned by the employee for services rendered on behalf of the employer during the period. For defined benefit plans, the pension obligations do not cease until the agreed pensions have been paid. Defined benefit plans typically define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. 2.7.2 Share-based compensation The group operates an equity-settled compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the option is recognized as an expense (payroll expenses) over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted: • Including any market performance conditions (e.g. an entity’s share price) • Excluding the impact of any service and non-market performance vesting conditions • Including the impact of any non-vesting conditions At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. The fair value of the options has been estimated at grant date and is not subsequently changed. When the options are exercised, and the company elects to issue new shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (par value) and share premium. Social security costs related to the options are accrued on a quarterly basis and become payable at exercise of the options. The social security provisions are estimated based on the gain on the options multiplied with the relevant social security rate. 2.8 Taxes Income taxes consist of current tax and deferred tax. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from, or paid to, the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date. Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences, except where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available, or which unused tax losses and unused tax credits can be utilized. A deferred tax asset arising from unused tax losses or tax credit is only recognized to the extent that the entity has sufficient taxable temporary differences or that there is other convincing evidence supporting the utilization of the tax losses and tax credits, including the impact of time restriction by local tax authorities. The carrying amount of deferred tax assets are reviewed at the end of each reporting period. Unrecognized deferred tax assets are reassessed at each reporting date. Deferred income tax assets and deferred income tax liabilities are offset only when a legally enforceable right exists to set off tax assets against income tax liabilities and the deferred income taxes relate to the same taxable entity or taxation authority. 2.9 Intangible assets Expenditures for software development that can be attributed to identifiable assets under the Group’s control and with anticipated future economic benefits are capitalized and recognized as intangible assets, in accordance with IAS 38 Intangible Assets. These capitalized expenses can include staff expenses if the resource has been taken out of its ordinary course of work for a longer period to work on the development project, which has been recognized as having future economic benefits. Customer contracts that are recognized as intangible assets relate to fair value recognized upon acquisition in accordance with IFRS 3 Business Combinations. Customer contracts are amortized on a straight-line basis over their estimated period of use. Other intangible assets relate to other acquired rights and are amortized on a straight-line basis over their estimated period of use. If there is an indication that an asset is impaired, the recoverable amount of the asset is calculated in accordance with IAS 36 Impairment of Assets. For goodwill, other intangible assets with indefinite useful lives and intangible assets not yet ready for use, the recoverable amount is assessed annually. Axactor Annual report 2022Axactor Annual report 2022 8888   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements 2.9.1 Goodwill Goodwill represents the excess of cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill from acquisition of subsidiaries is included within intangible assets. Goodwill that arises on the acquisition of subsidiaries is allocated to cash generating units (CGUs). Goodwill is measured at cost (residual) less accumulated impairment losses. Goodwill is tested for impairment at least annually, or when there are indications of impairment. Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. When the Group disposes of an operation within a CGU or group of CGUs to which goodwill has been allocated, a portion of the goodwill is included in the carrying amount of the operation when determining the gain or loss on disposal. The portion of the goodwill allocated is measured based on the relative values of the operation disposed of and the portion of the CGU retained at the date of the partial disposal, unless it can be demonstrated that another method better reflects the goodwill associated with the operation disposed of. The same principle is used for allocation of goodwill when the Group reorganizes its businesses. 2.9.2 Customer contracts and databases Separately acquired customer contracts and databases are initially recognized at historical cost. The assets acquired in a business combination are recognized at fair value at the acquisition date. Customer contracts and databases have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost over their useful lives. Development costs on an individual project are recognized as an intangible asset only when there is an identifiable asset that will generate expected future economic benefits and when the cost of such an asset can be measured reliably, otherwise development costs are recognized as an expense when incurred. 2.10 Property, plant and equipment Property, plant and equipment are reported at cost in the consolidated statement of financial position, with a deduction for accumulated depreciation and any impairment. Depreciation is made on a straightline basis over each asset’s estimated useful life, which is assessed on an individual basis. 2.11 Right of use assets and lease liabilities The Group has applied IFRS 16 Leases. At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For contracts that constitute or contain a lease, the Group separates lease components if it benefits from the use of each underlying asset either on its own or together with other resources that are readily available, and the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract. The Group then accounts for each lease component within the contract as a lease separately from non-lease components of the contract. At the lease commencement date, the Group recognizes a lease liability and corresponding right of use asset for all lease agreements in which it is the lessee, except for the following exemptions applied: • Short-term leases (defined as 12 months or less) • Low value assets For these leases, the Group recognizes the lease payments as other operating expenses in profit or loss when they incur. The lease liability is recognized at the commencement date of the lease. The Group measures the lease liability at the present value of the future lease payments for the right to use the underlying asset during the lease term. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments due to an adjustment in an index or rate. The Group does not include variable lease payments in the lease liability. Instead, the Group recognizes these variable lease expenses in profit or loss. The Group presents its lease liabilities as separate line items in the statement of financial position. The Group measures the right of use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment for depreciating the right of use asset, except that the right of use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right of use asset. The Group applies IAS 36 Impairment of Assets to determine whether the right of use asset is impaired and to account for any impairment loss identified. 2.12 Financial instruments A financial asset or liability is recognized in the consolidated statement of financial position when the Group has a contractual commitment regarding such an instrument. Financial instruments reported as assets in the consolidated statement of financial position are included in the line items purchased loan portfolios, other non-current assets, accounts receivable, other current assets, restricted cash and cash and cash equivalents. The majority of the Group’s financial assets are classified as measured at Axactor Annual report 2022Axactor Annual report 2022 8989   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements amortized cost, with the exception of derivatives which are classified as measured at fair value through profit or loss. Financial instruments reported as liabilities in the consolidated statement of financial position are included in the line items interest-bearing debt, accounts payable, lease liabilities and other current and non-current liabilities. The Group’s debt and other financial liabilities are, with the exception of derivatives, initially recognized at fair value, including transaction costs directly attributable to the transaction, and are subsequently measured at amortized cost. Derivative liabilities are, as derivative assets, measured at fair value through profit or loss. A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire, or when the Group has either transferred the contractual right to receive the cash flows from that asset or has assumed an obligation to pay those cash flows to one or more recipients, subject to certain criteria. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired, usually when the Group has paid the contractual obligation. Interest income and interest cost are calculated using the effective interest rate method. 2.12.1 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 carrying amount of each portfolio is determined by projecting future cash flows discounted to present value using the credit adjusted effective interest rate 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 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 income from purchased loan portfolios’. All non- performing loans are classified as non-current assets. Purchased loan portfolios that are secured by a property may have the securing property repossessed. Repossessed assets are not classified as non-performing loans according to IFRS 9, hence all values relating to the asset is derecognized from the portfolio value in the consolidated statement of financial position. Repossessed assets are held for sale and valued at the lower of cost and net realizable value in accordance with IAS 2 Inventories. 2.12.2 Forward flow agreements The Group has entered into several forward flow agreements to purchase future non-performing loan portfolios. These are agreements whereby Axactor agrees to buy and the counterparty agrees to sell future periods’ financial assets (loans) that fulfils a set of specified criteria (past due status etc.) in a number of batches over a specified time period. The price at which Axactor buys the loans is agreed when the contract is signed and can be segmented by types of claims or size bands. The value of a forward flow agreement shall reflect fair value. Any significant changes to the expected future cash flow will lead to a revaluation of the portfolio. If external factors assumed directly or implicitly in the business case valuation change significantly before the acquisition date of one or more batches in a portfolio, so that it will impact the value of the batch(es) through a change in the expected future cash flow from the batch(es), the change in value is recorded as a fair value adjustment with immediate effect. The fair value adjustment is recognized in the consolidated statement of profit or loss as ‘Other operating revenue’. 2.12.3 Accounts receivable Accounts receivable are recognized initially at fair value and measured at amortized cost. Evaluation of the value of overdue accounts receivable are based on individual judgment and/or from historical experience. 2.12.4 Accounts payable and other payables Accounts payable are recognized at the original invoiced amount. Other payables are recognized initially at fair value. The payables are measured at amortized cost. 2.12.5 Client funds Client funds arise from cash received on collections on behalf of a client. Collections are kept on separate restricted bank accounts and are reflected simultaneously as a liability. The funds are reported as ‘Restricted cash’ and ‘Other current liabilities’ in the consolidated statement of financial position, and shown on a separate line in note 22 and note 28. 2.12.6 Cash and cash equivalents Cash and cash equivalents include cash in banks and on hand, and other short term highly liquid investments with original maturities of three months or less. 2.12.7 Derivatives Derivatives are recognized at fair value on the date the contract is entered into and are subsequently measured at fair value. Derivatives are designated as hedging instruments in cash flow hedge relationships, and related gains or losses are recognized as described in note 2.14. 2.13 Provisions and contingent liabilities Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not Axactor Annual report 2022Axactor Annual report 2022 9090   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Restructuring provisions are recognized only when the recognition criteria for provisions are fulfilled. The Group has a constructive obligation when a detailed formal plan identifies the activities concerned, the location and number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline. Furthermore, the employees affected have been notified of the plan’s main features. 2.14 Hedge accounting The Group has elected to apply the hedge accounting rules in IFRS 9. When a hedging relationship meets the specified hedge accounting criteria in IFRS 9, the Group applies hedge accounting, based on the purpose of the hedge. Currently, the Group applies cash flow hedge accounting to mitigate the impact of changes in floating interest rates. Derivatives are used as hedging instruments. At inception, the Group formally documents how the hedging relationship meets the hedge accounting criteria. It records the economic relationship between the hedged item and the hedging instrument, including the nature of the risk, the risk management objective and strategy for undertaking the hedge, the hedge ratio determined in the risk management strategy and the ratio in the actual hedges performed and the effect of credit risk on the relationship, which cannot dominate the value changes from the economic relationship. The Group’s qualifying instruments are designated in their entirety as hedging instruments. For designated and qualifying cash flow hedges, the effective portion of the cumulative gain or loss on the hedging instrument is initially recognized in OCI as fair value net gain/(loss) on cash flow hedges in the cash flow hedge reserve. The ineffective portion of the gain or loss on the hedging instrument is recognized immediately in profit or loss as a financial revenue or expense. When the hedged cash flow affects the profit or loss, the effective portion of the gain or loss on the hedging instrument is recorded in the corresponding income or expense line. The market value is calculated by third parties. The calculation is based on a net present value calculation of the difference between agreed premium and market premium at the reporting date. To test the hedge effectiveness, the Group compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risk. When a hedging instrument expires, is sold, terminated, exercised, or when a hedge relationship no longer meets the criteria for hedge accounting or the risk management objectives, any cumulative gain or loss that has been recognized in OCI at that time remains in OCI and is recognized when the hedged forecast transaction is ultimately recognized in profit or loss. Further information is provided in note19. 2.15 Discontinued operations and assets held for sale The Group has applied IFRS 5 for discontinued operations and assets held for sale. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. The comparative consolidated statement of profit or loss has been re-presented to show the discontinued operation separately from continuing operations. Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position. Assets and liabilities classified as held for sale are not re-presented in prior period statements of financial position. Assets held for sale, liabilities in disposal groups and income and expenses from discontinued operations are excluded from specifications presented in the notes unless otherwise stated. Additional disclosures are provided in note 32. 2.16 Changes in accounting policies and disclosures implemented in 2022 On 1 January 2022, the Group implemented the amendments to IAS 16, IAS 37, IFRS 3 and Annual Improvements to IFRS Standards 2018–2020. The implementation of the amendments had no impact on the consolidated financial statements of the Group. In 2022, the Group has presented portfolios of purchased real estate as discontinued operations. Comparative information in the consolidated statement of profit or loss has been re-presented. Further information is provided in note 32. 2.17 Changes in accounting policies and disclosures for 2023 or thereafter The new and amended standards and interpretations that are issued, but not yet effective, are not expected to have a material impact on the Group. Axactor Annual report 2022Axactor Annual report 2022 9191   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 3 Risk management Axactor defines risk as all factors which could have a negative impact on the ability of the Group to achieve its business objectives. All economic activities are associated with risk. Axactor’s risks are managed within the Group in accordance with the policies established by the Board. Axactor conducts risk management at both a group and company level, where risks are evaluated and monitored in a systematic manner. Risk management and internal control is an integral part of management responsibility. Key risks are monitored through monthly business reviews with the executive management, and through quarterly reporting to the Board. The Group has assessed risks in the Board of Director’s report section 10, the Corporate governance report section 10 (unaudited) as well as in the Group’s Sustainability report (unaudited). Financial risk and non-financial risk in relation to the financial statements are presented separately below. Financial risk management Axactor’s financing and financial risks are managed within the Group in accordance with the treasury policy established by the Board. The treasury policy contains rules for managing financial activities, delegating responsibility, measuring and identifying financial risks and limiting these risks. The main categories of financials risks identified are the following; market risk, credit risk and liquidity risk. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. For Axactor, market risk compromises interest rate risk and currency risk. Interest rate risk Interest rate risk is related to the risk the Group is exposed to from changes in the market’s interest rate which can affect the net profit. The Group’s main interest rate risk arises from long-term borrowings with variable rates. The nominal value of interest-bearing debt (less treasury bonds) amounted to EUR 960.5 million on 31 December 2022 (2021: EUR 852.0 million). The loans carry a variable interest rate based on the interbank rate in each currency with a margin. The Group´s risk management objective and strategy is to apply cash flow hedge accounting for interest rate risk in order 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 strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. Per 31 December 2022, the strategy is under implementation and the Group is still committed to the strategy which it expects to fully implement. On 31 December 2022, the Group holds two interest rate caps with a strike of 0.5% EURIBOR with start date 15 December 2022 and maturity 15 December 2023. The two contracts hedge the interest risk of EUR 573 million in borrowings, equaling a hedging ratio of 60%. The details of the hedge relationships are described in note 2.14 and 19. The average interest rate in 2022 was 6.2% (2021: 6.2%). An annualized increase by 100 basis point would have reduced the Group’s profit before tax for 2022 by EUR 9.0 million (2021: EUR 7.0 million), before the impact of hedge accounting. Currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities and the Group’s net investments in foreign subsidiaries. The majority of the Group’s business operation is taking place in euro countries. The Group’s presentation currency is therefore euro. However, some of its business operations is in non-euro countries, Norway and Sweden. This foreign exchange exposure may affect the Group’s results and the value of its monetary assets. When the financial position of foreign subsidiaries is recalculated in euro, a translation exposure arises that affects consolidated shareholders’ equity. The Group aims to reduce currency risk by keeping interest-bearing debt in the same currencies as the Group’s asset. Credit risk Credit risks is the risk that the counterparty will not meet its obligations under a financial contract or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities, primarily related to purchased loan portfolios, trade receivables and from its financing activities, including deposits with banks. Customer credit risk is managed subject to established policies, procedures and controls relating to customer credit risk management. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy. The credit risk (excluding purchased loan portfolios) is not considered to be a material risk for the Group. Credit risk inherent in purchased loan portfolios Axactor invests in non-performing loans which consists of portfolios of delinquent consumer debt. The portfolios are purchased significantly below nominal value, and the purchase price reflects both incurred and expected credit losses. The portfolios are thus defined as credit impaired at acquisition. Even though the portfolios are credit impaired at acquisition, there is still inherent credit risk in the purchased loans. To mitigate this risk, the Group places high yield requirements on purchased loan portfolios and before every acquisition a careful assessment is made with a projection of future cash flows (collected amount) from the portfolio. In its calculations, Axactor is aided by scoring models (where the debtors’ payment capacities are assessed through statistical analysis) and historical data. In addition, Axactor uses specialized industry consultants to get a second opinion on contemplated loan portfolio purchases. This reduces the credit risk in the Group’s purchased loan portfolios. Axactor Annual report 2022Axactor Annual report 2022 9292   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Liquidity risk Liquidity risk is the potential loss arising from the Group’s inability to meet its contractual obligations when due. Axactor is exposed to liquidity risk related to its operations and financing activities. The Group monitors its risk of a shortage of funds using cash flow forecasts regularly. The Group had positive cash flow operating activities before NPL investments of EUR 220.0 million in 2022, as shown in the consolidated statement of cash flows (2021: 224.7 million). For 2022, the cash flows from operating activities ended at EUR -71.0 million (2021: EUR 109.6 million). The driver of the negative cash flows from operating activities is investments in NPL portfolios, which amounted to EUR 290.8 million in 2022 (2021: EUR 115.4 million). These investments can be scaled down relatively quick, as evident by the 46% reduction in investments in NPL portfolios from 2020 to 2021. The cash flow from operating activities in future years will be positively affected by the investment levels in 2022. The table below 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 (for both continuing and discontinued operations). 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. The table only include liabilities classified as financial instruments, contractual maturities of lease liabilities are presented in note 10. 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. When applying the interest rate curves at the end of the reporting period, the Group’s interest rate caps are expected to reduce the interest payments for borrowings. The effect of the interest rate caps is hence included in the table below. The Group’s estimated remaining collection for purchased loan portfolios for the next 15 years is presented below the table of contractual maturities (see also note 18). Per 31 December 2022, the Group’s estimated collection from purchased loan portfolios exceeds the Group’s contractual commitments for all periods presented, with the exception of Q4 2023 which includes repayment of the revolving credit facility. Contractual maturities per 31 December 2022 Contractual maturities per 31 December 2021 EUR thousand Q1-23 Q2-23 Q3-23 Q4-23 1–2 years 2–4 years 4+ years Total Q1-22 Q2-22 Q3-22 Q4-22 1–2 years 2–4 years 4+ years Total NPL investment commitments, non-cancellable  1 31,158 15,710 4,003 3,461 2,880 - - 57,211 34,597 19,938 19,420 21,092 31,984 - - 127,030 NPL investment commitments, cancellable  1 - 4,604 4,604 4,604 6,438 - - 20,249 - 8,992 7,116 6,300 45,600 17,349 - 85,357 Revolving credit facility 7,113 8,077 8,063 517,957 - - - 541,211 2,772 2,772 2,772 2,772 363,064 - - 374,152 Bond ACR02 (ISIN: NO0010914666) 3,897 4,326 3,186 4,608 170,218 - - 186,235 3,578 3,500 3,539 3,578 14,194 203,578 - 231,967 Bond ACR03 (ISIN: NO0011093718) 5,305 6,003 6,414 4,426 25,013 324,824 - 371,984 4,013 4,102 4,102 4,057 16,273 32,590 312,216 377,352 Interest rate caps -1,988 -3,314 -2,658 -2,110 - - - -10,071 - - - - - - - - Other non-current liabilities - - - - - - 3,423 3,422 - - - - - - 1,994 1,994 Accounts payable 7,141 - - - - - - 7,141 7,282 - - - - - - 7,282 Other current liabilities 21,111 3,203 - 800 - - - 25,114 23,177 3,764 - - - - - 26,939 Total contractual maturities 73,737 38,609 23,612 533,745 204,549 324,824 3,423 1,202,496 75,418 43,067 36,948 37,799 471,115 253,517 314,210 1,232,074 1 Expected cash flows based on the last three months’ actual delivieres. Per 31 December 2022, cash flows are limited to EUR 132.1 million (2021: EUR 308.5 million) by contracted capex limits. The NPL commitmens that are cancellable are cancellable with three to twelwe months’ notice ERC per 31 December 2022 ERC per 31 December 2021 EUR thousand Q1-23 Q2-23 Q3-23 Q4-23 1–2 years 2–4 years 4+ years Total Q1-22 Q2-22 Q3-22 Q4-22 1–2 years 2–4 years 4+ years Total Estimated remaining collection (ERC) 77,147 79,664 75,691 77,525 305,914 508,765 1,420,714 2,545,419 67,775 70,806 64,367 65,884 261,948 426,662 1,183,100 2,140,543 Axactor Annual report 2022Axactor Annual report 2022 9393   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements The Group manages the liquidity risk by continuously monitoring the liquidity status and the monthly rolling consolidated result- and cash flow forecasts. Securing non-current financing at competitive terms is an important part of the Group’s long-term liquidity planning. The revolving credit facility matures on 22 December 2023. Hence, the contractual maturity of interest-bearing debt presented as less than one year (EUR 569.1 million) includes both interest and repayment of the revolving credit facility. The Group has started the process to refinance the revolving credit facility and expects to conclude the refinancing well in advance of the maturity date. On 31 December 2022, the Group had an unused part of the RCF agreement of EUR 35 million (2021: EUR 193 million), an uncommitted accordion option of EUR 75 million, in addition to unrestricted cash and cash equivalents of EUR 39.7 million (2021: EUR 44.0 million). Axactor was compliant with all covenants throughout the year. Capital management The primary objective of the Group’s capital management is to ensure the Group maintains a solid capital structure enabling it to develop and build its business to maximize shareholder value. The Group’s objective is to maintain a balance of financial assets that reflects the cash requirement of its operations and investments for the next 12–24 months. No change was made to the objectives, policies, or process for managing capital during the year ended 31 December 2022. Non-financial risk Geopolitical risk, regulatory risk and climate risk in relation to the financial statements are described below. Geopolitical risk During 2022, Europe has seen increasing geopolitical risk with the ongoing conflict in Ukraine. Although Axactor’s operations are not directly impacted by the conflict, the executive management and the Board closely monitors the situation and potential indirect business impacts and maintains the business continuity plans. Regulatory risks Increased regulatory scrutiny from the authorities continues to be subject to close monitoring by Axactor. Previously included but still relevant examples include MAR (market abuse regulation), AML (anti-money laundering), GDPR (general data protection regulation), the NPL directive, and BEPS (base erosion and profit shifting). During the year, several regulatory initiatives from the EU have been either adopted or announced, stipulating stricter and more comprehensive sustainability related disclosure- and reporting requirements, including EU taxonomy regulation, CSRD (corporate sustainability reporting directive) to replace NFRD (non-financial reporting directive), CSDDD (corporate sustainability due diligence directive) and SFRD (sustainable finance disclosure regulation). These requirements are primarily expected to have an administrative cost in management but does also offer opportunities in terms of standardization and comparability to peers. This trend is coupled with more consumer-friendly debt collection legislations and practices across the EU Member States in which Axactor operates, having various consequences such as lower (regulatory) collection fees and more lenient debt forgiveness arrangements. The cumulated effects for Axactor are not currently expected to have any material financial impact, but Axactor is still actively working to identify and mitigate potential negative effects of regulatory changes and developments, and to promote the interests of the debt management industry through its various dialogues with the authorities. Climate risk The Group has considered the impact of climate change and no material impact on the financial reporting judgments and estimates have been identified. The Group has not identified any material impact on the financial reporting from transitional risks, which are the risks associated to shifting to a low-carbon economy, or to physical risks arising from projected climate changes. The Group’s assets mainly consist of unsecured non-performing loans. Less than 1% of the Group’s assets are tangible, whereas approximately 4% of the Group’s assets are secured by collateral in property objects, mainly in Spain. The climate risk assessment of Axactor’s locations shows limited climate- related risks associated with its locations. Operational resilience is secured through business continuity processes and procedures, with the ability to move locations and leverage home office solutions if necessary. Axactor Annual report 2022Axactor Annual report 2022 9494   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 4 Significant accounting judgements, estimates and assumptions The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur. Purchased loan portfolios Purchased loan portfolios consist of acquired non-performing (credit impaired) loans. 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. Changes in expected cash flows are adjusted in the carrying amount and are recognized in the consolidated statement of 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 income from purchased loan portfolios’. Estimating the timing and amount of cash flows, which forms the basis of the carrying amount and revenue recognition, requires significant professional judgment regarding the key assumptions. 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 collection (ERC) 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 collection. The fact that the claims are credit impaired reduces the presence of non-linear effects on credit losses. Estimated future cash flow from the portfolios is assessed and updated regularly. Each quarter the ERC is reviewed, and the Group’s actual collection is compared to the forecasted collection over time. The review considers several factors that may impact collection, some of which may be inherently subjective. Changes in the assumptions used to estimate the expected cash flows can result in significant changes to the carrying amount of the portfolios. For more details, see note 2.12.1 Purchased loan portfolios and note 18 Purchased loan portfolios. Update on process with FSA As communicated in a press release on 13 December 2021, Axactor ASA received a conclusion from the Norwegian Financial Supervisory Authority (FSA) in accordance with the preliminary conclusion as stated in the press release of 2 September 2021. The conclusion imposed Axactor to change its future accounting practice for subsequent measurement of expected credit losses for purchased loan portfolios with effect from the reporting of the annual accounts for the financial year 2022. The subsequent measurement shall apply current and future macroeconomic factors as input and use more than one scenario. Axactor has in previous periods considered relevant macro factors and market specific factors when estimating future cash flows but not as a direct input generating output in the portfolio revaluation model. During 2022, Axactor has performed extensive work to expand the portfolio revaluation model as required by the FSA. The work has included testing of correlation between macroeconomic factors and collection. The macroeconomic factors that have been assessed include central bank interest rate, unemployment rate, GDP growth, house price indexes, household consumption, disposable income, inflation and salary growth. The purpose of the testing has been to identify macroeconomic factors with prediction value on collection. Although it has been possible to identify correlations at reduced levels of statistical significance, the correlations have been weak and inconsistent. One possible explanation could be the data availability limited to Axactor’s short history. The company will continue to look for correlations through regular testing. Axactor has now implemented the expanded revaluation model that applies current and future macroeconomic factors as input and use of scenarios, with the model performance limitations explained above. The expanded revaluation model has been applied on Axactor’s portfolios of non-performing loans and a revaluation of EUR -1.9 million was recognized in the financial statement line item ‘Net gain/(loss) purchased loan portfolios’ in 2022. The revaluation is recognized as a change in an accounting estimate in accordance with IAS 8 Change in Accounting Policies, Changes in Accounting Estimates and Errors. Axactor Annual report 2022Axactor Annual report 2022 9595   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Goodwill In accordance with the stated accounting policy, the Group annually tests whether goodwill has suffered any impairment or more frequently if impairment indicators are identified. The recoverable amount of cash- generating units has been determined based on value in use calculations. These calculations require the use of estimates. The value in use calculation is based on a discounted cash flow model. The cash flows are based on management’s best estimate, reflecting the Group’s strategy plan. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model, as well as the expected future cash- inflows (sensitive to estimates of sales and cost levels) and the growth rate used for extrapolation purposes. Further details about goodwill and impairment reviews are included in note 15. Note 5 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 revenue reported represents revenue generated from external customers. Segment profitability and country profitability are the two most important dimensions when making strategic priorities and deciding where to allocate the Group’s resources. The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 2. 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. Portfolios of purchased real estate is classified as a discontinued operation (see note 32). Portfolios of purchased real estate has prior to 2022 been reported as part of the real estate owned (REO) operating segment. From 2022, in line with internal reporting, REO is no longer considered a separate operating segment. The REO segment consisted of portfolios of purchased real estate as well as repossessed assets from secured non-performing loans. From 2022, in line with the organization and reporting structure used by management, the repossessed assets from secured non-performing loans are reported as part of the NPL segment, whereas amounts from discontinued operations are not included in the segment reporting. Segment information for earlier periods is re-presented to reflect the change in operating segments. Axactor Annual report 2022Axactor Annual report 2022 9696   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements 2022 EUR thousand NPL 3PC Eliminations/ Not allocated Total Collection 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% 2021 EUR thousand NPL 3PC Eliminations/ Not allocated Total Collection on own portfolios 254,949 - - 254,949 Portfolio amortization and revaluation -148,542 - - -148,542 Revenue from sale of repossessed assets 3,018 - - 3,018 Other operating income Change in fair value forward flow commitments -782 - - -782 Other operating revenue and other income - 49,640 15 49,655 Total income 108,643 49,640 15 158,298 Cost of repossessed assets sold -2,046 - - -2,046 Impairment repossessed assets -90 - - -90 Direct operating expenses -36,819 -34,235 - -71,055 Contribution margin 69,687 15,405 15 85,107 SG&A, IT and corporate cost -44,609 -44,609 EBITDA 40,498 Amortization and depreciation -9,616 -9,616 Operating result 30,882 Total operating expenses -38,956 -34,235 -44,609 -117,800 Contribution margin (%) 64.1% 31.0% na 53.8% EBITDA margin (%) 25.6% Opex ex SG&A, IT and corporate cost / Gross revenue 15.1% 69.0% na 23.8% SG&A, IT and corporate cost / Gross revenue 14.5% Axactor Annual report 2022Axactor Annual report 2022 9797   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 6 Income The Group delivers credit management services in six European countries: Finland, Germany, Italy, Norway, Spain and Sweden. Axactor also owns certain 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 below consists of intangible assets, goodwill, property, plant and equipment and right of use assets. Total income Non-current assets EUR thousand 2022 2021 2022 2021 Finland 16,100 10,113 3,747 4,052 Germany 35,112 30,331 15,894 15,884 Italy 28,574 17,387 16,039 9,184 Norway 40,862 35,271 33,068 36,088 Spain 91,029 59,009 19,883 17,519 Sweden 28,016 6,187 3,185 4,115 Total 239,692 158,298 91,816 86,843 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. In line with the information given in note 5 and 32, revenue from sale of repossessed assets is reported as part of the NPL segment. Net gain/(loss) from purchased loan portfolios is split into collection above/(below) collection forecasts (previously reported as CU1) and net present value of changes in collection forecasts (previously reported as CU2 and CU2 tail). EUR thousand Finland Germany Italy Norway Spain Sweden 2022 Interest income from purchased loan portfolios 14,962 29,700 19,081 39,464 56,266 28,017 187,490 Collection 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 EUR thousand Finland Germany Italy Norway Spain Sweden 2021 Interest income from purchased loan portfolios 14,931 21,612 16,023 36,889 44,911 34,055 168,421 Collection above/(below) forecasts -1,728 -1,223 -272 -5,932 -1,605 -7,107 -17,867 NPV of changes in collection forecasts -3,817 -229 -684 -2,728 -14,589 -22,098 -44,146 Net gain/(loss) purchased loan portfolios -5,546 -1,452 -956 -8,660 -16,194 -29,206 -62,013 Sale of repossessed assets 3,018 3,018 Total portfolio revenue 9,385 20,160 15,067 28,230 31,734 4,849 109,426 Axactor Annual report 2022Axactor Annual report 2022 9898   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 7 Employee remuneration Personnel expenses EUR thousand 2022 2021 Salaries 41,203 39,862 Bonus 7,192 4,036 Commissions 2,203 2,210 Social security costs 10,593 10,047 Pension costs 1,315 1,489 Share-based payment expense 462 180 Other benefits 1,688 3,489 Total personnel expenses 64,655 61,313 Average number of FTEs 2022 2021 Number of FTEs, 1 Jan 1,096 1,128 Number of FTEs, 31 Dec 1,301 1,096 Average number of FTEs 1,199 1,112 Number of FTEs at end of year, per country 2022 2021 Finland 42 42 Germany 151 148 Italy  1 286 104 Norway 108 111 Spain 672 628 Sweden 42 64 Total number of FTEs 1,301 1,096 1 In 2022, the Axactor Group purchased CRS, an Italian debt collection agency with 150 employees Axactor Group is compliant with the different local mandatory occupational pension requirements. For information on the country specific pension schemes, see note 26. Axactor Annual report 2022Axactor Annual report 2022 9999   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 8 Executive remuneration Board of Directors remuneration The following remuneration has been made to the members of the Board of Directors during the year. Remuneration presented includes remuneration for participation in Board committees. EUR thousand 2022 2021 Kristian Melhuus  1 80 10 Terje Mjøs 55 45 Brita Eilertsen 57 47 Lars Erich Nilsen 46 41 Kathrine Astrup Fredriksen 41 41 Merete Haugli  2,  3 9 54 Hans Harén  3 10 41 Glen Ole Rødland  4 - 27 Total remuneration 298 306 1 Chair of the Board from February 2022 2 Interim Chair of the Board from May 2021 to February 2022 3 Member of the Board until April 2022 4 Chair of the Board until May 2021 Nomination committee The following remuneration has been made to the members of the nomination committee during the year: EUR thousand 2022 2021 Anne Lise Ellingsen Gryte 6 - Magnus Tvenge 4 - Total remuneration 10 - Group executive management remuneration EUR thousand Salary Bonus  7 Pension Share options  1 Other 2022 Johnny Tsolis, CEO 407 260 34 34 1 734 Nina Mortensen, CFO 204 106 17 16 1 343 Arnt Andre Dullum, COO 198 88 14 12 1 312 Vibeke Ly, Chief of Staff 197 89 14 12 1 312 Kyrre Svae, Chief of Strategy and IR 194 88 14 11 1 307 Robin Knowles, Chief Investment Officer 236 95 1 8 - 340 Total remuneration 1,435 726 95 91 6 2,349 EUR thousand Salary Bonus  7 Pension Share options  1 Other 2021 Johnny Tsolis, CEO 410 87 35 39 1 573 Endre Ragnes, CEO  2 - 44 - - - 44 Nina Mortensen, CFO  3 92 20 7 - 1 120 Teemu Alaviitala, CFO  4 44 16 2 - - 61 Arnt Andre Dullum, COO 178 18 16 17 2 230 Oddgeir Hansen, COO  5 46 133 - - - 179 Vibeke Ly, Chief of Staff 199 29 14 17 1 261 Kyrre Svae, Chief of Strategy and IR  6 185 49 14 8 2 257 Robin Knowles, Chief Investment Officer 297 25 3 19 - 344 Total remuneration 1,451 420 91 100 7 2,069 1 Cost in relation to share option program, not exercised 2 CEO until 3 April 2020 3 CFO from 1 August 2021 4 CFO until 31 January 2021 5 COO until 1 July 2020 6 Interim CFO from 1 February to 31 July 2021 7 Bonus for 2022 represents accrued bonus for the financial year, whereas bonus for 2021 represents paid bonus in the financial year Axactor Annual report 2022Axactor Annual report 2022 100100   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements The CEO, Johnny Tsolis, has a six-month notice period and is entitled to a severance pay of six months in case of termination by the company. In addition, there is a non-compete and non-solicitation clause in the employment agreement. The share-based option program is presented in note 24. Bonus stated in the tables above reflects the paid amounts during the year. At the end of 2022 no loan or prepayments were granted to members of the Board or Group executive management. Members of the Group executive management, employed in Axactor ASA, has an additional contribution plan entitling them to pension rights for salary above 12G (Norwegian Grunnbeløp). Note 9 Other operating expenses Other operating expenses EUR thousand 2022 2021 Direct operating expenses, excluding salary 8,307 7,282 External services 31,789 29,822 IT expenses 12,309 11,496 Restructuring cost - 1,591 Other expenses 2,181 4,159 Total other operating expenses 54,587 54,350 Auditor’s remuneration PricewaterhouseCoopers AS (PwC) is the Group auditor of Axactor ASA. The following table shows fees to the appointed auditor. The reported fees are the recognized expenses for the year. EUR thousand 2022 2021 Auditing 903 966 Audit related services 118 26 Other services 148 187 Total auditor’s remuneration 1,169 1,179 Axactor Annual report 2022Axactor Annual report 2022 101101   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 10 Leases The Group leases premises, office equipment and vehicles under non-cancellable lease agreements. The lease terms are between 1–9 years and the majority of the lease agreements are renewable after the end of the lease period. No periods covered by an option to extend the lease has been included in the lease term, as the Group is not reasonably certain to exercise the individual options. Leasing contracts are classified as lease liabilities and right of use assets under IFRS 16, see note 2, section 2.11. Right of use assets EUR thousand Buildings Vehicles Other Total Right of use assets at 31 Dec 2020 3,949 797 80 4,826 Additons 9,333 107 51 9,491 Depreciation -2,503 -346 -80 -2,929 Disposals -484 -84 -4 -572 Currency translation differences -48 1 - -48 Right of use assets at 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 at 31 Dec 2022 11,263 401 93 11,757 New leases amounted to EUR 4.3 million in 2022, mainly relating to new offices in Germany, Italy and Spain. The interest costs relating to IFRS 16 leases during the year are reflected in profit or loss with EUR 702 thousand (EUR 366 thousand). The interest rate used for discounting the lease liability is based on the interest rate on the Group’s external financing. Lease liabilities EUR thousand 2022 2021 Lease liabilities at 1 Jan 11,051 5,086 Net new leases 4,241 8,812 Lease payments, principal amount -2,755 -2,812 Currency translation differences -297 -35 Lease liabilities at 31 Dec 12,239 11,051 Current 2,835 2,185 Non-current 9,404 8,866 The future aggregated minimum lease payments under lease liabilities are as follows: EUR thousand 2022 2021 Undiscounted lease liabilities and maturity of cash outflows < 1 year 3,441 2,717 1–2 years 3,015 2,511 2–3 years 2,620 2,065 3–4 years 2,464 1,821 4–5 years 822 1,800 > 5 years 1,745 2,100 Total undiscounted lease liabilities 14,106 13,015 Discounting element -1,866 -1,964 Total lease liabilities 12,239 11,051 Axactor Annual report 2022Axactor Annual report 2022 102102   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 11 Financial items EUR thousand 2022 2021 Financial revenue Interest on bank deposits 203 5 Net foreign exchange gain  1 550 - Gain on purchase of bonds in own bond loans (note 25) 2,349 - Other financial income 91 46 Total financial revenue 3,194 51 Financial expenses Interest expense on borrowings  2 -57,902 -49,099 Net foreign exchange loss  1 - -1,504 Other financial expenses -1,158 -427 Total financial expenses -59,061 -51,030 Total net financial items -55,867 -50,979 1 Foreign exchange gains and losses are presented net as either financial revenue or financial expenses, depending on the net position 2 In 2022, EUR 0.3 million are reclassified from the cash flow hedge reserve (OCI) into interest expense on borrowings, see note 19 Note 12 Income tax Income tax calculation The Group’s tax expense is affected by several factors, where the most important are limitation of interest deduction, unrecognized tax losses carried forward, currency effects and local GAAP/IFRS-differences for calculation of taxable profit. The Group’s tax is related to continuing operations only, as there is no tax related to discontinued operations, see note 32. Tax expense in consolidated profit or loss EUR thousand 2022 2021 Profit/(loss) before tax from continuing operations 54,193 -20,097 Basis for income tax 54,193 -20,097 Income tax calculated on profit from continuing operations -13,548 5,411 Tax effect on permanent differences -1,541 -7,859 Adjustment for previous year -2,325 7 Limitation of interest deduction, for which no deferred tax asset was recognized -1,768 4,014 Tax assets, previously not recognized 309 - Tax losses for which no deferred tax asset was recognized -30 -1,530 Tax effect of change in net deferred income tax liabilites/assets 4,234 -3,912 Effect on foreign exchange rates 1,121 -1,426 Income tax expense -13,549 -5,296 Effective tax rate 25% -26% Axactor Annual report 2022Axactor Annual report 2022 103103   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Tax included in consolidated other comprehensive income EUR thousand 2022 2021 Fair value net gain/(loss) on cash flow hedges 2,720 - Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss -69 - Deferred tax charged to OCI 2,651 - Deferred taxes EUR thousand 2022 2021 Non-current portfolios -3,213 -2,887 Non-current intangible assets/liabilities -636 -159 Current assets -925 158 Non-current liabilities 528 -52 Tax losses carried forward 6,110 10,496 Deferred tax related to hedges through OCI -2,651 - Net deferred tax -787 7,556 Deferred tax asset 5,356 13,700 Deferred tax liability -6,143 -6,144 Net deferred tax -787 7,556 Unrecognized deferred tax assets A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Tax losses carried forward, not recognized, mainly relates to companies in Luxembourg and Italy. Limitation of interest deduction, not recognized, relates mainly to Norway: EUR thousand 2022 2021 Tax losses carried forward, not recognized 35,001 32,349 Limitation of interest deduction, not recognized 13,925 4,014 Net asset not recognized 48,926 36,363 Axactor Annual report 2022Axactor Annual report 2022 104104   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 13 Earnings per share Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders of the parent company by the weighted average number of ordinary shares outstanding during the year. Axactor currently has no share-based compensation programs that results in a dilutive effect on earnings per share. See note 24 for an overview of outstanding instruments in the share option plan. The following table reflects the income and share data used in the basic and diluted EPS calculations: Continuing operations Discontinued operations Total EUR thousand 2022 2021 2022 2021 2022 2021 Net profit/(loss) to shareholders of the parent company 40,156 -24,440 -3,399 -8,357 36,757 -32,797 Number of shares (in thousands) Weighted average number of ordinary shares 302,145 293,408 302,145 293,408 302,145 293,408 Effects of dilution from share options - - - - - - Weighted average number of shares adjusted for the effect of dilution 302,145 293,408 302,145 293,408 302,145 293,408 Basic and diluted earnings per share 0.133 -0.083 -0.011 -0.028 0.122 -0.112 The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted earnings per share: 2022 2021 Employee share options 13,267,100 8,548,969 Axactor Annual report 2022Axactor Annual report 2022 105105   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 14 Intangible assets EUR thousand Customer contracts Databases Software Goodwill Other intangibles Total Cost price Cost price at 31 Dec 2020 12,308 3,611 28,076 54,879 3,905 102,779 Acquisitions - - 3,131 - 412 3,543 Reclassification - - 619 - - 619 Disposals at cost price - - -2,885 - - -2,885 Currency translation differences 324 69 15 1,081 10 1,499 Cost price at 31 Dec 2021 12,631 3,680 28,956 55,960 4,328 105,555 Acquisition of CRS Italy - - 46 6,326 - 6,372 Acquisitions - - 3,281 - 552 3,833 Disposals at cost price - - -158 - -67 -226 Currency translation differences -330 -70 -98 -1,218 -13 -1,728 Cost price at 31 Dec 2022 12,301 3,610 32,026 61,069 4,800 113,806 Amortization Accumulated amortizations at 31 Dec 2020 -11,718 -3,013 -11,483 - -1,697 -27,911 Amortization -597 -553 -4,188 - -517 -5,854 Reclassification - - -619 - - -619 Disposals accumulated amortizations - - 2,863 - 135 2,998 Currency translation differences -316 -59 -6 - -2 -383 Accumulated amortizations at 31 Dec 2021 -12,631 -3,625 -13,433 - -2,081 -31,769 Acquisition of CRS Italy - - -30 - - -30 Amortization - -55 -4,480 - -506 -5,041 Disposals accumulated amortizations - - 158 - 67 226 Currency translation differences 330 70 91 - 5 496 Accumulated amortizations at 31 Dec 2022 -12,301 -3,610 -17,694 - -2,514 -36,118 Carrying amount at 31 Dec 2022 - - 14,332 61,069 2,286 77,687 Useful life 3–5 yr 3–6 yr 3–10 yr na 1–10 yr For impairment testing of goodwill see note 15. Axactor Annual report 2022Axactor Annual report 2022 106106   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 15 Goodwill and intangible assets with indefinite useful lives Goodwill stated in the consolidated financial position is derived from excess values following the acquisitions of ALD Abagados in Spain (2015), IKAS Group in Norway (2016), CS Union in Italy (2016), Altor Group in Germany (2016), Profact in Sweden (2017), SPT Group in Finland (2018) and CRS in Italy (2022). Recognized goodwill amounts to 61.0 EUR million on 31 December 2022 (2021: EUR 56.0 million). Only goodwill has an indefinite lifetime, all other intangible assets are amortized in accordance with their useful life, see note 14. Goodwill is tested for impairment for each cash generating unit (CGU) prior to preparation of the annual accounts. The test is performed annually, and more frequently if there are indications of impairment. The recoverable amount for each CGU has been determined estimating their value in use (VIU) and comparing that to the carrying amount of the specific CGU. The calculation of VIU has been based on management’s best estimate, reflecting the Group’s strategy plan. The discount rates are derived as the weighted average cost of capital (WACC) for a similar business in the same business environment. Goodwill has been allocated for impairment testing purposes to the CGU “Third-party collection business” for the following CGU “Countries”: EUR thousand 2022 2021 Finland 2,592 2,592 Germany 9,301 9,301 Italy 13,636 7,310 Norway 20,146 21,270 Spain 14,328 14,328 Sweden 1,066 1,159 Total goodwill 61,069 55,960 Cash flow projections and assumptions A five-year forecast of discounted cash flows plus a terminal value has been used to determine the net present value of the CGU. Discounted cash flows related to the third-party collection business were calculated pre-tax and by applying a pre-tax WACC. The pre-tax WACC was derived by back-solving based on the estimated value using the post-tax WACC and the post-tax cash flow. The terminal value is based on the estimated pre-tax net cash flow in year five, using a standard perpetuity formula with a long-term growth rate. Key assumptions for the value in use calculations The calculation of VIU for the CGUs is most sensitive when it comes to the following assumptions: Discount rate The input data for the WACC is gathered from representative sources, peer groups etc., and this is used to determine the best estimate. The WACC was calculated after tax, and then back solved to arrive at a pre-tax WACC. All parameters were set to reflect the forecast period of the cash flows. Key inputs for the WACC: EUR NOK SEK Risk-free rate 2.5% 3.1% 2.5% Market risk premium 4.9% 4.9% 4.9% Beta 1.81 1.81 1.81 Small cap premium 2.0% 2.0% 2.0% Cost of equity before tax 13.3% 14.0% 13.4% Cost of debt 7.4% 7.4% 7.4% Equity ratio 29.5% 29.5% 29.5% Corporate income tax rate 25% 22% 20.6% WACC 7.8% 8.2% 8.1% Axactor Annual report 2022Axactor Annual report 2022 107107   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements • Risk free rate: Five year risk free bond per country • Market risk premium: The market risk premium is based on empirical data for risk premium (Damodaran) • Beta: Observed monthly levered beta for Axactor for the last five years • Small cap premium/company specific premium: Based on the market cap of Axactor, Ibbotson research 2014, similar sized companies and industry peers • Cost of debt: Applied cost of debt of 7.4% based on company estimated forecasts • Capital structure: Applied 29.5% equity ratio based on company estimates for 2023 • Corporate income tax rate: The Group’s average tax rate for EUR and country specific tax rate for NOK and SEK Growth rate The growth rate in the forecast period is based on management’s expectation for the development in the different markets, and management’s strategic plan. The terminal growth rate applied in 2022 is 2.0% as opposed to 1.5% in 2021. The increase in growth rate is adjusted to be in line with expected long-term inflation rates from relevant central banks. Cash flow The calculation includes cash flows for five years, in addition to a terminal value. Cash flow estimates are based on the Board approved 2023 budget and a projection for the next four years. Impairment – test results and conclusion The impairment test concluded that the VIU exceeded the carrying amount for each of the CGUs. Hence, no impairment was recognized in 2022 (2021: EUR 0 million). Based on a sensitivity analysis, the ceteris paribus impact of reducing the terminal growth rate from 2.0% to 1.5% would not result in any impairment of goodwill. Similarly, the ceteris paribus impact of increasing the WACC by one percentage point would not result in any impairment of goodwill. Management has considered and assessed reasonable possible changes for key assumptions and has not identified any instance that could cause the carrying amount of the goodwill to exceed its recoverable amount. Note 16 Property, plant and equipment EUR thousand Fixtures Vehicles Office eqipment Total Cost price Cost price at 31 Dec 2020 4,581 80 3,600 8,260 Acquisitions 472 - 591 1,063 Disposals at cost price -2,233 -80 -852 -3,165 Currency translation differences -7 - 27 21 Cost price at 31 Dec 2021 2,814 - 3,366 6,180 Acquisition of CRS Italy - - 624 624 Acquisitions 746 - 284 1,030 Disposals at cost price -163 - -266 -429 Currency translation differences -44 - -70 -115 Cost price at 31 Dec 2022 3,353 - 3,937 7,290 Depreciation Accumulated depreciations at 31 Dec 2020 -3,107 -55 -2,568 -5,730 Depreciation -338 -7 -515 -860 Disposals accumulated depreciations 1,916 62 747 2,725 Currency translation differences 2 - -25 -23 Accumulated depreciations at 31 Dec 2021 -1,527 - -2,363 -3,889 Acquisition of CRS Italy - - -575 -575 Depreciation -318 - -464 -781 Disposals accumulated depreciations 7 - 258 265 Currency translation differences 19 - 44 63 Accumulated depreciations at 31 Dec 2022 -1,818 - -3,100 -4,918 Carrying amount at 31 Dec 2022 1,535 - 838 2,372 Useful life 3–6 yr 5 yr 3–5 yr Axactor Annual report 2022Axactor Annual report 2022 108108   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 17 Fair value measurement The Group’s financial assets consist of purchased loan portfolios, derivatives, accounts receivable and other receivables, restricted cash and cash and cash equivalents. The majority of the Group’s financial assets are classified, at initial recognition, as subsequently measured at amortized cost, with the exception of derivatives which are classified as subsequently measured at fair value through profit or loss. The Group’s debt and other financial liabilities are, with the exception of derivatives, initially recognized at fair value, including transaction costs directly attributable to the transaction, and are subsequently measured at amortized cost. Derivative liabilities are, as derivative assets, measured at fair value through profit or loss. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by the inputs used in the valuation techniques: Level 1: Quoted prices in active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable input) The level in this fair value hierarchy within which the measurements are categorized is determined based on the lowest level input that is significant to the fair value measurement. The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying amount Fair value EUR thousand Loans and receivables Other Total Level 1 Level 2 Level 3 Total 2022 Financial assets Purchased loan portfolios 1,252,642 - 1,252,642 - - 1,322,320 1,322,320 Cash flow hedge derivatives (note 19) - 12,367 12,367 - 12,367 - 12,367 Total financial assets 1,252,642 - 1,252,642 - 12,367 1,322,320 1,334,686 Financial liabilities Interest-bearing debt  1 955,546 - 955,546 421,673 510,134 - 931,807 Total financial liabilities 955,546 - 955,546 421,673 510,134 - 931,807 2021 Financial assets Purchased loan portfolios 1,095,789 - 1,095,789 - - 1,238,070 1,238,070 Total financial assets 1,095,789 - 1,095,789 - - 1,238,070 1,238,070 Financial liabilities Interest-bearing debt 838,256 - 838,256 503,320 351,998 - 855,318 Fair value forward flow commitments - 409 409 - - 409 409 Cash flow hedge derivatives (note 19) - 230 230 - 230 - 230 Total financial liabilities 838,256 639 838,894 503,320 352,228 409 855,957 1 The interest-bearing debt in the table includes interest-bearing debt attributable to both continuing and discontinued operations Axactor Annual report 2022Axactor Annual report 2022 109109   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Fair value estimation of interest-bearing loans The fair value of the bond loans was determined using the quoted market values for the bond loans from the Norwegian Verdipapirforetakenes Forbund. The fair value of the other interest-bearing loans is equal to the nominal value and accrued interest. Fair value estimation of purchased loan portfolios The fair value of purchased loan portfolios is calculated as the net present value of estimated net cash flows after tax for the next 15 years. The estimated net cash flows from portfolios are the assumed future collection, less assumed collection costs per portfolio and tax. The estimated net cash flows are for existing portfolios only, no cash flows from future investments are included. Collection costs consist of operational costs in the portfolio segment, i.e. commission to debt collection, payroll expenses, premises, communication costs, and other costs directly and indirectly attributable to the debt purchasing segment. The Group’s estimated average tax rate has been applied to the cash flows. The weighted average cost of capital after tax for the portfolio segment is estimated to 7.8% on 31 December 2022 (2021: 5.8%). The key inputs for the WACC applied for the portfolio segment are the same as those presented for EUR WACC in note 15. Most of the Group’s portfolio cash flows are in EUR, although some part of the Group’s portfolio cash flows are in NOK and SEK. Calculating a currency specific WACC, the risk-free rate element would have increased the WACC slightly compared to the WACC estimated for the Group. A sensitivity analysis of the cash flow estimates is presented in the table to the right. Fair value sensitivity table Performance EUR million 90% 95% 100% 105% 110% WACC 5% 1,353 1,427 1,501 1,576 1,650 6% 1,292 1,363 1,433 1,504 1,575 7% 1,235 1,303 1,371 1,439 1,506 8% 1,191 1,257 1,322 1,388 1,453 9% 1,135 1,197 1,260 1,322 1,385 10% 1,090 1,150 1,210 1,270 1,330 11% 1,049 1,106 1,164 1,222 1,280 Fair value of forward flow commitments, balance movements EUR thousand 2022 2021 Balance at 1 Jan -409 -834 Deliveries 409 1,221 Value change - -782 Currency translation differences - -14 Balance at 31 Dec - -409 Axactor Annual report 2022Axactor Annual report 2022 110110   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 18 Purchased loan portfolios EUR thousand 2022 2021 Balance at 1 Jan 1,095,789 1,124,699 Acquisitions during the year  3 288,052 113,979 Collection -276,524 -254,949 Interest income from purchased loan portfolios 187,490 168,421 Net gain/(loss) purchased loan portfolios  1 -8,185 -62,013 Repossessions -1,925 -845 Deliveries on forward flow contracts -409 -1,221 Disposals  1 - -193 Currency translation differences -31,646 7,911 Balance at 31 Dec 1,252,642 1,095,789 Payments during the year for investments in loan portfolios amounted to EUR  2 290,816 115,402 1 Gain on disposals is netted in profit or loss as ‘Net gain/(loss) purchased loan portfolios’ 2 Payments during the year will not correspond to credit impaired acqusitions during the year due to deferred payments 3 Reconciliation of credit impaired acquisitions during the year; Nominal value purchased loan portfolios 2,429,169 827,810 Expected credit losses at acquisition -2,141,117 -713,831 Acquisitions during the year 288,052 113,979 For a description of Axactor’s accounting principles for purchased loan portfolios, see note 2 and for a description of revenue recognition and fair value estimation, see note 4. 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 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 majority of the purchased loan portfolios are unsecured, whereas approximately 5% of the book value of the loans are secured by a property object per 31 December 2022 (2021: 3%). Book value Market 2022 2021 Finland 121,300 111,841 Germany 179,654 131,059 Italy 147,678 111,348 Norway 243,468 249,439 Spain 357,137 264,034 Sweden 203,405 228,068 Total book value 1,252,642 1,095,789 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 collection 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 collection. Axactor Annual report 2022Axactor Annual report 2022 111111   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements The ERC represents the estimated gross collection on the purchased loan portfolios. The ERC, amortization and interest income from purchased loan portfolios can be broken down per year as follows (year 1 means the first 12 months from the reporting date): EUR thousand Estimated remaining collection (ERC), amortization and yield per year Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total ERC 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  1 196,496 175,428 152,829 133,487 116,714 102,326 89,705 77,847 66,581 55,781 45,171 34,670 24,921 15,324 5,498 1,292,777 2021 ERC 268,832 261,948 225,843 200,819 177,633 160,087 141,774 127,467 114,766 103,142 93,135 84,078 72,064 58,344 50,611 2,140,543 Amortization 107,788 118,694 101,236 91,330 81,907 76,761 69,424 65,132 61,836 59,169 57,780 57,213 53,505 47,268 46,746 1,095,789 Interest  1 161,045 143,254 124,607 109,489 95,726 83,326 72,350 62,335 52,930 43,973 35,354 26,865 18,559 11,075 3,864 1,044,754 1 Interest income from purchased loan portfolios Axactor Annual report 2022Axactor Annual report 2022 112112   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 19 Hedge accounting The Group´s risk management objective is to mitigate the effect of interest rate changes related to its floating rate instruments. In order to achieve the objective, the Group´s strategy is to use derivatives to limit the impact of changes in interest rates on the Group´s interest expenses. The Group has applied cash flow hedge accounting to ensure that the Group´s risk management strategy is reflected in its financial statements. Cash flow hedges Interest rate risk in floating rate instruments The Group has applied cash flow hedge accounting for interest rate risk in order to mitigate the effect of increasing interest rates on issued loans and therefore limit the impact on the Group´s interest expenses. The hedged items consist of a proportion of issued floating-rate loans. The hedging instruments consist of interest rate caps. The hedge ratio for the relationships is defined by the ratio of the principal of the interest rate cap to the designated proportion of the hedged item, resulting in 100% hedge ratio. The cash flow hedges of interest rate risk on loans are expected to be highly effective. Potential sources of ineffectiveness have been identified as differences in timing of cash flows of hedged items and hedging instruments, derivatives used as hedging instruments having a non-nil fair value at the time of designation and the effect of changes in counterparties’ credit risk on the fair values of hedging instruments or hedged items. The Group’s strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. Per 31 December 2022, the strategy is under implementation and the Group is still committed to the strategy which it expects to fully implement. On 31 December 2022, the Group holds two interest rate caps with a strike of 0.5% EURIBOR and maturity 15 December 2023. The two contracts hedge the interest risk of EUR 573 million in borrowings, equaling a hedging ratio of 60%. The hedged items are included as part of current and non-current interest-bearing debt in the consolidated statement of financial position. Per 31 December 2022, the fair value of the interest rate hedging derivatives was positive EUR 12.4 million (2021: -0.2 million), reported as part of other current receivables (2021: other non-current liabilities) in the consolidated statement of financial position. The financial instruments designated as hedged items in existing cash flow hedge relationships are: Hedged items 2022 2021 EUR thousand Nominal amount Nominal amount designated for hedge accounting Cash flow hedge reserve Nominal amount Nominal amount designated for hedge accounting Cash flow hedge reserve Interest rate risk Floating rate issued loans 573,000 573,000 9,630 200,000 200,000 -230 Total 573,000 573,000 9,630 200,000 200,000 -230 The table below sets out the derivatives designated as hedging instruments in existing cash flow hedge relationships, and the outcome of the Group´s hedging strategy: Hedging instruments 2022 2021 EUR thousand Up to 1 year 1–5 years Total Up to 1 year 1–5 years Total Interest rate caps Nominal amount 573,000 - 573,000 2,778 197,222 200,000 Average strike 0.5% - 0.5% 0.5% 0.5% 0.5% The effective portion of changes in the fair value on the hedging instrument that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated in the cash flow hedge reserve. Hedge ineffectiveness is, if applicable, recorded as part of financial expenses or financial revenue. There was no material ineffectiveness in 2022 or 2021. Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. In 2022, EUR 0.2 million (net of tax) has been reclassified from the cash flows hedge reserve (OCI) into profit or loss, reducing the interest rate expenses on borrowings reported in note 11 with EUR 0.3 million (pre-tax). Axactor Annual report 2022Axactor Annual report 2022 113113   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 20 Shares in subsidiaries The table is an overview of the subsidiaries included in the Axactor Group. The financial figures of the subsidiaries have been included in the consolidated financial statements of Axactor Group from the date of acquisition. During 2022, Axactor purchased CRS Italy, see note 30 for the purchase price allocation. Several small entities have also either been liquidated or merged into other entities during the year to simplify the legal structure within the Group. EUR thousand Ownership Head office Country Axactor Holding Srl 100.0% Cuneo Italy Axactor Italy SpA 100.0% Cuneo Italy Axactor Capital Italy Srl 100.0% Cuneo Italy CR Service Srl 100.0% Grosseto Italy Axactor Portfolio Holding AB 100.0% Gothenburg Sweden Axactor Platform Holding AB 100.0% Gothenburg Sweden Axactor Sweden AB 100.0% Gothenburg Sweden Axactor Capital AS 100.0% Oslo Norway Axactor Norway AS 100.0% Drammen Norway Reolux Holding SARL 1 50.0% Luxembourg Luxembourg Axactor Invest 1 SARL 100.0% Luxembourg Luxembourg Axactor Capital Luxembourg SARL 100.0% Luxembourg Luxembourg Beta Properties SLU  2 100.0% Madrid Spain Borneo Commercial Investments SLU  2 100.0% Madrid Spain Alcala Lands Investments SLU  2 100.0% Madrid Spain PropCo Malagueta SL  3 75.0% Malaga Spain Proyecto Lima SL  3 75.0% Madrid Spain Axactor Espana SLU 100.0% Madrid Spain Axactor Espana Platform SA 100.0% Madrid Spain Axactor Germany Holding GmbH 100.0% Heidelberg Germany Axactor Germany GmbH 100.0% Heidelberg Germany Heidelberger Forderingskauf GmbH 100.0% Heidelberg Germany Heidelberger Forderungskaurf II GmbH 100.0% Heidelberg Germany Axactor Finland OY 100.0% Helsinki Finland 1 The parent company owns 50% of the shares of Reolux Holding. Based on the contractual arrangements between the Group and the other investor, the Group has concluded that it has control of Reolux Holding and the company is therefore consolidated in the Group’s financial statements 2 The company is owned 100% by Reolux Holding SARL, in which Axactor owns 50% of the shares and has control 3 The company is owned 75% by Reolux Holding SARL, in which Axactor owns 50% of the shares and has control Axactor Annual report 2022Axactor Annual report 2022 114114   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 21 Accounts receivable and other current assets Accounts receivable EUR thousand 2022 2021 Accounts receivable 6,376 7,060 Due to the nature of the business the amount of outstanding accounts receivable is low and shows an acceptable aging. Allowances for doubtful debts are recognized against account receivable on an individual basis. The allowance amount recognized is immaterial. Other current assets EUR thousand 2022 2021 Prepaid taxes 2,855 3,019 Prepaid expenses 4,773 4,609 Accrued revenue  1 5,747 2,754 Cash flow hedge derivatives (note 19) 12,367 - Other 3,279 5,772 Total other current assets 29,021 16,154 1 Accrued revenue relates to 3PC business Note 22 Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents including restricted cash as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated statement of financial position as follows: EUR thousand 2022 2021 Cash and bank deposits 29,045 38,155 Restricted cash - client funds  1 6,060 5,090 Restricted cash and bank deposits 966 708 Cash and cash equivalents, discontinued operations (note 32) 3,607 - Total cash and cash equivalents, incl. restricted cash 39,679 43,953 1 The corresponding client funds payable is reported as part of other current liabilities in note 28 Restricted cash relates to client funds, deposits for building rent guarantee and employee withholding taxes. Cash in bank earns interest at floating rates based on daily bank deposit rates. The composition of the cash per currency is shown below: EUR thousand 2022 2021 EUR 7,213 25,816 GBP 2 6 NOK 31,651 17,583 SEK 813 548 Total cash and cash equivalents, incl. restricted cash 39,679 43,953 Axactor Annual report 2022Axactor Annual report 2022 115115   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 23 Issued shares and share capital On 21 April 2022, Axactor ASA converted form from a Societas Europaea company (SE) to a Norwegian public limited liability company (ASA) and converted the share capital from EUR to NOK. A bonus issue was carried out the same day, whereby NOK 2,126,326 (EUR 218,961) was transferred from unrestricted equity to share capital. The share capital of Axactor ASA as of 31 December 2022 was NOK 1,537,920,412 (EUR 158,368,902) consisting of 302,145,464 ordinary shares at NOK 5.09 per share. Each share has the same rights, and all issued shares are fully paid. Issued shares and share capital Number of shares Share capital (EUR) At 31 Dec 2020 185,395,464 97,040,286 New share issues 116,750,000 61,109,656 At 31 Dec 2021 302,145,464 158,149,942 Bonus issue - 218,961 At 31 Dec 2022 302,145,464 158,368,902 20 largest shareholders at 31 December 2022 Name Shareholding Share % Geveran Trading Co Ltd 140,784,692 46.6% Torstein Ingvald Tvenge 10,000,000 3.3% Ferd AS 7,864,139 2.6% Skandinaviska Enskilda Banken AB (Nominee) 5,279,467 1.7% Skandinaviska Enskilda Banken AB 4,500,000 1.5% Verdipapirfondet Nordea Norge Verdi 4,454,162 1.5% Nordnet Livsforsikring AS 2,443,779 0.8% Endre Rangnes 2,017,000 0.7% Gvepseborg AS 2,009,694 0.7% Stavern Helse og Forvaltning AS 2,000,000 0.7% Alpette AS 1,661,643 0.5% Klotind AS 1,532,704 0.5% Velde Holding AS 1,500,000 0.5% Masani AS 1,400,000 0.5% David Martin Ibeas 1,177,525 0.4% Andres Lopez Sanchez 1,177,525 0.4% Latino Invest AS 1,040,000 0.3% Verdipapirfondet Nordea Avkastning 1,035,709 0.3% Titas Eiendom AS 1,000,000 0.3% Kistefos Investment AS 1,000,000 0.3% Total 20 largest shareholders 193,878,039 64.2% Other shareholders 108,267,425 35.8% Total number of shares 302,145,464 100% Total number of shareholders 9,825 Axactor Annual report 2022Axactor Annual report 2022 116116   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Shares owned by the Board and Group executive management per 31 December 2022 Name Shareholding Share % Latino Invest AS  1 1,040,000 0.3% Johnny Tsolis Vasili  1,  4 670,000 0.2% Terje Mjøs Holding AS  3 500,000 0.2% Robin Knowles  2 352,921 0.1% Vibeke Ly  2 203,750 0.1% Arnt Andre Dullum  2 162,000 0.1% Nina Mortensen  2 160,000 0.1% Kyrre Svae  2 150,000 0.0% Brita Eilertsen  3 19,892 0.0% 1 CEO/related to the CEO of Axactor ASA 2 Member of the Group executive management 3 Member of the Board of Directors/controlled by member of the Board of Directors 4 Holds 300,000 call options that will be settled in cash on 22 June 2023 Note 24 Share-based payments To incentivize and retain key employees, the Group operates an equity-settled option plan. Each option gives the right to acquire one share in Axactor ASA on exercise. The options carry neither right to dividends nor voting rights before exercised into ordinary shares. There is no cash settlement alternatives for the employees and the Group does not have a past practice of cash settlement for share option awards. Share options approved 2017–2021 The share options approved and granted from 2017 to 2020 vest annually in equal tranches over a three-year period following the date of the grant, with one third vesting each year. The options expire five years after the date of the grant. Options approved and granted in 2021 vest annually in equal trances over a two-year period following the date of the grant, with one half vesting each year, and expiry four years after the date of the grant. The share options approved from 2017 to 2021 vest based on service conditions/continuing employment as vesting criteria. Share options approved 2022 In April 2022, the Annual General Meeting approved 1,000,000 share options to be granted to a key employee with grant date 18 May 2021. The grant has been accounted for in 2022. The exercise price of the options of NOK 5.09 was equal to par value of the shares at the date of approval of the grant. The options vest if the key employee is still employed three years from the grant date and expire 20 days after vesting date. In June 2022, 5,500,000 share options were granted to key employees. The exercise price of the options of NOK 6.07 was equal to the average traded share price of the Axactor ASA share 30 trading days prior to the grant. The vesting period of the options is three years. One third of the options vests subject to the option holder being employed at the vesting date, one third vests based on relative market performance in the performance period and one third vests based on the Group’s return on equity in the performance period. The performance period is from June 2022 to June 2025. Measurement of fair values The Black-Scholes-Merton Option Pricing Model is used for valuing the share options without performance criteria, whereas the Monte Carlo Valuation Model is used to estimate the fair value of the options subject to performance criteria. Expected volatility has been based on an evaluation of the historical volatility of Axactor’s share price equal to the expected lifetime of the options. The lifetime of the option is set to the shortest period of either one year after vesting or expiry. The expected lifetime is hence not always set to expiry. This is because it is reasonable to assume, and Axactor Annual report 2022Axactor Annual report 2022 117117   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements prior exercise behavior has shown, that participants tend to exercise early as the options are “non-transferable” and the options’ gains are taxed as personal income (higher) and gains on ordinary shares are taxed as capital gains (lower). It is only possible to exercise at structured exercise windows, which might not coincide with time of vesting. The shortest period of either one year after vesting or expiry is therefore used as the assumption for the life of the option. Exercise patterns are monitored frequently and expected option lifetime for future grants will reflect exercise behavior. The inputs used in the measurement of the fair values at grant date of the equity settled share-bare based payment plans approved in 2022 were as follows (weighted average parameters at grant): June 2022-grant May 2021-grant Strike price (NOK) 6.07 5.09 Share price (NOK) 5.48 9.30 Expected lifetime 3.67 3.07 Volatility 58.6% 56.2% Interest rate 2.9% 0.7% Dividend - - Fair value per option 2.29 5.32 Outstanding share options The number and weighted-average exercise prices of share options outstanding during the year are as follows: 2022 2021 Activity Number of options Weighted average strike price (NOK) Number of options Weighted average strike price (NOK) Outstanding at 1 Jan 8,548,969 26.50 13,775,508 24.98 Granted during the year  1 6,500,000 5.92 500,000 24.10 Forfeited during the year -113,744 13.54 -4,101,481 26.54 Expired during the year -1,668,125 33.60 -1,625,058 12.74 Outstanding at 31 Dec 13,267,100 15.62 8,548,969 26.50 Vested at 31 Dec 5,175,432 24.95 4,531,169 28.05 1 2022 number includes May 2021-grant, which was approved and accounted for in 2022 No options were exercised in 2022 or 2021. At 31 December 2022 the Group has options outstanding that were granted from 2019 to 2022. The exercise prices vary from NOK 5.09 to NOK 28.00 per option (2021: NOK 17.50 to NOK 37.50). Outstanding options Vested options Strike price (NOK) Number of options Weighted average remaining contractual life Weighted average strike price (NOK) Vested options 31.12.2022 Weighted average strike price (NOK) 5.09 1,000,000 1.45 5.09 - - 6.07 5,425,000 4.46 6.07 - - 17.25 950,000 2.51 17.25 616,666 17.25 22.00 1,425,000 2.51 22.00 925,000 22.00 24.50 723,189 1.32 24.50 723,189 24.50 26.50 723,189 1.32 26.50 723,189 26.50 28.00 3,020,722 2.25 28.00 2,187,388 28.00 Total 13,267,100 5,175,432 Expenses recognized in profit or loss and liabilities arising from share-based payment transactions The total expense recognized for the share-based programs during 2022 was EUR 0.5 million (2021: EUR 0.2 million). There are no liabilities related to share-based payment transactions on 31 December 2022 (2021: EUR 0 million), total social security provisions amount to EUR 0 million on 31 December 2022 and 2021. Axactor Annual report 2022Axactor Annual report 2022 118118   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 25 Interest-bearing loans and borrowings The Group’s total loans and borrowings, attributable to both continuing and discontinued operations, are as follows: EUR thousand Currency Facility limit Nominal value Treasury bonds Capitalized loan fees Accrued interest Carrying amount, EUR Interest coupon Maturity Facility Bond ACR02 (ISIN: NO0010914666) EUR 200,000 -30,550 -2,009 3,133 170,574 3m EURIBOR+700pbs 12.01.2024 Bond ACR03 (ISIN: NO0011093718) EUR 300,000 -18,950 -2,901 925 279,074 3m EURIBOR+535bps 15.09.2026 Total bond loans 500,000 -49,500 -4,910 4,057 449,648 Revolving credit facility EUR 197,390 -4,234 116 193,272 EURIBOR+ margin 22.12.2023 (multiple currency facility) NOK 159,529 159,529 NIBOR+ margin 22.12.2023 SEK 153,099 153,099 STIBOR+ margin 22.12.2023 Total credit facilities 545,000 510,018 -4,234 116 505,899 Total loans and borrowings at 31 Dec 2022 1,010,018 -49,500 -9,144 4,172 955,546 Of the total borrowings, EUR 945.3 million is attributed to continuing operations, whereof EUR 445.6 million is classified as non-current and EUR 499.7 million is classified as current. Discontinued operations has EUR 10.3 million in current borrowings (note 32). All borrowings in discontinued operations are denominated in EUR. Axactor Annual report 2022Axactor Annual report 2022 119119   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Change in loans and borrowings from financial activities EUR thousand Bond loans Credit facilities Other borrowings Total Borrowings Total loans and borrowings at 31 Dec 2020 200,283 530,278 205,625 936,185 Proceeds from loans and borrowings 311,050 231,446 - 542,496 Repayment of loans and borrowings -11,050 -411,175 -206,456 -628,681 Loan fees -10,948 -13,087 2 -24,033 Total changes in financial cash flow 289,052 -192,816 -206,454 -110,218 Change in accrued interest 3,513 -45 -334 3,134 Amortization of capitalized loan fees 2,345 4,239 1,165 7,749 Currency translation differences - 1,406 - 1,406 Total loans and borrowings at 31 Dec 2021 495,193 343,063 - 838,256 Proceeds from loans and borrowings - 354,051 - 354,051 Repayment of loans and borrowings -49,500 -172,501 - -222,001 Loan fees - -83 - -83 Total changes in financial cash flow -49,500 181,467 - 131,967 Change in accrued interest 232 235 - 467 Amortization of capitalized loan fees 3,721 4,785 - 8,506 Currency translation differences - -23,651 - -23,651 Total loans and borrowings at 31 Dec 2022 449,648 505,899 - 955,546 Change in lease liabilities are presented in note 10. Other borrowings presented in the table are related to Italian facilities which were repaid in full in 2021. Axactor Annual report 2022Axactor Annual report 2022 120120   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements 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. Estimated future cash flow within Currency Carrying amount Total future cash flow 6 months or less 6–12 months 1–2 years 2–5 years Bond ACR02 (ISIN: NO0010914666) EUR 170,574 186,235 8,224 7,794 170,218 - Bond ACR03 (ISIN: NO0011093718) EUR 279,074 371,985 11,308 10,840 25,013 324,824 Total bond loans 449,648 558,220 19,531 18,633 195,231 324,824 Revolving credit facility (multiple currency facility) NOK/SEK/EUR 505,900 530,964 15,190 515,774 - - Total credit facilities 505,900 530,964 15,190 515,774 - - Total loans and borrowings at 31 Dec 2022 955,546 1,089,184 34,722 534,408 195,231 324,824 Bond ACR02 The bond was placed at 3m EURIBOR + 7% interest, with maturity date 12 January 2024. The bond is listed on Oslo Børs (ISIN: NO0010914666). The following financial covenants apply: • Interest coverage ratio: >4.0x (Pro-forma adjusted cash EBITDA to net interest expenses) • Leverage ratio: <4.0x (NIBD to pro-forma adjusted cash EBITDA) • Net loan to value: <75% (NIBD to total book value all loan portfolios and REOs) • Net secured loan to value: <65% (secured loans less cash to total book value all loan portfolios and REOs) Trustee: Nordic Trustee Bond ACR03 The bond was placed at 3m EURIBOR + 5.35% interest, with maturity date 15 September 2026. The bond is listed on Oslo Børs (ISIN: NO0011093718). The following financial covenants apply: • Interest coverage ratio: >4.0x (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: <65% (secured loans less cash to total book value all loan portfolios and REOs) Trustee: Nordic Trustee During 2022 the Group has repurchased part of the outstanding bonds. On 31 December 2022, the Group holds treasury bonds with a nominal value of EUR 49.5 million, split between EUR 30.6 million in ACR02 (ISIN NO 0010914666) and EUR 19.0 million in ACR03 (ISIN NO 0011093718). Revolving credit facility DNB/Nordea The revolving credit facility consists of EUR 545 million in a multicurrency facility, with an addition of 75 million in the form of accordion option. 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 22 December 2023. 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) margin. Subsidiaries in the Group have granted a pledge as part of the security package for this facility, see note 31. Axactor Annual report 2022Axactor Annual report 2022 121121   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 26 Post-employment benefits Axactor operates defined contribution retirement benefit plans for all qualifying employees of its subsidiaries in Sweden and Norway. The Group’s legal obligation for these plans is limited to the contributions. Members of the Group executive management, employed in Axactor ASA, has an additional contribution plan entitling them to pension rights for salary above 12G (Norwegian Grunnbeløp). The employees of the Finnish, German and Spanish subsidiaries are member of a state managed retirement benefit plan operated by the government of Finland, Germany and Spain respectively. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The Group’s legal obligation for these plans is limited to the contributions. Axactor meets the different local mandatory occupational pension requirements in the countries where Axactor operates. In Italy all employees are entitled to a termination indemnity (TFR) upon termination of employment for any reason. This TFR is considered a defined benefit obligation to be accounted for in accordance with IAS 19. Axactor funds defined benefit plans for the qualifying employees. Pension liabilities are recognized in the consolidated statement of financial position as other non-current liabilities (note 27). The total pension expenses recognized in profit or loss amount to EUR 1.3 million (2021: EUR 1.5 million) and represent contributions payable to these plans by Axactor at rates specified in the rules of the plans. Note 27 Other non-current liabilities EUR thousand 2022 2021 Post-employment liabilities (note 26) 1,572 1,293 Cash flow hedge derivatives (note 19) - 230 Other liabilities 1,851 471 Total other non-current liabilities 3,423 1,994 Axactor Annual report 2022Axactor Annual report 2022 122122   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 28 Other current liabilities EUR thousand 2022 2021 Public duties 3,483 3,943 Personnel related liabilities 7,083 6,452 Deferred payments relating to purchased loan portfolios 7,522 8,863 Client funds payable  1 6,060 5,090 Fair value of forward flow commitments, liability - 409 Accrued restructuring cost - 1,039 Other liabilities 594 1,145 Total other current liabilities 24,741 26,941 1 The corresponding client funds cash balance is reported as part of cash in note 22 A forward flow agreement is an obligation to acquire a portfolio as described in a contract. Typically, these agreements are to buy defaulted cases from the vendor on a monthly basis. The total volume under the contract can be capped. The price for the cases in the forward flow is agreed upfront when the contract is signed. Initially the fair value of the forward flow commitment is nil, as the future expected collection level is unchanged from the valuation assumption underlying the contract. If the future cash flow estimates for the forward flow changes from the assumed level when signing the contract, there can be a change in the value of the forward flow commitment. Note 29 Related party transactions EUR thousand 2022 2021 Related party balances at 31 Dec - - Related party transactions during the year On 17 February 2020, Axactor ASA entered into a servicing agreement with Seatankers Management Co. Ltd., a company controlled by Geveran, under which Seatankers Management Co. Ltd. has agreed to provide the company with advisory and other support services upon request. The agreement is entered on an arms-length basis and is not considered material. 150 7 On 5 January 2021 Axactor aquired the remaining 50% of the shares in Axactor Invest 1 SARL from Geveran Trading Co LTD. Axactor Invest 1 SARL was prior to the aquisition fully consolidated by Axactor, as a result of this there is a change between non-controlling interest and equity related to shareholders of the parent company in the consolidated statement of changes in equity. - 37,635 On 1 October 2021 Axactor ASA entered an agreement with Aston AS (a company controlled by Kristian Melhuus, former personal deputy board member for board member Kathrine Astrup Fredriksen and now Chair of the Board) for the delivery of advisory services to the company. The agreement was terminated in Q2 2022. 4 - For additional information on agreements with related parties, see the Corporate governance report. Axactor Annual report 2022Axactor Annual report 2022 123123   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 30 Purchase price allocations The Group secured 100% of the shares in C.R. Service - Credit Recovery Service Srl (CRS) on 26 October 2021 and the transaction was closed 3 January 2022. CRS is an Italian debt collection agency, managed from the headquarter in Grosseto (Tuscany) and has a contact center in Milazzo (Sicily). CRS is a top-5 independent 3PC-player in the Italian bank and finance segment. The acquisition supports the Group’s strategy of strengthening the position in existing countries, improving capabilities on 3PC and preparing for post-pandemic volumes and new signed contracts in Italy. The purchase price allocation identifies a fair value of the equity of EUR 0.7 million, the residual value of the transferred consideration, EUR 6.3 million, is allocated to goodwill. All goodwill in the acquisition is related to CRS’ 3PC business. The total amount of goodwill recognized in the period that is expected to be deductible for tax purposes is nil. The Group has recognized a provision per 3 January 2022 of EUR 2.6 million related to three contingent considerations. The payments are contingent upon retention and financial performance. The table discloses the impact from the transaction effective from 3 January 2022. EUR thousand Date of acquisition 3 Jan 2022 Acquired part of company 100% Purchase price 7,033 Whereof cash consideration 4,433 Whereof contingent consideration 2,600 Assets Deferred tax assets 103 Other intangible assets 15 Right of use assets 990 Property, plant and equipment 50 Current receivables 989 Cash and cash equivalents 1,348 Total assets 3,495 Liabilities Non-current interest-bearing debt 67 Deferred tax liabilities 265 Accounts payable 256 Lease liabilities 1,095 Other short-term liabilities 1,105 Total liabilities 2,788 Total net assets acquired 707 Identified goodwill 6,326 Cash consideration 4,433 Less cash and cash equivalent balances acquired 1,348 Net cash outflow arising on acquisition 3,085 Axactor Annual report 2022Axactor Annual report 2022 124124   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements Note 31 Pledged assets EUR thousand 2022 2021 Group 897,880 977,958 Parent 332,108 530,843 All material subsidiaries of the Group are guarantors and have granted a share pledge and bank account pledge as part of the security package for the revolving credit facility, see note 25. Reolux Holding SARL is not part of the agreement nor the security arrangement. Note 32 Discontinued operations The Board resolved to dispose of the Group’s real estate owned (REO) operating segment from 1 January 2022. The REO segment consisted of portfolios of purchased real estate and repossessed assets from secured loan portfolios. In the first quarter of 2022, both portfolios of purchased real estate and repossessed assets from secured non- performing loans were presented as discontinued operations in line with the Board’s resolution. In the second quarter of 2022, it was resolved that it is only the portfolios of purchased real estate that shall be classified as discontinued operations. Assets repossessed from secured loan portfolios prior to 2022 are thus presented as continuing operations, and the Group will also continue with repossessions from secured loan portfolios going forward. The disposal of portfolios of purchased real estate is consistent with the Group’s long-term policy to focus its activities on the Group’s other operating segments. These operations, which were expected to be sold within 12 months, have been classified as a disposal group held for sale and presented separately in the statement of financial position. The proceeds of disposal were expected to equal the carrying amount of the related net assets and accordingly no impairment losses have been recognized on the classification of these operations as held for sale. Axactor Annual report 2022Axactor Annual report 2022 125125   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements As per 31 December 2022, the Group is still pursuing a buyer for the assets classified as held for sale. Negotiations with several interested parties have taken place, but the Group has not reached an agreement at the reporting date. With rising inflation, rising interest rates and a weakened economy during 2022, the market conditions that existed at the date the assets were classified initially as held for sale has deteriorated, and as a result the assets are not sold. During this period, the Group has actively solicited but not received any reasonable offers to purchase the assets. The Group has impaired the assets by EUR 0.8 million in 2022. The assets continue to be actively marketed at a price that is reasonable given the change in market condition and is hence classified as held for sale on 31 December 2022. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between continuing operations and discontinued operations are eliminated in the consolidated financial statements. The elimination of the intragroup transactions seeks to portray the results of the continuing operations after the disposal. The discontinued operation has intragroup debt related to their operations. To seek to portray the results of the continuing operations after disposal, the intragroup receivable with corresponding interest income related to discontinued operations is eliminated within continuing operations. The same applies for intragroup debt and corresponding interest expense, taking minority interest into account and capped according to the cash flow the parent company expects to receive from the asset values in the discontinued operations. The rest of the intragroup debt is eliminated within discontinued operations. A part of the Group’s total debt and interest expense are hence retained in discontinued operations, as this debt is considered to be directly associated with the discontinued operations. The net assets directly associated with the assets classified as held for sale represents minority interests in the discontinued operations. The results of the discontinued operations, which have been included in net profit/(loss) after tax, were as follows: EUR thousand 2022 2021 Other operating revenue 14,113 36,828 Total income 14,113 36,828 Cost of REOs sold, incl impairment -18,318 -48,379 Other operating expenses -2,803 -5,215 Total operating expenses -21,121 -53,593 EBITDA -7,008 -16,765 Amortization and depreciation - -38 Operating profit -7,008 -16,803 Financial expenses -1,059 -3,796 Net financial items -1,059 -3,796 Profit/(loss) before tax -8,066 -20,599 Income tax expense - - Net profit/(loss) after tax -8,066 -20,599 Attributable to: Non-controlling interests -4,668 -12,242 Shareholders of the parent company -3,399 -8,357 Earnings per share: basic and diluted -0.011 -0.028 Axactor Annual report 2022Axactor Annual report 2022 126126   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements The major classes of assets and liabilities comprising the operations classified as held for sale were as follows: EUR thousand 2022 Current assets Stock of secured assets 8,418 Accounts receivable 116 Other current assets 518 Cash and cash equivalents 3,607 Assets classified as held for sale 12,660 Current liabilities Interest-bearing debt 10,247 Other current liabilities 373 Liabilities directly associated with assets classified as held for sale 10,619 Net assets classified as held for sale 2,041 The net cash flows incurred by the operations classified as held for sale were as follows: EUR thousand 2022 2021 Net cash flow from operating activities 11,310 28,535 Net cash flow from investing activities - - Net cash flow from financing activities -12,220 -33,151 Total net cash flow -910 -4,616 Note 33 Events after the reporting period There has been no material events after the reporting period for 2022. Axactor Annual report 2022Axactor Annual report 2022 127127   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Consolidated financial statementsFinancials | Consolidated financial statements / Financial statements of Axactor ASA Parent company statement of profit or loss 129 Statement of comprehensive income 129 Statement of financial position 130 Statement of cash flows 131 Statement of changes in equity 132 Notes to the parent company financial statements 133 Note 1 Corporate information 133 Note 2 Significant accounting policies 133 Note 3 Employee remuneration 134 Note 4 Executive remuneration 134 Note 5 Other operating expenses and remuneration to auditors 136 Note 6 Leases 136 Note 7 Financial items 137 Note 8 Income tax 138 Note 9 Intangible assets 139 Note 10 Property, plant and equipment 139 Note 11 Issued shares and share capital 140 Note 12 Shares in subsidiaries 141 Note 13 Other current assets 142 Note 14 Cash and cash equivalents 142 Note 15 Loans and receivables to group companies 143 Note 16 Interest-bearing loans and borrowings 144 Note 17 Other current liabilities 146 Note 18 Hedge accounting 146 Note 19 Events after the reporting period 147 Axactor Annual report 2022Axactor Annual report 2022 128128   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Parent company statement of profit or loss EUR thousand Note 2022 2021 Management services to group companies 11,241 10,519 Total revenue 11,241 10,519 Personnel expenses 3 -5,796 -4,922 Operating expenses 5 -7,665 -7,394 Total operating expense -13,461 -12,315 EBITDA -2,220 -1,797 Amortization and depreciation 6, 9, 10 -2,334 -2,004 Operating profit/(loss) -4,554 -3,801 Financial revenue 7 42,328 22,898 Financial expenses 7 -48,062 -35,525 Net financial items -5,734 -12,626 Profit/(loss) before tax -10,288 -16,427 Income tax expense 8 -4,662 23 Net profit/(loss) after tax -14,950 -16,404 Distibution from other paid in capital -14,950 -16,404 Statement of comprehensive income EUR thousand Note 2022 2021 Net profit/(loss) after tax -14,950 -16,404 Items that may be reclassified subsequently to profit or loss Fair value net gain/(loss) on cash flow hedges during the period 18 9,876 -230 Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss -245 Other comprehensive income/(loss) after tax 9,630 -230 Total comprehensive income/(loss) -5,319 -16,634 Axactor Annual report 2022Axactor Annual report 2022 129129   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Statement of financial position EUR thousand Note 2022 2021 Assets Intangible non-current assets Intangible assets 9 9,612 10,291 Tangible non-current assets Property, plant and equipment 10 55 71 Right of use assets 6 361 521 Financial non-current assets Investment in subsidiaries 12 332,108 532,086 Loans to group companies 15 428,728 290,507 Other long-term receivables 367 - Total non-current assets 771,231 833,475 Current assets Receivables group companies 15 25,400 37,310 Other current assets 13 13,175 664 Restricted cash 14 422 402 Cash and cash equivalents 14 4,046 4,182 Total current assets 43,043 42,558 Total assets 814,275 876,033 EUR thousand Note 2022 2021 Equity and liabilities Equity Share capital 158,369 158,150 Other paid in capital 202,225 218,386 Cash flow hedge reserve 18 9,401 -230 Result for the year -14,950 -16,404 Total equity 11 355,046 359,903 Non-current liabilities Interest-bearing debt 16 445,590 491,369 Deferred tax liabilities 8 3,956 167 Lease liabilities 6 245 401 Other non-current liabilities 367 230 Total non-current liabilities 450,159 492,167 Current liabilities Accounts payable 777 781 Liabilities group companies 15 260 15,607 Interest-bearing debt 16 4,057 3,824 Taxes payable 8 2,017 1,962 Lease liabilities 6 156 156 Other current liabilities 17 1,802 1,632 Total current liabilities 9,070 23,964 Total liabilities 459,229 516,131 Total equity and liabilities 814,275 876,033 Axactor Annual report 2022Axactor Annual report 2022 130130   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Statement of cash flows EUR thousand Note 2022 2021 Operating activities Profit/(loss) before tax -10,288 -16,427 Taxes paid 8 -2,864 -1,787 Adjustments for: Net financial items 7 5,734 12,626 Depreciation and amortization 6, 9, 10 2,334 2,004 Calculated cost of employee share options 112 81 Change in working capital 11,045 1,500 Net cash flow from operating activities 6,073 -2,003 EUR thousand Note 2022 2021 Investing activities Investment/share issue in subsidiaries - -148,100 Purchase of intangible and tangible assets 9, 10 -1,479 -1,652 Interest received 15 1 Net group contribution received - 4,346 Net cash flow from investing activities -1,464 -145,405 Financing activities Proceeds/repayments from external borrowings 16 -49,500 299,717 Loans to subsidiaries/repaid from subsidiaries 75,086 -176,593 Interest paid -30,006 -21,217 Lease payments, principal amount 6 -156 -144 Loan fees paid 16 - -10,976 New share issues - 50,792 Costs related to share issues - -1,460 Net cash flow from financing activities -4,576 140,119 Net change in cash and cash equivalents 34 -7,289 Cash and cash equivalents at the beginning of period, incl. restricted cash 4,584 10,988 Currency translation -150 886 Cash and cash equivalents at end of period, incl. restricted cash 4,468 4,584 Axactor Annual report 2022Axactor Annual report 2022 131131   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Statement of changes in equity Restricted Non-restricted EUR thousand Share capital Other paid in capital Cash flow hedge reserve Result for the year Total Total equity Balance at 31 Dec 2020 97,040 219,580 - -27,231 192,349 289,389 Transfer of prior year's net result -27,231 27,231 - - Result of the period -16,404 -16,404 -16,404 Other comprehensive income of the period -230 -230 -230 Total comprehensive income for the period - -27,231 -230 10,827 -16,634 -16,634 New share issues 61,110 27,318 27,318 88,427 Cost related to share issues -1,460 -1,460 -1,460 Share-based payment 180 180 180 Balance at 31 Dec 2021 158,150 218,386 -230 -16,404 201,753 359,903 Transfer of prior year's net result -16,404 16,404 - - Result of the period -14,950 -14,950 -14,950 Other comprehensive income of the period 9,630 9,630 9,630 Total comprehensive income for the period - -16,404 9,630 1,454 -5,319 -5,319 Bonus issue 219 -219 -219 - Share-based payment 462 462 462 Balance at 31 Dec 2022 158,369 202,225 9,401 -14,950 196,676 355,046 Oslo, 30 March 2023 Kristian Melhuus Chair Brita Eilertsen Board member Terje Mjøs Board member Lars Erich Nilsen Board member Kathrine Astrup Fredriksen Board member Johnny Tsolis CEO Axactor Annual report 2022Axactor Annual report 2022 132132   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Notes to the parent company financial statements Note 1 Corporate information The Parent Company Axactor ASA (“Axactor”) is a Norwegian public limited liability company (Allmennaksjeselskap), domiciled in Norway. The registered address is Drammensveien 167, 0277 Oslo. The company’s shares are traded in Norway on Oslo Børs. The Annual Report and Parent Company Report for Axactor ASA were adopted by the Board of Directors on 30 March 2023 and will be submitted for approval to the Annual General Meeting on 3 May 2023. Note 2 Significant accounting policies These parent company financial statements should be read in conjunction with the consolidated financial statements of the Axactor Group, published together with these financial statements. With the exceptions described below, Axactor ASA applies the accounting policies of the Group, as described in Axactor Group’s disclosure, note 2 Significant accounting policies, and reference is made to the Axactor Group note for further details. To the extent that the company applies policies that are not described in the Axactor Group note due to group level materiality considerations, such policies are included below, if necessary, for sufficient understanding of Axactor’s accounts. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. As a result of rounding adjustments, the figures in one or more columns may not add up to the total of that column. 2.1 Basis for preparation The financial statements of the parent company are prepared in accordance with simplified IFRS pursuant to the Norwegian Accounting Act §3-9 and regulations regarding simplified application of IFRS issued by the Norwegian Ministry of Finance on 3 November 2014. The company follows the exception from IAS 10 regarding timing of recognition of group contribution and dividend. The parent company’s functional currency is euro (EUR) and this is also the reporting currency for the Group. All amounts in the financial reports are stated in EUR thousands unless otherwise specified. 2.2 Investments in subsidiaries Investments in subsidiaries are accounted for using the cost method in the parent company accounts. The investments are valued at cost unless impairment losses occur. Impairment of investments are recognized as financial expenses in the statement of profit or loss. 2.3 Segment reporting Axactor ASA’s activities are currently organized as one operating unit for internal reporting purposes, thus no segment information is presented in these financial statements. Axactor Annual report 2022Axactor Annual report 2022 133133   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 3 Employee remuneration Personnel expenses EUR thousand 2022 2021 Salaries 2,803 2,752 Bonus 2,034 1,561 Social security costs 528 479 Pension costs 133 103 Share-based payment expense 112 83 Other benefits 188 -57 Total personnel expenses 5,796 4,922 Axactor ASA meets the local mandatory occupational pension requirement. Average number of FTEs EUR thousand 2022 2021 Number of FTEs, 1 Jan 19 16 Number of FTEs, 31 Dec 20 19 Average number of FTEs 19 17 Note 4 Executive remuneration Board of Directors remuneration The following remuneration has been made to the members of the Board of Directors during the year. Remuneration presented includes remuneration for participation in Board committees. EUR thousand 2022 2021 Kristian Melhuus  1 80 10 Terje Mjøs 55 45 Brita Eilertsen 57 47 Lars Erich Nilsen 46 41 Kathrine Astrup Fredriksen 41 41 Merete Haugli  2,  3 9 54 Hans Harén  3 10 41 Glen Ole Rødland  4 - 27 Total remuneration 298 306 1 Chair of the Board from February 2022 2 Interim chair of the Board from May 2021 to February 2022 3 Member of the Board until April 2022 4 Chair of the Board until May 2021 Nomination committee The following remuneration has been made to the members of the nomination committee during the year: EUR thousand 2022 2021 Anne Lise Ellingsen Gryte 6 - Magnus Tvenge 4 - Total remuneration 10 - Axactor Annual report 2022Axactor Annual report 2022 134134   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Executive management remuneration EUR thousand Salary Bonus  7 Pension Share options  1 Other 2022 Johnny Tsolis, CEO 407 260 34 34 1 734 Nina Mortensen, CFO 204 106 17 16 1 343 Arnt Andre Dullum, COO 198 88 14 12 1 312 Vibeke Ly, Chief of Staff 197 89 14 12 1 312 Kyrre Svae, Chief of Strategy and IR 194 88 14 11 1 307 Robin Knowles, Chief Investment Officer 236 95 1 8 - 340 Total remuneration 1,435 726 95 91 6 2,349 EUR thousand Salary Bonus  7 Pension Share options  1 Other 2021 Johnny Tsolis, CEO 410 87 35 39 1 573 Endre Ragnes, CEO  2 - 44 - - - 44 Nina Mortensen, CFO  3 92 20 7 - 1 120 Teemu Alaviitala, CFO  4 44 16 2 - - 61 Arnt Andre Dullum, COO 178 18 16 17 2 230 Oddgeir Hansen, COO  5 46 133 - - - 179 Vibeke Ly, Chief of Staff 199 29 14 17 1 261 Kyrre Svae, Chief of Strategy and IR  6 185 49 14 8 2 257 Robin Knowles, Chief Investment Officer 297 25 3 19 - 344 Total remuneration 1,451 420 91 100 7 2,069 1 Cost in relation to share option program, not exercised 2 CEO until 3 April 2020 3 CFO from 1 August 2021 4 CFO until 31 January 2021 5 COO until 1 July 2020 6 Interim CFO from 1 February to 31 July 2021 7 Bonus for 2022 represents accrued bonus for the financial year, whereas bonus for 2021 represents paid bonus in the financial year The CEO, Johnny Tsolis, has a six-month notice period and is entitled to a severance pay of six months in case of termination by the company. In addition, there is a non-compete and non-solicitation clause in the employment agreement. The share-based option program is presented in Group note 24. Bonus stated in tables above reflects the paid amounts during the year. At the end of 2022 no loan or prepayments were granted to members of the Board or executive management. Members of the executive management employed in Axactor ASA has an additional contribution pension entitling them to pension rights for salary over 12G (Norwegian Grunnbeløp). Axactor Annual report 2022Axactor Annual report 2022 135135   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 5 Other operating expenses and remuneration to auditors Other operating expenses EUR thousand 2022 2021 Direct operating expenses 1,217 972 External services 1,769 2,651 IT expenses 4,366 3,590 Other expenses 313 181 Total other operating expenses 7,665 7,394 Auditor’s remuneration PricewaterhouseCoopers AS (PwC) is the auditor of Axactor ASA. The following table shows fees to the appointed auditor. The reported fee is the recognized expense for the year. EUR thousand 2022 2021 Auditing 242 242 Other services 24 15 Total auditor’s remuneration 266 297 The audit fees and other operating expenses presented in the financial statements are exclusive of VAT. Note 6 Leases The company leases premises only. The Facility contract was entered into on 1 April 2020 and is being recognized as a right of use asset and lease liability from this date. Leasing contracts are classified as lease liabilities and right of use assets under IFRS 16. See Axactor Group note 2.11. Right of use assets EUR thousand Buildings Total Right of use assets at 31 Dec 2020 681 681 Depreciation -160 -160 Right of use assets at 31 Dec 2021 521 521 Depreciation -160 -160 Right of use assets at 31 Dec 2022 361 361 Lease liabilities EUR thousand 2022 2021 Lease liabilities at 1 Jan 558 701 Lease payments, principal amount -156 -144 Lease liabilities at 31 Dec 401 558 Current 156 156 Non-current 245 401 Axactor Annual report 2022Axactor Annual report 2022 136136   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA The future aggregated minimum lease payments under lease liabilities are as follows: EUR thousand 2022 2021 Undiscounted lease liabilities and maturity of cash outflows < 1 year 188 185 1–2 years 192 188 2–3 years 49 192 3–4 years - 49 Total undiscounted lease liabilities 429 614 Discounting element -28 -57 Total lease liabilities 401 558 Note 7 Financial items EUR thousand 2022 2021 Financial revenue Interest on bank deposits 15 1 Interest on loans to group companies 19,158 12,778 Group contribution 20,806 4,323 Net foreign exchange gain  1 - 5,796 Gain on purchase of bonds in own bond loans (note 16) 2,349 - Total financial revenue 42,328 22,898 Financial expenses Interest expense on borrowings  2 -33,612 -27,041 Net foreign exchange loss  1 -6,870 - Impairment of investment in subsidiaries - -6,760 Impairment of loans to group companies -7,400 -1,600 Other financial expenses -181 -123 Total financial expenses -48,062 -35,525 Net financial items -5,734 -12,626 1 Foreign exchange gains and losses are presented net as either financial revenue or financial expenses, depending on the net position 2 In 2022, EUR 0.3 million are reclassified from the cash flow hedge reserve (OCI) into interest expense on borrowings, see note 18 Axactor Annual report 2022Axactor Annual report 2022 137137   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 8 Income tax Income tax calculation EUR thousand 2022 2021 Profit/(loss) before tax -10,288 -16,427 Adjustment prior year - -297 Non deductible expenses - 2 Other permanent differences - 3,547 Interest expense limitation 4,539 8,118 Group contribution with tax effect - 15,942 Change in temporary differences 10,582 -640 Adjustment for currency differences due to tax calculation in NOK 5,563 -119 Basis for income tax 10,396 10,126 Taxes payable before tax deduction scheme 2,287 2,227 Tax deduction scheme  1 -270 -265 Taxes payable 2,017 1,962 Tax expense in profit or loss Change in deferred taxes -1,137 1,460 Adjustment for previous years -1,238 -158 Tax effect on permanent differences -2,287 - Adjustment for currency differences due to tax calculation in NOK - -1,279 Income tax expense -4,662 23 1 Skattefunn – Tax deduction scheme in Norway for companies with research and develoment projects Tax included in other comprehensive income EUR thousand 2022 2021 Fair value net gain/(loss) on cash flow hedges 2,720 - Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss -69 - Deferred tax charged to OCI 2,651 - Temporary differences EUR thousand 2022 2021 Non-current assets/liabilities 882 - Current assets 16 214 Limitation interest carried forward 6,037 3,202 Differences not included in the calculation of deferred tax -8,239 -3,583 Hedges over OCI -2,652 - Net income tax reduction temporary differences -3,956 -167 Net deferred tax asset - - Net deferred tax liability -3,956 -167 Net deferred tax -3,956 -167 Axactor Annual report 2022Axactor Annual report 2022 138138   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 9 Intangible assets EUR thousand Software Other intangibles Total Cost price Cost price at 31 Dec 2020 10,871 2,745 13,616 Acquisitions 1,227 412 1,639 Cost price at 31 Dec 2021 12,098 3,157 15,255 Acquisitions 904 552 1,456 Cost price at 31 Dec 2022 13,002 3,709 16,711 Amortization Accumulated amortizations at 31 Dec 2020 -2,445 -720 -3,165 Amortization -1,447 -352 -1,799 Accumulated amortizations at 31 Dec 2021 -3,892 -1,072 -4,965 Amortization -1,652 -483 -2,135 Accumulated amortizations at 31 Dec 2022 -5,544 -1,556 -7,100 Carrying amount at 31 Dec 2022 7,458 2,153 9,612 Useful life 5–10 yr 5–10 yr Note 10 Property, plant and equipment EUR thousand Fixtures Office eqipment Total Cost price Cost price at 31 Dec 2020 145 95 241 Acquisitions 6 7 13 Cost price at 31 Dec 2021 152 102 253 Acquisitions 2 21 23 Cost price at 31 Dec 2022 154 123 276 Depreciation Accumulated depreciations at 31 Dec 2020 -88 -50 -138 Depreciation -25 -19 -44 Accumulated depreciations at 31 Dec 2021 -59 -69 -182 Depreciation -13 -26 -39 Accumulated depreciations at 31 Dec 2022 -126 -95 -221 Carrying amount at 31 Dec 2022 28 27 55 Useful life 5 yr 3 yr Axactor Annual report 2022Axactor Annual report 2022 139139   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 11 Issued shares and share capital On 21 April 2022, the company converted form from a Societas Europaea company (SE) to a Norwegian public limited liability company (ASA) and converted the share capital from EUR to NOK. A bonus issue was carried out the same day, whereby NOK 2,126,326 (EUR 218,961) was transferred from unrestricted equity to share capital. The share capital of Axactor ASA as of 31 December 2022 was NOK 1,537,920,412 (EUR 158,368,902) consisting of 302,145,464 ordinary shares at NOK 5.09 per share. Each share has the same rights, and all issued shares are fully paid. Issued shares and share capital Number of shares Share capital (EUR) At 31 Dec 2020 185,395,464 97,040,286 New share issues 116,750,000 61,109,656 At 31 Dec 2021 302,145,464 158,149,942 Bonus issue - 218,961 At 31 Dec 2022 302,145,464 158,368,902 20 largest shareholders at 31 December 2022 Name Shareholding Share % Geveran Trading Co Ltd 140,784,692 46.6% Torstein Ingvald Tvenge 10,000,000 3.3% Ferd AS 7,864,139 2.6% Skandinaviska Enskilda Banken AB (Nominee) 5,279,467 1.8% Skandinaviska Enskilda Banken AB 4,500,000 1.5% Verdipapirfondet Nordea Norge Verdi 4,454,162 1.5% Nordnet Livsforsikring AS 2,443,779 0.8% Endre Rangnes 2,017,000 0.7% Gvepseborg AS 2,009,694 0.7% Stavern Helse og Forvaltning AS 2,000,000 0.7% Alpette AS 1,661,643 0.5% Klotind AS 1,532,704 0.5% Velde Holding AS 1,500,000 0.5% Masani AS 1,400,000 0.5% David Martin Ibeas 1,177,525 0.4% Andres Lopez Sanchez 1,177,525 0.4% Latino Invest AS 1,040,000 0.3% Verdipapirfondet Nordea Avkastning 1,035,709 0.3% Titas Eiendom AS 1,000,000 0.3% Kistefos Investment AS 1,000,000 0.3% Total 20 largest shareholders 193,878,039 64.2% Other shareholders 108,267,425 35.8% Total number of shares 302,145,464 100% Total number of shareholders 9,825 Axactor Annual report 2022Axactor Annual report 2022 140140   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Shares owned by the Board and Group executive management per 31 December 2022 Name Shareholding Share % Latino Invest AS  1 1,040,000 0.3% Johnny Tsolis Vasili  1  4 670,000 0.2% Terje Mjøs Holding AS  3 500,000 0.2% Robin Knowles  2 352,921 0.1% Vibeke Ly  2 203,750 0.1% Arnt Andre Dullum  2 162,000 0.1% Nina Mortensen  2 160,000 0.1% Kyrre Svae  2 150,000 0.0% Brita Eilertsen  3 19,892 0.0% 1 CEO/related to the CEO of Axactor ASA 2 Member of the Group executive management 3 Member of the Board of Directors/controlled by member of the Board of Directors 4 Holds 300,000 call options that will be settled in cash on 22 June 2023 Note 12 Shares in subsidiaries Subsidiary company EUR thousand Ownership Head office Country Book value in parent company Axactor Portfolio Holding AB 100.0% Gothenburg Sweden 169,234 Axactor Platform Holding AB 100.0% Gothenburg Sweden 162,874 Reolux Holding SARL 50.0% Luxembourg Luxembourg - Axactor Annual report 2022Axactor Annual report 2022 141141   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 13 Other current assets Other current assets EUR thousand 2022 2021 Prepaid expenses 809 664 Cash flow hedge derivatives (note 18) 12,367 - Total other current assets 13,175 664 Note 14 Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents including restricted cash as shown in the cash flow statement can be reconciled to the related items in the statement of financial position as follows: EUR thousand 2022 2021 Cash and cash equivalents 4,046 4,182 Restricted cash 422 402 Total cash and cash equivalents, incl. restricted cash 4,468 4,584 Composistion of the cash per currency EUR thousand 2022 2021 EUR 2,374 3,171 GBP 2 6 NOK 1,840 1,058 SEK 253 349 Total cash and cash equivalents, incl. restricted cash 4,468 4,584 Axactor Annual report 2022Axactor Annual report 2022 142142   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 15 Loans and receivables to group companies 2022 2021 EUR thousand Loans to group companies  1 Receivables group companies Liabilities group companies Loans to group companies  1 Receivables group companies Liabilities group companies Axactor Portfolio Holding AB 210,835 - - 6,417 218 - Axactor Platform Holding AB 195,627 - - 243,336 313 - Axactor Norway Holding AS - - - - 4,322 - Axactor Norway AS - 2 -3 - 718 -1,607 Axactor Capital AS 4,217 20,806 -9 4,452 17,947 -13,761 Axactor Sweden AB - 379 -57 - 435 -120 Axactor Germany Holding GmbH - - - - 2,157 - Axactor Germany GmbH - 1,419 - - - -17 Axactor Espana SLU - 236 - - -32 -5 Axactor Platform España SA - 2,184 -110 - 1,075 -45 Axactor Capital Luxembourg SARL - - - - 172 - Axactor Holding Srl 168 - - 156 - - Axactor Italy SpA - 326 -28 210 - -24 Axactor Capital Italy Srl - - - - 314 - Axactor Invest 1 SARL - - - - 9,352 - Reolux Holding SARL 17,881 - - 35,936 50 - Axactor Finland Holding OY - - - - 270 - Axactor Finland OY - 48 -53 - - -30 Closing balance at 31 Dec 428,728 25,400 -260 290,507 37,309 -15,607 1 Loans to subsidiaries carries an interest rate of 6.3–7.38%, to be paid at year end An ECL (Expected Credit Loss) assessment according to IFRS 9 has been carried out. The company has impaired a receivable towards Reolux Holding SARL with 7.4 million in 2022, included in the line item ‘Financial expenses’ in the statement of profit or loss. The same receivable was impaired with 1.6 million in 2021. There are no other expected credit losses on receivables to group companies. Axactor Annual report 2022Axactor Annual report 2022 143143   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 16 Interest-bearing loans and borrowings EUR thousand Currency Nominal value Treasury bonds Capitalized loan fees Accrued interest Carrying amount, EUR Interest coupon Maturity Facility Bond ACR02 (ISIN: NO0010914666) EUR 200,000 -30,550 -2,009 3,133 170,574 3m EURIBOR+700pbs 12.01.2024 Bond ACR03 (ISIN: NO0011093718) EUR 300,000 -18,950 -2,901 925 279,074 3m EURIBOR+535bps 15.09.2026 Total bond loan 500,000 -49,500 -4,910 4,057 449,648 Total loans and borrowings at 31 Dec 2022 500,000 -49,500 -4,910 4,057 449,648 whereof Non-current borrowings 445,590 Current borrowings 4,057 Maturity Estimated future cash flow within Currency Carrying amount Total future cash flow 6 months or less 6–12 months 1–2 years 2–5 years Bond ACR02 (ISIN: NO0010914666) EUR 170,574 186,235 8,224 7,794 170,218 - Bond ACR03 (ISIN: NO0011093718) EUR 279,074 371,985 11,308 10,840 25,013 324,824 Total bond loan 449,648 558,220 19,531 18,633 195,231 324,824 Total loans and borrowings at 31 Dec 2022 449,648 558,220 19,531 18,633 195,231 324,824 Axactor Annual report 2022Axactor Annual report 2022 144144   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Change in loans and borrowings from financial activities EUR thousand Bond loans Total borrowings Total loans and borrowings at 31 Dec 2020 200,283 200,283 Proceeds from loans and borrowings 500,000 500,000 Repayment of loans and borrowings -200,283 -200,283 Loan fees -10,976 -10,976 Total changes in financial cash flow 288,741 288,741 Change in accrued interest 3,824 3,824 Amortization capitalized loan fees  1 2,345 2,345 Total loans and borrowings at 31 Dec 2021 495,193 495,193 Repayment of loans and borrowings -49,500 -49,500 Total changes in financial cash flow -49,500 -49,500 Change in accrued interest 232 232 Amortization capitalized loan fees  2 3,721 3,721 Total loans and borrowings at 31 Dec 2022 449,648 449,648 1 Includes expensed capitalized loan fees of EUR 0.4 million related to the refinancing of the bond 2 Includes expensed capitalized loan fees of EUR 0.2 million related to repurchasing of bonds Bond ACR02 The bond was placed at 3m EURIBOR + 7% interest, with maturity date 12 January 2024. The bond is listed on Oslo Børs (ISIN: NO0010914666). The following financial covenants apply: • Interest coverage ratio: >4.0x (Pro-forma adjusted cash EBITDA to net interest expenses) • Leverage ratio: <4.0x (NIBD to pro-forma adjusted cash EBITDA) • Net loan to value: <75% (NIBD to total book value all loan portfolios and REOs) • Net secured loan to value: <65% (secured loans less cash to total book value all loan portfolios and REOs) Trustee: Nordic Trustee Bond ACR03 The bond was placed at 3m EURIBOR + 5.35% interest, with maturity date 15 September 2026. The bond is listed on Oslo Børs (ISIN: NO0011093718). The following financial covenants apply: • Interest coverage ratio: >4.0x (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: <65% (secured loans less cash to total book value all loan portfolios and REOs) Trustee: Nordic Trustee During 2022, the company has repurchased part of the outstanding bonds. On 31 December 2022, the company holds treasury bonds with a nominal value of EUR 49.5 million, split between EUR 30.6 million in ACR02 (ISIN NO 0010914666) and EUR 19.0 million in ACR03 (ISIN NO 0011093718). Axactor Annual report 2022Axactor Annual report 2022 145145   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA Note 17 Other current liabilities EUR thousand 2022 2021 Public duties 158 359 Personnel related liabilities 1,541 807 Other accruals 103 467 Total other current liabilities 1,802 1,632 Note 18 Hedge accounting The Group´s risk management objective is to mitigate the effect of interest rate changes related to its floating rate instruments. In order to achieve the objective, the Group´s strategy is to use derivatives to limit the impact of changes in interest rates on the Group´s interest expenses. The Group has applied cash flow hedge accounting to ensure that the Group´s risk management strategy is reflected in its financial statements. Cash flow hedges Interest rate risk in floating rate instruments The Group has applied cash flow hedge accounting for interest rate risk in order to mitigate the effect of increasing interest rates on issued loans and therefore limit the impact on the Group´s interest expenses. The hedged items consist of a proportion of issued floating-rate loans. The hedging instruments consist of interest rate caps. The hedge ratio for the relationships is defined by the ratio of the principal of the interest rate cap to the designated proportion of the hedged item, resulting in 100% hedge ratio. The cash flow hedges of interest rate risk on loans are expected to be highly effective. Potential sources of ineffectiveness have been identified as differences in timing of cash flows of hedged items and hedging instruments, derivatives used as hedging instruments having a non-nil fair value at the time of designation and the effect of changes in counterparties’ credit risk on the fair values of hedging instruments or hedged items. The Group’s strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. Per 31 December 2022, the strategy is under implementation and the Group is still committed to the strategy which it expects to fully implement. On 31 December 2022, the Group holds two interest rate caps with a strike of 0.5% EURIBOR and maturity 15 December 2023. The two contracts hedge the interest risk of EUR 573 million in borrowings, equaling a hedging ratio of 60%. The hedged items are included as part of current and non-current interest-bearing debt in the consolidated statement of financial position. Per 31 December 2022, the fair value of the interest rate hedging derivatives was positive EUR 12.4 million (2021: -0.2 million), reported as part of other current receivables (2021: other non-current liabilities) in the consolidated statement of financial position. Axactor Annual report 2022Axactor Annual report 2022 146146   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA The financial instruments designated as hedged items in existing cash flow hedge relationships are: Hedged items 2022 2021 EUR thousand Nominal amount Nominal amount designated for hedge accounting Cash flow hedge reserve Nominal amount Nominal amount designated for hedge accounting Cash flow hedge reserve Interest rate risk Floating rate issued loans 573,000 573,000 9,630 200,000 200,000 -230 Total 573,000 573,000 9,630 200,000 200,000 -230 The table below sets out the derivatives designated as hedging instruments in existing cash flow hedge relationships, and the outcome of the Group´s hedging strategy. Hedging instruments 2022 2021 EUR thousand Up to 1 year 1–5 years Total Up to 1 year 1–5 years Total Interest rate caps Nominal amount 573,000 573,000 2,778 197,222 200,000 Average strike 0.5% 0.5% 0.5% 0.5% 0.5% The effective portion of changes in the fair value on the hedging instrument that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated in the cash flow hedge reserve. Hedge ineffectiveness is, if applicable, recorded as part of financial expenses or financial revenue. There was no material ineffectiveness in 2022 or 2021. Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. In 2022, EUR 0.2 million (net of tax) has been reclassified from the cash flows hedge reserve (OCI) into profit or loss, reducing the interest rate expenses on borrowings reported in note 7 with EUR 0.3 million (pre-tax). Note 19 Events after the reporting period There has been no material events after the reporting period for 2022. Axactor Annual report 2022Axactor Annual report 2022 147147   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Financial statements of Axactor ASAFinancials | Financial statements of Axactor ASA / Responsibility statement from the Board and the CEO We confirm to the best of our knowledge that the consolidated financial statements for 2022 have been prepared in accordance with IFRS as adopted by the European Union, as well as additional information requirements in accordance with the Norwegian Accounting Act, that the financial statements for the parent company for 2022 have been prepared in accordance with simplified IFRS pursuant to the Norwegian Accounting Act and regulations regarding simplified application of IFRS issued by the Norwegian Ministry of Finance, and that the information presented in the financial statements gives a true and fair view of the assets, liabilities, financial position and result of Axactor ASA and the Axactor Group for the period. We also confirm to the best of our knowledge that the Annual Report gives a true and fair view of the development, performance and financial position of Axactor ASA and the Axactor Group, together with a description of the principal risks and uncertainties that they face. Oslo, 30 March 2023 Kristian Melhuus Chair Brita Eilertsen Board member Terje Mjøs Board member Lars Erich Nilsen Board member Kathrine Astrup Fredriksen Board member Johnny Tsolis CEO Axactor Annual report 2022Axactor Annual report 2022 148148   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Responsibility statementFinancials | Responsibility statement To the General Meeting of Axactor ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Axactor ASA, which comprise: • the financial statements of the parent company Axactor ASA (the Company), which comprise the statement of financial position as at 31 December 2022, the statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Axactor ASA and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 5 years from the election by the general meeting of the shareholders on 17 October 2018 for the accounting year 2018. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Axactor Annual report 2022Axactor Annual report 2022 149149   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Auditor’s reportFinancials | Auditor’s report The business activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or other events that qualified as new Key audit matters for our audit of the 2022 financial statements. Valuation of debt portfolios continues to be an important focus area in our audit. Key Audit Matters How our audit addressed the Key Audit Matter Valuation of debt portfolios Debt portfolios represent a considerable part of the Group’s total assets. The valuation of the portfolios includes substantial elements of management judgement. The book value of debt portfolios is determined by projecting expected future cash flows and discounting them to present value using the effective interest rate as of the date the portfolios were acquired. Some of the key assumptions related to the valuation includes the size of expected future cash flows, and timing of future payments. The estimated timing and size of payments of cash flows require both judgement and experience to assess, and actual timing and size of payments may differ from the estimates. Management performed a review every quarter in which they assessed the performance of the Group’s portfolios, with particular focus directed towards whether portfolios met certain performance criteria. The quarterly procedure was designed to identify portfolios where adjustments of book value was necessary. In accordance with IFRS 9, expected credit losses shall be based on forward-looking assessments, so that any impairment reflects expected losses. The use of models to determine expected credit losses also entails judgment, specifically related to determination of significant parameters in the model. During 2022 Axactor, with assistance from external experts, performed extensive work to expand the portfolio revaluation model. The work included testing of correlation between macroeconomic factors and cash collection. The purpose of the testing was to identify macroeconomic factors with prediction value on cash collection and apply current and future macroeconomic factors as input with usage of more than one scenario in subsequent measurement of expected credit losses. A new expanded revaluation model (macroeconomic overlay model) was implemented in Q4 2022. We focused on this area because valuation of debt portfolios carries an inherent risk of both errors due to the large data materials and complex models necessary to arrive at an estimate, and bias in judgmental assumptions. Both factors may have a material effect on the Group’s net profit and net book value of total assets. Notes 2.12.1, 3, 4 and 18 to the consolidated financial statements are relevant for the description of the Group’s debt portfolios. We tested the accuracy of initial recognition of portfolios by tracing purchase prices in the contracts back to registration in the system on a sample basis. We also tested completeness, by reconciling the value per 31 December 2022 of the debt portfolios from the database, which is used as a source for the performance review, to the booked value. To verify accuracy of portfolio performance, we sampled and matched reported cash collection to underlying bank statements. Correspondingly, we obtained cash collection reports and traced the amounts to the database. We obtained a detailed understanding of management’s review controls, specifically as it relates to the review management performed quarterly on the performance of the portfolio, and tested its operational effectiveness. We sampled all portfolios not meeting management’s defined performance criteria at year end. Based on obtained documentation for these portfolios, including inspection of the underlying figures in the database, we challenged management’s assumptions and conclusions noted in their review. We discussed with them their assessments and tested assumptions, and were deemed necessary, obtained and evaluated additional documentation that substantiated management’s conclusions. We performed recalculation based on our own models to test the completeness and accuracy of the Group’s, portfolio database. In connection with Axactor’s testing of macroeconomic relationships, scenarios, and implementation of the macroeconomic overlay model, we used our own experts and carried out an assessment of Axactor’s methodology for applying macroeconomic stress testing to their cash flow forecasts. The assessment consisted of a qualitative analysis of the model and a test of the model build to ensure that it had been implemented in line with their model documentation. Additionally, as part of our audit procedures, our experts also reviewed the adjustments implemented at the balance-sheet date related to macroeconomic adjustments and comparing Axactors documentation to their own experience and knowledge. Additionally, we assessed qualifications, competence and objectivity of management’s external experts by among other, reviewing their terms of engagement to determine whether there were unusual terms that might have affected their objectivity or imposed scope limitations upon their work. Based on this work, we were satisfied that the experts remained objective and competent, and that the scope of their work was appropriate. We read the notes and found them to be adequate and give a balanced overview of the different parameters and judgmental assumptions used. Axactor Annual report 2022Axactor Annual report 2022 150150   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Auditor’s reportFinancials | Auditor’s report Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appear to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable statutory requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with simplified application of international accounting standards according to the Norwegian Accounting Act section 3-9, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are Axactor Annual report 2022Axactor Annual report 2022 151151   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Auditor’s reportFinancials | Auditor’s report required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of Axactor ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name AxactorASA-2022-12-31-en, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation. Management’s Responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Oslo, 30 March 2023 PricewaterhouseCoopers AS Anne Lene Stensholdt State Authorised Public Accountant (This document is signed electronically) Axactor Annual report 2022Axactor Annual report 2022 152152   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Auditor’s reportFinancials | Auditor’s report / 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 change in fair value of forward flow commitments, portfolio amortizations and revaluations, repossessed assets cost of sale and impairment, and calculated cost of share option program 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 32, adjusted for specified elements from the consolidated statement of cash flows Estimated remaining collection (ERC) Estimated remaining collection express the expected future cash collection 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 collection including estimated interest income and opex Purchased loan portfolios from the consolidated statement of financial position 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 32, adjusted for capitalized loan fees and accrued interest according to note 25 Return on equity to shareholders Net profit/(loss) after tax from continuing and discontinued operations attributable to shareholders divided by average equity for the period attributable to shareholders 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 Net profit/(loss) after tax from continuing operations divided by average total equity for the period Measures the profitability in relation to total equity. This APM has replaced ‘Return on equity, including non- controlling interests’ to measure the profitability in relation to continuing operations 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 Axactor Annual report 2022Axactor Annual report 2022 153153   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Alternative performance measuresFinancials | Alternative performance measures Gross revenue EUR thousand 2022 2021  1 Total income 239,692 158,298 Portfolio amortizations and revaluations 97,218 148,542 Change in fair value of forward flow commitments - 782 Gross revenue 336,911 307,622 1 Comparative figures have been re-presented due to a discontinued operation, see note 32 EBITDA and Cash EBITDA EUR thousand 2022 2021  1 Total income 239,692 158,298 Total operating expenses -120,738 -117,800 EBITDA from continuing operations 118,955 40,498 Change in working capital related to forward flow commitments - 782 Calculated cost of share option program 462 180 Portfolio amortizations and revaluations 97,218 148,542 Cost of repossessed assets sold, incl. impairment 1,496 2,136 Cash EBITDA from continuing operations 218,130 192,138 EBITDA from discontinued operations -7,008 -16,765 Cost of REOs sold, incl. impairment 18,318 48,379 Cash EBITDA 229,440 223,752 Taxes paid -10,713 -3,261 Change in working capital, excl. forward flow commitments 1,291 4,209 Cash flow from operating activities before NPL and REO investments 220,019 224,700 1 Comparative figures have been re-presented due to a discontinued operation, see note 32 Estimated remaining collection (ERC) EUR thousand 2022 2021 Purchased loan portfolios 1,252,642 1,095,789 Estimated opex for future collection at time of acquisition 363,858 296,290 Estimated discounted gain 928,920 748,464 Estimated remaining collection (ERC) 2,545,419 2,140,543 Net interest-bearing debt (NIBD) EUR thousand 2022 2021 Non-current portion of interest-bearing debt from financial position 445,590 834,411 Current portion of interest-bearing debt from financial position 499,709 3,845 Interest-bearing debt, discontinued operations 10,247 Total interest-bearing debt 955,546 838,256 Capitalized loan fees -9,144 -17,566 Accrued interest 4,172 3,845 Cash and cash equivalents from financial position 29,045 38,155 Cash and cash equivalents, discontinued operations 3,607 Net interest-bearing debt (NIBD) 927,865 813,821 Axactor Annual report 2022Axactor Annual report 2022 154154   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Alternative performance measuresFinancials | Alternative performance measures Return on equity to shareholders EUR thousand 2022 2021 Net profit/(loss) after tax attributable to shareholders of the parent company 36,757 -32,797 Average equity for the period related to shareholders of the parent company 399,433 384,751 Return on equity to shareholders 9.2% -8.5% Return on equity, continuing operations EUR thousand 2022 2021 Net profit/(loss) after tax from continuing operations 40,644 -25,393 Average total equity for the period 397,163 407,454 Return on equity, continuing operations 10.2% -6.2% Axactor Annual report 2022Axactor Annual report 2022 155155   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK FinancialsFinancials | Alternative performance measuresFinancials | Alternative performance measures / Glossary Terms Active forecast Forecast of estimated remaining collection 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 collection 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 collection 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 Axactor Annual report 2022Axactor Annual report 2022 156156   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GlossaryAppendices | Glossary 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 collection 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 Axactor Annual report 2022Axactor Annual report 2022 157157   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GlossaryAppendices | Glossary / GRI content index Axactor has reported in accordance with the GRI Standards for the period from 1 January 2022 to 31 December 2022. This table shows Axactor’s reporting for 2022 with reference to the GRI Universal Standards 2021. GRI-Indicator Name Description of the indicator Response in the annual report Source General information Organization profile 2-1 Organizational details Name of the organization Axactor ASA 2-6 Activities and workers Activities, products and services provided by the organization This is Axactor -Axactor at a glance 2-1 Organizational details Location of the organization’s headquarters Drammensveien 167, 0277 Oslo, Norway 2-1 Organizational details The organization’s countries of operations Norway, Sweden, Finland, Germany, Spain and Italy 2-1 Organizational details Ownership and legal form Publicly listed limited liability company (Norwegian allmennaksjeselskap) https://www.axactor.com/ investor-relations/share-and-debt- information/main-shareholders 2-6 Activities and workers Sector(s) in which the organization is active This is Axactor -Axactor at a glance and Strategy and financial targets 2-6 Activities and workers Scope and size of the organization This is Axactor -Axactor at a glance and Key figures 2-6 Activities and workers Supply chain Sustainability report – Sustainable value chains 2-6 Activities and workers Significant changes in sector(s) which the organization is active and other relevant business relationships compared to the previous reporting period This is Axactor – Key events 2022 and Highlights of the year 2-7 Employees Total number of employees (permanent and temporary) and a breakdown by gender and region Sustainability report - People 2-23 Policy commitments Policy commitments for responsible business conduct and respect of human rights Corporate governance report – Section 10 Axactor Annual report 2022Axactor Annual report 2022 158158   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 2-28 Membership associations Industry associations, other memberships associations, and national or international advocacy organization in which it participates in a significant role Sustainability report - Ethical debt collection is an essential part of a well-functioning credit market Strategy, policies and practices 2-22 Statement on sustainable development strategy Statement from the highest governance body or most senior executive of the organization about the relevance of sustainable development and its strategy for contributing to this This is Axactor – Letter from the CEO Board of Director’s report – Section 4 2-23 Policy commitments Describe the organization's values, principals, standards and norms of behavior Sustainability report – Building a viable financial system for people and society 2-24 Embedding policy commitments Describe how policies for responsible business conduct are embedded in the organzation's activities and business relationships Sustainability report 2-25 Processes to remediate negative impacts Describe the organization's commitments and approach has for remedation of negative impacts it has directly or indirectly caused or contributed to Sustainability report – Sustainable value chains 2-26 Mechanisms for seeking advice and raising concerns Mechanisms for individuals to seek advice on implementing the organization's policies and practices for responsible business conduct, and raise concerns about the organization's business conduct Sustainability report – Sustainable value chains People – Health and work environment 2-27 Compliance with laws and regulation Total number of significant instances of non-compliance with laws and regulations during the reporting period, and instance where fines or non-monetary fines were incurred Board of Director’s report – Section 4 No violations and no fines Governance 2-9 Governance structure and composition Governance structure, including commitees of the highest governance body that are responsible for decision making on and overseeing the management of the organization's impacts on the economy, environment, and people Corporate governance report – Section 9 2-10 Nomination and selection of the highest governance body Criteria used for nominating and selecting highest governances body members, including whether and how views of stakeholders, diversity, independence and competencies relevant to the impacts of the organization are considered Corporate governance report – Section 7 Axactor Annual report 2022Axactor Annual report 2022 159159   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 2-11 Chair of the highest governance body Describe whether the chair of the highest governance body is also a senior executive of the organization, and if so, explain their function, the reasons of such an arrangement and how conflicts of interested are prevented and mitigated Corporate governance report – Section 8 2-12 Role of the highest governance body in overseeing the management of impacts Describe the role of the highest governance body and its senior executives in developing, approving and updating the organization's purpose, values, mission statement, strategies, policies and goals related to sustainable development Corporate governance report – Section 2 2-12 Role of the highest governance body in overseeing the management of impacts Describe the role of the highest governance body in overseeing the organizations’ due diligence and other processes to identify and manage the organization's impact of the economy, environment, and people Corporate governance report – Section 10 2-13 Delegation of responsibility for managing impacts Describe how the highest governance body delegates responsibilities for managing the organization's impacts on economy, environment and people Sustainability report 2-14 Role of the highest governance body in sustainability reporting If the highest governance body is responsible reviewing and approving the reported information, describe the process Corporate governance report – Section 4 Sustainability report 2-15 Conflict of interest Processes meant to prevent and mitigate conflicts of interest in the highest governance body Corporate governance report – Section 9 2-16 Communcation of critical concerns Whether and how critical concerns are communicated to the highest governance body, and the nature and number of critical concerns reported during the reporting period Corporate governance report – Section 10 No critical concerns reported during the year 2-17 Collective knowledge of the highest governance body Measures taken to advance the collective knowledge, skills, and experience of the highest governance body on sustainable development Corporate governance report 2-18 Evaluation of the performance of the highest governance body Independent and internal processes to evaluate the performance of the highest governance body in overseeing the management of the organization's impact on the economy, environment and people. Describe actions taken in response to the evaluations Corporate governance report – Section 7 and 8 https://www.axactor.com/ corporate-governance/ nomination-committee 2-19 Remuneration policies Remuneration policies for members of the highest governance body and senior executives, and how the remuneration policies for relate to their objectives and performance in relation to the management of the organization’s impacts on the economy, environment and people Corporate governance report – Section 11 and 12 https://www.axactor.com/ corporate-governance/ remuneration Axactor Annual report 2022Axactor Annual report 2022 160160   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 2-20 Process to determine remuneration Process for designing its remuneration policies and for determining remuneration Corporate governance report – Section 11 and 12 https://www.axactor.com/ corporate-governance/ remuneration 2-21 Annual total compensation ratio Ratio of the annual total compensation for the organization's highest-paid individual to the median annual total compensation for all employees (excluding the highest- paid individual), represented as amount and percentage People – Remuneration and benefits Stakeholder engagement 2-21 Approach to stakeholder engagement The categories of stakeholders the organization engages with Sustainability report – Material issues and stakeholder engagement 2-29 Approach to stakeholder engagement Description of how the organization identifies stakeholders Sustainability report – Material issues and stakeholder engagement 2-29 Approach to stakeholder engagement Approach to engaging with stakeholders, and how often the organization includes different stakeholders Sustainability report – Material issues and stakeholder engagement 2-30 Collective bargaining agreements Percentage of total employees covered by collective bargaining agreements People – Remuneration and benefits Reporting practices 2-2a Entities included in the organization's sustainability reporting Entities included in its sustainability reporting Financials – Note 20 2-2b Entities included in the organization's sustainability reporting Specify the differences between the list of entities included in its financial reporting and the list included in its sustainability reporting No differences 2-2c Entities included in the organization's sustainability reporting Explain the approach used for consolidating information Same as for financial reporting. See Financials – Note 2 3-1a Process to determine material topics Describe the process the organization has followed to determine its material topics Global Reporting Initiative 2016 and 2021 3-1b Stakeholders whose views have informed the process of determining material topics Specify the stakeholders and experts whose views have informed the process of determining its material topics Sustainability report – Material issues and stakeholder engagement 3-2 List of materials topics List the organization’s material topics (i) Sustainable value creation Ethical debt collection Environment 2-4 Restatements of information Report restatements of information from previous reporting periods N/A Axactor Annual report 2022Axactor Annual report 2022 161161   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 3-2 List of materials topics Report changes to the list of material topics compared to the previous reporting period N/A 2-3 Reporting period, frequency and contact point Reporting period for, and the frequency of, the organization's sustainability reporting, publication date and contact point for questions about the report Date of publishing: 30.03.2023 Reporting period: 2022 Reporting frequency: Yearly Contact point: Vibeke Ly Vibeke.ly@axactor.com 2-5 External assurance External assurance of the organization's sustainability report The organization’s sustainability report has not been externally assured. Specific information 1. Sustainable value creation 1.1. Preventing financial crime and corruption 3-3 Management of material topics Description and definition of material topics Sustainability report – Preventing financial crime and corruption https://www.axactor.com/ corporate-governance/policy- documents 205-1 GRI 205: Anti-corruption 2016 Operations assessed for risks related to corruption Sustainability report – Preventing financial crime and corruption https://www.axactor.com/ corporate-governance/policy- documents 205-2 GRI 205: Anti-corruption 2016 Communication and training about anti-corruption policies and procedures Sustainability report – Preventing financial crime and corruption 205-3 GRI 205: Anti-corruption 2016 Confirmed incidents of corruption and actions taken Sustainability report – Preventing financial crime and corruption No violations and no fines 207-1 GRI 207: Tax 2019 Approach to tax Sustainability report – Preventing financial crime and corruption https://www.axactor.com/ corporate-governance/policy- documents 207-2 GRI 207: Tax 2019 Tax governance, control, and risk management Sustainability report – Preventing financial crime and corruption https://www.axactor.com/ corporate-governance/policy- documents Axactor Annual report 2022Axactor Annual report 2022 162162   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 2. Ethical debt collection 2.1. Customer privacy 3-3 Management of material topics Description and definition of material topics Sustainability report – Data privacy and Information security 418-1 GRI 418: Customer privacy 2016 Substantiated complaints concerning breaches of customer privacy and losses of customer data Sustainability report – Data privacy and Information security None 2.2. Training and education 3-3 Management of material topics Evaluation of policies and commitments regarding material topics Sustainability report – People 404-1 GRI 404: Training and education 2016 Average hours of training per year per employee Sustainability report – People 404-2 GRI 404: Training and education 2016 Programs for upgrading employee skills and transition assistance programs Sustainability report – People 404-3 GRI 404: Training and education 2016 Percentage of employees receiving regular performance and career development reviews Sustainability report – People Close to 100% 2.3. Employment 3-3 Management of material topics Evaluation of policies and commitments regarding material topics Sustainability report – People 401-1 GRI 401: Employment 2016 New employee hires and employee turnover Sustainability report – People 401-3 GRI 401: Employment 2016 Parental leave Sustainability report – People 2.4. Diversity and equal opportunity 3-3 Management of material topics Evaluation of policies and commitments regarding material topics Sustainability report – People 405-1 GRI 405: Diversity and equal opportunity 2016 Diversity of governance bodies and employees Sustainability report – People 405-2 GRI 405: Diversity and equal opportunity 2016 Ratio of basic salary and remuneration of women to men Sustainability report – People Axactor Annual report 2022Axactor Annual report 2022 163163   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index GRI-Indicator Name Description of the indicator Response in the annual report Source 3. Environment 3.1. Emissions 3-3 Management of material topics Description and definition of material topics Sustainability report – Environment 305-1 GRI 305: Emissions 2016 Direct (Scope 1) GHG emissions Sustainability report – Environment 305-2 GRI 305: Emissions 2016 Energy indirect (Scope 2) GHG emissions Sustainability report – Environment 305-3 GRI 305: Emissions 2016 Other indirect (Scope 3) GHG emissions Sustainability report – Environment 305-5 GRI 305: Emissions 2016 Reduction of GHG emissions Sustainability report – Environment Axactor Annual report 2022Axactor Annual report 2022 164164   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   GO BACK AppendicesAppendices | GRI content indexAppendices | GRI content index General ESEF data Name of reporting entity or other means of identification Axactor ASA Domicile of entity Norway Legal form of entity Public limited liability Country of incorporation Norway Address of entity’s registered office Drammensveien 167, 0277 Oslo Principal place of business Oslo, Norway (head office) Description of nature of entity’s operations and principal activities Debt collection Name of parent entity Axactor ASA Name of ultimate parent of group Axactor ASA Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period Change of legal form from SE to ASA artbox.no   Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices    Contents     |     This is Axactor       Sustainability       Governance       Financials       Appendices   549300P5VT8OMA17TJ332022-01-012022-12-31549300P5VT8OMA17TJ332021-01-012021-12-31549300P5VT8OMA17TJ332022-12-31549300P5VT8OMA17TJ332021-12-31549300P5VT8OMA17TJ332020-12-31549300P5VT8OMA17TJ332020-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332021-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332020-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332021-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332020-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332021-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332020-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332021-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332020-12-31ifrs-full:MiscellaneousOtherReservesMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:MiscellaneousOtherReservesMember549300P5VT8OMA17TJ332021-12-31ifrs-full:MiscellaneousOtherReservesMember549300P5VT8OMA17TJ332020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332020-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332021-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332022-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332022-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332022-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332022-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:MiscellaneousOtherReservesMember549300P5VT8OMA17TJ332022-12-31ifrs-full:MiscellaneousOtherReservesMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332022-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares