Axactor SE

Investor Presentation • Feb 18, 2022

Q4 2021

18 February 2022

Agenda

Axactor is an established European debt collection company that has grown rapidly in targeted markets

• Established in Q4 2015 with headquarters in Oslo, Norway, and is one of Europe's top-ten debt collectors
• Main focus on collection and acquisition of unsecured non-performing loans ("NPL") and third-party collection ("3PC")
• Operations in six countries; Finland, Germany, Italy, Norway, Spain and Sweden, with 1,249³ FTEs
• Geveran owns 46% of Oslo-listed Axactor SE

A leading European debt collector Operating in stable and well developed markets¹

3 1) Share of Gross revenue last twelve months Q4 2021

2) Spain excl. REO 27%; REO 12%

3) Including Credit Recovery Service which was acquired in January 2022

Axactor is pursuing a niche strategy to disrupt the industry on cost-to-collect

NPL cost-to-collect for selected peers in 2020¹ (%)

• Axactor incepted to disrupt the industry on costto-collect
• Continued innovation and growing economies of scale to fuel further improvements
• Niche strategy supporting long-term competitiveness
  • Countries: Organic growth in current countries
  • Products: NPL & 3PC
  • Debt origination: Bank and finance
  • Debt type: Fresh, unsecured, business to consumer

4 1) Cost is calculated as DOPEX + allocation of unallocated OPEX and Depreciation & Amortization (excluding amortization of NPL portfolios). DOPEX is used as allocation key. Income is calculated as Total income adjusted for revaluations to show income excluding one-time effects based on changes in future expectations. Additional adjustments made on two peers to make numbers comparable, e.g. due to reporting numbers as a bank. Axactor updated with 2021 numbers. 1)

Agenda

Key financial highlights for the quarter

- Headlines of Q4 financials announced in the market update 17 January²

All numbers in EUR

YoY growth

• A majority of the revaluation relates to legacy portfolios acquired during the start-up phase of the company

• Cash EBITDA in line with last year adjusted for the REO run-off segment and EUR 2.2m in settlement cost
• NPL investments increasing for the second consecutive quarter

6 1) Return on equity, excluding non-controlling interests, annualized

2) For further information please see the stock exchange notice "Axactor SE: Market update" 17 January 2022

Key financial highlights for 2021

All numbers in EUR

YoY growth

• Implemented a cost reduction program with annual savings of EUR 6m
• Cost of funding reduced through obtaining credit rating and entering the European high yield bond market
• NPL investments has turned into growth during the second half of 2021 at satisfying gross IRR levels

Highlights per segment in 2021

• The company has acquired NPL portfolios at a gross IRR of 23% in 2021, 8%-points higher than the gross IRR on the total NPL portfolio at year end 2020
• Growth in NPL investments during the last two consecutive quarters and EUR 117m already secured in estimated commitments for 2022 at a gross IRR of 22%
• The negative trend on 3PC revenue y-o-y has turned into growth and the contribution margin has improved to 47% on the back of the cost reduction program in 2021
• The acquisition of CRS in Italy announced in Q4 comes with a recurring annual 3PC revenue of approximately EUR 6 million with effect from 1 January 2022

8

• Axactor has sold off ~90% of the REO portfolio¹
• Gross revenue for the segment came in at EUR 40m in 2021 and consolidated book values are down to only EUR 29m at year end
• In 2022 the REO segment will be reported as discontinued operations in the financial statement

1) Including revaluations

In the tail

Axactor has a robust balance sheet and is well positioned despite negative revaluations in Q4

NPL investments significantly above previous quarters and double of replacement capex in Q4

NPL investments (EUR million)

• NPL investments increasing for the second consecutive quarter
• NPL investment market normalizing during second half of 2021, but with lower volumes generated during the pandemic
• Expect NPL investments of EUR 200 250m in 2022, well above the estimated replacement capex of EUR 108m

Axactor is building up forward flow commitments enabling healthy growth going forward

NPL investments on forward flow contracts (EUR million)

• During 2021 Axactor invested EUR 71m on forward flow contracts
• For 2022 we have already secured estimated committed NPL investments of EUR 117m
• We expect to sign further forward flow contracts increasing investments in 2022
• In combination with one-off transactions the forward flow contracts is expected to secure healthy growth on the NPL segment going forward

NPL investments are made at a healthy gross IRR level

• The single most important profit improvement initiative for Axactor is to improve the portfolio profitability
• Gross IRR on total NPL book gradually increasing, up 0.6%-point last 12 months
• Everything else equal, 1%-point gross IRR improvement on the total NPL book equals 2%-point improvement in ROE
• Committed NPL investments for 2022 5.6%-points higher than the current NPL book

Successful implementation of the cost reduction program in 2021 has secured cost declining by 5% y-o-y

Total OPEX and D&A¹ (EUR million)

• Axactor is working continuously on implementation of cost reduction initiatives to increase profits and improve the competitive position
• Actual cost reduced by 4% from Q4 2019 to Q4 2020 and further 5% from Q4 2020 to Q4 2021

Agenda

Outlook

• The large negative NPL revaluation booked in the fourth quarter 2021 reduces downside risk for collection performance, which is expected to fluctuate around 100% going forward
• The cost reduction program has delivered above expectation, rendering a lower cost base going into 2022 than the Group had going into 2021
• Axactor expect to deploy between EUR 200 million and EUR 250 million in NPL portfolios for the coming twelve months, well above replacement capex of EUR 108m
  • Axactor has already estimated NPL investment commitments for EUR 117 million in 2022 at a satisfying 22% gross IRR level
• The acquisition of CRS in Italy comes with a recurring annual 3PC revenue of approximately EUR 6 million with effect from 1 January 2022

Supporting information

Financial highlights

Q4 2021

Declining gross revenue driven by declining revenue on the run-off segment REO and backloaded NPL investments

Gross revenue (EUR million)

• Run-off segment REO with EUR 3.5m lower revenue y-o-y as the segment is moving into the tail
• 75% of NPL portfolio investments in 2021 was during the second half yielding little cashflow in Q4, contrary to the investment profile in 2020

Financials heavily impacted by negative revaluation in Q4

- Cash EBITDA in line with last year adjusted for REO and EUR 2.2m in settlement cost in Q4

EBITDA and EBITDA-margin

Total Income

(EUR million)

(EUR million and %) 24 14 -30 30 ^{17 18 22} 10 49% 32% Q2 20 -105% Q4 19 Q1 20 -124% 25% Q3 20 32% Q4 20 29% Q1 21 34% Q2 21 22% Q3 21 Q4 21 -27

Cash EBITDA (EUR million)

Continued positive trend on depreciation and net financials

D&A¹ , Net financials and tax (EUR million)

Net profit after tax (EUR million)

Comments

• Depreciation and amortization trending down following investment discipline
• Placement of the bond ACR03 reduces funding cost
• FX-hedge reduces variability in net financials

Volatile ROE to shareholders during the pandemic

Return on Equity excl. non-controlling interest per quarter (Annualized in percent)

• Axactor with volatile financial results during the pandemic
• The large negative NPL revaluation booked in the fourth quarter 2021 reduces downside risk for collection performance, which is expected to fluctuate around 100% going forward
• ROE expected to improve and stabilize going forward

NPL portfolio

Q4 2021

NPL segment affected by negative revaluations in Q4

NPL Gross Revenue and CM% (EUR million and %)

• Gross revenue on NPL down 4% y-o-y
  • 75% of NPL portfolio investments in 2021 was during the second half yielding little cashflow in Q4, contrary to the investment profile in 2020
• Gross revenue on NPL up 4% compared to same quarter in 2019

Revaluation on NPL in Q4 is driven by a collection shortfall

NPL unsecured active forecast versus collection

Declining collection performance after a weak H2 2021

Actual collection vs. active forecast¹ (LTM, rolling)

• Q4 collection performance of 91%
  • LTM collection performance of 94%
• Long term average performance expected to fluctuate around 100%

NPL investment commitments of EUR 117m next 12 months

Quarterly NPL investments (EUR million)

• NPL investments increasing during the second half of 2021
• Trend expected to continue in 2022
• Commitments decrease towards the end of the period as contracts expire – expect to sign new volumes offsetting the decline

ERC decreasing by 1% y-o-y due to net negative revaluations

Estimated ERC development (EUR million)

Forward ERC profile by year (EUR million)

ERC split on estimated yield and amortization

- Axactor uses the IFRS industry standard, the effective interest method, to calculate amortization

ERC next four quarters (EUR million)

ERC next 15 years (EUR million)

3PC

Q4 2021

3PC development

- Margins are improving. Structuring organization to be positioned for volume ramp-up

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

• The negative trend on 3PC revenue y-o-y has turned into growth with a 3PC total income growth of 3% y-o-y
• The contribution margin has improved to 47% on the back of the cost reduction program in 2021

3PC volumes by geographic region

3PC total income split by geographic region

• Spain accounting for 60% of total income on 3PC
• Following the acquisition of C.R. Service in Italy we expect Italy to increase their relative share to between 10% and 15% going forward

REO portfolio (run-off segment)

Q4 2021

REO development (run-off segment)

- Good sales momentum on a declining asset base, but with negative margins

REO total income and CM% (EUR million and %)

• Axactor has sold off ~90% of the REO portfolio¹
• Gross revenue for quarter came in at EUR 9m
• Consolidated book values are down to only EUR 29m at year end
• In 2022 the REO segment will be reported as discontinued operations in the financial statement

REO portfolio in the tail

REO statistics*

(EUR million)

Current book
Asset class	# assets	% of total	Book value	% of total
Housing	551	38%	16 8	57%
Parking , annex etc	491	34%	1 4	5%
Land	217	15%	1 9	7%
Commercial	187	13%	9 9	34%
Eliminations	0	0%	-0 7	-2%
Total	1 446 ,	100%	29 3	100%

Originally acquired
Asset class	# assets	% of total	Book value	% of total
Housing	4 042 ,	47%	195 9	68%
Parking , annex etc	3 406 ,	39%	15 8	5%
Land	357	4%	9 4	3%
Commercial	872	10%	66 5	23%
Total	8 677 ,	100%	287 6	100%

• Housing represent >50% of current book value
• Average book value per remaining asset EUR 20k
  • Average book value per sold asset of EUR 34k
  • Average sale price per sold asset of EUR 37k

Covenants

Q4 2021

Bond covenants (1/2)

- Compliant with all covenants

Loan-to-value¹- Covenant ≤75% (Total portfolio book value divided by net interest-bearing debt)

Secured Loan-to-value¹ - Covenant ≤65%

(Total portfolio book value divided by secured net interest-bearing debt)

Bond covenants (2/2)

- Compliant with all covenants

Leverage ratio¹- Covenant ≤4.0x (Net interest-bearing debt divided by LTM Pro-forma adjusted EBITDA

Interest coverage ratio¹ - Covenant ≥4.0x (Pro-forma adjusted cash EBITDA divided by net interest expenses)

Appendix

P&L statement

	For the end quarter		Year date to
EUR thousand	31 Dec 2021	31 Dec 2020	31 Dec 2021	31 Dec 2020
Interest income from purchased loan portfolios	43,506	41 758 ,	168 421 ,	163 093 ,
gain/(loss) Net purchased loan portfolios	-44,588	-12 283 ,	-62 013 ,	-49 813 ,
Other operating revenue	22,575	25 191 ,	88 704 ,	87 871 ,
Other income	12	-24	15	24
Total income	21,505	54 642 ,	195 127 ,	201 175 ,
Cost of REO's sold incl impairment ,	-16,916	976 -5 ,	-50 515 ,	-52 932 ,
Personnel expenses	-13,609	-13 794 ,	-61 313 ,	-54 872 ,
Operating expenses	-17,543	-17 381 ,	-59 565 ,	-61 372 ,
Total operating expenses	-48,068	-37 150 ,	-171 393 ,	-169 176 ,
EBITDA	-26,563	17 493 ,	23 733 ,	31 999 ,
Amortization and depreciation	-2,442	-2 981 ,	-9 654 ,	-10 838 ,
EBIT	-29,006	14 511 ,	14 080 ,	21 161 ,
Financial revenue Financial	3,177	3 773 , -21 469	3 033 , 809 -57	12 650 , -66 039
expenses financial Net items	-16,191 -13,013	, -17 697	, -54 775	, -53 390
		,	,	,
Profit/(loss) before tax	-42,019	-3 186 ,	-40 696 ,	-32 228 ,
Tax (expense)	483	3 628 ,	-5 296 ,	-1 774 ,
Net profit/(loss) after tax	-41,536	443	-45 992 ,	-34 002 ,
Attributable to:
Non-controlling interests	-6,464	629	-13 194 ,	-15 871 ,
Shareholders of the parent company	-35,073	-187	-32 797 ,	-18 131 ,
Earnings per share: basic	-0.116	0 015	-0 112	-0 099
Earnings per share: diluted	-0.116	0 014	-0 112	-0 099

Balance sheet statement

EUR thousand	31 Dec 2021	31 Dec 2020	Full year 2020
ASSETS
Intangible non-current assets
Intangible Assets	17,824	19,989	19,989
Goodwill	55,960	54,879	54,879
Deferred tax assets	13,700	7,769	7,769
Tangible non-current assets
Property, plant and equipment	2,290	2,530	2,530
Right-of-use assets	10,768	4,826	4,826
Financial non-current assets
Purchased debt portfolios	1,095,789	1,124,699	1,124,699
Other non-current receivables	338	458	458
Other non-current investments	28	196	196
Total non-current assets	1,196,698	1,215,346	1,215,346
Current assets
Stock of Secured Assets	29,310	78,786	78,786
Accounts Receivable	7,060	7,124	7,124
Other current assets	16,154	11,645	11,645
Restricted cash	2,372	2,946	2,946
Cash and Cash Equivalents	41,581	47,779	47,779
Total current assets	96,476	148,281	148,281
TOTAL ASSETS	1,293,175	1,363,627	1,363,627

EUR thousand EQUITY AND LIABILITIES	31 Dec 2021	31 Dec 2020	Full year 2020
Share Capital	158,150	97,040	97,040
Other paid-in equity	269,919	236,562	236,562
Retained Earnings	-40,475	-16,036	-16,036
Translation reserve	-7,074	-15,999	-15,999
Other reserves	-245	0	0
Non-controlling interests	976	74,113	74,113
Total Equity	381,249	375,680	375,680
Non-current Liabilities
Interest bearing debt	834,411	579,282	579,282
Deferred tax liabilities	6,144	6,436	6,436
Lease liabilities	8,866	2,804	2,804
Other non-current liabilities	1,994	1,433	1,433
Total non-current liabilities	851,415	589,955	589,955
Current Liabilities
Accounts Payable	7,282	6,147	6,147
Current portion of interest bearing debt	3,845	356,903	356,903
Taxes Payable	20,259	12,002	12,002
Lease liabilities	2,185	2,282	2,282
Other current liabilities	26,941	20,657	20,657
Total current liabilities	60,511	397,992	397,992
Total Liabilities	911,925	987,947	987,947
TOTAL EQUITY AND LIABILITIES	1,293,175	1,363,627	1,363,627

Legal organization December 2021

Terms and abbreviations

Abbreviations

WACC Weighted Average Cost of Capital WAEP Weighted Average Exercise Price

		3PC	Third-Party Collection
		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)
Terms		CF	Consolidated Statement of Cash Flow
		CGU	Cash Generating Unit
Active forecast	Forecast of estimated remaining collection on NPL portfolios	CM1	Contribution Margin
Cash EBITDA margin	Cash EBITDA as a percentage of gross revenue	D&A	Depreciation and Amortization
Contribution margin (%)	Total operating expenses (excluding SG&A, IT and corporate cost) as a percentage of total income	Dopex	Direct operating expenses
Collection performance	Collection on own NPL portfolios in relation to active forecast	EBIT	Operating profit/Earnings before Interest and Tax
Equity ratio	Total equity as a percentage of total equity and liabilities	EBITDA	Earnings before Interest, Tax, Depreciation and Amortization
Forward flow agreement	Agreement for future aquisitions of NPLs at agreed prices and delivery The credit adjusted interest rate that makes the net present value of ERC equal to NPL book value, calculated using	ECL	Expected Credit Loss
		EPS	Earnings Per Share
Gross IRR	monthly cash flows over a 180-months period	ERC	Estimated Remaining Collection
NPL amortization rate NPL amortization divided by NPL gross revenue One off portfolio aquisitions Aquisition of a single portfolio of NPLs Opex Total operating expenses Recovery rate Portion of the original debt repaid		FTE	Full Time Equivalent
		IFRS	International Financial Reporting Standards
		LTV	Loan to value
		NCI	Non-Controlling Interests
Replacement capex	Aquisitions of new NPLs to keep the same book value of NPLs from last period	NPL	Non-Performing Loan
SG&A, IT and corporate cost	Total operating expenses for overhead functions, such as HR, finance and legal etc Accumulated paid principal amount for the period divided by accumulated collectable principal amount for the	OB	Outstanding Balance, the total amount Axactor can collect on claims under management, including outstanding principal, interest and fees
Solution rate	period. Usually expressed on a monthly basis Interest income from purchased NPL portfolios including net gain/(loss) on the NPL portfolios	P&L	Consolidated Statement of Profit and Loss
Yield		PCI	Purchased Credit Impaired
		PPA	Purchase Price Allocations
		REO	Real Estate Owned
		ROE	Return on Equity
		SG&A	Selling, General & Administrative
		SPV	Special Purpose Vehicle
		VIU	Value in Use

axactor.com