Q4 2018 presentation
Axactor SE
February 13, 2019
From start-up to top-10 player in Europe in 3 years
- Axactor has become a leading European debt management provider
- Accumulated investments of >EUR 1bn since inception
- Established collection platform companies in six countries
Generated strong revenue growth
- More than doubling of revenues
- Growth in all segments
- Investments and contracts signed in 2018 point towards continued revenue growth in 2019
Scalability beginning to show through in earnings
- Tripling of EBITDA
- 22% EBITDA-margin
- Improvement reflecting higher volumes, better geographical mix and high operational leverage
Focus on profitable growth
- Large and increasing NPL opportunities with attractive IRR
- Strengthening the 3PC and ARM business
- Relentless focus on ONEAXACTOR to sharpen the competitive edge
Key highlights Q4 2018
- Continued strong growth in revenue and sharp increase in EBITDA-margin
- Positive development across all segments
- High portfolio investments of EUR 334m in Q4, mainly in NPL
- Planned investment level of EUR 350-400m in 2019
Events post Q4 closing
- Acquisition of minority shareholder position (10%) in Axactor Italy S.p.A
- DnB/Nordea release of EUR 100 million of RCF accordion option (of total EUR 150 million)
- Signed small forward flow agreement and acquired NPL portfolio from a financial institution in Sweden
Growth and margin improvement
Gross revenue development (EUR million)
EBITDA (EUR million) and EBITDA-margin
Cash EBITDA (EUR million)
Growth across all segments
Gross revenue per segments (EUR million)
- Investment driven NPL growth, with limited effect of large investments in Q4
- REO sales on par with previous two quarters
- Limitations in sales capacity
- Market pausing in Oct-Nov due to political issues which were solved in December
- Healthy 3PC growth boosted by new Spanish contracts and acquisition of SPT in Finland
- ARM business stable before roll-out to new markets
Growing geographical footprint
Gross revenue per country (EUR million)
- 2018 with gross revenue growth in all countries
- Positive entry into Finland
- Revenue of EUR 3m based on one month of operation - exceeding Sweden and Italy
- Started implementing ONEAxactor
- Northern Europe expected to grow in relative importance
- Signed significant forward flow agreements in Germany, Norway and Sweden
EBITDA & Cash EBITDA: Profitability development LTM
EBITDA (EUR million) and cash EBITDA, Last 12 months
- 2018 EBITDA increased to EUR 46m
- High volume growth
- Favourable revenue mix
- High operational leverage
- 2018 Cash EBITDA increased to EUR 136m
- NPL cash EBITDA follows collection performance
- Steady growth in 3PC and ARM
- REO affected by lower than expected scale-up of sales, and EUR 2m negative effect of portfolio revaluation at lowest value principle (IFRS)
NPL portfolio
NPL: High investment level in more balanced portfolio
Quarterly NPL investments (EUR million)
NPL investments (EUR million), LTM rolling
NPL: Step change in total portfolio size
ERC development (EUR million) NPL book value per country (EUR million)
NPL: Forward flow build-up
Estimated FF from signed contracts (EUR million)
- Continued inflow of new forward flow contracts
- Several new contracts in Sweden, including large 18-month contract starting up in March
- Added large financial institution to the client list in Norway
- Extended the Instabank partnership to Finland
- Estimated forward flow of EUR 258m from signed contracts in 2019
- Expecting renewal of contracts expiring in 2019
NPL: Estimated collection points to profitable growth
Actual collection vs. original business case (LTM, rolling)
Forward ERC profile by year (EUR million)
REO portfolio
REO: Reduced capex – asset bulk sales in 2019
REO in Spain (EUR million)
- Axactor tuning down the REO investment level deployed only EUR 6m into REO assets in Q4
- 2019 focus is NPL investments, with good portfolio availability and increasing IRRs
- Timing of asset realizations somewhat postponed due to capacity limitations (bailiff/brokers)
- Exploring opportunities for bundle sales to add to regular unit divestments
- Underlying market, price levels and asset values remain largely intact
- Modest negative effect of EUR 2m of total portfolio
Quarterly REO capex, book value and ERC
REO investments, Spain (EUR million)
REO book value and ERC, Spain (EUR million)
REO – Lifetime KPIs
Sales (EUR million)* No. of assets sold*
- Lifetime portfolio performance ahead of original business case
- Low quality assets sold at a discount in Q4
- Average sales prices:
- Lifetime: EUR 44 k
- 2018: EUR 45 k (2.001 units sold)
- Q4'18: EUR 38 k ( 612 units sold)
- 6,928 units remaining in inventory at YE 2018
3PC & ARM
Growing the platform business
Gross revenue (EUR million)
- Targeting a more balanced product portfolio
- Established 3PC businesses in all markets
- Strong 3PC offers synergies in terms of business origination, collection execution and data generation
- Established customer relationships with leading financial institutions, including nine of the top 10 Spanish banks
- Increasing contribution of cash rich and capital light earnings for reinvestments
- ARM platform to be rolled out to more markets in 2019
- Established in Norway and Sweden, moving into Finland, Germany and Italy
One Axactor
- Digitalization
- Partnerships
- Systems
- Standardization
- Common KPIs
- Benchmarking
Financials
Contribution per segment – excl. unallocated overhead costs
Contribution per segment (EUR million)*
- Stronger NPL contribution due to higher volumes and more favourable geographical mix
- Steadily improving 3PC contribution with new contracts continuing to add volumes
- Stable development in ARM
- Slightly negative REO contribution in the quarter
- Includes EUR -2m effect of portfolio revaluation at lowest value principle
- Sold a number of low quality assets with a discount in Q4, contributing to low margin
Net finance, tax and net profits
Condensed Income statement Key comments
| EUR thousand |
Q4 2018 |
Q4 2017 |
2018 |
2017 |
| EBIT |
17 885 |
4 237 |
40 297 |
9 488 |
| Net financial items |
-12 447 |
-5 596 |
-34 138 |
-7 515 |
| Profit/ -loss before tax |
5 438 |
-1 359 |
6 159 |
1 974 |
| Tax expense |
-2 624 |
706 |
-3 770 |
611 |
| Net profit/-loss from operations |
2 814 |
-653 |
2 389 |
2 586 |
|
|
|
|
|
| Net profit/-loss to minority interest |
-1 578 |
-32 |
-2 103 |
-32 |
| Net profit/-loss to equity holders |
4 392 |
-622 |
4 492 |
2 617 |
|
|
|
|
|
| Earnings per share: basic |
0.028 |
0.000 |
0.029 |
0.002 |
| Earnings per share: diluted |
0.025 |
0.000 |
0.026 |
0.002 |
- Total net financial cost of EUR 12.4m in Q4
- Interest cost of EUR 9.5m, of which EUR 1.4m amortized loan fees
- Accrued EUR 2.1m for distr. of interest on Axactor invest 1 A-notes to non-controlling interests
- Average blended interest costs of 4.9%
- Negative net FX impact of EUR 0.3m
- Tax expense of EUR 2.6m in Q4
- High effective tax as certain loss-making entities are not allowed to recognize tax assets
- Net profit to equity shareholders of EUR 4.4m
Balance sheet structure
Assets (EUR million) Equity & Liabilities (EUR million)
Debt maturity profile
Revolving Credit Facility, EUR 250m + EUR 150m accordion Axactor Invest 1, EUR120m senior debt facility Bond, EUR 150m + EUR 100m tap option Reolux/Nomura, EUR 99m outstanding balance Axactor Invest 1, EUR 120m mezzanine
- Net interest bearing debt of EUR 664 million
- Cash flow from operations within restricted group more than covering investments in forward flow agreements after gearing
- EUR 150m accordion option with Nordic banks, of which EUR 100m released in February 2019
- EUR 100m bond tap option
- Axactor Invest 1 close to fully invested, will reinvest running cash flow through already signed forward flow contracts
Summary & Outlook
Q4 & 2018 Summary
- Continued growth and margin expansion
- High investments in several markets step change in portfolio size
- Geographical expansion positive entry into Finland
- Continuing to drive efficiency and cost through "ONEAxactor"
Outlook
- High investment level in 2018 secures healthy profitable growth in 2019
- Increasing revenue expected from 3PC and ARM
- Margin expansion expected to continue from 2018 to 2019, with quarterly fluctuations
- High volume of NPL portfolios for sale in our markets, with portfolio IRRs on the increase
Appendix
Legal Organization February 2019
P&L statement
|
|
for the quarter end |
|
Full Year |
|
|
|
31 Dec |
31 Dec |
31 Dec |
31 Dec |
|
|
2018 |
2017 |
2018 |
2017 |
| EUR thousand |
Note |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net revenue |
3,4 |
68 034 |
28 652 |
206 909 |
87 745 |
| Other revenue |
з |
0 |
o |
o |
2040 |
| Total revenue |
|
68 034 |
28 652 |
206 909 |
89785 |
|
|
|
|
|
|
| Cost of secured assets sold (REOs) |
7 |
$-16417$ |
$-1321$ |
$-54491$ |
$-1445$ |
| Personnel expenses collection |
|
$-8815$ |
$-7400$ |
$-32584$ |
$-26578$ |
| Personnel expenses other |
|
$-5211$ |
$-6478$ |
$-19548$ |
$-18378$ |
| Operating expenses |
|
$-18019$ |
$-7805$ |
$-53979$ |
$-28,569$ |
| EBITDA |
|
19571 |
5 6 4 9 |
46 30 6 |
14815 |
|
|
|
|
|
|
| Amortization and depreciation |
|
$-1686$ |
$-1412$ |
$-6009$ |
$-5327$ |
|
|
|
|
|
|
| EBIT |
|
17885 |
4 2 3 7 |
40 297 |
9488 |
|
|
|
|
|
|
| Financial revenue |
5 |
58 |
252 |
453 |
3070 |
| Financial expenses |
5 |
$-12504$ |
$-5848$ |
$-34590$ |
$-10,585$ |
| Net financial items |
|
$-12447$ |
-5 596 |
$-34138$ |
$-7515$ |
|
|
|
|
|
|
| Profit/ (loss) before tax |
|
5438 |
$-1359$ |
6 1 5 9 |
1974 |
| Tax expense |
|
$-2624$ |
706 |
$-3770$ |
611 |
| Net profit/(loss) from operations |
|
2814 |
$-653$ |
2 3 8 9 |
2586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net profit/(loss) to Non controlling interest |
5 |
$-1578$ |
$-32$ |
$-2103$ |
$-32$ |
| Net profit/(loss) to equity holders |
|
4 3 9 2 |
$-622$ |
4 4 9 2 |
2617 |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share: basic |
|
0,028 |
0,000 |
0,029 |
0,002 |
| Earnings per share: diluted |
|
0.025 |
0,000 |
0.026 |
0,002 |
|
|
|
|
|
|
Balance sheet statement
|
31 Dec |
31 Dec |
|
2018 |
2017 |
EUR thousand
Note |
|
|
| Assets |
|
|
|
|
|
| Intangible non-current assets |
|
|
| Intangible assets |
19 170 |
18 3 5 9 |
| Goodwill |
55 5 78 |
53 582 |
| Deferred tax asset |
7564 |
3 9 4 5 |
|
|
|
| Tangible non-current assets |
|
|
| Property, Plant and equipment |
2683 |
2499 |
|
|
|
| Financial non-current assets |
|
|
| Investment in joint ventures |
|
|
Purchased debt portfolios
6 |
728820 |
317150 |
| Other long term receivables |
801 |
1065 |
| Other long term investments |
170 |
191 |
| Total non-current assets |
814 786 |
396 791 |
| Current assets |
|
|
Stock of secured assets REO's
7 |
200 009 |
154 101 |
| Current receivables |
9937 |
8047 |
| Other current assets |
12 2 9 4 |
13070 |
| Restricted cash |
24 |
1878 |
| Cash and cash equivalents |
70 753 |
48 604 |
| Total current assets |
293 016 |
225 700 |
| Total assets |
1 107 802 |
622 491 |
Equity and liabilities
Total
equity
and
liabilities |
|
1
107
802 |
622
491 |
|
|
|
|
Total
liabilities
current |
|
197
233 |
84
198 |
Other
liabilities
current |
|
24
513 |
17
603 |
Payable
Taxes |
|
1
610 |
1
376 |
of
borrowings
Current
portion
non-current |
9 |
166
588 |
61
189 |
payables
Accounts |
|
4
522 |
4
029 |
Current
liabilities |
|
|
|
|
|
|
|
Total
liabilities
non-current |
|
582
399 |
246
459 |
Other
liabilities
non-current |
|
3
446 |
3
002 |
Deferred
liabilities
tax |
|
11
124 |
5
887 |
bearing
debt
Non-current
interest |
9 |
567
829 |
237
571 |
liabilities
Non-current |
|
|
|
Total
equity |
|
328
171 |
291
833 |
Non-controlling
interests |
|
63
746 |
31
776 |
| Reserves |
|
-2
817 |
1
3 |
profit/(Loss)
Retained
earnings |
|
-14
172 |
-15
630 |
Other
paid-in
equity |
|
200
298 |
196
298 |
Share
Capital |
8 |
81
115 |
79
377 |
attributable
holders
of
the
Equity
equity
to
parent |
|
|
|