Axactor SE

Quarterly Report • Aug 14, 2017

Report Q2 2017

August 14, 2017

Highlights

Second Quarter of 2017

• · Gross revenue grows by 37% from previous quarter to EUR 26.9 million.
• · Net profit is positive with EUR 4.6 million for the quarter.
• · EBITDA of EUR 6.1 million and Cash EBITDA at EUR 9.4 million for the quarter.
• · Settlement with former IGE Board members increased revenue and EBITDA by EUR 2 million.
• · In April Axactor increased the NPL funding lines from regional banks in Italy to EUR 55 million whereof EUR 29 million has been utilized.
• · In May the 4th and last tranche from DNB / Nordea was released including a volume increase from EUR 25 million to EUR 45 million increasing the facility to EUR 120 million.
• · In May Axactor completed a successful private placement issuing 50 million new shares, with gross proceeds of approximately NOK 107 million.
• · In April Axactor signed a total of 7 new 3PC contracts with financial institutions in Spain for a combined estimated annual revenue of EUR 8 million. The contracts are renewable every 12 months.
• · On 2 May 2017 Axactor acquired another two unsecured NPL portfolios in Italy. The portfolios are Auto finance shortfalls with a total outstanding balance of approximately EUR 22 million across 2,500 cases.
• · On 12 June 2017 Axactor acquired a NPL portfolio from Santander with an outstanding balance of more than EUR 300 million across 60,000 cases.
• · On 28 June 2017 Axactor purchased a portfolio from BMN in Spain with an outstanding balance in excess of EUR 165 million across more than 7,500 cases.
• · On 19 June 2017 Axactor Germany acquired its first unsecured NPL portfolio originated by a large German bank. The portfolio has a outstanding balance of EUR 32 million.
• · On 22 June 2017 Axactor completed its first secured transaction in Spain. The portfolio was sold by a large financial institution and contains roughly 600 assets with an appraisal value of around EUR 50 million.

Key events after end of the report period

• · In July Axactor signed a total of 4 new 3PC contracts with financial institutions in Spain and Germany for a combined estimated annual revenue of EUR 5 million. The contracts are renewable every 12 months.
• · In July, DNB and Nordea made a 5th tranche of EUR 40 million available with 100% gearing allowed on new NPLs – total facility increased from EUR 120 to 160 million.

Operations

Axactor shows record strong operating performance during the second quarter of 2017 and continues to grow the business through acquisitions of NPL portfolios and signing of new 3PC contracts. To fuel the growth the company has secured additional funding facilities from the banks in addition to the private placement which was successfully completed during the quarter.

The strong operating performance in second quarter resulted in a EBITDA of EUR 6.1 million and operating margin of 26%. The gross revenue of EUR 26.9 million was in line with company expectations, while total operating cost was 6% higher than previous quarter due to full quarter effect of Profact acquisition and high level of implementation projects within the IT area.

The settlement with the former IGE Board members contributed with a positive one-time effect of approx. EUR 2 million to revenue and EBITDA as Axactor in June received EUR 1.6 million cash and 0.4 million in none cash compensation.

The Group posted a record-high quarterly cash EBITDA of EUR 9.4 million, an increase of EUR 11.5 million compared to Q2 2016 and an increase of EUR 5.8 million compared to previous quarter.

The major contributor to the enhanced operational result is the Bank Norwegian portfolio where the portfolio shows performance significantly ahead of the initial investment case. Additionally, 3PC revenue was up by 18% compared to previous quarter, and these two elements combined with a modest development in cost resulted in a significant margin expansion for the quarter.

During the quarter the Group acquired its first portfolio in Germany and the first secured portfolio in Spain. In total Axactor invested EUR 54 million across 6 portfolios which increased ERC at the end of the quarter to EUR 511 million. The company sees promising developments in the newly acquired Spanish secured portfolio and expects to see meaningful contributions already in Q3 from this, for Axactor, new business line.

Axactor further increased the borrowing facilities in Norway and Italy by a total of EUR 71 million during the quarter, bringing total borrowing facilities earmarked for investments up to EUR 175 million at the end of Q2. Furthermore, in July of 2017, DNB and Nordea made a 5th tranche of EUR 40 million available bringing total borrowing facilities for investments to EUR 215 million. On the back of these two increases the company presently has approximately EUR 80 million in NPL investment capacity.

In May, the company did a private placement of 50 million shares which enabled Axactor to close a EUR 30 million NPL investment in Spain which subsequently was announced during June.

The market for purchase of NPL portfolios remains buoyant with Spain and the Nordics being the most active markets. New contracts within the 3PC segment is showing positive development particularly in Spain, where a total of 7 new contracts with a combined annual value of EUR 8 million have been announced during the quarter. Traditionally 2nd and 4th quarter are the most active periods within the debt purchasing segment and the company is in dialog with major financial institutions in all markets regrading new opportunities.

Key Figures Axactor AB (group)

EUR million	Q2 2017	Q1 2017	Q4 2016	Q3 2016	Q2 2016
Gross Revenue	26.9	19.7	18.5	11.1	7.8
Net Revenue	23.6	17.4	16.4	10.7	6.9
EBITDA	6.1	1.0	-1.2	-0.8	-3.4
Cash EBITDA 1)	9.4	3.6	0.3	0.2	-2.1
Normalized EBITDA 2)	6.1	1.0	-0.5	-0.2	-1.6
Depreciation and Amort. (excl. Portfolio Amortization)	-1.1	-1.4	-1.2	-0.9	-0.7
Net Financial Items	0.2	-1.1	-3.1	0.2	1.0
Tax	-0.6	-0.1	0.9	-0.6	0.4
Net Result	4.6	-1.7	-4.7	-2.1	-2.8
Cash and Cash Equivalents at end of Period	19.6	52.8	64.6	34.1	35.6
Acquired NPL portfolios during the Period 3)	54.3	66.5	33.8	39.5	31.9
Book Value of NPL portfolios at end of Period 4)	242.1	191.9	128.0	98.7	63.7
Gross Collection on Debt Portfolios during the quarter 5)	14.3	10.5	8.5	3.9	1.4
Estimated Remaining Collection (ERC) at end of quarter	510.7	427.1	317.1	253.2	126.0
Interest Bearing Debt at end of Period	128.2	66.0	74.0	84.6 7)	37.4 6)
Number of Employees (FTE) at end of Period	888	885	850	900	702

1) Cash EBITDA is adjusted for calculated cost of share option program and portfolio amortizations.

2) Defined as EBITDA adjusted for non-recurring items.

3) Includes portfolios on the balance sheet of CS Union and Altor at the time of acquisition.

4) Includes portfolios in CS Union and Altor per balance sheet date.

5) Excluding collections on CS Union portfolios in Q2 and Altor portfolios in Q3.

6) Includes EUR 22.5 million in bank debt in CS Union.

7) Q3-16 includes EUR 13.2 million in bank debt in Altor. This amount was refinanced with the DNB/Nordea facility in Q4-16.

Background

Axactor AB is a newly established European credit management services company with an initial focus on Spain, Germany, Italy and the Nordic countries.

The company is domiciled in Sweden and listed in Norway at the Oslo Stock Exchange with ticker "AXA". The number of shareholders amounts to some 10.300 and management is located in Oslo.

In Spain. Axactor owns 100% of the subsidiary ALD Abogados SL ("ALD"). which is one of the leaders in the Spanish legal debt collection market covering nearly all regions of this country. In April 2016 Axactor bought 100% of the shares in Geslico, a company that offers a fully integrated debt collection service for both secured and unsecured non-performing loans in Spain.

In Norway, Axactor acquired 100% of the shares in the IKAS group of companies in March 2016. The company was renamed Axactor Norway in August 2016 and is one of Norway's most reputable suppliers of invoice administration and debt collection with regional offices throughout Norway.

In Italy Axactor owns 90% of CS Union which employs approximately 100 people within credit management activities and has acquired 22 NPL portfolios with a combined open balance of of EUR 565 million. The remaining 10% of the shares in CS Union continue to be owned by Banca Sistema which in addition to Board representation in CS Union also provides attractive portfolio financing as well as access to the Italian NPL market.

Axactor acquired Altor Group in Germany in September 2016. Altor has been in business for more than 30 years and currently has 200 employees. 44 NPL portfolios and a 3PC business with approximately EUR 1.0 billion under management. Altor has head office in Heidelberg, Germany.

Axactor has entered the Swedish market in February 2017 through the acquistion of Profact AB. The company is offering credit management services and customer services in the Swedish market and employs 35 people.

Financials

Revenues

Gross revenue for the second quarter 2017 was MEUR 26.9 (7.8). Comparing to Q1 2017, the gross revenue grew by 37%. The growth is mainly driven by the acquisitions of Profact and the Bank Norwegian portfolio in Sweden, as well as a strong 3PC growth in Spain. Total amortization of NPL portfolios was MEUR 3.3 (0.8) in Q2 2017, leaving the net revenue for the quarter at MEUR 23.6 (6.9).

NPL portfolios continue to be the largest segment in terms of gross revenue, accounting for MEUR 14.2 (1.4) or 53% (18%) of total gross revenue in Q2 2017. Axactor has acquired several significant portfolios in the quarter, with a total capex of MEUR 54.3 (1.3). The most recent acquisitions are performing very well, and the overall collection performance compared to the initial business case was 97% in the quarter. Spain remains the largest country within the NPL segment, with Sweden is becoming second largest on the back of the Bank Norwegian portfolio acquisition of Q1 2017.

The 3PC segment delivered a gross revenue of MEUR 9.1 (5.0) in Q2 2017, and accounts for 34% (65%) of total gross revenue. The Spanish business grew significantly from Q1 2017 to Q2 2017, lifting the total 3PC gross revenue for the Group by 18%. The main driver of the increase in the Spanish 3PC business is increased volumes from both existing clients and from new contracts signed in Q2.

Payment Services is currently not rolled out to any other country than Norway, and comprised MEUR 1.5 (1.4), or 6% (18%) of the total gross revenue for the second quarter of 2017.

The Q2 gross revenue includes a significant one-time impact from a settlement with the former Board of Directors of MEUR 2.0.

Earnings

The reported EBITDA for the second quarter of 2017 was MEUR 6.1 (-3.4). Comparing to Q1 2017, the EBITDA grew by MEUR 5.1. The large increase in earnings is both a result of the increased revenues and of a significant improvement in margin. The margin expansion illustrates Axactors ability to leverage scale benefits and increased efficiency and knowledge sharing across the group as the company continue to grow. The EBITDA includes a positive one-off amount of MEUR 2.0 related to a settlement with the former Board of Directors. Excluding this one-time impact, the EBITDA would have been MEUR 4.1.

The cash EBITDA, (EBITDA excluding amortization and revaluations of NPL portfolios as well as calculated costs of the share option program) was MEUR 9.4 (-2.1) for Q2 2017. This is MEUR 5.8 above Q1 2017 and is showcasing the company's improved cash conversion capability.

Net profit for the period amounted to MEUR 4.6 (-2.8) for the second quarter of 2017. Earnings per share for the quarter was EUR 0.004.

Operating expenses

The total operating expenses for the second quarter of 2017 amounted to MEUR 17.5 (10.3). Direct operating expenses, which mainly consist of cost for operation staff, phone, printing & postage and fees & commission paid to external sources, comprised 60% of total operating expenses. Out of the total operating expenses, MEUR 6.6 was personnel expenses for collection staff.

Local SG&A, IT and corporate cost amounted to MEUR 7.0 (8.1). The reduction in cost is mainly related to less consulting fees, partly offset by an increase in IT cost following the business expansion during the period.

Depreciation and amortization excluding amortization of NPL portfolios was MEUR 1.1 (0.7). Most of the depreciation and amortization is related to intangible assets acquired through the acquisition of subsidiaries.

Net financial items

Interest cost on outstanding debt for the second quarter of 2017 was MEUR 1.5 (0.2). Net financial items were also impacted by FX gains of MEUR 1.6 (1.8). The positive impacts from unrealized FX gains compensated for the interest costs for the company, leaving the total net financial items at positive MEUR 0.2 (1.0) for Q2 2017.

Tax

Tax expense for the second quarter of 2017 was MEUR 0.6 (positive 0.4).

Cash flow

The cash flow from operating activities in the second quarter of 2017 amounted to MEUR 8.0 (-1.0).

Axactor invested in several NPL portfolios during Q2 2017, and the Bank Norwegian portfolio acquired in Q1 2017 was paid for in Q2. In addition, Axactor continues to invest in IT systems to optimize efficiency. Thus, the total cash flow from investments was MEUR -113.0 (-36.2).

Total cash flow from financing activities was MEUR 72.2 (53.0), as the company drew on the existing financing facilities to invest in NPL portfolios. The company did a private placement of 50 million shares in Q2 with gross proceeds of MEUR 11.4. Total cash and cash equivalents at the end of the period was MEUR 19.6 (30.4) with an additional MEUR 1.8 (5.3) in restricted cash, for a total cash balance of MEUR 21.4 (35.6).

Equity position

At the end of the second quarter of 2017, the total equity for the Group is MEUR 192.4, compared to MEUR 110.0 in Q2 2016. The resulting equity ratio at the end of the quarter was 54%, compared to 64% at the same time last year.

Comments to the 1H 2017 accounts

Gross revenues for the first half of 2017 was MEUR 46.6 (10.9) while net revenue for the same period was EURM 41.1 (9.9). Reported EBITDA for 1H 2017 was MEUR 7.1 (-4.5). Net financial items ended at MEUR -0.9 (+0.7) for 1H, resulting in a net profit of MEUR 3.0 (-4.4).

Parent company

The parent company's business activity is to manage the Group's operations. The result after tax for the second quarter 2017 ended at MEUR 2.6 (1.4). Total equity at the parent company at the end of the quarter was MEUR 200.8 (117.8).

Responsibility Statement

We confirm, to the best of our knowledge, that condensed set of the unaudited financial statements for the first half year 2017 have been prepared in accordance with IAS 34 – Interim Financial Reporting, and generally accepted accounting principles in Sweden, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole.

We also confirm that the Administration Report includes a true and fair review of the development and performance of the business and the position of the entity and the group.

Stockholm, 14 August 2017

The Board of Directors

Bjørn Erik Næss Chairman of the Board Dag W. R. Strømme Board member

Merete Haugli Board member

Brita Eilertsen Board member

Beate S. Nygårdshaug Board member

Terje Mjøs Board member

Endre Rangnes Chief Executive Officer

Consolidated Statement of Profit and Loss

		For the quarter end		YTD
EUR thousand	Note	30 June 2017	30 June 2016	30 June 2017	30 June 2016	Full year 2016
Continued operation
Net revenue from collection	3	21,592	6,948	39,020	9,941	37,074
Other revenue	3	2,040	-	2,040	-	-
Net revenue		23,632	6,948	41,060	9,941	37,074
Personnel expenses collection		-6,640	-1,644	-12,528	-2,730	-12,038
Personnel expenses other		-3,601	-2,250	-7,230	-3,336	-9,703
Operating expenses		-7,246	-6,453	-14,153	-8,399	-21,821
EBITDA		6,145	-3,399	7,149	-4,524	-6,488
Amortization and depreciation		-1,148	-719	-2,575	-984	-3,126
EBIT		4,997	-4,119	4,574	-5,508	-9,614
Financial revenue	4	1,849	1,845	1,859	2,301	1,279
Financial expenses	4	-1,633	-894	-2,738	-1,640	-3,562
Net financial items		216	951	-879	661	-2,283
Profit/(loss) before tax		5,213	-3,167	3,696	-4,847	-11,897
Tax expense		-582	379	-718	461	727
Net profit/(loss) from continued operations		4,631	-2,788	2,977	-4,385	-11,169
Earnings per share: basic		0.004	-0.002	0.002	-0.004	-0.013
Earnings per share: diluted		0.004	-0.002	0.002	-0.004	-0.012

Consolidated Statement of Comprehensive Profit and Loss

	For the quarter end		YTD
EUR thousand	30 June 2017	30 June 2016	30 June 2017	30 June 2016	Full year 2016
Net profit/(loss)	4,631	-2,788	2,977	-4,385	-11,170
Foreign currency translation differences - foreign operations	-4,288	-114	-5,307	-309	2,226
Remeasurement of pension plans	-		-		124
Other comprehensive income/ (loss) for the period	-4,288	-114	-5,307	-309	2,350
Total comprehensive income for the period attributable to:
Equity holders of the parent company	343	-2,902	-2,330	-4,694	-8,820

Interim Consolidated Statement of Financial Position

EUR thousand	Note	30 June 2017	30 June 2016	Full year 2016
ASSETS
Intangible non-current assets
Intangible assets		18,254	12,655	18,347
Goodwill		54,294	43,833	53,491
Deferred tax asset		1,590	-	1,442
Tangible non-current assets
Property, Plant and equipment		2,442	2,173	2,365
Financial non-current assets
Purchased debt portifolios	5	233,419	63,714	127,989
Other long term receivables		1,169	1,146	998
Other long term investments		221	43	415
Total non-current assets		311,390	123,565	205,046
Current assets
Stock of secured assets (NPL)	6	8,070	-	-
Current receivables		7,147	5,541	5,652
Other current assets		7,434	5,854	7,563
Restricted cash		1,800	5,260	1,510
Cash and cash equivalents		19,557	30,387	62,476
Total current assets		44,008	47,042	77,202
TOTAL ASSETS		355,398	170,607	282,248

Interim Consolidated Statement of Financial Position

EUR thousand	Note	30 June 2017	30 June 2016	31 Dec 2016
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share Capital		66,814	50,736	64,198
Other paid-in equity		142,416	201,994	262,414
Retained earnings profit/(Loss)		-15,279	-142,669	-147,438
Reserves		-1,592	-319	3,714
Non-controlling interests		-	295	-
Total equity		192,360	110,038	182,888
Non-current liabilities
Non-current interest bearing debt	7	23,486	29,622	25,149
Deferred tax liabilities		6,488	2,558	5,960
Other non-current liabilities		3,418	1,402	3,400
Total non-current liabilities		33,392	33,582	34,510
Current liabilities
Accounts payables		3,974	11,195	6,648
Current portion of non-current borrowings	7	104,749	7,735	48,852
Taxes Payable		58	1,637	387
Other current liabilities		20,866	6,419	8,962
Total current liabilities		129,646	26,987	64,850
TOTAL EQUITY AND LIABILITIES		355,398	170,607	282,248

Interim Consolidated Statement of Cash Flow

		For the quarter end		YTD
EUR thousand	Note	30 June 2017	30 June 2016	30 June 2017	30 June 2016	Full year 2016
Operating actitvities
Profit before tax		5,213	-3,166	3,696	-4,847	-11,897
Taxes paid		-757	-406	-1,419	-406	-2,271
Finance income and expense		-216	-951	878	-1,242	1,702
Amortization of debt portfolios		3,290	845	5,575	1,005	3,417
Depreciation and amortization		1,148	719	2,575	984	3,126
Calculated cost of employee share options		384	470	671	704	603
Unrealised foreign currency (gains)/losses		-	-797	-	-954	-2,875
Working capital changes		-1,100	2,244	-3,339	527	-5,570
Net cash flows operating activities		7,962	-1,043	8,637	-4,230	-13,765
Investing actitvities
Purchase of debt portfolios	5	-112,102	-6,811	-112,102	-33,698	-75,610
Investment in subsidiary (Geslico, Spain)	8	-100	-2,000	-100	-2,000	-2,000
Investment in subsidiary (IKAS, Norway)	8	-	-21,401	-	-21,401	-21,933
Investment in subsidiary (CS Union, Italy)		-	-5,950	-	-5,950	-5,950
Investment in subsidiary (Altor, Germany)	8	-	-	-	-	-17,824
Purchase of intangible and tangible assets		-861	-	-1,445	-175	-2,209
Sales of financial assets		-	-	175	-	-
Interest received		27	11	36	11	89
Net cash flows investing activities		-113,036	-36,151	-113,436	-63,212	-125,437
Financing actitvities
Proceeds from borrowings	7	76,057	14,675	76,057	14,675	57,134
Repayment of debt	7	-13,076	-	-20,234	-536	-18,307
Interest paid		-1,311	-182	-2,062	-195	-1,306
Loan fees paid	7	-646	-193	-1,978	-193	-1,491
Proceeds from share issue		11,416	40,314	11,416	51,513	132,620
Share issue costs		-285	-1,601	-285	-2,011	-4,434
Net cash flows financing activities		72,155	53,014	62,914	63,253	164,215
Currency translation		-	-297	565	-928	-1,792
Net change in cash and cash equivalents		-32,919	15,820	-43,194	-4,189	25,014
Cash and cash equivalents at the beginning of period		54,276	20,124	63,986	40,764	40,764
Cash and cash equivalents at end of period		21,357	35,647	-21,357	35,646	63,986

Interim Consolidated Statement of Changes in Equity

		Equity related to the shareholders of the Parent Company
EUR thousand	Share capital	Other paid in capital	Exchange differences	Retained earnings and profit for the year	Total Equity
Closing balance on 31 December 2015	32,655	160,787	-11	-141,216	52,215
Balance on 1 January 2016	32,655	160,787	-11	-141,216	52,215
Net result for the period	-	-	-	-11,169	-11,169
Comprehensive loss for the period	-1,726	-8,748	3,726	5,234	-1,514
Total comprehensive result	-1,726	-8,748	3,726	-5,935	-12,683
New share issues, February	3,148	7,883			11,031
New Share issues, May	11,642	27,853			39,493
Acquisition subsidiary, IKAS group	2,590	6,589			9,179
Acquisition subsidiary, CS Union	1,101	2,829			3,930
New share issues, October	3,788	17,753			21,541
New share issues, November	8,360	39,157			47,517
New share issues, December	2,641	11,898			14,539
Costs related to fund-raising		-4,470			-4,470
Share based payment		595			595
Closing balance on 31 December 2016	64,197	262,127	3,715	-147,151	182,887
Balance on 1 January 2016	64,197	262,127	3,715	-147,151	182,887
Allocation of result from discontinued operations 1)		-128,896		128,896	0
Net result for the period				2,977	2,977
Comprehensive Profit/(Loss) Foreign currency translation differences - foreign operations			-5,307		-5,307
Total comprehensive result for the period	0	0	-5,307	2,977	-2,330
New Share issues, May	2,617	8,799			11,417
Costs related to fund-raising		-285			-285
Share based payment	0	671			671
Closing balance on 30 June 2017	66,815	142,416	-1,592	-15,277	192,360

1) Ref. resolution in Annual general meeting on 31. May 2017.

Face value per share have been changed from SEK 0,50 to EUR 0,0523.

Parent Company Income Statement

		For the quarter end		YTD
EUR thousand	Note	30 June 2017	30 June 2016	30 June 2017	30 June 2016	Full year 2016
Other operating income		3,023	1,107	3,542	1,107	1,133
Operating expenses		-2,094	-1,856	-3,769	-2,209	-4,243
Personell expenses		-	-	-	-	-
EBITDA		929	-749	-227	-1,102	-3,110
Amortization and depreciation		-	-	-	-	-
EBIT		929	-749	-227	-1,102	-3,110
Financial revenue		1,776	2,348	2,127	3,026	8,141
Financial expenses		-117	-246	-117	-317	-582
Net financial items		1,659	2,103	2,009	2,709	7,559
Profit/(loss) before tax		2,588	1,354	1,783	1,607	4,449
Tax expense		-	-	-	-	-
Net profit/(loss) to equity holders		2,588	1,354	1,783	1,607	4,449

Parent Company Balance Sheet

EUR thousand	30 June Note 2017	30 June 2016	31 Dec 2016
ASSETS
Intangible non-current assets
Shares in subsidiaries	132,697	42,539	135,421
Loans to group companies	221	66,648	21,365
Other long-term receivables	60,906	14	-
Total non-current assets	193,824	109,201	156,786
Current assets
Short-term intercompany receivables	3,488	3,350	1,310
Other current assets	70	157	9
Restricted cash	415	4,429	418
Cash and cash equivalents	8,795	2,370	41,941
Total current assets	12,768	10,305	43,678
TOTAL ASSETS	206,592	119,506	200,463
SHAREHOLDERS' EQUITY
Restricted equity
Share Capital	66,814	50,736	64,197
Statutory reserve	240	240	240
Total restricted equity	67,054	50,976	64,437
Non-restricted equity
Share premium reserve	142,420	201,994	262,131
Retained earnings	-10,463	-136,795	-132,845
Result for the period	1,783	1,599	4,426
Total non-restricted equity	133,739	66,798	133,712
TOTAL SHAREHOLDERS EQUITY	200,794	117,774	198,149
LIABILITIES
Non-current liabilities
Long term intercompany liabilities	1,995	-	-
Other long term liabilities	1,332	-	1,444
Total non-current liabilities	3,327	-	1,444
Current liabilities
Accounts payables	589	477	94
Short-term intercompany liabilities	1,597	338	-
Other current liabilities	285	917	775
Total current liabilities	2,472	1,732	869
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	206,592	119,507	200,463

Parent Company Statement of Changes in Equity

	Restricted Equity		Non-restricted Equity
EUR thousand	Share capital	Statutory reserve	Share premium reserve	Exchange differences	Retained earnings	Result of the period	Total Equity
Opening balance of January 1, 2016	32,655	240	160,787		-117,265	-22,415	54,001
Transfer of prior year's net result		-	-		-21,629	21,629	0
New share issues, February	3,148		7,883				11,031
New Share issues, May	11,641		27,853				39,493
Acquisition subsidiary, IKAS group	2,590		6,589				9,179
Acquisition subsidiary, CS Union	1,101		2,829				3,930
New share issues, October	3,788		17,753				21,541
New share issues, November	8,360		39,157				47,517
New share issues, December	2,641		11,898				14,539
Costs related to fund-raising			-4,470				-4,470
Share based payment			595				595
Result of the period						4,449	4,449
Translation differences	-1,725		-8,744		6,049	762	-3,658
Closing balance on 31 December 2016	64,197	240	262,131		-132,845	4,425	198,149
Balance on 1 January 2017	64,197	240	262,131		-132,845	4,425	198,149
Transfer of prior years net result	-	-	-		4,425	-4,425	0
Allocation of result from discontinued operations 1)			-128,896		128,896		0
New Share issues, May	2,617		8,799				11,416
Costs related to fund-raising			-285				-285
Share based payment	-		670		-		670
Comprehensive Profit/(Loss) Foreign currency translation differences - foreign operations				-10,940			-10,940
Result of the period						1,783	1,783
Closing balance on 30 June 2017	66,815	240	142,419	-10,940	476	1,783	200,794

1) Ref. resolution in Annual general meeting on 31. May 2017.

Key Ratios and Share Data for the Consolidated Group

EUR thousand		2017	2016	2015	2014	2013
Number of outstanding shares at beginning of reporting period 2)	Number	1,226,488,769	596,614,360	90,809,360	18,174,922	18,174,922
New share issue	Number	50,000,000	629,874,409	505,805,000	72,634,438	-
Number of outstanding shares at the end of reporting period 1) and 2)	Number		1,276,488,769 1,226,488,769	596,614,360	90,809,360	18,174,922
Average number of shares 2)	Number	1,123,809,624	849,072,460	133,687,416	29,804,775	18,174,922
Operating result, for continued operations	TEUR	4,574	-9,614	-3,360	-1,214	-21,437
Result after tax	TEUR	2,977	-11,169	-17,810	-5,055	-110,088
Operating result per share	EUR	0.004	-0.011	-0.02	-0.15	-1.21
Result after financial items per share	EUR	0.005	-0.014	-0.05	-0.15	-8.47
Result per share after tax	EUR	0.004	-0.013	-0.13	-0.17	-6.06
Shareholders equity per share before dilution 2)	EUR	0.171	0.149	0.09	0.19	6.87
Dividend 3)	TEUR	-	-		59.69	-
Price per share at the end of reporting period	NOK	2.19	2.650	2.00	1.42	3 1)

1) A reversed share split of 1:10 was conducted on December 13, 2013.

2) The average number of shares during the 12 m period 2013 has been adjusted for the reversed split as from the beginning of the year.

3) Total dividend. Not per share.

Notes to the Financial Report

Note 1 Accounting principles

The interim report has been prepared in accordance with IAS 34 and recommendations RFR 1 and the Swedish Financial Reporting Board (RFR), and recommendation RFR 2 and the Annual Accounts Act with regards to the Parent Company. The accounting principles applied correspond to those described in the Annual Report for the Financial Year 2016. This interim report does not contain all the information and disclosures available in the annual report and the interim report should be read together with the Annual Report for the Financial Year 2016.

The Company have from 2017 converted the presentation currency from SEK to EUR to better reflect the currency in which the business operates. Comparable figures relating to 2016 is calculated based on the historic currency translation rate at the actual presented period using the currency exchange rates according to Riksbanken/Bolagsverket.

Note 2 Risks and uncertainties

The operations of Axactor involve certain significant risks, including but not limited to credit risk, risk inherent in purchased debt, interest rate risks and regulatory risks. For a complete discussion of the a forementioned risks, refer to the Company's Annual Report for the Financial Year 2016, which is available on Axactor website; www.axactor.com. In addition, a detailed risk factor account is given in the various prospectuses published and available at Axactor's website.

Note 3 Segment note

For the quarter end 30.06.2017

EUR thousand	NPL	3PC 1)	Payment Services	Eliminations/ Not allocated	Total
Gross revenue	14,247	9,100	1,535		24,882
Other revenue 2)				2,040	2,040
Portfolio amortization	-3,290				-3,290
Net revenue	10,957	9,100	1,535	2,040	23,632
Direct operating exspenses	-3,078	-6,564	-819	-	-10,461
Contribution margin	7,879	2,536	716	2,040	13,171
Local SG&A, IT and corporate cost				-7,027	-7,027
EBITDA				-4,987	6,144
Total Opex	-3,078	-6,564	-819	-7,027	-17,488
CM1 margin	71.9 %	27.9 %	46.6 %	100.0 %	55.7 %
EBITDA margin					26.0 %
Dopex / Gross revenue	21.6 %	72.1 %	53.4 %	-	42.0 %

1) External revenue

2) Settlement former BoD

Year to date 30.06.2017

EUR thousand	NPL	3PC 1)	Payment Services	Eliminations/ Not allocated	Total
Gross revenue	24,767	16,811	3,042	-30	44,591
Other revenue 2)				2,040	2,040
Portfolio amortization	-5,571	-	-	-	-5,571
Net revenue	19,197	16,811	3,042	2,010	41,060
Direct operating exspenses	-6,051	-12,405	-1,642	-	-20,098
Contribution margin	13,146	4,406	1,400	2,010	20,963
Local SG&A, IT and corporate cost				-13,814	-13,814
EBITDA				-11,804	7,149
Total Opex	-6,051	-12,405	-1,642	-13,814	-33,912
CM1 margin	68.5 %	26.2 %	46.0 %	100.0 %	51.1 %
EBITDA margin					17.4 %
Dopex / Gross revenue	24.4 %	73.8 %	54.0 %	0.0 %	45.1 %

1) External revenue

2) Settlement former BoD

Note 4 Financial items

		Quarter ended		Year to date
EUR thousand	30 June 2017	30 June 2016	30 June 2017	30 June 2016	Full year 2016
Financial revenue
Interest on bank deposits	27	11	37	11	89
Re-evaluation external investments	-	-	-	-	309
Exchange gains	1,626	1,834	1,626	2,290	881
Other financial income	206	-	206	-	-
Total financial revenue	1,859	1,845	1,869	2,301	1,279
Financial expenses
Interest expenses on borrowings	-1,482	-243	-2,533	-257	-2,003
Exchange losses	-105	-650	-158	-1,383	-1,373
Other financial expenses	-57	-	-57	-	-187
Total financial expenses	-1,644	-894	-2,748	-1,640	-3,563
Net finance	215	- 952	-879	661	-2,283

Note 5 Non-performing loans

EUR thousand	30.06.2017	30.06.2016	31.12.2016
Acquisition cost, opening balance	131,619	27,317	-
Purchase	111,072	6,811	74,955
Purchase from acquired business	-	30,772	56,408
Translation differences	47	-181	366
Accumulated acquisition cost	242,738	64,719	131,729
Amortization, opening balance	-3,744
Re-valuation opening balance	-		-
Amortization for the year	-5,575	-1005	-3,099
Re-valuation of the year	-
Accumulated amortization, closing balance	-9,319	-1,005	-3,099
Net booked value	233,419	63,714	128,630

Description of Axactor's accounting principles for Purchased Debt, see note 1 in the annual accounts.

Note 6 Stock of secured assets - NPL

EUR thousand	30.06.2017	30.06.2016	31.12.2016
Acquisition cost, opening balance	0	0	0
Purchase	8,070
Total	8,070	0	0

Axactor has during Q2 2017 purchased a secured transaction that contains approximateluy 600 assets. The assets are held for sale.

Note 7 Loans and borrowings

	Currency	Interest rate	Carrying amount 30.06.2017 EUR thousand	Year of maturity
Balance at 1 January 2017	1) EUR /NOK	Variable	74,002	2017-2022
New issues
Italian Banks			1,970
DnB/Nordea			74,087
Repayments
Italian Banks	EUR		-2,650
DnB/Nordea	EUR		-17,258
Other	EUR		-325
Other movements
Capitalized loan fees			-1,978
Amortized loan fees on loans			654
Currency translations			-268
Balance at 30 June 2017			128,234

1) Relates to different facilities and draw-downs with an interest between EURIBOR +2%-3,5%.

As of 30 June 2017, the Company had long-term loan balance of NOK 108 million relating to the financing of the Axactor Norway (former "IKAS") acquisition in Q2 2016, EUR 14,5 million relating to the Altor acquisition in Q4 2016, EUR 43 million relating to purchase of portfolios and secured assets in Spain and SEK 289,7 million relating to the purchase of Swedish portfolios. The loans were drawn under the Revolving Credit Facility with DNB and Nordea. The Facility agreement was entered into in March 2016 with repayment date in March 2019. All material subsidiaries of the group are guarantors and have granted a share pledge as part of the security package for this facility. Italian subsidiaries are not a part of the agreement and has separate local funding.

As of June 30th, the company is in breach with it is loan covenants and are in negotiations with the lending banks to get a waiver in place. As a consequence of this all drawings under the facility is classified as short term at year end 2016 and also per 30 June 2017. After the balances sheet date the company subsequently received a waiver from the banks regarding the breach.

One bank account is pledged at SEK 4 million per 30 June 2017. The pledge will be removed as a consequence of the settlement with the former IGE board members.

Note 8 Preliminary acquisition analysis

Axactor has during the last twelve months acquired shares in the below companies and consequently controls the subsidiaries from the date of acquisition. In the purchase price allocations (PPA), the assets and liabilities of the companies have been measured at the estimated fair value at the acquisition dates.

The preliminary purchase price allocation identified fair value adjustments on intangible assets like customer relations, databases, off market contracts, goodwill and deferred tax liabilities/assets. The residual value of the purchase price will be allocated to goodwill.

	Company
EUR thousand	ALD Abogados SL	Geslico SA	Axactor Norway (IKAS group)	CS Union S.t.A.	Altor	Profact
Date of acquisition	Dec 10, 2015	May 5, 2016	April 1, 2016	June 22, 2016	Sep 30, 2016	Feb 28, 2017
Acquired part of company	100 %	100%	100%	100%	100%	100%
Purchase price	20,628	2,100	31,100	11,125	17,983	1,257
- whereof cash consideration	15,628	2,100	21,792	5,940	17,983	1,257
- whereof share consideration	5,000	-	9,308	3,829
- whereof Put/Call option liability				1,355
ASSETS
Non-current assets
Intangible assets
Deferred tax assets		77		501	940	-
Customer Relationship	4,137		6,666	891	1,362
Database	836		1,415	382	1,135	314
Other intangible fixed assets	4	373		356	337	-
Off market contracts				900	-
Goodwill	14,227	100	22,716	7,228	9,276	1,242
Tangible assets
Plant and machinery	33	707	890	332	447	50
Long term financial assets
Purchased debt			-	29,975	25,891
Other long-term receivables	7	91	75	833	28
Other long-term investments			139	-
Total non-current assets	19,244	1,348	31,901	41,398	39,416	1,606
Current assets
Current receivables	6,938	1,799	1,531	973	655	351
Other current assets	90	576	95	409	2,362	94
Cash & cash equivalents	1,180	651	3,887	483	1,024
Total current assets	8,208	3,026	5,513	1,865	4,041	445
Total Assets	27,452	4,374	37,414	43,263	43,457	2,051
Non-current liabilities				-
Long-term interest bearing debt	54	505	65	14,114	13,287
Deferred tax liabilities	1,243		1,875	597	3,238
Other long-term liabilities	-	1	22	1,120	1,432
Total non-current liabilities	1,297	506	1,962	15,831	17,957	-
Current liabilities
Trade payables	-	992	451	5,598	653	433
Tax liabilities	-		536	426	454
Other short-term liabilities	4,835	455	2,712	9,858	6,410	361
Other public duties payable	692	321	653	425
Total current liabilities	5,527	1,768	4,352	16,307	7,517	794
Total Net assets	20,628	2,100	31,100	11,125	17,983	1,257
Net sales 2016	10,729	10,406	10,502	9,455	19,482	1,794
Profit 2016	-2,264	-3,316	2,259	529	328	-9
	PPA has

Note 9 Top 30 shareholders as at 30 June 2017

Name	Holding of shares	% Share
VERDIPAPIRFONDET DNB NORGE (IV)	70,738,817	6 %
TVENGE TORSTEIN	54,640,680	4 %
FERD AS	45,000,000	4 %
SONGA TRADING INC	40,000,000	3 %
MOHN, STEIN	38,116,700	3 %
VERDIPAPIRFONDET ALFRED BERG GAMBA	35,553,765	3 %
SWEDBANK GENERATOR	30,148,284	2 %
VERDIPAPIRFONDET HANDELSBANKEN	23,000,000	2 %
LOPEZ SANCHEZ, ANDRES 1)	22,902,500	2 %
MARTIN IBEAS, DAVID 2)	22,902,500	2 %
NOMURA INTERNATIONAL	22,850,000	2 %
ARCTIC FUNDS PLC	22,553,627	2 %
VERDIPAPIRFONDET DELPHI NORDEN	22,083,459	2 %
VERDIPAPIRFONDET ALFRED BERG NORGE	20,901,448	2 %
GVEPSEBORG AS	20,364,945	2 %
VERDIPAPIRFONDET DNB	19,538,098	2 %
STATOIL PENSJON	19,504,342	2 %
NORDNET LIVSFORSIKRING	17,781,132	1 %
DNB NOR MARKETS, AKSJEHANDEL/ANALYSE	17,283,569	1 %
VERDIPAPIRFONDET NORDEA NORGE VERDI	17,161,309	1 %
ALPETTE AS 3)	16,616,431	1 %
VERDIPAPIRFONDET DNB	16,146,834	1 %
CITIBANK, N.A.	12,463,147	1 %
VERDIPAPIRFONDET ALFRED BERG AKTIV	11,910,518	1 %
BORGEN INVESTMENT	11,000,000	1 %
LATINO INVEST AS 4)	10,300,000	1 %
VARDFJELL AS	9,914,019	1 %
ELENA AS	9,914,019	1 %
VERDIPAPIRFONDET DELPHI NORGE	9,000,000	1 %
BANCA SISTEMA S.P.A 5)	8,731,726	1 %
Total 30 largest shareholders	699,021,869	55 %
Other shareholders	577,466,900	45 %
Total number of shares	1,276,488,769	100.0 %
Total number of shareholders	10,385

Shares owned by related parties

Name	Holding of shares	% Share
LOPEZ SANCHEZ, ANDRES 1)	22,902,500	2 %
MARTIN IBEAS, DAVID 2)	22,902,500	2 %
ALPETTE AS 3)	16,616,431	1 %
LATINO INVEST AS 4)	10,300,000	1 %
BANCA SISTEMA S.P.A 5)	8,731,726	1 %
FARSTAD, SIV	2,000,000	0 %
SCHNEIDER, SUSANNE LENE RANGNES	398,320	0 %

1) Andres Lopez Sanche is a member of the Axactor Spain management team and former owner of ALD, Spain.

2) David Martin Ibeas is a member of the Axactor Spain management team and former owner of ALD, Spain.

3) Alpette AS is controlled by Endre Rangnes who is the CEO of Axactor AB.

4) Latino Invest AS is controlled by Johnny Tsolis who is a member of the executive management team of Axactor AB.

5) BANCA SISTEMA owns 10% of the shares in CS Union, the Axactor collection platform in Italy.

Financial year 2017

Quarterly Report - Q1	08.05.2017
Quarterly Report - Q2	14.08.2017
Quarterly Report - Q3	31.10.2017
Quarterly Report - Q4	23.02.2018
Annual General meeting	31.05.2017
Annual Report	20.04.2018

The company's annual report will be available on the company's website.

Contact details

Axactor AB (publ) Hovslagargatan 5B, bottom floor 111 48 STOCHOLM Sweden

Telephone: +46 8 402 28 00 info@axactor.com www.axactor.com

The shares of Axactor AB (publ.) are listed on the Oslo Stock Exchange, ticker symbol AXA.

Cautionary Statement: Statements and assumptions made in this document with respect to Axactor AB's ("Axactor") current plans, estimates, strategies and beliefs, and other statements that are not historical facts, are forward-looking statements about the future performance of Axactor. Forward-looking statements include, but are not limited to, those using words such as "may", "might", "seeks", "expects", "anticipates", "estimates", "believes", "projects", "plans", strategy", "forecast" and similar expressions. These statements reflect management's expectations and assumptions in light of currently available information. They are subject to a number of risks and uncertainties, including, but not limited to, (i) changes in the economic, regulatory and political environments in the countries where Axactor operates; (ii) changes relating to the statistic information available in respect of the various debt collection projects undertaken; (iii) Axactor's continued ability to secure enough financing to carry on its operations as a going concern; (iv) the success of its potential partners, ventures and alliances, if any; (v) currency exchange rate fluctuations between the SEK and the currencies in other countries where Axactor or its subsidiaries operate. In the light of the risks and uncertainties involved in the debt collection business, the actual results could differ materially from those presented and forecast in this document. Axactor assumes no unconditional obligation to immediately update any such statements and/or forecasts.