Axactor SE

Investor Presentation • Feb 14, 2025

Highlights

Financial update

Outlook

Q&A

Financial highlights for the quarter

Gross revenue of EUR 161m, up from EUR 85m last year

• Down 4% adjusted for the portfolio sale in Spain
• 3PC total revenue increasing by 10% y-o-y on a like-for-like basis

Cash EBITDA of EUR 130m, up from EUR 55m last year

• Down 6% adjusted for the portfolio sale in Spain

• Net negative portfolio revaluation of EUR 104m
  • The revaluations do not have any cash impact
  • The revalued claims remain valid and continue to accrue interests where applicable

• Return on equity to shareholders in 2024 of -19%
  • Return on equity to shareholders of 6% in 2024 excluding revaluation
  • Solid balance sheet with equity ratio of 26% after revaluation

Negative portfolio revaluation in Q4 will improve collection performance

Change in book value of NPL portfolios during the quarter Comments

• Net negative portfolio revaluation of EUR 104m • Revaluation corresponds to 9% of Q3 book value after portfolio sale and amortization • Negative revaluations in all countries – largest in Sweden and Germany
• Book value down 14% q-o-q following sale and revaluation

Axactor has a solid balance sheet with 89% of the assets invested in NPL portfolios, repossessed assets and cash

Assets as of Q4 2024 Comments

• Industry leading tangible equity ratio
  • 86% of the assets are NPL portfolios and repossessed assets
  • Only 5% goodwill on the balance sheet
• Equity ratio of 26%
• More than EUR 100m in available liquidity including undrawn RCF and unrestricted cash

Portfolio sale generating substantial covenant headroom

- Confirming book values in the Spanish market

Portfolio sale comprised of older Spanish vintages Positive effect on covenants

• 6% of the NPL portfolios sold at a 2% premium (EUR 83m)
  • Divesture of the Spanish unsecured portfolios in two investment companies
  • Portfolios acquired between 2016 and 2019
• The transaction visualizes Axactor's valuable and liquid balance sheet

3.8x 3.0x 2.7x 3.7x Leverage ratio Interest coverage ratio Q3'24 Actual Q4'24 Actual ≤4.0x ≥3.0x Covenant Covenant 46%

• The divestment has reduced net interest-bearing debt and increased cash EBITDA¹
• Reduced interests from lower NIBD will be fully rolled into LTM after twelve months as well

EUR 70m of ACR03 bond repurchased

- Deleveraging while reducing interest expenses

Size and maturities on current borrowings as of 31.12.2024¹

Expect to refinance 2026 maturities during 2025

1. RCF extension or renewal during 1H 2025

2. Reiterates investment guiding of EUR 100-200 million

3. Refinance ACR03 during 2025

4. Diversify debt maturity profile

5. Exploration of further portfolio sales in 2025

Highlights

Financial update

Outlook

Q&A

Group: Gross revenue is up 89% y-o-y, while declining 4% adjusted for the portfolio sale in Spain

Gross revenue Comments

• Total gross revenue of EUR 82m excluding the portfolio sale in Spain
• NPL gross revenue increasing by 107% y-o-y while declining 6% adjusted for the portfolio sale in Spain
  • NPL gross revenue of EUR 66m excluding the portfolio sale in Spain
• 3PC gross revenue increasing by 5% y-o-y

NPL segment: Total revenue of EUR -59m driven by the EUR 104m net negative revaluation

NPL Total revenue and CM% Comments

• Collection performance of 94% for the quarter
  • All markets performing below expectations
• Net negative revaluation of EUR 104m will improve collection performance

3PC segment: Underlying positive development on both the top line and margins

3PC Total revenue and CM% Comments

• 3PC total revenue increasing by 5% y-o-y
  • 10% growth on a like-for-like basis¹
  • Norway increasing by 25% y-o-y
• Margins down from 46% to 44% y-o-y due to Q4'23 being impacted by positive effects from the close-down of 3PC in Sweden and Finland

Group: Total revenue and EBITDA impacted by revaluation while Cash EBITDA impacted by portfolio sale

14 Comment: Stated numbers for continuing operations

1) Total revenue and EBITDA was affected by net negative revaluation of EUR 104m

2) Cash EBITDA was positively affected by the gross sales price of EUR 83m less interim cash flow from the cut-off date and transaction cost

ROE of -19% for 2024 – impacted by negative revaluation and challenging collection environment

Return on equity to shareholders

15 1) Using adjusted net profit to shareholders and adjusted equity to the shareholders. Adjustments assumes zero revaluations in 2024, 27% tax rate, no changes to amortization

Current status on financial targets for 2026

Dimension	Financial targets 2026	2024 result
Growth	• NPL investments of EUR 100 – 200 million annually	EUR 128m
Profit	Minimum 12% ROE1 • in 2026	-19%
Returns	• 20 - 50% dividend pay-out ratio annually	n.a.
Leverage2	• Maximum leverage of 3.5x in 2026	2.7x

Highlights

Financial update

Outlook

Q&A

Outlook

1	Collection	• Expect higher collection performance after negative revaluation in Q4
2	OPEX	• Aim to absorb inflation and keep OPEX flat
3	Cost of funding	• Expect continued reduction in cost of funding from repurchased bonds and lower IBOR-rates. Leverage to be substantially reduced
4	NPL investments	• Expect high quality NPL investments to be in the lower end of the financial target of EUR 100-200m. Pan-European position gives valuable access to attractive NPL markets in Europe
5	3PC	• Expect continued revenue growth on 3PC at healthy margins

Highlights

Financial update

Outlook

Q&A

Supporting information

Strict cost control enables a reduction in total operating expenses

Total operating expenses Comments

Total operating expenses for the year down 5% from FY 2023

• Despite inflationary pressure, operating expenses have been reduced since 2023 and 2022

NPL investment commitments of EUR 3m next 12 months

Quarterly NPL investments

ERC down due to portfolio sale and negative revaluation

EURm Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 2,545 2,523 2,563 2,586 2,620 2,555 2,664 2,602 2,340 -11% FIN DEU ITA NOR ESP SWE

ERC development Forward ERC profile by year

3PC volumes by geographic region

3PC Total revenue split by geographic region Comments

• Spain accounting for 57% of total revenue on 3PC
• Segment closed down in Finland and Sweden, with no active clients per year-end 2023

Bond covenants (1/2)

Leverage ratio - covenant ≤4.0x Interest coverage ratio - covenant ≥3.0x

Pro-forma adjusted cash EBITDA divided by net interest expenses

25

Bond covenants (2/2)

Net interest-bearing debt divided by total portfolio book value

Loan-to-value - covenant ≤80% Secured Loan-to-value - covenant ≤60%

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

Terms and abbreviations

Abbreviations

WAEP Weighted average exercise price

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

Terms