Axactor SE

Axactor ASA Annual report 2024 We are passionate, proactive and act with integrity Axactor Annual report 2024 Axactor Annual report 2024 2 2 Contents This is Axactor 4 Axactor at a glance 4 Strategy and financial targets 5 Letter from the CEO 7 Key events 2024 9 Highlights of the year 10 Key figures 11 Performance and governance 12 Operational performance 13 Financial performance 16 Risk review 21 Corporate governance report 24 Sustainability statement 33 General information 35 Environment, incl. EU Taxonomy 65 Social 72 Governance 92 Entity-specific topic 97 Financials 105 Consolidated financial statements 106 Financial statements of Axactor ASA 151 Responsibility statement 168 Auditor’s limited assurance report 169 Auditor’s report 171 Alternative performance measures 174 Report of the Board of Directors Other information 177 Remuneration report 177 Auditor’s assurance report 191 Glossary 192 Axactor Annual report 2024 Axactor Annual report 2024 3 3 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 society 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 2024 Axactor Annual report 2024 4 4 This is Axactor This is Axactor | Axactor at a glance This 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. 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 accretive. 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 satisfaction Bank and 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 and 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 and finance “Helping people and society to a better future” “Industry benchmark” Vision Axactor Annual report 2024 Axactor Annual report 2024 5 5 This is Axactor This is Axactor | Strategy and financial targets This is Axactor | Strategy and financial targets Axactor has set financial targets which outline a clear direction going forward Dimension Targets 2026 Performance 2024 Growth Annual NPL investments of EUR 100–200 million (for the years 2024 to 2026) EUR 128 million Profit Minimum 12% ROE‌ 1 (in 2026) ‌ -19% ‌3 Returns Annual 20–50% dividend pay-out ratio (for the years 2024 to 2026) n.a. Leverage ‌ 2 Maximum leverage of 3.5x (in 2026) 2.7x 1 Assuming EURIBOR and STIBOR of 2.0% and NIBOR of 2.9% in 2026. The target is excluding any possible one-time financial cost related to refinancing 2 Leverage = (net interest-bearing debt / pro-forma adjusted cash EBITDA). As defined in the bond covenants 3 Return on equity to shareholders Axactor Annual report 2024 Axactor Annual report 2024 6 6 This is Axactor This is Axactor | Strategy and financial targets This is Axactor | Strategy and financial targets Letter from the CEO A year of hard priorities As we expressed in 2023, we have continued to build on the positives amid a challenging macroeconomic environment in 2024. Although the challenges have again required some tough decisions, we have managed to uphold our industry leading cost position. With successful transformative projects implemented throughout the year, we have positioned ourselves well for an expected improvement in market conditions in 2025. Focus on deleveraging As we prepare to handle our two 2026 loan maturities, we have taken actions to reduce our leverage during 2024. Most notably is the completion of a major portfolio sale in the fourth quarter. The sale perimeter consisted of older Spanish portfolios, and the sales price was 2% above our book value. The fact that we are able to realize these assets at a premium is a strong affirmation of our liquid balance sheet. The proceeds were mainly used to buy back bond loans at sub-par values, and we are prepared to further utilize our balance sheet in 2025 to take down the refinancing risk. A Norwegian success story Through a successful reorganization across the Nordic countries at the end of 2023, we have been able to dedicate some of our most prominent resources towards the Norwegian 3PC market. After several years of hard work, it seems this reorganization was the move that finally enabled us to crack the Norwegian 3PC market for banks and financial institutions. I would especially like to highlight how we have positioned ourselves as the leading provider within the auto financing sub-segment. The results are a staggering 21% revenue growth from 2023 and a solid pipeline of new customers going into the new year. We will continue to push for increased market share in this segment and I am confident we will see continued double-digit growth in 2025. Rightsizing and site consolidation Since the acquisition of Credit Recovery Service (CRS) back in 2022 we have been running four sites in Italy. It goes without saying this is sub-optimal from an efficiency viewpoint. To improve our position, we closed the former main office in Cuneo in 2024 and gathered all functions in the three remaining locations. The front office functions were moved to our modern and highly efficient call center in Milazzo, while administrative functions were gathered in our Grosseto office, and the sales office in Milan is retained. The move will obviously give us increased scale benefits and we also see instant improvements in operational KPIs, boding well for future efficiency enhancements. In Germany, we have run a significant cost improvement project aimed at modernizing the operations. Through new and more efficient workflows and team structures, the German operations are now delivering the same output with fewer resources, with further improvement potential expected from process improvements during 2025-2026. Our greatest asset We firmly believe that our 1,285 employees are our most important asset to realize the Group’s potential. Throughout the year we have involved a large portion of them in our analysis for the updated Axactor Annual report 2024 Axactor Annual report 2024 7 7 This is Axactor This is Axactor | Letter from the CEO This is Axactor | Letter from the CEO sustainability reporting enclosed within this report. Although we have faced a few challenging years with large restructuring programs, we are proud to state that our employees remain highly dedicated and motivated. We see this across our KPIs, and the voluntary turnover was reduced by more than 35% compared to 2023. We do not plan on any further large restructuring projects in 2025, and will continue to develop our greatest asset and take care of our hard-working employees. Looking forward, our employees will continue to manifest Axactor’s position as a great company. In 2024 we have simplified our legal structure, made major revisions to our future collection estimates, implemented significant restructuring initiatives and further streamlined and digitized our operations. After cleaning up our structure in 2024, I look forward to an exciting 2025. Looking forward, our employees will continue to manifest Axactor’s position as a great company Johnny Tsolis, CEO I would like to take this opportunity to reiterate our continued commitment to the UN Global Compact initiative. We present our third “Communication of progress” incorporated into our Sustainability statem ent . Axactor Annual report 2024 Axactor Annual report 2024 8 8 This is Axactor This is Axactor | Letter from the CEO This is Axactor | Letter from the CEO Key events 2024 2024 2025 New financial targets for 2026 Announced site consolidation in Italy Major revision of future collection estimates Launched cost efficiency program in Germany Selected new IT infrastructure vendor NPS score of 78 Customer satisfaction survey Obtained new NPL license in Sweden (re. EU NPL directive) Re-purchase of EUR 51m bond loans Significant portfolio sale in Spain Yvonne Wagner New Country Manager Germany Axactor Annual report 2024 Axactor Annual report 2024 9 9 This is Axactor This is Axactor | Key events 2024 This is Axactor | Key events 2024 Achieved gross revenue growth of 21% to EUR 415.0 million (343.7), driven by a significant portfolio sale in Spain. Excluding the impact from the sale, the gross revenue was EUR 336.3 million Cash EBITDA ended at EUR 298.3 million, also positively affected by the Spanish portfolio sale (221.1) Total revenue for the year was EUR 127.9 million, down from EUR 256.6 million in 2023. The reason for the decline is collection headwinds throughout the year, leading to a total of EUR 120.3 million in net negative NPL revaluations from changes in collection forecasts (-7.1) EBITDA was also affected by negative NPL revaluations, ending at EUR 9.3 million for the year (131.8) NPL investments ended at EUR 127.8 million (116.1) compared to an estimated replacement capex of EUR 106 million. Average gross IRR for the total NPL back book was lifted from 18% in 2023, to 19% Organic 3PC revenue growth of 6%, with strong momentum into 2025 from contracts signed during second half of 2024, good results on benchmarking contracts and a customer satisfaction of 8.9 out of 10 (8.8). Improved contribution margin over revenue by 2 percentage points Repurchase of bond loans with nominal value of EUR 50.9 million in preparation of 2026 loan maturities. Net gain of EUR 2.6 million from acquisitions at sub-par prices recognized Transformational projects conducted in Germany and Italy and a continuous cost focus led to improvement in the total opex over gross revenue ratio to 35%, excluding the impact from the Spanish portfolio sale (36%) Landed new partner for IT infrastructure services after an extensive RFP process, with an outlook to strong support at lower prices. Migration is on track and planned to be finalized during the first half of 2025 Reduced voluntary turnover by more than 35%, indicating that employees remain motivated and dedicated despite seeing significant restructuring processes throughout the year Continued innovation with artificial intelligence assisted tools to drive operational efficiency Highlights of the year Axactor Annual report 2024 Axactor Annual report 2024 10 10 This is Axactor This is Axactor | Highlights of the year This is Axactor | Highlights of the year Key figures Key figures that cannot be directly found in the Group’s consolidated statements are reconciled in the APM tables . All prior year figures presented are for continuing operations unless otherwise stated. EUR million 2024 2023 Gross revenue 415 344 Total revenue 128 257 EBITDA 9 132 Cash EBITDA 298 221 Net profit/(loss) after tax -79 34 EBITDA margin 7% 51% Return on equity to shareholders‌ 1 -19% 7% Return on equity -20% 8% Equity ratio 26% 29% Acquired NPL portfolios 128 116 Book value of NPL portfolios 1,087 1,265 Estimated remaining collections (ERC) 2,340 2,620 Number of employees (FTEs) 1,174 1,255 Price per share, last day of period (NOK) 3.69 5.08 Market capitalization (NOK million) 1,115 1,535 1 Prior year figures for return on equity to shareholders include continuing and discontinued operations Gross revenue EUR million 415 21% y/y ERC, NPL EUR million 2,340 -11% y/y Return on equity -19 % to shareholders EBITDA EUR million 9 7% margin Cash EBITDA EUR million 298 35% y/y Equity ratio 26% Axactor Annual report 2024 Axactor Annual report 2024 11 11 This is Axactor This is Axactor | Key figures This is Axactor | Key figures Performance and governance Operational performance 13 Financial performance 16 Risk review 21 Corporate governance report 24 Report of the Board of Directors The following parts of this report constitute the Report of the Board of Directors Axactor Annual report 2024 Axactor Annual report 2024 12 12 Performance and governance Performance and governance Performance and governance Operational performance 2024 concluded a challenging year for Axactor, with macroeconomic headwinds and adverse regulatory changes hampering collections. As a result, the NPL collection performance ended at 93% for the full year 2024. Axactor continues to focus on efficiency initiatives to compensate for the macro induced delays in collection, especially within personnel expenses and costs related to legal activities. The efficiency projects that have been executed during 2022-2024 have successfully reduced the total number of employees in the Axactor Group without compromising on deliveries. The goal is to further increase the efficiency going forward, through further automation and increased use of artificial intelligence. Data driven operations Axactor implemented a new operational framework in 2024, focusing on optimization of the amount and type of legal actions to be initiated, and the timing of such actions. The aim of the new framework is to ensure continuous operational improvement and facilitate for innovation. Continuous investments are made into data driven operations, and further development of machine learning capabilities will remain a key focus area going forward. Through advanced analytics and business intelligence, Axactor’s 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 reduces the burden on the debtors. Axactor also uses generative pre-trained transformer (GPT) services, contained within a safe and controlled environment provided by the Group’s infrastructure provider. This has increased the areas of application substantially, and especially IT development and the advanced analytics area are identified as having large potential benefits from artificial intelligence usage. Operational efficiency projects The Group initiated several projects during 2024 to increase the efficiency within operations and to reduce cost. The two most notable were: An Italian site consolidation project was finalized in a successful manner during 2024. The former Italian headquarter in Cuneo was closed down at the end of the year and all activities were moved to Milazzo, Milan and Grosseto. The site consolidation has represented a substantial transformation for the Italian business, but operational KPIs already demonstrate improvements. As part of the project the Italian 3PC company acquired in 2022 has rebranded to Axactor Servicing, further strengthening Axactor’s market position. In Germany, a restructuring and site consolidation was announced in March. The operational contact center in Saarbrucken was closed, with the main office in Heidelberg set to handle all operations going forward. The employees in Heidelberg were affected as well, through both severances and a reorganization of tasks and responsibilities. The initiatives have increased the efficiency of the German operation, and improved the competitiveness. Ethical debt collection The focus on ethical debt collection is a strong commitment from Axactor to ensure high quality services to all stakeholders. Out of a wide range of operational KPIs, Axactor has identified three KPIs vital to ensure reliable services and helping debtors to find sustainable solutions to their financial difficulties: The inbound service level ended at an average of 97% for 2024 across all markets, illustrating Axactor’s strong availability for debtors The outbound nuisance rate for 2024 was 0.55%, a testament to the strict control of the advanced dialer system in accordance with the operational capabilities at any given time Axactor Annual report 2024 Axactor Annual report 2024 13 13 Performance and governance Performance and governance | Operational performance Performance and governance | Operational performance NPL payer-to-payer ratio, demonstrating the sustainability of payment agreements. The payer-to-payer ratio for 2024 was 75%, showing that the vast majority of debtors are able to make consecutive payments, and that the payment agreements are at a sustainable level The debtors are also given an opportunity to give feedback on how they perceive Axactor and the interactions between the debtors and the case handlers. In 2024, the debtors participating in the debtor satisfaction survey gave Axactor an average score of 4.2 out of 5 (4.3). This shows that the debtors receive the information they need from the case handlers, and that they feel they are treated fairly and with respect. High quality 3PC delivieries Great progress was made within the 3PC segment in 2024. In Norway, several large contracts were initiated during the year with some of the most prominent players in the consumer loan and auto financing sub-segments. The market share in Norway has historically been moderate for Axactor, but after several years of hard work this is now changing. The pipeline for further landmark contracts within the 3PC segment is strong going into 2025. Further, an important contract was renegotiated on improved terms in Germany, while the Italian business continues to grow in the wake of the acquisition of Credit Recovery Service in 2022. Spain is continuously evolving, coming up with new products to ensure Axactor’s position as a market leader within the bank and finance segment is upheld. The promising development within the 3PC segment is enabled by strong deliveries to the clients. Axactor achieved a total average of 8.9 out of 10 in the annual customer satisfaction survey for 2024, an increase from 8.8 last year. Customers show a high degree of satisfaction with Axactor services, and find Axactor to be professional, knowledgeable, and easily accessible. The customer survey also yielded an average net promoter score (NPS) of 78, which is considered excellent. People Axactor focuses on building a strong corporate culture. Key areas of attention have been performance management, career planning, leadership development, and fostering a positive and social work environment. Appraisal talks with focus on employee satisfaction and development have been conducted, and incentive targets have been set for all managers. The targets support Axactor’s strategy and environmental, social and governance related topics. Continuous improvements within IT Security Axactor annually conducts an external penetration test. This is an important assessment to ensure the security and integrity of the Axactor IT systems and solutions by identifying potential vulnerabilities that need to be addressed. The external vendor has given confirmation that Axactor have made security investments that have reduced the critical and high-risk vulnerabilities compared to similar corporations, providing assurance that the IT security in Axactor is of a high standard. The formal feedback also stated that the audited systems and solutions have increased their level of security compared to previous penetration tests, showing Axactor is making progress. Axactor also improved the internal phishing campaigns by developing more sophisticated phishing emails targeting employees within IT, finance, and sales departments in particular. The results are improving as very few employees are being tricked by the advanced phishing attempts, and an increasing number of employees are also reporting the e-mails to the security department. This demonstrates a strong employee engagement and a year- over-year improvement in the company’s security culture. New partner for IT infrastructure services During the first half of 2024 an extensive request for proposal (RFP) process was conducted to determine the future partner for the Groups’ IT infrastructure services. Several vendors were evaluated, and a 3-year agreement was signed with Advania. Axactor believes that Advania will be a strong partner for future growth supported by improved terms, flexible solutions and an impressive cybersecurity set-up. The project met all of its milestones in 2024, and aims to start the live migration of the first countries and systems during the first quarter of 2025. The migration is expected to be completed for all countries and systems by June 2025. EU’s Digital Operational Resilience Act (DORA) On 16 January 2023, EU’s digital operational resilience act (DORA) entered into force. DORA is part of the EU digital finance package and introduces uniform requirements for the security of network Axactor Annual report 2024 Axactor Annual report 2024 14 14 Performance and governance Performance and governance | Operational performance Performance and governance | Operational performance and information systems in the financial sector. The regulation applies from 17 January 2025 across all EU and EEA member states. During the year, Axactor has worked to confirm compliance with DORA’s requirements, and started implementation of necessary updates to its vendor management routines, as well as focusing on resilience & recovery testing, and IT risk management. Axactor has a continuous improvement approach, aiming to consolidate and optimize effectiveness of controls and internal processes in these particular focus areas. The approach ensures a high standard in all countries, including local systems and third party vendors. With significant investments in information and data security over the last few years, Axactor welcomes the introduction of DORA, and believe that it is well equipped to handle the newly introduced requirements. Implementation of EU’s NPL directive As of the end of 2024, EU’s implementation of the Non-Performing Loans (NPL) Directive (EU) 2021/2167 continues to face implementation delays across the EU and EEA member states in which Axactor operates. The NPL directive regulates the sale, purchase and servicing of NPLs originated by EU banks. Still, only Germany and Sweden in Axactor’s countries of operation have successfully implemented the directive. However, legislative proposals on implementation of the directive are being discussed in all remaining countries and are expected to enter into force during 2025 in all jurisdictions. Axactor Annual report 2024 Axactor Annual report 2024 15 15 Performance and governance Performance and governance | Operational performance Performance and governance | Operational performance Financial performance Axactor saw good results from its implemented actions to improve 3PC performance in 2024, with an organic growth of 6% and improved contribution margin. The total operating expenses as percent of gross revenue also improved in 2024, ending at 35% adjusted for a significant portfolio sale in Spain in the fourth quarter (36%). On the negative side, the challenging macroeconomic conditions seen in 2023 continued in 2024 and put pressure on collections throughout the year. Debtors faced reduced real income, with less money available to make payments on their debt. There were signs of improvements in the availability of refinancing options for debtors towards the end of the year, but the impact in 2024 from both a stagnating or falling housing market and more reluctant lenders was significantly negative. Finally, new legislation and increased reservation amounts for debtors across several of Axactor’s countries of operation, meant lower monthly payments coming from the bailiff systems. All-in-all, this caused cash flow delays, while at the same time the unsolved claims continue to generate accrued interest and fees. Axactor’s operations are split into two business segments, acquisition and collection on own portfolios: NPL, and collection on behalf of third-party clients: 3PC. Unless explicitly stated otherwise, figures for prior periods are stated for continuing operations, i.e. excluding portfolios of purchased real estate (REO). Axactor uses alternative performance measures (APM) such as gross revenue, EBITDA, cash EBITDA, estimated remaining collections, 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, please see the APM sect ion . Revenue Total revenue for 2024 ended at EUR 127.9 million, down from EUR 256.6 million in 2023. The lower total revenue is mainly caused by net NPL revaluations from changes in collection forecasts of EUR -120.3 million for the year (-7.1). The revaluations came as a result of a continued challenging collection environment across all Axactor geographies. The collection performance for the year ended at 93% (99%) and was negatively impacted by macroeconomic headwinds and adverse regulatory changes. Axactor Annual report 2024 Axactor Annual report 2024 16 16 Performance and governance Performance and governance | Financial performance Performance and governance | Financial performance Gross revenue ended at EUR 415.0 million, up from EUR 343.7 million in 2023. The growth in gross revenue stems from the sale of Spanish portfolios in November 2024. Excluding the sales proceeds, gross revenue was EUR 336.3 million in 2024, a decline of 2% compared to 2023. NPL segment The NPL segment delivered a total revenue of EUR 73.6 million in 2024, down from EUR 202.6 million in 2023. The lower total revenue was mainly caused by net negative NPL revaluations from changes in collection forecasts of EUR 120.3 million (negative 7.1). Gross revenue from the NPL segment increased to EUR 360.6 million in 2024 (289.6), including sales proceeds from the aforementioned Spanish portfolio sale. The segment gross revenue excluding the sales proceeds was EUR 281.9 million. The transaction was made at an average premium of 2% compared to book value, and the remaining book value was amortized upon sale. The effective amortization rate on the sale was thus significantly higher compared to the ordinary amortization rate, and the average effective amortization rate ended at 46% for the year, up from 28% last year. Axactor invested EUR 127.8 million in new NPL portfolios in 2024 (116.1), well within the target range of EUR 100-200 million. The estimated replacement capex for 2024 was EUR 106 million. 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 unsecured non-performing consumer loans from known sellers. Reflecting increased funding costs for the industry, market prices for NPL portfolios have gradually adjusted, which has allowed Axactor to add new deals at higher Internal Rate of Return (IRR). The strategy is evidenced by a higher gross IRR with an average for the back book at the end of 2024 of 19% (18%). With a moderate investment level in 2024, the Spanish portfolio sale, and the significant negative NPL revaluations, the estimated remaining collections declined by 11% from the end of 2023 to the end of 2024, ending at EUR 2,339.7 million (2,620.4). Estimated NPL investment commitments for 2025 stand at EUR 3.3 million per the end of 2024. 3PC Segment The 3PC business reported total revenue of EUR 54.3 million for 2024, in line with 2023 (54.0). Excluding the 3PC businesses in Sweden and Finland that were closed during 2023 the growth was 6%. The Norwegian 3PC business is performing particularly well, with solid growth from new sales within the bank and finance segment, a key focus area of Axactor’s strategy. Operating expenses Total operating expenses for 2024 amounted to EUR 118.7 million, excluding depreciation and amortization (124.8). Personnel expenses accounted for EUR 63.5 million in 2024 and is the single most important input factor in Axactor’s operations (66.6). Cost of repossessed assets sold amounted to EUR 1.6 million (1.8). Other expenses amounted to EUR 53.5 million and is mainly related to IT/ infrastructure costs and legal fees (56.5). A priority throughout 2024 has been to continue to reduce cost where possible, especially within support functions. This continued focus has driven down the operating expenses as percent of gross revenues to 35% for the full year of 2024, adjusted for the sale of the Spanish portfolios (36%). Operating results The total contribution margin amounted to EUR 51.4 million in 2024, down from EUR 174.2 million in 2023. The contribution margin reflects the segments’ contribution to EBITDA, before local SG&A, IT and corporate cost. The main driver for the decrease was the reduced total revenue within the NPL segment caused by the net negative revaluations. The NPL segment delivered a contribution margin of EUR 30.9 million in 2024, down from EUR 154.7 million in 2023. The contribution margin from 3PC was EUR 20.5 million (19.5), corresponding to 38% of total revenue (36%). Local SG&A, IT and corporate cost was reduced to EUR 42.1 million for 2024 (42.4). EBITDA for 2024 ended at EUR 9.3 million, down from EUR 131.8 million in 2023. Axactor Annual report 2024 Axactor Annual report 2024 17 17 Performance and governance Performance and governance | Financial performance Performance and governance | Financial performance Amortizations and depreciations related to leases, intangible and tangible assets (excluding amortization of NPL portfolios) amounted to EUR 11.6 million for 2024 compared to EUR 9.1 million in 2023. The increase is mainly due to an impairment of EUR 1.5 million related to unused office spaces in Germany and Sweden and EUR 0.8 million related to an obsolete IT system. Amortization of intangible assets, which mainly relates to investments in the collection platforms, accounted for EUR 5.7 million in 2024 (4.9). Operating profit (EBIT) was hence EUR -2.3 million for 2024, compared to EUR 122.8 million in 2023. Net financial items Net financial items were negative EUR 82.8 million in 2024 compared to negative EUR 81.4 million in 2023. Financial expenses amounted to EUR 91.2 million in 2024 (84.7), whereof interest expenses on borrowings accounted for EUR 89.1 million in 2024, up from EUR 81.6 million in 2023. The increase is driven by increased base interest rates during 2024 and a higher margin on the ACR04 bond issued in the third quarter 2023, compared to the former ACR02 bond. Financial revenue was EUR 8.4 million for 2024 (3.4), whereof EUR 2.6 million was related to a net gain on purchase of bond loans at sub-par values (0.1). Interest on bank deposits ended at EUR 5.5 million, up from EUR 0.4 million in 2023. The increase is related to recognition of interests received but not previously included in the reported accounts. Other financial revenue was EUR 0.1 million in 2024, while other financial revenue in 2023 included a EUR 1.9 million modification gain related to the renewal of the RCF agreement, and a EUR 0.9 million gain in market value of the Group’s hedging instruments. The net foreign exchange impact included in net financial items for 2024 was positive EUR 0.4 million, compared to a net negative impact in 2023 of EUR 0.8 million. Net results and tax The net result before tax was negative EUR 85.1 million in 2024 compared to a profit before tax of EUR 41.4 million in 2023. The net result after tax was EUR -79.1 million (33.6). Including discontinued operation, the net profit for 2023 was EUR 27.6 million. Axactor recorded a tax income of EUR 6.0 million in 2024 (tax expense 7.9), resulting in an effective tax rate of 7% (19%). The effective tax rate for 2024 reflects that not all tax losses are recognized as deferred tax assets. Axactor expects to trend towards a normalized average effective tax rate of approximately 27% over time. The net profit attributable to shareholders was negative EUR 79.5 million for 2024 (30.8), whereas the net profit to non-controlling interests was EUR 0.5 million (negative 3.2). Total comprehensive income was negative EUR 92.1 million for 2024 (13.5), with the deviation from reported net profit/ (loss) after tax mainly explained by foreign currency translation differences from foreign operations and fair value changes on cash flow hedges. EUR -92.5 million of the result was attributable to shareholders of the parent company (16.7) and EUR 0.5 million to non-controlling interests (-3.2). Earnings per share totaled EUR -0.263 both on an ordinary and on a fully diluted basis (0.102). Axactor Annual report 2024 Axactor Annual report 2024 18 18 Performance and governance Performance and governance | Financial performance Performance and governance | Financial performance Financial position Total assets amounted to EUR 1,265.7 million at the end of 2024, compared to EUR 1,435.8 million at the end of 2023. Total non-current assets amounted to EUR 1,181.8 million at the end of 2024 (1,364.9), including purchased NPL portfolios of EUR 1,087.5 million (1,265.3). Intangible assets accounted for EUR 83.2 million (83.4) reflecting intangible assets and goodwill acquired since inception, as well as deferred tax assets of EUR 12.3 million (8.5). Current assets amounted to EUR 83.9 million (70.9), including cash and cash equivalents of EUR 33.0 million (31.8) and EUR 1.9 million in restricted cash (2.6). Total interest-bearing debt stood at EUR 884.7 million at the end of 2024, compared to EUR 939.1 million at the end of 2023. Total equity amounted to EUR 331.7 million at the end of 2024 (423.5), including non-controlling interests of EUR -9.2 million (-9.7). The equity was reduced by the negative profit for the year. The Group still have a solid equity position with an equity ratio of 26% at the end of 2024 (29%). Cash flow and financing The following text regarding cash flow includes contribution from both continuing and discontinued operations for previous year. Including investments in NPL portfolios, cash flow from operating activities was EUR 139.2 million (89.3). The amount paid for NPL portfolios was EUR 128.5 million in 2024, up from EUR 120.0 million in 2023. The difference between the amount paid and total NPL investments for the year is related to deferred payments on certain contracts. Net cash flow from operating activities before NPL investments amounted to EUR 267.8 million in 2024 compared to EUR 209.4 million in 2023. The increase in cash flow was driven by the Spanish portfolio sale. Taxes paid was EUR 23.6 million in 2024, an increase from EUR 11.6 million last year. Net working capital increased by EUR 6.9 million during the year, compared to an increase in working capital of EUR 2.9 million in 2023. Net cash outflow from investing activities was EUR 3.1 million in 2024 and is primarily related to investments in IT and infrastructure. In 2023 the net cash outflow from investing activities was EUR 3.9 million. Net cash flow from financing activities was negative EUR 133.2 million in 2024 (negative 85.5). Net proceeds from borrowings were negative EUR 47.3 million after debt repayments in 2024 (positive 1.4). Net interest payments represented a cash outflow of EUR 82.0 million in 2024 (67.4). The increase is mainly related to increased interest rates on the Group’s outstanding debt. In 2023 the Group paid EUR 15.4 million in loan fees related to the refinancing of a bond loan and the revolving credit facility, compared to loan fees of EUR 0.1 million paid in 2024. Funding Axactor has two sources of funding; bond loans and a multi- currency revolving credit facility (RCF) from DNB and Nordea. All legal entities except Axactor ASA and the Reolux structure are inside the ringfenced structure funded by the RCF. The RCF has a total size of EUR 545 million, of which EUR 471.5 million were drawn per the end of 2024 (472.7). Additionally, the agreement has a EUR 275 million accordion option, contingent on separate credit approval. The maturity of the RCF agreement is 30 June 2026, with two one-year extension options contingent on separate credit approval. Axactor has two outstanding bond loans per the end of 2024. The first is a EUR 300 million bond with ticker ACR03 that matures in September 2026. Adjusting for treasury bonds the outstanding face value of the bond is EUR 230.2 million at the end of 2024. The second is a NOK 2,300 million bond with ticker ACR04 that matures in September 2027. Axactor was compliant with all loan covenants throughout the year. Proposed allocation of the company’s result The parent company, Axactor ASA, had a negative result after tax of EUR 7.6 million in 2024 (negative 9.0). The result available for disposal of the Annual General Meeting is as follows: EUR thousand Distribution from other paid in capital 7,558 Going concern Based on the review of Axactor ASA’s financial statement, the Board of Directors confirms that the annual financial statements for 2024 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. Axactor Annual report 2024 Axactor Annual report 2024 19 19 Performance and governance Performance and governance | Financial performance Performance and governance | Financial performance Outlook Axactor completed a EUR 50.9 million bond buy-back in 2024 as part of the deleveraging strategy. The Group will maintain its focus on deleveraging and expect to refinance its 2026 maturities during 2025. The Group will also continue to invest in attractive NPL portfolios and reiterates its current investment guiding of EUR 100 – 200 million per year for the period 2024-2026. The estimated replacement capex for 2025 is EUR 66.0 million. 3PC is expected to continue to grow, with very good traction in the Norwegian market with several large contracts signed during the second half of 2024 providing momentum into 2025. The Italian and Norwegian 3PC markets are expected to remain active through 2025, while Axactor expect to retain its market share in Spain and Germany. With new revised collection curves in place, Axactor expects improved collection performance in 2025. Although the collections will still be impacted by macroeconomic conditions, legislation and geopolitical uncertainty, there are upsides from falling interest rates and an expected improvement in both the market for refinancing unsecured loans and in debtor’s real disposable income. Falling interest rates and the planned deleveraging will also benefit Axactor in terms of reduced interest expenses. Furthermore, Axactor will accelerate its operational optimization program to enhance efficiency and reduce structural costs. Axactor Annual report 2024 Axactor Annual report 2024 20 20 Performance and governance Performance and governance | Financial performance Performance and governance | Financial performance 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. Further details about the Group’s risk management objectives and policies can be found in the corporate governance report, and in note 3 to the consolidated financial statements. Risk Description Mitigations Strategic risks Macroeconomic conditions 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. 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 focus on employer branding, monitoring of competitors, and efficient internal controls. Axactor Annual report 2024 Axactor Annual report 2024 21 21 Performance and governance Performance and governance | Risk review Performance and governance | Risk review Risk Description Mitigations 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, net investments in subsidiaries, 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 asset or using currency swaps to limit the exposure. Interest rate The interest rate risk relates to the variable rates on the Group’s net interest-bearing debt, which amounted to net EUR 863.7 million per 31 December 2024. An annualized increase/-decrease of 100 basis points would increase/ decrease profit before tax by EUR 7.6 million, given the debt and hedging level at the end of 2024. The Group has a strategy to hedge 50-70% of total outstanding gross debt with a duration of three to five years. The Group intends to gradually implement the strategy in line with new portfolio investments. 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. 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. 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 from the portfolio. Axactor applies scoring models (where the debtors’ payment capacities are assessed through statistical analysis) and historical data in the calculations. In addition, Axactor uses specialized industry consultants to get a second opinion on contemplated loan portfolio purchases. Liquidity The Group has financial obligations in terms of NPL forward flow commitments, interest expenses on borrowings, running salary expenses and other external expenses. 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 2024 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. 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. 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. Axactor Annual report 2024 Axactor Annual report 2024 22 22 Performance and governance Performance and governance | Risk review Performance and governance | Risk review Risk Description Mitigations Operational risks Performance Weaknesses in operational processes, or application of the processes, can 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, and continues 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 the 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. 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, e.g., 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, and tailored to their roles and responsibilities. Axactor has relevant group-wide insurance policies in place, covering; general liability and professional indemnity, director’s and officer’s insurance, crime, and cyber. The company’s directors and officer’s insurance cover the members 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. Axactor Annual report 2024 Axactor Annual report 2024 23 23 Performance and governance Performance and governance | Risk review Performance and governance | Risk review 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 12 December 2024. 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 2024 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 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 During 2024, 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, 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 stateme nt . Axactor Annual report 2024 Axactor Annual report 2024 24 24 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report 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 2024, the Group had an equity ratio of 26% and a debt-to-equity ratio of 2.8x. 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 8 May 2024 six authorizations were granted to the Board: Authorization to distribute dividends based on the company’s annual accounts for 2023 at the Board’s discretion, being subject to reduced market volatility and predictable future terms for the Group. The authorization is limited to NOK 0.52 per share in the aggregate, equivalent to maximum 50% of consolidated net profit after tax for the year 2023 Authorization to increase the share capital by issuing new shares or acquire own shares with a total nominal value of up to NOK 17,815,000, equal to 3,500,000 shares, each with a nominal value of NOK 5.09 in connection with performance share units allocated under LTI 2024 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 70,496,500, equal to 13,850,000 shares, each with a nominal value of NOK 5.09 in connection with the performance share units and share options allocated under ESOP 2020 (also named ESOP 2020-B), share options agreement with Andrés López Sánchez , LTI 2022 and LTI 2023, which are incentive programs for the company’s senior management and key personnel 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 acquire own 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, mergers, de-mergers or other transactions Authorization to acquire own 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 for investment purposes or for subsequent sale or deletion of such shares All six authorizations are valid until the AGM in 2025, and no later than 30 June 2025. As of 31 December 2024, none of the authorizations have been used. There was a separate vote on each of the authorizations. All six authorizations have a limited overall amount by which the Board is permitted to increase the share capital and acquire own shares. For supplementary information, see the minutes of the AGM held on 8 May 2024 available at www.axactor. com . Deviations from the Code: None Axactor Annual report 2024 Axactor Annual report 2024 25 25 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report 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 2024. 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 2024. 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 and 2022, and amended 13 April 2023. 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, 2022 and 2023. The options vested and became exercisable 18 May 2024, but were not exercised. Both agreements were entered on an arms-length basis and are not considered significant. For further details, see note 29 to the financial statements for 2024. 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 five business the day before the general meeting to attend, cf. the Norwegian Public Limited Liability Companies Act § 5-2. Notices of general meetings are made available on news web.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 AGM in 2024 was conducted as a virtual meeting with registration deadline CET 12:00 (noon) on the prior business day. When attending the general meeting, 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 were secured. The notice 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 procedure including a proxy form with and without voting 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 was required to be provided two business days prior to the general meeting by electronic means, in writing or by use of written proxy forms. The Chair declared the general meeting opened. The person chairing the general meeting 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. In 2024, Axactor held its AGM on 8 May 2024 with 54.72% of the shares represented. Axactor Annual report 2024 Axactor Annual report 2024 26 26 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report The minutes from general meetings are published on news web.no and on the company’s webs ite . 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) Peder Strand (member) Both were elected by the AGM in 2024 for a period of 2 years, until the AGM in 2026, 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 webs ite . The nomination committee monitors the need for any changes in the composition of the Board through dialogue with the shareholders, board members, and Group executive management. The nomination committee has also reviewed the Board of Directors’ 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 three to seven members, as regulated in the articles of association article 5. The Board was elected by the general meeting. On 31 December 2024, the Board consisted of the following five members: (see table below). All members of the Board are elected until the AGM in 2025 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 General information chapter of the Sustainability statement, and on the company’s webs ite . Name Role Age Considered independent of main shareholders Served since Term expires Participation Board meetings 2024 Share ownership in Axactor as of 31 December 2024 (direct/indirect) Terje Mjøs Chair 63 Yes 20.01.17 AGM 2025 16 750,000 Brita Eilertsen Member 62 Yes 20.01.17 AGM 2025 16 19,892 Lars Erich Nilsen Member 43 No 04.05.18 AGM 2025 16 - Kjersti Høklingen Member 53 Yes 03.05.23 AGM 2025 15 21,000 Ørjan Svanevik Member 59 No 11.12.23 AGM 2025 16 13,000 Axactor Annual report 2024 Axactor Annual report 2024 27 27 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report Independence The nomination committee has evaluated the independency of the Board members in relation to the Group executive management, and material business contacts. Three out of five 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 is, 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 2024. 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 2024, the Board held 16 meetings whereof eight were held in relation to the interim reporting, strategy discussions, budget, business, operational and financial updates, risk and internal control, sustainability discussions, portfolio assessments, remuneration and employee related matters, review of polices and instructions etc. In addition, eight extraordinary meetings were held to discuss dividend, financial calendar, covenants, credit servicer’s and credit purchaser’s (NPL) directive and associated license requirements, NPL purchases, M&A, and lease agreements. The CEO has been present in all Board meetings, except when the Board has discussed the CEO compensation and performance. The Board has also discussed without the CEO and other members of the Group executive management present in all ordinary board meetings and held separate discussions with the auditor without the 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 2024 was conducted in December 2024 and discussed in the Board meeting 16 January 2024.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. Axactor Annual report 2024 Axactor Annual report 2024 28 28 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report 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 sustainability 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, license 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 2024, the audit committee consisted of the following members: Brita Eilertsen (Chair) Kjersti Høklingen The members are independent of the Group executive management, and all of the members have qualifications within accounting. The audit committee held six meetings in 2024. The investment committee oversees the investment process and reviews investment 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. The investment committee regularly reviews the performance and revaluations of portfolios and assesses the risks of the market from a micro and macro perspective. Monthly reports are also provided to the committee members covering the portfolio performance, capex, investment commitments and opportunities. As of 31 December 2024, the investment committee consisted of the following members: Terje Mjøs (Chair) Lars Erich Nilsen Ørjan Svanevik The investment committee held 14 meetings in 2024. 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 2024, the remuneration committee consisted of the following members: Terje Mjøs (Chair) Ørjan Svanevik The remuneration committee held four meetings in 2024. 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 2024 Axactor has focused on adapting its sustainability reporting to comply with the new CSRD reporting requirements, 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 Sustainability statem ent . Axactor Annual report 2024 Axactor Annual report 2024 29 29 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report 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 Group executive management, responsible for developing and monitoring compliance with their respective areas. The Board has approved the following policies in 2024: Policies Quality Corporate governance IT and information security Code of Conduct Procurement Finance Communication Human resources Legal and compliance Operations Delegation of authority Physical security Environmental Debt purchase and portfolio management Data protection Insider Anti-corruption and anti-fraud Anti-money laundering Antitrust (competition) Trade sanctions Treasury (incl. interest rate- and currency risk management policies) Tax Dividend Human rights To most policies 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 quarterly. 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 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, and a complaints and incident management system to report and follow-up on debtor complaints and deviations to company internal policies and procedures. 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 Axactor Annual report 2024 Axactor Annual report 2024 30 30 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report 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 NPL portfolios are 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. The Board accounts for the main features of the internal control and risk management systems in the annual report. A description of the key risk factors and risk management can be found in the Risk review section. 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. Further details about the remuneration of the Board can be found in note 8 to the annual report, and in the Remuneration rep ort . 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. The Board’s statement regarding remuneration of the Group executive management can be found in note 8 to the annual report, and in the Remuneration rep ort . 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 Axactor Annual report 2024 Axactor Annual report 2024 31 31 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report that Axactor itself fulfils 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 five times with the auditor during 2024 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 2024 is described in note 9 to the annual report. 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 EY and considered independent from the company and the Board. Deviations from the Code: None Axactor Annual report 2024 Axactor Annual report 2024 32 32 Performance and governance Performance and governance | Corporate governance report Performance and governance | Corporate governance report General information - ESRS 2 General disclosures 35 Environment, incl. EU Taxonomy 65 Social - S1 Own workforce 72 Social - S4 Consumers and end-users 85 Governance - G1 Business conduct 92 Entity-specific topic 97 Appendix 102 Sustainability statement Report of the Board of Directors The sustainability statement is an integrated part of the Report of the Board of Directors Axactor Annual report 2024 33 Sustainability statement Content index General information - ESRS 2 General disclosures 35 General disclosures 36 BP-1 – General basis for preparation of the sustainability statement 36 BP-2 – Disclosures in relation to specific circumstances 37 Governance 38 GOV-1 – The role of the administrative, management and supervisory bodies 38 GOV-2 – Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies 42 GOV-3 – Integration of sustainability-related performance in incentive schemes 42 GOV-4 – Statement on due diligence 43 GOV-5 – Risk management and internal controls over sustainability reporting 44 Strategy 45 SBM-1 – Strategy, business model and value chain 45 SBM-2 – Interests and views of stakeholders 51 Impact, risk and opportunity management 56 IRO-1 – Description of the process to identify and assess material impacts, risks and opportunities 56 IRO-2 – Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement 58 Disclosures subject to ESRS 2 Appendix C 60 Group policies 62 Environment, incl. EU Taxonomy 65 EU Taxonomy 66 Social - S1 Own workforce 72 Strategy 73 ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model 73 Impacts, risks and opportunities management 74 S1-1 – Policies related to own workforce 74 S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts 75 S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns 76 S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions 77 Metrics and targets 79 S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 79 S1-6 – Characteristics of the undertaking’s employees 79 S1-7 – Characteristics of non-employees in the undertaking’s own workforce 82 S1-9 – Diversity metrics 82 S1-10 – Adequate wages 83 S1-11 – Social protection 83 S1-14 – Health and safety metrics 83 S1-16 – Remuneration metrics (pay gap and total remuneration) 83 S1-17 – Incidents, complaints and severe human rights impacts 84 Social - S4 Consumers and end-users 85 Strategy 86 ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model 86 Impact, risk and opportunity management 87 S4-1 – Policies related to consumers and end-users 87 S4-2 – Processes for engaging with consumers and end-users about impacts 88 S4-3 – Processes to remediate negative impacts and channels for consumers and end-users to raise concerns 88 S4-4 – Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions 89 Metrics and targets 90 S4-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 90 Governance - G1 Business conduct 92 Impact, risk and opportunity management 93 G1-1– Business conduct policies and corporate culture 93 G1-3 – Prevention and detection of corruption and bribery 94 Metrics and targets 96 G1-4 – Incidents of corruption or bribery 96 Entity-specific topic 97 Fair and efficient credit markets through compliant and ethical debt collection 98 Appendix 102 List of datapoints in cross-cutting and topical standards that derive from other EU legislation 102 Axactor Annual report 2024 Axactor Annual report 2024 34 34 Sustainability statement Sustainability statement General information (ESRS 2) General disclosures 36 Governance 38 Strategy 45 Impact, risk and opportunity management 56 Disclosures subject to ESRS 2 Appendix C 60 Group policies 62 Axactor Annual report 2024 Axactor Annual report 2024 35 35 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures General disclosures BP-1 – General basis for preparation of the sustainability statement This sustainability statement has been prepared in accordance with the Corporate Sustainability Reporting Directive (CSRD, Directive (EU) 2022/2464) adopted by the EU as part of the EU Green Deal, the Norwegian Accounting Act § 2-3 and § 2-4, and the Norwegian Securities Trading Act § 5-5. As a basis for preparing the sustainability statement and the process to identifying its impacts, risks and opportunities (“IROs”), the Group has analyzed its upstream and downstream value chain focusing on first tier stakeholders, Axactor expects that, going forward, the data available from business relationships will improve to better enable analysis of the value chain. Axactor has not omitted specific pieces of information corresponding to intellectual property, know-how or the results of innovation in its sustainability report. Axactor has not made use of the exemption as provided for in articles 19a(3) and 29a(3) of Directive 2013/34/EU. The report is prepared on a consolidated level comprising of Axactor ASA and entities in which Axactor ASA has control, equivalent to the Group’s consolidated financial statements. Legal organization December 2024 1 50% of the shares in Reolux Holding S.à r.l. is held by Geveran Trading Co. Limited (Cyprus). Geveran Trading Co. Limited also holds shares of Axactor ASA Beta Properties Investments S.L.U. Axactor Capital AS Axactor Invest 1 S.à r.l. Axactor Portfolio Holding AB Reolux Holding S.á r.l. 50% 1 Axactor ASA Axactor Platform Holding AB Axactor Holding S.r.l. Axactor Italy S.p.A. Axactor Italy Servicing Srl Axactor España, Platform S.A. Axactor Germany GmbH Heidelberger Forderungskauf GmbH Heidelberger Forderungskauf II GmbH Axactor Finland Oy Axactor Norway AS Axactor España, S.L.U. Axactor Sweden AB Axactor Germany Holding GmbH Axactor Annual report 2024 Axactor Annual report 2024 36 36 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures BP-2 – Disclosures in relation to specific circumstances The annual report 2024 is the first year of reporting according to CSRD for Axactor. Axactor has not included disclosures from other legislation or generally accepted sustainability reporting pronouncements. Axactor has incorporated information by reference to the consolidated financial statement in the sustainability statement. The consolidated financial statement is subject to a higher level of assurance and a part of the same annual report as the sustainability statement. Axactor has not omitted any information connected to the use of phase-in provisions in accordance with Appendix C of ESRS 1. Time Horizons The following time horizons are used for this sustainability reporting: Short-term 0-1 year Matching the period of the financial statement and budget Mid-term 1-5 years Matching the period of the financial plan Long-term 5-15 years Matching the period which the valuation of purchased loan portfolios is based on; 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. Value chain estimation All metrics presented in this report are based on data collected and managed by Axactor. No metrics are calculated based on value chain data using indirect sources. Sources of estimation and outcome uncertainty List of metrics and monetary amounts disclosed that are subject to a high level of measurement uncertainty: Metric/amount Reference to description Remuneration metrics (pay gap and total remuneration) Section S 1 - 16 Debtor satisfaction survey score Section S4 - 5 Inbound service level Section S4 - 5 Nuisance rate (outbound) Section S4 - 5 Customer satisfaction survey Entity-specific topic: Metrics and tar gets Axactor Annual report 2024 Axactor Annual report 2024 37 37 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Governance GOV-1 – The role of the administrative, management and supervisory bodies 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 of the company, which exercise the highest authority of the company. The Board has the primary responsibility for overseeing and supervising the Group's executive management and operations. For the purpose of this report Axactor defines administrative, management and supervisory bodies as the Board, the Board committees and the Group executive management. Board of Directors Executive and non-executive members Executive members: 0 Non-executive members: 5 Representation of employees and other workers 0/5 (0%) employee representatives Diversity ratio (number of female members divided by number of male members) 0.67% Experience relevant to the sectors, products and geographic locations of the undertaking The members of the Board consist of individuals with experience from a wide range of industries including banking, investment management and IT industry, together with several years of experience from the debt collection industry as members of the Board for Axactor. All members have experience with working in sizeable international corporations. Further details can be found on the Group's websit e . Independent board members 3 independent (60%): Mr Mjøs, Mrs Eilertsen and Mrs Høklingen Reflection of IRO’s in terms of reference, board mandates and other related policies The Board is responsible for the organization of the company and the management of the business of the company in accordance with the provisions of the Norwegian Public Limited Liability Companies Act and applicable corporate governance principles, including the management of sustainability matters. The Board has organized it’s work in three working groups, the audit committee, the remuneration committee and the investment committee. Each committee has an instruction approved by the Board which sets out the work, responsibilities and authorities for each work group, including each committee’s responsibilities for IROs. Terje Mjøs Chair of the Board Chair of the remuneration committee and chair of the investment committee Brita Eilertsen Board member Chair of the audit committee Lars Erich Nilsen Board member Member of the investment committee Kjersti Høklingen Board member Member of the audit committee Ørjan Svanevik Board member Member of the investment committee and member of the remuneration committee Axactor Annual report 2024 Axactor Annual report 2024 38 38 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Board commitees Audit Committee (“AC”) AC’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 independence to inform the Board of the results of the statutory audit 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 to ensure that the company has sufficient focus on sustainability matters to contribute to sustainable development and appropriate risk management to minimize negative impact of the company’s operations AC works as the Board’s risk committee, reviewing the procedures for risk management, and assessing the risks and financial controls related to the Group’s business activities. 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. AC receives reports on the work of the internal and the external auditor and the results of the audits. The audit committee consists of two members, with Brita Eilertsen as Chair. Board Investment committee ("BIC") BIC oversees the investment process and reviews investment 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. BIC shall ensure that the due diligence process takes in to account i.e. the current servicers' management of claims, the debtors' economy and ability to pay, regulatory compliance, risks associated with specific borrowers, industries, or geographic areas and other macroeconomic factors. BIC works to ensure that the Group succeed with debt portfolio purchase and portfolio management through high ethical standards and adhering to principles of good business practice. Throughout the entire value chain, Axactor shall operate with good business control, only purchasing legitimate claims, at the correct price, from responsible sellers and through balanced contracts protecting Axactor’s interests. The committee regularly assess the market risk relevant for the portfolio book values, such as the impact from potential regulatory changes. BIC ensures that the Board is aware of matters that may significantly impact on the financial condition or affairs of the business. The investment committee consists of three members, with Terje Mjøs as Chair. Remuneration Committee (“RC”) RC develops the philosophy, policy and guidelines for remuneration that creates the link between remuneration levels, business performance and return to shareholders. The remuneration policy is approved by the general meeting and published on the company’s website. The policy establishes precedence for remuneration throughout the organization. RC assures that the overall remuneration payable is in the best interest of the company and aligned with the overall business strategy, goals, objectives, the material sustainability matters identified such as gender balance and pay-gap and good corporate governance. It proposes to the Board on employment terms and total remuneration of the CEO and approves the terms and remuneration for the other members of the Group executive management. The remuneration for the Group executive management is reported to the general meeting and published as part of this annual report. The committee also conducts a formal evaluation of the CEO and the executives annually, applying established performance objectives. RC oversees that the company has an appropriate succession plan, monitors employee satisfaction, and assesses and follow-up other material employment matters related to executive personnel. The remuneration committee consists of two members, with Terje Mjøs as Chair. Axactor Annual report 2024 Axactor Annual report 2024 39 39 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Group executive management Executive and non-executive members Executive 100%, non-executive 0% Representation of employees and other workers NA Experience relevant to the sectors, products and geographic locations of the undertaking The Group executive management comprises of members with significant industry experience covering, but not limited to, corporate governance, strategy, risk management and internal controls, regulatory compliance, data privacy and information security, financial reporting, people management, sustainability, responsible investments, vendor management and good debt collection practices. Further details can be found on the Group's webs ite . Reflection of IRO’s in terms of reference, board mandates and other related policies The individual responsibilities for managing IRO’s are set out in the respective policies managed by each Group executive. Each policy is approved by the Board. Johnny Tsolis Chief Executive Officer ("CEO") 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. Mr. Tsolis holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian Business School, BI. Nina Mortensen Chief Financial Officer ("CFO") Ms. Mortensen has extensive experience in financial governance and transformations, financial operations, managing IPOs and M&A processes. 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 ("COO") Mr. Dullum has broad 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 Business Intelligence for the Axactor Group. Mr. Dullum holds a bachelor’s degree in business administration from BI Norwegian Business School (BI), and an MBA degree from Norwegian School of Economics (NHH). In addition, Mr. Dullum holds a personal debt collection licence given by the Financial Supervisory Authority of Norway (FSA) Kyrre Svae Deputy CEO & Chief Strategy Officer Mr. Svae holds the position as Deputy CEO and Chief Strategy Officer. During his career in Axactor he has also acted as Interim CFO and Interim Country Manager in Germany. Prior to joining Axactor he has extensive experience from working as a management consultant focusing on strategy development, operational improvement and M&A. Mr. Svae holds a M.Sc. from Copenhagen Business School, with part of the degree from Harvard and China Europe Int. Business School. Karl Mamelund Chief Investment Officer ("CIO") Mr. Mamelund has extensive experience working as a management consultant focusing on strategy development, profit improvement, organizational development, valuation and due diligence projects in a wide range of industries, including various sectors of the financial services industry. Mr. Mamelund holds a «Siviløkonom» degree in Economics and Business Administration from the Norwegian School of Economics (NHH). 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. 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). Axactor Annual report 2024 Axactor Annual report 2024 40 40 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Management, monitoring and oversight of sustainability matters Axactor’s sustainability matters constitute a fundamental part of the Group’s operations. The management of sustainability matters is an integrated part of the general course of business, internal control and risk management system, as well as management’s decision-making process. Risk management and internal control contributes to efficient operations, timely and correct financial and non-financial reporting, and compliance with applicable laws and regulations. The Group executive management has reviewed the material sustainability matters resulting from the double materiality assessment ("DMA"), suggested targets, implemented actions and monitors progress. The Board is the ultimate responsible for monitoring KPIs and approving the targets presented by the Group executive management. The sustainability matters are managed through the internal control and risk management process covering the organizational structure, managerial responsibilities for compliance, policies and procedures, training, customer and supplier due diligence, business reviews, internal controls through first and second line of defense and internal audits, incident investigations and corrective actions as well as reporting. Each member of the Group executive management has established reporting lines within their respective areas in each country to oversee and manage their responsibilities throughout the organization. The Group’s policies and procedures are important tools in ensuring sound governance processes. See section Group policies for more information about the Group’s policies. A risk assessment is conducted quarterly both by the local teams and by the responsible Group executives. The risk assessment includes a review of existing and potential new sustainability matters. Key risks are monitored through monthly business reviews with Group executive management, and through quarterly reporting to the Board. Internal audit Axactor has an internal auditor appointed by the Board. The Corporate governance policy states that an internal auditor shall assure the efficiency of the framework and risk management in business operations, including the management of sustainability related matters. Business audit activities aim to ensure the efficiency and appropriateness of the company’s operations. Control-related audit activities shall assess and assure the adequacy and effectiveness of internal controls and the risk management framework. Internal audits are planned and carried out independently but in coordination with other control functions and the external auditors. Audits can also be initiated due to escalations/whistleblowing, fraud attempts, misconducts or other breaches of laws or the company’s policies and rules. The internal auditor provides AC with a status of the internal control and report on any serious compliance breaches identified. Qualifications To ensure that the company possesses appropriate skills and expertise, regular assessments are carried out focusing on qualifications, performance management, succession planning and personal development. In accordance with the principles of good corporate governance, the nomination committee ensures that due attention is paid to the requirements for competence, capacity and diversity, of both existing and potential new members of the Board. The committee’s assessment is reported directly to the general meeting. The Board reviews the performance of the CEO and the Group executive management in relation to the adopted objectives. 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 Group executive management BIC RC AC External audit Axactor Annual report 2024 Axactor Annual report 2024 41 41 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures GOV-2 – Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies The Group executive management has conducted a DMA which will be reviewed annually. Each member of the Group executive management is responsible for ensuring necessary supervisory measures in line with the internal control and risk management system. All Group executive management members conduct monthly review sessions with representatives from their respective area, including representatives from the country management teams. The management of sustainability matters is an integrated part of the general reporting on all business matters. When deciding on major transactions, the relevant administrative, management and supervisory bodies are provided with a business case that incorporates relevant sustainability IROs information connected to the specific transaction matter. As with all general corporate and business matters, relevant sustainability IROs are part of assessing the Group's adherence to the Group defined strategy (see section SBM- 1 ). All material IROs, as described in section SBM-3 have been reviewed by the Group executive management and the Board as part of the DMA in 2024. GOV-3 – Integration of sustainability-related performance in incentive schemes The general meeting decides the remuneration to the Board and the nomination committee. The Board decides the salary and other compensation to the CEO. The Board’s remuneration committee assesses and determines the remuneration of executive managers reporting to the CEO based on the CEO’s recommendation. The CEO determines the remuneration of other executive managers based on the grandfather principle. See section Group policies Remuneration policy for more information. The remuneration to the executives comprises of a market based fixed salary, standard employee benefits and variable pay in terms of short- and long-term incentives. Target-setting for the short-term incentives across the Group is aligned with the overall strategy, budget, and other predefined criteria. The individual targets range from three to five personal targets, with weights ranging from 5-25%. The specific measures, targets and weightings vary. However, at least one of the individual performance objectives supports the company’s sustainability targets such as but not limited to ethical business behavior, good debt collection practices, data privacy, information security, prevention of financial crimes, diversity, non-discrimination and equal opportunities, talent attraction and retention, responsible selection of customers and partners and environmental footprint. Individual performance is assessed not only on what is delivered but also on how it is delivered. The remuneration to Group executive management is published in the remuneration rep ort . 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. 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 share 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 2024 Axactor Annual report 2024 42 42 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures GOV-4 – Statement on due diligence Core elements of due diligence Section Paragraphs in the sustainability statement Embedding due diligence in governance, strategy and business model G OV-1 G OV-3 S1-1 S1-1 Management, oversight and responsibility of governance and policies. The Board is the ultimate responsible for approval and compliance with policies (UN guiding principle 16a) Embedding sustainable business conduct in remuneration Human rights policy describing the Groups commitment and obligation to respect the ten principles of the UN Global Compact, The International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, The United Nations (UN) Sustainable Development Goals Code of Conduct describing the expectation to employees and business relationships on sustainable business conduct Engaging with affected stakeholders in all key steps of the due diligence S BM-2 I RO-1 S1-2 S4-2 G1-3 Consulting with relevant stakeholders across Axactor’s value chain including business relationships and activities Involving stakeholders in identifying and assessing sustainability matters and IROs Process for engaging with own workforce Process for engaging with consumers and end-users Systems and processes for receiving feedback and grievance mechanisms Identifying and assessing adverse impacts I RO-1 S1 S BM-3 S4 S BM-3 Description of the process to identify and assess material impacts, risks and opportunities Material impacts, risks and opportunities relating to own workforce Material impacts, risks and opportunities relating to consumers and end-users Taking actions to address those adverse impacts S1-4 S4-4 G1-3 Taking action on material impacts on own workforce Taking action on material impacts on consumers and end-users Key actions to manage corporate governance matters Tracking the effectiveness of these efforts and communicating S1-5 S4-5 Targets related to managing material matters relating to own workforce Targets related to managing material matters relating to consumers and end-users In June 2021, Axactor became a signatory of the UN Global Compact further recognizing the importance of sustainability for the organization Axactor Annual report 2024 Axactor Annual report 2024 43 43 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures GOV-5 – Risk management and internal controls over sustainability reporting As part of its work with preparing the sustainability statement for 2024 according to CSRD, Axactor has conducted a full review of the required data and the data gathering process. A working group led by the CFO and Chief of Staff was established to ensure compliance with reporting requirements. Axactor has since 2020 published a sustainability report in line with the GRI framework. The sustainability reporting is already an integrated part of the annual reporting process and has during 2024 been aligned with CSRD. All policies and procedures have been reviewed and updated to reflect and integrate the CSRD reporting requirements. Data quality in systems have been assessed and where weaknesses have been identified corrective measures have been implemented to ensure data quality. As an example, the HR reports used for monthly monitoring is updated and aligned with CSRD relevant definitions of employee and own work force categories, reducing the need for manual data management. Spot checks of data and internal controls have been conducted to verify the correctness, both by management and by the external auditor. The internal auditor has not conducted a audit of the sustainability reporting process for 2024. Training has been provided to relevant functions responsible for the data management. The annual report and related processes are supervised by the Board’s audit committee and hence a part of the committee’s reporting process and schedule. CSRD processes and reporting requirements are extensive with a vast number of supporting documents and publications, together with limited established best practices. The main risk is that some reporting requirements are misunderstood or misreported. Regular new publications and updated information has also changed the understanding of disclosure requirements during the process of producing the sustainability statement. Axactor trust that internal processes and initiatives have ensured a comprehensive knowledge of the CSRD requirements, and has kept in close dialogue with its external auditor throughout the process when conducting the DMA and preparing the sustainability statement, togheter with regular meetings with peers. The availability of value chain data as required by CSRD is not readily available to Axactor which inhibits the reporting capabilities. Axactor acknowledges that it takes time for both Axactor and its business relationships to implement and adapt to the new requirements. Axactor Annual report 2024 Axactor Annual report 2024 44 44 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Strategy SBM-1 – Strategy, business model and value chain Axactor’s purpose is to help people and companies to a better future by being an aid in situations of financial difficulties, offering sustainable solutions and enabling further investments and economic growth. Axactor recognizes that the company 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. 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 is committed to doing business in accordance with the ten principles of the UN Global Compact, actively support the UN Sustainable Development Goals #5, #8, #13 and #16, as well as the Norwegian Transparency Act. 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 employed 1,285 employees per 31 December 2024, and operates in six European markets: Finland, Germany, Italy, Norway, Spain and Sweden. Number of employees Number of employees by head count, by country. 31.12.2024 31.12.2023 Country Headcount % Headcount % Finland 18 1% 33 2% Germany 137 11% 182 13% Italy 206 16% 260 19% Norway incl. Group 140 11% 110 8% Spain 768 60% 759 56% Sweden 16 1% 23 2% Total 1,285 100% 1,367 100% Axactor’s vision is to become the industry benchmark. Axactor was founded in 2015 on the belief that it is possible to operate more efficiently with innovative and less costly IT-systems and more streamlined processes, but also raising the bar on environmental, social and governmental standards. The company focuses on delivering fair treatment of debtors, having satisfied customers, happy employees and, high return to investors. To achieve the vision Axactor is pursuing a strategy with three pillars; i) growth, ii) cost leadership and iii) bank and finance. To monitor the effectiveness of implemented initiatives, and to track the development of the strategy towards the vision, Axactor uses key performance indicators (KPIs). The KPI’s are designed to ensure that Axactor has a holistic view to the development, both with regards to financial performance, operational performance and how the company affects the stakeholders. As an example, employee satisfaction, customer satisfaction and debtor satisfaction are KPIs Axactor is measuring to ensure that the Group is developing in the right direction and is conscious of how it affects people and society. Axactor’s position within the value chain is between the providers of credit such as banks or businesses offering credit sales, and the debtor obtaining a loan or making a purchase using a line of credit. Axactor has a highly specialized and focused business model divided into two main business lines. Axactor acquires and collects on NPLs (87% of gross revenue in 2024) and provides 3PC services (13% of gross revenue in 2024). See the Note 5 (Operating segments) to the financial statements for a breakdown of total revenue. Axactor Annual report 2024 Axactor Annual report 2024 45 45 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures The NPL segment comprise of acquiring non-performing debt for subsequent collection through own operations. NPLs are credit agreements under which a borrower over time has defaulted payments and had their credit terminated by the original creditor. The outstanding loans are collected either amicably or through legal proceedings. 3PC is the collection of non-performing claims on behalf of third-party clients. The operating segment applies both amicable means and legal proceedings 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. Axactor’s value chain can be separated into five main elements: Upstream Own operations Downstream Capital structure External environment Axactor focus area NPL 3PC Account receivable management Amicable collection Legal collection Surveillance and recovery Creation of credit through purchase or loan Debtor fails to repay agreed amount by the due-date Follow-up of invoices from invoice date to collection Pre-legal collection Work closely with debtor to find amicable repayment plan Legal alternatives differ greatly between jurisdictions Local presence and competence is key Unrecoverable claims move to surveillance Collection reinitiated when debtor economic capacity improves Debt is ultimately settled or otherwise cancelled Axactor Annual report 2024 Axactor Annual report 2024 46 46 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures 1. Upstream Axactor’s upstream value chain comprise of a few group wide suppliers for common systems and services, complemented by local additions to cover country specific requirements. Axactor’s primary need for services relates to professional services rendered by reputable third parties in low-risk jurisdictions in Europe. Axactor ensures that its selection of partners is based on transparent, objective criteria, free from personal interest, through established procurement policies and procedures. Contracts includes warranties of compliance with relevant laws, regulations, and business practice principles, compliant with Axactor’s Supplier Code of Conduct. Axactor regularly reviews its vendors and partners, focusing on social risks and impacts, as well as financial risks including dependencies to human and natural resources. Axactor’s main business relationships in the upstream value chain are: Banks and financial institutions (debt collection and debt portfolio sourcing) IT infrastructure and data management services Collection system providers Legal system actors (courts, bailiffs, etc.) Various professional services (banking, credit information etc.) In identifying its primary business relationships, Axactor has identified the most significant suppliers and partners based on the value and importance of services provided. Value has been determined based on actual cost (derived from the ERP system), and importance has been determined in dialogue with Group- and local management, based on the importance of the service for the company’s ability to perform collection services and collect on own portfolios. a) Banks and financial institutions Banks and financial institutions are integral to Axactor’s business model, through supplying Axactor with NPLs, and acquiring 3PC services from Axactor. In both instances, Axactor is managing the collection of claims that has been or are in default. The sources for acquiring non-performing debt or offering 3PC-services are conducted through well-functioning, transparent and competitive processes, where the sellers require the best price and quality combination available. Axactor aims to succeed with debt purchase and portfolio management through high ethical standards and adhering to principles of good business practice. Throughout the entire value chain, Axactor shall operate with good business control, only purchasing legitimate claims, at the correct price, from responsible sellers and through balanced contracts protecting Axactor’s interests. Prior to initiating any relationship which leads to the acquisition of a portfolio, Axactor first demonstrates that the seller is an entity with a clear ownership structure, sound financial standing, that conducts business in compliance with laws, and generally recognized business practice principles. The same requirements apply for the servicing agreements, and the customers and banks to which Axactor offers collection services b) IT infrastructure and data management services IT infrastructure, data management services and information security form the technological backbone of Axactor. Axactor has since its inception had a common IT infrastructure platform across all countries of operation, operated by a Norwegian-based IT infrastructure provider compliant with ISAE 3000 Type II and ISAE 3402 Type II reporting standards. Most of Axactors’ daily operations are conducted using IT systems run and operated through the common IT infrastructure platform, which is a key element of maintaining cost-efficient operations. Axactor acknowledge that its operation is highly dependent on the services provided. The performance and services provided are closely monitored and regularly reviewed by the internal IT department, to mitigate risk and ensure sufficient service delivery. The infrastructure services are provided from data centers located at locations considered to be low-risk areas both from an environmental and regulatory perspective. 1. Upstream 2. Own operations 3. Downstream 4. Capital structure 5. External environment Axactor Annual report 2024 Axactor Annual report 2024 47 47 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures c) Collection system providers Axactor’s collection systems are the cornerstone of the company’s ability to perform services and collect on own claims. All Axactor countries uses external providers of collection systems, as well as self-developed supporting systems and functionalities. Axactor is continuously working to ensure that the systems and processes are compliant. These systems are acquired and managed locally, and subject to strict requirements, supervision, and continuous quality assurance measures. The collection systems process vast amounts of data on Axactor’s debtors, as well as applying interests, fees, etc. on claims. Addressing these aspects comprehensively through inter alia, policy commitments, effective procurement practices, information security requirements, not only support effective debt recovery but also align with broader sustainability goals. d) Legal system actors Axactor uses a variety of strategies to collect on debt. When an amicable solution is not possible, an alternative is to use the legal system. Legal system actors play an important role in the upstream value chain of debt collection agencies. These actors include courts, bailiffs, legal firms, regulatory bodies, and other judicial entities. Their involvement is essential to ensure enforcement of claims, and effective dispute resolution. Axactor exerts no influence over these actors, and in terms of identifying material sustainability linked IROs in the value chain, legal system actors are considered to constitute a negligible risk. e) Various professional services Axactor acquires complementary professional services which (in number) makes up most of the Group’s suppliers. These services include, inter alia: Downstream distribution services (letters, notices, legal documents to debtors) Banking services (management of funds, payments, reconciliation, etc.) Financial consulting services Legal and compliance services IT and information technology services/systems (excl. infrastructure services) Data analytics and research services Insurance services Considering the number of suppliers and wide array of services covered, it is important to have efficient and comprehensive procurement and vendor management systems in place. Axactor strives to regularly review and assess its vendor base. In summary, Axactor’s upstream value chain is a potential source of sustainability related IROs across various dimensions, including data privacy, social responsibility, regulatory compliance, combatting financial crime and corruption, and the environment. At the same time, Axactor’s limited size needs to be taken into consideration when determining potential risks and impacts (directly or indirectly) caused by its operations or value chain, as Axactor’s need for goods or services is quite modest compared to for instance material- or energy intensive manufacturing companies. Axactor Annual report 2024 Axactor Annual report 2024 48 48 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures 2. Own operations Axactor operates within a dynamic and highly regulated industry, offering debt collection services primarily to banks and financial institutions. Axactor’s operations are primarily office-based and spread across six different well-functioning EU/EEA regulated markets. For the purpose of analyzing sustainability matters, Axactor’s operations can be separated into two main interfaces: Core activities Employees a) Core activities Debt collection services: Engage in contacting debtors via various channels, including phone calls, emails, and postal correspondence, to recover outstanding debts on behalf of itself and its clients. This process involves negotiation, payment arrangement, and, where necessary, legal action. Customer management: Maintain robust relationships with its customers, offering tailored solutions to meet their debt recovery needs. This involves regular communication, performance reporting, and compliance with client-specific requirements. Data management and analysis: Axactor handles large volumes of sensitive data, utilizing advanced data management systems to ensure accuracy, security, and compliance with data protection regulations. Data analysis are crucial for optimizing collection strategies and improving recovery rates. Compliance and risk management: Axactor’s operations are governed by strict regulatory frameworks such as, but not limited to, the local debt collection regulations, GDPR regulations and anti-money laundering regulations. Axactor has dedicated teams to ensure compliance with relevant laws, ethical standards, and industry best practices. This includes regular audits, training programs, and risk assessment procedures. b) Employees Axactor strives to ensure that it remains an attractive workplace for all its employees by providing a healthy work environment with meaningful tasks through fostering a culture that empowers everyone to learn and grow. The nature of debt collection exposes a significant part of the workforce, the collection advisors, to situations that can be mentally challenging to manage, which consequently is a key source for sustainability matters. Axactor has mapped the company’s operations across the entire value chain, including its own activities (including direct and indirect vendors), to identify its material human- and workers’ rights risks. This includes understanding the geographic locations, sectors, and specific activities at each stage of the value chain, and the number of individuals potentially affected by these activities. In summary, together with its downstream value chain, own operations are unquestionably where Axactor has identified the most relevant sustainability matters, and associated IROs. Axactor employs a significant number of people, which not only comprises the individuals directly affected by the company’s acts and policies, but also represents the company externally towards debtors, society, and other stakeholders. 3. Downstream Axactor’s main downstream business relationships are the 3PC customers and the debtors from whom Axactor collects outstanding debt on behalf of a third party or its own portfolios. As part of the debt collection process, Axactor process large amounts of personal data and millions of transactions pass through Axactor each year. It is therefore vital that Axactor ensures the confidentiality of this information and has systems in place to combat financial crime and corruption. The debt collection process is strictly regulated and Axactor continuously focus on preventive and detective measures to ensure compliance with its various legal obligations. Given the number of affected individuals, and the number of payments processed each year, several relevant sustainability matters have been identified in Axactor’s downstream value chain. Axactor Annual report 2024 Axactor Annual report 2024 49 49 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures 4. Capital structure Axactor’s business of purchasing NPLs is by nature capital intensive. Portfolios are financed using a mix of equity and debt financing where the purchase price is fully paid on the time of acquisition and valued using up to a 15-year collection curve, with a front-loaded pay-back profile. To fund its operations Axactor is dependent on investor’s willingness to provide the Group with capital at reasonable terms. Axactor’s capital structure consists of bank loans from reputable Nordic banks and listed bonds. The sustainability matters at this level of the value chain relates to expectations and requirements from lenders with respect to sustainability performance. Axactor is in active dialogue with its lenders to identify and manage such matters, as further described in section SBM -2 . 5. External environment Axactor recognizes it is a part of a greater society. In addition to the stakeholders the company directly or indirectly interact with, there are several other interests that impact, or are impacted by Axactor’s operations across the upstream, own operations and downstream value chain categories. Such interests could be physical people, societies or nature, and also the more abstract parts of society such as economic or regulatory factors. In order to operate sustainably Axactor considers the ripple effects of its operations and also adapt its strategies and actions to mitigate risks and capitalize on opportunities. Examples of relevant external value chain factors and participants include, inter alia: Country-specific regulation: Debt collection is regulated through various means in Axactor’s countries of operation. Compliance with its legal obligations is crucial to avoid legal penalties and maintain credibility, but foremost ensuring the rights and protection of the individuals. In addition to debt collection legislation, data protection and consumer protection laws carry the most relevance to the industry. Through its participation in interest groups Axactor contributes to shaping the regulatory environment by sharing experience and opinions. Furthermore, Axactor recognizes that the governing bodies will adapt its regulation based on the actions of Axactor and its peers, especially when developing new ways of collecting or offering new products within the collection space. Macroeconomic conditions: The debt collection industry is heavily dependent on the disposable income and asset values of the debtors. Any macroeconomic development either increasing or decreasing the debtors’ available funds for repaying debt will in turn impact the cash flow of Axactor. Furthermore, the collection industry is impacted by the general condition of the economy where the buildup of debt and consequently NPLs depend on the state of supply and demand for credit. This again is likely to be impacted by the demand from debt collectors to acquire and manage such debt. The debt collection industry is also under frequent political pressure, due to the nature of its business, and political instability and changes in government policies affects the business environment. Competitive environment: The level of competition in the debt collection industry varies depending on market and segment which also impacts the business environment. Axactor Annual report 2024 Axactor Annual report 2024 50 50 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures SBM-2 – Interests and views of stakeholders To ensure identification of material sustainability IROs in its operations and value chain, Axactor has for several years engaged with various stakeholders to understand their interests and views. This process includes vendor assessment, employee surveys and interviews with different stakeholders, such as lenders, vendors, unions, peers, customers, investors and management. Axactor’s key stakeholders can be distributed as follows: Key stakeholders Affected stakeholders / users of sustainability information / both affected and users of sustainability information 1 Stakeholder dialogue and main important sustainability topics (bullets) Investors & bond holders User Axactor interacts with its investors on a regular basis through formal events such as the quarterly reporting meetings and other ad hoc investor events. Group executive management is regularly meeting face to face with investors to discuss business matters where investors can address their concerns. These meetings are vital for Axactor to understand the views and expectations of its existing and potential equity and debt investors. Sound corporate governance and business behavior Lenders User Axactor is in close dialogue with its lenders including quarterly business updates. Each year the banks are invited to one of Axactor’s offices to learn more about Axactor’s operations and the different aspects of the debt collection industry. During 2024 Axactor has conducted interviews with both of its RCF banks to validate the result of the DMA. Both banks conduct their in-house sustainability assessment to be used in their credit approval process and are well-informed discussion partners on sustainability. Sound corporate governance and business behavior Customers & sellers of non-performing debt Affected & User Axactor’s customers (3PC clients) and the sellers of NPL portfolios are mainly companies within the bank and finance industry which are subject to a strict regulatory framework. Axactor conducts a customer satisfaction survey annually. A key element of customer satisfaction and success is the continuous dialogue on and expectation to the debt collection practices which is of high importance to both Axactor and the customer. Ethical and fair debtor treatment Debtors Affected Debtors are individuals or companies from which Axactor collect claims. To ensure that the rights and interests of debtors are catered to, Axactor use the feedback from the debtors through the debtor satisfaction survey, through direct contact with the case-handlers, internal and external complaints channels including the customers (3PC clients). Axactor conducts millions of conversations each year with its debtors, in which the collection advisors develop a deep knowledge of the debtor’s concerns. Furthermore, the strict regulatory requirements, and required licenses in several jurisdictions gives Axactor a solid indication on what topics to focus on. Axactor has a significant responsibility in balancing the interest of the debtor, who often finds themselves in a difficult situation, and the creditor to which the debtor owe money. Reports and feedback from regulatory bodies are also an important input to understanding the sustainability related matters for debtors. Ethical and fair debtor treatment Data privacy Axactor Annual report 2024 Axactor Annual report 2024 51 51 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Key stakeholders Affected stakeholders / users of sustainability information / both affected and users of sustainability information 1 Stakeholder dialogue and main important sustainability topics (bullets) Suppliers Affected & User Axactor carefully selects its suppliers and ensure they comply with the Group’s Supplier Code of Conduct. Axactor aims to perform a supplier risk assessment including sustainability related matters and will continue to improve this work going forward. Axactor meets with its suppliers on a regular basis depending on the size and the importance for maintaining operational activities. During the DMA process in 2024, Axactor interviewed two of its most important IT service providers. Information security Ethical business behavior Authorities & regulators Affected & User By operating within the debt collection industry and engaging with financial institutions there are a number of direct and indirect engagements with authorities and regulators. The expectations to businesses like Axactor are clearly expressed through regulations and public statements. Axactor has or is about to obtain a debt collection license in most of its jurisdictions, which sets a clear expectation to its business behavior. Through participation in industry organizations Axactor contributes to the development of a sound financial market regulation. Ethical business behavior Fraud and corruption Ethical and fair debtor treatment Society Affected Axactor recognize its important role in society by contributing to a sustainable financial market through responsible debt management and collection. Axactor pays close attention to media reports, peers and other public communication relating to its activities. Good corporate governance and business behavior Equal treatment and opportunities for all Employees & unions Affected The employees are the most important resource of Axactor. Axactor regularly conduct an employee satisfaction survey and systematically address areas of improvement (see section S1-4 for more information). Each employee conducts an annual performance and appraisal talk with its senior manager. Furthermore, all employees have access to a whistleblower channel and complaint management channel. During 2024 employee representatives from each of Axactor’s countries and staff functions have contributed to the DMA, both with input and in verifying the results. See section S1 for more information on strategic goals, policies and procedures relating to own workforce. Working conditions Equal pay for equal work Training and education Workers in the value chain Affected Axactor purchases external services and uses external consultants for e.g. IT services. Axactor acknowledges that the job security of the employees of these suppliers will, to a varying degree, depend on Axactor purchasing services. Employees from Axactor’s main IT suppliers has been included in the stakeholder dialogue during 2024. Working conditions (secure employment) 1 All stakeholders can be both affected stakeholders and users of sustainability information. However, in the table above Axactor has focused on the most relevant types for the purpose of the stakeholder dialogue. Axactor Annual report 2024 Axactor Annual report 2024 52 52 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures The list of stakeholders is non-exhaustive. Inputs and engagement with the stakeholders have been used in the DMA conducted during 2024, both to understand the context and for assessing the outcome of the materiality assessment. Sustainability matters, and the results of stakeholder dialogue and feedback are frequently discussed by Group executive management. In preparation of the CSRD reporting for 2024, members of the Group executive management have participated in meetings with the unions, lenders, the Board, local management teams and key suppliers. The Board’s audit committee is updated on the company’s sustainability related work at least quarterly, including key topics addressed with or by the company’s stakeholders. Most of the stakeholder dialogue is conducted as a continuous process and part of the daily business. All important matters addressed are reported through the existing channels of communication such as business reviews, informal dialogues, whistleblowing and incident management systems, to the responsible Group executive management representative. Throughout these processes the company continuously consider the need to take further actions to address sustainability matters being negative or positive impacts, addressing any risk or opportunities. Axactor does not plan any amendments to its strategy based on the stakeholder dialogue in relation to the 2024 DMA process. SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model Sub-topic Sub sub-topic / entity spesific disclosure Upstream Own operations Downstream Time horizon Topical ESRS N I P I R O N I P I R O N I P I R O N I S1 Own work- force Equal treatment and opportunities for all Gender equality and equal pay for work of equal value Short-term Working conditions Secure employment Short-term Health and safety (mental) Short-term S4 Consumers and end- users Personal safety of consumers and/or end-users Health and safety (mental) Short-term Information-related impacts for consumers and/or end-users Privacy Short-term G1 Business conduct Corruption and bribery Mid/long-term Entity-spesific disclosures Fair and efficient credit markets Short-term N I = Negative impact, P I = Positive impact, R = Risk, O = Opportunity Material IRO Axactor Annual report 2024 Axactor Annual report 2024 53 53 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures In previous years, Axactor has reported in accordance with GRI’s reporting principles in all material respects as defined by the GRI Universal Standards (2021). Through preparation for the 2024 sustainability reporting, Axactor has for the first time conducted a DMA as required by the CSRD (see section Impact, risk and opportunity management ). The reporting requirements following CSRD differs from the GRI. Consequently, the material issues identified and included in this report has changed from the previous reports following the GRI standard. Based on the DMA, Axactor has identified material matters within three topical ESRS’s and one entity specific matter. S1 Own workforce The sustainability matters relating to own workforce are by nature located in Axactor’s own operations. As part of its business model Axactor is focusing on NPLs that to a large extent require human processing. The company is therefore highly dependent on employees to conduct the debt collection services. Equal pay for equal work Axactor is committed to ensure equal compensation for equal work and actively work to ensure fair compensation through annual compensation assessments. Working conditions Axactor has a dynamic operating activity level driven by the available volume of NPLs. The acquisition of large portfolios of NPLs and the subsequent collection of these can result in large shifts in the required workload. Axactor is through its strategy committed to being a cost-leader and as a result it has, and may conduct, up-or downsizing of the workforce. Axactor acknowledge the negative impact on people losing their job and strives to always preserve the affected worker’s rights. Axactor takes pride in its opportunity to offer jobs with low requirement to prior job experience and education enabling access to the labor market, and to contribute to training and education enabling employees to advance in their professional careers. Employee mental health As part of Axactor’s business model employees are working with cases of a sensitive nature and engage with people in vulnerable situations. Through conversations with debtors the collection advisors are to a varying degree exposed to emotional and sometimes aggressive or other forms of behavior that could impact their mental health. Axactor focuses on sufficient training and education of its employees enabling them to handle difficult situations. Furthermore, Axactor has established processes for employees to be taken care of when experiencing any distress or other adverse impacts. S4 Consumers and end-users Debt collection services are by nature conducted in relation to debtors in varying degrees of financial distress. The contact with, and actions taken by Axactor may lead to mental distress for the individual debtors, especially for debtors in vulnerable personal situations. As part of its business model and strategy Axactor strives to ensure that the interests and rights of the debtors are upheld during the collection process. Debtor mental health Axactor handles a significant number of cases and works diligently to ensure that all actions taken are compliant with good debt collection practices. However, it is a possibility that Axactor may be accused of violating good debt collection practices, especially with respect to application of undue pressure (e.g. through excessive attempts at achieving contact with the debtor). The distinction between overly aggressive collection pressure and acceptable practices can be subtle, especially for inexperienced employees. A potential breach of ethical debt collection would negatively impact the debtor in a manner depending on the seriousness of the breach. Through policies and procedures informed by ethical debt collection guidelines and a well-established regulatory framework, Axactor ensures that all employees receive training to comply with the high standards expected of the company. Data privacy Digital security and data privacy is of the utmost importance to Axactor, given its industry and operations. In order to provide its services, Axactor collects and processes substantial amounts of data relating to debtors for debt collection purposes. Data privacy is assessed as material in the DMA due to the high severity of a potential breach taking precedence over the probability of any such incident occurring. Axactor invests significant amounts and resources in organizational and technical measures to secure the information and personal data processed. Axactor Annual report 2024 Axactor Annual report 2024 54 54 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures G1 Business conduct Corruption and bribery Axactor manages a large volume of payments, both in terms of amount and quantity. There is an inherent risk attached to management of payments relating to bribery, fraud and corruption. Axactor has extensive policies and procedures in place to reduce the possibility of using its systems in bad faith, however Axactor recognize the possibility for it to happen and the potential operational and/or financial consequences that would follow. The timing and size of any potential penalty will depend on the severity and occurrence of any punishable breach. The matter of corruption and bribery in the DMA is assessed as material mainly due to the maximum potential magnitude of a violation. Axactor assess the likelihood of such an outcome to be very limited due to the mitigations mentioned above. Axactor does currently not expect any effect on its financial position, cash flow or results nor is it identified any necessary material investments in systems, to manage the risk in the short, medium- and long-term. Entity-specific topic(s) Fair and efficient credit markets (Entity-specific matter) Axactor’s purpose is to help people and society to a better future. Fair and efficient credit markets imply ensuring a debt collection process that is fair for both the debtor and creditor i.e. conducted according to good debt collection practices and compliant with relevant regulation, and doing so in a cost- and process efficient manner. Axactor brings value to the providers of credit by contributing to a secondhand market for NPLs and in turn free up capital for new lending, improving the function of the financial market. Axactor brings value to debtors by reducing the cost and ensuring a compliant debt collection process. A key element of Axactor’s strategy is to be as efficient as possible which again provides better and more cost-efficient solutions to both creditor and debtor. All identified IROs and how Axactor manages these, are already an integrated part of the daily operation. Axactor does not expect to make any material changes to the already established processes included in its business model and strategy based on the DMA. However, it is important to note that there is always room for improving processes, which the company always strive to do. Moreover, the material impacts are considered to be of such a nature that they do not pose any risk to the current operating capacity of the company. Axactor has not found any meaningful way of quantifying the resilience of the business to any of the IROs. The analysis has rather been conducted through qualitative workshops and discussions. Axactor Annual report 2024 Axactor Annual report 2024 55 55 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Impact, risk and opportunity management IRO-1 – Description of the process to identify and assess material impacts, risks and opportunities 2024 is the first year of reporting according to CSRD for Axactor. In the 2023 annual report Axactor published a sustainability report based on the GRI universal standards (2021) which includes an impact materiality assessment. The previous work on GRI reporting has been a valuable starting point for the DMA required by CSRD. Axactor expects to update the materiality assessment annually. The identification of IROs has been conducted through the following workstreams: 1. Value chain, business model and activities A desk-based analysis of the value chain, as described in section SBM-1, has been conducted by management representatives from all parts of the business, being finance, legal, compliance, operation, IT and strategy. Each element such as geographical location, types of business relationships and business activities have been analyzed to identify IROs. Furthermore, throughout the value chain it has been considered what dependencies Axactor has to sustainability related resources such as energy and people. All group policies and procedures (see section Group policies ) have been reviewed to identify which high-risk matters that are already identified and addressed through existing quarterly risk assessments. The Group internal control system has been reviewed to identify existing high concern matters and to identify necessary amendments or additions for new controls. 2. Stakeholder dialogue See section SBM-2 for a description of the stakeholder dialogue that both has served as a source for identifying IROs and to confirm and quality proof the outcome of the DMA. Axactor has, together with internal and external stakeholders discussed social trends, such as information security and data privacy, and human rights including gender equality and diversity. Each quarter, Axactor participates in a peer discussion forum on sustainability matters and industry trends with recent topics focusing on CSRD processes and requirements as well as relevant IROs for the industry. Axactor has analyzed the published sustainability reports from industry peers, banks and key vendors as well as reports from the Governance Group. 3. Screening findings against ESRS topical standards The topical ESRS standards published in ESRS 1 AR 16 (Regulation (EU) 2023/2772) has been screened against identified sustainability matters from the value chain analysis and the stakeholder dialogue, in order to identify possible gaps. Where matters identified by Axactor are not included in the ESRS list, the matter is presented as an entity-specific disclosure. Axactor has evaluated all sustainability matters identified through the impact materiality assessment in order to consider the risks and opportunities that arise from sustainability matters. In the risk assessment process, all risk categories are prioritized equally, with the aim of identifying the most material risks independent of whether it is a sustainability related risk or not. The identification of matters and the materiality scoring has been independently conducted by a team consisting of group management members and representatives from each country. The country results have been compiled and analyzed by the Group team to form a consolidated DMA. The resulting Group DMA has subsequently been presented to the country teams, the Group executive management and the Board for internal control purposes, anchoring throughout the organization and approval. While every effort has been made to conduct a thorough and comprehensive analysis, there are certain limitations that should be noted. The assessment is based on the information and data available at the time of the analysis and captures to the best of the company’s knowledge the most material sustainability related IROs associated with the company's operations and value chain. The assessment relies on publicly available information and self- reported information from local teams and vendors, which may not always be accurate or complete. Indirect vendors have been analyzed using information provided by its direct vendors and publicly available information, due to a lack of incentive amongst indirect vendors to engage in discussions given the absence of any direct contractual or economic relationship. Furthermore, the assessment cannot account for unforeseen events or changes in circumstances that arise after the date of this assessment. Axactor Annual report 2024 Axactor Annual report 2024 56 56 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures The identified sustainability matters have been screened against either qualitative scoring criteria based on management discussions, or quantitative scoring in those cases where the potential or actual financial effects are quantifiable. Based on the identified sustainability matters Axactor is of the opinion that the use of scenarios in the materiality assessment of its identified matters in the 2024 analysis, does not provide any added value. The company will closely monitor the development of best practices for measuring financial effect from sustainability matters, going forward. The scoring of magnitude and likelihood of financial effects has been conducted based on management discussions. Materiality scoring Impact materiality: In general, the scoring criteria have been established with the intention of being able to compare Axactor, on sustainability matters, to any other company irrespective of size, geographical positioning, or industry. Social impact has been scored based on how grave the impact is on people, how widespread the impact is and how difficult the impact is to reverse. For positive impacts the scoring consists of how beneficial and widespread the impact is to the subject matter. For potential impacts an additional consideration is included as to how likely it is for the impact to materialize, while for actual impacts it is automatically given a 100% probability, Governance topics have been evaluated based on how grave the impact is on society, how widespread the impact is and how difficult it is to reverse. For positive impacts only the benefit to society and how widespread the impact is, have been considered. Potential impacts have also been multiplied by a factor du reflect the probability of materializing. Financial materiality: Risks and opportunities stemming either from impacts or from dependencies have been scored based on magnitude and likelihood. For magnitude, Axactor has used either a qualitative or quantitative criteria, as many of the risks and opportunities are considered to abstract to confidently estimate. A scale from 1-5 has been used for magnitude while likelihood is scored from 0-100%, in line with the internal risk assessment methodology. Materiality thresholds The thresholds have been discussed and approved by the Group executive management and supported by the Board represented by the audit committee. Likelihood / probability Score Probability descriptions 1 – Will probably not happen Less than 10% chance of occurrence 2 – Might happen, but probably not 10% up to 35% chance of occurrence 3 – Maybe 35% up to 65% chance of occurrence 4 – Will probably happen 65% up to 90% chance of occurrence 5 – Almost certain that it will happen or has happened 90% or greater chance of occurrence Magnitude / impact Score Description 1 – Insignificant / low Impact is primarily operational, local, and mediated within the current fiscal year. 2 – Small Negative outcomes from risks that are unlikely to have a permanent or significant effect on Axactor’s reputation or performance. 3 – Moderate Negative outcomes from risks that will have a significant impact on Axactor but can be managed effectively in the medium term. 4 – Great Negative outcomes from risks with a significant effect that will require major effort to manage and resolve in the medium term but do not threaten the existence of Axactor in the medium term. Value added if managed successfully is significant. 5 – Critical / Transformational Negative outcomes from risks which if not resolved in the medium term will threaten the existence of Axactor. Axactor Annual report 2024 Axactor Annual report 2024 57 57 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures The assessment of the IROs by scoring severity/magnitude and probability results in a materiality score. IROs with score 1-4 are low in impact/magnitude and probability and would generally require no additional remedies. The IRO should be analyzed to find out if Axactor is using unnecessary resources on these matters. Scores of 4-12 are medium IROs that should be actively mitigated to reduce the impact or risk, or to take advantage of the opportunity. These IROs have either a low probability of occurrence and high impact, a high probability and low impact, or a combination of both. These types of matters might also be analyzed for unnecessary use of resources or considered if the company should allocate more resources to manage. Scores of 13-25 are critical IROs and must be addressed to reduce negative impacts or risk level, or maintain positive impact or take advantage of opportunities, considering its high impact on the company value and/or its operations. All IROs in this category shall continuously be assessed. IROs with a materiality score above 12 is defined as material matters. Time horizons under which the IROs have been evaluated to materialize is aligned with the disclosure in section B P-2 . IRO-2 – Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement Explanation on non-material ESRS topics ESRS E1 Climate change: Axactor has performed a materiality assessment as described in section IRO-1 . The process has been informed by screening the ESRS 1 Appendix A AR 16 list of sustainability matters, including the topic E1 Climate change. Through the assessment of the topics listed in the AR 16 list, the stakeholder dialogue and an assessment of Axactor’s GHG inventory, the company has not identified any impacts, risks or opportunities that are assessed as material in the DMA. Consequently, as indicated in the ESRS 1 appendix E Flowchart for determining disclosures to be included illustration, the company has omitted all the disclosure requirements under ESRS E1. However, Axactor is still required to report on E1 ESRS 2 IRO-1 pursuant to ESRS 1 paragraph 29 and ESRS 2 Appendix C Disclosure/Application Requirements in topical ESRS that are applicable jointly with ESRS 2 General Disclosures (disclosed in section: Disclosure/Application Requirements in topical ESRS that are applicable jointly with ESRS 2 General Disclosures ). As an office-based services company Axactor has incorporated basic environmental practices such as waste reduction, supporting energy efficiency measures by landlords for its offices and promoting the use of online meetings instead of physical to reduce business travel. As a result of the increased focus on reliable data relating to sustainability matters, Axactor initiated during 2022 a project to develop a GHG inventory tool to accurately measure its emissions. This tool incorporates all identified emission sources for scope 1, 2 and 3 in accordance with the GHG Protocol Corporate Standard requirements (aligned with the table in ESRS E1 AR48 which defines the table to report on Scope 1, scope 2 and Scope 3, including all categories 1-15 under Scope 3). For Scope 3 categories Axactor has identified emission sources within: purchased goods and services, fuel- and energy related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, and downstream transportation and distribution. The results of the GHG inventory enables Axactor to better analyze and understand its GHG emission and to more accurately direct emission reduction initiatives where it matters the most. The GHG inventory show that Axactor’s emissions is driven by the fact that the company depends on people, its workforce, to run its activities. Axactor’s GHG emission calculation from 2023 show that 54% of the Group’s total emissions of 2,765.8 tCo 2 relates to employees commuting between their home and work. With the remaining 46% mainly comprising of mobile combustion from leased vehicles (14%), scope 2 electricity, and heating and cooling purchases (12%), and business travel (8%). To meaningfully reduce emissions Axactor is dependent on a general shift in society from carbon intensive to emission free means of transportation or a general expectation that all employees should work from home. With the current technology, Axactor is not able to reach a climate neutral operation without purchasing carbon removal credits. Axactor’s DMA show that the company has much greater impacts, risks and opportunities arising from social and governance Axactor Annual report 2024 Axactor Annual report 2024 58 58 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures matters compared to climate change and other environmental matters. The company’s analysis infer that in comparison to other industries such as oil and gas, manufacturing of goods or transportation, Axactor are not able to make a material contribution to environmental matters, being positive or negative. Axactor recognize the overall societal importance of climate change and will continue to support emission reduction initiatives. Axactor consider that its operations are adaptable to climate change, as the company’s systems and IT infrastructure is secured through storage and backup in different locations and the collection activities can be easily operated from anywhere in Europe (and the world, subject to data privacy restrictions within the EU). Should any incident occur, such as rising sea levels, extreme heat, or other events that makes it impossible to operate at any of Axactor’s locations the business activities can quickly be moved to other locations. Therefore, the company has not identified any material climate change risks. In conclusion, although the environment is important both for Axactor and the society, there is not identified any potential or actual material impacts, risks and opportunities relating to climate change for Axactor. For Axactor to assess E1 climate change as a material topic there must be a clear expectation from the company’s stakeholders that environmental related information is material. Alternatively, E1 may be material if a regulatory body such as the EU commission, the Norwegian government or other stakeholders such as the stock exchange impose requirements that would fundamentally change the company’s assessment of IROs related to climate change. As an example, a significant development in capital markets pricing mechanisms that would cause Axactor to expect a material shift in its cost of capital could make the topic material from a financial materiality point of view. ESRS E2 to ESRS E5: Axactor does not have any indication through the process of understanding its context that there is any material IROs related to pollution, water and marine resources, biodiversity and ecosystems or circular economy in Axactor’s operations or business relationships. Axactor will closely follow the development on the consideration of these matters under the CSRD framework. Axactor has identified non-material sustainability matters relating to pollution and circular economy. ESRS S2 Workers in the value chain: Axactor has identified sustainability matters relating to workers in the value chain, especially related to job security of consultancy workers from companies that Axactor purchase services. However, due to the relatively small size of Axactor, the matter has not been assessed as material. ESRS S3 Affected communities: Axactor has not identified or received any indications from stakeholders, that matters relating to the sub-sub-topics of ESRS S3 are relevant to Axactor or its business relationships. To identify and disclose material information related to IROs, Axactor has conducted a materiality assessment involving all levels of the organisation. Based on discussions with internal matter experts, industry peers and stakeholders, and analysing EFRAG publications, Axactor has gained a solid understand of what information that is relevant to the respective user of the sustainability statement. In prior years, feedback on material topics was collected through questionnaires to external and internal stakeholders, based on relevant topics inspired by the GRI standards, either by survey or through interviews. The surveys have covered key factors for Axactor’s daily operations and long-term value creation related to governance, people, and the environment. The results of the materiality analysis have been substantially the same the last 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 reviewed certain societal trends. Preparation for this year’s reporting requirements under the CSRD, Axactor has also reviewed the prior years’ materiality analysis (in accordance with GRI 2021). The approach integrates both impact materiality and financial materiality to ensure the disclosed information is relevant and decision-useful for all stakeholders. A description of the process to identify sustainability matters and to assess their materiality, including the use of thresholds are described in section IRO-1 of this report. The material IROs have been screened against the EFRAG IG 3: Detailed ESRS Datapoints and accompanying Explanatory Note as a basis for discussions on identifying material datapoints. Being the first year of reporting under CSRD, Axactor acknowledges the uncertainty in mapping the identified material matters with the relevant disclosure requirements and datapoints in ESRS, Axactor welcomes further guidance on the process. Axactor Annual report 2024 Axactor Annual report 2024 59 59 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Disclosures subject to ESRS 2 Appendix C ESRS E1 Climate change Global trends and initiatives are driving actions towards strengthened accountability and transparency on greenhouse gas (GHG) emissions, together with increased climate ambition towards reaching a low carbon future. Axactor recognizes the growing expectation to improve its practices on emissions’ data collection and reporting as an important first step towards having a high-quality GHG inventory that enables a clear understanding of the main sources and issues to be addressed, and the best mitigations available. Process to calculate GHG emissions Axactor’s inventory tool covers emissions in scopes 1, 2 and 3 in accordance with the GHG Protocol Corporate Standard requirements and the categories presented in ESRS E1 AR 48. 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. Axactor’s inventory tool for scope 1, 2 and 3 GHG emissions is prepared in accordance with the Global Reporting Initiative (GRI) protocol, in particular GRI 305: Emissions 1 . This reporting protocol is compatible with the GHG Protocol Corporate Standard 2 and Carbon Disclosure Project (CDP) 3 requirements. An analysis has been conducted to identify emission sources in each country and map each source to the categories corresponding to the table in ESRS E1 AR 48. The analysis has focused on the activities performed, and the services or products purchased, and offered by Axactor. For each identified emission source Axactor has performed a data availability and quality assessment to identify the most appropriate datasource. The best estimate for emissions has been considered and selected from, estimated total emissions from a third-party provider, activity data from a third-party provider multiplied with a relevant emissions factor or activity data from Axactor multiplied with a relevant emission factor. The emission factors are obtained from an Ecoinvent database. See section IRO-2 for more information on the assessment of the GHG emissions in relation to materiality of ESRS topic E1 climate change. For each office location, Axactor has assessed the physical risks related to climate change (flood, landslide, tornadoes and wildfires), and other relevant environmental risks such as earthquake and volcanic eruption. Office location Flood Earthquake Volcanic eruption Landslides Tornadoes Wildfires Oslo, Norway Drammen, Norway Gothenburg, Sweden Helsinki, Finland Heidelberg, Germany Cuneo, Italy Milano, Italy Grosseto, Italy Milazzo, Italy Madrid, Spain Alicante, Spain Barcelona, Spain Valladolid, Spain No/negligible risk Medium risik High risk 1 Can be downloaded from https://www.globalreporting.org / , 2016 version. 2 https://ghgprotocol.org/corporate-stand ard 3 https://www.cdp.net /en Axactor Annual report 2024 Axactor Annual report 2024 60 60 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures The assessment has not taken into consideration any climate scenarios as exemplified in ESRS E1 AR 11 (d), nor to identify climate-related physical risks or climate-related transition risks, as Axactor considers that such scenario analysis will not provide any material added value. The most severe risks identified relate to earthquake and volcanic eruption in Axactor’s Italian office in Milazzo. Axactor considers the risk relating to climate hazards and transition events to be of an acceptable magnitude given the company’s possibility to quickly re-locate its operations, due to the web-based nature of debt collection. For the value chain other than own operations, Axactor has considered the server locations of the upstream main IT service provider. All Axactor data have storage and backup on different locations which Axactor considers not to pose any material risk. Axactor has not assessed the physical climate risk for the location of other upstream or downstream business relationships. The financial value of assets at each location is of negligible value compared to the total asset value of the company balance sheet. ESRS E2 Pollution As part of the annual review of the GHG inventory, representatives from each country conducts a desk-based review of all potential sources of emissions. All the emissions have been calculated to Co 2 equivalents for reporting purposes. Axactor has not investigated the potential pollution stemming from any site operated by business relationships in its upstream or downstream value chain as it does not have the capacity to do so. Axactor will closely follow the development in reporting requirements and expectations regarding this subject. Due to the limited scope of emissions, Axactor has not conducted any formal consultations with potentially affected communities. ESRS E3 Water and marine resources Axactor has through the GHG inventory identification estimated the water consumption and wastewater from its office spaces. Axactor has not identified any IROs relating to this topic as it assesses the consumption and resulting wastewater to be part of the basic needs of human beings and the structure of western society, therefore it would not comply with the qualitative characteristics of information-criteria to include it in the analysis. Axactor has not consulted with potentially affected communities regarding water and marine resources. ESRS E4 Biodiversity and ecosystems Axactor has conducted a desk-based analysis of its IROs for environmental topics in general. The Group has not, in relation to biodiversity and ecosystems, identified actual and potential impacts, any dependencies or transition and physical risks. Neither has the company considered any systemic risk or consulted potentially affected communities. Axactor has not considered if its office spaces are located in or near biodiversity-sensitive areas, neither has it considered if it is necessary to implement biodiversity mitigation measures. Axactor consider, based on the definition of “impact drivers” in ESRS, that for its own operation the relevant factor to analyze comprise of leased office spaces, and GHG emissions covered in section ESRS E1 Climate change above. For its office spaces Axactor has inferred that since the buildings are already built and are located in European economic area (“EEA”) there has been structured processes and assessments made by qualified resources in relation to construction approval processes. ESRS E5 Resource use and circular economy As part of the annual review of the GHG inventory, Axactor endeavors to estimate the lifecycle GHG emissions from purchased office equipment (including computers and mobile phones) as well as general office waste. This assessment has included a review of servers and other necessary equipment acquired by the Groups main infrastructure provider but is relating to Axactor’s scope 3 emissions and therefore does not give a complete picture on IROs relating to the value chain. Axactor’s activities are mainly web-based services, and the same applies for most of its value chain. The resource inflows to the facilities are assumed to mainly comprise of electricity. Axactor has identified the impact from GHG emissions stemming from use of energy. The company has not identified any risk or opportunities connected to electricity. Axactor does not have the capacity to trace and analyze the source of its electricity use as it purchases the energy mix in the respective countries. Axactor has not consulted with potentially affected communities regarding resource use and circular economy. Axactor Annual report 2024 Axactor Annual report 2024 61 61 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Group policies Group policies including the Code of Conduct are reviewed and approved by the Board annually. All policies have designated owners within the Group executive management, responsible for implementing, developing and monitoring compliance within their respective areas. To each policy a set of procedures are established e.g., the Legal and compliance policy has a procedure for internal control and risk management. The content of the policies, unless otherwise specified, applies for all business activities conducted throughout the value chain with the same strict expectations applying for the Group's business relationships. All policies referenced in the sustainability statement are listed below: Policy Key content Reference to third-party standards or initiatives Owner Availability Human resources policy HR organization and goals Principles and expectations to fair and divers recruiting Performance management of employees Principles for employee learning and development Administration and compliance of personal data Zero tolerance for harassment and discrimination Compliance with health, safety and work environment regulations Right to association and collective bargaining Workers representatives and employee interaction Enabling and encouraging reporting on deviations N/A Chief of staff Company website and intranet Remuneration policy Describes the approval hierarchy of remuneration Aligns remuneration with strategic goals, policies and processes Encourage a strong and sustainable performance-based culture Attract, retain, and engage highly motivated, competent, and performanceoriented people Reward both corporate and individual performance Describes the types and boundaries of remuneration plans Norwegian public limited liability companies act Chief of staff Company website and intranet Axactor Annual report 2024 Axactor Annual report 2024 62 62 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Policy Key content Reference to third-party standards or initiatives Owner Availability Human rights policy Set out Axactor’s commitments to human rights Treat everyone working at Axactor and impacted by our operations with fairness, respect, and dignity Create a working environment free from any form of discrimination based on gender, race, ethnicity, sexual orientation, political beliefs, age, etc. (in hiring and employment) Respecting the human rights of anyone affected by its operations, including but not limited to, their freedom of opinion and expression, belief, privacy, and equality Ensuring the employee’s freedom of association and the right to collective bargaining Provide a safe, healthy, and secure workplace Oppose any form of forced-, compulsory- or child labour Providing appropriate grievance mechanisms for potential human rights infringements Conduct human rights due diligence assessments and reporting on the results Aim to continuously improve our human rights efforts Ensure appropriate remediation in case of infringements The International Bill of Human Rights The United Nations (UN) Guiding Principles on Business and Human Rights The ten principles of the UN Global Compact The International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work The United Nations (UN) Sustainable Development Goals Chief of staff Company website and intranet Code of Conduct Commitment to engage efficiently, responsibly and profitable for all stakeholders Reporting, investigation, and resolution of conflicts Zero tolerance of fraud and corruption Economic sanctions and money laundering prevention Commitment to antitrust law Treatment of inside information and secrecy obligation Human rights and fair employment practices Internal control and risk management N/A Chief of staff Company website and intranet Data protection policy Ensuring compliance with GDPR regulation Outlining roles and responsibilities Principles on employee training Deviation and data breach management Regulation (EU) 2016/679 Chief of staff Company intranet Operations policy Commitment to the principles of good debt collection practices and ethical standards Principles on employee training in debt collection standards and legislation Principles on debtor interaction and communication Principles on management of client funds Principles complaints process N/A COO Company intranet incl. local versions Axactor Annual report 2024 Axactor Annual report 2024 63 63 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures Policy Key content Reference to third-party standards or initiatives Owner Availability IT and Information security policy Defines the security requirements for the proper and secure use of Axactor’s information and technology services Committed to safeguarding the confidentiality, integrity, and availability of all physical and electronic information assets Principles for incidents, vulnerabilities and risk management Security awareness and training initiatives ISO 27001: 2013. Information security – security techniques – information security management systems – requirements COO together with the Chief Information Security Officer (CISO) Company intranet Anti-corruption and anti- fraud policy Statement of zero tolerance of fraud and corruption Outlining actions to prevent fraud and corruption Principles for employee awareness and training Measures to detect fraud and corruption Principles in case of violations and sanctions Obligation to report on incidents N/A Chief of staff Company website and intranet Procurement policy Establish transparent, objective, time and cost-effective decision making and risk management in procurement Requirements to ethics, regulations, professionalism, and equal treatment of suppliers Principles for vendor management N/A CFO Company intranet Debt purchasing and portfolio management policy Principles for responsible investment in acquiring NPL portfolios Principles for KYC and due dilligence of products and business relationships Compliance with anti-money laundering and terror financing, and GDPR regulation N/A CIO Company intranet Legal and compliance policy Ensuring compliance with laws and regulations and internal policies and procedures Principles for corporate governance incl. roles and responsibilities Principles for training of employees regarding laws and regulations Principles for risk assessment including reporting and preventive measures Committee of Sponsoring Organizations of the Treadway Commission’s (“COSO”) The COSO Internal Control Framework The Institute of Internal Auditors (IIA) Chief of staff Company intranet Physical security Describe the measures designed to deny unauthorized access to office facilities, equipment and resources, and to protect personnel and property from damage or harm Treatment of debtor visits Instrcutions for handling threats against employees ISO 27001/17799 Information Security Management System Chief of staff Company intranet Delegation of authority The principle of ""two set of eyes"" when making commitments on behalf of Axactor The authority to approve expenditures, engage in commitments, or make decisions within and on behalf of the Axactor companies to prevent the risk of unauthorized approvals N/A CFO Company intranet Axactor Annual report 2024 Axactor Annual report 2024 64 64 Sustainability statement | General information - ESRS 2 General disclosures Sustainability statement | General information - ESRS 2 General disclosures EU Taxonomy 66 Environment Axactor Annual report 2024 Axactor Annual report 2024 65 65 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy EU Taxonomy The EU Taxonomy (the “Taxonomy”) is a framework aimed at facilitating sustainable finance and fostering green investments. The Taxonomy serves as a classification system, providing a standardized set of criteria to determine the environmental sustainability of economic activities. In essence, the Taxonomy lays down strict requirements that businesses must meet to qualify an economic activity as environmentally sustainable. These requirements are intended to align with the EU’s overarching goal of transitioning to a greener, more sustainable economy in line with the Paris Agreement’s objectives and the European Green Deal. Axactor is covered by the Taxonomy as it is a listed company with more than 500 employees. Since 2023 Axactor has conducted an assessment to identify activities falling within the scope of the Taxonomy. Taxonomy-eligible activities The activities that are eligible for qualifying as environmentally sustainable is listed in the Climate Delegated Act (Regulation (EU) 2021/2139), the Complementary Climate Delegated Act (Regulation (EU) 2022/1214) and the Environmental Delegated Act (Regulation (EU) 2023/2486). During the year, Axactor has performed an analysis to determine which of its activities are in scope of the Taxonomy. Two activities have been identified under Climate Change Mitigation in the Climate Delegated Act: 6.5 Transport by motorbikes, passenger cars and light commercial vehicles. All vehicles operated by Axactor are leased and reported as right-to-use assets. 7.7 Acquisition and ownership of buildings. The activity comprises of Axactor’s leased office spaces. The activity was not identified for the 2023 reporting as Axactor assessed the activity description not to include leased office space: However, for 2024 the activity is included on the assumption that the activity description also covers leased real-estate accounted for in accordance with IFRS 16 as described in FAQ 17 in Commission Notice C/2024/6691. 2023 numbers will be restated to reflect the new interpretation. Taxonomy-aligned activities In order to determine if an activity is taxonomy-aligned it must comply with the criteria defined in Article 3 in Regulation (EU) 2020/852. An activity is environmentally sustainable when it: Contributes substantially to one or more of the environmental objectives Does not significantly harm any of the environmental objectives Is carried out in compliance with the minimum safeguards Complies with technical screening criteria Substantial contribution Activity 6.5 comprise of approximately 60 vehicles primarily operated by field collectors in Spain. As this is not part of Axactor’s main operating activity of collecting on non-performing debt and the company considers it to be an immaterial part of its business, the vehicles have not been screened against the substantial contribution criteria. The activity is therefore not taxonomy-aligned and not assessed against the remaining three criteria. Activity 7.7 comprises of Axactor’s office spaces. Axactor has not been able to collect the Energy Performance Certificates (EPC) of the buildings. The activity is therefore not taxonomy-aligned and not assessed against the remaining three criteria. Reporting and accounting policy Axactor is considered a “non-financial undertaking” following Article 1 point 9 in the Regulation (EU) 2021/2178, as the Group is subject to the disclosure obligations laid down in Articles 19a and 29a of Directive (EU) 2013/34 and is not a financial undertaking as defined in point 8 of (EU) 2021/2178. Article 2 in Regulation (EU) 2021/2178 requires Axactor to report on turnover, capital expenditures and operating expenses in the form of key performance indicators defined in the same regulation. Figures provided in the KPI-tables are prepared in line with the consolidated financial statements and are based on separate accounts in the Group’s financial reporting system to avoid double counting. As required, figures are presented in accordance with Annex I-II and XII in the Delegated Regulation (EU) 2021/2178 updated as of 01.01.2024: Turnover The turnover arising from services or products, including intangibles, associated with taxonomy-aligned economic activities. Axactor has no taxonomy-eligible turnover for either of the fiscal years 2023 or 2024. Axactor Annual report 2024 Axactor Annual report 2024 66 66 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy CapEx Total capital expenditures (denominator), includes additions considered before depreciation, amortization, and any re-measurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. For Axactor, this comprises of additions/acquisitions as specified in Note 10 Leases, Note 14 Intangible Assets and Note 16 Property, plant and equipment of the annual report. Activity: 6.5 Transport by motorbikes, passenger cars and light commercial vehicles The numerator associated with activity 6.5 comprise of additions to vehicles booked as right of use assets. See note 10 Leases in the consolidated financial statements. Activity: 7.7 Acquisition and ownership of buildings The numerator relating to activity 7.7 comprise of additions to buildings booked as right of use assets. See note 10 Leases in the consolidated financial statements. OpEx The total operational expenditure (denominator) includes direct non-capitalized cost that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures related to the day-to-day servicing of assets or property, plant, and equipment by the undertaking or a third-party. For Axactor, this primarily includes costs relating to the maintenance of its leased vehicles and office spaces, which constitutes a very limited part of the total operating expenses and is reported as part of “other operating expenses” in the consolidated statement of profit or loss. Activity: 6.5 Transport by motorbikes, passenger cars and light commercial vehicles The numerator relating to activity 6.5 comprise mainly of maintenance cost relating to Axactor’s vehicles and is estimated as the difference between the rental invoice and the IFRS 16 adjustment, included in the operating expenses. The OpEx is included in Other operating expenses in the consolidated statement of profit or loss. Activity: 7.7 Acquisition and ownership of buildings The numerator relating to activity 7.7 comprise mainly of maintenance cost relating to Axactor’s leased office spaces and is estimated as the difference between the rental invoice and the IFRS 16 adjustment, included in the operating expenses. The OpEx is included in Other operating expenses in the consolidated statement of profit or loss. 2023 was the first year of reporting on the Taxonomy for Axactor. In the 2023 annual report Axactor did not report any eligible CapEx or OpEx relating to activity 7.7. Following a new understanding of the regulation and in line with the reporting practices set out above, the 2023 numbers are reclassified to reflect that the denominator of the CapEx and OpEx KPIs relating to the eligible activities are allocated to section A.2. in the tables. Furthermore, activity 7.7 is included for both 2023 and 2024. Axactor has prepared the following reporting to the best of its knowledge. Due to the limited history and lack of industry best practices, the reporting is expected to further improve and align across industry participants over time. Axactor Annual report 2024 Axactor Annual report 2024 67 67 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy Turnover Financial year 2024 Year 2024 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) Turnover, year 2023 (18) Economic Activities (1) Category (enabling activity) (19) Category (transitional activity) (20) EURm % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0% 0% 0% 0% 0% 0% 0% N N N N N N N % Of which enabling % % % % % % % Y Y Y Y Y Y Y % E Of which transitional % % Y Y Y Y Y Y Y % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Acquisition and ownership of buildings CCM 7.7 / CCA 7.7 0.0 0% EL N/EL N/EL N/EL N/EL N/EL 0% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 / CCA 6.5 0.0 0% EL N/EL N/EL N/EL N/EL N/EL 0% Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 0% % % % % % % 0% A. Turnover of Taxonomy-eligible activities (A.1+A.2) 0.0 0% % % % % % % 0.0 B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 127.9 100% TOTAL 127.9 100% Code (2) Proportion of Turnover, year 2024 (4) Turnover (3) Climate Change Mitigation (5) Water (7) Climate Change Adaptation (6) Pollution (8) Biodiversity (10) Circular Economy (9) Climate Change Mitigation (11) Water (13) Climate Change Adaptation (12) Pollution (14) Biodiversity (16) Circular Economy (15) Minimum Safeguards (17) Axactor Annual report 2024 Axactor Annual report 2024 68 68 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy CapEx Financial year 2024 Year 2024 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) CapEx, year 2023 (18) Economic Activities (1) Category (enabling activity) (19) Category (transitional activity) (20) EURm % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 0% % % % % % % Y Y Y Y Y Y Y 0.0% Of which enabling 0.0 0% % % % % % % Y Y Y Y Y Y Y 0.0% E Of which transitional 0.0 0% % Y Y Y Y Y Y Y 0.0% T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Acquisition and ownership of buildings CCM 7.7 / CCA 7.7 1.9 36% EL N/EL N/EL N/EL N/EL N/EL 38% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 / CCA 6.5 0.3 5% EL N/EL N/EL N/EL N/EL N/EL 10% CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 2.2 41% % % % % % % 48% A. CapEx of Taxonomy-eligible activities (A.1+A.2) 2.2 41% % % % % % % 48% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 3.1 59% TOTAL 5.2 100% Code (2) Proportion of CapEx, year 2024 (4) CapEx (3) Climate Change Mitigation (5) Water (7) Climate Change Adaptation (6) Pollution (8) Biodiversity (10) Circular Economy (9) Climate Change Mitigation (11) Water (13) Climate Change Adaptation (12) Pollution (14) Biodiversity (16) Circular Economy (15) Minimum Safeguards (17) Axactor Annual report 2024 Axactor Annual report 2024 69 69 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy OpEx Financial year 2024 Year 2024 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) OpEx, year 2023 (18) Economic Activities (1) Category (enabling activity) (19) Category (transitional activity) (20) EURm % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 0% % % % % % % Y Y Y Y Y Y Y 0.0% Of which enabling 0.0 0% % % % % % % Y Y Y Y Y Y Y 0.0% E Of which transitional 0.0 0% % Y Y Y Y Y Y Y 0.0% T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Acquisition and ownership of buildings CCM 7.7 / CCA 7.7 1.5 82% EL N/EL N/EL N/EL N/EL N/EL 79% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 / CCA 6.5 0.3 18% EL N/EL N/EL N/EL N/EL N/EL 21% OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 1.9 100% % % % % % % 100% A. OpEx of Taxonomy-eligible activities (A.1+A.2) 1.9 100% % % % % % % 100% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities 0.0 0% TOTAL 1.9 100% Code (2) Proportion of OpEx, year 2024 (4) OpEx (3) Climate Change Mitigation (5) Water (7) Climate Change Adaptation (6) Pollution (8) Biodiversity (10) Circular Economy (9) Climate Change Mitigation (11) Water (13) Climate Change Adaptation (12) Pollution (14) Biodiversity (16) Circular Economy (15) Minimum Safeguards (17) Axactor Annual report 2024 Axactor Annual report 2024 70 70 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy Nuclear energy related activities Row Activities Y/N Nuclear energy related activities 1 The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO 2 The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. NO 3 The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. NO Fossil gas related activities 4 The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. NO 5 The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. NO 6 The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. NO 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 2024 Axactor Annual report 2024 71 71 Sustainability statement | Environment, incl. EU Taxonomy Sustainability statement | Environment, incl. EU Taxonomy Strategy 73 Impacts, risks and opportunities management 74 Metrics and targets 79 Social – S1 Own workforce Axactor Annual report 2024 Axactor Annual report 2024 72 72 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Strategy ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model As part of identifying the IROs connected to its own workforce, Axactor has included all people employed by, under a direct contractual relationship with the company or employed through a third party, and for all the activities across the value chain including all business relationships. Axactor has focused the analysis on the working conditions in its different jurisdictions as well as the activities they perform including whom they engage with. From the materiality assessment it is evident that the people in Axactor’s own workforce who conducts call center activities are at a greater risk of harm relative to other employees (see ESRS 2 SMB-3 S1 own workforce for an in-depth description). The identified IROs from Axactor’s DMA relates to all three groups of employees mentioned above. Negative material impacts relate to all employees either (i) at risk of losing their job if Axactor downscale its operation at certain locations or move its operation to other locations where the employees are not able to relocate, or (ii) all workers that are exposed to challenging conversations with debtors through Axactor’s activity of collecting on non-performing debt. For positive material impacts Axactor has committed to ensure equal pay for equal work which would positively impact all groups directly employed by the company. Due to the nature of Axactor's business, Axactor is able to offer a large amount of job opportunities across its markets of operation that does not require higher education or previous work experience. These positions are available to a large amount of people and the company offer on-the-job training. This enables access to the job market for a large group of people either directly employed by Axactor, contract workers or working through a third party. Axactor has not identified any material risks and opportunities for the undertaking arising from impacts or dependencies related to its own workforce. Axactor does not have any transition plans relating to reducing negative impacts on the environment that cause IROs for its employees. Axactor’s operation is not at risk of incidents of forced or compulsory labor, or child labor. Axactor’s operations are located in well-regulated and orderly labor markets in Europe. Relevant policies (see section Group policies for description of key policies) Human resources policy Remuneration policy Human rights policy Code of Conduct Physical security policy Material matter Equal pay for work of equal value Working conditions Employee mental health 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%. 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. Axactor Annual report 2024 Axactor Annual report 2024 73 73 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Impacts, risks and opportunities management S1-1 – Policies related to own workforce At Axactor, responsible business conduct has always been at the core of its operations. Strategic goals, policies and procedures coupled with recruiting, development and succession of employees are managed 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 labor law, work environment and collective bargaining agreements, are fundamental prerequisites for Axactor’s operations. Human resources (“HR”) Axactor’s commitment to and management of its workforce is guided by the Human resources policy (see section Group policies ). The policy supports the work to establish a common “One Axactor” culture and commits the company and its representatives to comply with relevant labor legislation. The Human resources policy advocates the equal importance of physical and psychosocial elements of creating an attractive workplace. Working conditions at Axactor should be such that they are suitable for, and inclusive for all individuals. Axactor recognizes the importance of addressing the needs of vulnerable employees and promoting overall physical health and well-being. Axactor aims to create a workplace where all employees feel valued, supported, and empowered to thrive. Axactor is focused on the psychosocial and physical work environment in order to increase job satisfaction, prevent injuries, facilitate for employees with disabilities and avoid any danger to the employees’ health. The measures are further regulated in the Physical security policy (see section Group policies ). Axactor works systematically to meet Health, Safety and Environment (HSE) regulations set in the individual country’s legal framework by ensuring awareness about health and safety issues, preventing occupational disease, reducing stress and improving ergonomics. Equal pay for work of equal value The Remuneration policy (see section Group policies ) sets out the key principles for the remuneration for all employees in the company which is reflected in the Remuneration procedure approved by the CEO. The objective of Axactor’s remuneration philosophy is to ensure that the employees are rewarded for their valuable contributions which supports growth in shareholder value over time, based on responsible business practices and aligned with the company values. Axactor also aims to attract and retain key talents by delivering competitive remuneration to high performing employees. Regular analysis of the wage levels is conducted to secure a fair level for all and no discrimination of any sort. Axactor shall uphold the principle of equal pay for equal work, ensuring that all employees receive fair compensation. An annual survey and analysis of the wages of employees shall ensure that unjustified wage discrimination does not occur. Salary gaps shall be measured based on total compensation, i.e. including salary, pension, benefits and other monetary compensations. No employee in Axactor should be paid below the minimum wage as defined by local law or applicable benchmarks. Axactor shall make a reasonable effort in ensuring that any non-employee working directly or indirectly for Axactor is paid an adequate wage. Human rights Axactor’s human rights governance follows from its Human rights policy (see section Group policies ) that express the Group’s commitment to respect human rights guided by internationally recognized human rights and labor standards, including those contained in the UN Guiding Principles on Business and Human Rights, the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work (Core Labor Standards). The principles are further reflected and detailed through other related Board approved policies, covering relevant areas such as human resources, data privacy and procurement. The Board is ultimately responsible to ensure that Axactor complies with its human rights commitments, but everyone at Axactor has an independent responsibility to act with integrity and in line with the corporate values. By having to read and sign the company’s Code of Conduct (see section Group policies ), and through regular ethics and compliance trainings, all employees are educated in Axactor’s corporate values and what are expected of each employee. Axactor has in place efficient systems to monitor and follow up on both human- and workers’ rights risks in its operations and Axactor Annual report 2024 Axactor Annual report 2024 74 74 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce value chain, including internal reporting, complaints and deviation management systems, employee- and customer surveys, vendor assessments and internal audit. Axactor understands the significance of timely and appropriate remediation for any substantiated adverse human rights impacts, and the company has a policy commitment (Human rights policy) to address such impacts through remedial actions, including compensation, rehabilitation, and institutional changes to prevent recurrence. Through the DMA, Axactor has identified its most significant human rights risks, or “salient” risks. Salient human rights risks are those that are of the most severe and to have likely, actual or potential negative impact on individuals across the value chain – introducing a stricter threshold than the risks only identified as material. In other words, the salient risks are the most critical risks out of the identified material risks, considering the effects to the individuals concerned. The company considers that its salient human rights risk is limited to digital security and privacy. This conclusion is reached based on the number of (potentially) affected individuals, as well as the potential impact to those individuals if their right to digital security and privacy is violated. Through its human rights due diligence assessment, Axactor has not found evidence of any adverse human rights impacts caused or contributed to by Axactor. At the same time, this is not something which can be taken for granted, and Axactor will continue to work towards improving its human rights monitoring and governance. Integration of human rights risks in the group wide risk management systems has been implemented by the end of 2024. Regarding digital security and data privacy, and considering the rapidly changing information security environment, the company continuously works towards improving the safety and integrity of its systems, processes, and data, through appropriate technical and organizational measures – with the aim to reduce the probability and impact of any actual or potential adverse human rights impacts. The policies addressing human rights are all supported by procedures outlining actions to mitigate and act upon matters such as discrimination such as the Whistleblower procedure (see section G1 -3 ). In light of the company’s reporting obligations pursuant to the Norwegian Transparency Act, Axactor has mapped the company’s operations across the entire value chain. The result of Axactor’s human rights due diligence assessment is reported on annually. The report is published on the the company web s ite . Discrimination and diversity The Code of Conduct, the Human resources policy and the Human rights policy all directly address the matter of discrimination and promoting equal opportunities. The Human resources policy specifically address and forbid treating people differently on the following grounds: racial and ethnic origin, color, sex, sexual orientation, gender identity, disability, age, religion, political opinion, national extraction or social origin, or other any other forms of discrimination covered by union regulation and national law, all employees shall be given the same opportunities for development diversity and not treated less favorable. A variety of people with different backgrounds, experience and skills are a prerequisite for the success of an international organization such as Axactor. Axactor shall strive to reflect the composition of society through a diverse workforce in general but does not target any group based on certain characteristics specifically. Axactor has zero tolerance for any type of harassment or discrimination. If this is detected, managers and employees are obliged to report this to the HR director who shall follow up in line with appropriate procedures. Axactor’s employees shall have knowledge of whom to turn to if they are subjected to harassment and Axactor shall take sufficient measures to ensure that the harassment ends. S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts At Axactor it is important to actively engage with its employees. This is done systematically across the Group through structured annual appraisal talks, anonymous employee satisfaction surveys, and regular staff talks and meetings. In Finland, Italy, Norway, Spain and Sweden Axactor has monthly meetings with worker representatives to discuss all potential topics addressed by unions, workers or the company. The Chief of Staff, reporting directly to the CEO and part of the Group executive management, is responsible for ensuring management of sustainability matters relating to own workforce. Investing in the employees is key for Axactor’s success. In October 2023, 1,139 of the 1,262 employees invited gave 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 Axactor Annual report 2024 Axactor Annual report 2024 75 75 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce people you work with. Axactor actively use the result from the survey to assess the Group's treatment of employees, identify areas for improvement and to compare development on topics from previous surveys in order to assess the effectiveness of the engagement. The feedback from the employees showed that Axactor is an effective, rational, and competent organization with a clear strategy. Management sets clear expectations, and the employees show high trust in management. The systematic work to develop the organization and culture is paying off with improvements in several areas. The employees are informed and involved in decisions that affects their job and work environment regardless of position. Through observations and feedback provided through appraisal talks etc., there are little corporate politics and people feel free to be, and to express themselves. People are social and friendly, and one can count on the colleagues. New employees feel welcome. Employees are given the resources and equipment needed to do their job. Axactor is more innovative, but managers can be more open for new and better ways of doing things. During 2024, no feedback has been received indicating that this has changed. Feedback provided in the survey showed that not everyone feels that Axactor is a psychologically and emotionally safe place to work. Analysis show that this is mainly due to the industry and type of work, but also related to organizational changes, turnover, leadership styles and periodically high workloads. As underlined above, this is also one of the reasons Axactor has identified mental ill-health as a material IRO in the DMA. Through exit interviews, employees confirm that home-office is desired and benefits such as salary levels could be better. S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns If a material negative impact is identified relating to own workforce, appropriate actions shall be taken, and regulatory requirements always followed. Any reported incident shall be managed by an HR representative and, where appropriate, the Chief of Staff shall be informed. Remedies depend on the facts and circumstances of the incident. All employees in Axactor are encourage and have an obligation to speak up when something is wrong, or if something does not feel right. Speaking up protects not only the interests of the company, but the interests of the employees, stakeholders, and society. Everyone that in good faith reports a breach, or suspicion of a breach, will be protected and not met with any reprisals – this is an unwavering principle. Axactor has clear guidelines that should be followed when breaches of law, the Code of Conduct, company policies, or ethics are observed: Discuss the matter/ethical dilemma with the immediate supervisor. If the supervisor might be involved, then the issue should be presented to either the next level manager, the compliance officer in the country, or HR. Axactor has an ethics committee supervising the company’s compliance with laws and the Group policies. The ethics committee also advices on matters relating to inter alia, diversity, sustainability, and other matters the committee and the employees considers important. Where there exists ambiguity or doubt related to resolving any ethical dilemma or any specific case, the question may be referred to the ethical committee to be resolved. The ethical committee may also where appropriate refer the case to the Group executive management or ultimately the Board for a decision. Reporting through Axactor’s whistleblower channel (see section G1 -3 ). All reported breaches are managed with strict confidentiality, regardless of reporting channel. Axactor always applies the principle of proportionality. Each case is treated individually to determine what consequences are suitable, necessary, and appropriate in each instance. Breaches of laws, regulations, Group policies and the company’s ethical standards may lead to disciplinary consequences proportionate to the type of breach and scope, such as, formal warning, cut in bonus, change of work tasks, dismissal, or even civil or criminal prosecution. The company has dedicated employee representatives, in countries with collective bargaining agreements, that is tasked with managing employee feedback and promoting employee interests with local management. Axactor has established a reporting procedure to set a clear and effective process for reporting deviations from Group policies to ensure that all employees understand their responsibilities and the steps needed to be taken when actions or behaviors that conflict with the company's standards are observed or experienced. Axactor trusts that all employees are familiar with the available structures for raising their concerns. The whistleblower channel is addressed in the Code of Conduct which all employees are required to read and sign annually. Additionally, as part of the annual training, all employees are reminded about their Axactor Annual report 2024 Axactor Annual report 2024 76 76 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce responsibility to – and how to raise concerns. The right and duty to make a whistleblowing report, the form and content and the treatment and protection of any report and person submitting such report is described in the whistleblowing procedure available to all employees. Axactor believes that these reporting structures are trusted by the employees as it is established according to internationally recognized guidelines (see disclosure S4- 3 ). Axactor has not caused or contributed to a material negative impact on people in its own workforce during 2024. S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions The daily employee dialogue in both formal and informal settings, together with the employee satisfaction survey are vital in understanding the impact on employees. The 2023 employee satisfaction survey was used by local management in 2024 to analyze what is working well and areas where Axactor needs to improve. This is done both on a department level to address specific issues in single departments or locations, and at Group level to understand if there are systematic issues that needs to be addressed. Together with the HR functions, the Group and local management teams work to identify issues and suggest remedying actions such as specific training of managers, reorganizations or other appropriate measures. Axactor has worked systematically to develop its organization and culture, and hard work pays off. Axactor will continue to build on its strengths and strives to continuously improve as an employer. During 2024, Axactor continued to focus on the leadership principles, on seeing each employee, strengthening the teams and promoting the understanding of the purpose, making everyone understand why they make a difference and increase the pride each employee takes in their work. Together with its employees, each manager is obliged to plan how to improve identified weaknesses within their respective departments. Actions to address material sustainability matters Remuneration 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 alignment with the company values. Remuneration may differ based on market, achievements, competences, abilities, and behavior, but shall never discriminate on gender, sexual orientation, age, ethnicity, religion, marital status, or any other identity. This is stated in the Remuneration policy, determined by the Board, and approved by the general meeting, available at the company website. 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. Managers are requested to ensure fair and equal pay for equal valuable work, and to raise awareness and ensure that correct salary levels are set. To support identification of comparable roles, competences, and expectations, the job framework and supporting tools are continuously developed. During 2024, Axactor developed PowerBI reports enabling all country managers and HR managers to monitor all relevant KPIs related to own workforce real-time. The Remuneration policy is approved by the Board and compliance monitored through inter alia internal control. The grand-father principle is applied for all salary adjustments and other decisions affecting the employees’ remuneration. Axactor has implement standardized salary structures and job evaluation frameworks to ensure consistency with defined criteria for promotions, bonuses, and raises to prevent bias. The countries having entered collective bargaining agreements, the union representatives are involved in the process of salary adjustments. A culture of fairness and accountability in pay discussions is encourage. Employee satisfaction survey include questions related to remuneration to assess perceptions of pay fairness and take corrective action where needed. Compensation practices is compared with industry data to ensure competitiveness and equity. Salary levels are also reviewed annually proactively to remain compliant and attractive to top talents. Despite all good intentions, undesired pay-gap may occur. Pay gap, especially when based on gender, race, or other discriminatory factors, poses a risk for Axactor. Not only is it illegal and may result in lawsuits, fines, and reputational damage if found to be discriminatory, but public perception of unfair pay practices can harm Axactor’s employer branding, reducing talent attraction and retention. Employees who perceive unfair pay practices may experience decreased job satisfaction, lower motivation, and reduced engagement. This can lead to higher turnover rates, loss of valuable talent, and overall lower productivity. Axactor Annual report 2024 Axactor Annual report 2024 77 77 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce To effectively respond to an actual or potential pay gap, a pay equity audit will be conducted including data analysis, root cause investigation, stakeholder involvement, and deciding upon corrective measures where reasonable such as salary increase for the underpaid employee. Mental health A continuous trust-based dialogue between managers and their employees make it possible to detect early signs of poor health and to ensure the work situation is sustainable in the long run. Axactor recognizes the importance of being able to combine work, career, family life and spare time, but to be able to catch early signs of mental ill-health among the employees, Axactor has decided not to offer home-office. When employees are away from the office it is more difficult to communicate on and for managers to notice negative impacts amongst employees. However, flexible solutions when needed shall be offered considering work tasks, responsibilities and other personal needs. Home-office disconnect the employees from the workplace and reduce the interaction which enables managers to catch signs of ill-health at an early stage. Furthermore, it reduces the value creation in the workplace, the passion, good solutions reached through discussions and knowledge sharing, innovation and proactiveness driving great results. Poor ergonomic conditions are also one of the most frequent causes of illness and absence. Further, home office increases the risk of non-compliance as there is no one proactively correcting actions or tone of voice, nor anyone to easily advice when needed. Data privacy and information security is also more challenging to secure at home-office. HR monitors all absences locally and the Group Chief of Staff monitor all absence overall and investigates any abnormality. All managers are obliged to follow-up its employees being on short or long-term sick-leaves and facilitate work tasks and workplace securing the physical and psychological health of the employees. All managers have access to training and guidelines on how to detect and proactively act upon signs of ill-health among employees and increase the work attendance rate through wellness initiatives. 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, such as initiatives to facilitate cycling to and from 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. To manage mental ill-health risks effectively, Axactor has established structured processes to identify, assess, and take appropriate action in response to actual or potential employee mental health concerns. It is important to recognize signs of mental ill-health before they escalate. Axactor focus on mental health as part of its employee satisfaction survey and track key mental health indicators (e.g., absenteeism rates, turnover, reported stress levels). The survey is anonymous and conducted to identify widespread concerns. Workload, working hours, check-ins and appraisal talks are conducted to track stress levels. Absenteeism, productivity declines, increased error rates and observations by colleagues and feedback from debtors’ conversations are monitored as potential indicators of mental distress. Managers are trained to recognize early warning signs such as increased irritability or frustration, changed behavior e.g. withdrawal from colleagues or disengagement from work, frequent complaints of headaches, fatigue, or physical ailments, declining performance and missed deadlines. The deviation and complaints management system, whistle blower channel and union representation are established for employees to raise their concerns. Policies are set to ensure employees feel safe when reporting. Once concerns are identified, the severity and underlying causes of mental health challenges are assessed. Individual support measures will be evaluated. One-to-one check-ins will be conducted to understand the affected employee’s challenges. Depending on the individual situation, the employee may be referred to occupational health professionals. Mental health leave or workload adjustments including suitable training will be offered. Axactor encourages open discussions on mental health and reduce stigma. Axactor regularly reassesses sustainability matters to ensure that actions taken are delivering the desired outcome and make any necessary adjustments. The Chief of Staff is responsible for managing material matters relating to own workforce across the group and each country’s HR manager is responsible for the local management of IRO’s. The country representatives and the Chief of Staff conduct monthly review sessions to address relevant topics. The Chief of Staff reports material findings directly to the CEO and the Board’s audit committee. Axactor Annual report 2024 Axactor Annual report 2024 78 78 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Metrics and targets S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Axactor has not set any targets relating to managing material IROs connected to own workforce. The Group has currently not identified any single metric that appropriately and efficiently measurers the effectiveness of the actions implemented to manage material sustainability matters. Especially for mental health issues it is both challenging to accurately measure, but the company is also limited by the data privacy regulation in what data that it is allowed to access and collect. The company tracks the effectiveness of actions and policies through a set of KPIs that combined provides a strong indication on the performance on sustainability matters. The KPIs are included in the reporting routines of the respective departments and are especially relevant for operation management and HR. The base period for which the KPIs are measured depends on the specific circumstances for which it is used, however most is evaluated on an annual basis. The following KPIs are examples of indicators used by Axactor in relation to material IROs on own workforce (level of ambition in brackets): Gender balance (Axactor has a zero-discrimination tolerance regarding, but not limited to, gender) Gender pay-gap (All employees at Axactor should be paid equal pay for equal work) Turnover (Axactor aim to have a low turnover, but acknowledge that for certain parts of the workforce a high turnover rate is to be expected) Sick leave (Axactor aim to positively contribute to employee’s health, both physical and mental and have a low level of sick- leave) Axactor will continue the work to identify and develop measurable targets and will disclose such when and if adopted. S1-6 – Characteristics of the undertaking’s employees Axactor’s employees are a reflection of the society in which it operates. Axactor believes that the strength lies in the diversity of the workforce, which is one of the key factors to the Group’s success. Their varied skills, perspectives and experiences form the basis of innovation, helping Axactor to better understand the needs of customers and debtors. Axactor has a solid diversity amongst employees based on age, skills, gender, cultural backgrounds, education and perspectives. A variety of languages are spoken which eases communication and the ability to assist many debtors. Job opportunities are offered to individuals with disabilities and the offices are universally designed to accommodate employees with disabilities. Due to the nature of Axactor’s operations, a higher female ratio is expected. The overall gender balance is 64% women and 36% men. Axactor aims to have an even gender balance in all managerial levels, where genders are represented within a range of 40%–60%. The reduction of 6% in the number of employees from 2023 to 2024 is mainly explained by the reorganization projects conducted in Germany and Italy during 2024. Number of employees by gender Number of employees by head count and by gender. The number of employees at year end is counted on a head-count basis. It only includes employees in a direct contractual relationship with Axactor that are entitled to salary and benefits from the company. The categorization by gender is as registered in the Group’s employee management system. Number of employees (head count) Gender 31.12.2024 31.12.2023 Male 459 475 Female 826 892 Other 0 0 Not reported 0 0 Total employees 1,285 1,367 Axactor Annual report 2024 Axactor Annual report 2024 79 79 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce The employee statistics data is gathered through the Group’s employee management system and accumulated in the Group data warehouse. The Chief of Staff is responsible for aligning definitions across the Group. All employees and non-employees are registered in the system with relevant data on salary, employment type, agreed working hours and other relevant employee and employment data, subject to data privacy regulation. All numbers reported are based on head count at year-end 2024 and for turnover the full year registered leavers. Number of employees by country 1) Number of employees by head count and by country. The number of employees at year end is counted on a head-count basis. Categorized by countries with 50 or more employees representing at least 10% of total number of employees. Number of employees (head count) Country 31.12.2024 31.12.2023 Germany 137 182 Italy 206 260 Norway incl. Group 140 110 Spain 768 759 1 See Note 7 Employee remuneration to the financial statements Employees by form of employment 2024 Gender Country Employee category Female Male Other Not disclosed Total Finland Germany Italy Norway incl. HQ Spain Sweden Total Number of employees (head count) 826 459 0 0 1,285 18 137 206 140 768 16 1,285 Number of permanent employees (head count) 755 413 0 0 1,168 18 108 155 139 732 16 1,168 Number of temporary employees (head count) 70 41 0 0 111 0 23 51 1 36 0 111 Number of non-guaranteed hours employees (head count) 1 5 0 0 6 0 6 0 0 0 0 6 Number of full-time employees (head count) 641 400 0 0 1,041 18 90 186 99 632 16 1,041 Number of part-time employees (head count) 185 59 0 0 244 0 47 20 41 136 0 244 Employees by form of employment 2023 Gender Country Employee category Female Male Other Not disclosed Total Finland Germany Italy Norway incl. HQ Spain Sweden Total Number of employees (head count) 892 475 0 0 1,367 33 182 260 110 759 23 1,367 Number of permanent employees (head count) 790 418 0 0 1,208 32 135 206 109 703 23 1,208 Number of temporary employees (head count) 102 57 0 0 159 1 47 54 1 56 0 159 Number of non-guaranteed hours employees (head count) 0 0 0 0 0 0 0 0 0 0 0 0 Number of full-time employees (head count) 630 407 0 0 1,037 33 117 170 95 599 23 1,037 Number of part-time employees (head count) 262 68 0 0 330 0 65 90 15 160 0 330 Axactor Annual report 2024 Axactor Annual report 2024 80 80 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Employee category Description Permanent employee Comprises of employees with an employment contract with Axactor, without a fixed end-date. The calculation is based on the head count as of 31.12.2024. Temporary employee Comprises of employees with an employment contract with Axactor with a fixed end-date. The calculation is based on the head count as of 31.12.2024. Non-guaranteed hours employees Comprises of employees with an employment contract with Axactor without a minimum guaranteed set of working hours. The calculation is based on the head count as of 31.12.2024. The non-guaranteed hours employees are included in the reporting starting from 2024 as Axactor has not previously recorded such information. Full-time employee Comprises of employees with an employment contract with Axactor, both with and without a fixed end-date. The number includes employees with the equivalent of a 100% employment grade as defined by local legislation. The calculation is based on the head count as of 31.12.2024. Part-time employee Comprises of employees with an employment contract with Axactor, both with and without a fixed end-date. The number includes employees with a guaranteed set of working hours of less than a 100% employment grade as defined by local legislation. The calculation is based on the head count as of 31.12.2024. Employee turnover by head-count 2024 Turnover Turnover Men Turnover Women Country Voluntary % Total % Voluntary % Total % Voluntary % Total % Finland 13% (3) 54% (13) 0% (0) 29% (3) 22% (3) 74% (10) Germany 17% (27) 37% (58) 15% (8) 38% (20) 18% (19) 36% (38) Italy 12% (27) 43% (99) 6% (4) 26% (18) 14% (23) 50% (81) Norway incl. Group 10% (12) 14% (17) 11% (6) 18% (10) 9% (6) 10% (7) Spain 15% (113) 30% (226) 17% (47) 31% (84) 13% (66) 29% (142) Sweden 15% (3) 41% (8) 0% (0) 12% (1) 26% (3) 61% (7) Group total 14% (185) 32% (421) 14% (65) 29% (136) 14% (120) 33% (285) Employee turnover by head-count 2023 Turnover Turnover Men Turnover Women Country Voluntary % Total % Voluntary % Total % Voluntary % Total % Finland 33% (12) 72% (26) 23% (3) 46% (6) 39% (9) 87% (20) Germany 26% (47) 34% (62) 33% (20) 43% (26) 23% (27) 30% (36) Italy 6% (16) 16% (42) 1% (1) 16% (11) 8% (15) 17% (31) Norway incl. Group 19% (21) 24% (26) 25% (13) 31% (16) 14% (8) 17% (10) Spain 25% (184) 35% (261) 28% (75) 42% (111) 23% (109) 31% (150) Sweden 43% (16) 84% (31) 25% (3) 67% (8) 52% (13) 92% (23) Group total 22% (296) 33% (448) 24% (115) 37% (178) 19% (181) 29% (270) Turnover Description Calculation of turnover Employee turnover refers to the proportion of 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. Calculation of voluntary turnover Voluntary turnover refers to termination of employment which are not due to dismissal or termination due to restructuring and downsizing. Axactor Annual report 2024 Axactor Annual report 2024 81 81 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce S1-7 – Characteristics of non-employees in the undertaking’s own workforce Due to the volatility in number of cases received from customers, Axactor’s operations demands some flexibility in its workforce. This is solved through engaging a number of non-employees. Most of the non-employees are connected to the Italian operations. Non-employee Non-employees in an undertaking’s own workforce include both individual contractors supplying labour to the undertaking (“self-employed people”) and people provided by undertakings primarily engaged in “employment activities” (NACE Code N78). Non-employees are registered in the Group’s employee management system irrespective of whether they have a direct contractual agreement with Axactor or are employed through a third party. Non-employees are defined as workers that does not have a contractual relationship directly with Axactor, does the same work as ordinary staff and are self-employed or work through a third party. Number of non-employees in own workforce (head count) Employee category 31.12.2024 31.12.2023 Total non-employees 66 43 S1-9 – Diversity metrics Gender distribution at top management Top management (Group executive management) is defined as two levels below the Board. The first level is the CEO reporting directly to the Board and the second level the Group executive management excluding the CEO. 31.12.2024 31.12.2023 Men Women Men Women Head count % Head count % Head count % Head count % CEO 1 100% 0 0% 1 100% 0 0% Group executive management excl. CEO 3 60% 2 40% 3 60% 2 40% Total top management 4 67% 2 33% 4 67% 2 33% By the end of 2024, 7% of the employees in Axactor were 24 years or younger. Axactor facilitates for older employees to stay in work-life also after retirement age. This retains important competence within the company. Older employees educate younger with their experiences and younger employees contributes with new 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 1,285 employees, 46 employees are over the age of 60 years. The average age in within the Group is 40 years old. Axactor Annual report 2024 Axactor Annual report 2024 82 82 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Distribution of employees by age group (head count) Age group 31.12.2024 31.12.2023 Under 30 years old 225 222 30-50 years old 781 885 Over 50 years ols 279 260 Total 1,285 1,367 S1-10 – Adequate wages All employees of Axactor are paid adequate wages in line with local minimum wage regulations. S1-11 – Social protection All employees in Axactor are covered by the local public social protection programs covering loss of income due to any of the following: sickness, unemployment starting from when the own worker is working for the undertaking, employment injury and acquired disability, parental leave and retirement. S1-14 – Health and safety metrics Health and safety metrics Country Employees Non-employees Percentage of people covered by the health and safety management system 100% 100% Due to privacy regulations in the jurisdictions Axactor operates, the Group is not able to report separately for injuries related to ill health. S1-16 – Remuneration metrics (pay gap and total remuneration) Base salary gender pay-gap The gender pay gap is calculated using base salary which is the is the sum of guaranteed, short-term, and non-variable cash compensation. The number is presented as the average base salary of female employees divided by the average base salary of male employees. The total variable compensation calculation to employees is not decided in time to include in the publishing of this report. Axactor will continue to develop and improve the data quality in order to more accurately measure the pay-gap including all remuneration elements. Country 31.12.2024 31.12.2023 Finland 97% 89% Germany 75% 81% Italy 73% 56% Norway incl. Group 71% 74% Spain 74% 72% Sweden 101% 79% Total 71% 75% 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 part-time, which also affects the comparable salary. Market prices for specialist roles explains other differences. Managerial positions have higher salaries and consist of more men. As an example, in Italy the women are on average paid 73% of the average male salary. The country management team consist of six men and one woman. 68% 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 less, women is paid 95% of men. Axactor Annual report 2024 Axactor Annual report 2024 83 83 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Annual total remuneration ratio The annual total remuneration ratio is calculated by comparing the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual). The highest paid individual is the CEO of the group. The median paid employee is a female case handler in Italy. The total remuneration for the CEO includes base salary, short- and long-term incentive, pension, benefits (electronic communication), taxable travel benefits and taxable part of insurance, in total for the fiscal year 2024 NOK 9,717,000, equal to EUR 823,000 (FX per 31.12.2024 of 11.7950). For further information regarding the CEO remuneration, see the Remuneration report . The total annual remuneration of the median employee is EUR 23,107, consisting of base salary and short-term incentive. This results in a total annual remuneration ratio of 36. S1-17 – Incidents, complaints and severe human rights impacts Total number of incidents of discrimination, including harassment Number of complaints files through channels for people in the undertaking’s own workforce Total amounts of fines, penalties, and compensation for damages as a result of the incidents and complaints (EURm) 2024 2023 2024 2023 2024 2023 Group total 8 6 2 1 0 0 All managers are obliged to report incidents in the Group’s employee management system. Additional incidents are added if reported verbally directly through the HR departments and the Chief of Staff. The eight reports of discrimination, including harassement received during 2024 are not considered to be a human rights violation. All identified cases are aimed to be amicably resolved in coherence with the involved individual(s), and such cases may not be registered if all parties indicate that they are satisfied with the solution. During 2024, there have been no complaints filed to National Contact Points for OECD Multinational Enterprises relating to Axactor. Axactor has not paid nor been convicted to pay any fines, penalties, nor compensation for damages as result of incidents of discrimination, including harassment and complaints filed. There has not been recorded any human rights violation incidents during 2024. Axactor Annual report 2024 Axactor Annual report 2024 84 84 Sustainability statement | Social - S1 Own workforce Sustainability statement | Social - S1 Own workforce Strategy 86 Impact, risk and opportunity management 87 Metrics and targets 90 Social – S4 Consumers and end-users Axactor Annual report 2024 Axactor Annual report 2024 85 85 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Strategy ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model The identified IROs connected to debtors are mainly a result of the company’s activity of debt collection where the end-user by nature is in a difficult situation, by being in default on debt obligations, and therefore is the origination of sustainability matters. How Axactor’s strategy addresses these issues are explained in section ESRS 2 SB M-1 . Axactor has one group of consumers and end-users, namely the debtors. Axactor considers the vulnerable debtors to be at greater risk of harm. However, the industry has no easy way of categorizing debtors and grades of vulnerability as it is subject to the specific facts and circumstances of each individual. Consequently, the analysis include impact on all debtors as a single group, both from the debt collection services and other necessary complementary services that Axactor purchases through third parties such as data storage or other IT services. The debtors managed by Axactor either becomes so by having their debt sold to, or having the collection process outsourced to Axactor. Axactor has limited knowledge and control on what the credit has been used for. Axactor focuses on debt originated from financial institutions as financial institutions are subject to strict regulatory requirements on e.g. background checks before they source credit to the debtors, information, consumer protection, contractual terms etc. It is therefore limited risk connected to the origination of the initial contractual relationship. Axactor processes a large amount of personal data as part of business activities. Policies and procedures are in place to ensure compliance with data protection regulations and secure the data privacy rights of all debtors. Debt collection regulation and best practice guidelines give clear guidance on how to secure good debt collection practices and ensure that the debtors receive necessary information on their rights as debtors. No debtor Axactor is in contact with wants to be in a situation of not being able to settle their debt. For Axactor it is important to find the right and ethical balance of collecting the debt for the creditor, while at the same time ensuring the debtors rights are complied with. It is difficult to measure the mental stress of debtors, and who or how many that experiences actual material negative impacts on their mental health due to collection related activities. Axactor can through dialogue, statistics and debtor satisfaction surveys confidently assume that there is not a widespread issue of material negative impacts on its debtor’s mental health. Axactor has not identified any material positive impacts, risks or opportunities for ESRS S4. Relevant policies (see section Group policies for description of key policies) Data protection policy IT and information security policy Operations policy Code of Conduct Human rights policy Material matter Debtor mental health Data privacy Axactor Annual report 2024 Axactor Annual report 2024 86 86 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Impact, risk and opportunity management S4-1 – Policies related to consumers and end-users The fair and ethical treatment of consumers and end-users (debtors) are the core of Axactor’s operation. The commitment to ethical debt collection is reflected through the policies on all key areas and part of the mandatory training for all employees in Axactor, from the CEO to the IT manager and the collection advisor. All policies are supplemented by procedures and local adaptations where relevant. Ethical debt collection The Operations policy (see section Group policies ) particularly focus on Axactor’s commitment to fair debtor treatment in line with local guidelines. Furthermore, it outlines the expectations to (i) the accuracy of data used in the collection process, (ii) fair and transparent communication with the debtor, (iii) management of client funds, (iv) prohibition of holding on to valuables, (v) field collection and doorstep practices, (vi) data privacy and (vii) confidentiality. It also addresses the requirements for the debtor complaints process and Axactors’ management of such complaints. Particular attention is paid to Axactors’ potential impacts towards vulnerable groups, including people in financial difficult situations. Data protection Protection and appropriate treatment of all sensitive data is of utmost importance to Axactor. The Data protection policy (see section Group policies ) ensures implementation of systems and processes to ensure compliance with the GDPR regulation in order to secure especially the data privacy of consumers and end-users (debtors). 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 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. During 2024 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 audited the usage of personal data and routines to protect the data in different systems. The IT and information security policy (see section Group policies ) sets out detailed procedures and clear roles and responsibilities applicable for all employees within the Group. The information security procedures below have been reviewed and where necessary updated. 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 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. Building a good security culture requires continuous work through regular improvements, trainings, and awareness campaigns. In 2024 Axactor continued its investments in cyber- and information security, by various initiatives and trainings, such as new advanced routines for additional access controls and new technology for security. Debtors and human rights commitments Axactor conducts its business consistent with all internationally recognized human rights (see Human rights policy in section Group policies ). Relevant commitments to consumers and end-users addressed by the policy include: Axactor Annual report 2024 Axactor Annual report 2024 87 87 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Providing appropriate grievance mechanisms for potential human rights infringements Conduct human rights due diligence assessments and report on the results at least annually Axactor employees, suppliers or others that suspects or becomes aware of any human rights violations in connection with Axactor’s operations, shall report it immediately to their manager, HR, legal and compliance or through the independent whistleblower solution, in accordance with the company’s whistleblower procedure. The treatment of any reports shall be managed in accordance with the process outlined in section G1-1 Handling non-compliance with policies. Regarding the material topic of data privacy, all deviations and data breaches shall be reported according to Axactor’s data breach management procedure. In the event of a data breach, the local data protection officer shall consider whether is necessary to notify one or more of the following: lead authority, the data protection authorities in the countries Axactor operates, the data subjects affected by the data breach; and/or any controllers that Axactor processes data on behalf of (where Axactor is processor). The aim of this procedure is to ensure correct and efficient handling of data breaches, compliant with Axactor’s obligations pursuant to Regulation (EU) 2016/679 (the “General Data Protection Regulation” or “GDPR”). The procedure applies to all employees within the Axactor Group and shall ensure uniform response and reporting mechanisms relating to data breaches. All suspected and confirmed data breaches shall immediately be reported to the local data protection officer or through the complaint and deviations management system. Axactor is not aware of any breach during 2024 to the principles set out in any of UN Guiding Principles on Business and Human Rights, ILO Declaration on Fundamental Principles and Rights at Work or OECD Guidelines for Multinational Enterprises. S4-2 – Processes for engaging with consumers and end-users about impacts Axactor’s end-users comprise of the debtors from which Axactor collects debt. A key element of Axactor’s business model is to get in direct contact with the debtors, typically over phone or the online debtor portal. Axactor will, subject to legal requirements, contact the debtor as soon as Axactor receives a 3PC case or purchases a defaulted credit. The number of interactions with the debtor depends on the complexity of the case, the availability of the debtor and the debtors’ ability and willingness to follow the agreed payment plan. As part of conducting an ethical debt collection process, Axactor adapts its collection strategy and actions based on the debtor’s specific situation. Axactor shall seek to assess the debtor’s current situation, strive to understand the debtor and their different perspectives. Axactor shall exercise forbearance and consideration of a debtor’s circumstances, of which they are aware - in particular, in relation to those who are particularly vulnerable. When seeking to recover debts a debtor’s circumstances and ability to pay shall be considered. The debtor satisfaction survey (see section S4-5 ) is an opportunity for the debtor to anonymously provide feedback on their experience with Axactor. The COO is responsible for the follow-up of the debtor satisfaction survey and the results are reported daily in the Group Power BI reports as well as in monthly operations reviews with each country. The development in the satisfaction score is discussed both in local operations teams and with the Group operations officer when necessary to address actions to maintain a satisfactory score. The performance of how Axactor treats its debtors, and the quality of communication, is primarily assessed through the debtor satisfaction survey. 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. All complaints and issues addressed by debtors in communication with collection advisors are noted in the collection systems and elevated to the next management level if necessary. The basic training of collection advisors includes how to manage complaints. S4-3 – Processes to remediate negative impacts and channels for consumers and end-users to raise concerns Axactor has a data protection officer present in each country responsible for monitoring compliance with and advising on data privacy matters. To ensure sufficient focus on and compliance with good debt collection practices, certified debt collection advisors are tasked with training the collection advisors. The topics are pivotal to the risk and internal control management system. Axactor Annual report 2024 Axactor Annual report 2024 88 88 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Axactor 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 at regular intervals throughout the contract period. All Axactor’s employees have a responsibility to report complaints and deviations that they become aware of whilst working at Axactor through the Group complaints and deviations system. In the Complaints and deviations management procedure, deviations and complaints are clearly defined as well as a distinction between the complaints and deviation management system and the whistleblower channel. All registered issues are recorded and kept for data and training purposes. Each country has a dedicated complaints manager that process the complaints in accordance with local legal requirements and instructions. The whistleblower channel is implemented in accordance with the whistleblower directive adopted by local legislation in each of Axactor’s countries. Consequently, Axactor is of the opinion that the user should be able to trust the implemented structure and procedure for raising concerns to Axactor. See section G1-3 for a description of the Axactor whistleblower channel. In all the countries where Axactor operates, there are proactive data inspectorates with breach notification processes and procedures established. Most countries also have public complaints boards supervising and monitoring compliance with good debt collection practices such as “inkassoklagenemnda” in Norway. S4-4 – Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions The most important initiative to remedy negative impacts and positively contribute to a positive outcome for the customers and debtors is by ensuring training for its employees to make sure they act according to good debt collection practices including maintaining privacy rights. All new employees are introduced to the Code of Conduct as part of their on-boarding and signs a declaration confirming that it is read and understood. This commitment shall be re-confirmed annually. Employees are provided with training giving 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, and comprehensive communication training. Employees are also offered various e-learning courses throughout the year, some of which are mandatory. 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 2024 represented in various committees working on specific topics, such as new legislation and fair debt collection practices. The work to manage material impacts relating to debtors and customers is part of the daily operation of Axactor, and a part of the license to operate through strict regulatory requirements which Axactor always strive to comply with. The negative outcomes relating to Axactor’s material impacts is not a binary consideration with impacts such as mental health issues that can vary significantly from one individual to the other. The Group complaints and management deviation system (see section G1-3 ) and operational metrics and the debtor survey (see section S4-5 ) is actively used to monitor and address issues relating to debtors and prevent potential risks from materializing. Axactor Annual report 2024 Axactor Annual report 2024 89 89 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Metrics and targets S4-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Axactor has the following targets to manage IROs relating to debtors: KPI Target 2024 2023 Debtor satisfaction survey score 1 >4.00 4.22 4.29 Inbound service level ≥95% 97.21% 95.86% Nuisance rate (outbound) <1% 0.55% 0.35% 1 Reported numbers are the survey score for Q4 in the respective reporting year due to data retention policies. The targets have all been in use since before 2021 and Axactor expect to maintain the targets unchanged. All targets are measured on a running basis and therefore does not have a baseline year or a defined period for which the target applies. Debtor satisfaction The debtor satisfaction survey is conducted via phone after the debtor has talked to a collection advisor. The survey is 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. The call centers that are in dialogue with the debtors, uses the debtor satisfaction score, proactively when conducting training and developing call scripts for collection advisors. If the scores are trending downwards, actions will be implemented to revise calling scripts and tone of voice. The survey has inherent elements causing measurement uncertainty. The number of respondents will vary between country and over time, especially since the survey is only sent to a debtor after the first conversation. All replies are included in the reported number, however Axactor does not have any influence on who that chooses to answer the survey, or the ability to follow up with the respondent as it is anonymous. The country total average score per month is calculated from the monthly average reply to each question. The average of the score for the last three months of the year gives the reported debtor satisfaction survey score. Axactor recognizes that each individual reply to the survey may be impacted by other factors such as the outcome of a collection case which could negatively or positively impact the respondent’s perception of the service provided by Axactor. Therefore, there is measurement uncertainty connected to the survey for smaller samples of data, however on an aggregated basis and over time the results are more reliable. The debtor satisfaction survey has been developed based on debt collection regulations, guidelines from debt collection associations and statements from debt collection complaints boards and the courts. It is considered the best possible indicator available to get debtor feedback on a broad-based level and is widely used by the industry and considered as the normal CSAT (customer satisfaction score) on a debtor level. The debtor satisfaction survey has remained unchanged since 2020. The metric is not validated by an external body. The Operations policy states that debtor satisfaction survey shall be executed on a regular basis to measure satisfaction with Axactor’s services. Inbound service level The inbound service level measures the availability of a collection advisor to debtors contacting Axactor by phone. Where a debtor reaches out to find solutions to settle their debt, it is Axactor’s responsibility to be available to assist. Axactor has defined a group-wide target to achieve an average service level of answering a minimum of 95% of all incoming calls to the contact centers. Additionally, all contact centers have an automatic callback function, to call back all debtors that does not get through to the collection advisors. This is to ensure that all debtors are serviced even where incoming calls are lost. In 2024 Axactor achieved an inbound service level of more than 97%. In Italy, Axactor has initiated actions to improve the service rate as the results were below the target. During 2024 the Italian operation conducted a site consolidation project during which Axactor used contractors in the call-center. These contractors are not allowed, by local legislation, to directly answer inbound calls. Axactor Annual report 2024 Axactor Annual report 2024 90 90 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users The reported metric is calculated by a module in the dialer system based on how many incoming calls that Axactor answers. Calls ended before a set time limit, to give the collection advisors a minimum time to answer, is excluded from the calculation. No manual handling of the scores is conducted. The call centers actively use the inbound service level to ensure a sufficient collection advisor availability. The metric is unchanged since 2018 and is being measured continuously. The metric is not validated by an external body, nor has any stakeholder been directly involved in developing the target. The Operations policy states that collection shall be managed in accordance with fair debt collection practice. The debtors shall receive guidance, phone collection shall not be performed at inconvenient hours compliant with local regulations, and all requests shall be replied to within given deadlines as measured by the inbound service level. Nuisance rate (outbound) The nuisance rate measure 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 dialer call the debtors. The overall target is that the nuisance call rate should not exceed 1%, meaning that Axactor should have a collection adviser available more than 99% of the times Axactor calls a debtor. The metric is unchanged since 2018 and is being measured continuously. A module in the dialer system registers the rate of outbound calls that are answered by a debtor and how many of these Axactor has a collection advisor available to take the call. Outbound calls that are not answered by a debtor, is not included in the calculation. No manual handling of the scores is conducted. The call centers actively use the nuisance rate level to adjust the dialer parameters. In 2024 Axactor had a nuisance rate of 0.55% which is well within the target. In most markets the nuisance rate is guided by an industry practice. It is an important metric to avoid that debtors are harassed and to ensure that Axactor acts in accordance with good collection practices as stated in the Operations policy. The metric is not validated by an external body. Axactor Annual report 2024 Axactor Annual report 2024 91 91 Sustainability statement | Social - S4 Consumers and end-users Sustainability statement | Social - S4 Consumers and end-users Impact, risk and opportunity management 93 Metrics and targets 96 Governance Axactor Annual report 2024 Axactor Annual report 2024 92 92 Sustainability statement | Governance - G1 Business conduct Sustainability statement | Governance - G1 Business conduct Impact, risk and opportunity management G1-1– Business conduct policies and corporate culture Each year, millions of transactions pass through Axactor, which impose 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 exploited for any illegal activity. This also includes complying with all relevant trade sanctions regulations. The Board approved policies are updated annually to reflect the risks identified through the annual risk assessments. Compliance with the policies is tracked through preventive and detective actions, see section G 1-3 . Code of conduct The Code of Conduct (see section Group policies ) sets out the objectives of the Axactor Group which are to engage efficiently, responsibly and profitable for its investors, customers, debtors, and employees and general principles to prevent financial crimes. It sets out requirements to all Axactor employees and business relationships relating to environmental, social and governance matters, and how to comply with these. The policy covers all IROs and all business conduct matters connected to Axactor. All employees are themselves responsible for abiding by the policy and is required to sign it annually. Anti-corruption and anti-fraud Axactor has zero tolerance for fraud and corruption as stated in the Anti-corruption and anti-fraud policy (see section Group policies ). All employees in Axactor are required to report on any incident. The policy outlines the measures that are implemented to avoid, detect, report and act on any breach. Axactor considers that the functions most at risk of committing corruption and bribery are decision makers and functions with authorization to approve transactions. Delegation of authority The Delegation of authority policy is to clearly define who in the Axactor Group having the authority to approve expenditures, engage in commitments, or make decisions within and on behalf of the Axactor companies to prevent the risk of unauthorized approvals. Procurement policy The Procurement policy ensures that the purchasing processes and sourcing strategies of the services and goods the Group acquire are the result of Relevant policies (see section Group policies for description of key policies) Code of Conduct (incl. supplier CoC) Anti-corruption and anti-fraud policy Procurement policy Trade sanctions policy Antitrust policy Legal and compliance policy Delegation of authority Material matter Corruption and bribery 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 2024 Axactor Annual report 2024 93 93 Sustainability statement | Governance - G1 Business conduct Sustainability statement | Governance - G1 Business conduct transparent, objective, time and cost-effective decision making and risk management. Ethics, regulations, professionalism, and equal treatment of suppliers are absolute requirements in the policy. Legal and compliance policy The Legal and compliance policy (see section Group policies ) of Axactor outlines the governance model of the Group to ensure the company remain in compliance on an ongoing basis with external laws and regulations and that this is reflected in the policies and procedures. This policy is also where the risk and internal control management system is founded. Handling non-compliance with policies When non-compliance is suspected or reported, the receiver shall acknowledge and confirm the report, appoint a dedicated team or individual to spearhead an investigation ensuring a thorough and impartial process, take corrective actions based on the investigation's findings, implement appropriate corrective or disciplinary measures, and communicate the outcomes while respecting confidentiality and offer feedback to the reporter. Non-compliance with policies to prevent financial crime may result in criminal or civil penalties which will vary according to the offence. G1-3 – Prevention and detection of corruption and bribery Preventive actions Axactor has implemented several preventive actions based on the Group’s risk assessment. The mitigations are implemented throughout the policies and procedures forming the governance structure. Employees are not permitted to give or receive any gifts or other benefits that question 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 donations require approval from the Chief of staff. Charitable contributions to political parties shall never be approved, and no such contributions have been made during the lifetime of Axactor. This also precludes 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. All bank transfers shall be based on segregation of duties and dual sign off. Due to the nature of Axactor's business, before final hire and provided it is allowed by local legislation, the employee needs to sign a consent allowing Axactor to perform background checks related to their financial situation and other relevant areas, depending on the position to be filled, before and during the employment. The manager conducts reference checks and spot checks of relevant sources before hiring. Any irregularities need to be sorted out before hiring or if severe, the person cannot be hired. All employees are made familiar with Axactor’s Code of Conduct and confirm their awareness annually. Axactor provides adequate training for all employees consistent with Axactor's different operating units risk profile and appropriate to employee responsibilities on a regular basis, at least annually. 100% of functions-at-risk of corruption and bribery are covered by the training programs. Administrative, management and supervisory bodies are provided with general training equally to general staff. Axactor addresses fraud and corruption issues in relevant forums to ensure that employees of Axactor are aware of this policy and are motivated to abide by it. Local legal and compliance officers provide guidance and are available for consultations related to fraud and corruption issues. Chief of Staff is responsible for overseeing the training of Axactor's employees. The direct managers are responsible for distributing and communicating the relevant polices and have the responsibility to ensure such polices is properly distributed and communicated. Axactor regularly evaluate systems, internal control mechanisms and procedures, to ensure that they are adequate 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 documentation of financial transactions, risk assessments and due diligence shall be maintained and available in case of audits. Axactor has an open and active dialogue with the regulators. Employees are encouraged to report any suspicions of violations through either of the reporting channels. Axactor is committed to follow up all reports of suspicious acts and take appropriate action. Vendor management is an increased focus area by improving and expanding the supplier risk assessment. A new risk assessment tool is under development and expected to be implemented during 2025. The new tool will standardize and simplify the assessment from a user perspective and incorporating relevant elements Axactor Annual report 2024 Axactor Annual report 2024 94 94 Sustainability statement | Governance - G1 Business conduct Sustainability statement | Governance - G1 Business conduct from policies and procedures. Especially, the risk assessment will support fulfilling the requirements of the Procurement policy. Detective actions Complaints and deviations management system The group-wide complaints and deviations management system helps the Group manage complaints and deviations efficiently. It helps identify opportunities for improvement of processes, ensure compliance with 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’s reputation, as well as employee, debtor, and customer satisfaction. Whistleblower channel Axactor 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 enables management of 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 (e.g. whistleblower procedure) and in compliance with applicable data privacy regulations. The whistleblower procedure describes the treatment of whistleblower reports and express the importance of protecting any reporter from any form of retaliation. Submissions through the channel is reported to the Board’s audit committee quarterly. In order to avoid conflict of interest the reporter can choose to report to either the local compliance officer, Chair of the Board of Directors, the Chief of Staff or to an external party. Compliance officers “The second line of defense” is represented by the compliance officers in each country verifying the internal controls conducted by the managers within their respective area. Internal audit The internal audit, also considered the third line of defense, shall provide the Board with reasonable assurance that internal controls are present and functioning, also from a fraud and corruption prevention perspective. The internal audit has during the year focused on systems and process owners in Norway, control of collection discounts in all countries, delegation of authority in Germany and Spain in addition to follow-up on observations from 2023. 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 internal audit in 2024. Axactor Annual report 2024 Axactor Annual report 2024 95 95 Sustainability statement | Governance - G1 Business conduct Sustainability statement | Governance - G1 Business conduct Metrics and targets G1-4 – Incidents of corruption or bribery During 2023 and 2024, Axactor had no convictions for violation of anti-corruption and anti- bribery laws. The limitations of the methodologies used for compiling information consist of incidents not being detected or reported, unintentionally or intentionally. Any such incident that are identified by Axactor employees shall be reported through legal and compliance reviews or the complaints and deviation management system. To the best of the Group's knowledge, no incident has been identified during 2024 based on reports from the Group’s complaints and deviation management system, the whistleblower channel, internal control mechanisms, internal audits, external audit, nor any financial prosecutions initiated towards any Axactor representative. The metric is not validated by an external body, other than the consolidated financial statement being audited. Target Axactor has a zero-tolerance policy, and hence target, related to incidents of corruption and bribery. This statement is founded in the Anti-corruption and anti-fraud policy and the Code of Conduct (see section Group policies ). The target has been in force since the inception of Axactor and will continue to be a fundamental target and principle. Axactor prohibits corruption and fraud in all its forms, including facilitation payments, trading in influence, extortion and bribery. The target applies for Axactor, however, the Group expects the same high standard from all its business relationships and request confirmation of compliance with the supplier Code of Conduct. Stakeholders have not been directly involved in establishing the target, however through discussions it has been highlighted. Corruption and fraud undermine legal business activities, distorts competition, destroys Axactor's reputation, exposes companies and individuals to risk and is a threat to humanity. By systematically work to prevent corruption and bribery in all their forms and prevent illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime Axactor also contribute to meet the UN development goal number 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. Axactor Annual report 2024 Axactor Annual report 2024 96 96 Sustainability statement | Governance - G1 Business conduct Sustainability statement | Governance - G1 Business conduct Fair and efficient credit markets through compliant and ethical debt collection 98 Entity-specific topic Axactor Annual report 2024 Axactor Annual report 2024 97 97 Sustainability statement | Entity-specific topic Sustainability statement | Entity-specific topic Fair and efficient credit markets through compliant and ethical debt collection Axactor help debtors pay their bills and make sustainable plans to get out of debt. Axactor helps hard-working companies to get paid for their products and services. Fair and efficient credit markets are an important cornerstone of the financial system. Governance GOV-1 – The role of the administrative, management and supervisory bodies The general role of administrative, management and supervisory bodies and the reporting lines, is described in section GOV-1 . Key elements of ensuring fair and efficient credit markets includes i) responsible investing in debt porfolios to ensure a compliant origination of credit, and proper documentation, ii) ensuring operational processes aligned with good debt collection practices, and iii) ensuring the overall compliance of the company with laws and regulations. These elements are managed by the Group executive mangement in the following way: BIC is responsible for monitoring and managing the Group NPL portfolio investments and to ensure responsible investing. Subject to the authority matrix investments shall be presented to and approved by the BIC. Day to day management is administered by the CIO who regularly reports to BIC. The CIO is responsible for implementation of the Debt purchasing and portfolio management policy (see section Group policies ). Each country has a dedicated investment manager responsible for implementation in their respective organizations who reports to the CIO. The COO is responsible for the daily management of operations and ensuring compliance with the Operations policy (see section Group policies ). The general reporting structure of sustainability matters is outlined in section GOV-1 . Each country has a dedicated operations director responsible for implementation in their respective organizations and for reporting to the COO which in turn regularly reports to the Board. The Chief of Staff is responsible for ensuring compliance with the Code of Conduct (see section Group policies ) and ensuring that the Group stays up to date with relevant laws and regulations. GOV-2 – Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Fair and efficient credit markets is a fundamental element of Axactor's Board approved strategy which states that the purpose of Axactor is to: Help people and society to a better future. See section GOV-2 for a general description on the information provided to administrative, management and supervisory bodies. The Chief of Staff, COO and CIO performs monthly reviews with country representatives. Depending on the severity of any incident or breach of the groups policies shall be reported in line with the general reporting guidelines as outlined in section G1-1 Handling non-compliance with policies. GOV-3 – Integration of sustainability-related performance in incentive schemes The structure of the Group’s incentive schemes is outlined in section GOV-3 . Relevant examples for 2024 incentive schemes to the Group executive management include reduction of the cost to collect and improving quality of the portfolio purchase model. The Board of Axactor is only compensated through fixed-salary schemes approved by the general meeting, thus no sustainability related incentives apply. Relevant policies (see section Group policies for description of key policies) Operations policy Code of Conduct Debt purchasing and portfolio management policy Material matter Fair and efficient credit markets Axactor Annual report 2024 Axactor Annual report 2024 98 98 Sustainability statement | Entity-specific topic Sustainability statement | Entity-specific topic GOV-4 – Statement on due diligence The due diligence statement is presented in section GOV-4 . The embedding of due diligence related to fair and efficient credit markets is: Core elements of due diligence Section Paragraphs in the sustainability statement Embedding due diligence in governance, strategy and business model G OV-1 G OV-1 Entity-specific topic GOV-1: Management, oversight and responsibility of governance and policies. The Board is the ultimate responsible for approval and compliance with policies. Entity-specific topic GOV-1: Embedding sustainable business conduct in remuneration Engaging with affected stakeholders in all key steps of the due diligence S BM-2 I RO-1 Consulting with relevant stakeholders across Axactor’s value chain including business relationships and activities Entity-specific topic IRO-1: Involving stakeholders in identifying and assessing sustainability matters and IROs. Identifying and assessing adverse impacts I RO-1 Description of the process to identify and assess material impacts, risks and opportunities Section 6.2: Material impacts, risks and opportunities relating to consumers and end-users. Taking actions to address those adverse impacts Entity- specific t opic Actions to ensure fair and efficient credit markets Tracking the effectiveness of these efforts and communicating Entity- specific t opic Metrics and targets related to managing material matters relating to fair and efficient credit markets GOV-5 – Risk management and internal controls over sustainability reporting The established risk management and internal control processes for ensuring compliance and trustworthy reporting on good debt collection practices is a key element of the governance structure of Axactor (see section GOV-5 ). The complaint and deviation management system (see section G1-3 ) facilitate reporting of incidents and suspected issues, annual reviews of Group policies are conducted to ensure they are up to date and that adequate internal controls are in place. Strategy ESRS 2 SBM-1 – Strategy, business model and value chain Axactor’s purpose is about helping people and society to a better future. For Axactor, that implies offering debt collection services to the best of debtors and creditors by being efficient and professional. And upholding maintaining the interest of the society by supporting the function of credit markets and ensuring a lawful and compliant process. See section SBM-1 for a description of the Groups strategy and value chain, including its main products and services and significant markets. ESRS 2 SBM-2 – Interest and views of stakeholders Through regulatory attention it is evident that the EU commission and local authorities place a high value to ensuring that the debt collection process is conducted in accordance with established principles. Axactor closely monitors the reports from the financial supervisory authorities, interest organizations and media to understand the expectations of a debt collection agency. By providing services to and being a part of the bank and finance sector, the regulatory scrutiny also affects Axactor. See section SBM-2 for an in-depth discussion on the stakeholder dialogue. ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model Axactor’s positive impact on the fair and efficient functioning of credit markets is the cornerstone of Axactor’s strategy and business model, without it Axactor would not exist. One of three pillars in Axactor’s strategy is to be a leader on cost efficiency, which in turn will benefit both the debtor and the creditor see section SMB-3 for more information. Axactor Annual report 2024 Axactor Annual report 2024 99 99 Sustainability statement | Entity-specific topic Sustainability statement | Entity-specific topic Impact, risk and opportunity management The process for identifying material sustainability matters is described in section IRO-1 . The process has included analyzing the value chain, business model and activities, stakeholder dialogue, and screening findings against the topical ESRS. Section IRO1-1 also outlines the materiality scoring process and details. Policies related to fair and efficient credit markets Fair and ethical debt collection The debt collection industry is a necessary enabler for the credit markets to function properly. By having efficient means to collect on outstanding debts creditors are secured payment in due course, and debtors are given the opportunity to settle their debts without incurring unnecessary costs. The debt collection industry brings value to the providers of credit by contributing to a secondhand market for non-performing debt, so that they can free up capital for new lending. The debtors benefit by reducing the cost and ensuring a compliant debt collection process. Axactor is handling volumes at many stages of the credit lifecycle throughout the different markets, from pre-collection to legal collection and longtime surveillance. Coupled with the element of debt purchase, Axactor is truly an integrated part of the European credit market. The Code of Conduct and the Operation policy are central to the principle of fair and ethical debt collection, see section S4 Consumers and end-users for more information on the treatment of debtors. Responsible investments The Debt purchasing and portfolio management policy (see section Group policies ) lays out the principles for responsible investments in debt portfolios. Responsible investment includes principles for due diligence of the underlying clains and "know your counterparty"- assessments of the sellers. Ethical, compliant and efficient debt collection are covered by for example the Code of Conduct and Operations policy (see section S4 -1 ). Actions to ensure fair and efficient credit markets Contributing to ensuring a fair and efficient credit market is Axactor’s “bread and butter”. The governance structure including the policies and internal controls are designed to ensure that Axactor stays compliant with laws and regulations and conduct debt collection activities in an ethical manner. In addition to the policies and actions relating to debtors (see section S4 Consumers and end-users ) and general business conduct (see section Governence ) Axactor has implemented the actions below. All actions are ongoing and part of the daily operating activities. Training and compliance officers In each country of operation, Axactor has dedicated employees to monitor the development in local regulation and requirements, and to follow up on any incident or concern reported through the Group Complaints and deviations management system (see section G1-3 ). The training and compliance officers actively engage in activities such as training of staff, development of collection systems to ensure compliance with the group’s policies relating to collection activities (see section Group policies ). Certifications and licenses 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. Contributing to a sustainable industry Further, Axactor is actively engaged in the local debt collection associations and was in 2024 represented in various committees working on specific topics, such as new collection legislation, fair debt collection practices, CSRD and GDPR. The engagement is motivated by protecting its own and the industry’s interests, but always with integrity and through transparent means. Country Debt collection association Membership Norway 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 Litto Yes Axactor Annual report 2024 Axactor Annual report 2024 100 100 Sustainability statement | Entity-specific topic Sustainability statement | Entity-specific topic Engagement with regulatory bodies Axactor monitors statements and publications from the financial supervision authority, governmental agencies and interest organizations. When appropriate Axactor replies to request for opinions related to development of legislation. Axactor efficiency model The Axactor efficiency model scores the operational departments on operational processes, people & organization, business intelligence, compliance, project management and IT & systems. 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. Metrics and targets Metrics KPI Target 2024 2023 Customer satisfaction score na 8.9 8.8 Customer satisfaction survey The customer satisfaction (CSAT) survey is a valuable measurement of the satisfaction from executives at Axactor’s 3PC customers in Germany, Italy, Norway and Spain. The survey is sent to a representative selection, including the largest and strategically most important customers. The customer satisfaction survey is not a perfect measure for assessing the impact from Axactor's services on customers, however the company believes that it is a good indication. If a customer or a customer’s customer (debtor) was treated unfair or otherwise in breach of good debt collection practices, or bad business conduct, they would likely have given Axactor a low score and relevant feedback. The customers are asked to score Axactor on a scale from 1 to 10 for different statements and to give written feedback, both negative and positive. Where appropriate, Axactor will directly contact the customer to follow up on any identified issues and implement necessary actions. The score will be impacted by which of the customers that chooses to answer the survey. Uncertainty in the score is also connected to the respondent’s interpretation of the questions, perceptions of the levels in the scale from 1 to 10, recent events connected to contractual topics or specific collection cases. The Group score is calculated as the average of the respective country average scores. In 2024 the score improved to 8.9 from 8.8 in 2023 underlining a continued high customer satisfaction. Feedback evidence Axactor to be professional, knowledgeable, and easily accessible. Targets Axactor has not set any measurable outcome-oriented targets relating to ensuring an efficient credit market. Nevertheless, the Group tracks the effectiveness of its policies and actions in relation to the material sustainability-related IRO through, inter alia, monitoring the reports through the complaints and deviation management system, through the internal controls and audit, reports to the debtor complaints boards, outcome of legal collection procedures and responses through the debtor- and customer satisfaction surveys (see section S4-5 for information on the debtor satisfaction survey). The Group will continue to collaborate with industry peers to develop industry specific metrics. Axactor Annual report 2024 Axactor Annual report 2024 101 101 Sustainability statement | Entity-specific topic Sustainability statement | Entity-specific topic Appendix List of datapoints in cross-cutting and topical standards that derive from other EU legislation Disclosure requirement Datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Material/ Not Material Page ESRS 2 GOV-1 Board's gender diversity paragraph 21 (d) x x Material 38 ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) x Material 38 ESRS 2 GOV-4 Statement on due diligence paragraph 30 x Material 43 ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i x x x Not Material ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii x x Not Material ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii x x Not Material ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv x Not Material ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 x Not Material ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) x x Not Material ESRS E1-4 GHG emission reduction targets paragraph 34 x x x Not Material ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 x Not Material ESRS E1-5 Energy consumption and mix paragraph 37 x Not Material ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 x Not Material ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 x x x Not Material ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 x x x Not Material ESRS E1-7 GHG removals and carbon credits paragraph 56 x Not Material ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66 x Not Material ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) x Not Material ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c). x Not Material ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). x Not Material ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69 x Not Material ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 x Not Material ESRS E3-1 Water and marine resources paragraph 9 x Not Material ESRS E3-1 Dedicated policy paragraph 13 x Not Material Axactor Annual report 2024 Axactor Annual report 2024 102 102 Sustainability statement | Appendix Sustainability statement | Appendix Disclosure requirement Datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Material/ Not Material Page ESRS E3-1 Sustainable oceans and seas paragraph 14 x Not Material ESRS E3-4 Total water recycled and reused paragraph 28 (c) x Not Material ESRS E3-4 Total water consumption in m 3 per net revenue on own operations paragraph 29 x Not Material ESRS 2- SBM 3 - E4 paragraph 16 (a) i x Not Material ESRS 2- SBM 3 - E4 paragraph 16 (b) x Not Material ESRS 2- SBM 3 - E4 paragraph 16 (c) x Not Material ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) x Not Material ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) x Not Material ESRS E4-2 Policies to address deforestation paragraph 24 (d) x Not Material ESRS E5-5 Non-recycled waste paragraph 37 (d) x Not Material ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 x Not Material ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f) x Material 73 ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) x Material 74 ESRS S1-1 Human rights policy commitments paragraph 20 x Material 73 ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 x Material 74 ESRS S1-1 processes and measures for preventing trafficking in human beings paragraph 22 x Not Material ESRS S1-1 workplace accident prevention policy or management system paragraph 23 x Material 74 ESRS S1-3 grievance/complaints handling mechanisms paragraph 32 (c) x Material 88 ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c) x x Not Material ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) x Not Material ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) x x Material 83 ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) x Material 84 ESRS S1-17 Incidents of discrimination paragraph 103 (a) x Material 84 ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD Guidelines paragraph 104 (a) x x Material 84 ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) x Not Material ESRS S2-1 Human rights policy commitments paragraph 17 x Not Material ESRS S2-1 Policies related to value chain workers paragraph 18 x Not Material ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 x x Not Material ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 x Not Material ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 x Not Material Axactor Annual report 2024 Axactor Annual report 2024 103 103 Sustainability statement | Appendix Sustainability statement | Appendix Disclosure requirement Datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Material/ Not Material Page ESRS S3-1 Human rights policy commitments paragraph 16 x Not Material ESRS S3-1 non-respect of UNGPs on Business and Human Rights, ILO principles or OECD guidelines paragraph 17 x x Not Material ESRS S3-4 Human rights issues and incidents paragraph 36 x Not Material ESRS S4-1 Policies related to consumers and end-users paragraph 16 x Material 87 ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 x x Material 89 ESRS S4-4 Human rights issues and incidents paragraph 35 x Material 93 ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) x Not Material ESRS G1-1 Protection of whistle- blowers paragraph 10 (d) x Not Material ESRS G1-4 Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a) x x Material 96 ESRS G1-4 Standards of anti- corruption and anti- bribery paragraph 24 (b) x Not Material Axactor Annual report 2024 Axactor Annual report 2024 104 104 Sustainability statement | Appendix Sustainability statement | Appendix Consolidated financial statements 106 Financial statements of Axactor ASA 151 Responsibility statement 168 Auditor’s limited assurance report 169 Auditor’s report 171 Alternative performance measures 174 Financial statements Axactor Annual report 2024 105 Financials Financials Consolidated financial statements Consolidated statement of profit or loss 107 Consolidated statement of comprehensive income 108 Consolidated statement of financial position 109 Consolidated statement of cash flows 110 Consolidated statement of changes in equity 111 Notes to the consolidated financial statements 112 Note 1 Corporate information 112 Note 2 Material accounting policies 112 Note 3 Risk management 117 Note 4 Significant accounting judgements, estimates and assumptions 120 Note 5 Operating segments 121 Note 6 Revenue 123 Note 7 Employee remuneration 124 Note 8 Executive remuneration 125 Note 9 Other operating expenses 126 Note 10 Leases 127 Note 11 Financial items 128 Note 12 Income tax 129 Note 13 Earnings per share 130 Note 14 Intangible assets 131 Note 15 Goodwill and intangible assets with indefinite useful lives 132 Note 16 Property, plant and equipment 133 Note 17 Fair value measurement 134 Note 18 Purchased loan portfolios 136 Note 19 Hedge accounting 138 Note 20 Shares in subsidiaries 139 Note 21 Accounts receivable and other current assets 140 Note 22 Cash 140 Note 23 Issued shares and share capital 141 Note 24 Share-based payments 142 Note 25 Interest-bearing loans and borrowings 144 Note 26 Post-employment benefits 147 Note 27 Other non-current liabilities 147 Note 28 Other current liabilities 148 Note 29 Transactions with related parties 148 Note 30 Pledged assets 149 Note 31 Discontinued operations 149 Note 32 Events after the reporting period 150 Axactor Annual report 2024 Axactor Annual report 2024 106 106 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of profit or loss EUR thousand Note 2024 2023 Continuing operations Interest revenue from purchased loan portfolios 6 , 18 222,038 211,289 Net gain/(loss) purchased loan portfolios 6 , 18 -152,269 -13,082 Revenue from sale of repossessed assets 6 3,968 2,587 Other operating revenue 5 54,200 55,843 Total revenue 5 , 6 127,937 256,637 Cost of repossessed assets sold, incl impairment 5 -1,599 -1,759 Personnel expenses 7 , 8 -63,541 -66,576 Other operating expenses 9 -53,518 -56,454 Total operating expenses -118,658 -124,789 EBITDA 1 9,279 131,848 Amortization and depreciation 10 , 14 , 16 -11,557 -9,050 Operating profit /(loss) -2,278 122,797 Financial revenue 11 8,437 3,389 Financial expenses 11 -91,238 -84,750 Net financial items -82,801 -81,360 Profit/(loss) before tax from continuing operations -85,079 41,437 Income tax expense 12 6,019 -7,874 Net profit/(loss) after tax from continuing operations -79,060 33,563 1 Alternative performance measure (APM) EUR thousand Note 2024 2023 Discontinued operations Net profit/(loss) after tax from discontinued operations 31 - -5,969 Net profit/(loss) after tax -79,060 27,594 Attributable to Non-controlling interests 466 -3,235 Shareholders of the parent company -79,526 30,830 Earnings per share From continuing operations, basic and diluted 13 -0.263 0.110 From continuing and discontinued operations, basic and diluted 13 -0.263 0.102 Axactor Annual report 2024 Axactor Annual report 2024 107 107 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of comprehensive income EUR thousand Note 2024 2023 Net profit/(loss) after tax -79,060 27,594 Items that will not be reclassified subsequently to profit or loss Remeasurement of pension plans -6 -48 Items that may be reclassified subsequently to profit or loss Currency translation differences - foreign operations -9,419 -10,495 Fair value net gain/(loss) on cash flow hedges during the period 19 -407 - Cumulative net gain/(loss) on cash flow hedges reclassified to profit or loss 19 -3,185 -3,569 Other comprehensive income/(loss) after tax -13,018 -14,112 Total comprehensive income/(loss) -92,077 13,482 Attributable to Non-controlling interests 466 -3,235 Shareholders of the parent company -92,544 16,718 Axactor Annual report 2024 Axactor Annual report 2024 108 108 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of financial position EUR thousand Note 31.12.2024 31.12.2023 Assets Non-current assets Intangible assets Goodwill 14 , 15 58,871 59,799 Deferred tax assets 12 12,320 8,502 Other intangible assets 14 12,003 15,116 Tangible assets Property, plant and equipment 16 1,839 2,036 Right of use assets 10 7,820 11,604 Financial assets Purchased loan portfolios 17 , 18 1,087,472 1,265,327 Other non-current assets 1,431 2,495 Total non-current assets 1,181,757 1,364,879 Current assets Repossessed assets 4,180 2,664 Accounts receivable 21 7,730 6,636 Other current assets 21 37,151 27,196 Restricted cash 22 1,882 2,613 Cash and cash equivalents 22 32,991 31,826 Total current assets 83,934 70,935 Total assets 1,265,691 1,435,815 EUR thousand Note 31.12.2024 31.12.2023 Equity and liabilities Equity Share capital 23 158,369 158,369 Other paid-in equity 271,048 270,831 Retained earnings -52,450 27,082 Other components of equity -36,092 -23,080 Non-controlling interests -9,201 -9,667 Total equity 24 331,674 423,534 Non-current liabilities Interest-bearing debt 17 , 25 884,728 939,104 Deferred tax liabilities 12 1,802 10,549 Lease liabilities 10 7,083 8,969 Other non-current liabilities 26 , 27 4,570 2,740 Total non-current liabilities 898,183 961,361 Current liabilities Accounts payable 3,915 4,057 Taxes payable 2,406 12,243 Lease liabilities 10 3,348 3,194 Other current liabilities 28 26,165 31,425 Total current liabilities 35,834 50,919 Total liabilities 934,017 1,012,281 Total equity and liabilities 1,265,691 1,435,815 Axactor Annual report 2024 Axactor Annual report 2024 109 109 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of cash flows EUR thousand Note 2024 2023 Operating activities Profit/(loss) before tax from continuing operations -85,079 41,437 Profit/(loss) before tax from discontinued operations - -5,969 Taxes paid 12 -23,584 -11,616 Adjustments for: Net financial items, continuing operations 11 82,801 81,360 Net financial items, discontinued operations 32 - 348 Portfolio amortization and revaluation 5 , 18 286,898 88,840 Change in fair value of forward flow commitments 120 -1,805 Cost of repossessed assets sold, incl impairment 1,599 1,759 Cost of REOs sold, incl impairment 31 - 8,422 Depreciation and amortization 10 , 14 , 16 11,557 9,050 Calculated cost of employee share options 24 382 450 Change in working capital -6,894 -2,905 Cash flow from operating activities before NPL investments 267,800 209,372 Purchase of loan portfolios 18 -128,522 -119,987 Purchases related to repossessed assets -104 -73 Net cash flow from operating activities 139,174 89,311 EUR thousand Note 2024 2023 Investing activities Purchase of intangible and tangible assets 14 , 16 -3,071 -3,874 Net cash flow from investing activities -3,071 -3,874 Financing activities Proceeds from borrowings 25 42,000 343,274 Repayment of debt 25 -89,321 -341,873 Interest paid -87,467 -67,737 Interest received 5,451 385 Loan fees paid 25 -117 -15,376 Lease payments, principal amount 10 -3,731 -3,143 Repayments to non-controlling interests - -992 Net cash flow from financing activities -133,185 -85,462 Net change in cash and cash equivalents 2,918 -24 Cash and cash equivalents at the beginning of period 31,826 32,652 Currency translation -1,753 -802 Cash and cash equivalents at end of period 1 22 32,991 31,826 1 Restricted cash is excluded from Cash and cash equivalents, and the comparative figures for 2023 have been adjusted accordingly. Axactor Annual report 2024 Axactor Annual report 2024 110 110 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Consolidated statement of changes in equity Equity attributable to 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 Total Non-controlling interests Total equity Balance on 31 Dec 2022 158,369 270,381 -3,699 -18,417 9,401 416,034 -5,441 410,593 Result of the year 30,830 30,830 -3,235 27,594 Other comprehensive income -48 -10,495 -3,569 -14,112 -14,112 Total comprehensive income - - 30,782 -10,495 -3,569 16,718 -3,235 13,482 Repayments to non-controlling interests - -992 -992 Share-based payment 450 450 450 Balance on 31 Dec 2023 158,369 270,831 27,082 -28,912 5,832 433,202 -9,667 423,534 Result of the year -79,526 -79,526 466 -79,060 Other comprehensive income -6 -9,419 -3,592 -13,018 -13,018 Total comprehensive income - - -79,533 -9,419 -3,592 -92,544 466 -92,077 Share-based payment 218 218 218 Balance on 31 Dec 2024 158,369 271,048 -52,450 -38,332 2,240 340,875 -9,201 331,674 Oslo, 8 April 2025 Terje Mjøs Chair Brita Eilertsen Board member Lars Erich Nilsen Board member Kjersti Høklingen Board member Ørjan Svanevik Board member Johnny Tsolis CEO Axactor Annual report 2024 Axactor Annual report 2024 111 111 Financials Financials | Consolidated financial statements Financials | 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 Karenslyst allé 8A, 0278 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 in 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 8 April 2025 and will be submitted for approval to the Annual General Meeting on 6 May 2025. Note 2 Material accounting policies 2.1 Basis for preparation The consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU and effective as of 31 December 2024. Axactor also provides additional disclosures in accordance with requirements in the Norwegian Accounting Act. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Group’s consolidated financial statements comprise Axactor ASA and entities in which Axactor ASA has control. 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. Accounting policies that are material to the Group are described below. These policies have been applied consistently for all years presented, unless otherwise specified. 2.2 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 (in Sweden and Norway) are translated to euro using exchange rates prevailing at the end of each reporting period. Revenue and expense items are translated at the average exchange rates for each month. 2.3 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 Group executive management, which is the Group’s chief decision makers, is in accordance with this structure. 2.4 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. Axactor Annual report 2024 Axactor Annual report 2024 112 112 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The recognition of revenues from purchased loan portfolios is described in detail in 2.10.1. Revenue from Contracts with Customers is recognized according to the five-step model in IFRS 15 at an amount which reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. Revenue is measured at the fair value of the consideration received or receivable, considering contractually defined terms of payment and excluding taxes and duties. Revenue from contracts with customers are mainly revenue from external collection (3PC) and is 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 in 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. 2.5 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. 2.6 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 tax liabilities are recognized for all taxable temporary differences, except where the deferred 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 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. 2.7 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired and liabilities assumed at the acquisition date. This includes the aggregate of the consideration transferred, the amount recognized for non-controlling interests, and any previous interests held. If purchase price exceeds the net fair value of the identifiable assets, liabilities and contingent liabilities, the difference is recognised as goodwill. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill arising from the acquisition of subsidiaries is classified as an intangible asset and allocated to the cash-generating units (CGUs) expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Goodwill is tested for impairment annually or more frequently if there are indications that it may be impaired. Impairment is determined by assessing the recoverable amount of the lowest identifiable CGU to which the goodwill relates. If the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognized in profit or loss. Impairment losses relating to goodwill cannot be reversed in future periods. When a portion of an operation within a CGU, or a group of CGUs to which goodwill has been allocated, is disposed of, the goodwill associated Axactor Annual report 2024 Axactor Annual report 2024 113 113 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. The portion of goodwill allocated is measured based on the relative values of the disposed operation and the portion of the CGU retained at the date of disposal, unless another method better reflects the goodwill associated with the disposed operation. This principle is also applied when the Group reorganizes its business. 2.8 Other 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. Other intangible assets relate to internally developed assets that are amortized on a straight-line basis over their estimated period of use. 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. 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 intangible assets not yet ready for use, the recoverable amount is assessed annually. 2.9 Right of use assets and lease liabilities The Group applies IFRS 16 Leases and 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 Group presents its lease liabilities and right of use assets as separate line items in the statement of financial position. 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. 2.10 Financial instruments 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 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. 2.10.1 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 revenue 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’. 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 as part of the recovery strategy for the purpose of being divested within the Group's operations to maximize the value of recoveries. Such assets are classified as inventories and Axactor Annual report 2024 Axactor Annual report 2024 114 114 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements recognized in the balance sheet at the lowest of cost and net realizable value in accordance with IAS 2 Inventories. 2.10.2 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 reflects 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’. 2.10.3 Derivatives Derivatives are recognized at fair value on the date the contract is entered into and are subsequently measured at fair value. Derivatives that are designated as hedging instruments in cash flow hedge relationships are recognized as described in note 2.11. 2.10.4 Accounts receivable and Other current assets Accounts receivable and other current assets are recognized when the Group has performed and there is a contractual obligation on the counterparty to pay, even if an invoice has not yet been received. Accounts receivables are recognized when an invoice has been sent. Accounts receivables are recognized at the transaction price, nominal amount unless containing a significant financing component and subsequently measured at amortized cost less any loss allowance. The loss allowance is based on a lifetime credit loss. The anticipated maturity of these receivables is short, so their carrying values are not discounted. 2.10.5 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 22and note28. 2.10.6 Cash Cash and cash equivalents consist of cash and short-term deposits as well as immediately available balances with banks and similar institutions. Short-term deposits are easily and readily convertible to a known amount of cash and have a maturity of not more than three months. 2.11 Hedge accounting The Group has elected to apply the hedge accounting rules in IFRS 9. Hedge accounting is applied when a hedging relationship meets the specified criteria in IFRS 9, and it is aligned with the Group’s overall risk management strategy. Currently, the Group applies cash flow hedge accounting to mitigate variability in future cash flows attributable to changes in floating interest rates, primarily through the use of interest rate swaps as hedging instruments. At the inception of a hedge, the Group formally documents the relationship between the hedged item and the hedging instrument, including the risk management objective, strategy for undertaking the hedge, and the hedge ratio, which reflects both the risk management strategy, and the actual hedges performed. The Group also assesses and documents the existence of an economic relationship between the hedged item and the hedging instrument, ensuring that credit risk does not dominate changes in value arising from this relationship. The Group’s qualifying hedging instruments are designated in their entirety. For designated and qualifying cash flow hedges, the effective portion of the cumulative gain or loss on the hedging instrument is recognized in other comprehensive income (OCI) under the cash flow hedge reserve. The ineffective portion of the gain or loss is recognized immediately in profit or loss as a financial revenue or expense. When the hedged cash flow subsequently affects profit or loss, the effective portion of the gain or loss on the hedging instrument is reclassified to the corresponding revenue or expense line in the statement of profit or loss. Fair value is measured based on input from third parties and the utilization of valuation reports from derivative counterparty bank and is the present value sum of the difference between the fixed payments and floating payments based on market projections at year end until maturity. Hedge effectiveness is tested by comparing changes in the fair value of the hedging instruments against changes in the fair value or cash flows of the hedged items attributable to the hedged risk. These assessments ensure that the hedging relationship remains effective throughout its duration. When a hedging instrument expires, is sold, terminated, or no longer qualifies for hedge accounting, or if the risk management objectives change, the cumulative gain or loss previously recognized in OCI remains in equity until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the cumulative amount in OCI is reclassified immediately to profit or loss. Further quantitative disclosures, including notional amounts, maturities, and the fair values of hedging instruments, are provided in Note19. Axactor Annual report 2024 Axactor Annual report 2024 115 115 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 2.12 Interest-bearing debt Interest bearing debt is initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans are subsequently measured at amortized cost using the effective interest method and included in net financial items. The upfront fees and discounts are a part of the borrowing cost and are recognized as part of the interest expense in accordance with the effective interest method. Due to their short-term nature, other loans and borrowings are recognised at nominal value and are subsequently measured at amortized cost. 2.13 Discontinued operations and assets held for sale In the current year, the Group did not have any discontinued operations or assets held for sale. Comparative information for the prior year, where applicable, is presented in accordance with IFRS 5. The results of the discontinued operations, which have been included in net profit/(loss) after tax for 2023, are excluded from the results of continuing operations and presented as a single amount in the statement of profit or loss. Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position. Additional disclosures are provided in note31. 2.14 Changes in accounting policies and disclosures implemented in 2024 Axactor has not implemented any new accounting standards during 2024. 2.15 Changes in accounting policies and disclosures for 2025 or thereafter The Group has not early adopted new and revised IFRS standards which are not yet mandatory or effective. IFRS 18 Presentation and Disclosure in Financial Statements, effective from 2027, is expected to significantly affect the presentation of profit and loss statement and disclosures for most entities. Axactor Annual report 2024 Axactor Annual report 2024 116 116 Financials Financials | Consolidated financial statements Financials | 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 Group executive management, and through quarterly reporting to the Board. The Group has assessed risks in the corporate governance report as well as in the Group's sustainability statement statement which are both part of the report of Board of Directors. 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 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 negatively. 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) was EUR 896.7 million on 31 December 2024 (2023: EUR 958.4 million). The loans carry a variable interest rate based on the interbank rate in each currency with a margin. The Group´s interest rate risk management objective is to hedge interest rate risk 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 long-term strategy is to hedge between 50% and 70% of interest- bearing debt with a duration of three to five years. The Group intends to gradually implement the strategy in line with new portfolio investments. The details of the Group’s hedge relationships are described in note 2.10.3, note 2.11and note19. The average interest rate in 2024 was 8.7% (2023: 8.5%). An increase by 100 basis point would have reduced the Group’s profit before tax for 2024 by EUR 7.6 million (2023: EUR 9.6 million). The equity would change with the same amount less tax. 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, borrowings, and net investments in foreign subsidiaries. The Group is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily euro, whereas some companies use Norwegian kroner (NOK) and Swedish kroner (SEK). The Group reduces its exposure to fluctuations in foreign exchange rates by using currency swaps and by keeping interest-bearing debt in the same currencies as the Group’s assets. The Group’s exposure to currency risk as reported to the management of the Group consists of outstanding foreign currency denominated monetary items, including currency derivatives. The net exposure includes external loans as well as loans to foreign operations within the group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. On 31 December 2024, the Group’s net exposure to NOK and SEK was EUR 2.3 million (2023 EUR 6.2 million). The Group’s exposure to foreign currency changes for all other currencies is not considered material. The Group has performed a foreign currency sensitivity analysis for changes in NOK and SEK exchange rates, with all other variables held constant, based on the net exposure as reported above. The sensitivity analysis shows that if NOK and SEK strengthen by 10%, would increase by EUR 0.2 million. Similarly, profit before tax would be reduced by EUR 0.2 million if NOK and SEK weaken by 10%. Credit risk Credit risk 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 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. Axactor Annual report 2024 Axactor Annual report 2024 117 117 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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 from the portfolio. Axactor applies scoring models (where the debtors’ payment capacities are assessed through statistical analysis) and historical data in the calculations. 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. 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 manages the liquidity risk by continuously monitoring the liquidity status and the monthly rolling consolidated result- and cash flow forecasts. The Group had positive cash flow from operating activities before NPL investments of EUR 267.8 million in 2024, as shown in the consolidated statement of cash flows (2023: 209.4 million). For 2024, the cash flows from operating activities ended at EUR 139.2 million (2023: EUR 89.3 million). The table of contractual maturities 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. 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 of liabilities except for NPL investment commitments, where 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. The Group’s estimated remaining collections for purchased loan portfolios for the next 15 years is presented below the table of contractual maturities (see also note 18). Contractual maturities per 31 December 2024 Contractual maturities per 31 December 2023 EUR thousand Q1-25 Q2-25 Q3-25 Q4-25 1–2 years 2–4 years 4+ years Total Q1-24 Q2-24 Q3-24 Q4-24 1–2 years 2–4 years 4+ years Total NPL investment commitments, non-cancellable‌ 1 1,572 43 - - - - - 1,614 4,678 1,901 962 - - - - 7,540 NPL investment commitments, cancellable‌ 1 374 1,288 - - - - - 1,661 - - - - - - - - Revolving credit facility (RCF) 6,800 6,490 6,263 6,306 484,156 - - 510,016 8,351 8,120 7,523 7,039 28,156 486,776 - 545,965 Bond ACR03 (ISIN NO0011093718) 4,713 4,492 4,436 4,383 243,338 - - 261,360 6,520 6,380 6,017 5,760 23,041 298,331 - 346,050 Bond ACR04 (ISIN NO0013005264) 5,978 5,919 5,897 5,832 23,330 218,209 - 265,166 6,432 6,410 6,184 6,029 24,117 246,904 - 296,076 Other non-current liabilities - - - - - - 4,570 4,570 - - - - 1,000 - 1,740 2,740 Accounts payable 3,915 - - - - - - 3,915 4,057 - - - - - - 4,057 Lease liabilities 983 1,002 959 948 3,683 2,534 1,672 11,781 968 964 958 948 3,598 4,469 1,962 13,866 Other current liabilities 18,397 4,133 - 3,636 - - - 26,165 24,649 5,970 - 807 - - - 31,425 Total contractual maturities 42,730 23,366 17,555 21,105 754,506 220,743 6,243 1,086,248 55,655 29,744 21,644 20,583 79,911 1,036,480 3,701 1,247,718 1Expected cash flows based on the last three months’ actual deliveries and future deliveries on new agreements confirmed at the balance sheet date. Per 31 December 2024, cash flows are limited to EUR 9.6 million (2023: EUR 54.5 million) by contracted capex limits. The NPL commitments that are cancellable are cancellable with one to three months’ notice. ERC per 31 December 2024 ERC per 31 December 2023 EUR thousand Q1-25 Q2-25 Q3-25 Q4-25 1–2 years 2–4 years 4+ years Total Q1-24 Q2-24 Q3-24 Q4-24 1–2 years 2–4 years 4+ years Total Estimated remaining collections (ERC) 1 65,350 66,680 61,768 64,572 267,437 499,937 1,313,985 2,339,729 78,153 82,732 75,102 78,689 308,058 543,117 1,454,566 2,620,416 1Alternative performance measure (APM) Axactor Annual report 2024 Axactor Annual report 2024 118 118 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Securing non-current financing at competitive terms is an important part of the Group’s long-term liquidity planning. There are no maturities on the RCF or bond loans until June 2026. On 31 December 2024 the Group had an unused part of the RCF agreement of EUR 73.5 million (2023: EUR 72.3 million), in addition to unrestricted cash and cash equivalents of EUR 33.0 million (2023: EUR 31.8 million). 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 2024. Non-financial risk Geopolitical risk, regulatory risk and climate risk in relation to the financial statements are described below. Geopolitical risk During the last years Europe has seen increasing geopolitical risk among others with the ongoing war in Ukraine. Although Axactor’s operations are not directly impacted by the war, the Group 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 a risk to Axactor such as but not limited to MAR (market abuse regulation), AML (anti-money laundering), GDPR (general data protection regulation), the NPL directive, DORA (Digital Operational Resilience Act), the EU Pay Transparency Directive, EU taxonomy regulation, CSRD (corporate sustainability reporting directive), CS3D (corporate sustainability due diligence directive) and SFRD (sustainable finance disclosure regulation) and BEPS (base erosion and profit shifting). These regulatory initiatives are stipulating stricter and more comprehensive disclosure- and reporting requirements resulting in increased administrative cost 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. However, in the event that Axactor fails to comply with applicable regulations in relevant jurisdictions, this may materially adversely affect the financial position due to severe fines, or inability to operate due to loss of license in respective jurisdictions. 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. Approximately 1% of the Group’s assets are tangible, whereas approximately 10% of the Group’s purchased loan portfolios 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 2024 Axactor Annual report 2024 119 119 Financials Financials | Consolidated financial statements Financials | 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, which 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 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’. 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 collections (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 flows from the portfolios are 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 2.10.1and note18. Goodwill Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. 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 2.7and note15. Deferred tax assets Deferred tax assets are recognized for unused tax losses only to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, and deferred tax assets have been recognized in the balance sheet. The recognized amount is most sensitive to expected future taxable profits. Information on deferred tax assets is disclosed in note 2.6and note12. Axactor Annual report 2024 Axactor Annual report 2024 120 120 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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 profitability and country profitability are the two most important dimensions when making strategic priorities and deciding where to allocate the Group’s resources. Segment revenue reported represents revenue generated from external customers. 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. The measurement basis of the performance of the segment is the segment’s contribution margin. Axactor Annual report 2024 Axactor Annual report 2024 121 121 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 2024 EUR thousand NPL 3PC Eliminations/Not allocated Total Collections on own portfolios 356,667 - - 356,667 Portfolio amortization and revaluation -286,898 - - -286,898 Revenue from sale of repossessed assets 3,968 - - 3,968 Other operating revenue: Change in fair value forward flow commitments -120 - - -120 Other operating revenue - 54,320 - 54,320 Total revenue 73,617 54,320 - 127,937 Cost of repossessed assets sold -1,599 - - -1,599 Impairment repossessed assets - - - - Direct operating expenses -41,143 -33,818 - -74,961 Contribution margin 30,875 20,503 - 51,377 SG&A, IT and corporate cost -42,098 -42,098 EBITDA 9,279 Amortization and depreciation -11,557 -11,557 Operating result -2,278 Total operating expenses -42,742 -33,818 -42,098 -118,658 Contribution margin (%) 41.9% 37.7% na 40.2% EBITDA margin (%) 7.3% Opex ex SG&A, IT and corporate cost / Gross revenue 11.9% 62.3% na 18.5% SG&A, IT and corporate cost / Gross revenue 10.1% 2023 EUR thousand NPL 3PC Eliminations/Not allocated Total Collections on own portfolios 287,046 - - 287,046 Portfolio amortization and revaluation -88,840 - - -88,840 Revenue from sale of repossessed assets 2,587 - - 2,587 Other operating revenue: Change in fair value forward flow commitments 1,805 - - 1,805 Other operating revenue - 54,039 - 54,039 Total revenue 202,598 54,039 - 256,637 Cost of repossessed assets sold -1,759 - - -1,759 Impairment repossessed assets - - - - Direct operating expenses -46,186 -34,492 - -80,678 Contribution margin 154,653 19,547 - 174,200 SG&A, IT and corporate cost -42,352 -42,352 EBITDA 131,848 Amortization and depreciation -9,050 -9,050 Operating result 122,797 Total operating expenses -47,945 -34,492 -42,352 -124,789 Contribution margin (%) 76.3% 36.2% na 67.9% EBITDA margin (%) 51.4% Opex ex SG&A, IT and corporate cost / Gross revenue 16.6% 63.8% na 24.0% SG&A, IT and corporate cost / Gross revenue 12.3% Axactor Annual report 2024 Axactor Annual report 2024 122 122 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 6 Revenue The Group delivers credit management services in six European countries: Finland, Germany, Italy, Norway, Spain and Sweden. Axactor also owns some portfolios through an entity based in Luxembourg. The Group’s revenue 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 consists of intangible assets, goodwill, property, plant and equipment and right of use assets. Total revenue Non-current assets EUR thousand 2024 2023 31.12.2024 31.12.2023 Finland 4,236 14,425 3,036 3,017 Germany 6,618 40,759 13,530 15,903 Italy 25,493 38,438 15,317 15,825 Norway 15,845 41,088 27,221 30,186 Spain 85,999 100,498 19,388 20,299 Sweden -10,254 21,428 2,041 3,325 Total 127,937 256,637 80,533 88,555 Portfolio revenue Portfolio revenue consists of interest revenue from purchased loan portfolios, net gain/(loss) from purchased loan portfolios and revenue from sale of repossessed assets. Net gain/(loss) from purchased loan portfolios is split into collections above/(below) collection forecasts and net present value of changes in collection forecasts. EUR thousand Finland Germany Italy Norway Spain Sweden 2024 Interest revenue from purchased loan portfolios 14,813 35,214 30,212 38,375 78,405 25,020 222,038 Collections above/(below) forecasts -2,080 -9,775 -3,204 -6,691 -7,457 -2,808 -32,016 NPV of changes in collection forecasts -8,534 -25,029 -12,864 -22,815 -18,546 -32,465 -120,253 Net gain/(loss) purchased loan portfolios -10,614 -34,805 -16,068 -29,506 -26,002 -35,274 -152,269 Sale of repossessed assets 3,968 3,968 Total portfolio revenue 4,199 409 14,144 8,869 56,371 -10,254 73,737 EUR thousand Finland Germany Italy Norway Spain Sweden 2023 Interest revenue from purchased loan portfolios 15,713 37,520 26,730 36,345 69,649 25,332 211,289 Collections above/(below) forecasts -1,654 -2,774 296 -3,274 3,696 -2,295 -6,004 NPV of changes in collection forecasts -779 -861 335 338 -2,915 -3,196 -7,078 Net gain/(loss) purchased loan portfolios -2,433 -3,635 631 -2,935 781 -5,491 -13,082 Sale of repossessed assets 2,587 2,587 Total portfolio revenue 13,280 33,885 27,361 33,409 73,017 19,841 200,793 Axactor Annual report 2024 Axactor Annual report 2024 123 123 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 7 Employee remuneration Personnel expenses EUR thousand 2024 2023 Salaries 43,937 44,666 Bonus 2,519 4,138 Commissions 2,359 2,269 Social security 11,081 11,532 Pension 928 1,144 Share-based payment 382 451 Other benefits 2,335 2,376 Total personnel expenses 63,541 66,576 Average number of FTEs 2024 2023 Number of FTEs, 1 Jan 1,255 1,301 Number of FTEs, 31 Dec 1,174 1,255 Average number of FTEs 1,214 1,278 Number of FTEs per country 31.12.2024 31.12.2023 Finland 15 36 Germany 108 141 Italy‌ 255 296 Norway 109 95 Spain 674 672 Sweden 12 16 Total number of FTEs 1,174 1,255 Axactor Group is compliant with the different local mandatory occupational pension requirements. For information on the country specific pension schemes, see note26. Axactor Annual report 2024 Axactor Annual report 2024 124 124 Financials Financials | Consolidated financial statements Financials | 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 2024 2023 Current members of the Board Terje Mjøs, Chair 88 75 Brita Eilertsen 48 61 Lars Erich Nilsen 46 46 Kjersti Høklingen 46 31 Ørjan Svanevik 52 - Former members of the Board Kristian Melhuus - 27 Kathrine Astrup Fredriksen - 13 Total remuneration 280 253 Terje Mjøs was elected Chair of the Board in May 2023. He previously held the position as member of the Board. Kjersti Høklingen was elected as a member of the Board in May 2023, Ørjan Svanevik was elected as a member of the Board in December 2023, whereas Brita Eilertsen and Lars Erich Nilsen has been members of the Board for the full year of both periods presented. Nomination committee The following remuneration has been made to the members of the nomination committee during the year: EUR thousand 2024 2023 Anne Lise Ellingsen Gryte 8 8 Magnus Tvenge 1 5 5 Total remuneration 13 13 1Replaced by Peder Strand who was appointed member of the nomination committee on AGM 8thof May 2024. Remuneration is paid first quarter of the year. Group executive management remuneration EUR thousand Salary Bonus‌ 1 Pension Share options‌ 2 Other 2024 Johnny Tsolis, CEO 420 288 38 89 1 836 Nina Mortensen, CFO 229 52 18 18 1 319 Arnt Andre Dullum, COO 199 17 15 18 1 250 Vibeke Ly, Chief of Staff 201 49 15 18 2 284 Kyrre Svae, Chief of Strategy and IR 217 52 17 20 1 307 Karl Mamelund, Chief Investment Officer 211 48 14 19 1 293 Total remuneration 1,478 506 117 182 7 2,289 EUR thousand Salary Bonus‌ 1 Pension Share options‌ 2 Other 2023 Johnny Tsolis, CEO 387 201 33 60 1 681 Nina Mortensen, CFO 211 50 16 16 1 295 Arnt Andre Dullum, COO 189 41 14 14 1 259 Vibeke Ly, Chief of Staff 187 75 13 14 1 291 Kyrre Svae, Chief of Strategy and IR 205 81 16 15 1 318 Karl Mamelund, Chief Investment Officer‌3 138 51 8 13 1 211 Robin Knowles, Chief Investment Officer‌4 47 - 1 6 2 55 Total remuneration 1,365 498 100 139 8 2,110 1Accrued bonus for the financial year. 2023 is now also including extraordinary bonus 2Cost in relation to share option program, not exercised 3Chief Investment Officer from April 2023 4Chief Investment Officer until April 2023 Axactor Annual report 2024 Axactor Annual report 2024 125 125 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Members of the Group executive management, employed in Axactor ASA, have an additional contribution plan entitling them to pension rights for salary above 12G (Norwegian Grunnbeløp). 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 reflect the accrued amounts during the year. At the end of 2024, no loan or prepayments were granted to members of the Board or Group executive management. Note 9 Other operating expenses Other operating expenses EUR thousand 2024 2023 Direct operating expenses 7,346 6,158 External services 27,205 31,512 IT expenses 12,355 11,903 Other expenses 6,613 6,881 Total other operating expenses 53,518 56,454 Auditor’s remuneration During the financial year 2024, the company changed its auditor. The previous auditor, PricewaterhouseCoopers AS (PwC), was replaced by Ernst & Young (EY). The total remuneration paid to PwC for their services during the financial year amounted to EUR 0.6 million. The table shows all fees paid to the auditors in 2024. The reported fees are the recognized expenses for the year. EUR thousand 2024 2023 Auditing 1,214 1,176 Audit related services - - Tax related services 102 58 Other services 115 21 Total auditor’s remuneration 1,431 1,255 Axactor Annual report 2024 Axactor Annual report 2024 126 126 Financials Financials | Consolidated financial statements Financials | 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 and 7 years and the majority of the lease agreements are renewable after the end of the lease period. Extension of the lease period are included in the lease term when it is probably that the option will be utilised. Leasing contracts are classified as lease liabilities and right of use assets under IFRS 16, see note 2.9. Right of use assets EUR thousand Buildings Vehicles Other Total Right of use assets on 31 Dec 2022 11,263 401 93 11,757 Additions 2,881 752 53 3,685 Depreciation -3,034 -331 -44 -3,409 Disposals -232 -31 - -264 Currency translation differences -167 2 - -165 Right of use assets on 31 Dec 2023 10,711 792 101 11,604 Additions 1,906 271 - 2,177 Depreciation -3,175 -445 -50 -3,670 Impairment 1 -1,559 - - -1,559 Disposals -585 -22 - -608 Currency translation differences -122 -3 - -125 Right of use assets on 31 Dec 2024 7,176 594 50 7,820 Remaining lease term 1-7 years 1-4 years 1-3 years Depreciation method Linear Linear Linear 1The impairment is related to unused office spaces on leased offices in Germany, Sweden and Norway. The interest costs relating to IFRS 16 leases during the year are reflected in profit or loss with EUR 881 thousand (EUR 743 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 2024 2023 Lease liabilities on 1 Jan 12,163 12,239 Net new leases 2,153 3,237 Lease payments, principal amount -3,731 -3,143 Currency translation differences -155 -171 Lease liabilities on 31 Dec 10,430 12,163 Current 3,348 3,194 Non-current 7,083 8,969 The future aggregated minimum lease payments under lease liabilities are as follows: EUR thousand 2024 2023 Undiscounted lease liabilities and maturity of cash outflows < 1 year 3,892 3,837 1–2 years 3,683 3,598 2–3 years 1,575 3,232 3–4 years 959 1,237 4–5 years 696 700 > 5 years 977 1,261 Total undiscounted lease liabilities 11,781 13,866 Discounting element -1,350 -1,703 Total lease liabilities 10,430 12,163 Axactor Annual report 2024 Axactor Annual report 2024 127 127 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 11 Financial items EUR thousand 2024 2023 Financial revenue Interest on bank deposits‌ 5,451 385 Net foreign exchange gain‌ 1 352 - Gain on purchase of treasury bonds (note25) 2,554 115 Other financial revenue 79 2,889 Total financial revenue 8,437 3,389 Financial expenses Interest expense on borrowings‌ -89,141 -81,594 Net foreign exchange loss‌ 1 - -815 Other financial expenses -2,097 -2,341 Total financial expenses -91,238 -84,750 Total net financial items -82,801 -81,360 1Foreign exchange gains and losses are presented net as either financial revenue or financial expenses, depending on the net position. The amount includes changes in fair value of currency derivatives. Axactor Annual report 2024 Axactor Annual report 2024 128 128 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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 note31. Tax expense in consolidated profit or loss EUR thousand 2024 2023 Profit/(loss) before tax from continuing operations -85,079 41,437 Income tax calculated at 25% on profit from continuing operations 21,270 -10,359 Tax effect on permanent differences -2,780 32 Adjustment previous years -2,245 1,133 Tax assets, previously not recognized - 2,735 Tax loss and interest carryforwards for which no deferred tax asset was recognised -10,225 - Tax effect of change in net deferred income tax liability/asset - -2,266 Effect on foreign exchange rates - 852 Income tax expense 6,019 -7,874 Effective tax rate 7% 19% Tax included in consolidated other comprehensive income EUR thousand 2024 2023 Opening balance deferred tax liability in OCI -1,644 -2,651 Fair value net gain/(loss) on cash flow hedges 115 - Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss 898 1,007 Deferred tax charged to OCI on 31 Dec -632 -1,644 Deferred taxes EUR thousand 31.12.2024 31.12.2023 Non-current portfolios 3,556 -8,604 Non-current intangible assets/liabilities -637 -803 Current assets 1,930 1,357 Tax loss and interest carryforwards 6,501 7,648 Hedge over OCI -632 -1,644 Net deferred tax 10,518 -2,047 Deferred tax asset 12,320 8,502 Deferred tax liability -1,802 -10,549 Net deferred tax 10,518 -2,047 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, Spain (Real estate company) and Sweden. Limitation of interest deduction, not recognized, relates to Sweden and Norway. EUR thousand 31.12.2024 31.12.2023 Tax loss carryforwards, not recognized 25,827 23,287 Interest carryforwards, not recognized 8,590 4,604 Total unrecognized deferred tax on tax loss and interest carryforwards 34,418 27,891 Axactor Annual report 2024 Axactor Annual report 2024 129 129 Financials Financials | Consolidated financial statements Financials | 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 24for an overview of outstanding instruments in the share option plan. The following table reflects the net profit/(loss) and share data used in the basic and diluted EPS calculations: Continuing operations Discontinued operations Total EUR thousand 2024 2023 2024 2023 2024 2023 Net profit/(loss) to shareholders of the parent company -79,526 33,381 - -2,551 -79,526 30,830 Number of shares (in thousands) Weighted average number of ordinary shares 302,145 302,145 - 302,145 302,145 302,145 Effects of dilution from share options - - - - - Weighted average number of shares adjusted for the effect of dilution 302,145 302,145 - 302,145 302,145 302,145 Basic and diluted earnings per share -0.263 0.110 - -0.008 -0.263 0.102 The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted earnings per share: 2024 2023 Employee share options 15,083,333 15,942,100 Axactor Annual report 2024 Axactor Annual report 2024 130 130 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 14 Intangible assets EUR thousand Goodwill Customer contracts Databases Software and other intangibles Total Cost price Cost price on 31 Dec 2022 61,069 12,301 3,610 36,826 113,806 Acquisitions - - - 3,457 3,457 Reclassification - - - -47 -47 Disposals at cost price - -11,928 -3,530 -863 -16,321 Currency translation differences -1,270 -373 -79 -91 -1,814 Cost price on 31 Dec 2023 59,799 - - 39,282 99,081 Acquisitions - - - 2,559 2,559 Disposals at cost price - - - -2 -2 Currency translation differences -928 - - -406 -1,334 Cost price on 31 Dec 2024 58,871 - - 41,434 100,305 Amortization Accumulated amortizations on 31 Dec 2022 - -12,301 -3,610 -20,207 -36,118 Amortization of the year - - - -4,885 -4,885 Reclassification - - - 8 8 Disposals accumulated amortizations - 11,928 3,530 840 16,298 Currency translation differences - 373 79 80 533 Accumulated amortizations on 31 Dec 2023 - - - -24,165 -24,165 Amortization and impairment of the year - - - -5,730 -5,730 Currency translation differences - - - 464 464 Accumulated amortizations on 31 Dec 2024 - - - -29,431 -29,431 Carrying amount on 31 Dec 2024 58,871 - - 12,003 70,874 Useful life na 1-10 yr Customer contracts and databases were fully amortized per 31 December 2023 and removed from the balance sheet in 2023. For impairment testing of goodwill see note15. Axactor Annual report 2024 Axactor Annual report 2024 131 131 Financials Financials | Consolidated financial statements Financials | 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 EUR 58.9 million on 31 December 2024 (2023: EUR 59.8 million). Only goodwill has an indefinite lifetime, all other intangible assets are amortized in accordance with their useful life, see note14. 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 “collection services” for the following CGU “countries” EUR thousand 2024 2023 Finland 2,592 2,592 Germany 9,301 9,301 Italy 13,636 13,636 Norway 17,978 18,873 Spain 14,328 14,328 Sweden 1,035 1,068 Total goodwill on 31 Dec 58,871 59,798 Cash flow projections and assumptions A four-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 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 four, 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 2.1% 3.8% 2.2% Market risk premium 4.3%-7.3% 4.3% 4.3% Beta 1.54 1.54 1.54 Small cap premium 2.0% 2.0% 2.0% Cost of equity before tax 10.8%-15.3% 12.4% 10.8% Cost of debt 9.3% 9.3% 9.3% Equity ratio 25.7% 25.7% 25.7% Corporate income tax rate 26.0% 22.0% 20.6% WACC 7.6%-8.8% 8.6% 8.3% Axactor Annual report 2024 Axactor Annual report 2024 132 132 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements •Risk free rate: Five year risk free bond per currency •Market risk premium: The market risk premium per country 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 9.3% based on company estimated forecasts •Capital structure: Applied 25.7% equity ratio based on company estimates for 2025 •Corporate income tax rate: 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 2024 is 2.0% (2023: 2.0%). Cash flow The calculation includes cash flows for four years, in addition to a terminal value. Cash flow estimates are based on the Board approved 2025 budget and a projection for the next three 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 2024 (2023: EUR 0 million). Based on a sensitivity analysis, the ceteris paribus impact of reducing the terminal growth rate by one percentage point 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. The lowest headroom was observed in Finland, Germany and Spain, which all have headrooms over the combined value of goodwill and net assets in the range 20-30%. Impairment would be triggered for these CGUs if the terminal growth rate is reduced by 1 percentage point while simultaneously increasing the WACC by 2 percentage points. The cash flow sensitivity to changes in the operating results were also measured, with all CGU’s withstanding a 10% ceteris paribus haircut in their respective EBITDA. Note 16 Property, plant and equipment EUR thousand Furniture, fittings and equipment Cost price Cost price on 31 Dec 2022 7,290 Acquisitions 417 Reclassification 47 Disposals at cost price -468 Currency translation differences -50 Cost price on 31 Dec 2023 7,236 Acquisitions 511 Disposals at cost price -319 Currency translation differences -46 Cost price on 31 Dec 2024 7,382 Depreciation Accumulated depreciations on 31 Dec 2022 -4,918 Depreciation -756 Reclassification -8 Disposals accumulated depreciations 451 Currency translation differences 32 Accumulated depreciations on 31 Dec 2023 -5,199 Depreciation -599 Disposals accumulated depreciations 219 Currency translation differences 36 Accumulated depreciations on 31 Dec 2024 -5,542 Carrying amount on 31 Dec 2024 1,839 Useful life 3-6 yr Axactor Annual report 2024 Axactor Annual report 2024 133 133 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 17 Fair value measurement The Group’s financial assets consist of purchased loan portfolios, derivatives, accounts receivable and other non-current assets, 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 Fair value through profit or loss Amortised cost Total Level 1 Level 2 Level 3 Total 31.12.2024 Financial assets Purchased loan portfolios (Note18) - 1,087,472 1,087,472 - - 1,221,552 1,221,552 Derivatives (Other non-current assets) 659 - 659 - 659 - 659 Other non-current assets - 772 772 - - - - Accounts receivables (Note21) - 7,730 7,730 - - - - Cash and cash equivalent (Note22) - 32,991 32,991 - - - - Financial liabilities Interest-bearing debt (Note25) - 884,728 884,728 405,469 471,544 - 877,012 Derivatives (Note27) 3,347 - 3,347 - 3,347 - 3,347 31.12.2023 Financial assets Purchased loan portfolios (Note18) - 1,265,327 1,265,327 - - 1,351,808 1,351,808 Fair value of forward flow commitments (Note21) 311 - 311 - - 311 311 Derivatives (Other non-current assets) 1,920 - 1,920 - 1,920 - 1,920 Other non-current assets - 575 575 - - - - Accounts receivables (Note21) - 6,636 6,636 - - - - Cash and cash equivalent (Note22) - 31,926 31,926 - - - - Financial liabilities Interest-bearing debt (Note25) - 939,104 939,104 474,151 472,698 - 946,849 Axactor Annual report 2024 Axactor Annual report 2024 134 134 Financials Financials | Consolidated financial statements Financials | 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. 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 collections, 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 7.7% on 31 December 2024 (2023: 8.1%). 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 4.7% 1,262 1,331 1,400 1,469 1,539 5.7% 1,203 1,270 1,336 1,402 1,468 6.7% 1,150 1,213 1,276 1,340 1,403 7.7% 1,100 1,161 1,222 1,282 1,343 8.7% 1,054 1,113 1,171 1,229 1,287 9.7% 1,012 1,068 1,124 1,180 1,236 10.7% 973 1,026 1,080 1,134 1,188 Fair value of forward flow commitments, balance movements EUR thousand 2024 2023 Balance on 1 Jan 311 - Value change -120 1,805 Deliveries -185 -1,435 Currency translation differences -5 -58 Balance on 31 Dec - 311 Axactor Annual report 2024 Axactor Annual report 2024 135 135 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 18 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 majority of the purchased loan portfolios are unsecured, whereas approximately 10% of the book value of the loans are secured by a property object per 31 December 2024 (2023: 6%). 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 ‘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 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 collections 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 collections. For more information on accounting principles and a description of significant accounting judgments, estimates and assumptions related to purchased loan portfolios, see Note 2.10.1and note 4in the Group’s annual report 2024. EUR thousand 2024 2023 Balance on 1 Jan 1,265,327 1,252,642 Acquisitions during the year 127,757 116,118 Collections -356,667 -287,046 Interest revenue from purchased loan portfolios 222,038 211,289 Net gain/(loss) purchased loan portfolios -152,269 -13,082 Repossessions -3,077 -1,123 Deliveries on forward flow contracts 185 1,435 Currency translation differences -15,822 -14,905 Balance on 31 Dec 1,087,472 1,265,327 Acquisitions during the year can be split into nominal value of the acquired portfolios and expected credit losses at acquisition as follows: EUR thousand 2024 2023 Nominal value purchased loan portfolios 3,780,879 3,659,615 Expected credit losses at acquisition -3,653,122 -3,543,497 Acquisitions during the year 127,757 116,118 The payments during the year for investments in loan portfolios presented in the consolidated statement of cashflow may not correspond to acquisitions during the year due to deferred payments. Axactor Annual report 2024 Axactor Annual report 2024 136 136 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The book value of purchased loan portfolios per market is presented in the table below: 31.12.2024 31.12.2023 EUR thousand Book value % of total Book value % of total Finland 102,351 9% 118,453 9% Germany 152,474 14% 189,308 15% Italy 158,001 15% 165,929 13% Norway 212,450 20% 240,989 19% Spain 297,245 27% 349,715 28% Sweden 164,951 15% 200,932 16% Total book value 1,087,472 100% 1,265,327 100% The ERC represents the estimated gross collections on the purchased loan portfolios. ERC, amortization, and interest revenue from purchased loan portfolios per year are specified below (year 1 means the first 12 months from the reporting date): EUR thousand Estimated remaining collections (ERC), amortization and interest revenue from purchased loan portfolios per year Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total ERC 2024 ERC 258,370 267,437 261,253 238,684 211,405 181,386 160,781 144,227 129,412 113,140 95,242 83,210 73,814 64,402 56,964 2,339,729 Amortization 65,964 90,888 105,702 104,680 97,594 83,769 76,451 71,981 68,481 62,940 54,624 51,536 50,846 50,235 51,778 1,087,472 Interest revenue 192,406 176,549 155,550 134,004 113,811 97,618 84,330 72,245 60,932 50,200 40,618 31,674 22,968 14,167 5,186 1,252,257 2023 ERC 314,676 308,058 283,589 259,528 225,064 195,895 176,394 158,644 143,318 129,194 112,964 93,850 81,633 72,962 64,648 2,620,416 Amortization 105,653 120,186 118,013 116,194 102,024 89,571 83,946 79,066 75,868 73,397 68,420 59,450 56,796 57,606 59,135 1,265,327 Interest revenue 209,023 187,871 165,575 143,334 123,040 106,323 92,448 79,578 67,450 55,797 44,544 34,400 24,838 15,356 5,513 1,355,089 Axactor Annual report 2024 Axactor Annual report 2024 137 137 Financials Financials | Consolidated financial statements Financials | 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. 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’s long-term strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. The Group intends to gradually implement the strategy in line with new portfolio investments. Cash flow hedges Interest risk is mitigated by hedging exposures (interest rate swaps). The Group has implemented cash flow hedge accounting to reduce the impact of changing interest rates on the Group's interest expenses in the profit and loss. The hedged items include a portion of issued floating-rate loans in EUR and NOK. 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 the timing of cash flows between hedged items and hedging instruments, derivatives used as hedging instruments having a non-zero 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 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 2024. The critical terms of the hedging instruments and the hedged items are closely aligned and credit risk does not dominate the hedging relationship. The financial instruments designated as hedged items in the cash flow hedge relationships EUR thousand Nominal amount designated for hedge accounting 31.12.2024 Interest rate risk related to issued bonds 1 Floating rate issued loans (EUR) 80,000 Floating rate issued loans (NOK) 25,435 Total 105,435 1See note 25for overview of issued bonds. Hedge instruments (Interets rate swaps) Notional amount Notional amount EUR thousand Fix Floating 3M IBOR Start date Maturity date Fair value 31.12.2024EUR thousand EUR 25 million 25,000 2.9880% 2.91% 16.09.24 15.09.27 -581 EUR 25 million 25,000 2.9930% 2.91% 16.09.24 15.09.27 -599 EUR 15 million 15,000 1.9450% 2.91% 17.03.25 15.03.28 53 EUR 15 million 15,000 1.9600% 2.91% 17.03.25 15.03.28 38 NOK 150 mill 12,718 3.3975% 4.68% 09.09.24 07.09.29 278 NOK 150 mill 12,718 3.3740% 4.68% 09.09.24 07.09.29 290 Total 105,435 -521 The fair value of the hedge instruments are included in Other non-current assets with EUR 0.7 million and in Other non-current liabilities with EUR 1.2 million. The group had no hedge accounting instruments in 2023. Cash flow hedge reserve EUR thousand Fair value of hedge instruments net of tax (22%) Accumulated amount related to discontinued hedge 1 Total Balance on 31 Dec 2023 - 9,401 9,401 Change in the year - -3,569 -3,569 Balance on 31 Dec 2023 - 5,832 5,832 Change in the year -407 -3,185 -3,592 Balance on 31 Dec 2024 -407 2,647 2,240 1The remaining fair value of derivatives recorded in other comprehensive income related to discontinued cash flow hedges are released into profit and loss over the period when the Group’s earnings are affected by the variability in cash flows of the originally underlying floating rate loan of EUR 200 million (until December 2025). In 2024, EUR 3.2 million has been reclassified from the cash flows hedge reserve (OCI) into profit or loss and EUR 0.9 million has been reclassified from the deferred tax liability, reducing the interest rate expenses on borrowings reported in note 11with EUR 4.1 million (2023: EUR 4.6 million).The remaining cash flow hedge reserve related to the diconstinued hedge as at 31 December 2024 is EUR 2.6 million and deferred tax EUR 0.7 million; hence EUR 3.4 million will reduce interest expenses in 2025. Axactor Annual report 2024 Axactor Annual report 2024 138 138 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 20 Shares in subsidiaries The table is an overview of the subsidiaries included in the Axactor Group. The proportion of ownership interests held equals the voting rights held by the Group. The financial figures of the subsidiaries have been included in the consolidated financial statements of the group from the date of acquisition. EUR thousand Ownership Head office Country Axactor Holding Srl 100.0% Cuneo Italy Axactor Italy SpA 100.0% Cuneo Italy Axactor Italy Servicing 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 Beta Properties SLU 2 100.0% 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 1The parent company owns 50% of the shares of Reolux Holding S.à r.l. 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 2The company is owned 100% by Reolux Holding S.à r.l. in which Axactor owns 50% of the shares Changes in ownership interest in 2024 The shares in Axactor Capital Luxembourg S.à r.l. was sold in November 2024. The shares in PropCo Malagueta SL and Proyector Lima SL in Spain were sold in October 2024. Borneo Commercial Investments SLU, Alcala Lands Investments SLU and Beta Properties SLU have been merged with Beta Properties SLU as the surviving entity. Axactor Annual report 2024 Axactor Annual report 2024 139 139 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 21 Accounts receivable and other current assets Accounts receivable EUR thousand 31.12.2024 31.12.2023 Accounts receivable 7,730 6,636 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 31.12.2024 31.12.2023 Prepaid taxes 10,115 3,828 Prepaid expenses 13,121 5,826 Accrued revenue‌ 1 7,378 7,561 Fair value of forward flow commitments, asset - 311 Public duties receivable 788 7,148 Other 5,749 2,522 Total other current assets 37,151 27,196 1Accrued revenue relates to 3PC business Note 22 Cash The composition of the cash and cash equivalents per currency is shown below: EUR thousand 31.12.2024 31.12.2023 EUR 6,298 1,529 NOK 22,942 30,379 SEK 3,751 -83 Total cash by currency 32,991 31,826 EUR thousand 31.12.2024 31.12.2023 Restricted cash - client funds 1 1,050 1,768 Restricted cash and bank deposits 832 845 Total restricted cash 1,882 2,613 1The corresponding client funds payable is reported as part of other current liabilities in note28. Axactor Annual report 2024 Axactor Annual report 2024 140 140 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 23 Issued shares and share capital The share capital of Axactor ASA as of 31 December 2024 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) On 31 Dec 2022 302,145,464 158,368,902 On 31 Dec 2023 302,145,464 158,368,902 On 31 Dec 2024 302,145,464 158,368,902 20 largest shareholders at 31 December 2024 Name Shareholding Share % Geveran Trading Company Ltd 150,385,439 49.8% DNB Markets Aksjehandel/-analyse (Broker) 9,593,658 3.2% Skandinaviska Enskilda Banken AB 8,420,924 2.8% Skandinaviska Enskilda Banken AB (Nominee) 5,279,467 1.7% J.P. Morgan SE (Nominee) 4,454,162 1.5% Spectatio Finans AS 3,786,728 1.3% Stiftelsen Kistefos 3,000,000 1.0% Nordnet Livsforsikring AS 2,985,796 1.0% Nordnet Bank AB (Nominee) 2,736,073 0.9% Stavern Helse og Forvaltning AS 2,700,675 0.9% Siljan Industrier AS 2,135,306 0.7% Endre Rangnes 2,017,000 0.7% Gvepseborg AS 1,782,826 0.6% Latino Invest AS/Johnny Tsolis 1,770,000 0.6% Alpette AS 1,661,643 0.5% Avanza Bank AB (Broker) 1,389,817 0.5% Andres Lopez Sanchez 1,177,525 0.4% David Martin Ibeas 1,177,525 0.4% Øen Holding AS 1,100,000 0.4% Øvrum Invest AS 1,009,384 0.3% Total 20 largest shareholders 208,563,948 69.0% Other shareholders 93,581,516 31.0% Total number of shares 302,145,464 100% Total number of shareholders 7,761 Axactor Annual report 2024 Axactor Annual report 2024 141 141 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Shares owned by the Board and Group executive management per 31 December 2024 Name Shareholding Share % Latino Invest AS /Johnny Tsolis‌ 1 1,770,000 0.6% Terje Mjøs Holding AS‌ 2 750,000 0.2% Vibeke Ly‌ 3 240,850 0.1% Arnt Andre Dullum‌ 3 200,000 0.1% Karl Mamelund 3 196,858 0.1% Nina Mortensen 3 160,000 0.1% Kyrre Svae 3 43,000 0.0% Kjersti Høklingen 2 21,000 0.0% Brita Eilertsen 2 19,892 0.0% Ørjan Svanevik, through Oavik Capital AS 2 13,000 0.0% 1CEO/related to the CEO of Axactor ASA 2Member of the Board/controlled by member of the Board 3Member of the Group executive management 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 granted 2020 The share options granted in 2020 vest annually in equal tranches over a three-year period following the date of the grant. The options vest based on service conditions/continuing employment as vesting criteria and expire five years after the date of the grant. Share options granted 2021 Share options approved and granted in 2021 vest annually in equal tranches over a two-year period following the date of the grant. The share options vest based on service conditions/continuing employment as the vesting criteria and expire four years after the date of the grant. The share options approved in 2022 and granted for 2021 vest if the employee is still employed three years from the grant date and expire 20 days after the vesting date. Share options granted 2022-2024 The share options granted in 2022, 2023 and 2024 vest annually in equal tranches over three years following the date of the grant. 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 three years from the date of the grant, and the options expire five years after the grant date. 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 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). Axactor Annual report 2024 Axactor Annual report 2024 142 142 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements 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-based payment plans approved in 2024 were as follows (weighted average parameters at grant): 2024-grant Strike price (NOK) 4.30 Share price (NOK) 4.30 Expected lifetime 3.67 Volatility 38.1% Interest rate 3.4% Dividend - Fair value per option 1.32 Outstanding share options The number and weighted-average exercise prices of share options outstanding during the year are as follows: 2024 2023 Activity Number of options Weighted average strike price (NOK) Number of options Weighted average strike price (NOK) Outstanding on 1 Jan 15,942,100 13.92 13,267,100 15.62 Granted during the year 2,750,000 4.30 2,750,000 5.48 Terminated -516,667 5.50 - - Forfeited during the year - - -75,000 6.07 Expired during the year -3,092,100 19.42 - - Outstanding on 31 Dec 15,083,333 11.32 15,942,100 13.92 Vested on 31 Dec 4,750,000 24.05 6,842,100 24.73 No options were exercised in 2024 or 2023. On 31 December 2024, the Group has options outstanding that were granted from 2020 to 2024. The exercise prices vary from NOK 4.30 to NOK 28.00 per option (2023: NOK 5.09 to NOK 28.00). Outstanding options Vested options Strike price (NOK) Number of options Weighted average remaining contractual life Weighted average strike price (NOK) Vested options 31.12.2024 Weighted average strike price (NOK) 4.30 2,625,000 4.46 4.30 - - 5.48 2,625,000 3.46 5.48 - - 6.07 5,083,333 2.46 6.07 - - 17.25 950,000 0.51 17.25 950,000 17.25 22.00 1,425,000 0.51 22.00 1,425,000 22.00 28.00 2,375,000 0.51 28.00 2,375,000 24.50 Total 15,083,333 4,750,000 Expenses recognized in profit or loss and liabilities arising from share-based payment transactions The total expense recognized for the share-based programs during 2024 was EUR 0.4 million (2023: EUR 0.5 million). There are no liabilities related to share-based payment transactions on 31 December 2024 (2023: EUR 0 million), total social security provisions amount to EUR 0 million on 31 December 2024 and 2023. Axactor Annual report 2024 Axactor Annual report 2024 143 143 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 25 Interest-bearing loans and borrowings The Group’s total loans and borrowings on 31 December 2024:: EUR thousand Currency Facility limit Nominal value Treasury bonds Carrying amount, EUR Interest coupon Maturity Facility Bond ACR03 (ISIN NO0011093718) EUR 300,000 -69,810 228,101 3m EURIBOR+535bps 15.09.2026 Bond ACR04 (ISIN NO0013005264) NOK 194,998 193,663 3m NIBOR + 825bps 07.09.2027 Total bond loans 494,998 -69,810 421,764 Revolving credit facility (RCF) EUR 327,294 318,714 EURIBOR+ margin 30.06.2026 (multi-currency facility) SEK 144,250 144,250 STIBOR+ margin 30.06.2026 Total credit facilities 545,000 471,544 462,964 Total interest-bearing loans and borrowings on 31 Dec 2024 966,541 -69,810 884,728 Of the total borrowings is EUR 884.7 million classified as non-current and EUR 0 million is classified as current. Axactor Annual report 2024 Axactor Annual report 2024 144 144 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Change in loans and borrowings from financial activities EUR thousand Bond loans Credit facilities Total Borrowings Total interest-bearing loans and borrowings on 31 Dec 2022 445,590 505,784 951,374 Proceeds from loans and borrowings 200,340 142,934 343,274 Repayment of loans and borrowings -169,522 -172,352 -341,873 Loan fees -3,367 -12,009 -15,376 Total changes in financial cash flow 27,451 -41,427 -13,975 Amortization of capitalized loan fees 2,930 4,316 7,246 Currency translation differences 4,360 -7,903 -3,543 Other non-cash movements -116 -1,882 -1,998 Total interest-bearing loans and borrowings on 31 Dec 2023 480,215 458,889 939,104 Proceeds from loans and borrowings - 42,000 42,000 Repayment of loans and borrowings -50,860 -38,461 -89,321 Loan fees -117 - -117 Total changes in financial cash flow -50,977 3,539 -47,438 Amortization of capitalized loan fees 2,111 5,229 7,340 Currency translation differences -9,702 -4,693 -14,395 Other non-cash movements 117 - 117 Total interest-bearing loans and borrowings on 31 Dec 2024 421,764 462,964 884,728 Change in lease liabilities are presented in note10. Axactor Annual report 2024 Axactor Annual report 2024 145 145 Financials Financials | Consolidated financial statements Financials | 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 estimated future cash flow 6 months or less 6–12 months 1–2 years 2–5 years Bond ACR03 (ISIN NO0011093718) EUR 228,101 261,360 9,205 8,818 243,338 - Bond ACR04 (ISIN NO0013005264) NOK 193,663 265,167 11,897 11,730 23,330 218,209 Total bond loans 421,764 526,527 21,102 20,548 266,667 218,209 Revolving credit facility (multi-currency facility) EUR/NOK/SEK 462,964 510,016 13,290 12,570 484,156 - Total credit facilities 462,964 510,016 13,290 12,570 484,156 - Total interest-bearing loans and borrowings on 31 Dec 2024 884,728 1,036,543 34,392 33,118 750,824 218,209 Revolving credit facility DNB/Nordea The revolving credit facility consists of EUR 545 million in a multi-currency facility. 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 30 June 2026. The following financial covenants apply: •NIBD 1to pro-forma adjusted cash EBITDA ≤ 3:1 (secured loans (RCF) less cash to pro-forma adjusted cash EBITDA L12M) •Portfolio loan to value ≤ 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) Axactor was compliant with all covenants throughout the year. All subsidiaries of the Group, except Reolux Holding S.à r.l. and its subsidiaries, are part of the security package for this facility. The subsidiaries that are part of the security package are guarantors and have granted a share pledge and a bank account pledge with the exception of Axactor Italy SpA and the subsidiaries of Axactor Portfolio Holding AB where there is only granted a share pledge. Bond loans ACR03 (ISIN NO0011093718) The bond was placed at 3m EURIBOR + 5.35% interest, with maturity date 15 September 2026. The bond is listed on Oslo Børs. On 31 December 2024, the Group holds treasury bonds in ACR03 with a nominal value of EUR 70 million. ACR04 (ISIN NO0013005264) The bond was placed at 3m NIBOR + 8.25% interest, with maturity date 7 September 2027. The bond is listed on Oslo Børs. The following financial covenants apply to both bond loans: •Interest coverage ratio: ≥ 3.0x (pro-forma adjusted Cash EBITDA to net interest expenses) •Leverage ratio: ≤ 4.0x (NIBD to pro-forma adjusted cash EBITDA) •Loan to value: ≤ 80% (NIBD to total book value all loan portfolios and REOs) •Secured loan to value: ≤ 60% (secured loans less cash to total book value all loan portfolios and REOs) Axactor was compliant with all covenants throughout the year. Trustee: Nordic Trustee 1 Alternative performance measure (APM) Axactor Annual report 2024 Axactor Annual report 2024 146 146 Financials Financials | Consolidated financial statements Financials | 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 0.9 million (2023: EUR 1.1 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 31.12.2024 31.12.2023 Post-employment liabilities (note26) 1,163 1,663 Derivatives 3,347 - Other liabilities 61 1,077 Total other non-current liabilities 4,570 2,740 Axactor Annual report 2024 Axactor Annual report 2024 147 147 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 28 Other current liabilities EUR thousand 31.12.2024 31.12.2023 Public duties 3,234 7,940 Personnel related liabilities 4,796 6,413 Deferred payments relating to purchased loan portfolios 2,500 3,652 Accrued interest 2,400 3,210 Client funds payable‌1 1,050 1,768 Accrued expenses and other liabilities 12,186 8,441 Total other current liabilities 26,165 31,425 1The corresponding client funds cash balance is reported as part of restricted cash in note 22 Note 29 Transactions with related parties EUR thousand 2024 2023 Related party balances at 31 Dec 41 - Related party transactions during the year 197 158 Axactor ASA has entered into a service agreement with Seatankers Management Co. Ltd., where Seatankers Management has agreed to provide the company with advisory and other support services upon request. Seatankers Management is a company controlled by Geveran. The agreement was entered into in February 2020 and amended in April 2023. The agreement is entered into on an arm’s length basis and is not considered material (capped at EUR 200,00. All figures presented is related to the agreement with Seatankers Management Co. Ltd. For additional information on agreements entered with related parties, see corporate governance report. Axactor Annual report 2024 Axactor Annual report 2024 148 148 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Note 30 Pledged assets EUR thousand 31.12.2024 31.12.2023 Group 1,244,496 1,412,220 Parent 432,108 332,108 All subsidiaries of the Group, except Reolux Holding S.à r.l. and its subsidiaries, are part of the security package for the revolving credit facility, see note 25. The subsidiaries that are part of the security package are guarantors and have granted a share pledge and a bank account pledge with the exception of Axactor Italy S.p.A. and the subsidiaries of Axactor Portfolio Holding AB where there is only granted a share pledge. Note 31 Discontinued operations There are no discontinued operations or assets classified as held for sale in 2024. The results of the discontinued operations, which have been included in net profit/(loss) after tax for 2023, were as follows: EUR thousand 2024 2023 Other operating revenue - 4,296 Total revenue - 4,296 Cost of REOs sold, incl impairment - -8,422 Other operating expenses - -1,495 Total operating expenses - -9,917 EBITDA - -5,621 Amortization and depreciation - - Operating profit - -5,621 Financial expenses - -348 Net financial items - -348 Profit/(loss) before tax - -5,969 Income tax expense - - Net profit/(loss) after tax - -5,969 Attributable to: Non-controlling interests - -3,418 Shareholders of the parent company - -2,551 Earnings per share: basic and diluted - -0.008 Axactor Annual report 2024 Axactor Annual report 2024 149 149 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements The net cash flows incurred by the operations classified as held for sale were as follows: EUR thousand 2024 2023 Net cash flow from operating activities - 2,801 Net cash flow from investing activities - - Net cash flow from financing activities - -6,409 Total net cash flow - -3,607 Note 32 Events after the reporting period There has been no material events after the reporting period for 2024. Axactor Annual report 2024 Axactor Annual report 2024 150 150 Financials Financials | Consolidated financial statements Financials | Consolidated financial statements Financial statements of Axactor ASA Parent company statement of profit or loss 152 Statement of comprehensive income 152 Statement of financial position 153 Statement of cash flows 154 Statement of changes in equity 155 Notes to the parent company financial statements 156 Note 1 Corporate information 156 Note 2 Material accounting policies 156 Note 3 Employee remuneration 157 Note 4 Other operation expenses and remuneration to auditors 157 Note 5 Leases 158 Note 6 Financial items 159 Note 7 Income tax 159 Note 8 Intangible assets 160 Note 9 Property, plant and equipment 161 Note 10 Issued shares and share capital 161 Note 11 Shares in subsidiaries 162 Note 12 Other current assets 162 Note 13 Cash 163 Note 14 Loans and receivables to group companies 164 Note 15 Interest-bearing loans and borrowings 165 Note 16 Other current liabilities 167 Note 17 Hedge accounting 167 Note 18 Events after the reporting period 167 Axactor Annual report 2024 Axactor Annual report 2024 151 151 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Parent company statement of profit or loss EUR thousand Note 2024 2023 Management services to group companies 11,656 12,132 Total revenue 11,656 12,132 Personnel expenses 3 -5,616 -5,458 Operating expenses 4 -7,415 -7,518 Total operating expense -13,031 -12,977 EBITDA -1,375 -845 Amortization and depreciation 5 , 8 , 9 -2,899 -2,471 Operating profit/(loss) -4,274 -3,316 Financial revenue 6 48,085 54,809 Financial expenses 6 -50,594 -65,386 Net financial items -2,510 -10,577 Profit/(loss) before tax -6,784 -13,893 Income tax expense 7 -774 4,881 Net profit/(loss) after tax -7,558 -9,011 Distibution from other paid in capital 7,558 9,011 Statement of comprehensive income EUR thousand Note 2024 2023 Net profit/(loss) after tax -7,558 -9,011 Items that may be reclassified subsequently to profit or loss Fair value net gain/(loss) on cash flow hedges 17 -407 - Cumulative (gain)/loss on cash flow hedges reclassified to profit or loss -3,185 -3,569 Other comprehensive income/(loss) after tax -3,592 -3,569 Total comprehensive income/(loss) -11,150 -12,580 Axactor Annual report 2024 Axactor Annual report 2024 152 152 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Statement of financial position EUR thousand Note 31.12.2024 31.12.2023 Assets Non-current assets Intangible assets Other intangible assets 8 7,752 8,959 Tangible assets Property, plant and equipment 9 4 23 Right of use assets 5 570 214 Financial assets Investment in subsidiaries 11 432,108 332,108 Loans to group companies 14 316,667 465,545 Other long-term receivables 982 2,259 Total non-current assets 758,084 809,108 Current assets Receivables group companies 14 5,362 22,203 Other current assets 12 1,525 641 Restricted cash 13 370 374 Cash and cash equivalents 13 3,453 3,450 Total current assets 10,710 26,669 Total assets 768,794 835,777 EUR thousand Note 31.12.2024 31.12.2023 Equity and liabilities Equity Share capital 158,369 158,369 Other paid in capital 183,196 191,825 Cash flow hedge reserve 17 2,240 5,832 Result for the year -7,558 -9,011 Total equity 10 336,246 347,015 Non-current liabilities Interest-bearing debt 15 421,764 480,215 Deferred tax liabilities 7 699 2,133 Lease liabilities 5 475 43 Other non-current liabilities 3,675 344 Total non-current liabilities 426,613 482,735 Current liabilities Accounts payable 1,024 945 Liabilities group companies 14 333 311 Lease liabilities 5 98 211 Other current liabilities 16 4,481 4,560 Total current liabilities 5,935 6,027 Total liabilities 432,548 488,762 Total equity and liabilities 768,794 835,777 Axactor Annual report 2024 Axactor Annual report 2024 153 153 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Statement of cash flows EUR thousand Note 2024 2023 Operating activities Profit/(loss) before tax -6,784 -13,893 Taxes paid 7 -1,223 2,073 Adjustments for: Net financial items 6 2,510 10,577 Depreciation and amortization 5 , 8 , 9 2,899 2,471 Calculated cost of employee share options 201 151 Change in working capital 12,015 -2,370 Net cash flow from operating activities 9,618 -991 EUR thousand Note 2024 2023 Investing activities Purchase of intangible and tangible assets 9 -1,422 -1,603 Net cash flow from investing activities -1,422 -1,603 Financing activities Proceeds/repayments from external borrowings 15 -50,860 30,818 Loans to subsidiaries/repaid from subsidiaries 94,600 6,419 Interest paid -51,704 -31,458 Interest received 151 229 Lease payments 5 -209 -203 Loan fees paid 15 -117 -3,367 Net cash flow from financing activities -8,140 2,438 Net change in cash and cash equivalents 57 -156 Cash and cash equivalents at the beginning of period 3,450 4,046 Currency translation -55 -440 Cash and cash equivalents at end of period 1 3,453 3,450 1 Restricted cash is excluded from the Cash and cash equivalents and comparative numbers for 2023 is changed accordingly Axactor Annual report 2024 Axactor Annual report 2024 154 154 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Statement of changes in equity Restricted Non-restricted EUR thousand Share capital Other equity Cash flow hedge reserve Total Total equity Balance on 31 Dec 2022 158,369 191,375 9,401 200,777 359,146 Result of the year (restated) -9,011 -9,011 -9,011 Other comprehensive income -3,569 -3,569 -3,569 Total comprehensive income - -9,011 -3,569 -12,580 -12,580 Share-based payment 450 450 450 Balance on 31 Dec 2023 158,369 182,814 5,832 188,647 347,015 Result of the year -7,558 -7,558 -7,558 Other comprehensive income -3,592 -3,592 -3,592 Total comprehensive income - -7,558 -3,592 -11,150 -11,150 Share-based payment 381 381 381 Balance on 31 Dec 2024 158,369 175,638 2,240 177,879 336,246 Oslo, 8 April 2025 Terje Mjøs Chair Brita Eilertsen Board member Lars Erich Nilsen Board member Kjersti Høklingen Board member Ørjan Svanevik Board member Johnny Tsolis CEO Axactor Annual report 2024 Axactor Annual report 2024 155 155 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Notes to the parent company financial statements Corporate information The Parent Company Axactor ASA (“Axactor”) is a Norwegian public limited liability company (Allmennaksjeselskap), domiciled in Norway. The registered address is Karenslyst allé 8, 0278 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 8 April 2025 and will be submitted for approval to the Annual General Meeting on 6 May 2025. Material 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 Material 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. 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. 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. 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 2024 Axactor Annual report 2024 156 156 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Employee remuneration Personnel expenses EUR thousand 2024 2023 Salaries 3,758 3,533 Bonus 648 816 Social security 678 672 Pension 126 117 Share-based payment 201 151 Other benefits 206 170 Total personnel expenses 5,616 5,458 Axactor ASA meets the mandatory occupational pension requirement. Average number of FTEs EUR thousand 2024 2023 Number of FTEs, 1 Jan 21 20 Number of FTEs, 31 Dec 21 21 Average number of FTEs 21 21 Remuneration to the Group executive management Remuneration to the Group executrive management is described in the Remuneration report and Note 8 of the consolidated financial statements. Other operation expenses and remuneration to auditors Other operating expenses EUR thousand 2024 2023 Direct operating expenses 1,186 1,116 External services 1,274 1,572 IT expenses 4,648 4,447 Other expenses 307 383 Total other operating expenses 7,415 7,518 Auditor’s remuneration During the financial year 2024, the company changed its auditor from PricewaterhouseCoopers AS (PwC) to Ernst & Young AS (EY). EUR thousand 2024 2023 EY Auditing 178 Other services 64 Total 242 - PWC Auditing 137 232 Audit related services - 29 Fees, tax advisory 23 - Other services 7 - Total 166 262 Total auditor’s remuneration 408 262 The audit fees and other operating expenses presented in the financial statements are exclusive of VAT. Axactor Annual report 2024 Axactor Annual report 2024 157 157 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Leases The company leases premises only. The facility contract relating to Drammensveien 167 was terminated 30 November 2024. A new lease contract for Karenslyst Allé 8A was entered into from 1 December 2024 and has been recognized as a new right of use asset and lease liability. The contract's maturity date is 1 December 2029. Leasing contracts are classified as lease liabilites and right of use assets under IFRS 16. See Axactor Group note 2.9 . Right of use assets EUR thousand Total Right of use assets on 31 Dec 2022 361 New leases 36 Depreciation -183 Right of use assets on 31 Dec 2023 214 New leases 580 Depreciation -179 Termination -44 Right of use assets on 31 Dec 2024 570 Depreciation method Linear Lease liabilities The future aggregated minimum lease payments under lease liabilities are as follows: EUR thousand 2024 2023 Lease liabilities on 1 Jan 254 401 New leases and lease modifications 597 56 Terminations -70 Lease payments,principal amount -209 -203 Lease liabilities on 31 Dec 572 254 Current: 98 211 Non-current 475 43 EUR thousand 2024 2023 Undiscounted lease liabilities and maturity of cash outflows < 1 year 143 211 1-2 years 143 53 2-3 years 143 - 3-4 years 143 - 4-5 years 131 - Total undiscounted lease liabilities 704 264 Discounting element -132 -10 Total lease liabilities on 31 Dec 572 254 Axactor Annual report 2024 Axactor Annual report 2024 158 158 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Financial items EUR thousand 2024 2023 Financial revenue Interest on bank deposits 151 229 Interest on intercompany loans 41,755 37,304 Group contribution 3,624 16,241 Net gain on purchase of treasury bonds ( note 15 ) 2,554 - Other financial revenue - 1,035 Total financial revenue 48,085 54,809 Financial expenses Interest expenses on borrowings‌ 1 -49,189 -41,973 Net foreign exchange loss‌ 2 -1,133 -9,831 Impairment of loans to Group companies‌ 3 - -12,000 Other financial expenses‌ 4 -272 -1,582 Total financial expenses -50,594 -65,386 Net financial items -2,510 -10,577 1 In 2024 EUR 4.1 million (2023: EUR 4.6 million) has been reclassified from the cash flow hedge reserve (OCI) with corresponding deferred tax liability into interest expense on borrowings, see not e 17 2 Foreign exchange gains and losses are presented net as either financial revenue or financial expenses, depending on the net position and includes change in fair value of currency derivatives 3 The impairment of loans to subsidiaries in 2023 concerns Reolux Holding S.à r.l. No interest has been charged to the company in 2023 nor 2024 Income tax Income tax calculation EUR thousand 2024 2023 Profit/(loss) before tax -6,784 -13,893 Non deductible expenses 203 140 Non taxable revenue -4,084 - Change in temporary differences 6,820 9,031 Adjustment for currency differences due to tax calculation in NOK 1,356 -1,276 Basis for current income tax -2,489 -5,997 Tax expense in profit or loss Change in deferred taxes 421 816 Adjustment for previous years -1,195 1,330 Utilisation of interest carry forward not previously recognized - 2,735 Income tax expense -774 4,881 Axactor Annual report 2024 Axactor Annual report 2024 159 159 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Tax included in other comprehensive income EUR thousand 2024 2023 Opening balance deferred tax liability in OCI -1,644 -2,651 Deferred tax on fair value net gain/(loss) on cash flow hedges 115 - Deferred tax on (gain)/loss on cash flow hedges reclassified to profit or loss 898 1,007 Closing balance deferred tax liability through OCI on 31 Dec -632 -1,644 Temporary differences EUR thousand 31.12.2024 31.12.2023 Non-current assets/liabilities -226 -1,629 Current assets - 11 Limitation interest carried forward - 1,608 Tax losses carried forward, recognized 159 1,340 Differences not included in the calculation of deferred tax - -1,819 Hedges over OCI -632 -1,644 Net deferred tax -699 -2,133 Net deferred tax asset - - Net deferred tax liability -699 -2,133 Net deferred tax -699 -2,133 Intangible assets EUR thousand Software and other intangibles Cost price Cost price on 31 Dec 2022 16,711 Acquisitions 1,601 Cost price on 31 Dec 2023 18,312 Acquisitions 1,438 Cost price on 31 Dec 2024 19,750 Amortization Accumulated amortizations on 31 Dec 2022 -7,100 Amortization -2,254 Accumulated amortizations on 31 Dec 2023 -9,353 Amortization -2,645 Accumulated amortizations on 31 Dec 2024 -11,998 Carrying amount on 31 Dec 2024 7,752 Useful life 5–10 yr Axactor Annual report 2024 Axactor Annual report 2024 160 160 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Property, plant and equipment EUR thousand Furniture, fittings and equipment Cost price Cost price on 31 Dec 2022 276 Acquisitions 2 Cost price on 31 Dec 2023 278 Disposals -16 Cost price on 31 Dec 2024 262 Amortization and impairment Accumulated depreciations on 31 Dec 2022 -221 Depreciation -34 Accumulated depreciations on 31 Dec 2023 -255 Depreciation -11 Disposals 8 Accumulated depreciations on 31 Dec 2024 -258 Carrying amount on 31 Dec 2024 4 Useful life 1-5 yr Issued shares and share capital The share capital of Axactor ASA as of 31 December 2024 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. Please see note 23 of the consolidated financial statements for an overview of the 20 largest shareholders and shares owned by the Board and Group executive management on 31 December 2024. Axactor Annual report 2024 Axactor Annual report 2024 161 161 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Shares in subsidiaries Subsidiary company EUR thousand Ownership Head office Country Carrying value in parent company Axactor Portfolio Holding AB 100.0% Gothenburg Sweden 169,234 Axactor Platform Holding AB 100.0% Gothenburg Sweden 262,874 Reolux Holding S.à r.l. 50.0% Luxembourg Luxembourg - Investment in subsidiaries on 31 Dec 2024 432,108 Other current assets Other current assets EUR thousand 31.12.2024 31.12.2023 Prepaid expenses 1,525 641 Total other current assets 1,525 641 Axactor Annual report 2024 Axactor Annual report 2024 162 162 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Cash For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks excluding restricted cash. EUR thousand 31.12.2024 31.12.2023 Cash and cash equivalents 3,453 3,450 Restricted cash 370 374 Total cash and cash equivalents, incl. restricted cash 3,823 3,825 Composistion of the cash per currency EUR thousand 31.12.2024 31.12.2023 EUR 2,206 1,726 GBP 4 9 NOK 1,249 1,230 SEK 364 860 Total cash and cash equivalents, incl. restricted cash 3,823 3,825 Axactor Annual report 2024 Axactor Annual report 2024 163 163 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Loans and receivables to group companies 2024 2023 EUR thousand Loans to group companies‌ 1 Current IC receivables Loans from group companies Current IC payables Loans to group companies‌ 1 Current IC receivables Loans from group companies Current IC payables Axactor Finland OY - 5 - 39 - 65 - 37 Axactor Germany GmbH - - - 44 - 228 - - Axactor Platform Holding AB 70,078 - - - 229,665 - - - Axactor Portfolio Holding AB 244,813 - - - 234,018 - - - Axactor Italy Holding S.r.l. 194 - - - 181 - - - Axactor Italy S.p.A - 619 - 32 - 858 - 28 Reolux Holding S.à r.l 1,581 - - - 1,681 -4 - - Axactor Norway AS - 3,630 - - - 656 - 15 Axactor Capital AS - - - 37 - 18,401 - 47 Axactor Espãna, S.L.U. - - - 7 - 55 - - Axactor Platform Espãna SA - 961 - 137 - 2,003 - 126 Axactor Sweden AB - 148 - 36 - -58 - 57 Closing balance on 31 Dec 316,667 5,362 - 333 465,545 22,203 - 311 1 The loans carries an interest rate of 7.4 - 11%, to be paid or added to the principal amount at year end, except for the loan to Reolux Holding S.à r.l which has been granted an interest free period An expected credit loss (ECL) assessment has been carried out with no loans impaired in 2024. The loan to Reolux Holding S.à r.l were impaired EUR 12 million in 2023 and the accumulated impairment is EUR 21 million. No interest has been recognized or charged on the loan in 2024. Axactor Annual report 2024 Axactor Annual report 2024 164 164 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Interest-bearing loans and borrowings EUR thousand Currency Nominal value Treasury bonds 1 Carrying amount, EUR Interest coupon Maturity Facility Bond ACR03 (ISIN NO0011093718) EUR 300,000 -69,810 228,101 3m EURIBOR+535bps 15.09.2026 Bond ACR04 (ISIN NO0013005264) NOK 194,998 193,663 3m NIBOR + 825bps 07.09.2027 Total bond loans 494,998 -69,810 421,764 Total interest-bearing loans and borrowings on 31 Dec 2024 421,764 whereof Non-current borrowings 421,764 Current borrowings - 1 The company has acquired treasury bonds of EUR 50.9 million in 2024 and recognized a net gain of EUR 2.6 million. Maturity Estimated future cash flow within Currency Carrying amount Total estimated future cash flow 6 months or less 6–12 months 1–2 years 2–5 years Bond ACR03 (ISIN NO0011093718) EUR 228,101 261,360 9,205 8,818 243,338 - Bond ACR04 (ISIN NO0013005264) NOK 193,663 265,167 11,897 11,730 23,330 218,209 Total bond loans 421,764 526,527 21,102 20,548 266,667 218,209 Total interest-bearing loans and borrowings on 31 Dec 2024 421,764 526,527 21,102 20,548 266,667 218,209 Axactor Annual report 2024 Axactor Annual report 2024 165 165 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Change in loans and borrowings from financial activities EUR thousand Bond loans Total interest-bearing loans and borrowings on 31 Dec 2022 445,590 Proceeds from loans and borrowings 200,340 Repayment of loans and borrowings -169,522 Loan fees -3,367 Total changes in financial cash flow 27,451 Amortization of capitalized loan fees 2,930 Currency translation differences 4,360 Other non-cash movements -116 Total interest-bearing loans and borrowings on 31 Dec 2023 480,215 Proceeds from loans and borrowings - Repayment of loans and borrowings -50,860 Loan fees -117 Total changes in financial cash flow -50,977 Amortization of capitalized loan fees 2,111 Currency translation differences -9,702 Other non-cash movements 117 Total interest-bearing loans and borrowings on 31 Dec 2024 421,764 Change in lease liabilities are presented in not e 5 . Bond loans ACR03 (ISIN NO0011093718) The bond was placed at 3m EURIBOR + 5.35% interest, with maturity date 15 September 2026. The bond is listed on Oslo Børs. On 31 December 2024, the Group holds treasury bonds in ACR03 with a nominal value of EUR 70 million. ACR04 (ISIN NO0013005264) The bond was placed at 3m NIBOR + 8.25% interest, with maturity date 7 September 2027. The bond is listed on Oslo Børs. The following financial covenants apply to both bond loans: Interest coverage ratio: ≥ 3.0x (Pro-forma adjusted Cash EBITDA to net interest expenses) Leverage ratio: ≤ 4.0x (NIBD to pro-forma adjusted cash EBITDA) Loan to value: ≤ 80% (NIBD to total book value all loan portfolios and REOs) Secured loan to value: ≤ 60% (secured loans less cash to total book value all loan portfolios and REOs) Axactor was compliant with all covenants throughout the year. Trustee: Nordic Trustee Axactor Annual report 2024 Axactor Annual report 2024 166 166 Financials Financials | Financial statements of Axactor ASA Financials | Financial statements of Axactor ASA Other current liabilities EUR thousand 31.12.2024 31.12.2023 Public duties 99 157 Personnel related liabilities 987 1,234 Accrued interest 2,312 2,970 Other accruals 1,083 199 Total other current liabilities 4,481 4,560 Hedge accounting The Group´s risk management objective is to mitigate the effect of interest rate changes related to its floating rate instruments. 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’s long-term strategy is to hedge between 50% and 70% of interest-bearing debt with a duration of three to five years. The Group intends to gradually implement the strategy in line with new portfolio investments. Cash flow hedges The hedged items consist of a proportion of issued floating-rate loans. The hedging instruments consist of interest rate swaps. See Note 19 Hedge accounting to the consolidated financial statements for detailed information of hedged items, hedging instruments and impact on the Cash flow hedge reserve in equity. Events after the reporting period There has been no material events after the reporting period for 2024. Axactor Annual report 2024 Axactor Annual report 2024 167 167 Financials Financials | Financial statements of Axactor ASA Financials | 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 2024 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 the financial statements for the parent company for 2024 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 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 the consolidated sustainability statement for 2024, as part of the report of the Board of Directors has been prepared, in all material respects, in accordance with the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) pursuant to the Accounting Act §§ 2-3 and 2-4. Disclosures within the EU taxonomy, are in all material respects, prepared in accordance with Article 8 of EU Taxonomy Regulation (EU 2020/852). Furthermore, the sustainability statement includes information prepared in accordance with the Norwegian Transparency Act, that is included in Additional information the Board of Directors report, including the chapters on corporate governance and the sustainability statement give a true and fair view of the development, performance and financial position of the Axactor ASA and the Axactor Group, and includes a description of the key risks and uncertainties the companies are faced with. Oslo, 8 April 2025 Terje Mjøs Chair Brita Eilertsen Board member Lars Erich Nilsen Board member Kjersti Høklingen Board member Ørjan Svanevik Board member Johnny Tsolis CEO Axactor Annual report 2024 Axactor Annual report 2024 168 168 Financials Financials | Responsibility statement Financials | Responsibility statement TXT TBU Axactor Annual report 2024 Axactor Annual report 2024 169 169 Financials Financials | Auditor’s limited assurance report Financials | Auditor’s limited assurance report Axactor Annual report 2024 Axactor Annual report 2024 170 170 Financials Financials | Auditor’s limited assurance report Financials | Auditor’s limited assurance report Axactor Annual report 2024 Axactor Annual report 2024 171 171 Financials Financials | Auditor’s report Financials | Auditor’s report Axactor Annual report 2024 Axactor Annual report 2024 172 172 Financials Financials | Auditor’s report Financials | Auditor’s report Axactor Annual report 2024 Axactor Annual report 2024 173 173 Financials Financials | Auditor’s report Financials | Auditor’s report Alternative performance measures Alternative performance measures (APMs) used in Axactor APM Definition Purpose of use Reconciliation IFRS Gross revenue Total revenue plus portfolio amortizations and revaluation, and change in fair value of forward flow commitments To review the revenue before split into interest and amortization (for own portfolios) Total revenue from consolidated statement of profit or loss plus portfolio amortization and revaluation and change in fair value of forward flow commitments in the consolidated statement of cash flows Cash EBITDA EBITDA adjusted for calculated cost of share option program, portfolio amortization and revaluation, change in fair value of forward flow commitments and repossessed assets cost of sale and impairment To reflect cash from operating activities, excluding timing of taxes paid and movement in working capital EBITDA (total revenue minus total operating expenses) in consolidated statement of profit or loss adjusted for specified elements from the consolidated statement of cash flows Cash EBITDA, incl. discontinued operations Cash EBITDA 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 (total revenue minus total operating expenses) in consolidated statement of profit or loss plus EBITDA from discontinued operations according to note 11 (only 2023), adjusted for specified elements from the consolidated statement of cash flows Estimated remaining collections (ERC) Estimated remaining collections express the expected future cash collections 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 collections including estimated interest revenue and opex Purchased loan portfolios in the consolidated statement of financial position, plus estimated operating expenses for future collections at time of acquisition and estimated discounted gain Net interest-bearing debt (NIBD) Net interest-bearing debt reflects total interest-bearing debt less total amount of unrestricted cash and cash equivalents 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 11 , with adjustments to get to nominal value of the debt, less treasury bonds Return on equity to shareholders Net profit/(loss) after tax attributable to shareholders divided by average equity for the period attributable to shareholders, annualized 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 divided by average equity attributable to shareholders from the consolidated statement of changes in equity Return on equity Net profit/(loss) after tax divided by average total equity for the period, annualized Measures the profitability in relation to total equity Net profit/(loss) after tax from continuing operations from the consolidated statement of profit or loss divided by average total equity from the consolidated statement of changes in equity Axactor Annual report 2024 Axactor Annual report 2024 174 174 Financials Financials | Alternative performance measures Financials | Alternative performance measures Gross revenue EUR thousand 2024 2023 Total revenue 127,937 256,637 Portfolio amortization and revaluation 286,898 88,840 Change in fair value of forward flow commitments 120 -1,805 Gross revenue 414,956 343,672 EBITDA and Cash EBITDA EUR thousand 2024 2023 Total revenue 127,937 256,637 Total operating expenses -118,658 -124,789 EBITDA from continuing operations 9,279 131,848 Calculated cost of share option program 382 450 Portfolio amortization and revaluation 286,898 88,840 Change in fair value of forward flow commitments 120 -1,805 Cost of repossessed assets sold, incl impairment 1,599 1,759 Cash EBITDA from continuing operations 298,278 221,092 EBITDA from discontinued operations - -5,621 Cost of REOs sold, incl impairment - 8,422 Cash EBITDA 298,278 223,894 Taxes paid -23,584 -11,616 Change in working capital -6,894 -2,905 Cash flow from operating activities before NPL and REO investments 267,800 209,372 Estimated remaining collections (ERC) EUR thousand 2024 2023 Purchased loan portfolios 1,087,472 1,265,327 Estimated opex for future collection at time of acquisition 367,087 369,720 Estimated discounted gain 885,170 985,368 Estimated remaining collections (ERC) on 31 Dec 2,339,729 2,620,416 Net interest-bearing debt (NIBD) EUR thousand 2024 2023 Non-current portion of interest bearing debt from financial position 884,728 939,104 Total interest bearing debt 884,728 939,104 Capitalized loan fees and other adjustments 12,004 19,344 Cash and cash equivalents from financial position -32,991 -31,826 Net interest-bearing debt (NIBD) on 31 Dec 863,740 926,622 Axactor Annual report 2024 Axactor Annual report 2024 175 175 Financials Financials | Alternative performance measures Financials | Alternative performance measures Return on equity to shareholders EUR thousand 2024 2023 Net profit/(loss) after tax attributable to shareholders of the parent company -79,526 30,830 Average equity for the period related to shareholders of the parent company 411,687 419,074 Return on equity to shareholders -19.3% 7.4% Return on equity, continuing operations EUR thousand 2024 2023 Net profit/(loss) after tax from continuing operations -79,060 33,563 Average total equity for the period 402,223 411,350 Return on equity, continuing operations -19,7% 8.2% Axactor Annual report 2024 Axactor Annual report 2024 176 176 Financials Financials | Alternative performance measures Financials | Alternative performance measures 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 2024 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 2024 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 2024 for an advisory shareholder vote. All amounts in the remuneration report are stated in NOK thousand unless otherwise specified. The Group’s financial results Gross revenue increased 21% to EUR 415 million from 2023 to 2024. The high growth stems from sale of Spanish portfolios. EBITDA was affected by net negative portfolio revaluations and ended at EUR 9.3 million (131.8 million) for the year. Net profit ended at EUR -79.1 (33.6) million, resulting in a return on equity (ROE) of -19% (8%) for 2024. Changes in the Board and Group executive management during 2024 There have been no changes in the composition of the Board or Group executive management during 2024. Remuneration The annualized fixed fees for the board members were unchanged in line with the recommendation from the nomination committee and approved by the AGM 8 May 2024. The annualized fixed fee for the Chair is NOK 820,000 and for the other board members NOK 460,000. Any changes of total actual remuneration at an individual level in 2024 is due to additional committee responsibilities that the individual member has taken on during the reporting year. Information on remuneration to the Board is also described in section 11 in the corporate governance report. The Group executive management received an increase in the annual base salary during 2024 of 4.6%. The overall average salary change was 2% for non-executives in Axactor Norway and is due to more temporary employees. The bonus pay-out in 2024 is determined based on the Group’s performance and individual performance during 2024. This resulted in a variable remuneration between 9% and 74% of the Group executive manager’s individual base salary for 2024. Remuneration committee (RC) The RC continuously monitors prevailing market practice and developments in remuneration in Europe and within its group of peers. Axactor has ongoing dialogue with shareholders, institutional investors, and other stakeholders to ensure that Axactor’s remuneration policy is aligned with market practice and helps drive the implementation of the company’s strategy. In 2024, the RC has focused on the following key areas: Reviewing the remuneration and benefits strategy, including short- and long-term incentive plans to ensure it continues to fit business needs Assure that the overall remuneration payable are in the best interest of the company and aligned with the overall business strategy, goals, objectives, the material sustainability matters identified such as gender balance and pay-gap and good corporate governance. Maintaining a close dialogue with shareholders, gathering their feedback, and having subsequent discussions on their views about Axactor’s remuneration arrangements. Axactor Annual report 2024 Axactor Annual report 2024 177 177 Other information Other information | Remuneration report Other information | Remuneration report Assessing and approving the overall remuneration, the composition between fixed and variable pay, pensions, and other employment conditions for the Group executive members and country managers. 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 promoting 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 pursuant to the Norwegian Public Limited Liability Companies Act, section 6-16a. This report is authored in accordance with 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 2024. 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 2024 Axactor Annual report 2024 178 178 Other information Other information | Remuneration report Other information | 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 ) Board of Directors remuneration All numbers in NOK thousand Fixed fee Name 2024 2023 Current members Terje Mjøs‌ 1 1,020 867 Brita Eilertsen 560 702 Lars Erich Nilsen 535 527 Kjersti Høklingen‌ 2 535 357 Ørjan Svanevik‌ 3 610 - Former members Kathrine Astrup Fredriksen - 146 Kristian Melhuus - 317 1 Terje Mjøs, BoD member since 2017, was appointed Chair of the Board 3 May 2023 2 Kjersti Høklingen was appointed Board member 3 May 2023 3 Ørjan Svanevik was appointed Board member 11 December 2023 Axactor Annual report 2024 Axactor Annual report 2024 179 179 Other information Other information | Remuneration report Other information | 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 Short term incentive‌ 3 Long term incentive‌ 4 Pension Total remuneration Fixed pay Variable pay Group executive management Johnny Tsolis, CEO 2024 4,887 13 3,348 1,033 436 9,717 55% 45% 2023 4,467 11 2,314 688 376 7,856 62% 38% Nina Mortensen, CFO 2024 2,667 13 607 210 207 3,704 78% 22% 2023 2,434 13 580 188 184 3,399 77% 23% Arnt Andre Dullum, COO 2024 2,314 12 201 210 175 2,912 86% 14% 2023 2,179 12 471 165 157 2,984 79% 21% Vibeke Ly, Chief of Staff 2024 2,336 18 569 210 172 3,304 76% 24% 2023 2,160 12 864 165 155 3,356 69% 31% Kyrre Svae, Chief of strategy and IR 2024 2,521 13 600 230 201 3,565 77% 23% 2023 2,366 12 933 177 179 3,667 70% 30% Karl Mamelund, Chief Investment Officer‌ 1 2024 2,457 12 553 222 167 3,411 77% 23% 2023 1,593 10 587 147 91 2,429 70% 30% Former management Robin Knowles, Chief Investment Officer‌ 2 2024 n.a n.a n.a n.a n.a n.a n.a n.a 2023 543 20 n.a 69 8 639 89% n.a 1 Karl Mamelund was appointed Chief Investment Officer from 1 April 2023 2 Robin Knowles was Chief Investment Officer until 1 April 2023. Remuneration is denominated in GBP, an exchange rate of 13.13 is used to convert to NOK 3 Includes discretionary bonus due to exceptional performance and bonus according to the ordinary variable pay program. The amount is paid in one payment in 2025 4 Share option plan, see section Long-term incentive plan Axactor Annual report 2024 Axactor Annual report 2024 180 180 Other information Other information | Remuneration report Other information | 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 2024 (ESOP 2024) is based on performance share units with strike price set at the volume weighted average price during the 30 business days before grant. Vesting is conditional upon service conditions and performance criteria to ensure commitment to common goals. The same vesting structure applies for ESOP 2022 and ESOP 2023. For earlier share option programs (ESOP 2020), service conditions are the only vesting criteria. 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 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 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 22.00 75,000 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 17.25 50,000 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 28.00 125,000 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 22.00 75,000 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 17.25 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 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 316,666 - - - 316,666 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 316,667 - - - 316,667 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 316,667 - - - 316,667 ESOP 2024 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 316,666 - 316,666 316,666 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 316,667 - 316,667 316,667 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 316,667 - - 316,667 Axactor Annual report 2024 Axactor Annual report 2024 181 181 Other information Other information | Remuneration report Other information | 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 - - - - 04.08.2021 02.08.2022 02/08/2022 - 01/08/2025 22.00 37,500 - - - - 04.08.2021 02.08.2022 02/08/2022 - 01/08/2025 17.25 25,000 - - - - 04.08.2021 02.08.2023 02/08/2023 - 01/08/2025 28.00 62,500 - - - - 04.08.2021 02.08.2023 02/08/2023 - 01/08/2025 22.00 37,500 - - - - 04.08.2021 02.08.2023 02/08/2023 - 01/08/2025 17.25 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 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - 41,667 41,667 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,666 - - 41,666 41,666 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - - 41,667 ESOP 2024 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,667 - 41,667 41,667 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,666 - 41,666 41,666 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,667 - - 41,667 Axactor Annual report 2024 Axactor Annual report 2024 182 182 Other information Other information | Remuneration report Other information | 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 Arnt André Dullum, COO 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 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 17.25 25,000 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 28.00 62,500 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 17.25 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 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,666 - - 41,666 41,666 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - 41,667 41,667 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - - 41,667 ESOP 2024 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,667 - - 41,667 14/06/2024 - 14/06/2027 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,667 - 41,667 41,667 14.06.2024 14.06.2027 14/06/2027 - 14/06/2029 4.30 - 41,666 - 41,666 41,666 Axactor Annual report 2024 Axactor Annual report 2024 183 183 Other information Other information | Remuneration report Other information | 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 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 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2022 26/06/2022 - 26/06/2025 17.25 25,000 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 28.00 62,500 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 22.00 37,500 - - - - 26.06.2020 26.06.2023 26/06/2023 - 26/06/2025 17.25 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 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - 41,667 41,667 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,666 - - 41,666 41,666 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 41,667 - - - 41,667 ESOP 2024 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 41,666 - 41,666 41,666 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 41,667 - 41,667 41,667 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 41,667 - - 41,667 Axactor Annual report 2024 Axactor Annual report 2024 184 184 Other information Other information | Remuneration report Other information | 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 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 - - - - 01.08.2020 01.08.2022 01/08/2022 - 01/08/2025 22.00 37,500 - - - - 01.08.2020 01.08.2022 01/08/2022 - 01/08/2025 17.25 25,000 - - - - 01.08.2020 01.08.2023 01/08/2023 - 01/08/2025 28.00 62,500 - - - - 01.08.2020 01.08.2023 01/08/2023 - 01/08/2025 22.00 37,500 - - - - 01.08.2020 01.08.2023 01/08/2023 - 01/08/2025 17.25 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 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 50,000 - - 50,000 50,000 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 50,000 - - 50,000 50,000 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 50,000 - - - 50,000 ESOP 2024 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 66,666 - 66,666 66,666 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 66,667 - 66,667 66,667 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 66,667 - - 66,667 Karl Mamelund, Chief Investment Officer ESOP 2022 15/06/2022 - 15/06/2025 15.06.2022 15.06.2025 15/06/2025 - 15/06/2027 6.07 75,000 - - 75,000 75,000 15/06/2022 - 15/06/2025 15.06.2022 15.06.2025 15/06/2025 - 15/06/2027 6.07 75,000 - - 75,000 75,000 15.06.2022 15.06.2025 15/06/2025 - 15/06/2027 6.07 75,000 - - - 75,000 ESOP 2023 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 66,666 - - 66,666 66,666 15/06/2023 - 15/06/2026 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 66,667 - - 66,667 66,667 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 5.48 66,667 - - - 66,667 ESOP 2024 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 58,333 - 58,333 58,333 14/06/2024 - 14/06/2027 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 58,333 - 58,333 58,333 15.06.2023 15.06.2026 15/06/2026 - 15/06/2028 4.30 - 58,334 - - 58,334 Axactor Annual report 2024 Axactor Annual report 2024 185 185 Other information Other information | Remuneration report Other information | Remuneration report Performance measures and outcomes for 2024 short-term incentive The Group executive management is measured on a combination of financial targets for the Group related to EBITDA and return on equity (ROE) and individual targets relating to the development according to Axactor’s strategy and ESG targets. Each member of the Group executive management has between three and five individual targets, whereof one must relate to ESG. The maximum and actual remuneration under the ordinary variable pay program are presented in the table at the right. According to the Remuneration policy section 5.2.2 individual members of the Group executive management may in addition be granted a limited discretionary variable pay for exceptional performance in case of initiatives that represents significant value for Axactor. Such discretionary variable bonus, in addition to actual remuneration under the ordinary variable pay program, has been granted to: Chief Executive Officer: NOK 2,500,000 Chief Financial Officer: NOK 292,863 Chief of Staff: NOK 292,863 Chief of strategy and IR: NOK 292,863 Chief Investment Officer: NOK 292,863 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 2024. Maximum and actual remuneration under the ordinary variable pay program Name/position Value driver Weighting Min performance (%) Min remuneration Max performance (%) Max remuneration 2024 Actual performance (%) Actual remuneration Johnny Tsolis, CEO Financial performance 70% - - 100% 2,375 - - Other 30% - - 100% 1,018 83.3% 848 Nina Mortensen, CFO Financial performance 70% - - 100% 880 - - Other 30% - - 100% 377 83.3% 314 Arnt Andre Dullum, COO Financial performance 70% - - 100% 782 - - Other 30% - - 100% 335 60.0% 201 Vibeke Ly, Chief of Staff Financial performance 70% - - 100% 772 - - Other 30% - - 100% 331 83.3% 276 Kyrre Svae, Chief of strategy and IR Financial performance 70% - - 100% 860 - - Other 30% - - 100% 369 83.3% 307 Karl Mamelund, Chief Investment Officer Financial performance 70% - - 100% 842 - - Other 30% - - 100% 361 72.2% 261 Axactor Annual report 2024 Axactor Annual report 2024 186 186 Other information Other information | Remuneration report Other information | 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 4.6% to compensate for the general cost level increase in Norway. The changes in remuneration are in line with the remuneration policy. Comparative table of the remuneration of Group executive management and company performance over the last five reported financial years (RFY) Name/position 2020 2021 2022 2023 2024 Current Group executive management Johnny Tsolis, CEO Total remuneration‌ 1 5,609 5,823 7,742 7,856 9,717 Change in NOK 47 215 1,919 114 1,861 Change in % 1% 4% 33% 1% 24% Nina Mortensen, CFO Total remuneration‌ 1 2,298 3,625 3,399 3,704 Change in NOK 1,328 -226 305 Change in % 58% -6% 9% Arnt Andre Dullum, COO Total remuneration‌ 1 1917 2,427 3,293 2,984 2,912 Change in NOK 509 867 -309 -72 Change in % n.a 27% 36% -9% -2% Vibeke Ly, Chief of Staff Total remuneration‌ 1 2,540 2,650 3,294 3,356 3,304 Change in NOK 553 110 644 62 -52 Change in % 28% 4% 24% 2% -2% Kyrre Svae, Chief of strategy and IR Total remuneration‌ 1 2,453 2,615 3,240 3,667 3,565 Change in NOK 163 625 427 -102 Change in % n.a 7% 24% 13% -3% Karl Mamelund, Chief Investment Officer Total remuneration‌ 1 3,042 3,411 Change in NOK n.a 368 Change in % n.a 12% Axactor Annual report 2024 Axactor Annual report 2024 187 187 Other information Other information | Remuneration report Other information | Remuneration report Name/position 2020 2021 2022 2023 2024 Former Group executive management‌ 1 Robin Knowles, CIO Total remuneration‌ 1, ‌ 2 4,175 3,538 3,583 2,734 - Change in NOK 30 -638 45 -849 - Change in % 1% -15% 1% -24% - Endre Rangnes, CEO Total remuneration‌ 1 10,616 - - - - Change in NOK -1,555 - - - - Change in % -13% - - - - Oddgeir Hansen, COO Total remuneration‌ 1 7,131 - - - - Change in NOK 1,296 - - - - Change in % 22% - - - - Siv Farstad, EVP HR Total remuneration‌ 1 4,286 - - - - Change in NOK 1,424 - - - - Change in % 50% - - - - Teemu Alaviitala, CFO Total remuneration‌ 1 2,291 - - - - Change in NOK - - - - Change in % - - - - 1 Total remuneration is grossed up to full year if executive has been employeed only for a part of the year 2 Salary in last year of employement is based on employment period in the year plus severance pay if agreed Axactor Annual report 2024 Axactor Annual report 2024 188 188 Other information Other information | Remuneration report Other information | Remuneration report Group result Amounts in EUR million 2020 2021 2022 2023 2024 Net result to shareholders of the parent company -18 -33 37 31 -80 Annual change net result to shareholders of the parent company -34 -15 70 -6 -110 Annual change net result to shareholders of the parent company % -211% -81% 212% -16% -358% ROE to shareholders, excluding non-controlling interests -6.1% -8.5% 9.2% 7.4% -19.3% Annual change ROE -202% -39% 208% -20% -361% EBITDA 32 24 119 132 9 Annual change EBITDA -60 -8 95 13 -123 Annual change EBITDA % -65% -26% 402% 11% -93% Gross revenue 325 345 337 344 415 Annual change gross revenue -43 19 -8 7 71 Annual change gross revenue % -12% 6% -2% 2% 21% Axactor average remuneration The average remuneration presented is excluding Group management remuneration. Amounts in NOK thousand 2020 2021 2022 2023 2024 Employees in Axactor ASA‌ Average total salary 1,199 1,136 1,128 1,177 1,172 Change in NOK 160 -63 -8 49 -5 Change in % 15% -5% -1% 4% - Employees in Norwegian Axactor companies‌ Average total salary 649 674 644 670 658 Change in NOK 53 25 -30 26 -11 Change in % 9% 4% -4% 4% -2% The remuneration report for 2023 was approved by 94.11% of the votes on the Annual General Meeting 8 May 2024. Axactor Annual report 2024 Axactor Annual report 2024 189 189 Other information Other information | Remuneration report Other information | 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 2024. The remuneration report will be presented for an advisory vote at the Annual General Meeting on 6 Mai 2025. Oslo, 8 April 2025 Terje Mjøs Chair Brita Eilertsen Board member Lars Erich Nilsen Board member Kjersti Høklingen Board member Ørjan Svanevik Board member Axactor Annual report 2024 Axactor Annual report 2024 190 190 Other information Other information | Remuneration report Other information | Remuneration report Axactor Annual report 2024 Axactor Annual report 2024 191 191 Other information Other information | Auditor’s assurance report Other information | Auditor’s assurance report Glossary Terms Active forecast Forecast of estimated remaining collections 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 revenue Collection performance Gross collections 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 collections on own portfolios for the NPL segment NPL cost-to-collect ratio NPL cost to collect divided by NPL total revenue 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 2024 Axactor Annual report 2024 192 192 Other information Other information | Glossary Other information | 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) BV Book value 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 collections 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 2024 Axactor Annual report 2024 193 193 Other information Other information | Glossary Other information | Glossary artbo x.no 549300P5VT8OMA17TJ332024-01-012024-12-31549300P5VT8OMA17TJ332023-01-012023-12-31549300P5VT8OMA17TJ332024-12-31549300P5VT8OMA17TJ332023-12-31549300P5VT8OMA17TJ332022-12-31549300P5VT8OMA17TJ332022-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332023-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332022-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332023-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332022-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332023-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332022-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332023-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332022-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332023-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332024-12-31ifrs-full:IssuedCapitalMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332024-12-31ifrs-full:AdditionalPaidinCapitalMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332024-12-31ifrs-full:RetainedEarningsMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332024-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332024-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300P5VT8OMA17TJ332024-01-012024-12-31ifrs-full:NoncontrollingInterestsMember549300P5VT8OMA17TJ332024-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares

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