Q4 2018 presentation

Axactor SE

February 13, 2019

From start-up to top-10 player in Europe in 3 years

Axactor has become a leading European debt management provider
Accumulated investments of >EUR 1bn since inception
Established collection platform companies in six countries

Generated strong revenue growth

More than doubling of revenues
Growth in all segments
Investments and contracts signed in 2018 point towards continued revenue growth in 2019

Scalability beginning to show through in earnings

Tripling of EBITDA
22% EBITDA-margin
Improvement reflecting higher volumes, better geographical mix and high operational leverage

Focus on profitable growth

Large and increasing NPL opportunities with attractive IRR
Strengthening the 3PC and ARM business
Relentless focus on ONEAXACTOR to sharpen the competitive edge

Key highlights Q4 2018

Continued strong growth in revenue and sharp increase in EBITDA-margin
Positive development across all segments
High portfolio investments of EUR 334m in Q4, mainly in NPL
Planned investment level of EUR 350-400m in 2019

Events post Q4 closing

Acquisition of minority shareholder position (10%) in Axactor Italy S.p.A
DnB/Nordea release of EUR 100 million of RCF accordion option (of total EUR 150 million)
Signed small forward flow agreement and acquired NPL portfolio from a financial institution in Sweden

Growth and margin improvement

Gross revenue development (EUR million)

EBITDA (EUR million) and EBITDA-margin

Cash EBITDA (EUR million)

Growth across all segments

Gross revenue per segments (EUR million)

Investment driven NPL growth, with limited effect of large investments in Q4
REO sales on par with previous two quarters
Limitations in sales capacity
Market pausing in Oct-Nov due to political issues which were solved in December
Healthy 3PC growth boosted by new Spanish contracts and acquisition of SPT in Finland
ARM business stable before roll-out to new markets

Growing geographical footprint

Gross revenue per country (EUR million)

2018 with gross revenue growth in all countries
Positive entry into Finland
Revenue of EUR 3m based on one month of operation - exceeding Sweden and Italy
Started implementing ONEAxactor
Northern Europe expected to grow in relative importance
Signed significant forward flow agreements in Germany, Norway and Sweden

EBITDA & Cash EBITDA: Profitability development LTM

EBITDA (EUR million) and cash EBITDA, Last 12 months

2018 EBITDA increased to EUR 46m
High volume growth
Favourable revenue mix
High operational leverage
2018 Cash EBITDA increased to EUR 136m
NPL cash EBITDA follows collection performance
Steady growth in 3PC and ARM
REO affected by lower than expected scale-up of sales, and EUR 2m negative effect of portfolio revaluation at lowest value principle (IFRS)

NPL portfolio

NPL: High investment level in more balanced portfolio

Quarterly NPL investments (EUR million)

NPL investments (EUR million), LTM rolling

NPL: Step change in total portfolio size

ERC development (EUR million) NPL book value per country (EUR million)

NPL: Forward flow build-up

Estimated FF from signed contracts (EUR million)

Continued inflow of new forward flow contracts
Several new contracts in Sweden, including large 18-month contract starting up in March
Added large financial institution to the client list in Norway
Extended the Instabank partnership to Finland
Estimated forward flow of EUR 258m from signed contracts in 2019
Expecting renewal of contracts expiring in 2019

NPL: Estimated collection points to profitable growth

Actual collection vs. original business case (LTM, rolling)

Forward ERC profile by year (EUR million)

REO portfolio

REO: Reduced capex – asset bulk sales in 2019

REO in Spain (EUR million)

Axactor tuning down the REO investment level deployed only EUR 6m into REO assets in Q4
2019 focus is NPL investments, with good portfolio availability and increasing IRRs
Timing of asset realizations somewhat postponed due to capacity limitations (bailiff/brokers)
Exploring opportunities for bundle sales to add to regular unit divestments
Underlying market, price levels and asset values remain largely intact
Modest negative effect of EUR 2m of total portfolio

Quarterly REO capex, book value and ERC

REO investments, Spain (EUR million)

REO book value and ERC, Spain (EUR million)

REO – Lifetime KPIs

Sales (EUR million)* No. of assets sold*

Lifetime portfolio performance ahead of original business case
Low quality assets sold at a discount in Q4
Average sales prices:
Lifetime: EUR 44 k
2018: EUR 45 k (2.001 units sold)
Q4'18: EUR 38 k ( 612 units sold)
6,928 units remaining in inventory at YE 2018

3PC & ARM

Growing the platform business

Gross revenue (EUR million)

Targeting a more balanced product portfolio
Established 3PC businesses in all markets
Strong 3PC offers synergies in terms of business origination, collection execution and data generation
Established customer relationships with leading financial institutions, including nine of the top 10 Spanish banks
Increasing contribution of cash rich and capital light earnings for reinvestments
ARM platform to be rolled out to more markets in 2019
Established in Norway and Sweden, moving into Finland, Germany and Italy

One Axactor

Digitalization
Partnerships
Systems
Standardization
Common KPIs
Benchmarking

Financials

Contribution per segment – excl. unallocated overhead costs

Contribution per segment (EUR million)*

Stronger NPL contribution due to higher volumes and more favourable geographical mix
Steadily improving 3PC contribution with new contracts continuing to add volumes
Stable development in ARM
Slightly negative REO contribution in the quarter
Includes EUR -2m effect of portfolio revaluation at lowest value principle
Sold a number of low quality assets with a discount in Q4, contributing to low margin

Net finance, tax and net profits

Condensed Income statement Key comments

EUR thousand	Q4 2018	Q4 2017	2018	2017
EBIT	17 885	4 237	40 297	9 488
Net financial items	-12 447	-5 596	-34 138	-7 515
Profit/ -loss before tax	5 438	-1 359	6 159	1 974
Tax expense	-2 624	706	-3 770	611
Net profit/-loss from operations	2 814	-653	2 389	2 586

Net profit/-loss to minority interest	-1 578	-32	-2 103	-32
Net profit/-loss to equity holders	4 392	-622	4 492	2 617

Earnings per share: basic	0.028	0.000	0.029	0.002
Earnings per share: diluted	0.025	0.000	0.026	0.002

Total net financial cost of EUR 12.4m in Q4
Interest cost of EUR 9.5m, of which EUR 1.4m amortized loan fees
Accrued EUR 2.1m for distr. of interest on Axactor invest 1 A-notes to non-controlling interests
Average blended interest costs of 4.9%
Negative net FX impact of EUR 0.3m
Tax expense of EUR 2.6m in Q4
High effective tax as certain loss-making entities are not allowed to recognize tax assets
Net profit to equity shareholders of EUR 4.4m

Balance sheet structure

Assets (EUR million) Equity & Liabilities (EUR million)

Debt maturity profile

Revolving Credit Facility, EUR 250m + EUR 150m accordion Axactor Invest 1, EUR120m senior debt facility Bond, EUR 150m + EUR 100m tap option Reolux/Nomura, EUR 99m outstanding balance Axactor Invest 1, EUR 120m mezzanine

Net interest bearing debt of EUR 664 million
Cash flow from operations within restricted group more than covering investments in forward flow agreements after gearing
EUR 150m accordion option with Nordic banks, of which EUR 100m released in February 2019
EUR 100m bond tap option
Axactor Invest 1 close to fully invested, will reinvest running cash flow through already signed forward flow contracts

Summary & Outlook

Q4 & 2018 Summary

Continued growth and margin expansion
High investments in several markets step change in portfolio size
Geographical expansion positive entry into Finland
Continuing to drive efficiency and cost through "ONEAxactor"

Outlook

High investment level in 2018 secures healthy profitable growth in 2019
Increasing revenue expected from 3PC and ARM
Margin expansion expected to continue from 2018 to 2019, with quarterly fluctuations
High volume of NPL portfolios for sale in our markets, with portfolio IRRs on the increase

Appendix

Legal Organization February 2019

P&L statement

		for the quarter end		Full Year
		31 Dec	31 Dec	31 Dec	31 Dec
		2018	2017	2018	2017
EUR thousand	Note


Net revenue	3,4	68 034	28 652	206 909	87 745
Other revenue	з	0	o	o	2040
Total revenue		68 034	28 652	206 909	89785

Cost of secured assets sold (REOs)	7	$-16417$	$-1321$	$-54491$	$-1445$
Personnel expenses collection		$-8815$	$-7400$	$-32584$	$-26578$
Personnel expenses other		$-5211$	$-6478$	$-19548$	$-18378$
Operating expenses		$-18019$	$-7805$	$-53979$	$-28,569$
EBITDA		19571	5 6 4 9	46 30 6	14815

Amortization and depreciation		$-1686$	$-1412$	$-6009$	$-5327$

EBIT		17885	4 2 3 7	40 297	9488

Financial revenue	5	58	252	453	3070
Financial expenses	5	$-12504$	$-5848$	$-34590$	$-10,585$
Net financial items		$-12447$	-5 596	$-34138$	$-7515$

Profit/ (loss) before tax		5438	$-1359$	6 1 5 9	1974
Tax expense		$-2624$	706	$-3770$	611
Net profit/(loss) from operations		2814	$-653$	2 3 8 9	2586



Net profit/(loss) to Non controlling interest	5	$-1578$	$-32$	$-2103$	$-32$
Net profit/(loss) to equity holders		4 3 9 2	$-622$	4 4 9 2	2617


Earnings per share: basic		0,028	0,000	0,029	0,002
Earnings per share: diluted		0.025	0,000	0.026	0,002

Balance sheet statement

	31 Dec	31 Dec
	2018	2017
EUR thousand Note
Assets

Intangible non-current assets
Intangible assets	19 170	18 3 5 9
Goodwill	55 5 78	53 582
Deferred tax asset	7564	3 9 4 5

Tangible non-current assets
Property, Plant and equipment	2683	2499

Financial non-current assets
Investment in joint ventures
Purchased debt portfolios 6	728820	317150
Other long term receivables	801	1065
Other long term investments	170	191
Total non-current assets	814 786	396 791
Current assets
Stock of secured assets REO's 7	200 009	154 101
Current receivables	9937	8047
Other current assets	12 2 9 4	13070
Restricted cash	24	1878
Cash and cash equivalents	70 753	48 604
Total current assets	293 016	225 700
Total assets	1 107 802	622 491

Equity and liabilities

Total equity and liabilities		1 107 802	622 491

Total liabilities current		197 233	84 198
Other liabilities current		24 513	17 603
Payable Taxes		1 610	1 376
of borrowings Current portion non-current	9	166 588	61 189
payables Accounts		4 522	4 029
Current liabilities

Total liabilities non-current		582 399	246 459
Other liabilities non-current		3 446	3 002
Deferred liabilities tax		11 124	5 887
bearing debt Non-current interest	9	567 829	237 571
liabilities Non-current
Total equity		328 171	291 833
Non-controlling interests		63 746	31 776
Reserves		-2 817	1 3
profit/(Loss) Retained earnings		-14 172	-15 630
Other paid-in equity		200 298	196 298
Share Capital	8	81 115	79 377
attributable holders of the Equity equity to parent