Axactor SE

Investor Presentation • Feb 12, 2020

Q4 & FY 2019

12 February, 2020

Secured new funding to deliver on profitable growth strategy

Axactor's scalable model proven with doubling of the 2019 EBITDA and 430% YoY growth in Earnings Before Tax

Attractive NPL market development with price levels down and IRRs up 2

Equity issue of EUR 51 million in Q1'20 to deliver on profitable growth strategy in a market with opportunities at hand 3

1

Growth strategy to drive scale benefits, profits and ROE

Group revenue 12 months rolling (EUR million)

• People, systems and funding enablers of the 2015-2019 growth
• 2020: People and systems in place – secured additional funding to continue growth

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19

^• Industry challenger rising to Europe's top 10 in 4 years

Built a next-generation debt management company

• Axactor is an industry challenger providing innovative, cost efficient and IT powered debt management solutions

HQ

• Debt purchase, debt collection and accounts receivables management are the main business activities
• Operations in six sound markets on One Axactor platform, enabled by leading people, systems and funding
• Established in 2015, ~1150 employees, listed on Oslo Stock Exchange

Q4 2019 - Key highlights

• Strong YoY revenue growth, driven by the NPL and 3PC segments
• EBITDA up on higher margins underlining the high operational leverage of Axactor's model
• Earnings before tax of EUR 8.5 million
• Capex invested in NPL portfolios of EUR 95 million
• Increased RCF funds by EUR 150 million during the quarter, and a private placement of EUR 51 million in February

2019 - Key highlights

• Substantial revenue growth and doubling of EBITDA driven by scalability and efficiency
• EBITDA margin up 10 percentage points
• Earnings before tax of EUR 32.6 million, compared to EUR 6.2 million last year: 430% YoY growth
• NPL portfolios book value up by 43%, and ERC above 2 billion
• Capex of EUR 399 million invested in portfolios for the full-year

-,5 ,5 ,15 ,25 ,35 ,45 ,55 ,65 ,75 ,85 ,95 ,105 ,115 ,125 ,135 ,145 ,155 ,165 ,175 ,185 ,195 ,205 ,215 ,225 ,235 ,245 ,255 ,265 ,275 ,285 ,295 ,305

Growth and margin improvement

Gross revenue development (EUR million)

EBITDA and EBITDA-margin (EUR million and %) 6 11 10 20 22 26 20 24 17% 20% 21% 29% 30% 36% 31% 32% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2018 2018 2018 2018 2019 2019 2019 2019 Cash EBITDA (EUR million)

Growth in all three business areas

Gross revenue development (EUR million)

Strong YoY revenue growth FY 2019:

• Total 54%
• NPL +86%
• 3PC +11%
• REO +31%

Continued YoY growth Q4 2019:

• Total 32%
• NPL +54%
• 3PC +6%
• REO +5%

NPL portfolio

Q4 2019

QoQ NPL growth – capex mainly deployed in forward flow

NPL gross revenue development (EUR million)

Quarterly NPL investments (EUR million)

ESP NOR DEU SWE ITA FIN

Collection performance below expected long-term average

Actual collection vs. active forecast* (LTM, rolling)

Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419

• Negative effect from one-offs in the quarter:
  • Postal strike in Finland during seasonally strong December
  • Delays in collection from the Swedish bailiff due to transition to new IT system
    • Expect backlog to be gradually reduced through H1 2020
• Long term average performance expected to fluctuate around 100%
  • Portfolios with large positive or negative deviations are continuously on review for revaluation

Unsecured NPL claims accounts for vast majority of total

• Focus on unsecured consumer loans
• Opportunistic approach to secured NPL
• Currently less than 6% of total NPL book value consist of secured NPL claims
• Average claim size in secured NPL book is approximately EUR 161k
• Combined ERC for five largest secured claims less than EUR 10m

Forward flow outlook

Estimated FF investments from signed contracts (EUR million)

Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

Actual FF investments Estimated FF investments

• Total estimated forward flow volume of EUR 190m in 2020 (at reporting date)
• Selective approach given upwards trend in IRRs
  • Renegotiating and discontinuing existing contracts
• Focusing on combined forward flow and 3PC contracts
  • Expanded agreement with Nordic consumer bank client, including 3PC servicing of part of the claims prior to our purchase
  • In process with several potential clients with similar structure

NPL: Increasing and balanced portfolio

Forward ERC profile by year (EUR million)

300

2 500

(EUR million)

ERC development

Increased Nordic exposure to benefit from attractive market opportunity

NPL ERC (EUR million, % of total)

• EUR ~400m invested in 2019 in NPL portfolios
  • EUR 234m invested in Nordic forward flows from major consumer banks during 2019

0

500

1 000

1 500

2 000

2 500

3PC

Q4 2019

Growing asset-light 3PC business

Gross revenue 3PC (EUR million)

18

• +11% YoY growth in 2019
• Focus on combined forward flow and 3PC deals
  • Product synergies in business origination, collection execution and data generation
  • Expecting more forward flow agreements with initial 3PC periods
  • A combined 3PC and NPL deal signed in Norway in January
• Changing market environment
  • The finance sector accounts for three quarters of the 3PC revenue
  • More banks are expected to partner with 3PC services

Building for the future of debt management

3PC revenue split by geographic region

• Increasing the Nordic 3PC business
  • Synergies to be extracted from cross-border deals
  • Seeking combined 3PC and forward flow deals to improve collection performance and profitability
• Specialized value chain proposition
  • Focus on financial institutions, both in NPL and 3PC
  • ARM/3PC offerings with recurring revenue
  • Highly modern, flexible and scalable platform

REO portfolio

Q4 2019

Maintained high REO revenue on declining asset base

REO gross revenue development (EUR million)

REO sales No. of assets in inventory

• Revenue up 5% compared to Q4'18 on lower asset base
  • Large bulk sale accounting for EUR 2.3 million (106 assets)
• 595 units sold in Q4, 12% up from Q3
  • 7 assets repossessed from secured NPL during the quarter
• Average unit price of EUR 36k
• Number of REO assets steadily declining
  • Capital released from REO will be invested into high performing NPL business
  • Allowed for increased discounts to support continued high sales volumes

Book value of EUR 129m at year-end 2019

• ERC decreased by 22% in the quarter
  • ERC adjusted to reflect expected discount level going forward
    • EUR 5m discount vs ERC in Q4
    • EUR 16m reduction of future ERC
• REO represents 7% of Group ERC and declining
• Target to realize half of remaining asset base over the next 12 months
• Axactor has approximately 40% of the total exposure for REO
  • Minority shareholders in both Reolux and its subsidiaries

REO: ERC profile

(EUR million)

Financials

Q4 2019

Contribution per segment

Contribution per segment*

(EUR million) - Excluding unallocated overhead cost

NPL portfolios 3PC REO portfolios Other

Total:

• Contribution margin of 48% in Q4, compared to 45% last year

NPL:

• Contribution margin of 75% (80%)
• Portfolio amortization and revaluation of EUR 24.0m (6.6), EUR 23.1m in Q3

3PC:

• 40% contribution margin (36%)

REO:

• 5% YoY growth on significantly lower asset base
• Low contribution margin at 3% (-4%), 7% in Q3, reflects moderately higher discounts

'Other' item of EUR 1.1m, mainly reflects disposal of some small non-core portfolios and a positive legal settlement

23 *Contribution before allocation of local SG&A and IT cost, management fee, central administration costs, other gains and losses or finance costs Segment contribution margin = Segment contribution/Segment net revenue Total segment contribution less unallocated cost = EBITDA

Net finance, tax and net profits

Condensed Income statement (EUR thousand)

	For the quarter end		YTD
EUR thousand	Dec 31 2019	Dec 31 2018	Dec 31 2019	Dec 31 2018
EBIT	20,998	17,885	82,025	40,298
Financial revenue	526	58	2,787	453
Financial expenses	-13,011	-12,504	-52,176	-34,590
Net financial items	-12,485	-12,447	-49,389	-34,138
Profit/(loss) before tax	8,513	5,438	32,636	6,160
Tax (expense)	-1,979	-2,624	-11,667	-3,770
Net profit/(loss) after tax	6,534	2,814	20,969	2,390
profit/(loss) Net to Non-controlling interests	1,310	-1,578	4,643	-2,103
Net profit/(loss) to equity holders	5,223	4,392	16,326	4,492
Earnings per share: basic	0.034	0.028	0.106	0.029
Earnings per share: diluted	0.029	0.025	0.093	0.026

• Total net financial cost of EUR 12.5m
  • Interest cost of EUR 13.9
  • Average blended interest costs of approx. 5%
  • Reversed note interest distribution to minorities of EUR 2.1m

• Tax expense of EUR 2.0m

• Overall tax rate still high, expected to trend towards ~25% over time

• Net profit of EUR 6.5m

• EUR 5.2m to equity shareholders
• EUR 1.3m to non-controlling minorities

Minority shareholders in both NPL and REOs - Axactor REO exposure down to ~3% of total ERC

Total ERC exposure (EUR million)

• Axactor has approximately 40% of the total exposure for REO
  • Minority shareholders in both Reolux and its subsidiaries
  • Axactor's share of REO amounts to 3% of its total ERC
• Axactor shareholders has approximately 84% of the total exposure for NPL
  • Minority shareholder in Axactor Invest

Axactor's growth yields scale benefits and higher profits

Local SG&A, IT & corporate expenses % of net revenue vs EBITDA (LTM, EUR million)

EBITDA Local SG&A, IT and corporate cost % Net revenue

Axactor's growing profitability to improve ROE over time

1.7 % 5.8 % 2018 2019 • IRR increased during the year • EBITDA margin up 10 percentage points YoY • Strong growth in capital light 3PC collection • Current level of ~5% • Reduced efficient tax rate to 36% • Improved IRR levels to be blended in over time • Stabilizing while awating further scale effect • Combining NPL and 3PC deals, reducing REO exposure • Refinancing and continiued improvement of capital structure • Expected to further decline towards ~25% over time Drivers 2019 2020 • NPL portfolio prices • Economies of scale • Business mix • Funding cost • Tax rate Return on Equity* (%)

Funding has supported a fast-growing asset base

15%

20%

25%

30%

35%

40%

• Portfolios represent the vast majority of the asset base
• Debt has increased following portfolio acquisitions
• Expect equity ratio at approximately 30% over time
• Equity injection in Q1 2020 of EUR ~50m

0

500

1000

1500

Current funding structure

• Net interest bearing debt of EUR 858 million per YE'19
• Expanded RCF with two new accordion options in October, each for EUR 75m: One of the options executed in October, the other unused per YE '19
• Increased funding by a total EUR 310m in 2019:
  • Released EUR 225m in accordion options with Nordic banks: EUR 100m in February + EUR 50m in June + EUR 75m in October
  • Executed bond tap option of EUR 50m bond tap option in March
  • EUR 15m equity injection and EUR 20m new mezzanine loan from Geveran to Axactor Invest 1 in April
• EUR ~50m equity issue in February 2020

Outlook & Summary

Q4 2019

Attractive market opportunity

Large volumes of NPL coming to market

NPL price levels down – IRRs up

3PC & ARM growth – new products emerging

Industry consolidation

Summary

• YoY growth in all three business areas
• Growth drives scale benefits, profits and ROE
• Earnings before tax growth of 430%
• People, systems and funding enablers of growth
• Secured new equity funding of EUR 51 million to deliver on profitable growth strategy
• Attractive market opportunities Axactor targeting portfolio capex of EUR 350-400 million for 2020

Appendix

P&L statement

	For the end quarter		YTD
EUR thousand	31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018
Interest income from purchased loan portfolios	37,239	22 289 ,	134 531 ,	74 536 ,
Net gain/loss purchased loan portfolios	-412	10 751 ,	-319	10 599 ,
Other operating revenue	36,865	34 994 ,	148 926 ,	121 774 ,
Other revenue	1,137	0	2 021 ,	0
Total Revenue	74,830	68 034 ,	285 159 ,	206 909 ,
Cost of REO's sold	-18,371	-18 364 ,	-74 464 ,	-56 438 ,
Personnel expenses operations	-10,041	-8 815 ,	-38 203 ,	-32 584 ,
Personnel expenses other	-5,196	211 -5 ,	-19 506 ,	-19 548 ,
Operating expenses	-17,397	-16 073 ,	-60 847 ,	-52 033 ,
Total operating expense	-51,004	-48 463 ,	-193 019 ,	-160 602 ,
EBITDA	23,826	19 571 ,	92 140 ,	46 306 ,
Amortisation and depreciation	-2,828	-1 686 ,	-10 115 ,	-6 009 ,
EBIT	20,998	17 885 ,	82 025 ,	40 298 ,
Financial revenue	526	58	2 787 ,	453
Financial expenses	-13,011	-12 504 ,	-52 176 ,	-34 590 ,
Net financial items	-12,485	-12 447 ,	-49 389 ,	-34 138 ,
Profit/(loss) before tax	8,513	438 5 ,	32 636 ,	6 160 ,
Tax (expense)	-1,979	-2 624 ,	-11 667 ,	-3 770 ,
Net profit/(loss) after tax	6,534	2 814 ,	20 969 ,	2 390 ,
profit/(loss) Net Non-controlling interests to	1,310	-1 578 ,	4 643 ,	-2 103 ,
Net profit/(loss) equity holders to	5,223	4 392 ,	16 326 ,	4 492 ,
Earnings per share: basic	0.034	0 028	0 106	0 029
Earnings per share: diluted	0.029	0 025	0 093	0 026

Balance sheet statement

EUR thousand ASSETS	31 Dec 2019	31 Dec 2018
Intangible non-current assets
Intangible Assets	21 487	19 170
Goodwill	56 170	55 577
Deferred tax assets	9 742	7 564
Tangible non-current assets
Property , plant and equipment	2 903	2 683
Right-of-use assets	846 5	0
Financial non-current assets
Purchased debt portfolios	1 041 919	728 820
Other receivables non-current	765	293
Other investments non-current	193	778
Total non-current assets	1 139 025	814 885
Current assets
Stock Secured of Assets	129 040	200 009
Accounts Receivable	13 135	9 459
Other current assets	14 960	12 774
Restricted cash	3 739	3 184
Cash Cash and Equivalents	71 657	67 593
Total current assets	232 531	293 018
TOTAL ASSETS	1 371 556	1 107 903

EUR thousand EQUITY LIABILITIES AND	Dec 31 2019	Dec 31 2018
Equity attributable equity holders of the to parent
Share Capital	81,338	81,115
Other paid-in equity	201,879	200,298
Retained Earnings	2,153	-14,172
Reserves	-4,721	-2,817
Non-controlling interests	96,977	63,746
Total Equity	377,626	328,170
Non-current Liabilities
Interest bearing debt	466,378	567,829
Deferred liabilities tax	17,591	11,124
Lease liabilities	3,481	0
Other liabilities non-current	1,415	1,180
Total liabilities non-current	488,864	580,132
Current Liabilities
Accounts Payable	5,902	4,522
Current portion of interest bearing debt	463,555	169,296
Taxes Payable	6,570	1,610
Lease liabilities	2,549	0
Other liabilities current	26,491	24,172
Total liabilities current	505,066	199,600
Total Liabilities	993,930	779,732
TOTAL EQUITY AND LIABILITIES	1,371,556	1,107,903

Legal organization February 2020

*50% of the shares in Axactor Invest 1 S.à r.l. and Reolux Holding S.à r.l. is held by Geveran Trading Co. Limited (Cyprus). *Geveran Trading Co. Limited also holds shares of Axactor SE

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