Axactor SE

Investor Presentation • Nov 2, 2023

Q3 highlights

Financial update

Outlook

Q&A

Financial highlights for the quarter on continuing operations

• Gross revenue growth of 3% y-o-y

• 5% y-o-y with constant currency

• Cash EBITDA growth of 2% y-o-y

• 5% y-o-y with constant currency

• Healthy EBITDA margin of 54%

• EBITDA of EUR 34m, up from EUR 30m last year

• Annualized return on equity of 6%

• 8% excluding one-time cost related to the refinancing of ACR02

Key profit improvement initiatives

After successfully refinancing both the RCF and ACR02 there are no maturities until June 2026

Stable positive development over time has secured affirmation of credit ratings despite industry turmoil

EBITDA and EBITDA-margin (EUR million and %)

Unchanged credit rating since initiation¹

NPL gross IRR on the total book is steadily increasing

- Currently signing deals with a gross IRR almost twice as high as the total NPL book

• Gross IRR for new acquisitions upheld at same level as in previous quarters
• Moderate change in investment commitments in Q3 2023

NPL investment estimate of EUR 100 - 150m for the year

NPL investments (EUR million)

• NPL investment estimate of EUR 100 150m for the year
• Invested EUR 19m during the quarter and EUR 92m YTD
• Additional EUR 12m in committed NPL investments
• Experiencing fewer transactions as sellers and buyers are trying to agree on new price levels

NPL cost-to-collect stabilizing at a record low level

- Materializing in an EBITDA percentage among the best in the industry

Axactor NPL cost-to-collect per year¹

9 1) Cost is calculated as segment OPEX + allocation of unallocated OPEX and Depreciation & Amortization (excluding amortization of NPL portfolios). Segment OPEX is used as allocation key. Income is calculated as Total income adjusted for revaluations to show income excluding one-time effects based on changes in future expectations.

Axactor is exiting the 3PC market in both Sweden and Finland to increase profits

3PC total income split by geography YTD Q3'23

• Axactor has not been able to grow sizable 3PC revenue in Sweden and Finland
• Furthermore, the market prices are low resulting in an unprofitable business
• Axactor has therefore decided to exit the 3PC market in both Sweden and Finland
• 3PC total income will be substantially lower in both countries already in Q4 2023

Q3 highlights

Financial update

Outlook

Q&A

Group: Continued growth on gross revenue y-o-y

Gross revenue (EUR million)

• Gross revenue is up 3% y-o-y
• NPL gross revenue growth of 4% y-o-y
• 3PC gross revenue growth of -3% y-o-y
• Estimated gross revenue growth of 5% y-o-y with constant currency

NPL segment: Steady total income growth with stable margins

NPL Total income and CM% (EUR million, and %)

• Satisfying total income growth of 13% y-o-y with stable margins, despite macroeconomic headwinds
• Collection performance of 98% for the quarter
• Satisfactory quarter in southern Europe
• Debtors in Nordics and Germany opt for longer payment plans with lower monthly installments

3PC segment: Total income and margins under pressure

3PC Total income and CM% (EUR million and %)

• 3PC total income growth of -3% y-o-y
• Competition puts pressure on both total income and contribution margin
• Axactor is currently going through all contracts and terminate those with too low margins
• Axactor will exit 3PC in Sweden and Finland during the fall (5% of 3PC total income in Q3)

Group: Growth y-o-y in all key parameters despite headwind on currency and macro

Total income (EUR million)

EBITDA and EBITDA-margin (EUR million and %)

Cash EBITDA (EUR million)

Stable ROE of 9% on continuing operations last twelve months – despite increased cost of funding

Return on equity to shareholders

Q3 highlights

Financial update

Outlook

Q&A

Outlook

Key driver	Outlook
Accretive investments	+	• Highly accretive gross IRR on new deals of 30+% compared to the backbook of 18%
Growth	+	NPL: Minimum 10% growth in interest income in 20231 • • 3PC: Competition puts pressure on both total income and contribution margin
Funding	~	Interest rate hedge secures partial protection of financial expenses for 9 more quarters2 • • No maturities until June 2026
Collection	~	• Expect continued negative macroeconomic impact in Nordics and Germany • Collection curves are adjusted to reflect the current macroeconomic conditions

Q3 highlights

Financial update

Outlook

Q&A

Supporting information

NPL investment commitments of EUR 20m next 12 months

Quarterly NPL investments (EUR million)

ERC increasing by 9% y-o-y driven by increased NPL investments in 2022

ERC development

Forward ERC profile by year (EUR million)

3PC volumes by geographic region

3PC Total income split by geographic region

• Spain accounting for 49% of total income on 3PC
• Italy share of Total income increased to 22% (17%) following organic growth in Italy

Discontinued operations

- REO book value reduced to EUR 4m ultimo Q3

REO Total income and net profit¹ (EUR million and %)

REO book value (EUR million)

REO number of units

Bond covenants (1/2)

Loan-to-value - covenant ≤80% (Net interest-bearing debt divided by total portfolio book value)

Secured Loan-to-value - covenant ≤60%

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

Bond covenants (2/2)

Leverage ratio - covenant ≤4.0x

(Net interest-bearing debt divided by LTM Pro-forma adjusted cash EBITDA

Interest coverage ratio - covenant ≥3.0x (Pro-forma adjusted cash EBITDA divided by net interest expenses)

Terms and abbreviations

Abbreviations

WAEP Weighted average exercise price

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