Axactor SE — Investor Presentation 2023

Aug 17, 2023

Q2 highlights

Financial update

Outlook

Q&A

Financial highlights for the quarter on continuing operations

• Gross revenue growth of 5% y-o-y
  • 8% y-o-y with constant currency

• Cash EBITDA growth of 4% y-o-y
  • 6% y-o-y with constant currency

• Healthy EBITDA margin of 50%
  • EBITDA of EUR 33m, up from EUR 30m last year

• Double digit annualized return on equity of 11%
  • Despite increased cost of funding

Going forward we will stick to our successful strategy developed in 2020

1 Accretive investments	• Invest in accretive portfolios with attractive gross IRR driving margin expansion on NPL • Target of reaching total backbook Gross IRR above 20%. Currently experiencing Gross IRR of 30+% on newly signed acquisitions
2 Cost leadership	• Cloud based unified IT-infrastructure, optimized processes and a strong cost culture • Currently investing extensively in data-driven valuation and -operation to further excel
3 Best at what we do	Targeted focus to become best at what we do1 • Industry: Bank & finance • Debt type: B2C, unsecured • Markets: Existing six countries

Axactor has had a healthy growth of 20% in ERC since year-end 2021

NPL ERC and company acquisitions (EUR billion)

NPL gross IRR on the total book is steadily increasing

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

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 40m during the quarter and EUR 73m YTD
• Additional EUR 20m 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

8 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.

Q2 highlights

Financial update

Outlook

Q&A

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

Gross revenue (EUR million)

• Gross revenue is up 5% y-o-y
  • NPL gross revenue growth of 8% y-o-y
  • 3PC gross revenue growth of -10% y-o-y
• Estimated gross revenue growth of 8% y-o-y with constant currency

NPL segment: Steady total income growth with stable margins

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

Satisfying growth in total income of 13% y-o-y, with stable margins, despite headwind.

Collection performance of 102% 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 -10% 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 during the fall (4% of 3PC total income in Q2)

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)

RCF refinanced according to the plan in Q2. Expect to refinance ACR02 in Q3 according to the plan

Stable ROE of 10% on continuing operations last twelve months – despite increased cost of funding

Return on equity to shareholders (%)

Q2 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 10 more quarters2 • • RCF renewal closed in Q2. Next step is the planned refinancing of ACR02 in Q3
Collection	~	• Expect continued negative macroeconomic impact in Nordics and Germany • Collection curves are adjusted to reflect the current macroeconomic conditions

Q2 highlights

Financial update

Outlook

Q&A

Supporting information

NPL investment commitments of EUR 26m next 12 months

Quarterly NPL investments (EUR million)

ERC increasing by 12% y-o-y driven by increased NPL investments in 2022

ERC development (EUR million)

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 20% (15%) following organic growth in Italy

Discontinued operations

- REO book value reduced to EUR 5m ultimo Q2

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 ≤75%

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

Secured Loan-to-value - covenant ≤65%

(Total portfolio book value divided by secured net interest-bearing debt)

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 ≥4.0x (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
	repossessed assets in relation to book value	EBIT	Operating profit/Earnings before interest and tax
Cost-to-collect	Cost to collect is calculated as segment operating expenses plus a pro rata	EBITDA	Earnings before interest, tax, depreciation and amortization
	allocation of unallocated operating expenses and unallocated depreciation and	ECL	Expected credit loss
	amortization. The segment operating expense is used as allocation key for the	EGM	Extraordinary general meeting
	unallocated costs	EPS	Earnings per share
Equity ratio	Total equity as a percentage of total equity and liabilities	ERC	Estimated remaining collection
Forward flow agreement	Agreement for future acquisitions of NPLs at agreed prices and delivery	ESG	Environmental, social and governance
Gross IRR	The credit adjusted interest rate that makes the net present value of ERC equal to	ESOP	Employee stock ownership plan
	NPL book value, calculated using monthly cash flows over a 180-months period	FSA	The financial supervisory authority
		FTE	Full time equivalent
Group	Axactor ASA and all its subsidiaries	GHG	Greenhouse gas emissions
NPL amortization rate	NPL amortization divided by collection on own NPL portfolios	IFRS	International financial reporting standards
NPL cost-to-collect ratio	NPL cost to collect divided by NPL total income excluding NPV of changes in	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