Axactor SE

Investor Presentation • Feb 17, 2023

Q4 2022

17 February 2023

Q4 and full year highlights

Financial update

Outlook

Q&A

Financial highlights for the quarter on continuing operations

• Strong EBITDA margin reaching 49% for the quarter
  • EBITDA of EUR 31m, up from EUR -17m last year

• Cash EBITDA growth of 18% y-o-y
  • Cash EBITDA of EUR 58m, up from EUR 49m last year

• Profit after tax of EUR 10m, up from EUR -32m last year
  • Stable annualized return on equity of 10%

• NPL investments of EUR 93m for the quarter
  • NPL investments of 2.7x replacement capex in 2022 secures growth
  • Investing at an attractive Gross IRR of 21% in 2022 compared to 16% on the backbook¹

2022 is a material step in the right direction on key financials

1.0 1.1 1.1 1.3 Book value of NPL portfolios (EUR billion, end of period)

4 Comment: Stated numbers are for continuing operations. 2021 numbers are fully restated in company financial statements. 2016-2020 figures are estimated without considering certain intercompany eliminations and consolidation effects

2022 is a material step in the right direction on key ratios

Discontinued operation is expected to be fully exited during the year

REO book value (EUR million, end of period)

• REO book value down to only EUR 8m at yearend
• Expect to fully exit discontinued operations during 2023
• 1pp uplift in return on equity in 2022 excluding discontinued operation

Axactor on track to deliver material growth on NPL in 2023

(EURm, 2016-2023e) NPL segment with several similarities to how a bank report income

• Interest income is calculated on the portfolios
  • Predictable book values multiplied by gross IRR
  • Represented 98% of NPL total income in 2022
• In addition, total income includes net gain/(loss) on portfolios and sale of repossessed assets

Interest income is the key NPL top-line driver… … with minimum 10% estimated growth in 2023

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 22+% 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

Q4 and full year highlights

Financial update

Outlook

Q&A

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

Gross revenue (EUR million)

• Gross revenue is up 13% y-o-y
  • NPL gross revenue growth of 15% y-o-y
  • 3PC gross revenue growth of 5% y-o-y
• Significant NPL investments and the acquisition of C.R. Service are the primary growth drivers

NPL segment: Steady total income growth with stable margins

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

Total income growth drivers

• Interest income increased by 16%
  • Book value of NPL portfolios up 14% y-o-y
  • Gross IRR increased by 1pp y-o-y
• Collection performance of 99% for the quarter
• No significant impairments for the quarter compared to large impairments last year

3PC segment: Total income growth of 5% compared to last year

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

• Total income growth of 5% y-o-y driven by the acquisition of C.R. Service
• Year-end bonuses came in lower this year compared to last year in Spain, burdening both revenue and contribution margin for the quarter

Group: Strong EBITDA margin expansion through 2022 and Cash EBITDA growth of 18% compared to last year

Total income (EUR million)

EBITDA and EBITDA-margin (EUR million and %) 12 20 25 13 -17 30 30 31 Q3 '21 Q2 '22 28% 47% Q4 '20 33% 38% Q1 '21 Q3 '22 Q2 '21 50% -125% Q4 '21 48% Q1 '22 51% 49% Q4 '22 28

Cash EBITDA (EUR million)

Interest expenses on borrowings expected to increase slightly in Q1 driven by accretive investments

Quarterly interest expense on borrowings (EUR million)

2) The interest rate sensitivity calculation is valid until the hedge expires 15 Dec 2023 and based on the interest-bearing debt at year-end 2022

14 Comment: Stated numbers are for continuing operations

¹⁾ Axactor has a 1-year, EUR 573m, 0.5% EURIBOR strike contract with start date 15 Dec 2022

Refinancing of the RCF is going according to the plan. Awaiting refinancing of ACR02

ROE for the year came in at 10% on continuing operations

Return on equity to shareholders (%)

Financial targets announced 11 January 2023

Dimension	Targets 2023	Targets 2024 and beyond
Growth	150 million1 • NPL investments of EUR 100 -	• NPL investments of EUR 200 – 300 million
Profit	• Minimum 9% ROE	• To be announced towards end of year
Returns	50% dividend pay-out ratio2 • 20 -	• 20 - 50% dividend pay-out ratio
Leverage3	• Maximum leverage of 3.5x at year-end	• Maximum leverage of 3.5x

17 1) Whereof an estimated amount of EUR 68m is already committed NPL investments 2) Based on FY2023 results and onwards 3) Leverage = (net interest-bearing debt / pro-forma adjusted cash EBITDA). As defined in the bond covenants

Q4 and full year highlights

Financial update

Outlook

Q&A

Outlook

Key driver	Outlook
Accretive investments	+	• Highly accretive gross IRR on new deals of 22+% compared to the backbook of 17%
Growth	+	NPL: Minimum 10% growth in interest income in 20231 • • 3PC: Expect market growth driven by increased defaults in the society
Funding	~	• Interest rate hedge secures flat interest rates from Q4 2022 into Q1 2023 • Ongoing refinancing of the RCF according to the plan
		• Awaiting refinancing of ACR02 to get clearer visibility on portfolio- and bond market
Collection	~	• A satisfying collection performance of 99% in 2022. Expect collection performance to fluctuate around +/- 100% over time

Q4 and full year highlights

Financial update

Outlook

Q&A

Supporting information

NPL investment commitments of EUR 68m next 12 months

Quarterly NPL investments (EUR million)

ERC increasing by 19% 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 53% of total income on 3PC
• Italy share of Total income increased to 19% (5%) following the acquisition of C.R. Service and subsequent organic growth in Italy

Discontinued operations

- REO book value reduced to EUR 8m ultimo Q4

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

REO book value (EUR million)

REO number of units

Bond covenants (1/2)

- Secured LTV is increasing as bond repurchase is funded by drawing on the secured RCF

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 increasing due to 1) investment ramp-up and 2) discontinued operations

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