NAXS — Interim / Quarterly Report 2018

Apr 20, 2018

NAXS AB (publ) Interim Report January-March 2018

First quarter 2018

• Net profit for the first quarter amounted to MSEK 21.0 (10,6).
• Earnings per share amounted to SEK 1.55 (0,73).
• Net asset value amounted to MSEK 846 (SEK 62,32 per share) at March 31, 2018, compared to MSEK 821 (SEK 60.17 per share) at December 31, 2017.
• Net cash amounted to MSEK 437 (SEK 32.17 per share) at March 31, 2018, compared to MSEK 450 (SEK 32.97 per share) at December 31, 2017.

Distribution of profits

The Board of Directors previously communicated its intention to make the level of the proposed dividend for FY 2017 dependent on the amount that may have been distributed under the form of share repurchases during the first quarter of 2018.

The Board of Directors stated that the actual level of the dividend would be set as the difference between SEK 38,682,960,25 (corresponding to SEK 2.75/share) and the amount that has been distributed under the form of share repurchases during the period between January 1 and March 31, 2018.

NAXS repurchased shares for a total amount of SEK 3,099,608.69 during the period between January 1 and March 31, 2018. Therefore, the amount that remains available to be paid as dividend for the fiscal year 2017 is SEK 35,583,351.56, corresponding to SEK 2.53/share.

The Board of Directors therefore proposes to the Annual General Meeting the payment of a dividend of SEK 2.53/share for FY 2017. In addition, the Board of Directors proposes to the Annual General Meeting to vote on a continued share repurchase mandate.

Comments by the CEO

NAXS's net asset value per share made good progress during the first quarter of 2018, increasing by 3.6%.

The Company made 1 new direct investment during the quarter, participating in a private placement of new shares by Awilco Drilling PLC, a drilling operator listed on the Oslo Stock Exchange, and subsequently acquiring additional shares on the market. At the end of the quarter, NAXS's total investment in Awilco Drilling amounted to MNOK 17.6, and as of the date of this report to MNOK 23.3.

NAXS also continued to selectively repurchase shares during the quarter, acquiring 61,642 of its own shares.

After the end of the reporting period, NAXS announced that it had opted to roll-over part of its interests in Nordic Capital Fund VII to a continuation vehicle established by Nordic Capital, and had acquired MEUR 4 of additional interests in the same vehicle. We believe that this transaction, combining elements of a new fund commitment with those of a secondary transaction with full visibility on underlying assets, represents a particularly attractive risk/reward profile.

Finally, in light of the prevailing investment climate and NAXS' current pipeline of potential investment opportunities, the board of NAXS decided to make 2 adjustments to the Company's investment policy: (i) the proportion of the net asset value that can be invested in any assets in any jurisdiction has been raised from 25% to 40%, and (ii) the geographic restriction to the Nordic countries for co-investments has been lifted. You can find the revised policy on our website.

Lennart Svantesson

Financial summary

	2018 1/1–03/31	2017 1/1–03/31
Net profit/loss for the period, KSEK	21 042	10 583
	2018 03/31	2017 12/31
Private equity fund investments, KSEK	383 862	357 780
Private equity fund investments in % of equity	45	44
Remaining commitments, KSEK	87 221	92 928
Total exposure to private equity fund investments, KSEK	471 083	450 708
Net cash, KSEK	436 795	449 671
Private equity fund investments per share, SEK	28,28	26.24
Net cash per share, SEK	32,17	32.97
Net asset value per share, SEK	62,32	60.17
Share price, SEK	50,40	50.25

Operations

NAXS AB (publ) ("NAXS" or the "Company") is an investment company listed on NASDAQ Stockholm. NAXS primarily invests in private equity funds with a Nordic focus, but may also make direct investments or co-investments alongside private equity or other alternative assets funds. In addition, NAXS may, to a limited extent, make other types of investments.

Operations commenced on April 17, 2007, and the Company was listed on First North on May 14, 2007, where it traded until its change of listing to NASDAQ Stockholm on June 8, 2010.

NAXS is the Group's parent company and is headquartered in Stockholm. In addition to the parent company, the Group consists of an operational Danish subsidiary, NAXS A/S, headquartered in Copenhagen, and a Norwegian subsidiary, NAXS Nordic Access Buyout

AS, headquartered in Oslo. The Danish subsidiary operates as the holding company for the Group's investments.

Naccess Partners AB has been contracted as the investment advisor to the Danish subsidiary.

Market review

The first quarter of 2018 saw the return of volatility on the public markets. The private equity markets continued, however, to experience a relatively high level of activity, fueled notably by readily available financing. The IPO window remained opened during quarter, allowing private equity managers to continue to use listings as an attractive exit route.

Investment portfolio

Private equity fund investments

As of March 31, 2018, NAXS had commitments to 9 private equity funds (8 buyout funds and 1 special situations fund).

At the end of the first quarter:

• private equity fund investments amounted to MSEK 384, which corresponds to 45 percent of the Company's equity;
• remaining commitments amounted to MSEK 87.

Other investments

As of March 31, 2018, NAXS held 2 direct investments in listed shares:

• 350,000 shares in Scout Gaming Group AB (publ), a provider of Fantasy Sport and Daily Fantasy Sports solutions to online gaming operators. As of March 31, 2018, the holding of NAXS in Scout Gaming Group was valued at MSEK 15.2.
• 529,002 shares in Awilco Drilling Plc, a UK-based drilling contractor. The shares are listed on the Oslo Stock Exchange. As of March 31, 2018, the holding of NAXS in Awilco Drilling was valued at MNOK 18.4.

Exposure to private equity fund investments and other investments

As of March 31, 2018, the total exposure to private equity fund investments and other investments amounted to MSEK 506, which corresponds to 59 percent of the Company's equity

Private equity fund investments and other investments, and total exposure to private equity fund investments and other investments (in % of equity)

Evolution of private equity fund investments and other investments (in % of equity)

The net asset value (NAV) per share increased by 3.6% during the first quarter of 2018 and by 8% over 12 months.

New investments, acquisitions and liquidity events

Investments

NAXS made 1 direct investment during the quarter, investing MNOK 3.9 in a private placement of new shares by Awilco Drilling Plc, and subsequently acquiring additional shares in the company for an amount of MNOK 13.7. Awilco Drilling Plc a UK-based drilling contractor, listed on the Oslo stock exchange.

Company	Sector	Country	Size of initial investment
Awilco Drilling Plc	Energy	Norway	MNOK 17.6

Acquisitions

No new acquisition was made by underlying funds during the quarter.

Liquidity events

2 full exits took place during the fourth quarter, with Apax divesting Genex Services, a US cost containment services provider, and Valedo I exiting thermal binding supply and equipment provider Bindomatic.

Portfolio Company	Sector	Year of initial investment	Fund
Genex	Business services	2014	Apax VII
Bindomatic	Business services	2008	Valedo I

In addition, 1 partial exit through an IPO took place during the quarter, with FSN Capital III listing Swedish landscaping services provider Green Landscaping on Nasdaq First North.

As of March 31, 2018, NAXS underlying funds had acquired a total of 116 companies, 59 of which had been fully divested. These 59 exits have generated an average gross IRR of 22%. The average holding period for the remaining 57 portfolio companies is approx. 5.75 years.

No. of portfolio companies acquired per year

March 31, 2018

• Total exposure to private equity fund investments: 56% of total equity

• Private equity fund investments: 45% of total equity
• Number of full exits since inception: 59
• Average gross IRR generated by the 59 full exits since inception: 22%

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	total
No of new portfolio companies	12	16	12	18	16	15	9	7	4	3	4	0	116
No of exits during the year				4		4	11	9	9	10	10	2	59
No of companies acquired in the year that are now fully exited	9	14	9	8	9	5	3	1	1				59

Portfolio composition/diversification

As of March 31, 2018, NAXS provided the following exposure:

• 9 private equity funds (8 buyout funds and 1 special situations fund) from 7 managers:

Fund	Commitment Year	Commitment Currency	Initial Commitment Amount (in 000s)
Apax Europe VII LP	2007	EUR	15,000
FSN Capital III LP	2008	EUR	10,000
Herkules Private Equity III LP	2008	NOK	40,000
Intera Fund I KY	2007	EUR	7,000
Intera Fund II KY	2011	EUR	7,250
Mimir Invest AB	2017	SEK	50,000
Nordic Capital Fund VII LP	2008	EUR	20,000
Valedo Partners Fund I AB	2007	SEK	60,000
Valedo Partners Fund II AB	2011	SEK	65,000

• 4 different fund vintages and a diversification in terms of size segments, with small cap being the largest, as illustrated below (based on current commitments):

• 57 portfolio companies (remaining after 59 exits) acquired by underlying funds over a period of approx. 11 years, with the 10 largest holdings accounting for less than 27% of the total equity and no single portfolio company accounting for more than 5% of the total equity.

• a diversification of portfolio companies per geography and sector as illustrated below (based on the fair value of the current portfolio companies):

• a direct holding in 2 listed companies:

Company	Sector	Exchange	Timing of investment	Size of initial investment
Scout Gaming Group	iGaming	NASDAQ First North	Q4 2017	MSEK 8
Awilco Drilling	Energy	Oslo Exchange	Q1 2018	MNOK 17.6

Underlying funds

Summary information regarding NAXS' underlying funds is provided below:

Fund	Fund size	Segment	Vintage	Geographic focus	# of portfolio companies	# of exits
Valedo Partners I	MSEK 1,000	small cap	2007	Sweden	1	8
Intera Partners I	MEUR 125	small cap	2007	Finland	3	4
Apax Europe VII	MEUR 11,000	large cap	2008	Europe/Global	12	23
FSN Capital III	MEUR 375	mid cap	2008	Norway/Nordic	2	8
Herkules PE III	MNOK 6,000	mid cap	2008	Norway/Nordic	4	7
Mimir Invest	<msek 500<="" td="">	small cap	2017	Sweden/Nordic	3	0	small cap	2017	Sweden/Nordic	3	0
Nordic Capital VII	MEUR 4,300	mid/large cap	2008	Primarily Nordic	13	5
Intera Partners II	MEUR 200	small cap	2011	Finland	9	3
Valedo Partners II	MSEK 2,000	small cap	2011	Sweden	10	1

Group

Financial performance, January-March 2018

Operating profit/loss

The operating profit/loss amounted to KSEK 27,710 (10,959) for the first quarter. The operating profit/loss includes a change in value of private equity fund investments of KSEK 29,693 (14,065) and in other financial investments of KSEK 1,410 (132). Realized profit/loss in investments in private equity funds amounts to KSEK -4,340 (13,518), and unrealized profit/loss amounted to KSEK 34,033 (547). The currency effects are included in the changes in value and amounted to KSEK 17,106 (-1,295) for the first quarter. Operating expenses amounted to KSEK 3,393 (3.238).

January 1– March 31, 2018

• Changes in value of private equity fund investments: KSEK 29,693, whereof currency effects on private equity fund investments KSEK 17,106

Financial items

Financial items net totaled KSEK -6,668 (-376) for the first quarter. Interest expenses on cash in banks amounted to -611 (-430). Exchange rate profit/loss amounted to KSEK -6,057 (54).

Tax and net profit

The Group's profit/loss after financial items for the first quarter amounted to KSEK 21,042 (10,583). Income taxes amounted to KSEK 0 (0). Net profit/loss after tax amounted to KSEK 21,042 (10,583). Earnings per share were SEK 1.55 (0.73).

Investments, financing and liquidity

Private equity fund investments

During the first quarter, net investments/repayments from private equity funds amounted to KSEK 7,952 (994) whereof KSEK -4,340 (13,518) is realized profit/loss in investments in private equity funds. As of March 31, 2018, private equity fund investments amounted to KSEK 383,862 (357,780).

March 31, 2018

• Private equity fund investments per share: SEK 28.28

Other investments

During the first quarter, NAXS invested KSEK 4,160 in the private placement of new shares by Awilco Drilling Plc, and subsequently acquired additional shares on the market for a total amount of KSEK 14,809.

As of March 31, 2018, Other Investments amounted to KSEK 34,660.

Financing

The Group is financed with shareholders' equity. Shareholders' equity amounted to KSEK 846,074 (820,567) at the end of the first quarter, corresponding to SEK 62.32 (60.17) per share and an equity/asset ratio of 99 (100) percent.

March 31, 2018

• Equity per share: SEK 62.32

Net cash

At the end of the first quarter, net cash amounted to KSEK 436,795 (449,671), which corresponds to SEK 32.17 (32.97) per share. During the first quarter, cash and cash equivalents were invested in interest-bearing instruments or held on interest-bearing bank accounts, in accordance with the Company's policy.

March 31, 2018 • Net cash per share: SEK 32.17

Significant risks and uncertainty factors

Significant risks and uncertainty factors are described in the Annual Report 2017. There has been no significant change in relation to risks and uncertainty factors since the publication of the Annual Report.

Events after the end of the reporting period

After the end of the reporting period, NAXS announced that it had chosen to roll-over part of its interests in Nordic Capital Fund VII to a continuation vehicle established by Nordic Capital, and had acquired MEUR 4 of additional interests in the same vehicle. In addition, NAXS acquired additional shares in Awilco Drilling on the market after the end of the reporting period. As of the date of this report, the total investment in Awilco Drilling amounted to MNOK 23.3

Future prospects

Volatility is expected to remain elevated in the short term, driven by central bank tightening and geo-political uncertainty. It is unclear what effect, if any, this will have on the private markets.

Parent company

The parent company has not had any sales during the first quarter. The profit/loss after financial items amounted to KSEK -262 (-1.304). The net interest income amounted to KSEK -260 (-310) and exchange rate profit/loss amounted to KSEK 1,113 (-65). Income tax amounted to KSEK 0 (0). The net profit/loss amounted to KSEK -262 (-1.304).

Organization

The Company's CEO is Lennart Svantesson. The Board of Directors consists of John D. Chapman (chairman), Tony Gardner-Hillman and Andrew Wignall, who were re-elected at the 2017 annual general meeting, as well as Damhnait Ni Chinneide, who was elected at the same annual general meeting.

The share

The NAXS share was initially listed on First North on May 14, 2007. Since June 8, 2010, the share is traded on NASDAQ Stockholm. The share trades under the designation "NAXS".

The number of outstanding shares in the Company at the beginning of the year was 13,637,387. During the interim period 61,642 shares were repurchased. The number of outstanding shares in the Company at the end of the interim period was 13,575,745. At the end of the interim period, the NAXS share price was SEK 50.40 and the total shareholders' equity per share was SEK 62.32. The Company's market capitalization was MSEK 684 and the number of shareholders was 927.

Evolution of the share price during Q1 2018

Accounting principles

The condensed consolidated financial statements have been established in accordance with the International Financial Reporting Standards (IFRS), as recognized by the EU. This report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Reporting legislation.

The accounting principles applied in this report are described in the Annual Report 2017. The Parent Company follows the Swedish Annual Reporting legislation and the Swedish Financial Reporting Board RFR 2 for legal entities, which provides that the IFRS principles shall apply.

Alternative performance measures

The definitions for the net asset value, net cash/net debt and gross IRR performance measures are provided in the 2017 Annual Report and in the definitions on page 19 of this report. The equity ratio is defined as equity in relation to total assets. These alternative performance measures are essential for the understanding and evaluation of NAXS's business.

Financial information Contact persons

Annual General Meeting: June 5, 2018 Lennart Svantesson, CEO Interim Report (6 months): July 12, 2018 +46 73 311 00 11 Interim Report (9 months): October 19, 2018 lennart.svantesson@naxs.se

Gösta Lundgren, CFO +46 70 710 47 88 gosta.lundgren@naxs.se

Ticker codes

NAXS SS in Bloomberg NAXS.ST in Reuters

This information is information that NAXS AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 8.30 CET on April 20, 2018.

This report is an in-house translation of the original report in Swedish

Interim Report Jan-March, 2018 Page 13 of 19

Stockholm, April 20, 2018

John D. Chapman Chairman

Tony Gardner-Hillman Director

Damhnait Ni Chinneide Director

Andrew Wignall Director

Lennart Svantesson Chief Executive Officer

This report has not been subject to review by the Company's auditors.

This report and other information are available on www.naxs.se

NAXS AB (publ) Corp. Reg. No. 556712-2972 Grev Turegatan 10 114 46 Stockholm, Sweden Tel: +46 8 611 33 25 E-mail: info@naxs.se

Consolidated Income Statement Amounts in SEK 000s

	2018	2017
	1/1-03/31	1/1-03/31
Change in value	31 103	14 197
Operating costs Note 1	-3 393	-3 238
Operating profit/loss	27 710	10 959
Net financial items	-6 668	-376
Profit/loss after financial items	21 042	10 583
Income taxes	-	-
Net profit/loss	21 042	10 583
Earnings per share, SEK*	1,55	0.73
Average number of shares, 000s*	13 607	14 457
* Basic and diluted

Consolidated Statement of Comprehensive Income Amounts in SEK 000s

	2018	2017
	1/1-03/31	1/1-03/31
Net income	21 042	10 583
Other comprehensive income
Items which will be reversed to the income statement
Exchange differences	7 565	-2 899
Total comprehensive income	28 607	7 684
Attributable to:
Parent company shareholders	28 607	7 684
Total comprehensive income	28 607	7 684

Consolidated Balance Sheet Amounts in SEK 000s

	2018	2017
	03/31	12/31
Assets
Private equity fund investments	383 862	357 780
Other financial investments	34 660	13 930
Total non-current assets	418 522	371 710
Other receivables	451	161
Cash and cash equivalents	436 795	449 671
Total current assets	437 246	449 832
Total assets	855 768	821 542
Equity	846 074	820 567
Current liabilities	9 694	975
Total equity and liabilities	855 768	821 542

Consolidated Net cash

Amounts in SEK 000s

	2018	2017
	03/31	12/31
Cash, bank and short-term investments	436 795	449 671
Total net cash	436 795	449 671

Consolidated Statement of Changes in Equity Amounts in SEK 000s

	2018	2017	2017
	1/1-03/31	1/1-12/31	1/1-03/31
Equity at the beginning or the year	820 567	841 816	841 816
Repurchase of own shares	-3 100	-60 234	-38 151
Total comprehensive income for the period	28 607	38 985	7 684
Shareholder's equity at the end of the period	846 074	820 567	811 349

Consolidated Statement of cash flows analysis Amounts in SEK 000s

	2018	2017
	1/1-03/31	1/1-03/31
Profit/loss after financial items	21 042	10 583
Adjustment for non-cash items, etc.	-28 112	-3 540
Income tax paid	-	-
Cash flow from operating activities before changes in working capital	-7 070	7 043
Cash flow changes in working capital	8 428	-426
Cash flow from operating activities	1 358	6 617
Acquisitions/disposals of private equity fund
investments, net	7 952	994
Other financial investments	-19 320	-1 840
Cash flow from investing activities	-11 368	-846
Repurchase of own shares	-3 100	-38 151
Cash flow from financing activities	-3 100	-38 151
Cash flow during the period	-13 110	-32 380
Cash and cash equivalents, beginning of the year *	449 671	383 807
Exchange-rate differences in cash and cash equivalents	234	-39
Cash and cash equivalents at the end of the
period	436 795	351 388
* Including short-term investments

Parent Company Income Statement

Amounts in SEK 000s

	2018	2017
	1/1-03/31	1/1-03/31
Operating costs	-1 115	-929
Operating profit/loss	-1 115	-929
Net financial items	853	-375
Profit /loss after financial items	-262	-1 304
Income taxes	-	-
Net profit/loss for the period	-262	-1 304

Parent Company Statement of Comprehensive Income Amounts in SEK 000s

Total comprehensive income for the period	-262	-1 304
Net profit/loss for the period	-262	-1 304
	1/1-03/31	1/1-03/31
	2018	2017

Parent Company Balance Sheet

Amounts in SEK 000s

	2018	2017
	03/31	12/31
Assets
Shares in subsidiaries	481 802	481 802
Receivables on group companies	26 426	25 312
Total non-current assets	508 228	507 114
Other receivables	509	161
Cash and cash equivalents	281 672	286 330
Total current assets	282 181	286 491
Total assets	790 409	793 605
Equity	789 568	792 930
Current liabilities	841	675
Total equity and liabilities	790 409	793 605

Parent Company Statement of Changes in equity Amounts in SEK 000s

	2018	2017	2017
	1/1-03/31	1/1-12/31	1/1-03/31
Equity at the beginning of the year	792 930	843 372	843 372
Repurchase of own shares	-3 100	-60 234	-38 151
Total comprehensive income for the period	-262	9 792	-1 304
Shareholder's equity at the end of the period	789 568	792 930	803 917

Note 1

Operating costs Amounts in SEK 000s

	2018	2017
	1/1-03/31	1/1-03/31
Fee to the investment advisor	-1 828	-1 972
Carried interest to the investment advisor	-247	-154
Personnel expenses	-449	-378
Other operating costs	-869	-734
	-3 393	-3 238

No related party transaction occurred during the period, except for remunerations to the board members and the managing director.

Note 2

Financial assets and liabilities

NAXS's financial instruments consist of fund investments, cash and cash equivalents and accounts payable. Level 3 investments includes only the Company's publicly traded share of the fund holdings / securities of unlisted companies (in some cases, also listed companies). When observable prices are not available for these securities, the fund manager uses one or more valuation techniques (e.g. yield methods or income-based methods), or a combination of techniques, for which sufficient and reliable data are available. Within Level 3, the market approach generally uses earnings multiples of comparable companies, while the income-based approach generally uses the present value of estimated future cash flows, adjusted for liquidity, credit, market and/or other risk factors.

For NAXS, the book value of all financial assets and liabilities corresponds to fair value. All amounts are shown in the reported balance sheets.

Definitions

Buyout fund

A private equity fund, whose strategy is to acquire a controlling interest in the targeted companies

Cash & cash equivalents Cash, bank and short-term investments

Cash per share

Cash & cash equivalents in relation to the number of outstanding shares at the end of the period

Commitment The maximum amount that a limited partner agrees to invest in a fund

Current commitments

Acquisition cost for private equity fund investments, plus remaining commitments to private equity funds

Gross IRR

The internal rate of return generated annually at the underlying private equity funds' level, before the deduction of the management fees and carried interest. The calculation includes all payments to the funds and all distributions from the funds since their inception, but excludes the management fees and carried interest

Net asset value (NAV)

The fair value of total assets, less net debt (corresponds to equity)

Net asset value (NAV) per share

The fair value of total assets, less net debt (corresponds to equity) in relation to the number of outstanding shares at the end of the period

Net cash/Net debt

Cash and cash equivalents, short-term investments and interest-bearing current and longterm receivables, less interest-bearing current and long-term liabilities

Other investments Investments in financial instruments other than private equity funds

Private equity fund investments Fair value of investments in private equity funds

Special situations fund

A private equity fund, whose strategy is to acquire companies, where an active ownership is required, such as under-performing companies, and/or imply complex transactions, such as carve-outs from larger conglomerates.

Total assets

All assets and liabilities not included in net debt or net cash, which is the same as the balance sheet total, less asset items included in net debt or net cash and less non-interestbearing liabilities

Total exposure to private equity fund investments and other investments Private equity funds investments and remaining commitments to private equity funds, as well as other investments