NAXS — Interim / Quarterly Report 2019

Apr 25, 2019

NAXS AB (publ) Interim Report January-March 2019

First quarter 2019

• Net profit for the first quarter amounted to MSEK 15.8 (21.0).
• Earnings per share amounted to SEK 1.33 (1.55).
• Net asset value amounted to MSEK 759 (SEK 63.75 per share) at March 31, 2019, compared to MSEK 736 (SEK 61.81 per share) at December 31, 2018.
• Net cash amounted to MSEK 260 (SEK 21.87 per share) at March 31, 2018, compared to MSEK 261 (SEK 21.94 per share) at December 31, 2018.

Distribution of profits

The Board of Directors previously communicated its intention to make the level of the proposed dividend for FY 2018 dependent on the amount that may have been distributed under the form of share repurchases during the first quarter of 2019.

The Board of Directors stated that the actual level of the dividend would be set as the difference between SEK 33,359,931 (corresponding to SEK 2.80/share) and the amount that has been distributed under the form of share repurchases during the period between January 1 and March 31, 2019.

NAXS repurchased shares for a total amount of SEK 205,289 during the period between January 1 and March 31, 2019. Therefore, the amount that remains available to be paid as dividend for the fiscal year 2017 is SEK 33,154,642, corresponding to SEK 2.78/share. The Board of Directors therefore proposes to the Annual General Meeting the payment of a dividend of SEK 2.78/share for FY 2018. 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 experienced a steady development during the first quarter of 2019, with the NAV/share increasing by 3.1%.

The company continued to build on its position in Awilco Drilling during the period, acquiring 94 974 additional shares in a new issue.

In regard to the distribution of profits for FY 2018, the board of NAXS is proposing to the Annual General Meeting, which will take place on June 4, the payment of a dividend of SEK 2.78/share. The proposed dividend

represents 4.5% of the NAV at December 31, 2018 and a dividend yield of 5.7% calculated on the share price as of March 31, 2019. The level of the proposed dividend is consistent with the dividends paid by the Company during the previous years.

Lennart Svantesson

Financial summary

	2019 1/1–03/31	2018 1/1–03/31
Net profit/loss for the period, KSEK	15 839	21 042
	2019 03/31	2018 12/31
Private equity fund investments, KSEK	436	406 861
Private equity fund investments in % of equity	026 57	55
Remaining commitments, KSEK	73 313	86 953
Total exposure to private equity fund investments, KSEK	509	493 814
Other investments, KSEK	339 64 052	56 784
Net cash, KSEK	260	261 444
Private equity fund investments per share, SEK	430 36.61	34.15
Other investments per share, SEK	5.38	4.77
Net cash per share, SEK	21.87	21.94
Net asset value per share, SEK	63.75	61.81
Share price, SEK	48.40	47.90

Operations

NAXS AB (publ) ("NAXS" or the "Company") is a company listed on NASDAQ Stockholm and investing primarily in private equity funds with a Nordic focus. NAXS 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

Despite recurring concerns about global growth, financial markets experienced a strong development during the first quarter and private equity activity continued at a good pace in the Nordic region. The IPO market, however, remained largely unavailable as an exit route for private equity managers.

Investment portfolio

Private equity fund investments

As of March 31, 2019, NAXS had commitments to 11 private equity funds (10 buyout funds and 1 special situations fund):

• private equity fund investments amounted to KSEK 436, which corresponds to 57 percent of the Company's equity;
• remaining commitments amounted to KSEK 73.

Other investments

As of March 31, 2019, NAXS held 2 direct investments in listed shares:

• 375,437 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, 2019, the holding of NAXS in Scout Gaming Group was valued at KSEK 9.7 (11.5)
• 828,319 shares in Awilco Drilling Plc, a UK-based drilling contractor. The shares are listed on the Oslo Stock Exchange. 94 974 shares were acquired in a new share issue during the first quarter for 3.0 MSEK. As of March 31, 2018, the holding of NAXS in Awilco Drilling was valued at KSEK 29.0 (21.0).

In addition, NAXS held as of March 31, 2019, a senior secured bond issued in 2018 by Jacktel AS, a wholly-owned subsidiary of Master Marine AS. The Bond has a tenor of 5 years and a coupon of 10% p.a., with quarterly interest payments. As of March 31, 2019, the holding of NAXS in Jacktel was valued at KSEK 25.3 (24.2).

Exposure to private equity fund investments and other investments

As of March 31, 2019, the total exposure to private equity fund investments and other investments amounted to KSEK 573, which corresponds to 76 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)

The net asset value (NAV) per share increased by 3.1% during the first quarter of 2019, and by 10.2% over 12 months (including dividend paid).

New investments, acquisitions and liquidity events

Investments

During the first quarter, NAXS acquired 94,974 shares in a new issue by Awilco Drilling PLC for a total amount of MSEK 3.3.

Company	Sector	Country	Size of investment
Awilco Drilling	Energy (offshore drilling operator)	Norway	MSEK 3.3

Acquisitions

1 new investment was made by underlying funds during the quarter, with JAB Global Consumer Brands II acquiring Compassion First Pet Hospitals, a US chain of veterinary clinics.

Company	Sector	Country	Fund
Compassion First Pet Hospitals	Healthcare	USA	JAB GCB II

Liquidity events

2 full exits took place during the first quarter, with Intera I divesting Normek, a Finnish steel and glass façade manufacturer and Valedo II signing an agreement for the sale of Cambio Healthcare, a Swedish healthcare IT solution provider.

Portfolio Company	Sector	Year of initial investment	Fund
Normek	Building & construction	2008	Intera I
Cambio Healthcare	Healthcare	2012	Valedo II

As of March 31, 2019, NAXS underlying funds had acquired a total of 130 companies, 78 of which had been fully divested. These 78 exits have generated an average gross IRR of 20%. The average holding period for the remaining 52 portfolio companies is approx. 4.7 years.

March 31, 2019

• Total exposure to private equity fund investments: 67% of total equity
• Private equity fund investments: 57% of total equity
• Number of full exits since inception: 78
• Average gross IRR since inception generated by the 78 exits: 20%

Portfolio composition/diversification

As of March 31, 2019, NAXS provided the following exposure:

• 11 private equity funds (10 buyout funds and 1 special situations fund) from 8 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 JAB Consumer Fund – Global	2011	EUR	7,250
Consumer Brands II	2018	USD	5,000*
Mimir Invest AB	2017	SEK	50,000
Nordic Capital CV1	2018	EUR	14,654
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

* as part of a consortium

• 5 different fund vintages and a diversification in terms of size segments, as illustrated below (based on current commitments):

• 52 portfolio companies (remaining after 78 exits) acquired by underlying funds over a period of approx. 11 years, with the 10 largest portfolio companies accounting for less than 37% of the total equity and no single portfolio company accounting for more than 5.5% 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):

• direct investments in 2 listed companies and 1 bond:

Company	Sector	Type of instrument	Timing of initial investment	Acquisition cost
Scout Gaming Group	iGaming	listed share (NASDAQ First North)	Q4 2017	MSEK 9.5
Awilco Drilling	Energy	listed share (Oslo Exchange)	Q1 2018	MNOK 28.1
Jacktel/Master Marine	Energy	senior secured bond	Q4 2018	MUSD 3.0

Underlying funds

Summary information regarding NAXS' underlying funds is provided below:

Fund	Fund size	Segment	Vinta ge	Geographic focus	# of portfolio companies	# of exits
Apax Europe VII	MEUR 11,000	large cap	2008	Europe/Global	12	24
FSN Capital III	MEUR 375	mid cap	2008	Norway/Nordic	1	9
Herkules PE III	MNOK 6,000	mid cap	2008	Norway/Nordic	3	8
Intera Partners I	MEUR 125	small cap	2007	Finland	2	5
Intera Partners II	MEUR 200	small cap	2011	Finland	7	4
JAB Consumer Fund – GCB II	MEUR 5,000	large cap	2018	Global	3	0
Mimir Invest	<MSEK 500	small cap	2017	Primarily Nordic	4	0
Nordic Capital VII	MEUR 4,300	mid/large cap	2008	Primarily Nordic	3	16
Nordic Capital CV1	MEUR 2,500	mid/large cap	2018	Primarily Nordic	9	0
Valedo Partners I	MSEK 1,000	small cap	2007	Sweden	0	9
Valedo Partners II	MSEK 2,000	small cap	2011	Sweden	8	3

Group

Financial performance, January-March 2019

Operating profit/loss

The operating profit/loss amounted to KSEK 17,400 (27,710) for the first quarter. The operating profit/loss includes a change in value of private equity fund investments of KSEK 17,637 (29,693) and in other financial investments of KSEK 3,883 (1,410). Realized profit/loss in investments in private equity funds amounts to KSEK -633 (-4.340), and unrealized profit/loss amounted to KSEK 18,270 (34,033). The currency effects are included in the changes in value and amounted to KSEK 2,450 (17,106) for the first quarter. Interest income related to other investments amounted to 688 (-) TSEK, and unrealized profit/loss amounted to KSEK 3,195 (1,410). Operating expenses amounted to KSEK 4,121 (3,393).

January 1– March 31, 2019

Changes in value of private equity fund investments: KSEK 17,400, whereof currency effects on private equity fund investments KSEK 2,450 Changes in value of other investments: KSEK 3,883

Financial items

Financial items net totaled KSEK -1561 (-6,668) for the first quarter. Interest expenses on cash in banks amounted to -228 (-611). Exchange rate profit/loss amounted to KSEK -1,333 (-6,057).

Tax and net profit

The Group's profit/loss after financial items for the first quarter amounted to KSEK 15,839 (21,042). Income taxes amounted to KSEK 0 (0). Net profit/loss after tax amounted to KSEK 15,839 (21,042). Earnings per share were SEK 1.33 (1.55).

Investments, financing and liquidity

Private equity fund investments

During the first quarter, net investments (-)/repayments (+) from private equity funds amounted to KSEK -6,048 (7,952) whereof KSEK -633 (-4,340) is realized profit/loss in investments in private equity funds. As of March 31, 2019, private equity fund investments amounted to KSEK 436,026 (383,862).

March 31, 2019

• Private equity fund investments per share: SEK 36.61

Other investments

During the first quarter, NAXS invested KSEK 3,233 in a private placement of new shares by Awilco Drilling Plc. As of March 31, 2019, Other Investments amounted to KSEK 64,052.

Financing

The Group is financed with shareholders' equity. Shareholders' equity amounted to KSEK 759,248 (736,371) at the end of the first quarter, corresponding to SEK 63.75 (61.81) per share and an equity/asset ratio of 100 (100) percent.

March 31, 2019

• Equity per share: SEK 63.75

Net cash

At the end of the first quarter, net cash amounted to KSEK 260,430 (261,444), which corresponds to SEK 21.87 (21.94) per share. During the 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, 2019 • Net cash per share: SEK 21.87

Significant risks and uncertainty factors

Significant risks and uncertainty factors are described in the Annual Report 2018. There has been no significant change in relation to risks and uncertainty factors since the publication of the Annual Report.

Future prospects

While the financial markets have been generally supportive during the first quarter, it is unclear whether investor sentiment will retain its strength in the short- to medium-term, as fears of a global slowdown intensify. We therefore expect private equity activity and valuations to experience volatility in the coming quarters.

Parent company

The parent company has not had any sales during the first quarter. The profit/loss after financial items amounted to KSEK -769 (-262). The net interest income amounted to KSEK -102 (-260) and exchange rate profit/loss amounted to KSEK 388 (1,113). Income tax amounted to KSEK 0 (0). The net profit/loss amounted to KSEK -769 (-262).

Organization

The Company's CEO is Lennart Svantesson. The Board of Directors consists of John D. Chapman (chairman), Damhnait Ni Chinneide, Tony Gardner-Hillman and Andrew Wignall, who were re-elected at the 2018 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 11,914,261. During the interim period 4,200 shares were repurchased. The number of outstanding shares in the Company at the end of the interim period was 11,910,061. At the end of the interim period, the NAXS share price was SEK 48.40 and the total shareholders' equity per share was SEK 63.75. The Company's market capitalization was MSEK 576 and the number of shareholders was 1,107.

Evolution of the share price during Q1 2019

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 2018. 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 2018 Annual Report and in the definitions on page 20 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 4, 2019 Lennart Svantesson, CEO Interim Report (6 months): July 16, 2019 +46 73 311 00 11 Interim Report (9 months): October 18, 2019 lennart.svantesson@naxs.se Year-end report 2019: January 29, 2020 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 25, 2019.

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

Stockholm, April 25, 2019

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

Financial reports summary

Consolidated Income Statement Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Change in value	21 521	31 103
Operating costs Note 1	-4 121	-3 393
Operating profit/loss	17 400	27 710
Net financial items	-1 561	-6 668
Profit/loss after financial items	15 839	21 042
Income taxes	-	-
Net profit/loss	15 839	21 042
Attributable to:
Parent company shareholders	15 839	21 042
Earnings per share, SEK*	1.33	1.55
Average number of shares, 000s*	11 912	13 607
* Basic and diluted

Consolidated Statement of Comprehensive Income Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Net income	15 839	21 042
Other comprehensive income
Items which will be reversed to the income statement
Exchange differences	7 242	7 565
Total comprehensive income	23 081	28 607
Attributable to:
Parent company shareholders	23 081	28 607
Total comprehensive income	23 081	28 607

Consolidated Balance Sheet Amounts in SEK 000s

	2019	2018
	03/31	12/31
Assets
Private equity fund investments	436 026	406 861
Other long-term holdings of securities	64 052	56 784
Total non-current assets	500 078	463 645
Other receivables	488	12 330
Cash and cash equivalents	260 430	261 444
Total current assets	260 918	273 774
Total assets	760 996	737 419
Equity	759 248	736 371
Current liabilities	1 748	1 048
Total equity and liabilities	760 996	737 419

Consolidated Net cash Amounts in SEK 000s

Cash, bank and short-term investments 260 430	261 444

Consolidated Statement of Changes in Equity

Amounts in SEK 000s

	2019	2018	2018
	1/1-03/31	1/1-12/31	1/1-03/31
Equity at the beginning or the year	736 372	820 567	820 567
Repurchase of own shares	-205	-88 408	-3 100
Dividend	-	-32 209	-
Total comprehensive income for the period	23 081	36 421	28 607
Shareholder's equity at the end of the period	759 248	736 371	846 074

Consolidated Statement of cash flows analysis Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Profit/loss after financial items	15 839	21 042
Adjustment for non-cash items, etc.	-20 134	-28 112
Income tax paid	-	-
Cash flow from operating activities before changes in working capital	-4 295	-7 070
Cash flow changes in working capital	12 710	8 428
Cash flow from operating activities	8 415	1 358
Acquisitions of private equity fund investments	-12 148	-4 517
Disposals of private equity fund investments Acquisitions of other long-term holdings of	6 100	12 469
securities	-3 233	-19 320
Cash flow from investing activities	-9 281	-11 368
Repurchase of own shares	-205	-3 100
Cash flow from financing activities	-205	-3 100
Cash flow during the period	-1 071	-13 110
Cash and cash equivalents, beginning of the year *	261 444	449 671
Exchange-rate differences in cash and cash equivalents	57	234
Cash and cash equivalents at the end of the period	260 430	436 795

* Including short-term investments

Parent Company Income Statement

Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Operating costs	-1 055	-1 115
Operating profit/loss	-1 055	-1 115
Net financial items	286	853
Profit /loss after financial items	-769	-262
Income taxes	-	-
Net profit/loss for the period	-769	-262

Parent Company Statement of Comprehensive Income Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Net profit/loss for the period	-769	-262
Total comprehensive income for the period	-769	-262

Parent Company Balance Sheet

Amounts in SEK 000s

	2019	2018
	03/31	12/31
Assets
Shares in subsidiaries	481 802	481 802
Receivables on group companies	26 717	26 328
Total non-current assets	508 519	508 130
Other receivables	546	133
Cash and cash equivalents	179 340	181 203
Total current assets	179 886	181 336
Total assets	688 405	689 466
Equity	687 864	688 838
Current liabilities	541	628
Total equity and liabilities	688 405	689 466

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

	2019	2018	2018
	1/1-03/31	1/1-12/31	1/1-03/31
Equity at the beginning of the year	688 838	792 930	792 930
Repurchase of own shares	-205	-88 408	-3 100
Dividend	-	-32 209	-
Total comprehensive income for the period	-769	16 525	-262
Shareholder's equity at the end of the period	687 864	688 838	789 568

Note 1

Operating costs Amounts in SEK 000s

	2019	2018
	1/1-03/31	1/1-03/31
Fee to the investment advisor	-1 614	-1 828
Carried interest to the investment advisor	-1 385	-247
Personnel expenses	-388	-449
Other operating costs	-734	-869
	-4 121	-3 393

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 long-term holdings of securities/ Other investments

Investments in financial instruments other than private equity funds

Private equity fund investments

Fair value of investments in private equity funds

Profit per share

Profit for the year attributable to the Parent Company's shareholders divided by the average number of shares.

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.