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presentation Axactor SE February 13, 2019 From start-up to top-10 - - PowerPoint PPT Presentation

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Q4 2018 presentation Axactor SE February 13, 2019 From start-up to top-10 player in Europe in 3 years Estimated Remaining Collection 1.7 (ERC in EUR bn) Axactor has become a leading European debt management provider

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SLIDE 1

Q4 2018 presentation

Axactor SE February 13, 2019

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SLIDE 2

From start-up to top-10 player in Europe in 3 years

  • Axactor has become a leading

European debt management provider

  • Accumulated investments of

>EUR 1bn since inception

  • Established collection platform

companies in six countries

€ 0.3 € 0.9

€ 1.7

2016 2017 2018 Estimated Remaining Collection (ERC in EUR bn)

2

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SLIDE 3

Generated strong revenue growth

  • More than doubling of revenues
  • Growth in all segments
  • Investments and contracts

signed in 2018 point towards continued revenue growth in 2019

€ 40 € 105

€ 239

2016 2017 2018 Gross revenue (EUR million)

3

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SLIDE 4

Scalability beginning to show through in earnings

  • Tripling of EBITDA
  • 22% EBITDA-margin
  • Improvement reflecting higher

volumes, better geographical mix and high operational leverage

  • € 6

€ 15

€ 46

2016 2017 2018 EBITDA in EUR million

4

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SLIDE 5

Focus on profitable growth

  • Large and increasing NPL
  • pportunities with attractive

IRR

  • Strengthening the 3PC and

ARM business

  • Relentless focus on

ONEAXACTOR to sharpen the competitive edge

5

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SLIDE 6

Key highlights Q4 2018

  • Continued strong growth in revenue and sharp increase in EBITDA-margin
  • Positive development across all segments
  • High portfolio investments of EUR 334m in Q4, mainly in NPL
  • Planned investment level of EUR 350-400m in 2019

GROSS REVENUE

75

EUR MILLION EBITDA-margin

29

PERCENT EBITDA

20

EUR MILLION CASH EBITDA

45

EUR MILLION CASH BALANCE

71

EUR MILLION

6

+116% y/y +246% y/y +9%p y/y +231% y/y

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SLIDE 7

Events post Q4 closing

7

  • Acquisition of minority shareholder position (10%)

in Axactor Italy S.p.A

  • DnB/Nordea release of EUR 100 million of RCF

accordion option (of total EUR 150 million)

  • Signed small forward flow agreement and acquired

NPL portfolio from a financial institution in Sweden

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SLIDE 8

Growth and margin improvement

8

Gross revenue development (EUR million)

34 41 67 57

75

10 20 30 40 50 60 70 80 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

EBITDA (EUR million) and EBITDA-margin

6 6 11 10

20

20% 17% 20% 21%

29%

5 10 15 20 25 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

Cash EBITDA (EUR million)

13 18 41 33

45

10 20 30 40 50 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

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SLIDE 9

Growth across all segments

9

  • Investment driven NPL growth, with limited effect of

large investments in Q4

  • REO sales on par with previous two quarters
  • Limitations in sales capacity
  • Market pausing in Oct-Nov due to political issues

which were solved in December

  • Healthy 3PC growth boosted by new Spanish

contracts and acquisition of SPT in Finland

  • ARM business stable before roll-out to new markets

34 41 67 57

75

10 20 30 40 50 60 70 80 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 ARM 3PC REO portfolios NPL portfolios

Gross revenue per segments (EUR million)

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SLIDE 10

Growing geographical footprint

10

  • 2018 with gross revenue growth in all countries
  • Positive entry into Finland
  • Revenue of EUR 3m based on one month of
  • peration - exceeding Sweden and Italy
  • Started implementing ONEAxactor
  • Northern Europe expected to grow in relative

importance

  • Signed significant forward flow agreements in

Germany, Norway and Sweden Gross revenue per country (EUR million)

34 41 67 57

75

10 20 30 40 50 60 70 80 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 FIN ITA SWE DEU NOR ESP

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SLIDE 11

EBITDA & Cash EBITDA: Profitability development LTM

11

  • 2018 EBITDA increased to EUR 46m
  • High volume growth
  • Favourable revenue mix
  • High operational leverage
  • 2018 Cash EBITDA increased to EUR 136m
  • NPL cash EBITDA follows collection performance
  • Steady growth in 3PC and ARM
  • REO affected by lower than expected scale-up of

sales, and EUR 2m negative effect of portfolio revaluation at lowest value principle (IFRS) EBITDA (EUR million) and cash EBITDA, Last 12 months

33 47 78 105

136

15 20 24 32

46

25 50 75 100 125 150 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 EBITDA Cash EBITDA

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SLIDE 12

NPL portfolio

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SLIDE 13

NPL: High investment level in more balanced portfolio

13

87 47 17 69

329

50 100 150 200 250 300 350 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

ESP NOR DEU SWE ITA FIN

Quarterly NPL investments (EUR million)

206 187 158 220

462

50 100 150 200 250 300 350 400 450 500 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

ESP NOR DEU SWE ITA FIN

NPL investments (EUR million), LTM rolling

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SLIDE 14

NPL: Step change in total portfolio size

14

317 354 359 419

729

100 200 300 400 500 600 700 800 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

ESP NOR DEU SWE ITA FIN

NPL book value per country (EUR million) ERC development (EUR million)

633 726 729 821

1 388

200 400 600 800 1 000 1 200 1 400 1 600 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

ESP NOR DEU SWE ITA FIN

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SLIDE 15

NPL: Forward flow build-up

15

18 19 24 24 24 25 21 21 21 20 19 19

5 10 15 20 25 30

Estimated FF from signed contracts (EUR million)

  • Continued inflow of new forward flow contracts
  • Several new contracts in Sweden, including large

18-month contract starting up in March

  • Added large financial institution to the client list in

Norway

  • Extended the Instabank partnership to Finland
  • Estimated forward flow of EUR 258m from signed

contracts in 2019

  • Expecting renewal of contracts expiring in 2019
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SLIDE 16

NPL: Estimated collection points to profitable growth

16

183

198 147 124 111 99 89 80 71 64 57 50 44 39 32

25 50 75 100 125 150 175 200 225 250

'19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 ESP NOR DEU SWE ITA FIN

Forward ERC profile by year (EUR million)

92% 91% 100% 96% 101% 103% 105% 105% 105% 80% 85% 90% 95% 100% 105% 110% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Actual collection vs. original business case (LTM, rolling)

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SLIDE 17

REO portfolio

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SLIDE 18

REO: Reduced capex – asset bulk sales in 2019

18

156 99 225 274 161 86 21 6 50 100 150 200 250 300 2017 2018 2017 2018 2019 2020 2021 2022

REO in Spain (EUR million)

  • Axactor tuning down the REO investment level –

deployed only EUR 6m into REO assets in Q4

  • 2019 focus is NPL investments, with good portfolio

availability and increasing IRRs

  • Timing of asset realizations somewhat postponed

due to capacity limitations (bailiff/brokers)

  • Exploring opportunities for bundle sales to add to

regular unit divestments

  • Underlying market, price levels and asset values

remain largely intact

  • Modest negative effect of EUR 2m of total portfolio

revaluation under lowest value principle

Capex ERC ERC by year

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SLIDE 19

Quarterly REO capex, book value and ERC

19

154 193 181 213

200

225 274 250 304

274

50 100 150 200 250 300 350 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

Book value ERC

REO book value and ERC, Spain (EUR million)

147 45 5 44

6

20 40 60 80 100 120 140 160 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

REO investments, Spain (EUR million)

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SLIDE 20

REO – Lifetime KPIs

20

  • Lifetime portfolio performance ahead of original

business case

  • Low quality assets sold at a discount in Q4
  • Average sales prices:
  • Lifetime:

EUR 44 k

  • 2018:

EUR 45 k (2.001 units sold)

  • Q4’18:

EUR 38 k ( 612 units sold)

  • 6,928 units remaining in inventory at YE 2018

*Including assets sold between signing and closing

97 89 Actual Business case 2 223 2 114 Actual Business case

Sales (EUR million)*

  • No. of assets sold*
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SLIDE 21

3PC & ARM

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SLIDE 22

Growing the platform business

  • Targeting a more balanced product portfolio
  • Established 3PC businesses in all markets
  • Strong 3PC offers synergies in terms of business
  • rigination, collection execution and data generation
  • Established customer relationships with leading

financial institutions, including nine of the top 10 Spanish banks

  • Increasing contribution of cash rich and capital light

earnings for reinvestments

  • ARM platform to be rolled out to more markets in

2019

  • Established in Norway and Sweden, moving into

Finland, Germany and Italy

13 2

5 10 15

Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18

3PC ARM

Gross revenue (EUR million)

22

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SLIDE 23

One Axactor

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SLIDE 24

24

  • Digitalization
  • Partnerships
  • Systems
  • Standardization
  • Common KPIs
  • Benchmarking

Structure People Systems AEM 2.0 & IT Sales acceleration Innovation & Digital Basics Scale benefits Partners 2015 2017 2019

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SLIDE 25

Financials

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SLIDE 26
  • 5

5 10 15 20 25 30 35 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 NPL portfolios REO portfolios 3PC ARM

Contribution per segment – excl. unallocated overhead costs

26

  • Stronger NPL contribution due to higher volumes

and more favourable geographical mix

  • Steadily improving 3PC contribution with new

contracts continuing to add volumes

  • Stable development in ARM
  • Slightly negative REO contribution in the quarter
  • Includes EUR -2m effect of portfolio revaluation

at lowest value principle

  • Sold a number of low quality assets with a

discount in Q4, contributing to low margin

*Contribution before unallocated overhead costs

Contribution per segment (EUR million)*

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SLIDE 27

Net finance, tax and net profits

27

  • Total net financial cost of EUR 12.4m in Q4
  • Interest cost of EUR 9.5m, of which EUR 1.4m

amortized loan fees

  • Accrued EUR 2.1m for distr. of interest on Axactor

invest 1 A-notes to non-controlling interests

  • Average blended interest costs of 4.9%
  • Negative net FX impact of EUR 0.3m
  • Tax expense of EUR 2.6m in Q4
  • High effective tax as certain loss-making entities

are not allowed to recognize tax assets

  • Net profit to equity shareholders of EUR 4.4m

Condensed Income statement Key comments

EUR thousand Q4 2018 Q4 2017 2018 2017 EBIT 17 885 4 237 40 297 9 488 Net financial items

  • 12 447
  • 5 596
  • 34 138
  • 7 515

Profit/ -loss before tax 5 438

  • 1 359

6 159 1 974 Tax expense

  • 2 624

706

  • 3 770

611 Net profit/-loss from operations 2 814

  • 653

2 389 2 586 Net profit/-loss to minority interest

  • 1 578
  • 32
  • 2 103
  • 32

Net profit/-loss to equity holders 4 392

  • 622

4 492 2 617 Earnings per share: basic 0.028 0.000 0.029 0.002 Earnings per share: diluted 0.025 0.000 0.026 0.002

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SLIDE 28

Balance sheet structure

28

292 328 299 734 32 45 YE 2017 YE 2018 Other IB debt Equity 471 929 76 82 27 26 49 71 YE 2017 YE 2018 Cash Other Intangibles Portfolios

Equity & Liabilities (EUR million) Assets (EUR million)

622 1,108 1,108 622

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SLIDE 29

Debt maturity profile

  • Net interest bearing debt of EUR 664 million
  • Cash flow from operations within restricted group more than covering investments in forward flow agreements after gearing
  • EUR 150m accordion option with Nordic banks, of which EUR 100m released in February 2019
  • EUR 100m bond tap option
  • Axactor Invest 1 close to fully invested, will reinvest running cash flow through already signed forward flow contracts

29

31.12.2018 31.12.2019 30.12.2020 30.12.2021 30.12.2022 30.12.2023 Revolving Credit Facility, EUR 250m + EUR 150m accordion Axactor Invest 1, EUR120m senior debt facility Bond, EUR 150m + EUR 100m tap option Reolux/Nomura, EUR 99m outstanding balance Axactor Invest 1, EUR 120m mezzanine

Option

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SLIDE 30

Summary & Outlook

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SLIDE 31

Q4 & 2018 Summary

31

  • Continued growth and margin expansion
  • High investments in several markets – step

change in portfolio size

  • Geographical expansion - positive entry

into Finland

  • Continuing to drive efficiency and cost

through “ONEAxactor”

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SLIDE 32

32

  • High investment level in 2018 secures healthy

profitable growth in 2019

  • Increasing revenue expected from 3PC and ARM
  • Margin expansion expected to continue from

2018 to 2019, with quarterly fluctuations

  • High volume of NPL portfolios for sale in our

markets, with portfolio IRRs on the increase

Outlook

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SLIDE 33

Klikk for å redigere tittelstil

AXACTOR Confidential

33

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SLIDE 34

Appendix

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SLIDE 35

Axactor SE (Norway) Axactor Platform Holding AB (Sweden) Axactor Finland Holding Oy (Finland) Axactor Finland Oy Axactor Finland SW Oy SPT Latvija SIA (Latvia) SPT Inkasso OÜ (Estonia) UAB Isieskojimu kontora (Lithuania) Axactor Norway Holding AS (Norway) Axactor Capital AS Axactor Norway AS Axactor Germany Holding GmbH (Germany) Axactor Germany GmbH Heidelberger Forderungskauf GmbH Taloa Equity Management GmbH VABA GmbH Axactor Mobile Services Germany GmbH Heidelberger Forderungskauf II GmbH Axactor España, S.L.U. (Spain) Axactor España Platform S.A. Axactor Sweden Holding AB (Sweden) Axactor Sweden AB Axactor Capital Sweden AB Axactor AS (Norway) Axactor Portfolio Holding AB (Sweden) Axactor Capital Luxembour S.à r.l. Axactor Capital Italy S.r.l Reolux Holding S.à r.l. Beta Properties Investments S.L.U Borneo Commercial Investments S.L.U. Alcala Lands Investments S.L.U. PropCo Malagueta S.L. Proyecto Lima S.L. Axactor Italy Holding S.r.l. (Italy) Axactor Italy S.p.A. Axactor Incentive AB (Sweden) Axactor Invest 1 S.à r.l. (Luxembourg) 75% 75%

Legal Organization February 2019

50% 50%

50% of the shares in Axactor Invest 1 S.à r.l. and Reolux Holding S.à r.l. is held by Geveran Trading Co. Limited (Cyprus). Geveran Trading Co. Limited also holds shares of Axactor SE

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SLIDE 36

P&L statement

36

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SLIDE 37

Balance sheet statement

37 Equity and liabilities Equity attributable to equity holders of the parent Share Capital 8 81 115 79 377 Other paid-in equity 200 298 196 298 Retained earnings profit/(Loss)

  • 14 172
  • 15 630

Reserves

  • 2 817

13 Non-controlling interests 63 746 31 776 Total equity 328 171 291 833 Non-current liabilities Non-current interest bearing debt 9 567 829 237 571 Deferred tax liabilities 11 124 5 887 Other non-current liabilities 3 446 3 002 Total non-current liabilities 582 399 246 459 Current liabilities Accounts payables 4 522 4 029 Current portion of non-current borrowings 9 166 588 61 189 Taxes Payable 1 610 1 376 Other current liabilities 24 513 17 603 Total current liabilities 197 233 84 198 Total equity and liabilities 1 107 802 622 491