presentation Axactor SE April 26, 2019 Q1 2019 - Key highlights - PowerPoint PPT Presentation

Q1 2019 presentation Axactor SE April 26, 2019

Q1 2019 - Key highlights ERC EBITDA and margin Cash EBITDA Gross revenue (EUR million) (EUR million) 1 717 +72% +121% 244 +225% +263% 1 001 30% 274 1,473 17% 1 473 726 41 91 18 59 6 22 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 NPL REO Revenue more than doubling and with continued margin expansion • • EUR 8 million Earnings Before Tax – up 47% from Q4 2018 • CAPEX of EUR 69 million invested in NPL portfolios – mainly forward flow contracts • Released EUR 100m of additional funding from RCF accordion option and EUR 50m from Bond Tap • 2019 planned CAPEX deployment of EUR 400-450m 2

Attractive European NPL market • Q1’19 NPL gross revenue of EUR 52.4m (20.9) • NPL contribution margin of EUR 27.1m (10.4) or 77% of net revenue (67%) • Steady flow of new portfolios coming to the market • Attractive opportunities in all Axactor markets • Declining portfolio prices - “ Axactor markets” trading at 12-14% IRR 3

The REO sales growing REO gross revenue (EUR million) • Q1 REO gross revenue of EUR 24.7m (8.7) • Sales growth of 22% vs Q4’18 - and return to 25 profitability 22 20 • REO contribution margin of EUR 2.8 or 11%, 19 up from EUR -0.8m (- 4%) in Q4’18 • Prioritizing margins over sales volumes and expecting positive sales trend to continue in 9 Q2’19 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 4

Improved funding • ~EUR 185m in increased funding capacity Axactor Invest 1 funding (EUR million) • EUR 100m accordion option in February • EUR 50m bond tap option in March 350 15 • EUR 15m equity investment and 15 45 300 20 30 • EUR 20m loan from Geveran to Axactor 45 30 Invest 1 in April’19 140 120 • Upgrading 2019 investment level from EUR 350-400m to EUR 400-450m 120 120 Pre-upsize Post-upsize Equity Axactor Mezzanine loan Geveran Equity Geveran RCF Facility 5

Revenue growth and margin improvement Gross revenue development EBITDA (EUR million) and Cash EBITDA (EUR million) EBITDA-margin (EUR million) 30 60 100 59 30% 90 29% 91 25 50 80 45 75 70 22 20 40 21% 41 67 20% 20 60 17% 57 33 15 30 50 40 41 10 20 11 30 10 18 20 5 10 6 10 0 0 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 6

NPL and REO growth from Q4 to Q1 Gross revenue per segments (EUR million) 100 • NPL collection up 32% from Q4’18, driven by large 91 90 investments in Q4’18 80 • REO sales up 22% from Q4’18 75 67 70 • 3PC with 22% y/y growth 60 57 • Stable ARM business before roll-out to new markets 50 41 40 30 20 10 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 NPL portfolios REO portfolios 3PC ARM 7

More balanced geographical footprint REO portion set to decline over time REO; 14% REO; 27% ESP; 30% ESP; 32% FIN; 12% Q1-2019 Q1-2019 Gross revenue ERC EUR 90.7m EUR 1,717m FIN; 6% ITA; 10% NOR; 11% ITA; 7% NOR; 13% SWE; 5% SWE; 11% DEU; 10% DEU; 12% 8

NPL portfolio

Strong NPL growth – solid collection performance NPL gross revenue development (EUR million) Actual collection vs. original business case (LTM, rolling) 60 110 % 105 % 105 % 105 % 104 % 50 105 % 52 103 % 101 % 100 % 40 100 % 40 96 % 30 95 % 31 91 % 25 20 90 % 21 10 85 % 0 80 % Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 10

NPL: Investments set to increase through 2019 Quarterly NPL investments (EUR million) 400 • CAPEX deployment in several NPL forward 350 329 flow contracts 300 • Acquired new Spanish NPL portfolio in April: 250 • Outstanding balance of EUR 77m across 22,000 claims 200 150 100 69 69 47 50 17 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 ESP NOR DEU SWE ITA FIN 11

NPL: Forward flow build-up Estimated FF from signed contracts (EUR million) 30 27 27 26 25 • Graph illustrates already contracted volumes 24 24 25 23 23 23 23 22 • Additional volumes (on top) from renegotiations/ 20 19 renewals with improved IRRs • Estimated forward flow volume of EUR 286m from 15 signed contracts in 2019, of which EUR 219m remaining (rest of 2019) 10 5 0 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Actual FF investments Estimated FF from signed contracts 12

NPL ERC: Growing and more diversified ERC development (EUR million) Forward ERC profile by year (EUR million) 1 600 250 1 473 1 388 225 211 1 400 201 200 1 200 175 151 1 000 150 132 821 117 800 125 726 729 105 94 100 600 84 75 67 75 60 400 53 47 50 42 34 200 25 0 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 ESP NOR DEU SWE ITA FIN ESP NOR DEU SWE ITA FIN 13

REO portfolio

REO sales growth REO gross revenue development (EUR million) 30 • Q4 issues with notary & stamp costs resolved • First small bulk sale closed in Q1 25 • Continued ramp-up of sales expected in Q2 22 20 20 • Margin prioritized over sales volume 19 10 9 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 15

REO ERC: Protecting margins – flatter sales curve REO ERC per year (EUR million) 140 • REO sales of EUR 24.7m in Q1’19 123 • 555 units at average price of EUR 44k 120 Total REO ERC Q1 2019: 5,773 units remaining in inventory • EUR 244m • Good cash-flow 100 • Remaining ERC lowered by EUR 6m (2.5%) 80 68 Asset value largely intact. However, discounts • slightly higher than business case 60 • Prioritizing margins over volumes 37 40 Expecting a flatter ERC curve going forward • 16 20 0 Y1 Y2 Y3 Y4 16

The REO exposure will be quickly reduced going forward ERC by segment 2000 • No new REO portfolio acquisitions REO 14% 1500 • Current REO portfolio to be halved over next 12 months • Investments in NPL will reduce the share of REO ERC 1000 REO further in 2019 27% 500 NPL NPL 73% 86% 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 17

3PC & ARM

Growing the platform business Gross revenue (EUR million) • 3PC sales up 22% y/y 15 • Collection platforms established in all six markets 3PC ARM • Product synergies in terms of business origination, 1 collection execution and data generation 12 Customer relationships with leading financial • 10 institutions, including nine of the top 10 Spanish banks • Increasing contribution of cash rich and capital light earnings for reinvestments 5 • ARM platform to be rolled out to more markets 0 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 19

Financials

Contribution per segment Contribution per segment (EUR million) Excluding unallocated overhead cost • NPL: Continued contribution growth 40 35 77% contribution margin of net revenue • 30 • REO: Return to profitability 25 11% contribution margin in Q1’19 vs. - 4% in Q4’18 • 20 • 3PC: Steady y/y improvement – normal seasonality 15 27% contribution margin • 10 • ARM: Marginal changes 5 42% contribution margin • 0 -5 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 NPL portfolios REO portfolios 3PC ARM 21

Cost efficiency increasing with scale Revenue, Local SG&A, IT and Corporate costs, LTM 300 • One Axactor - Clear strategy with focus on 30 % 250 streamlined organization secures scalable platform 25 % • Standardization reduces costs and improves cross- 200 21 % border cooperation 18 % • Expect to leverage scale benefits further over the 17 % 150 coming years 100 50 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Net revenue EBITDA Local SG&A, IT and corporate cost 22

Net finance, tax and net profits Condensed Income statement Key comments • Total net financial cost of EUR 11.9m For the quarter end/YTD Full year 2018 EUR thousand 31 Mar 2019 31 Mar 2018 • Interest cost of EUR 10.9m, of which EUR 1.5m EBIT 19,875 4,757 40,298 amortized loan fees Financial revenue 16 91 453 • Average blended interest costs of 5.0% Financial expenses -11,919 -5,541 -34,591 Net financial items -11,903 -5,450 -34,138 • Negative net FX impact of EUR 0.4m Profit/(loss) before tax 7,972 -693 6,160 • Tax expense of EUR 3.3m Tax (expense) -3,348 -303 -3,770 • 42% effective tax rate Net profit/(loss) after tax 4,624 -996 2,390 • Some entities not yet in position to recognize tax Net profit/(loss) to Non-controlling interests 2,584 425 -2,103 losses Net profit/(loss) to equity holders 2,040 -1,421 4,492 • Net profit of EUR 4.6m Earnings per share: basic 0.013 -0.001 0.029 Earnings per share: diluted 0.012 -0.001 0.026 • EUR 2.0m to equity shareholders • EUR 2.6m to non-controlling minorities

Balance sheet structure Assets (EUR million) Equity & Liabilities (EUR million) 1,198 1,198 51 1,108 1,108 125 43 71 29 26 82 82 962 842 842 929 Cash Other 79 Other 787 198 IB debt 737 Intangibles 20 Equity 78 Portfolios 467 547 360 328 296 Q1-19 Q1-18 YE 2018 Q1-19 Q1-18 YE 2018 24