Q2 2017 Axactor AB August 14, 2017
Key highlights Q2 * * REVENUE ERC EBITDA CASH EBITDA * CASH BALANCE 26.9 511 6.1 9.4 19.6 EUR MILLION EUR MILLION EUR MILLION EUR MILLION EUR MILLION +245% y/y +20% q/q 26% margin • 3PC growth 18% compared to Q1 • Successful entry to secured space in Spain through acquisition of secured portfolio • Deployed EUR 54 million in NPL CAPEX and increased ERC by 20% compared to Q1 • Positive net profit after tax (NPAT) for the first time with EUR 4.6 million reported for the quarter • Increased the borrowing facilities by EUR 71 million to a total of EUR 175 million by end of Q2 • Axactor received EUR 1.6 million cash and EUR 0.4 million in none cash items as settlement with former IGE Board *Includes settlement with former IGE Board members 2
Events after Q2 closing • DNB/Nordea made a 5th tranche of EUR 40 million available with 100% gearing allowed DNB/Nordea facility on new NPLs – total facility increased from EUR 120 million to 160 million • New 3PC Agreements Third party collection growth continues with new agreements announced in Spain 3
Balanced revenue mix Q2 Revenue Distribution per Country Revenue per Quarter (EUR million) 30 26.9 25 Other 7 % GER 19.7 20 18.5 20 % SWE 16 % 15 ITA 11.1 Q2 7 % 10 7.8 26.9m NOR 5 10 % 0 SPA 40 % Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 • Swedish revenue mainly derived from the BN portfolio GER ITA NOR SPA SWE Other acquired in Q1 • Sweden is contributing to further geographical • Other revenue is settlement amount received from diversification former IGE Board members 4
Balanced revenue mix Revenue Development per Product (EUR million) 37% revenue growth in Q2 versus previous quarter 30 • Main driver is NPL collections where BN portfolio acquired 26.9 in Q1 performs strongly 25 • 3PC grows 18% mainly driven by Spain where 7 new 3PC 19.7 agreements were signed in Q2 18.5 20 • Payment services being rolled out in SWE, GER and ITA during 2H 2017 15 11.1 • Other Revenue includes settlement with former IGE board 10 7.8 members. 5 0 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 NPL Portfolios 3PC Payment Services Other 5
Financial performance 1H 2017 vs 1H 2016 Gross Revenue (EUR million) ERC (EUR million) 50 46,6 600,0 511 500,0 40 400,0 +36m 30 +385m or 300,0 or 326% 20 305% 200,0 10,9 126,0 10 100,0 0 0,0 1H 2016 1H 2017 1H 2016 1H 2017 • • Revenue growth driven by additional platforms Book value of NPL portfolios has increased from added (Italy, Germany and Sweden) as well as 64m to 242m from 1H-2016 to 1H-2017 substantial investments in new NPL portfolios. 6
Financial performance 1H 2017 vs 1H 2016 EBITDA (EUR million) CASH EBITDA (EUR million) 1H 2016 1H 2017 1H 2016 1H 2017 9 16 13.0 7.1 7 12 5 8 +15.8m +11.7m 3 or or 4 561% 258% 1 0 -1 -4 -2,8 -3 -5 -4,5 • EBITDA growth driven by increasing business volumes and less cost related to M&A transactions • Positive effects of increased business volume on current operating platform is becoming evident 7
Collection on NPL portfolios vs. Initial business case (EUR million) 18,0 120% • 2016 performance colored by external servicing and replacement of old collection 102% 16,0 97% systems in all countries 100% 91% 14,0 87% • 14,3 Q4-16 collection includes a large settlement of 900k which was not modelled 12,0 80% in initial business case. 10,0 60% 10,4 60% 8,0 8,5 6,0 40% 4,0 3,9 20% 2,0 1,4 - 0% 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 Gross cash Collection on portfolios Performance vs. business case 8
Portfolio Statistics ERC per year (EUR million) Historical Development ERC (EUR million) 600 SPA ITA GER SWE NOR SPA ITA GER SWE NOR 90 510,7 77,5 80 500 65,7 427,1 70 65,0 400 60 51,0 317,1 50 42,2 300 253,2 36,2 40 30,9 27,2 200 30 24,0 21,3 126,0 18,6 16,6 20 14,8 13,0 100 6,8 10 0 0 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 y1 y2 y3 y4 y5 y6 y7 y8 y9 y10 y11 y12 y13 y14 y15 • • ERC increase of 20% compared to previous quarter Increase in Y2 and Y3 improved by forecasted collection on new secured portfolio in Spain 9
Portfolio Statistics Capex (EUR million) Book value Portfolios (EUR million) SPA ITA GER SWE NOR SPA ITA GER SWE NOR 66,5 70 300 60 242,1 54,3 250 50 191,9 200 40 33,8 150 128,0 30 98,7 100 20 63,7 13,6 50 10 1,3 0 0 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 -10 • Two smaller portfolios acquired in Italy in Q2-17 • Entire 2017 NPL CAPEX budget deployed within H1. • Large NPL portfolio acquired in Spain in Q2-17 • First secured portfolio for Axactor acquired in Spain during the quarter
Q2 Income statement Income statement Key comments 2Q 2Q • 36.6% revenue growth compared to Q1-17 EURO 1000' 2017 2016 Income 26 922 7 792 • Double digit EBITDA margin Amortization of debt portfolios -3 290 -845 Net revenue 23 632 6 948 • Cash EBITDA above EUR 9 million Personnel expenses collection -6 640 -1 644 Personnel expenses other -3 601 -2 250 • First full quarter including Profact Operating expenses -7 246 -6 453 EBITDA 6 145 -3 399 • Interest cost for the quarter is EUR 1.5 million Amortization and depreciation -1 148 -719 EBIT 4 997 -4 119 • Positive one-off revenue item of EUR 2.0 million Financial revenue 1 849 1 845 Financial expenses -1 633 -894 Net financial items 216 951 Profit/(loss) before tax 5 213 -3 167 Tax expense -582 379 Net profit/(loss) from continued operations 4 631 -2 788 Result for the period attributable to: Equity holders of the Parent Company 4 631 -2 788 Result for the period 4 631 -2 788 CASH EBITDA 9 401 -2 085 NORMALIZED EBITDA 6 145 -203 11
Market trends in NPL unsecured Germany Spain • • Strong macro situation increasing the long term High volume of transactions expected to continue across expected recovery all sizes and products • • Strong competition on NPL portfolios, but limited Strong focus on legal actions, focused on benefiting from number of competitors longer term macro recovery • • Increasing number of forward flow contracts Inventory sales becoming fresher. • Prices stabilized during first half 2017 Italy • Sweden Limited number of large sales • • High volume of medium / small transactions Key financial institutions expected to move to fresh • forward flow, or regular sales (annual) High competition from several purchasers • • Some inventory sales expected over time Sales still primarily inventory • Prices relatively stable Norway Comments: • • Key financial institutions expected to move to fresh High consolidation and diversification activity forward flow, or regular sales (annual) • Attractive industry for financial gearing • Limited number of inventory sales expected • Potential new markets available • Strong volumes from consumer banks • Significant number of transactions expected across Europe • Prices relatively stable 12
2H 2017 main focus areas • Ensure volume growth on current platform and new SPV NPL acquisitions – Primary Sales from FI • Growth in the “Forward Flow deals” segment • Roll-out of Payment Services in SWE, ITA and GER Product and market strategy • Focus on growth in existing geographical markets • Build up of secured capabilities Entering Secured NPL market in Spain • Performance ramp up on secured portfolios • New collection systems in all countries Operational improvements and systems implementation • Implementing standard IT platform and systems • Bank refinancing Future funding structure • Secure senior debt for the Co-invest SPV 13
Overview Operational systems – “One Axactor” Country NEW COLLECTION SYSTEM Gira Ikaros Predator Recupera Aptic specific DIALER Altitude Altitude Altitude Altitude Altitude IT INFRASTRUCTURE Intility Intility Intility Intility Intility ERP SYSTEM/ INC. HR UBW UBW UBW UBW UBW DEBTOR PORTAL Standard/TBD Standard/TBD Standard/TBD Standard/TBD Standard/TBD Group BI/DATA WAREHOUSE MicroStrategy MicroStrategy MicroStrategy MicroStrategy MicroStrategy systems CRM Dynamics 365 Dynamics 365 Dynamics 365 Dynamics 365 Dynamics 365 INTEGRATION BROKER Standardize Standardize Standardize Standardize Standardize DIGITALISATION Started Started Started Started Started PAYMENT SERVICES Axactor Office Axactor Office Axactor Office Axactor Office Axactor Office 14
Co-investment partnership and equity issue
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