Q2 2018 Axactor AB July 25, 2018
Key highlights Q2 2018 GROSS REVENUE ERC EBITDA CASH EBITDA CASH BALANCE 66.7 979 10.6 40.6 121.0 EUR MILLION EUR MILLION EUR MILLION EUR MILLION EUR MILLION +148% y/y +92% y/y +158% y/y * +423% y/y * • Continued margin expansion – EBITDA margin of 20% in Q2 2018 • Cash EBITDA of EUR 41m, illustrating the strong cash flow from the REO segment • More than 1.000 REO units sold (since entering this market segment in 2017) • EUR 23m portfolio investments, as well as several large forward flow deals with start date later in the year • Optimization of co-investment structure with Geveran completed • Completed reverse share split in the ratio of 10:1 2 * Q2 2017 settlement with former IGE board members is excluded
Axactor events post Q2 closing • New funding line for REOs with Nomura International plc • Will release approximately EUR 100m in cash • Lowering funding cost for REOs significantly • Subject to final documentation. Signing/closing within 3 weeks • Signed important forward flow contract in Germany • Expect acquisition cost of EUR 20m over a 12 month period • Complements the large forward flow contract closed in June • Signing a of large unsecured claims from Banco Sabadell: • Conditional to formal authorization of the contract • Outstanding balance of EUR 875m • Added two new outsourcing contracts in Spain • Servicing contracts for secured debt 3
Axactor will establish new credit line for funding of REOs • Axactor will establish a new funding line for REOs with Nomura International plc • The transaction will release cash of approximately EUR 100m and will be used to pay down intercompany loan to Axactor AB • The released funds will be available for Axactor to allocate freely within the group, providing increased flexibility for future investments • The new loan facility will significantly reduce the REO portfolios funding cost • Axactor expects the funds to be available in approximately 3 weeks 4
Standardization is used to reduce costs and to drive efficiency Standardization - “One Axactor ” Positive effects from “One Axactor ” • Intility (IT Infrastructure) • Miratech partnership (AD/AM) IT & SG&A share of cost will continue to 1 • ERP/Finance/HR decrease year over year • Portfolio pricing • Digitalization Efficiency will increase as a result of best − Dialer robot practise sharing 2 − Business Intelligence (BI) • Establishing CoE in different areas − Data Warehouse (DW) Improved operational control through common − Core Collection Systems KPIs 3 − Debtor/Client Portals • Possibility to perform internal benchmarking − Skill based collection • CRM Building one “corporate culture”, eliminate • Branding 4 “negative legacy” • Common KPIs • Accounts Receivable Management (ARM) 5
Axactor revenue mix – distribution per country Gross revenue per quarter (EUR million) Q2 Revenue Distribution per Country 70 66.7 ITA 60 5 % SWE GER 6 % NOR 8 % 50 5 % 41.0 40 34.5 Q2 30 * 24.9 23.6 66.7m 19.7 20 10 SPA 0 76 % -10 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 ITA NOR SWE GER SPA • • REO segment in Spain driving the shift in business mix Significant growth in Spain driven by the REO segment compared to Q1-18 • Growth compared to Q1-18 in all geographies • Expect large forward flow contracts to increase the relative size of Germany and Norway the next quarters 6 * Q2 2017 settlement with former IGE board members is excluded
Axactor revenue mix – distribution per business segment Gross revenue development per segment (EUR million) 70 66.7 148% revenue growth y/y * in Q2 2018 primarily driven by • 60 REO and NPL portfolios 50 • Ramp-up of the REO segment continues, and REOs 41.0 40 represented 33% of total gross revenue in Q2 2018 34.5 30 • 3PC with 30% growth y/y * 24.9 23.6 19.7 • Growth in all segments compared to Q1 2018 20 10 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 ARM 3PC REO Portfolios NPL Portfolios 7 * Q2 2017 settlement with former IGE board members is excluded
Profitability development – EBITDA and Cash EBITDA EBITDA per quarter (EUR million) Cash EBITDA per quarter (EUR million) 10.6 11 45 10 40.6 40 9 8 35 7 30 6.1 5.6 6 25 5 * 20 18.1 4.1 4 13.5 15 3 2.0 * 10 7.8 2 6.2 1.0 3.6 5 1 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 • • 158% EBITDA growth compared to the same quarter last year * Strong REO cash flow ramping up the Cash EBITDA • • 74% EBITDA growth compared to last quarter Good performance on NPL portfolios • • 20% EBITDA margin in Q2-18 Gross margin of 61% in Q2-18, up from 44% last quarter • Q2 and Q4 are seasonally strong quarters 8 * Q2 2017 settlement with former IGE board members is excluded
EBITDA and cash EBITDA - quarter by quarter EBITDA (EUR million) Cash EBITDA (EUR million) +158% +423% 12 45 10.6 40.6 40 10 35 8 30 6 25 * 4.1 4 20 15 2 * 7.8 10 0 5 -2 0 -2.1 -4 -5 -3.4 Q2-16 Q2-17 Q2-18 Q2-16 Q2-17 Q2-18 • • Maintained strong cash flow development Continued significant growth • • Gross margin at a record high 61% Increased EBITDA margin to 20% 9 * Q2 2017 settlement with former IGE board members is excluded
Gross revenue and ERC - quarter by quarter Gross revenue (EUR million) ERC (EUR million) +92% +168% 979 70 67 1 000 REOs NPLs 900 60 250 800 50 700 600 511 40 500 18 30 * 25 400 729 300 20 493 200 126 8 10 100 0 0 Q2-16 Q2-17 Q2-18 Q2-16 Q2-17 Q2-18 • • ERC growth supported by investments of EUR 114m during The good development continues in Q2-18 with 168% gross revenue growth compared to last year * the first half of 2018 • • ERC is slightly down from Q1-18 due to the high liquidation Significant growth across all segments of REO portfolios 10 * Q2 2017 settlement with former IGE board members is excluded
Collection on portfolios versus business case LTM Performace vs. Business Case 1,7 • NPL collection performance stabilizing at 152% ~100%, with a strong LTM performance of 143% 1,5 105% in Q2-18 1,3 117% • High REO performance in Q4 2017 based 1,1 on moderate volume 105% 103% 101% 100% 0,9 • 96% Conservative build-up in REO BC 92% 91% • Expect convergence towards business 0,7 case over time 0,5 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 NPLs REOs* 11 * Including assets sold between signing and closing
Portfolio statistics NPL Historical development ERC (EUR million) ERC per year (EUR million) 800 120 113 729.0 726.2 109 700 633.0 100 86 600 506.9 492.6 80 500 427.1 64 55 400 60 48 42 300 38 40 34 30 27 200 24 22 20 17 20 100 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 NOR GER ITA SWE SPA NOR GER ITA SWE SPA • ERC increase of 48% compared to same quarter last year • NPL portfolios with finance claims have long and stable cash flows • Modest growth from Q1-18 due to the relatively low portfolio (15 years+) investments during the quarter 12
Portfolio statistics NPL Book value portfolios (EUR million) Capex (EUR million) 87.0 400 90 358.5 354.0 80 350 317.1 70 66.5 300 60 237.9 250 233.4 46.2 46.8 50 191.9 200 40 150 30 100 17.5 20 6.6 50 10 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 -10 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 NOR GER ITA SWE SPA SPA GER ITA NOR SWE • • Book value increased 54% compared to Q2 2017 One portfolio acquired in Sweden in Q2-18 • • Modest growth of 1% from Q1 2018 due to the modest Forward flow contracts signed during the quarter will start investment level during the second quarter during Q3 and Q4 • Several potential deals delayed to Q3 13
Portfolio statistics REOs Historical development ERC (EUR million) ERC per year (EUR million) 300 140 274.3 120 249.7 120 250 110 225.3 100 200 80 150 60 100 40 18 50 20 18.9 18.2 2 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 SPA SPA • • REO portfolios typically last 3-5 years before depletion First REO portfolio acquired in Q2-17 • • REOs generally have a lower money multiple than traditional Reduction in Q2-18 due to the quick liquidation of the REO NPL, short payback time ensures very attractive IRR levels portfolios 14
Portfolio statistics REOs Book value portfolios (EUR million) Capex (EUR million) 147.0 192.7 200 150 180.5 154.1 150 100 100 44.7 50 50 8.1 8.4 8.1 5.2 0.4 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 SPA SPA • • REO portfolios account for 33% of total portfolio balance No new portfolios acquired in Q2-18 • Capex in the quarter represent activated costs on assets in inventory and transfer of remaining assets from one of the portfolios announced in Q1-18 15
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