Q2 2018 Axactor AB July 25, 2018 Key highlights Q2 2018 GROSS - - PowerPoint PPT Presentation

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Q2 2018 Axactor AB July 25, 2018 Key highlights Q2 2018 GROSS - - PowerPoint PPT Presentation

Nov 07, 2023 365 likes •626 views

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%

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SLIDE 1

Q2 2018 Axactor AB

July 25, 2018

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SLIDE 2

Key highlights Q2 2018

  • 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

GROSS REVENUE

66.7

EUR MILLION ERC

979

EUR MILLION

+92% y/y

EBITDA

10.6

EUR MILLION CASH EBITDA

40.6

EUR MILLION CASH BALANCE

121.0

EUR MILLION

+148% y/y +158% y/y*

2

+423% y/y*

*Q2 2017 settlement with former IGE board members is excluded

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SLIDE 3

3

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
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SLIDE 4

Axactor will establish new credit line for funding of REOs

4

  • 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
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SLIDE 5

Standardization is used to reduce costs and to drive efficiency

5

  • Intility (IT Infrastructure)
  • Miratech partnership (AD/AM)
  • ERP/Finance/HR
  • Portfolio pricing
  • Digitalization

− Dialer robot − Business Intelligence (BI) − Data Warehouse (DW) − Core Collection Systems − Debtor/Client Portals − Skill based collection

  • CRM
  • Branding
  • Common KPIs
  • Accounts Receivable Management (ARM)

Standardization - “One Axactor” Positive effects from “One Axactor”

1

IT & SG&A share of cost will continue to decrease year over year

2

Efficiency will increase as a result of best practise sharing

  • Establishing CoE in different areas

3

Improved operational control through common KPIs

  • Possibility to perform internal benchmarking

4

Building one “corporate culture”, eliminate “negative legacy”

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SLIDE 6

GER 8 % ITA 5 % NOR 5 % SPA 76 % SWE 6 %

Q2 Revenue Distribution per Country

6

  • REO segment in Spain driving the shift in business mix

compared to Q1-18

  • Expect large forward flow contracts to increase the

relative size of Germany and Norway the next quarters

  • Significant growth in Spain driven by the REO segment
  • Growth compared to Q1-18 in all geographies
  • 10

10 20 30 40 50 60 70 66.7 Q3-17 Q2-17 Q2-18 19.7 24.9 23.6 41.0 34.5 Q1-17 Q1-18 Q4-17

SWE SPA NOR GER ITA

Q2 66.7m Gross revenue per quarter (EUR million)

*

*Q2 2017 settlement with former IGE board members is excluded

Axactor revenue mix – distribution per country

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SLIDE 7

Axactor revenue mix – distribution per business segment

7

  • 148% revenue growth y/y* in Q2 2018 primarily driven by

REO and NPL portfolios

  • Ramp-up of the REO segment continues, and REOs

represented 33% of total gross revenue in Q2 2018

  • 3PC with 30% growth y/y
  • Growth in all segments compared to Q1 2018

Gross revenue development per segment (EUR million)

10 20 30 40 50 60 70 66.7 Q2-18 41.0 19.7 Q3-17 34.5 23.6 Q1-17 24.9 Q4-17 Q2-17 Q1-18

NPL Portfolios 3PC ARM REO Portfolios *

*Q2 2017 settlement with former IGE board members is excluded

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SLIDE 8

1 2 3 4 5 6 7 8 9 10 11 10.6 Q1-17 Q3-17 Q1-18 2.0 4.1 1.0 5.6 Q2-17 Q4-17 6.1 Q2-18 5 10 15 20 25 30 35 40 45 40.6 Q2-18 Q1-18 3.6 18.1 Q1-17 13.5 6.2 Q3-17 Q2-17 Q4-17 7.8

Profitability development – EBITDA and Cash EBITDA

8

EBITDA per quarter (EUR million) Cash EBITDA per quarter (EUR million)

  • Strong REO cash flow ramping up the Cash EBITDA
  • Good performance on NPL portfolios
  • Gross margin of 61% in Q2-18, up from 44% last quarter
  • 158% EBITDA growth compared to the same quarter last year*
  • 74% EBITDA growth compared to last quarter
  • 20% EBITDA margin in Q2-18
  • Q2 and Q4 are seasonally strong quarters

* *

*Q2 2017 settlement with former IGE board members is excluded

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SLIDE 9
  • Continued significant growth
  • Increased EBITDA margin to 20%
  • 4
  • 2

2 4 6 8 10 12

  • 3.4

Q2-16 10.6 4.1 Q2-17 +158% Q2-18

  • 5

5 10 15 20 25 30 35 40 45 Q2-17 40.6 +423% Q2-18 Q2-16 7.8

  • 2.1

Cash EBITDA (EUR million) EBITDA (EUR million)

9

EBITDA and cash EBITDA - quarter by quarter

  • Maintained strong cash flow development
  • Gross margin at a record high 61%

*

*Q2 2017 settlement with former IGE board members is excluded

*

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SLIDE 10

Gross revenue and ERC - quarter by quarter

67 25 8 10 20 30 40 50 60 70 Q2-16 Q2-18 Q2-17 +168% 729 493 250 100 200 300 400 500 600 700 800 900 1 000 18 126 +92% 979 Q2-17 Q2-18 511 Q2-16

ERC (EUR million) Gross revenue (EUR million)

  • The good development continues in Q2-18 with 168% gross

revenue growth compared to last year*

  • Significant growth across all segments
  • ERC growth supported by investments of EUR 114m during

the first half of 2018

  • ERC is slightly down from Q1-18 due to the high liquidation
  • f REO portfolios

10

NPLs REOs

*

*Q2 2017 settlement with former IGE board members is excluded

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SLIDE 11

92% 91% 100% 96% 101% 103% 105% 152% 117% 143% 0,5 0,7 0,9 1,1 1,3 1,5 1,7 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2

LTM Performace vs. Business Case

NPLs REOs*

Collection on portfolios versus business case

11

  • NPL collection performance stabilizing at

~100%, with a strong LTM performance of 105% in Q2-18

  • High REO performance in Q4 2017 based
  • n moderate volume
  • Conservative build-up in REO BC
  • Expect convergence towards business

case over time

*Including assets sold between signing and closing

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SLIDE 12

Portfolio statistics NPL

100 200 300 400 500 600 700 800 506.9 729.0 726.2 Q2-18 Q1-18 Q4-17 633.0 Q3-17 Q2-17 492.6 427.1 Q1-17

ERC per year (EUR million)

20 40 60 80 100 120 55 86 Y2 Y3 Y6 109 113 48 Y5 Y4 64 Y1 Y13 38 17 22 Y11 27 Y10 Y8 Y9 Y7 42 Y15 20 Y12 24 30 34 Y14

SPA SWE NOR ITA GER

  • NPL portfolios with finance claims have long and stable cash flows

(15 years+)

  • ERC increase of 48% compared to same quarter last year
  • Modest growth from Q1-18 due to the relatively low portfolio

investments during the quarter

SWE GER NOR ITA SPA

Historical development ERC (EUR million)

12

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SLIDE 13

Portfolio statistics NPL

  • Book value increased 54% compared to Q2 2017
  • Modest growth of 1% from Q1 2018 due to the modest

investment level during the second quarter

50 100 150 200 250 300 350 400 317.1 Q1-18 Q1-17 191.9 Q4-17 Q3-17 237.9 Q2-18 358.5 354.0 Q2-17 233.4

GER SPA ITA NOR SWE

Book value portfolios (EUR million) Capex (EUR million)

  • 10

10 20 30 40 50 60 70 80 90 Q2-18 Q4-17 46.8 87.0 Q3-17 17.5 6.6 Q1-18 66.5 Q1-17 Q2-17 46.2

SPA ITA GER NOR SWE 13

  • One portfolio acquired in Sweden in Q2-18
  • Forward flow contracts signed during the quarter will start

during Q3 and Q4

  • Several potential deals delayed to Q3
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SLIDE 14

Portfolio statistics REOs

50 100 150 200 250 300 18.2 Q2-18 225.3 249.7 Q3-17 Q2-17 Q1-17 18.9 274.3 Q4-17 Q1-18

ERC per year (EUR million)

2 18 110 120 20 40 60 80 100 120 140 Y13 Y10 Y14 Y11 Y15 Y5 Y9 Y7 Y6 Y8 Y12 Y4 Y3 Y2 Y1

SPA

  • REO portfolios typically last 3-5 years before depletion
  • REOs generally have a lower money multiple than traditional

NPL, short payback time ensures very attractive IRR levels

  • First REO portfolio acquired in Q2-17
  • Reduction in Q2-18 due to the quick liquidation of the REO

portfolios

SPA

Historical development ERC (EUR million)

14

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SLIDE 15

Portfolio statistics REOs

  • REO portfolios account for 33% of total portfolio balance

50 100 150 200 8.1 Q2-17 Q1-18 Q2-18 Q3-17 8.4 Q1-17 180.5 192.7 Q4-17 154.1

SPA

Book value portfolios (EUR million) Capex (EUR million)

50 100 150 0.4 44.7 5.2 Q2-18 Q1-18 Q4-17 147.0 Q3-17 Q2-17 8.1 Q1-17

SPA 15

  • 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

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SLIDE 16

REO portfolios lifetime KPIs*

  • Lifetime performance ahead of business case
  • More than 1.000 units sold
  • Quicker liquidation
  • Higher money multiple
  • Total of 6 portfolios serviced by two different providers:

GIA and Altamira

  • New funding line for REOs announced in July
  • Re-finance current stock and release cash to be

deployed where Axactor sees fit

Total Sales (EURm) 33.5 47.7 Business case Actual 1 043 Assets sold 823

  • Average price per asset sold: EUR 46k
  • Number of assets in inventory per end Q2-18: 6,153

*Including assets sold between signing and closing

16

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SLIDE 17

Opex profile REOs

17

  • REO opex consist of three main elements:
  • Sales commission paid to servicer
  • Servicing fee (maintenance, marketing etc.)
  • Cost of sale – reversal of book value upon sale

(no cash impact)

  • Sales commission generally fixed percentage of sales
  • Servicing fee generally based on volume under

management by the servicer

  • Opex to sales ratio declining with volume as the

portfolio liquidates

*Excluding cost of sales

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SLIDE 18

2Q 2Q LTM 2Q Jan - Dec EURO thousand 2018 2017 2018 2017 Income 66,696 26,922 165,813 104,734 Amortization of debt portfolios

  • 12,310
  • 3,290
  • 26,901
  • 14,948

Net revenue 54,386 23,632 138,912 89,785 Cost of secured assets sold

  • 17,353
  • 24,921
  • 1,445

Personnel expenses collection

  • 7,975
  • 6,640
  • 30,111
  • 26,578

Personnel expenses other

  • 5,170
  • 3,918
  • 20,900
  • 18,378

Operating expenses

  • 13,278
  • 6,929
  • 38,605
  • 28,569

EBITDA 10,610 6,145 24,373 14,815 Amortization and depreciation

  • 1,476
  • 1,148
  • 5,569
  • 5,327

EBIT 9,134 4,997 18,805 9,488 Financial revenue 473 1,849 1,775 3,070 Financial expenses

  • 8,994
  • 1,633
  • 22,381
  • 10,585

Net financial items

  • 8,521

216

  • 20,607
  • 7,515

Profit/(loss) before tax 613 5,213

  • 1,802

1,974 Tax expense

  • 442
  • 582

585 611 Net profit/(loss) from continued operations 172 4,631

  • 1,217

2,585 CASH EBITDA 40,566 9,401 78,359 32,695

Q2 income statement

18

  • Net financial items were negative EUR 8.5m for the

quarter:

  • Interest cost of EUR 8.4m of which EUR 0.9m in

amortized loan fees

  • Amortized warrant cost of EUR 0.4m
  • Positive net FX impact in the quarter of EUR

0.4m Income statement Key comments

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SLIDE 19

Balance sheet structure

241 471 539 74 76 80 50 121 Q4-17 25 Q2-17 355 622 19 Q2-18 760 18 21 192 292 314 128 299 407 35 32 39 622 760 Q2-18 Q4-17 355 Q2-17 Other Portfolios Intangibles Cash Other IBD Equity

  • Portfolio book value is EUR

539m, including REO

  • Available cash at end of Q2 is

EUR 121m

  • Equity ratio of 41%

Assets Equity & Liabilities

19

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SLIDE 20

Axactor AB (Sweden) Axactor Platform Holding AB (Sweden) 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) Luxco Invest 1 S.à r.l. (Luxembourg) 75% 75%

Legal organization July 2018

90% 50% 50%

Link between Luxco Invest I and Reolux has been broken - Both companies are now stand-alone SPVs owned 50/50 by Axactor and Geveran New SPV for acquisition of Italian NPL portfolios established within the ring- fenced structure

20

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SLIDE 21

Forward flow build-up

21

  • Significant forward flow contracts have been

signed during the first half of 2018 in Germany, Italy, Norway and Sweden

  • Some of the new contracts started late in Q2,

while the rest are due to start later in the year

  • With the new contracts, total annual forward flow

investments will be in the region of EUR 175m

  • Contracted forward flow volume will double NPL

collections for Germany and Norway in 2019

  • The forward flow pipeline is still strong

15 15 15 14 14 15 7 2 3 3 2 1 1801 1802 1809 1811 1810 1812 1807 1806 1805 1804 1803 1808 Actual FF investments Estimated FF investments

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SLIDE 22

Axactor funding capacity

22

  • Axactor with approximately 450 mEUR in funding

capacity (after closing the Nomura agreement)

  • Additional capacity
  • Axactor has close to 200 mEUR in accordion
  • ptions with the Nordic banks
  • Bond tap option of 100 mEUR
  • Full utilization of additional capacity must be

matched by approximately 40% equity

450 200 250 250 Total current funding capacity Co-investment SPVs Restricted Group

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SLIDE 23

Outlook

  • REO market in Spain remains strong
  • Rapid growth in Spanish market for secured NPL
  • Continued high volumes of unsecured NPL forward

flow portfolios from Nordic consumer banks

  • Solid 3PC pipeline in Spain
  • Expect high cash flow generation to continue in the

second half of 2018

23

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SLIDE 24

Summary Q2 presentation

  • Significant ramp-up of cash generation (Cash EBITDA of EUR 41m)
  • 20% EBITDA margin in Q2
  • Signed significant forward flow portfolios in Germany, Italy,

Norway and Sweden

  • Establishing new funding line for REO portfolios with Nomura,

releasing approximately EUR 100m in cash at lower cost

  • Continue to drive efficiency and cost initiatives through

One Axactor

  • Strong momentum into 2H 2018

24

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SLIDE 25

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