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 • Accumulated investments of >EUR 1bn since inception € 0.9 • Established collection platform companies in six countries € 0.3 2016 2017 2018 2
Generated strong revenue growth Gross revenue € 239 (EUR million) • More than doubling of revenues • Growth in all segments • Investments and contracts signed in 2018 point towards continued revenue growth in € 105 2019 € 40 2016 2017 2018 3
Scalability beginning to show through in earnings EBITDA in EUR million € 46 • Tripling of EBITDA • 22% EBITDA-margin • Improvement reflecting higher volumes, better geographical mix and high operational € 15 leverage - € 6 2016 2017 2018 4
Focus on profitable growth • Large and increasing NPL opportunities with attractive IRR • Strengthening the 3PC and ARM business • Relentless focus on ONEAXACTOR to sharpen the competitive edge 5
Key highlights Q4 2018 EBITDA-margin GROSS REVENUE EBITDA CASH EBITDA CASH BALANCE 29 75 20 45 71 PERCENT EUR MILLION EUR MILLION EUR MILLION EUR MILLION +246% y/y +231% y/y +116% y/y +9%p y/y • 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 6
Events post Q4 closing • 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 7
Growth and margin improvement Gross revenue development EBITDA (EUR million) and Cash EBITDA (EUR million) EBITDA-margin (EUR million) 25 50 80 75 29% 70 45 20 40 67 41 60 20 57 21% 50 33 20% 20% 15 30 17% 40 41 10 20 34 11 30 10 18 20 13 6 5 10 6 10 0 0 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 8
Growth across all segments Gross revenue per segments (EUR million) 80 • Investment driven NPL growth, with limited effect of 75 ARM large investments in Q4 70 67 3PC • REO sales on par with previous two quarters REO 60 57 portfolios Limitations in sales capacity • NPL 50 portfolios Market pausing in Oct-Nov due to political issues • 41 which were solved in December 40 34 • Healthy 3PC growth boosted by new Spanish 30 contracts and acquisition of SPT in Finland 20 • ARM business stable before roll-out to new markets 10 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 9
Growing geographical footprint Gross revenue per country (EUR million) 80 • 2018 with gross revenue growth in all countries 75 FIN • Positive entry into Finland 70 67 ITA SWE Revenue of EUR 3m based on one month of • 60 57 DEU operation - exceeding Sweden and Italy NOR 50 Started implementing ONEAxactor ESP • 41 40 • Northern Europe expected to grow in relative 34 importance 30 Signed significant forward flow agreements in • 20 Germany, Norway and Sweden 10 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 10
EBITDA & Cash EBITDA: Profitability development LTM EBITDA (EUR million) and cash EBITDA, Last 12 months • 2018 EBITDA increased to EUR 46m 150 136 • High volume growth 125 Favourable revenue mix • 105 100 • High operational leverage 78 75 • 2018 Cash EBITDA increased to EUR 136m 47 46 50 • NPL cash EBITDA follows collection performance 33 32 24 20 • Steady growth in 3PC and ARM 25 15 • REO affected by lower than expected scale-up of 0 sales, and EUR 2m negative effect of portfolio Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 revaluation at lowest value principle (IFRS) EBITDA Cash EBITDA 11
NPL portfolio
NPL: High investment level in more balanced portfolio Quarterly NPL investments (EUR million) NPL investments (EUR million), LTM rolling 350 500 329 462 450 300 400 250 350 300 200 250 220 206 150 187 200 158 150 100 87 69 100 47 50 50 17 0 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 ESP NOR DEU SWE ITA FIN ESP NOR DEU SWE ITA FIN 13
NPL: Step change in total portfolio size ERC development (EUR million) NPL book value per country (EUR million) 1 600 800 729 1 388 1 400 700 1 200 600 1 000 500 419 821 800 400 726 729 359 354 633 317 600 300 400 200 200 100 0 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 ESP NOR DEU SWE ITA FIN ESP NOR DEU SWE ITA FIN 14
NPL: Forward flow build-up Estimated FF from signed contracts (EUR million) 30 • Continued inflow of new forward flow contracts 25 • Several new contracts in Sweden, including large 24 24 24 25 18-month contract starting up in March 21 21 21 20 19 19 19 • Added large financial institution to the client list in 20 18 Norway 15 • Extended the Instabank partnership to Finland 10 • Estimated forward flow of EUR 258m from signed contracts in 2019 5 • Expecting renewal of contracts expiring in 2019 0 15
NPL: Estimated collection points to profitable growth Actual collection vs. original business case (LTM, rolling) Forward ERC profile by year (EUR million) 110% 250 105% 105% 105% 225 105% 103% 198 200 183 101% 100% 175 100% 147 150 96% 124 95% 125 111 92% 99 91% 100 89 80 90% 71 75 64 57 50 44 50 39 32 85% 25 0 80% '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 ESP NOR DEU SWE ITA FIN 16
REO portfolio
REO: Reduced capex – asset bulk sales in 2019 REO in Spain (EUR million) 300 • Axactor tuning down the REO investment level – 274 deployed only EUR 6m into REO assets in Q4 250 • 2019 focus is NPL investments, with good portfolio 225 availability and increasing IRRs 200 161 156 • Timing of asset realizations somewhat postponed 150 due to capacity limitations (bailiff/brokers) 99 • Exploring opportunities for bundle sales to add to 100 86 regular unit divestments • Underlying market, price levels and asset values 50 21 remain largely intact 6 0 Modest negative effect of EUR 2m of total portfolio • 2017 2018 2017 2018 2019 2020 2021 2022 revaluation under lowest value principle ERC by year Capex ERC 18
Quarterly REO capex, book value and ERC REO investments, Spain (EUR million) REO book value and ERC, Spain (EUR million) 160 350 147 304 140 300 274 274 120 250 250 225 213 100 200 193 200 181 80 154 150 60 45 44 100 40 50 20 5 6 0 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Book value ERC 19
REO – Lifetime KPIs Sales (EUR million)* No. of assets sold* • Lifetime portfolio performance ahead of original 2 223 2 114 business case 97 89 • 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 Actual Business case Actual Business case * Including assets sold between signing and closing 20
3PC & ARM
Growing the platform business Gross revenue (EUR million) 15 • Targeting a more balanced product portfolio 3PC ARM 2 • Established 3PC businesses in all markets 13 • Strong 3PC offers synergies in terms of business origination, collection execution and data generation 10 • Established customer relationships with leading financial institutions, including nine of the top 10 Spanish banks • Increasing contribution of cash rich and capital light 5 earnings for reinvestments • ARM platform to be rolled out to more markets in 2019 Established in Norway and Sweden, moving into • 0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Finland, Germany and Italy 22
One Axactor
2019 AEM 2.0 Sales Innovation & • Digitalization & IT acceleration Digital • Partnerships 2017 • Systems • Standardization Basics Scale benefits Partners • Common KPIs 2015 • Benchmarking Structure People Systems 24
Financials
Contribution per segment – excl. unallocated overhead costs Contribution per segment (EUR million)* • Stronger NPL contribution due to higher volumes 35 and more favourable geographical mix 30 • Steadily improving 3PC contribution with new 25 contracts continuing to add volumes 20 • Stable development in ARM 15 • Slightly negative REO contribution in the quarter 10 • Includes EUR -2m effect of portfolio revaluation 5 at lowest value principle 0 • Sold a number of low quality assets with a discount in Q4, contributing to low margin -5 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 NPL portfolios REO portfolios 3PC ARM * Contribution before unallocated overhead costs 26
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