Axactor company presentation

DNB SME CONFERENCE

Bjørvika, March 21st, 2018

• Axactor is a Nordic-based debt management company with operations

in five European countries

− Established in December 2015 – rapid expansion

− En route to execute on clearly defined strategy to build an

efficient and high-quality debt collection company without any

legacy burdens

• Main investment focus area has been unsecured B2C loans – also

invested in portfolios of secured non-performing loans and REOs in ‘17

• Specialises in both purchasing and collection on own debt portfolios,

and providing collection services for 3rd party owned portfolios

• Headquartered in Oslo, Norway, with a total of +900 employees

• Listed on the Oslo Stock exchange (ticker: AXA)

This is Axactor

2

Axactor in brief

Collection on own NPLs1

Axactor service offerings

HQ

Axactor geographic footprint

Axactor established as a

large debt collection player

with platform companies1

and own portfolios in 5

European countries

1: Note: Platform companies refer to companies performing debt collection services

Collection on 3rd party owned NPLs3

Accounts Receivable Management4

Acquisitions of REOs2

Executive management team with solid track record

Endre Rangnes (CEO)

Oddgeir Hansen

(COO)

Siv Farstad

(EVP HR)

Johnny Tsolis

(CFO)

Robin Knowles

(Investment Director)

Massimiliano Ciferri Ceretti

(Country Mgr. Italy)

Andrés Lopez

(Country Mgr. Spain)

David Martin

(Country Mgr. Spain)

Doris Pleil

(Country Mgr. Germany)

Fredrik Kessler

(Country Mgr. Sweden)

Oddgeir Hansen

(Acting Country Mgr. Norway)

Significant expansion since start-up in December 2015

4 1: Source: Factset. Enterprise value based on market cap plus EUR 250m in NIBD as per Q4 reporting

Note: Profiles of acquired companies are included in the appendix of this presentation

Key milestones and achievements

Platform

acquisitionsJun ‘16

Dec ‘15 Sep ‘16

Feb ‘17

May ‘16

Apr ‘16

• +900 employees

• System consolidation across

platforms to secure optimal

operational setup

• One Axactor: 3PC / portfolios /

ARM

Equity capital markets development1

Portfolio

acquisitions

• EUR 485m in investments made per

Q4 2017

• As per Q4 2017, 120 portfolios

acquired

• EUR 471m in book value per Q4 2017

• EUR 858m est. remaining collection

per Q4 2017

• Unsecured B2C loans/secured non-

performing loans and REOs

Financing

• 11 equity issues

• Co-investment partnership

established with Geveran

• Bank facilities secured and

expanded

• EUR 250m in equity raised from

leading Norwegian institutions that

remain as large investors

• Geveran co-investment partnership

with EUR 300m in funding secured

• DnB/Nordea facility of EUR 350m

(200+150)

Share price development (NOK)

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

x2

0

100

200

300

400

500

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

Market cap development (EURm)

EURm

Market cap ~410

Enterprise value ~660

Axactor covers all major parts of the value chain

5

Legal

collection

Surveillance and

recovery

Portfolio acquisitions

• Fresh claims

• “Call center” contact

• Low marginal cost

• Efficient systems /

automation

yields economies of

scale

• Legal action taken when

claims can not be collected

amicably

• Higher marginal cost

• Legal alternatives differ

greatly between

jurisdictions

• Local presence and

competence is key

Amicable

collectionFactoringCredit information Invoice

• Unrecoverable claims

move to surveillance

• Recovery reinitiated when

economic capacity

improves

• Large volume, minimal

cost

• Efficient systems /

automation yields

economies of scale

Note: Value chain based on management considerations

Axactor focus areaOutside Axactor scope

Payment

service

• “Call center” contact

on behalf of 3PC

customers

• Follow-up of

outstanding invoices

• Manage the invoice

until amount is

collected

• If invoice remains

unpaid – automatic

transfer to collection

Operational achievements completed through 2016/2017

6

• Intility (IT Infrastructure)

• Miratech partnership (AD/AM)

• ERP/Finance/HR

• Portfolio pricing

• Digitalization

− Dialer

− BI/DW

− Core collection Systems

− Debtor/Client Portals

− Skill based collection

• CRM

• Branding

• Common KPIs

• Accounts Receivable Management (ARM)

Group level Country specific achievements and priorities

One

Axactor

✓ New collection system implementation

✓ Bank of Italy 106 license

✓ Legal collection

✓ Consolidate core collection systems

✓ New infrastructure

✓ REO start-up

✓ Improve old collection system

✓ Skill based collection

✓ ARM roll-out ongoing

✓ New organisation

✓ ARM roll-out ongoing

✓ 3PC collection start up

✓ New collection system implemented

✓ Portfolio collection start up in 2017

✓ New ARM solution

Increased efficiency in collection operations going forward on the back of operational achievements made to date

Acquisition of REO portfolios highly attractive for Axactor

7

Real Estate Owned (REO) attractions

Attractive stand-alone

returnsIRR normally 30-60% higher than for

B2C unsecured

1

Improved macro

environment in SpainReal estate prices are increasing,

labour market improving in

combination with low interest rates

2

Increased diversificationThe REO segment and increased

exposure to secured assets increases

diversification

3

Creating even stronger

relationships with banksAxactor better positioned to acquired

other NPL assets and 3PC business

4

Access to attractive fundingInternational banks with long

experience and high appetite for

REOs funding and vendor financing

possible

5

Regulatory changes driving

large transaction volumesMore than 70 transactions last 3 years,

15 last year with asset value

exceeding EUR 35 billion

6

Pipeline illustration: Axactor acquisitions 2017 vs pipeline H1 2018 (EURm)

Trends in Spanish macro and banking supportive of REOs

8

Unemployment declining2 After years of decline, lending in the banking sector is rising

Housing prices on the rise2 Healthy pipeline of Spanish REO opportunities

+37%

Q4-17

9,800

Q4-16

7,138

0%

5%

10%

15%

20%

25%

30%

20172016201520142013201220112010200920082007

Unemployment rate

0

20

40

60

80

100

120

20172016201520142013201220112010200920082007

Housing prices (2007-index)

+22%

Q4-17

9,929

Q4-16

8,109

+15%

Q4-17

3,336

Q4-16

2,911

1: Source: Bankia (consumer finance), CaixaBank (consumer lending in Spain) and BBVA (consumer, performing loans under management in Spain)

2: Source: Statista

Development in consumer lending balances among selected Spanish banks (EUR million)1

156

AXA H1 2018 pipeline

~8,200

AXA 2017 acquisitions

+10 dealsApprox. 500k residential real estate

units sold in Spain in 2017 – this level

of activity was last observed in 2008

http://www.google.no/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiSzeL53qXZAhXFCywKHcUVBi0QjRx6BAgAEAY&url=http://logo-logos.com/bankia-logo-1269.html&psig=AOvVaw3-y3JSY8dFGIKlddMiWQ55&ust=1518709240947602https://www.google.no/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwjH1qnI36XZAhUD6CwKHYbYD5MQjRx6BAgAEAY&url=https://www.bbva.com/&psig=AOvVaw2xKhbzhDbblO7_jhjo0apc&ust=1518709407708841

• NPL portfolios with finance claims are characterised by long and stable

cash flows (+15 years)

− REO portfolios typically last 3-5 years before depletion

• REOs with a lower money multiple, but shorter payback time, ensuring

healthy IRR levels

• Accounting treatment of NPLs rely on amortized cost principle, i.e.

amortization is based on forecasted collections and reported above net

revenue

− Accounting treatment of REOs rely on stock held for sale

principle, i.e. cost of sale is performed when an asset is sold and

posted as opex

REOs with significantly shorter payback time compared to NPLs

9

Gross collection in year

Y14Y6 Y8 Y12Y7 Y11Y10 Y15Y13Y5 Y9Y4Y3Y2Y1

NPL REO

NPL (FI) REO

Gross payback 40-50 months 20-30 months

Money multiple >2.0 ~1.4

Lifetime >15 years 3-5 years

CommentsPortfolio cash flow characteristics

Key highlights 2017

• Significant growth, Gross revenue EUR 104.7m (EUR 40.5m in ‘16), cash EBITDA EUR 32.7m (negative EUR 2.5m in ‘16)

• Co-investment partnership with Geveran established - first transactions completed

• Refinancing of existing debt facility with a new facility of EUR 350m (EUR 200m +EUR150m accordion)

• EUR 362m portfolio investments – including EUR 156m of REO assets in Spain

10

GROSS REVENUE

104.7EUR MILLION

ERC

858EUR MILLION

+171% y/y

EBITDA

14.8EUR MILLION

ADJ CASH EBITDA1

33.9EUR MILLION

CASH BALANCE

48.6EUR MILLION

+159% y/y 17% margin

1: Cash EBITDA adjusted for non-recurring items related to SPV setups and restructuring cost of EUR 1.2m in 2017. Cash EBITDA was EUR 32.7m in 2017

Financial performance – Gross revenue and ERC

105

40

2016 2017

+159%

858

317

2016 2017

+171%

• Revenue growth driven by NPL acquisitions in all countries and

3PC growth, particularly in Spain

• Book value of NPL portfolios has increased from EUR 128m to

EUR 471m from 2016 to 2017

• REO a significant contributor to the growth

11

Gross Revenue (EUR million) ERC (EUR million)

Financial performance – EBITDA and Cash EBITDA

+21.3

2017

14.8

2016

-6.5

+35.2

2017

32.7

2016

-2.5

• Profitability driven by growth in revenue and improved utilization of resources

• Reduction in M&A activities in 2017 impacting costs

12

EBITDA (EUR million) Cash EBITDA (EUR million)

13

Q4-17

34.5

Q3-17

23.6

Q2-17

24.91

Q1-17

19.7

Q4-16

18.5

SPAITA SWENORGER

CommentsDevelopment gross revenue mix (EUR million)

24.91

Q2-17 Q3-17

23.6

Q4-17

34.5

Q1-17Q4-16

19.718.5

NPL Portfolios3PCARM

• Q4 a seasonally strong quarter

− Strong Q4 performance in all geographies

• Stable balance between NPL and 3PC

− Several new 3PC contracts in Spain during 2H 2017 supporting growth in 3PC

− NPL segment (including REO) growing significantly on the back of Q4 investments

− Stable Accounts Receivable Management (ARM) development –ongoing roll-out in Sweden, Germany and Italy

7%

18%

9%

57%

9%

31%

64%

5%

NORSPA SWEGER ITA 3PCNPL Portfolios ARM

Gross revenue mix Q4 2017

By geography

By segment

1: Q2 settlement with former IGE board members is excluded

Axactor gross revenue mix by geography and segment

• REO investments are made in REO holding SPV (Reolux)

• Book value of REO assets amounted to EUR 154m per Q4’17

• Book value include minority shareholders interest

Q4-17

471

Q4-16

128

Q3-17

246

Q2-17

241

Q1-17

192

SWEREOSPANORITAGER

14

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

Portfolio statistics – Capex and book value

• Total of EUR 362m invested in portfolios in 2017

• REO investments in Q4’17 of EUR 147m (incl. minority)

• Capex deployed in all Axactor geographies in Q4’17

• EUR 20m invested in NPL in Italy in Q4’17

Q2-17 Q4-17

234

Q3-17

7

Q1-17

66

Q4-16

34

54

REO SWEITAGER SPANOR

Significant growth

investments made

in Q4 2017

Portfolio statistics – ERC

Q4-17

858

Q3-17

526

Q2-17

511

Q1-17

427

Q4-16

317

Y15

14

Y14

16

Y13

18

Y12

20

Y11

22

Y10

25

Y9

28

Y8

32

Y7

36

Y6

42

Y5

48

Y4

64

Y3

140

Y2

213

Y1

142

SWEREOSPANORITAGER

• ERC increase of 171% compared to same quarter last year

• REO portfolios represent EUR 225m of ERC as per Q4 2017

• ERC figures include minority shareholders interest

SWEREOSPANORITAGER

15

ERC per year (EUR million)Historical development ERC (EUR million)

• NPLs with finance claims have long and stable cash flows (+15 years)

• REO portfolios typically last 3-5 years before depletion

• Compared to NPLs, REOs typically have a lower money multiple, but shorter payback time, ensuring healthy IRR levels

Portfolio collection vs. initial business case: +100% performance per Q4 ‘17

16

• Continued positive trend in collection performance

• Effect partly driven by new collections systems and robot

dialer system

• Significant uplift in gross collections in 2018 on the back

of Q4’17 investments

CommentsPerformance vs. business case (EUR million)

97%100%

91%92%

72%

0

5

10

15

20

25

0%

20%

40%

60%

80%

100%

120%

14.2

Q2-17

14.0

101%

Q3-17Q4-16

10.4

Q1-17 Q4-17

22.1

8.5

Q3-16

3.9

80%

Q2-16

1.4

Q1-16

0.9

Gross cash collection on portfoliosLTM performance vs business case

Note: Performance graph includes REOs

Axactor investment capacity post bond placement

17

Axactor AB

• 200 mEUR

• 150 accordion options

DNB/Nordea RCF

• 150 mEUR

• 100 mEUR tap option

• 60 mEUR

• To be further increased,

maximum 100 mEUR

Italian credit lines

• 60 mEUR equity

• 120 mEUR mezzanine

• 80+40 mEUR DNB

Geveran SPV

• 156 mEUR invested

• No gearing in Reolux

SPV

Reolux SPV

• 50-60% LTV on

Axactor/Geveran REO

investments

International bank

Total “as is” investment capacity of 350 – 400 mEUR• Excluding running cash flow

• Excluding potential financing on REOs

Shareholders and BoD

18

Bjørn Erik Næss

Chairman

Beate S.

Nygårdshaug

Board member

Brita Eilertsen

Board member

Merete Haugli

Board member

Terje Mjøs

Board member

Michael Hylander

Board member

(Deputy)

Harald Thorstein

Board member

Board of directorsTop 20 shareholders

Source: VPS register 20 March 2018

Investor Number of shares % of total

Geveran trading 173 902 500 11,5 %

Verdipapirfondet DNB Norge 106 704 919 7,0 %

Tvenge Torstein 70 000 000 4,6 %

Ferd 53 351 399 3,5 %

Songa Trading 47 423 467 3,1 %

Verdipapirfondet Alfred Berg Gamba 35 553 765 2,3 %

Verdipapirfondet Alfred Berg Norge 28 901 448 1,9 %

Arctic Funds 24 845 540 1,6 %

Gvepsborg 20 364 945 1,3 %

VPF Nordea Norge 20 131 026 1,3 %

Verdipapirfondet Delpi Norden 19 241 228 1,3 %

Statoil Pensjon 18 634 327 1,2 %

Alpette 16 616 431 1,1 %

Skøien 15 304 397 1,0 %

Nordnet Livsforsikring 15 132 690 1,0 %

Pacunia Forvaltning 13 900 000 0,9 %

Verdipapirfondet Alfred Berg Aktiv 13 410 518 0,9 %

Handelsbanken fonds 12 158 703 0,8 %

VPF Nordea Kapital 12 147 486 0,8 %

Martin Ibas David 11 451 250 0,8 %

Total top 20 729 176 039 48,1 %

Total shares 1 516 237 427