Axactor terminates discussions regarding a potential public offer for the company and announces preliminary financial results

Axactor SE (“Axactor” or the “Company”) today announced that it has terminated discussions regarding a potential public offer for the Company that were initiated in Q4 2019. The decision followed receipt of an updated, conditional expression of interest (the “Proposal”), which was submitted after conclusion of due diligence. The Proposal included an offer price of NOK 22 per share.

The termination by the Board of Axactor (the “Board”), in consultation with its appointed advisors ABG Sundal Collier and BAHR, was made on the basis of an overall assessment of the Proposal, including the indicated timeline, and a determination that confirmation of a definitive offer at adequate terms would not materialise in a timely manner. The Board hence concluded that putting full focus on execution of Axactor’s strategy must take priority, also as the Company sees a number of near-term opportunities in an increasingly attractive market for portfolio purchases, 3PC and forward flow agreements.

As of this date, the Company is consequently not in any discussions regarding any structural transaction There can, however, be no assurance that any proposal relating to a transaction will or will not be made or that any such proposal, if made, will be recommended.

Preliminary fourth quarter and full year 2019 headline financials

In connection with the abovementioned discussions, Axactor has shared preliminary financial results for 2019 as part of the due diligence, and therefore discloses certain preliminary financial information as set out below for the three months and the year ended December 31, 2019. The fourth quarter result will be released in full on 12 February 2020.

(EUR million) Q4-18 Q4-19 Change FY2018 FY2019 Change

Gross revenue 74.6 98.8 32.5% 238.8 368.1 54.1%

Net revenue 68.0 74.8 10.0% 206.9 285.2 37.8%

EBITDA 19.6 23.8 21.7% 46.3 92.1 99.0%

EBITDA margin 28.8% 31.8% 22.4% 32.3%

Cash EBITDA 44.7 66.8 49.5% 136.0 250.8 84.4%

Total portfolio investments

334.5 95.7 (71.4%) 561.2 399.0 (28.9%)

NIBD 663.6 854.5 28.8% 663.6 854.5 28.8%

Preliminary and unaudited figures show that Axactor increased its gross revenue by 32% to EUR 98.8 million in the fourth quarter of 2019 (74.6) and by 54% to EUR 368.1 million for the full year (238.8), with growth in all segments for both the fourth quarter and full year. Net revenue increased by 10% to EUR 74.8 million for the fourth quarter (68.0) and by 38% to EUR 285.2 million for the full year (206.9).

EBITDA increased by 22% to EUR 23.8 million for the fourth quarter (19.6), and by 99% to EUR 92.1 million for the full year (46.3). Cash EBITDA increased by 50% to EUR 66.8 million in the fourth quarter (44.7) and by 84% to EUR 250.8 million for the full year (136.0).

Axactor invested EUR 95.7 million into portfolio acquisitions in the fourth quarter of 2019 (334.5), bringing total portfolio investments to EUR 399.0 million for the full year (561.2). The investments were funded by operating cash flow and drawdowns of new and existing credit lines. The Company in the fourth quarter increased available funding by EUR 150 million through an increase of an existing revolving credit facility with its main banks, in the form of two accordion options of EUR 75 million each. One option was executed in October while the other remains unused. Net interest-bearing debt at year end 2019 was EUR 854.5 million (663.6).

(EUR million) Q4-18 Q4-19 Change FY2018 FY2019 Change

Net revenue

NPL 33.0 36.8 11.5% 85.1 134.2 57.6%

3PC 14.7 15.6 5.8% 52.0 57.7 11.0%

REO 20.3 21.3 5.0% 69.8 91.2 30.7%

Contribution margin

NPL 26.3 27.6 4.6% 62.0 101.9 64.2%

NPL in % 79.7% 74.8% 72.9% 75.9%

3PC 5.4 6.3 16.6% 16.6 22.4 34.8%

3PC in % 36.5% 40.2% 32.0% 38.8%

REO (0.8) 0.6 n.a. 4.8 7.1 49.5%

REO in % (3.9%) 2.8% 6.8% 7.8%

ERC

NPL 1,388.2 2,038.4 46.8% 1,388.2 2,038.4 46.8%

REO 274.5 150.9 (45.0%) 274.5 150.9(45.0%)

The NPL segment accounted for EUR 36.8 million (33.0) of total net revenue in the fourth quarter and EUR 134.2 million for the full year (85.1). Net revenue for the 3PC segment amounted to EUR 15.6 million (14.7) for the fourth quarter and EUR 57.7 million for the full year (52.0), whereas the REO segment accounted for EUR 21.3 million (20.3) for the fourth quarter and EUR 91.2 million for the full year (69.8).

Total contribution margin amounted to EUR 35.6 million for the fourth quarter (30.9), of which NPL accounted for EUR 27.6 million (26.3), 3PC for EUR 6.3 million (5.4), REO for EUR 0.6 million (-0.8) and other unallocated items of EUR 1.1 million (0.0). Contribution margin for the full year was EUR 133.4 million (83.4), of which NPL accounted for EUR 101.9 million (62.0), 3PC for EUR 22.4 million (16.6), REO for EUR 7.1 million (4.8) and other unallocated items of EUR 2.0 million (0.0).

The ERC for the NPL segment was EUR 2,038 million at the end of 2019, compared to 1,877 million at Q3 2019. For the REO portfolio, the ERC was EUR 151 million at year end, compared to 193 million at Q3 2019. The development in the ERC for REO includes both the effect of sales during the quarter (reducing ERC with EUR 26 million) and a EUR 16 million reduction of remaining ERC in Q4, reflecting management’s updated view on expected discounts to realised going forward, considering also the achieved sales prices in Q4.

The Company sees increasingly attractive business opportunities in both the NPL and 3PC markets.

The preliminary financial information above for the three months and the year ended December 31, 2019 is based upon the Company’s estimates and subject to completion of the financial closing procedures. Moreover, these data have been prepared solely on the basis of currently available information by, and are the responsibility of, Axactor. Axactor’s independent registered public accounting firm, PwC, has not audited, and does not express an opinion with respect to, these data. This summary is not a comprehensive statement of the financial results for this period, and the actual results may differ from these estimates due to the completion of the financial closing procedures, final adjustments, completion of the audit of the financial statements and other developments that may arise between now and the time the audit of the financial statements is completed. There can be no assurance that these estimates will be realised, and estimates are subject to risks and uncertainties, many of which are not within the Company’s control.