Axactor Q3 2017 - Continues to deliver on strategy, with rapid development and growth
Highlights third Quarter of 2017
- Continued positive operational performance and to grow the business.
- Signed and closed a co-investment partnership with Geveran Trading Co. Limited, with a EUR 300 million investment capacity.
- Future growth opportunities fueled by additional funding facilities from the banks, in addition to the partnership with Geveran.
- Gross Revenue of EUR 23.6 million (11.1)
- EBITDA of EUR 2.0 million (-0.8)
- Cash EBITDA at EUR 6.2 million (-0.1)
- Net result positive with EUR 0.3 million (-2.1)
Axactor continued to show positive operational performance in the third quarter of 2017, and to grow the business according to the communicated strategy through acquisitions of NPL (non-performing loan) portfolios and signing of new 3PC (third party collection) contracts. As notified in Q2, summer holiday both for our staff and debtors, and less number of available portfolios from banks and financial institutions during this period, led to lower activity.
Axactor achieved an EBITDA of EUR 2.0 million and Cash EBITDA of EUR 6.2 million in Q3. The corresponding numbers for the same period in 2016 was EUR -0.8 million and EUR -0.1 million. The operating margin was 10 % in Q3, compared to -7 % in the same quarter in 2016. The gross revenue of EUR 23.6 million was in line with the company's expectations.
The main event of the quarter was the signing of a letter of intent with Geveran Trading Co. Limited to enter in to a co- investment partnership (SPV) with a EUR 300 million investment capacity. The transaction was closed in October 2017. This was an important strategic milestone for Axactor, bringing the company to a new level, and puts Axactor in a position to compete for larger portfolios. In addition, Axactor has an exclusive service agreement for debt collection on behalf of the SPV, which will generate additional 3PC revenue for Axactor.
In conjunction with the signing of the partnership with Geveran, Axactor did a private placement directed at Geveran Trading Co. Limited and other large existing shareholders of Axactor, bringing Geveran to own 9.96 per cent of the outstanding shares in Axactor. Axactor's total investment capacity at the end of Q3 totals more than EUR 430 million and this could be further increased as we conclude the re-financing discussion of the current RCF with our Nordic banks during Q4. The company's total financial position supports continued rapid development and growth, in line with the communicated strategy.
Axactor's development over the last two years, and the opportunities that have emerged as a result of the partnership with Geveran, means that Axactor in record time has evolved from being a startup company to being a long-term challenger with a strong position in our markets. But the ambitions are considerably higher.
"We are pleased with the development and implementation of our strategy in Axactor's first two years, and are impressed by the organization's ability to execute initiatives to reach our growth targets. From the start in December 2015, we have developed the company to be a top 10 provider in Europe, with ambitions of significant growth over the coming years. Q3 is usually the quarter of the year with the lowest activity level in our industry, primarily because of the summer holiday and consequently less portfolios available in the market. Despite this, we maintain rapid development and growth, in line with our high ambitions", says Rangnes.
On 11 September Axactor acquired two portfolios of NPL Loans including auto financing and personal loans in Germany, with an outstanding balance of EUR 25.7m across more than 4,000 cases. In July Axactor signed a total of 4 new 3PC contracts with financial institutions in Spain and Germany for a combined estimated annual revenue of EUR 5 million. The contracts are renewable every 12 months.
The market for sales of NPL portfolios remains strong, with Spain and the Nordics currently being the most active markets. The fourth quarter has started on a strong note, with a significant ramp up of available portfolios. In October Axactor acquired an Auto Loan Portfolio in Spain from one of the major European car manufacturers, with a total outstanding balance close to EUR 100 million and more than 10.000 claims.
With a strong capital base which enables larger portfolio acquisitions, Axactor will pursue both medium- and large sized portfolios within the secured and unsecured consumer debt space. As a continuance of the secured portfolio which Axactor acquired in Spain in Q2, we are now actively seeking portfolio opportunities within the Real Estate Owned (REOs) segment. Through Axactor´s excellent relationship with financial institutions the company has access to a large and highly attractive pipeline, particularly in Spain. The REOs segments offers significantly higher IRRs than what we currently can expect in the unsecured market and provides further diversification to our business model. International banks have both long experience and great appetite for financing such transactions due to the portfolios high cash flow generation and short payback time.
For additional information, please contact:
Endre Rangnes, CEO Axactor
Mobile phone: +47 4822 1111
Geir Johansen, CFO & Investor Relations, Axactor
Mobile phone: +47 4771 0451
Axactor Group specializes in both Debt Collection and Debt Purchasing across several countries, with operations in Italy, Germany, Norway, Sweden and Spain. The company has a Nordic base and an ambitious Pan-European growth strategy, which targets the market for non-performing loans (NPL) in Europe. This market is estimated to be about 1,500 billion euros across Europe providing significant opportunities for Axactor's future expansion. Axactor has approximately 900 employees.