Letter from the CEO
We believe the key success factors for a good operating model in the debt management industry are people, systems and funding.
— Endre Rangnes, CEO
We continued to deliver on our growth strategy through 2019 and see that scale benefits and increasingly efficient operations generated sharp margin improvements. Total gross revenue increased by 54% to EUR 368 million - with growth in all our business segments - and EBITDA almost doubled to EUR 92 million.
Gross revenue in the NPL business increased by 86% last year, mainly driven by investments in both forward flow agreements and one-off portfolio acquisitions. We invested close to EUR 400 million in NPLs in 2019, and the estimated remaining collection (ERC) on these portfolios exceeded EUR 2 billion at the end of the year.
Our growth journey has taken us from a start-up to a top-10 European debt management provider in just four years. Right from the outset we have said that the key enablers of a good operating model in the debt management industry are People, Systems, and Funding, and we have continued to strengthen all three factors over the past year.
We have grown the organization and have the right people onboard to continue to invest and collect on our own NPL portfolios at the same time as we accelerate the growth of our 3PC business. Our surveys show that we manage to combine solid 3PC performance with higher customer satisfaction than our competitors, measured as net promotor score. Our operations are built on a combination of strong industry standard core collection systems and standardized and scalable support systems, in a set-up that yields a very low cost-to-revenue ratio in an industry perspective. Finally, we have been able to attract funding to support a rapidly growing asset base.
Our business mix changed over the past years, as we are deploying all our investments into NPLs and are running-off our stock of real estate owned assets (REOs). NPLs now account for 93% of ERC, with REOs at 7% and declining. The asset base is also changing in geographical terms. We have been investing more into the currently very attractive Nordic markets, which now account for almost half of the estimated remaining collection on the NPLs. We see increasing synergies between the NPLs and the asset light 3PC business, and several of the forward flow contracts we have signed recently include a 3PC period before we acquire the claims. This should benefit our collection performance and our overall capital efficiency.
Over the past year, we have seen an increasingly attractive market opportunity with declining portfolio prices and increasing IRRs. We are therefore glad to have secured the funding required to continue to invest EUR 350-400 million also in 2020, which will drive the scale benefits further. In combination with continued operational improvements under our ‘One Axactor’ program this will improve profitability and return on equity over time. We remain excited about the opportunities that Axactor and our employees, customers, partners and shareholders have in front of us.
Key figures 2019
Report of the Board of Directors