B2 Impact : Q1 2024 Report

Q1

First quarter 2024

Report

15 May 2024

2 B2 Impact - Quarterly report Q1 2024HighlightsInvestmentsFinancials Corporate Matters Financial Report

Key figures Q1 2024CEO comment

In the first quarter we delivered strong collection performance and solid cash flow. Pipeline visibility has been improving and we see increasing activity going into the second quarter. We have remained disciplined in our approach to investments and expect a favourable competitive environment going forward. Entering Q2 we have invested and committed volumes of over NOK 1bn which allows for a selective approach for the year where we aim to take advantage of an expected increase in NPL volumes and capital restrictions for the industry as a whole.

During the quarter, we strengthened our capital structure through the bond and tap issue, raising EUR 150m at a significantly improved margin compared with our previous two issues, while at the same repaying the EUR 200m bond that matured in May. As a consequence of this we have notably reduced our cost of debt compared with the end of 2023. In February, due to our low leveraging and strong financial position we received a credit rating upgrade from S&P from B+ to BB- with stable outlook. Our leverage ratio of 1.9x is currently the lowest in the industry and we are well positioned to take advantage of an attractive NPL market going forward. We will continue to focus our investments in countries where we have scale and to reduce our footprint by exiting our smaller markets. Finally, our Board has proposed a dividend of NOK 0.7 for approval at our Annual General Meeting on 23 May.

Erik Just Johnsen

CEO of B2 Impact ASA.

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Quarterly highlights

• Strong collection performance: Unsecured at 105 % and secured at 164 % compared with latest forecasts
• Lower underlying Opex: Personnel expenses trending down. Increase in legal collection costs driven by unsecured collection growth and positioning for tax refunds in Q2
• Solid financial performance: Cash EBITDA ahead of last year
• Strong financial position & positive trend in interest costs: Bond issue of EUR 100m and tap of EUR 50m completed at improved margins. Further improved credit rating.
• Investments on track: Portfolio investments in line with normal seasonality. Increasing market activity with NOK 290m invested in Q1 and an additional NOK 700m already committed for the remainder of the year
• Positioned for growth: Leverage ratio at 1.9x provides significant headroom for investments

Highlights

Investments

Financials

Corporate Matters

Financial Report

Key financials1

illion

1. Key Financials exclude non-recurring items
2. Includes the Group's share of portfolios held in SPVs and joint ventures
3. Comparable numbers are adjusted for FX and Bulgaria

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B2 Impact - Quarterly report Q1 2024

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Investments

Portfolio investments in the first quarter were NOK 290m. The Group has committed further volume for the remainder of 2024 with total invested and committed capital at the end of the first quarter of NOK 1 bn. All portfolios acquired so far this year are retail unsecured of which a large majority are consumer finance portfolios.

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targets for 2024 both in terms of expected volumes and returns on portfolios acquired. The Group observes a diverse competitive environment with varying degrees of competition as markets adapt to new equilibriums. The Group will continue to be selective and disciplined in its investment approach and expects favourable market conditions going forward.

Estimated Remaining Collections (ERC) have developed in line with the announced strategy to invest in core unsecured markets. ERC in unsecured have grown in the last 12 months despite strong unsecured collection performance. Secured ERC have declined both in absolute and relative numbers due to limited investments and successful collection of several large claims.

Portfolio investments (NOKm)

ERC1 (NOKm)

Book value NPLs, REOs, JVs (NOKm)

1. Includes the Group's share of ERC for portfolios in joint ventures (	3 5 in secured and	1 081 in
unsecured at end Q1 2024).

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B2 Impact - Quarterly report Q1 2024

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Financials

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Financial Report

Collection performance and revenues

Unsecured collection performance

Unsecured collections continue to have a positive trend compared to the latest forecast and ended at 105 % in the first quarter. Collections were up 5 % compared to the same quarter last year which shows the strength and resilience in our unsecured business. Collections from JVs were also strong in the quarter, however with the cash effect from these delayed to Q2 2024.

Secured collection performance

Secured collections showed overall solid performance during the quarter. Despite no new investments, cash collections were at the same level as the first quarter last year. The decrease compared with Q4 2023 reflects

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successful efforts in extracting value through repossessions.

Other revenues

Other revenues of NOK 132m included NOK 73m of revenues from third party collections, NOK 18m of

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Collections development (NOKm)

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B2 Impact - Quarterly report Q1 2024

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Financial Report

Operating efficiency

Operating expenses (opex)

Total opex in the quarter was up by just under 3 % compared with the same quarter last year. The increase is driven by actions within legal collection processes with related external expenses increasing by close to 19 % compared with last year. As a result of this, the Group achieved growth in its unsecured collections and is well positioned for tax refunds in Q2 which are expected to further improve the positive trend in collection performance.

Personnel expenses were down by over 4 % compared with the same quarter last year. As previously communicated, we expect positive cost effects from the many initiatives already implemented as well as from continued focus on cost going forward.

Other expenses were up by less than 2 % compared with the same quarter last year.

Cost efficiency and initiatives

Following efficiency initiatives completed throughout 2023 we have achieved a reduction in the underlying

operating expenses in the quarter. These initiatives include reduction of central costs, closure of the loan Operating margin LTM1receivables business in Poland, as well as numerous other actions undertaken across the Group.

In Q1 2024 we have continued to focus on extracting efficiencies with further reductions in central costs and

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The Group continuously focuses on improvements to increase scalability. We see increased use of our self- service platforms, chat bots, multi-channel customer communication, scoring models and AI powered automation as essential elements in our digitalization strategy today and going forward.

1. Numbers in NOK million in constant FX, ex. Bulgaria, ex. NRIs

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B2 Impact - Quarterly report Q1 2024

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Cash EBITDA

Cash revenues were up compared with Q1 2023 following higher cash collections from unsecured and with cash collections from secured and other revenues in line with Q1 2023.

Cash EBITDA was ahead of Q1 2023 as a result of strong collections and actions taken to reduce operating expenses. Higher operating expenses in the quarter were mainly legal expenses which resulted from actions taken in Q1 which are expected to drive higher collections in subsequent periods.

Cash from JVs in unsecured was slightly delayed in Q1 and the distributions will come through in Q2. Cash

EBITDA would have been close to NOK 920m for the quarter had these delays not occurred.

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Reported revenues and EBIT

Revenues

Revenues were NOK 32m lower than Q1 2023 due to lower collections related to repossessions on secured portfolios. Repossessions are non-cash items but are reported as collections and were NOK 38m higher in Q1 2023.

Overperformance and early collection on secured portfolios in Q1 2024 of NOK 87m resulted in a revaluation of NOK -58m on secured curves. Although reported as a revaluation in accounting terms, this is effectively an amortisation due to claims collected earlier than expected and consequently removed from future ERC.

Unsecured portfolios were revised upwards with a revaluation of NOK +36m following a sustained period of strong overperformance.

Collections e Vs	1	30	1 53	1 8	5 38
ortisation	5	0	0		0
Revaluation			50	55 3	0

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EBIT

Reported EBIT was down in Q1 2024 compared to Q1 2023 driven by lower non-cash collections being repossessions. Repossessions were NOK 69m in Q1 2024 compared with NOK 107 in Q1 2023 and are reported as collections.

Underlying operating expenses were down compared with Q1 2023 with the exception of external expenses which will drive higher collections in the coming quarters,.

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B2 Impact - Quarterly report Q1 2024

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Debt, Capital Structure and Financing Costs

Debt and interest cost (NOKm)

Net financial items (NOKm)

Capital Structure (EURm)			Positive trend in interest costs
I+2.9-3.75%	E+6.90%	E+4.55%	E+5.00%	Interest cost and commitment fees decreased to NOK 231m from NOK 254m in the previous quarter mainly
due to refinancing of bonds at more favourable terms and a lower average debt balance. Arrangement fees

decreased to NOK 21m from NOK 24m in the previous quarter as part of previous RCF refinancing was fully expensed by the end of 2023. Other financial expenses of NOK 4m mainly consists of interest expense on leases. This is down from previous quarters where expenses from sale of Bulgaria, amendment fee on one of our bonds and changes in fair value of derivatives has been recorded.

The refinancing of bonds in the quarter and the expiry of the reinvestment facility within the SFA on 30 April 2024 will further decrease interest costs going forward. Additionally, we are in dialogue with the RCF banks to extend the facility during this year.

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B2 Impact - Quarterly report Q1 2024

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Corporate matters

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leveraging ensures liquidity and financial flexibility to deliver on the strategy. The combination of equity, bank financing, project financing and bonds provides access to capital when larger opportunities arise, while steady collections across the Group provide a strong operating cash flow.

The Group holds an EUR 610m senior secured revolving credit facility (RCF) with DNB Bank ASA, Nordea Bank AB and Swedbank AB which matures in June 2025. The project financing from PIMCO, the Senior Facility Agreement (SFA), of EUR 180m was fully repaid in January 2024.

A new senior unsecured bond (B2I07) of EUR 100m was issued on 23 January 2024 at an interest rate of 3M EURIBOR + 500 basis points in margin. The proceed was used to fully repay B2H05 on 6 February

2024 based on a call option exercise. On 27 February 2024 B2 Impact completed a tap issue of EUR 50m in B2I07 at a price of 101.25 % to par which indicate a spread (margin) of 4.61 %. The new bond (B2I07) was

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In addition to above-mentioned financing, the Group holds a senior unsecured bond loan of EUR 300m which matures in 2026.

On 27 February 2024 S&P upgraded its credit rating (corporate family rating) for B2 Impact ASA to BB- (stable outlook) from previously B+ (positive outlook). The rated Senior Unsecured Bond was also upgraded to BB- from B+ given a better Corporate Family Rating and unchanged recovery rating. According to S&P the upgrade is a reflection of B2 Impact's steady competitive position, solid investment performance, and reduced refinancing risk improving B2 Impact's credit quality. The solid performance that B2 Impact had both in its secured and unsecured portfolio through 2023 resulted in higher-than-expected revenue. The latter leaves the company in a better financial position to increase its investment volumes with higher internal rates of return (IRR) compared with many of its peers with higher leverage.

Subsequent events

B2 Impact continues to focus on its core markets and in May 2024 an agreement was signed in connection

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Disclaimer

This report contains forward- k

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future events. All such statements are subject to inherent risks and uncertainties, and many factors can lead to developments deviating from what has been expressed or implied in such statements.

Board of Directors, B2 Impact ASA

14 May 2024