B2 Impact : B2Impact Annualreport 2023

Contents

1. This is B2 Impact

1. Message from CEO

1. The share

1. Corporate governance

1. Risk management

1. Directors' report

1. Financials

1. Alternative performance measures

1. Responsibility statement
2. Auditors' report

1. Appendix

Key figures

Cash collections (NOKm)

5,408 5,843 6,164

2021** 2022** 2023

Cash EBITDA (NOKm)

4,214 4,535 4,752

2021** 2022** 2023

Portfolio investments

2,459 2,741

1,331

2021** 2022** 2023

Estimated Remaining Collections* (ERC)

Sustainability higlights

Fair treatment and satisfaction of customers

8 of 10

surveyed customers said that they were satisfied with our services in 2023.

Employee wellbeing

80/100

engagement score in annual employee engagement survey.

Anti-corruption and anti-bribery

91 %

Quality standards

91 %

of all audited calls and quality controls fulfilled collection standards.

Work life balance

80 %

of our locations have measures in place supporting work life balance.

Anti-corruption

0

of employees received training on anti-corruption.

Zero confirmed incidents of corruption.

As a signatory of the United Nations Global Compact (UNGC), B2 Impact supports the UN's 10 Principles and the Sustainable Development Goals (SDGs). Since 2021, we have pledged to continually improve their integration into our business strategy, culture, and operations. We report on our journey in our annual Communication on Progress (CoP). Furthermore, our Sustainalytics risk rating of 8.7 indicates that we are a negligible risk

and a top performer in our sector.

Business lines

The Group's main business lines are Investments and Servicing. The Group focuses on granular consumer NPLs, and retail and corporate secured NPLs, owned and serviced for JV partners.

Unsecured markets:

Sweden, Denmark, Finland, Estonia, Latvia, Lithuania, Poland, Spain, Czech Republic

Secured markets (Veraltis Asset Management):

Italy, France, Romania, Greece, Cyprus, Slovenia, Croatia, Serbia

Offices

Norway, Head office

Luxembourg, Investment office

Usecured markets (core markets) Secured markets (Veraltis)

Head office, Norway Investment Office, Luxembourg

A strong financial position in a market with improving returns

2023 can be summarised as a year with many challenges but also many positives. The main challenges for the industry have been continued inflationary pressure and increasing interest rates translating into higher cost of financing. Compared with 2022 our cost of financing almost doubled, but we countered this by delivering stable results and a dividend capacity around the same level as the previous year. Strong cash flow, low leverage and improved efficiency, positions B2 Impact to be able to take advantage of a more favourable competitive environment and a market with improving returns.

During 2023, our operational focus has been on cost reducing efforts through organisational changes and investments in technology that increase our efficiency and scalability in the future. We have also focused on reducing our footprint, exiting Bulgaria as announced in the third quarter and signing an agreement for the sale of our assets in Montenegro late in the fourth quarter. Our focus to reduce footprint and concentrate capital in fewer markets will continue in 2024.

Performance through the year has been strong, with overperformance in collections in all quarters. Unsecured collections ended at 105 % versus latest forecast for the full year. Secured collections were also strong, and we collected close to NOK 500 million on our largest secured claim in the fourth quarter which contributed to a very strong cash flow for the full year. Real estate owned (REO) sales were also solid, with sales proceeds of NOK 499 million for REOs in 2023 which was 41 % over book value.

Our deleveraging efforts continued in 2023, and our leverage ratio decreased from 2.26x to 1.90x at the end of year. Coupled with strong cash flow, we were able to increase our investments from the previous year. In January this year, we issued a new EUR 100 million bond at favourable terms, and followed on with a tap issue of EUR 50 million at even better terms in the first quarter of 2024. Our blended cost of debt has consequently been reduced, and our aim is to reduce it even further during 2024 via an active hedging policy and better financing terms.

We observed a shift in many of our markets during 2023. Following a period of lower returns due to price pressure following increased competition with a significant inflow of capital to the industry, we now see a more favourable competitive environment and improved returns. We currently observe capital constraints

in the industry, whilst B2 Impact has reduced its debt by around EUR 400 million over the last four years. During the year we invested more than NOK 2.7 billion which was well within our guided full year target of NOK 2.5 to 3 billion. Furthermore, we entered 2024 with committed investments of over NOK 700 million, which is around twice the volume that was committed at the end of the previous year.

On September 29 we announced our new company name and brand, B2 Impact. "Operate as One" is one of the key elements of our strategy to increase operational, commercial, financial and cultural alignment across the Group. The new brand will be rolled out in all core markets during 2024 to increase recognition across our markets and strengthen both our internal culture and our commercial activities.

Fair treatment and high customer satisfaction is our main priority and where our sustainability impact is most material. Our objective is to find amicable solutions that lead to beneficial outcomes for all parties, which is achieved by providing necessary training to our employees and by keeping a close dialogue with customers, for example through the customer survey. We are proud that 78 %

of respondents in our customer survey are saying that they are satisfied with our services and that many of our customers have managed to become debt-free in 2023. We are also proud that our employee satisfaction is high (mapped through the annual employee engagement), as we believe that a friendly and inclusive working environment is crucial for providing high-quality services.

We recognise that our business activities can also entail actual and potential negative impacts, both across our organisation's own activities and in our value chain, and it is important that such impacts are properly addressed. According to our materiality assessment, negative impacts

are mainly linked to cyber security and ethical misconduct. To mitigate such risks, we have established high ethical standards that clearly communicate our expectations and aim to promote a responsible corporate culture.

We have also strengthened our work on human rights and decent working conditions in our supply chain, as demonstrated in the 2023 Transparency Act report.

Going forward we will put more efforts into mapping sustainability and governance initiatives across the different companies in the Group, with the aim to provide a transparent presentation of our results to date, and to set Group- wide goals and targets for the future.

The approved share buy-back program has been carried out according to plan. By the end of the year 18.9 million shares were acquired with a weighted average price per share of NOK 6.79 and representing 5 % of outstanding shares. As stated previously, our continued focus is to deliver shareholder value through solid performance, low leverage and shareholder distributions. The Board has proposed a dividend of NOK 0.70 per share for the financial year of 2023.

Outlook

Going into 2024, we anticipate an improved market for portfolio investments. We will continue to remain disciplined in our approach. We invested in portfolios with improved returns throughout 2023 and we believe further improvements can be made. We also see a potential to further improve efficiency and economies of scale, and a higher degree of automation and increased use of AI powered tools will contribute to this. We will also have a continued focus on concentration of footprint.

After a period of declining NPL volumes we now observe an increase in reported NPL levels in European banks. Stage 2 loans have increased in many of our markets, and

we also expect additional NPL volumes from secondary trades by industry players and financial investors. As such, we could see the beginning of a new cycle in the NPL industry where returns are improving after a period of price pressure. B2 Impact is in a strong financial position and well placed to take advantage of an improving market for NPL investments.

Finally, I would like to express my gratitude to all of our employees for contributing to our strong results. I would also like to thank our shareholders, bondholders, and other stakeholders for their continued trust in us. We look to the future with optimism and our focus remains on maintaining our solid performance and delivering strong cash flow.

Oslo, 25 April 2024

Erik J. Johnsen

Chief Executive Officer

The share

B2 Impact's objective is to create long-term sustainable value for its owners, through stable performance and results and with competitive returns through dividend and share buy-back programs.

Share data

Based on the last trade on 29 December 2023, which was at NOK 7.35, B2 Impact's market capitalisation was NOK 2,845 million as of the same date. The highest closing price quoted during the year was NOK 7.91 on 2 January 2023, and the lowest closing price was NOK 6.38 on 28 June 2023. During 255 trading days in 2023, a total of 99,001,335 B2 Impact ASA shares were traded. The average daily trading volume of the B2 Impact ASA shares on the Euronext Oslo Stock Exchange in 2023 was 388,240, equivalent to 0.10 % of the total number shares.

Share capital

At year-end 2023, B2 Impact's share capital amounted to NOK 38.7 million, divided among 387,180,824 shares and corresponding to a nominal value of NOK 0.10 per share. There is one class of shares, and all shares are treated equally. The shares are freely negotiable and with equal rights to vote and equal entitlement to B2 Impact's profit and dividend.

Ownership structure

The number of shareholders was 4,435 per year-end 2023, a 9.2 % decrease from 4,884 at year-end 2022. According to the shareholder register maintained by the Norwegian Central Securities Depository (VPS), 95.36 % of B2 Impact's shares are owned by Nordic investors.

Dividend and share buy-back

The dividend policy aims for shareholder returns of up to 50 % of the company's adjusted net profit (both in cash and in distribution in kind as share buy-back programs of own shares). The Board of Directors considers applicable legal restrictions, capital expenditure requirements, the financial conditions, general business conditions and contractual obligations when assessing the company's ability to pay dividends.

Under the share buy-back program that was initiated on 25 May 2023 and concluded on 12 January 2024, 19,348,672 shares were bought back at an average price of NOK 6.81 per share, corresponding to 5.00 % of the outstanding shares and decreasing the equity attributable to parent company shareholders by NOK 132 million. After the use of 700,000 treasury shares to honour obligations in connection with employee incentive arrangements, B2 Impact ASA owns a total of 18,648,672 own shares, corresponding to 4.82 % of B2 Impact ASA's share capital. As in previous years, it will be proposed to the Annual General Meeting 2024 to decrease the parent company's share capital and other paid in capital by cancellation of its 18,648,672 treasury shares acquired under the share buy-back program.

For the financial year 2023, the Board proposed to the Annual General Meeting a cash dividend of NOK

228 million equivalent to NOK 0.62 per share. In addition, the Board proposed that the unused capacity of the latest share buy-back program is paid out as additional cash dividend. The unused capacity amounts to NOK 31 million equivalent to NOK 0.08 per share. Total proposed dividend is NOK 0.70. Based on the last price paid on 29 December 2023 (NOK 7.35), the proposed cash dividend represents a dividend yield of 9.5 %.