Axactor ASA

Good morning and welcome to VoxActor's first quarter presentation. By my side, I have Nina Mortensen, our CFO. This presentation will be divided into four parts. First, I will take you through Q1 highlights. Then Nina will present financials before I give an updated outlook. We will round off with a Q&A session. Let's move to slide three and have a look at the highlights for the quarters. Collection performance was 101% for the quarter, which affirms the updated curve forecast after the revaluations done in Q4 last year. Total gross revenue ended at 77 million euros in the seasonally weak quarter. Here it is important to remember that we sold off approximately 6% of our total back book in the Spanish portfolio sale at the end of last year. Adjusting for this, the gross revenue was up 7% year over year. We also delivered an impressive 28% growth in the 3PC segment. On top, we managed to increase the margin. I will come back with more details. The EBITDA ended north of 32 million euros, which was an increase of 23% year over year. The solid EBITDA margin of 50% was driven by margin expansion and cost reductions. Annualized return on equity to shareholder reached 20%, which is all time high, and on par with 2026 financial targets. Oxtocler has a very solid balance sheet with close to 350 million euros in equity, which gives an equity ratio of 27%. Let's move to slide four for more comments on collection performance. I'm pleased to see that we are now back to the expected level on collection performance. This level is of course supported by the Q4 revaluations, but we can also observe positive signals in the underlying performance in certain markets. For example, we can observe more larger payments in the Norwegian market and even stronger collections in the Spanish market for secured assets. Both likely to be explained by positive development in housing prices. The Q1 collection performance was affirming that our new forecast assumptions was correct for the period and we expect collections in line with the forecast going forward. Moving to slide 5 and more comments on the positive development we saw in the 3PC segment for the quarter. Although NTL counts for the largest part of our sector's P&L, 3PC is still a significant and important part of our business. It is a capital-like business model, offers lower risk, but still generates a strong cash flow at healthy margins. It is also an important part in building the relationship with our banking customers. Q1 was a very strong quarter for our 3PC business, showing an impressive 28% increase in revenue year over year. and at the same time, the contribution margin was increasing. What is equally positive is that we see a broad improvement for the segment, with double-digit growth in all of our four 3PC markets. We see a clear trend that the customers are more willing to pay for high-quality collection services, and the growing pipeline with solid prospects gives a very positive foundation for further growth and margin expansion for 3PC. Let's move on to the next topic, refinancing, on page 6. Over the last couple of weeks, we have announced two important elements in addressing our loan maturities. Firstly, and maybe most importantly, we have agreed with our RCF banks to extend the RCF with two more years, and new maturity will be June 2028. The terms and conditions will not be changed. This is a pure extension exercise. We consider the terms both to be fair and attractive, and this shows continued strong support for our two main banks. Secondly, we have repurchased a substantial amount of bonds at significant discounts during Q1. In the quarter, we acquired bonds for 49 million euros at 97.3% of par. We continue to buy a little bit more in the ACR03 bond in April, so the current outstanding amount on ACR03 is 180 million. In total, we have acquired bonds for approximately 100 million euros during the last two quarters. Let us move on to the next slide for more comments on how we plan to continue the bond refinancing. First, it is important to say that we are on track to refinance the ACR3 bond. It is 16 months left to maturity, and normally we have done refi closer to the bond maturity. However, we recognize that the market has put a significant spread on our bonds and has therefore started the refinancing by acquiring bonds worth of 120 million euros in the market at substantial discount. Our aim is to refinance the remainder of ACRO 3 during 2025, and the main elements of this refi would be to place a new 100 to 150 million euro bond in combination with cash flow generation in the period until refinancing. This continued reduction in bond debt is expected to further fuel reduced interest expenses. We have also several other options for cash generation, such as portfolio sales. Regarding covenants, we have comfortable headrooms on all covenants, and many of them actually improved during Q1. The last point I will mention before I leave the word to Nina is the development in interest expenses. Please move to slide eight. The favorable development we saw at the end of last year has continued with even more strength into Q1. The reason for the positive development is the double positive effects from reduced IBOR rates in combination with effect from bond buybacks since we are using cash in combination with RCF, which has a lower interest margin. In numbers, the reduction is 15% of interest expenses last two quarters. Also, we believe the positive trend will continue the next two quarters, although at a bit slower pace. Still, a 7% reduction is expected until end of Q3. Please note that the 7% reduction is assuming a constant level of interest bearing debt. With that, I'll leave the word to Nina for the financial update.

Thank you, Johnny. So now I'll take you through the Q1 financial performance, starting with the overall figures and then a bit more context on what is behind the numbers. Gross revenue for the group ended at 77 million euros in the quarter, down 2% compared to the first quarter of 2024. Excluding the portfolio sold in Spain in Q4 last year, The increase in gross revenue was a healthy 7%. The NPL segment reported a gross revenue of 62 million euros. The segment gross revenue, excluding the sole Spanish portfolios, increased 2% compared to Q1 2024. The CPC segment delivered revenues of 15 million euros, up 28% from the first quarter last year. Let's look a bit more into details on each of the business segments, starting with NPL on the next slide. The NPL segment delivered an increase of 11% compared to the first quarter of 2024, with total revenue of 50 million euros. The reported collection performance ended at 101% for the quarter, affirming the active forecast after a Q4 revaluation with adjusted ERC curves. The improvement in total revenues was also supported by lower net negative revaluations and lower effective NPL amortization rate. The amortization rate was reduced to 17%, down from 26% in the first quarter of 2024. The contribution margin ended at 77% for the quarter, up one percentage point from Q1 2024. The margin is supported by both rising total revenues and lower operating costs. Please turn to the next slide for comments on the development in the CPC segment. The CPC revenues ended at 15 million euros for the quarter, equal to a growth of 28%. All markets delivered double-digit growth this quarter, with especially good results in Norway and Spain. The contribution margin also increased this quarter to 33%, up from 32% in the first quarter 2024, driven by healthy volume growth. Further expansion in the CPC segment is expected throughout the year. with strong pipelines for new business in several markets. Let us move on to the next slide, where I'll present more details on the reported financials. Total revenue at group level ended at 65 million euros, up from 57 million euros in the first quarter in 2024. The reported EBITDA ended at 32 million euros, with a strong EBITDA margin of 50%. So we continue to see results from our cost reduction and revenue growth initiatives. Cash EBITDA ended at 47 million euros for the first quarter compared to 49 million euros in the corresponding quarter last year. The reduction is due to the large portfolio divestment in the fourth quarter 2024. Now on to the next slide for a look at the development in return on equity. The analysed return on equity for the first quarter climbed to 12%. The increase was driven by improvements in total revenue and lower financial expenses. The reported return on equity is all-time high in AXAFTOR's history and is on par with the announced 2026 financial goal. With lower interest rates, improved NPL collection performance, strong 3PC growth and a continued focus on cost, AXAFTOR expects to deliver a return on equity at a healthy level throughout 2025. With that, I'll now hand it back to Johnny for some comments on the outlook.

Thank you so much, Nina. As previously mentioned, we expect the collection performance to continue to be around 100% going forward, and we expect the 3PC growth to continue with healthy margins. Declining interest expenses from bond buybacks and falling IBOR rates will continue, and it is worth to mention that quarterly OPEX is expected to be reduced by approximately 700K post-IT migration to new infrastructure platform. We expect full run-right on IT savings from Q3. We will continue to see strong cash flow generation that will be used for both buying portfolios and to conclude the refinancing process. As I mentioned earlier, we expect to refinance ACR03 in 2025, while ahead of maturity, which is September 26th. With that, we open up for questions.