Axactor ASA

Good morning or good afternoon all and welcome to the Exactor ASA presentation of Q4 results. My name is Adam and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad or by submitting a text question through the webcast. I will now hand the floor to Johnny Tsirilis, CEO to begin.

Good morning and welcome to Exactor's fourth quarter presentation. With me today, I have our CFO, Nina Mortensen. This presentation will be divided into four parts. First, I will take you through the Q4 highlights. Then Nina will present financials before I go through our key focus areas going forward. We will round off with a Q&A session. Let us move to slide 3 and have a look at the highlights for the quarter. Before I start, please note that the numbers are affected by one-off effects, in particular portfolio sales in both 2024 and 2025. Reference is made to the footnotes. In Q4, Axtractor delivered revenue growth with positive contribution from both segments. NPL gross revenue grew by 3% year-over-year, and the 3PC growth was impressive 16%. Axtractor delivered a solid cash EBITDA of €54 million, up from €51 million last year. Cash EBITDA margin increased from 63% to 64%. Annualized return on equity to shareholders was 14%. We continued to see positive effects from both changes in the IBOR interest level and reduced net debt, resulting in a 15% year-over-year reduction in interest expenses on borrowings. During the quarter, we divested a couple of smaller-sized portfolios in Germany and Spain, and we did so at a solid premium-to-book value. The transaction strengthened the balance sheet and contributed to the strategy of renewing the NPL book. Let's move to slide 4 for more comments on collection performance. Aksakto delivered a strong reported collection performance of 106% for the quarter and a full year collection in line with expectations of 102%. Obviously, the collection performance was positively affected by the earlier mentioned portfolio sales, and excluding these, the collection performance for Q4 was 102% and 101% for the full year. Please move to the next slide for more comments on the portfolio sales we executed in Q4. During the quarter, we sold two small portfolios in Germany and Spain. The common denominator for the sales was that these were the oldest portfolios we had in the two respective countries. In Germany, the vintage was from 2016, and in Spain, this was the oldest remaining unsecured portfolio we had, and it was from an early 2018 vintage. The total perceived was approximately 15 million euros, and the transactions was done at a premium of more than 20% to book value. These transactions were a part of the strategy to renew our unsecured NPL book, and the buy effect is obviously the positive effect it had on Covenant, creating more Covenant headroom. Let's move to the next slide for more comments on the development within 3PC. The 3PC segment continues to deliver impressive results. In Q4, their revenue growth ended at 16% year-over-year. We saw double-digit growth in both Norway, Spain, and Germany. In Spain, the growth is fueled by a successful partnership with a major investment fund. The previously announced landmark agreement in Norway contributed with its first onboarded volume during the quarter. 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 give a positive foundation for further growth and margin expansions for 3PC, not only in Norway, but for the total group. Let's move on to slide 7 for a summary of the key highlights of the year. 2025 was a busy year for our sector, and I would like to highlight four areas where we saw significant improvements from previous years. Firstly, we delivered an impressive 19% organic growth in the 3PC area. This is one of the highest, if not the highest, growth for any collection company of a larger size in Europe. Secondly, our collection performance improved substantially from 24 to 25, supported by the negative revaluations performed on the backbook in 24. The full year performance was in line with expectations, ending at 102%. During the first half of 2025, we spent a lot of time on refinancing activities, and the maturity profile was de-risked through the prolongment of the RCF and the issuance of a new bond, ACR 05. And finally, we implemented a large cost initiative by changing our IT infrastructure supplier, taking down the cost for IT infrastructure by approximately 30%. All these four areas contributed to the improved financial results for our sector in 2025. Let's move on to the next slide and comment on where we are compared to our financial targets for 2026. Let me start on the left-hand side, NPL Investments. We anticipate NPL investments of 100 to 200 million euros annually. In 2025, we ended below the target range at 59 million euros. This is partly explained by the fact that in first half 2025, we were holding back on investments until we got the refinancing of the RCF and the ACR 03 executed. Regarding return on equity, we were at 10% reported ROE and 12% adjusted for non-recurring cost items in 2025. The target is to be at a minimum 12% ROE in 2026. When it comes to returns and leverage, it is important to view these two in combination. We have a dividend policy with a dividend payout ratio between 20 and 50%, and at the same time, we want to have a maximum leverage ratio of 3.5 times at the end of 2026. What has become evidently clear over the last couple of years is that the debt market profoundly rewards low leverage ratios with tight bond spreads. It is therefore the board's recommendation not to pay dividend based on the 2025 results to prioritize deleveraging and hence improve cost of funding. We have already seen a strong tightening of the margin on our bonds, and we hope that the trend will continue into 2026. With that, I will leave the word to Nina for the financial updates.

Thank you, Johnny. So, now I'll take you through the Q4 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 99 million euros in the quarter, down 39% compared to the first quarter of 2024. The gross revenue was strongly affected by the sale of portfolios in both Q4 2024 and Q4 2025. Excluding the portfolios sold, the underlying life-for-life growth year-on-year was 6%. The MPRO segment reported a gross revenue of €80 million. The underlying growth this quarter was 3% when adjusting for the sale of portfolios. The growth was mainly driven by improved collection performance. The CPC segment continued to deliver a strong top line of 19 million euros, up 16% from the fourth quarter in 2024. Let's look a bit more into details on each of the business segments, starting with Enpel on the next slide. The Enpel segment delivered total revenues in the fourth quarter 2025 of 49 million euros. When doing the year-on-year comparison, it's important to note that in Q4 2024, the company adjusted DRC curves and reported a net negative valuation of 104 million euros, resulting in negative total revenues for that quarter. Total revenues for Q4 2025 were positively impacted by the improved collection performance. Collection performance continues as expected to hold steady at around 100% and ended up at 106% for the quarter and 102% for the full year 2025. When excluding the sale of portfolios in Germany and Spain, the collection performance came in at 102% for the quarter. The contribution margin ended at 74% for the fourth quarter 2025. The contribution margin was slightly down compared to previous quarters due to higher legal activation in Italy in the quarter. This year, Axato will resume full focus on building a solid NPL investment pipeline consisting of attractively priced accretive portfolios. The market NPL portfolios remain active with numerous opportunities expected through the coming year. The estimated replacement capex for 2026 is 75 million euros and based on expected investments for the year of 100 to 200 million euros, we would likely see a growth in the NPEL book value. Please turn to the next slide for comments on development in the CCC segment. The Q4 2025 performance for the CCC segment was all-time high with solid revenues of 19 million euros. We reported double-digit growth in Norway, Spain, and Germany, and the year-over-year growth ended at 16%. The contribution margin was 48%, up from 44% in the fourth quarter of 2024. This represents the highest margin since 2019, even when we include the significant ramp of costs related to the landmark agreement signed in Norway during 2025. The CPC segment continues to show strong momentum with ambitious new sales targets. The Norwegian-Denmark agreement will have a gradual ramp up throughout the year, supporting over significant growth expectations for 2026. 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 68 million euros for a quarter, Total revenue for the fourth quarter in 2024 ended negative due to the derailations made at year-end. The reported EBITDA ended at 35 million euros with a strong EBITDA margin of 52%. So we continue to see results from our cost reduction and revenue growth initiatives. Cash EBITDA ended at 67 million euros for the fourth quarter compared to 130 million euros in the corresponding quarter in 2024. The reduction was driven by the large portfolio divestment in the fourth quarter in 2024 compared to the smaller portfolio sales in the fourth quarter in 2025. Now on to the next slide for a look at the development in return on equity. The return on equity for the year came in at 10%. The ROE is increasing to 12% and excluding cost-related NRIs. A return on equity of 12% is in line with the communicated financial target for 2026. This result was mainly achieved through improvements in collection performance, strict cost control, and lower financial expenses. We continue to accelerate our operational automatization program to help maintain a healthy return on equity going forward. This concludes a positive year with a stable financial performance. With that, I'll now hand it back to Johnny for some comments on the focus areas going forward.