Axactor ASA

Hello and welcome to Assector ASA presentation of first quarter 2026 results call. Please note that this call is being recorded. After the prepared remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star followed by one on your telephone keypad. You can also ask questions via webcast platform by clicking the Q&A icon. I'd now like to hand the call over to Johnny Choles, CEO of AxaCorp. Please go ahead, sir.

Good morning and welcome to AxaCorp's first 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 highlights. Then, Nina will present the financial update before I will go through the updated financial targets. We will round off with a Q&A session. Let us move to slide three and recap the most important event that actually happened after Q1 this time, the private placement we announced on April 28th. As you now know, approximately four weeks ago, we announced the transformational transaction where Fortress came in as a major shareholder in our sector with an ownership stake of approximately 30%. The transaction consisted of three main elements. The first part was a 200 million euro private placement that was subscribed at the price of NOK 470. We also announced that we would do a subsequent offering, and this has now been launched. More about this in a few minutes. Secondly, we have established a co-investment partnership with Fortes, which will ensure strong investment capacity going forward. This will also be a driver for capitalized revenue growth. And thirdly, as part of the transaction, the company will divest a seed portfolio that will generate approximately 100 million euros in proceeds, with closing in Q2. Please note that KPMG has issued a fairness opinion to the Board of Directors of AXA-AXA, stating that the transaction price is financially fair. In addition to these three elements, the company announced that AXA-AXA's book value of NPL portfolios is to be assessed in Q2 2026. We have no further information on this point as of now, other than that the work has started. As a last remark, the Fortress partnership enhances AXAXA's underwriting capabilities through a separate agreement ensuring access to Fortress underwriting knowledge. On the next page, we will repeat the most important profit growth drivers that will occur as a result of the transaction. In principle, there are four major net profit drivers that will derive from the transaction. The first one is the leveraging. It will happen immediately and the effect is instant. Both the interest burden and the balance sheet risk will be reduced. Second, the transaction offers improved opportunity to refinance and to optimize cost of funding. This will lead to structural savings on interest expenses. The third driver is the opportunity for substantially higher investment levels going forward. It will be a step change in investment capacity, generating higher revenues from portfolios. It will unlock the opportunity to purchase attractively priced portfolios available in the market. And lastly, from day one, we will experience a 3PC uplift from servicing of the seed portfolio. And over time, the coin investment portfolios will contribute to growth in reoccurring asset-light revenue streams. To summarize, the transaction is vital in creating net profit growth going forward. In fact, the positive effects has already started to materialize. Please move to the next page. Already the week after the announcement of the private placement, we issued a new four-year 100 million euro bond. It was done at 390 bps plus eurobar, which is more than 50% lower than the total cost of our largest outstanding bond, ACR04. We noted high interest for the new bond, which was more than two times oversubscribed. This bond issue confirms a strong confidence for X-Actor in the bond market, and it is a testament to what we said when you announced equity transaction, that the substantially lower leverage ratio will give a significant payoff in terms of lower interest expenses. Actually, for X-Actor, this marks a step change in funding costs. More about this on the next page. I think it's worthwhile to develop it on what this will mean for X-Actor going forward. As we replace the current bonds at the approved margins, our interest expenses will be significantly reduced. As an illustrative example, if we place two more bonds at the same terms as ACR 06, 390 bps, and remaining proceeds from the transaction to reduce the RCF draw and to repay ACR 03, the quarterly pro forma interest expenses will be reduced with approximately 40%, from 19 million euros a quarter down to 11. This will of course have a significant impact on our sector's profitability. Before I leave the word to Nina, I would like to remind you about the ongoing subsequent offering. Please move to the next page. As you are probably aware, the subsequent offering was launched earlier this week on Tuesday. The subscription period will end on June 8th, close of business. You can find detailed information on how to subscribe on our website, along with other useful information regarding the subsequent offering. With that, I will leave the word to Nina for a 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 75 million euros in the quarter, down 3% compared to the first quarter of 2025. The gross revenue decline comes mainly as a result of the portfolio sales in Spain and Germany last year and the low investment level in 2025. The NPL segment reported a gross revenue of 59 million euros, excluding their portfolios sold last year. The gross revenue decreased 2% compared to Q1 2025. The CCC segment continued to deliver a solid top line of 16 million euros, up 5% from the first quarter last year. Let's look a bit more into details on each of the business segments, starting with NPEL on the next slide. The NPEL segment delivered total revenues in the first quarter 2026 of 37 million euros, down from 50 million euros in the first quarter 2025. The reduction comes mainly from negative net evaluations of 9 million euros booked in the quarter. The effective NPL amortization rate increased to 21% in the first quarter, up from 17% in the first quarter of 2025. The NPL collection performance was 94% for the quarter, affected by challenging collection environments in several of AXAFTOR's countries of operation. The contribution margin was 71% for the first quarter 2026, down from 77% in the first quarter 2025. Reduction was driven by the lower total revenues. Total operating expenses for the NPL segment were reduced by 7%, driven by lower costs related to the sale of repossessed assets. As Jonny mentioned earlier, there will be a step change in investment capacity going forward, enabling solid future growth from the NPL segment. Please turn to the next slide for comments on the development in the CPC segment. The CPC revenues ended at a solid €16 million for the quarter, up 5% from the corresponding quarter last year. The first quarter of 2025 saw positive one-offs impacts on a specific contract in Spain, limiting the growth for the quarter. Adjusted for a one-off impact, the underlying year-over-year growth was 12%. The Norwegian business continues to grow on the back of recently signed contracts, and the German market is also performing well. The contribution margin ended at 37%, up from 33% in the first quarter of 2025, The contribution margin is improving through the revenue growth along with stable operating expenses. Further growth in the CPC segment is expected going forward based on a strong underlying momentum across countries supported by a solid pipeline for new business and the ramp up of recently implemented contracts. 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 53 million euros compared to 65 million euros in the first quarter of 2025. The decline is driven by lower gross revenue and negative evaluations made during the quarter. The reported EBITDA ended at 22 million euros with an EBITDA margin of 42%, impacted by the evaluations made during the quarter. Total operating expenses were down 5% compared to first quarter in 2025. We are able to maintain lower operating expenses as a result of both our ongoing cost initiatives and benefiting from a continued cost-conscious approach across the company. The total operating expenses as a percentage of gross revenue ended at 41% for the quarter, down from 42% in the first quarter of 2025. We uphold the cash EBITDA at a good level for the quarter, ended at 45 million euros. With that, I'll now hand it back to Johnny for additional remarks on the new financial targets.

Thank you so much, Nina. As we announced in connection with the private placement, we have introduced a new set of financial targets. Since these were thoroughly introduced as part of the transaction, I will keep this short. We target to invest between 200 and 400 million euros annually in NPL portfolios. Further, we target to deliver an annual average growth of 10% on GPC, and we aim for a return on equity that exceeds 15%. Regarding leverage, we will focus on keeping a moderate leverage ratio to create an optimal capital structure. The target is to have a leverage ratio between 225 and 275. When it comes to total shareholder distribution, we aim to pay a minimum of 50% of adjusted net profit distributed through cash dividends and or share buybacks. We target the first shareholder distribution in June 27, when we expect all current outstanding bonds to be refinanced. With that, we open up for questions.

We are now opening the floor for question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. You can also ask questions via webcast platform by clicking the Q&A icon. Again, if you'd like to ask a question, please press star, followed by one on your telephone keypad. Thank you. We will pause for a brief moment to wait for the questions to come in. If you'd like to ask a question, please press star followed by one on your telephone keypad. Thank you. As of right now, we don't have any pending questions in the conference line. I'd now like to hand the call back to Johnny Tolis to address the Q&A webcast questions.

Thank you for that. Yes, not so many questions here either. We have one, probably not a big surprise since the Q1 numbers were already released one month ago. But we have one here. It says outlook for 2026 were positive and collections were above 100%. Then they suddenly dropped dramatically to Q1. Did all the problems occur after the presentation of Q4? What was the collection performance per month? And what was the collection April? So let me start with the easiest one. We don't disclose collection data per month. And I have to say, there is no dramatic drop in the actual collection. We have a normal decay in collections of 2026. However, as described in the Q4 report, the 2026 curves did rely upon some improvements on certain relevant macroeconomics parameters that has not materialized. In every quarter, we have disclosed the curve shape, and there it's for everyone to see that we have expected an increase in collection in 2026, which we are unfortunately currently not reaching. So this is the main explanation for the dropped in the reported collection performance. How can your collection be so poor relative to Hoist and B2? You are in the same market. It's impossible to just compare like this. We have some overlapping markets, but we are also very different as companies in terms of segments and when the debt is bought. It's also on how you book the portfolios, at what IRRs you book it on, and so on. So it's not a very relevant comparison to be honest. That was the questions that we have received. So with that, thank you all for calling in and I wish all of you a good day.

Thank you for attending today's conference call. You may now disconnect. Goodbye.