KRUK Spólka Akcyjna

This presentation is available on the website and during my commentary please ask questions in the question and answer section here in the Teams application and I will refer to them after I complete the comment of the presentation. So let's start. The six months of 2026 meant 555 million zloty of net profit. A solid result. However, you see that there is no growth versus six months of last year. So the growth we expect will come in the second half of this year. Cash APDA grew healthy by 8%. Our recoveries grew by 5%. Our assets grew by 12%, which means there will be more revenue growth from those assets in the future. The business is in depth at a similar level like last year, 2.6, so a healthy level for representing still a potential to increase if we need it. So overall, this second quarter and six months we believe was a solid result, although we hope for somewhat better results. One of the reasons why this results was not better was depreciation of the Romanian currency versus Euro. Another reason was that we planned somewhat higher recoveries, not significantly, but a small few percent higher recoveries. And there is no one significant reasons why we wouldn't achieve it, but the fact is we missed some of those recoveries. However, if you look at the recovery plan, it was healthy at about 5% of the active forecasts, the so-called accounting forecast. So no need to worry about the possible negative evaluation. The question is, what is the upside? How much more can we recover above? If you look at investments, we secured about 860 million of new investments. This is still not even a half of what we expect to invest this year. We sustain our expectation that we will be able to deploy about 2.5 billion Zloty in portfolios this year. However, is our comment on the market slides.

The market is competitive.

This net results and the dividend payout of above 20 of 20 Zloty's per shares meant that the business had a 19% return on equity. You'll see the revenue growth which is relatively insignificant, but as I said, we hope the second half of the year will be better. You see lower costs versus last year, specifically legal costs are lower and this is a consequence of certain lifecycle of legal costs where we intensify sending cases to the legal system at a certain point of time of owning portfolio later on. recoveries grow or are sustained at certain level, the costs drop. No more cases that are sent to the court and the margin grows nicely. The financial costs decreased and this is a result of the effect of the hedging instruments which played to our advantage. In these six months, we had a gain of about 53 million zloty, so relatively high by impact. The business is well capitalized, the indebtedness is contained, and the business shows a healthy growth on assets as you see here on the slides. And just to remind you, Apart from business as usual, the company is conducting two major transformational projects. One is the replacements of the IT system, which mainly is about process engineering and IT system replacements. We are advanced more or less as planned in this project. An important milestone was achieved by the company in July when NVP, so Minimum Viable and the project product for the new system in Poland was released. The first batches of a few hundred cases went through the process and now we are learning on this exercise and improving what needs to be improved. So things are going well, although this is a difficult and very complex product. And the second initiative is our reorganization into becoming Alternative Investment Fund sometime in 2027 possibly second half of that year and this process is also going on plan. Let's take a look at the results per segment so this is a summary slide which shows where we are in terms of investments this 864 million zloty is a growth versus last year but This is somewhat below our expectations. We hope we will be able to achieve much better results in the second half of this year. Therefore, we sustain this guideline of 2.5 billion, but we want to tell you the market remains competitive, especially in Poland and Romania. So the risk is rather on the downside. It's lower, it's less likely that we will exceed this target and it's somewhat more likely that we will have some shortage versus this target if we decide, as we did in the first half of this year, not to compromise on the IRRs, on the expected returns on portfolios, which is the plan. Recoveries were strong, but we hope there would be a few and dozens, millions more than the results you see. The revenue was somewhat negatively affected by the depreciation of the 4 million lei. That cost us roughly 59 million zloty. What I'm very happy about is a significant improvement of recoveries and profitability of the Spanish business in the second quarter. I think we've gone a long way from January 2026 to today. The legal process, how we manage it, the results of it are much better today than they used to be, as expected as we were communicating to you after the first quarter of this year. Therefore, we are ready to come back to buying more performance in the second half of this year. It's also good to see that all of our markets were profitable. if you look across the board here on EBITDA Poland showed healthy growth Romania showed good profitability but depressed but by the depreciation of the currency Italy showed a very nice growth doing very well after very successful the amicable process now the legal process continues to be somewhat disappointed to this result but again this is early stage and we are learning what to improve when we start to build our operational presence possibly sometime next year in France. The cash flow generation has been very strong as evidenced here by this one almost 0.4 billion zloty of cash in the deal. Let's look now at the market by market in Poland and the volume of portfolios offered on the market was relatively small this three billion however these were portfolios of high value so there were not many secondary markets usually much cheaper transactions but more bigger banking type portfolios which represent high recovery potential and comment high prices but also competition for these portfolios were high and this is evidence by this price of 34%. In this quite competitive environment we did not compromise on the returns and we decided to give up some of the portfolios and as a result our market share is lower than historically. We hope the second half of the year will be better for us in Poland. The results were very good. for the business. As you see here, recovery, revaluation, one of the highest in the past couple of quarters, and we're quite happy with the underlying profitability. So it also shows you being a big business in Poland, but also in other markets, we can afford not to participate quarter to quarter with cyclical changing competitive environment. We can press the gas pedal in less competitive market and press the brake pedal in more competitive markets and this is how we optimized deployment of our capital in Q2 as usual. In Romania the supply was similar to what it was last year. The market also offered usually the big banking portfolios and again As similar as in Poland, competition level was quite high and this is evidenced by this high price versus normal 46%. We had about 40% share in that market in the first six months of 2026. The results were depressed by the depreciation of lei that goes straight into P&L. The line, as you see here, of course, despite that the business was still quite highly profitable, but we hope this revaluation, this depreciation of the currency was a one-off event. And that happened exactly when the government lost the majority, backing from the majority of the parliament. The issue is not resolved yet. We don't know where we'll be heading towards. Early elections in Romania, or there will be a new majority forming a new government without the elections. We don't expect Romania to appreciate, but we also have no means to believe that depreciations will become in time soon. Italy, a relatively I would say similar level of supply than in the past the years as you see here much lower the price versus nominal which is mostly driven by quality of this portfolio it's lower potential for recoveries but also to something we lower competition on that market that's our relative assessment compared to Poland and Romania and you may see that on that market with advantage of their benign competitive environment and we recommend it to the majority of the market with 55% market share and we're very happy with what this means for us. And the results are solid in terms of recoveries. You can see revaluation which is relatively high for Italian markets compared to previous quarters and also good profitability. In Italy, apart from a steady supply on the primary market, we may also look at some secondary market deals which may be interesting for us. So apart from this relatively stable supply on the primary market, there are also some opportunities for us to increase our deployments through participation in the secondary market. and Spain. In terms of market, it was small. You can see about 300 million Zloty deployed in that market in consumer unsecured only. Very low prices, so also showing you that the portfolio that was sold was rather of low quality. We started to buy some portfolios in Q2, investing there not much and having 80 percent market share but we know already will be more active in the in the second half of this year after the results improve and we have more and more credibility now to see that that our improvements in the process and improve is there it's visible it's confirmed by two quarters of results and also there is more stability in the EU system in Spain that we observed. And you can see a nice improvement of results on EBITDA and the gross profit and also steady growth of recoveries in the environment where we didn't add much portfolios and our value of the products also did not grow. So hopefully, whatever problems we've had in Spain, the problems are already behind. And if you ask me, Can we still increase of the performance in Spain? I would say yes. There is this potential. I don't know when it will come, whether in the next few months or the next few quarters, but we see potential worth of further improvement, especially on the on the VR trusts. And other markets, just to remind you, this is France, the market that we'll be developing, and this is the remnants of our assets in Czech. As I mentioned, in France, after very good performance on any couple of parts, we continue to see relatively weak results on the ego process. This is not significant for the results. It's a significant lesson, of course, for the future, for what we can improve in the process and what data we collect. But it's fair to say that we'll be able to use much of that knowledge only when we start to build our operational presence in France, which likely will not happen this year, but hopefully will happen in the following year. Our lending business performed relatively well. We had 27 and we now have just to remind you, we have three lines of lending business in Poland, in Poland and in Romania, a startup that took over the lending assets, the little lending assets we had in Romania, and it's now starting on the open market. For the past couple of months, we are in the middle of a marketing campaign, and we have good ambitions to grow our business there in Romania, copying the good practices from Poland and also adapting and two Romanian conditions. The business is profitable, the Romanian business probably will be loss making this year as expected as we incur startup costs, any marketing costs, but hopefully in two years it will be also profitable like the Polish business. So overall, good results with some pinch of salt that we did count on them being somewhat better. we expect a better second half than the first half in terms of profitability but please bear in mind the biggest sensitivity on whether we'll grow by this or other percent for the full year will be whether our recoveries will be two three percent smaller or higher versus our plans we will put all the efforts to make the best results possible the business is well funded with access Thank you for listening to this commentary. Now I'll be very happy to take your questions. Let's see what are the questions. I see first one. Can you help us understand if you're able to continue within your 20% IRRs for your first half 2026 debt purchases? 20% IRRs I expect you refer to the gross IRR we have here in this presentation. and the question and the answer would be I would expect the IRR for the full 2026 to be at similar level than 2025 maybe it's somewhat lower level but not significant so of course I don't know how we will invest exactly for the full year but I would expect that this number is still 20 something but maybe not close to 21 but more close to the 20s

and let's see what it is in six months. Another question.

Please explain why recoveries are growing slower versus the carrying value of portfolio, which is where the WV. This is because we are buying assets with the recovery curves assumed at 20 years. and with cash flow breakeven of about six years. So these recoveries are relatively spread flat for a long period of time. So that's why the growth of assets is quicker than the growth of recoveries in the first years after acquisition. And this is something that is evolutionary coming from first realization that we are in a business where recoveries are much longer and there is much more recoveries than we initially thought some years ago and because competition is paying for these assets today a relatively high price. You saw the numbers for Romania and Poland for fresh banking portfolios, the marketplace now 37 or even 40 something percent and and we can still make this 20% IRR in 2.3 times money but over a really long period of time and this is today's economics which is driven by by competition so it's not surprising us The difference between reported EBITDA and cashier EBITDA, where is the difference coming from? Well, this is a difference specific for the industry. The EBITDA, the accounting EBITDA is not a good measure for cash flow, for operating cash flow, because it only incorporates the so-called interest revenue, not recoveries. By subtracting revenue With recoveries, we get cash EPDA, which is a better representation of operating cash flow of the business. It should not as something you say here potential for future recognition. So it's just a difference between recovery and revenue. Revenue in our accounting is the difference between recoveries from a given portfolio and the purchase price so it's a net revenue recoveries so if we buy a portfolio for a hundred and we collect 220 the revenue is to 120 but recoveries are two thousand two hundred and twenty the difference is a hundred which is a purchase price of a portfolio please refer in we have a revenue recognition slide in our deck and contact the IR if this is not clear

I'm checking if there are any other questions. I don't see them at this point. I see no further questions.

Therefore, I thank you very much for your interest in the company. If you have any follow-up queries, please contact the IR. Thank you. Have a good day.