Intrum AB (publ)

Thank you, operator. And good morning from a cloudy and somewhat wet Stockholm. I'm here, as the operator indicated, with Emil, the acting CFO. And thank you for joining us this morning. Before we jump into the heart of the presentation, I just wanted to take a little bit of a step back and set the stage. I think it's very important to see, and this quarter was a very active one. We've been very busy across several fronts. We've accomplished a lot. And I think it's very important to always go back to what we set out to do and what we've done thus far. So Everyone on this call is going to remember that less than a year ago, in September of 23, at the Capital Markets Day, we set out some near-term and long-term goals. Near-term, we wanted to strengthen our financial profile. We wanted to cut costs. We wanted to deleverage. Long-term, we wanted to lead with client-facing servicing. We wanted to shrink our proprietary investment portfolio. And we wanted to become an investment manager. I think this quarter is really the first quarter where all of those initiatives really showed material progress. On the near term progress, we strengthened our financial profile by completing the asset sale to Cerberus to raise meaningful liquidity. That liquidity, in part, allowed us to agree a going concern restructuring with holders of the majority of our bonds and MTNs, where we're going to amend and extend our capital structure to align it with our business plan. During the quarter, we also got up to $900 million out of a total $1.5 billion of cost reductions, making us more and more efficient as a platform. And we also delivered on both an absolute and ratio basis, which we'll explain more. In terms of the long-term progress, the more fundamental transformation of the company, servicing outperformed across all metrics, top line, bottom line, across all our markets. I'll get into more detail on that. Our investment portfolio has gone from $37 billion to $26 billion. While we're still collecting above 100% and throwing off very strong cash flow, but we are shrinking that book. And we signed, as you saw earlier this week, a long-term investment management agreement or investment agreement with Cerberus for future investments, whereby we are the minority of capital, but we're reloading and getting much more dry powder to go and attack the market over the coming three years, with third-party capital being the majority, in this case Cerberus' capital. And we get the benefit of servicing and investment management fees, taking a very important step towards taking a capital-light approach to investing, which benefits our servicing, and begins our journey on becoming an investment manager. So On all those fronts, we've made tremendous progress. I think now we can jump in to the presentation, and I'll go through the first section, and then I'll hand it over to Emil, and then I'll conclude it, and we'll get to your Q&A. But on page three, you can see some of the highlights. Top left, continued trend of increasing profitability in servicing and investing income, decreasing by shifting to capital light. Very importantly, I'll give you a bit of an update later on on the initial results. Last quarter, I talked about how the first few cases were being handled on Ophelos and the Netherlands. Now we see some more meaningful data, although still a limited sample size, but very positive indications of potential cost reductions. We also realized the cost savings, as I just said, of 0.9 billion or 900 million. Our goal was to get to a billion and a half. I'll talk more about that. And our income grew and we extracted cash and our leverage ratio fell to 3.9. For those of you who saw me this morning at Dogged Industry, I was asked a question about that 3.9. I will get into more detail on it, but it's effectively an artifact. of the fact that our ratio is trailing 12-month EBITDA, which is an income statement item, which includes the income from that sold portfolio, but the current balance sheet item includes the proceeds and the deleveraging. What's going to happen and what we've indicated in our disclosure is that 3.9 is a meaningful step down. Over the next six to 12 months, that 3.9 is going to remain around 3.9, 4.0 as the historical Earnings from that sold perimeter of burn off or come off as we do our restructuring agreement. And as we grow, continue to grow our servicing and remain around three point nine to four zero. And then we'll continue down to the three and a half by twenty six and then below that beyond. On the strategic initiatives on the top right, we did the back book sale. We'll talk a little bit about that. We did the lockup agreement on the refinancing and recapitalization. Very important for having a capital structure that supports our business plan and long-term sustainable profitability. And we signed the investment agreement, which I'll get into more detail on. But much more importantly, we do this all with the foundation of a business that actually is performing quite well. Bottom left, external income and servicing grew by 10%. This is ahead of our expectations. EBIT grew by 23%. That means we are expanding our margin. We grew our bottom line more than our top line and our top line grew by more than we expected. So servicing is outperforming as an aggregate and across almost all markets. Positive rolling 12 months organic growth in the North and Middle Europe. Very meaningful 10% trailing 12 month organic growth in Middle Europe, which is our largest economic area. Our commercial success continues. Last year was a record year in ACV. Yet this quarter, we still outperformed last year 307 versus 257. So we continue to be winning in the marketplace. Our clients continue to need our services and they continue to recognize that we are probably the best provider of services in the market. And as a consequence of all this, our servicing adjusted EBIT margin increased to 19%. A year ago, it was 16%. So servicing is hitting all cylinders, but it still has much more to go. And I'll talk about this later as well. This improvement is without any major restructurings in the way we operate, without new products, which we're going to roll out. It's really due to leadership, focus, and ultimately the environment working to our benefit. On investing, we collected at above 100% despite the difficult collections environment, 102 to be precise. That very importantly is 116% of our original forecast. And this is both, both these numbers are on a smaller perimeter. Cash income and cash EBITDA did decrease because we are shrinking that business. We've all known that for a year and that's just the law of numbers. When we're shrinking the business, our EBITDA and our cash income will decrease. What's good is that during the quarter, other than a little bit of a blip in some minor costs and some JV income, We extracted exactly the amount of cash or just below the amount of cash we expected. And we continue to invest, albeit at lower volumes, at very high RRs. This is still proprietary investments. Going forward, starting next quarter, you will see these investments to not only be our own investments, but also investments we do jointly with servers. Going to the next page. Let's go through the three initiatives and then we'll get into the performance of the business. We did close the back book transaction. Everyone's aware of this. We announced this earlier this year. This was to raise significant liquidity, use that liquidity to deliver. We did pay off the twenty four bonds earlier this week. That liquidity and that ability to meet maturities over the near term gave us a better standing as it relates to renegotiating the long term recap of our capital structure. It validated our book value. We traded at nearly book value and it is a significant percentage of our portfolio, about a third. And this is consistent with our stated goal of a year ago of shrinking our proprietary investment book. In the context of wanting to shed assets and raise liquidity, we did it in a strategically beneficial manner as possible because we did it with servers, who is not only the top, one of the top NPL investors globally, it's one of our biggest clients. And now this actually, they are become our partner, not only on this deal, but also on the front book, they're going to become an even more important client for us and a very important partner in matching the one of the top MPL investors with the leading MPL servicer, who was also an investor, makes a perfect strategic match. This does shift assets from proprietary balance sheet investment to third party servicing income. Again, accelerating that capital light strategy and ultimately moving more towards not just capital light, but also an asset management business model. Now, looking at the next page, we did do the refinancing recapitalization. Here is just a description. Later on, I'm going to talk a little bit about some housekeeping and some logistical items for the benefit of the note holders and the MTN holders. But this deal was incredibly important to us. As we stated earlier this year, we wanted to realign our capital structure with our business plan. Ultimately, what we did in this is we had a reduction of our commitments, reduction in our leverage, and an extension of our maturities. We are going to repay the 24s and the secured term loan in 25. We are retaking 25s through 28s, reducing them by 10% and pushing them out to 27 to 30 in exchange for an uplift in economics and 10% of the equity. All of that is effectively, I think, a very good deal for the bondholders and a very good deal for us. Ultimately, we could not have structured what I call an going concern restructuring, which is what this is, without the underlying business, without recognition from all parties, particularly bondholders and the RCF banks, of the strength of the underlying business. And as evidence of that, we're even given new money from these. So these entities are increasing their exposure to us in order to facilitate further discounted buybacks and accelerate our deleveraging. This is exactly consistent with what we said earlier this year and is actually, I think, a balanced, good outcome for the bondholders, all the creditors, frankly, and a good outcome for the company. At the bottom, you see the link for those of you who are note holders on the line, who would like to sign up. Later on, I'm going to talk more specifically about the note holders. Going to the next page, the third initiative during the quarter on page six is the Frontville Capital Partnership. We signed a term sheet. That term sheet will be turned into a definitive agreement by year end. It's a three-year agreement where we're going to jointly approach the market. We will invest a minority, 30% or less. They will invest a majority, 70% or more. Ultimately, we are going to be responsible for origination, execution, underwriting, and portfolio management. We will jointly decide on larger investments. Once we get the definitive documentation in place, we will actually do a lot of the smaller investments on a batch basis. But anything that's of meaningful size, we jointly decide. Our balance sheet exposure is not going to increase, but our investment activity will. Our servicing activity will. Our investment management fees will start increasing. So ultimately, this is going to be a very important way of attacking what is a, I believe, an attractive investment market and one that will become more attractive over the next few years. with more firepower, but not having to increase our debt to use our own proprietary balance sheet to use this firepower to attack the investing market. It's completely consistent on the far right, as you see with what we said in the C&D, which is we wanted to leverage our existing investment capabilities, but using third party capital to grow it. This is entirely consistent with that and is a first step towards becoming an investment manager down the road with more with broader pools of capital and more limited partner type of capital. On page seven here, it's very important that all of you as stakeholders understand what we say we want to do and have confidence that we're going to do what we say we want to do. So here you see on the far left, we said we're going to overall under the heading of pivoting towards capital light, we say we're going to extract value. We have collected over the last year at 101 versus active forecast. We successfully exited five markets and we completed the back book sale. So we've done a meaningful extraction. You'll see that numerically expressed in one of the later graphs. We have taken advantage of the fact that we have an unparalleled investment platform for this asset class. And that's why together with servers, we've already submitted bids on eight deals. We've won two. We are actually increasing our investment activity and our average transaction size while maintaining investment discipline. So it's exactly the type of not financial leveraging, but operationally leveraging of our platform that we wanted to pursue. And ultimately, we are starting down the path of becoming an investment manager using third-party capital, the service investment over three years. When it's fully ramped up, it could be up to a billion a year, but fundamentally, this is an investing activity. It's going to be opportunistic and it's going to invest in the market when we see the right values in the market. And it will generate management income stream for us starting next quarter, And as it scales up, that'll be much more meaningful. From now on, going forward, we're going to look at not just servicing and balance sheet investing, but also investment management. Transitioning on page eight to our performance, our performance is a function of our own capabilities, but also the market. The market continues to be favorable, both on a cyclical as well as secular basis. Here you see that there was a slight increase in continued rise in MPLs, although it was very modest on a percentage basis. The total MPLs in the European system increased by approximately 10 billion. So that's a meaningful amount. And what that tells you is that even small amounts of increases in the percentage of the MPL ratio, and even when it is stable, our AUM continues to grow and we continue to be important to our clients in dealing with those MPLs. High borrowing costs are still here. The consumer is still under pressure. Bankruptcies still remain close to a record high. And wage growth is continuing to see whether or not the ECB is going to initiate monetary easing is still very much in question. All of this means that the amount of unpaid invoices and unpaid loans are going to continue to be stable to increasing. Our clients are going to continue to need us to deal with that. And we not only have a cyclical movement in the absolute volumes of these things, but we also have the secular trend, which is the outsourcing trend. Banks and companies increasingly are recognizing that we do this better than them. And therefore, even in a stable environment, a bigger percentage of these type of assets are going to be externalized. And as a leader, we're going to disproportionately benefit from that. As a consequence, what you see in the quarter, and that's the next page, page nine, is servicing is ahead on top line and on bottom line. Why is that? Well, you see it here. It continues to grow income or revenue. The margin, you can't see it that well, but it was 15% on a trailing 12-month basis at the end of Q1. Today, it's 16. That's a function of in Q2 24, as I said earlier, it was 19%. Last year, it was 16%. By year end, that trailing 12-month number will be closer to 19%. And we're very confident that we're going to hit that. We're very confident we're going to hit the 25% by 2026. What you see in the bottom is one of the drivers, organic growth, as I said earlier, some in Northern Europe, very significant in Middle Europe. Southern Europe is still a stock market, so it's still very large volumes that were transferred, predominantly loans that were working off. It's still our highest margin and our highest revenue region, but it isn't the growth region. New volumes do exist, but they don't exist in sufficient volumes to offset what is a working down of the perimeter. So that will reverse in the future, but ultimately at this point in the cycle, that's where we are. And then what you see in the bottom is one of the reasons, one of the many reasons, in addition to the tactical cost cutting and the focus is the new underwriting of business. The new underwriting, which is accelerating, as I said earlier, with ACVs higher than last year, even though last year was a record, In Northern Europe, it's in the 40s, relative to 17%. In Middle Europe, it's doubling at 32 versus 16. And in Southern Europe, it's consistent with past very high levels of profitability. All of these are reasons why we are very comfortable that we're going to hit in servicing the 10% CAGR at the top line through 26, as well as the 25% margin by 26. The next page is just some selected performance. This is broad based. As I said earlier, 14 out of our 20 markets have increased the margins year on year. Of the other six, two are our highest margin countries, which are more stable, not necessarily expanding. So it's a very broad based and comprehensive improvement in performance. Here you see three examples, one in each of our core regions. Sweden, which previously was a very challenged market for us, is growing top line and disproportionately growing EBIT, which shows you meaningful margin expansion. France was also a market where we changed leadership not recently. The growth in servicing income has been significant. EBIT growth has been very significant relative to history. And as a consequence, we've had margin expansion. Italy, which is in Southern Europe, which is not known for growth because of the phenomenon I described earlier, where we have very large historical balances that were transferred to us. Italy is growing top line. And this is why I said that eventually in these markets in Southern Europe, it is going to flip. Right now, we have too much historical stock that we're working down where new volumes aren't sufficient. But in Italy, they are just demonstrating very significant top line growth, very meaningful bottom line growth, and very meaningful EBIT expansion. What's very important is that these are each in one market in each of the main regions, as well as these are not markets where we did M&A. This is purely organic improvement in performance. Next, let's talk about cost reductions on page 11. You guys have already heard this from us. We did phase one and phase two. Phase one, we called project boost. Phase two, we called project fit. We had a target of 600, which we expanded to 800 in phase one. We now have an additional phase, which we initiated earlier this year, which is 700. To date, we have achieved 900, which is the second graph on the bottom from left to right. By year end, we will achieve an additional 300. So that's going to be 1.2. During 25, we'll reach the full 1.5. This is very important. We need to continue to be efficient. And half of this is roughly in the markets. Half of it is in the center. This is also consistent with our change in enterprise operating model, another element of our transformation where we're devolving more responsibility to the markets and we're shrinking the center and making it more an effective supporter of the markets. That's an important thing for long-term development. And this cost cutting is commensurate with that. And overall, we just need to be more mindful of efficiencies because we still do operate in an inflationary environment. Next page, page 12, we're transitioning over to investing, our proprietary investing book. As you can see here, as of Q3 last year, as per our stated strategy, even before our capital markets day, we reduced our investments. That means that we were extracting on a quarterly basis value from our book. And then obviously the sale of the back book has added to that. So in the trailing 12 months, We've expanded, we've extracted more than 8 billion, and we've used that to reduce leverage, which is one of the reasons we are where we are now in leverage relative to the last year to two years. When you look at the next page, this page 13, despite the fact that we're shrinking the book, that it shrank 14 or 15% before the sale of assets, with the sale of assets, it's going to shrink more than a third, like 35, 36%. It still is collecting very well with RTM gross cash collections just slightly down, and it's still collecting above 100%. It's 116% as I said earlier of original underwriting forecast. So this business continues to throw off a tremendous amount of cash and it continues to demonstrate real resiliency. Our point here is that now that we've shrunk it down to the level of call it from 37 billion down to about 25, 26 billion, it will be stable to slightly down. We won't be shrinking it by as much going forward. We will be more harvesting it and trying to figure out where our investments land going forward in the context of the service agreement. So now the last page, and then I'll hand it over to Emil to do the financials, is something that's, as everyone knows, is one of my favorite things to talk about, which is the why. Why does Interim exist? What do we do that actually gets us up in the morning? Certainly what gets me up in the morning? It's because we play a critical role in the economy, in frankly, the financial, the sustainability of the financial ecosystem. What does that mean? We help individuals get out of a difficult situation. These are the consumers. We have 30 million in our book, roughly speaking, today. Historically, we've dealt with over 100 million consumers. In the last 12 months, we've helped just under 5 million of those individuals become debt-free. That means they can reintegrate into society, get a bank account, get a credit card, et cetera. They have dealt with a difficult situation. Despite the fact that we're dealing with them at a very delicate moment on a very delicate subject, we still have very high ratings from them, 4.3 out of 5. What this means by doing this in this fashion, what it means is we deliver for our clients. All-time high trailing 12-month collections are $122 billion, of which $14 billion is for ourselves. The other $108 billion is for clients. Why are we this successful in dealing with consumers and helping them, but also at the same time delivering for our clients? It's the values on the far right of this page. We deal with these consumers on an industrial level, by the way, in terms of across 20 countries, across 25 million consumers, 160 million actions a year. We deal with these consumers with empathy, understanding their situation. We deal with them in a completely ethical fashion that is non-negotiable in terms of this industry. We dedicate resources to them. We have 10,000 people in 20 countries, of which 5,800 or so are in collections activities. And we provide them with solutions, payment plans, one-off payments. We understand their situation. We understand their limitations. That's ultimately why we exist. Everything else is a derivative of this. And this is one of the reasons that I get up in the morning. So with that, I'll hand it over to Emil to deal with the financials. And then you'll come back to me with some concluding remarks.

Thank you, Andres. And good morning, everyone. So please turn to page 16. When we conclude a very eventful quarter for interim, the two businesses, as you've heard described, has continued to perform in line with our expectations. So the underlying good performance is, however, somewhat muted by the delayed collections or temporarily delayed collections in our JVs in Southern Europe. All in all, this sums up to the sixth consecutive quarter with growing adjusted incomes. Adjusted income was 5 billion for the quarter, up 1% compared to last year, and this is primarily driven by the growth in our servicing sector. As we shift the relative size of our income streams from capital-intensive high-margin investing business to capital-light lower-margin servicing, the group's total adjusted EBIT margin will naturally be smaller over time. As said, this quarter servicing income grew by 10% and investing had a negative growth of 10%. This combined with the temporary delays in JV collection drove our EBIT to decrease by 4% versus Q2 last year and adjusted EBIT to decrease by 15%. The leverage ratio decreased to 3.9 times net debt to cash EBITDA during the quarter. The leverage ratio calculations includes the trailing 12 months cash EBITDA contribution from the assets we sold to servers by the end of June. and the net that has decreased by the organic cash we generated in the quarter, and the net proceeds from the back book sale. Our expectation, and then including the effects from the liability restructuring, is that the leverage ratio will be around four times towards the end of the year. Turning to page 17 in our servicing segment. We had extremely strong external income growth in the quarter, up 10% to just about 3 billion, and that's mainly driven by the acquisitions that were closed during last year. Total income for the quarter came in at 3.7 billion, 7% above last year. We also continue to see a trend of increasing adjusted EBIT margins, and this is driven by the cost initiatives, the focus, and the impact from the higher margin servicing contract that was signed during the last year. Adjusted EBIT for the quarter is up 23% to 692 million, with an increase in adjusted EBIT margin of circa 3 percentage point to 19%. And in the graph to the right, you can also see that our RTM adjusted EBIT margin of 16% have started to increase and is starting to bottom out. And we expect this to continue throughout the year. And equally important, This is broad-based. It's 14 out of the 20 markets, which accounts for circa 70% of our income, have increased the margin compared to last year. And as you saw on the page six, on an RTM basis, we have grown 1% in Northern Europe and 10% in the large and super important Middle Europe region. For the full segment, though, this is offset by the natural decay and when we work out the cases that we have in Southern Europe. Turning to page 18, our investment business continued to show a very resilient cash collection. Despite the tough operating environment, we collected 102% versus the active forecast and 116% against the original underwriting forecast during the quarter. As a function of the smaller book and the slower investment pace, we will see a natural reduction in our adjusted income and adjusted daily going forward. Adjusted income and adjusted EBIT decreased 12% and 13% respectively during the quarter. And the reduction in adjusted EBITs was further impacted by the temporary delayed collections and increasing costs, both due to higher activity level to working on an aging book and inflation in combination with investment in legal activities that will drive future collection later in the year. If you look at the cash EBITDA, which adjusts for these non-cash items, the margin is less impacted and demonstrates the high cash generation that we continue to have from the investing segment. During the second quarter, organically, we extracted 2 billion from the segment. And over the last 12 months, we extracted 8.4 billion. The new investments of 425 million in the quarter were made at an 18% underwriting IRR and were predominantly from forward flow contracts across our footprint. And the full year's capital deployment is expected to be around 2 billion as previously announced. Please go to the next page and the progress of our cost program. This is the slide that we have showed the last couple of quarters for the cost program development with an RTM cost base from Q1 2023, which was the cost baseline for the first phase that we called Pride Boost of our cost reduction initiatives. During the second quarter, We have realized an additional 400 million Swedish krona and implemented an addition of 200 million savings. In total, to date, we have achieved 900 million of the 1.5 billion identified and expected the full effect of the cost program to be achieved in the beginning of 2025. In the graph to the left-hand side, we are visualizing the impact compared to the baseline cash cost. The first bar, It's the actual realized saving to date of 900 million. The second bar shows that like for like organic reduction of our income, the cost base is further down 500 million. As we acquired the high-end Aero platforms during 2023, the cash cost has increased by 1.7 billion compared to the baseline. And the fourth and the fifth bar, inflation and currency effects, are adding a significant amount of cost for the periods of 1.3 billion. And that sums up to total cash cost increase comparing the Q2 trailing 12 months in 2024 to Q1 trailing months in 2023 of 1.7 billion. So if we're looking at the next page, we're trying to illustrate the cost evolution versus full year 2023. The graph is the same, so they have the same bars as on the previous page. And as you can see, combining the cost savings achieved during only 2024 of 600 million plus the inflation during the same period, the underlying cost base are actually decreasing. In terms of progress, we expect to realize the additional 300 million in 2024 and the last bit of the program in early 2025. Next page, please. So on my last page, if we look at the net debt development in the quarter, we had an organic cash flow generation across the platform of 1.1 billion. Adding the 7.2 billion of net proceeds from the back book sales, and then we have some investing currency effects, which is minor in the quarter, that takes you to a net debt reduction of 8.5 billion in the quarter. Below that, you can see that consistently since mid-2022, our underwriting IRR has increased. And the last quarter we underwrote, as we have mentioned a couple of times, the 425 that we invested of 18% unlevered returns. By the end of the quarter, the net liquidity stood at 10.5 billion. With that, Anders, I'll hand it back to you for some final remarks.

Perfect.

Thank you, Emil. And I think I have two or three pages. I have two pages of concluding remarks on the business and the direction we're going, and then a little bit of housekeeping specifically directed at the note holders on the line. But starting on page 23, I wanted to give an update. Last quarter, I was very excited about the first few cases on Ophelos being rolled out in Belgium and Netherlands, specifically in the Netherlands where we rolled it out before Belgium. You can see here that on additional set of data, albeit a still limited set of data, We have effectively taken 75% of a certain type of claim and put it into a fellows and compared that to the retaining 25% as well as our historical performance with our more traditional collections method and across the board between inbound phone calls, which consume resources, inbound emails, which consume resources, other manual activities, as well as in total, the direct cost per case, meaningfully down 50% or more across the board, albeit early days, albeit still limited but meaningful data relative to last quarter. When you look at these numbers and you extrapolate them to the totality of our platform, to the 122 billion of collections, to our 20 markets, to our 5,800 people, to our 159 million actions we take a year, what is very encouraging here is that the utilization of this different operating model, it's not a tool, it's just a different way. It's an autonomous, AI-based, debt resolution platform, the application and roll out of that in our markets to our consumer and client base has vast potential, well, well more potential impact than we have incorporated in our plan. And this is why I'm incredibly excited about the fact that we've rolled it out in this market. We're going to roll it out in Spain starting in September. We're going to roll it out in France thereafter. So we're not just dealing with Belgium and Netherlands. which are relatively smaller markets for us. We're now going into much bigger markets, Spain and France later this year. And as we do that, you're going to see more and more progress. I think ultimately not just in those countries, but overall in a reduction of our costs to collect. And at the same time, given the, this different way of operating a better customer experience. Flipping to the next page on page 24, Just taking stock of where we are relative to our targets, from Q2 23 is the starting point. The 10.6 billion of revenue has grown at 14% to date. That's ahead of the 10% that we expected to grow during the whole period between Q2 23 and end of 26. Our margin, as you saw, you've seen over the last few quarters has been declining. We have turned that around. We're now back up to 16. We're at 19 in the quarter. We will be at 19 on a trailing 12 month basis by the end of the year. And we're well on our way and we're very confident we're going to get to that 25 or greater during 26. We've already shrunk our book more than we intended to or more than we originally intended to. That is going to be stable to slightly down going forward as we continue to invest two plus or minus billion. But our investment activity, thanks to the service agreement, will increase, which will then benefit servicing and benefit our overall profitability. And we have delevered both on an absolute basis, as Emil showed on his page, but also a ratio basis. As I explained at the beginning and as Emil touched upon, That 4.6 to 3.9 is an artifact of having just done the asset sale. It will remain stable for the next 6 to 12 months and then continue to progress downward towards our 3.5 target during 2026. So we're well on our way, if not ahead, on many of our metrics and many of our stated goals from the CMD, which are all from now through 2026. Finally, I'll take a minute and then we'll get to Q&A, but I'll take a few minutes to do some housekeeping and address specifically the note holders on the line. We did reach a very important milestone in the last week, which is we agreed to a lockup agreement with the majority, i.e. circa 51% of all our NTN and bond holdings. This is a very high level of support for such a large capital structure. We are and have already actively entered into dialogues with other creditors as well as have received significant reverse inquiries from note holders who have manifested an intention to sign. One of the things that we've been asked, which is how do we sign up with this link that's on the second bullet point here and was on my prior page, excuse me, is the link. There's also going to be a button on our website as of later today. which you can go on, you can click on, there'll be some instructions, and then there'll be this link that'll get you over to Kroll, where you can then navigate through things like NDAs, review the lockup agreement, and ultimately sign up to the agreement. Note holders who sign up to the lockup agreement can receive consent fees. This is including a 1% consent fee to Eurobond holders who sign up by the end of this month. There is a lower fee for those who sign up after that. So there is an incentive for people to sign up earlier. One potential misconception, which we wanted to address and clarify, is note holders who sign up to a lockup agreement are not restricted from trading. They can buy as much as they'd like. They can actually sell those notes that are subject to the lockup agreement. The only caveat is the buyer needs to be those notes are subject to the lockup agreement. So the buyer has to the new owner has to own those notes and still live up to the lockup agreement. The transaction, very importantly as to where we go from here, we started at 51%, which is a high percentage for a capital structure of this size, and particularly one that has not only this size, but also a fair amount of retail in it. It is fully implementable at two-thirds. Our goal is to get well above that, but it is fully implementable at two-thirds via a court process with no requirement of reaching any specific threshold in any specific debt instruments. We are at 51. If we get the additional roughly 16%, we will affect this. We want to do it with higher thresholds in different processes, which will not only be better because we have more note holders signed up, but also it'll be cheaper and more efficient for the company. There are multiple implementation options, but the minimum level of support is 66.7, which we are confident we will hit. So with that, our presentation, our presented materials, our preplanned commentary,

is over and operator we can open it up for q a if you wish to ask a question please dial pound key 5 on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key 6 on your telephone keypad The next question comes from Patrick Bertilius from ABG. Please go ahead.

Good morning. Thank you. A few questions from my side. If we start on the servicing, the servicing margin is a little bit lumpy, as we have seen in H1 here. And now you talk about reaching the 19% margin for the full year 2024. Could you please help share some more details on how would you think about the lumpiness of the margin looking into the second half?

Good morning, Patrick, and thank you for your question and thank you for your time. It is lumpy, but it actually is not so much lumpy as it's seasonal, I think. So first quarter is relatively weak. Second quarter is stronger. Third quarter is relatively weaker relative to the second quarter. Fourth quarter is the strongest by far. Most a lot of activity happens in the fourth quarter. We are. And so what you'll see is you'll probably see something comparable to the second quarter in the third quarter. And what you'll see is a very strong end to the year. We're very confident with that. Again, year on year comparisons help that three percent that we did in the Q2. We would expect that even on a like for like basis, even though third quarter is slower than second and fourth quarter. On a year-on-year basis, we still expect improvement. And then the fourth quarter will finish out the year very strong. We're confident we're going to get to, I think this precise number is 18.8, so close to that 19% by year-end.

And just to add, I mean, this is a seasonality effect we have seen in the industry for years and years. I think the only deviation to that was during the pandemic years, where you had a more stable margin throughout the years.

Thank you. Very helpful. Yeah, I know about the seasonality, but sometimes it's hard to fully get it into the numbers. Okay, my second question is regarding this announcement with Cerebrus, where you highlighted in the press release that investments can go up to Euro 1 billion. You talked a little bit about this on the call earlier, about who decides the actual level and there are some downwards adjustments could you elaborate a little bit more about that and what are examples that would do downwards adjustment so to be clear the billion is a target once this thing is fully ramped up assuming that the market opportunity is there

I think it's very important when you get into one of these arrangements that you know capacity. That doesn't mean we necessarily will invest a billion. I also think there's going to be a ramp-up period, and ultimately, if there's not a billion of opportunities, we're not going to strive to do a billion. I've said often on these calls that one of the reasons we've somewhat gotten into the problems that we did in the industry is that we looked at investing as a volume or market share business. We don't do that. It's an opportunistic business. We invest where we see opportunity. The billion is just to make sure that we all have an understanding of what could be the level of investment. And that's after a ramp up period. So I wouldn't see the billion actually happening until well into 25 and not beyond. We are at 70-30, which when you do the simple math, that implies us investing more than our 2 billion. Ultimately, we have the option of doing that or we have the option of lowering our 30%. That's in the arrangement with service. We can lower it at our discretion going forward.

Okay, perfect, because that ties into my follow-up question. You touched upon that. Because in this business plan that you sent out in June, it said annual NPL purchases of €2 billion per year basically out to 2028, and then 30% of €1 billion run rate. That would imply a little bit more, but then you have this...

commenting so so how should we think can it be above this two million if you see the the right opportunity or is it uh some flavor there i think i think you said it correctly this gives us the flexibility if we see the right opportunity i mean one of the major concerns that many of our shareholders and bondholders have is do you have enough firepower to capture the opportunity This gives us their firepower as well as gives us the option to invest more if we see the opportunity still within, and you said it correctly also, a little bit more. This is not something that ultimately is going to change the profile of our business plan materially. I think that ultimately we will be somewhere plus or minus $2 billion more for the near term. Long term, we have the flexibility of increasing it if we see the opportunity and if it makes sense. What's great about it is that if we increase it, we ultimately get more servicing and get more investment management because it means the overall pie is bigger of what we're investing with them. But we always have the option of lowering it as well.

Thank you. And my last question is just a clarification regarding this 10% of equity to participant note holders. How should we think about that? Is that at the price, at the predetermined price? Or is that when you reach the 66.67% support? Or is it when the transaction is written? How should we think about that?

Well, it only happens if the restructuring is implemented. And we are able to do it once we get to that minimum two-thirds threshold I talked about earlier, if not higher. So ultimately, when we get a 10% discount in our debt, we will issue 10% of additional shares. It's irrespective of price, by the way. It's just today we have X shares. In the future, we're going to issue 10% of shares on top of it. And that's going to go to the bondholders. So it's not price dependent. It's dependent upon the conclusion of the restructuring and the realization of the haircut on the debt.

Okay, perfect. I see. Thank you. That was all for me.

Thank you, Patrick.

The next question comes from Johan Ekblom from UBS. Please go ahead.

Thank you. Just a couple of questions, please. So in terms of the debt restructuring or refinancing, in terms of future communications, should we expect you to come back to us when you've hit that two-thirds threshold, or will there be any kind of intermittent reporting on where you are in terms of acceptance levels?

Thank you. Good morning, Johan. The answer is that we're going to be spending the next one to two months getting more people to sign up to this. Ultimately, we will determine what is the path to implementation. The minimum, as I said earlier, is a 66.67%. That would indicate one particular implementation scheme. 75 would represent another. 90 will represent another. Once we achieve a sufficient level, we will then come back to the market and announce the and formally launch the implementation of the restructuring. Thus far, what we have is a majority of the note holders committing to a deal along the lines of what we disclosed, subject to reaching the proper threshold where it can be implemented. Until we decide on what the level of this implementation, I would not expect any further disclosure.

Thank you. And then just maybe the next one is, When we look at the discontinued operations in investing, is that a good proxy for what we should expect to fall out from the Cerberus transaction? Or are there any one-off effects in there that we need to bear in mind?

I'm not really sure I follow. I mean, we have the... split out the discontinued operation effect on investing and on a total page. I think on the page five, if I remember correctly in the report, you can see what's the portion of the portfolio that's being discontinued. Remember that it is a portfolio and it collects, so there's a natural decay in the relative size to the business.

Let me rephrase that. The income that you had on, you know, booked in servicing from the investing or, you know, the revenue, basically, that will now be an external revenue. Can we just take that number from the discontinued portion in investing? I think it's 567 this quarter as a run rate going forward. And then, of course, decaying with the portfolio size.

Yes. Then it was a much simpler question. Yes.

Sorry for not being clear. In the 2028 cash revenues, you have an $800 million contribution from JVs, but in the ERC bridge, it's only $200 million. So there's a $600 million delta. Is that future JV investments, or is that kind of a judgment on a write-up of the value of the Italian SVV?

No, let's connect, Johan. I think that's a good question. It should not be any disconnect between the ERC.

I think the ERC is 0.2 billion in year four. And in the cash revenues, you have a 0.8 billion contribution from JV. So, yeah, if we can come back to that at some point, that would be great.

You have a point because there are some of the JVs that is not consolidated and are not part of the ERC that drives cash contributions. That's probably the plug, but I need to see the numbers before.

And when we think about the central functions, right? So in the EBIT improvement in the plan that you sent out earlier, there's about a billion contribution positive from central functions. And What you're showing today is cash revenues of 0.8. So the implication is that the central functions need to have positive costs in 28. How do we bridge the gap in terms of the revenue and the EBIT contribution from central functions? And what drives that? Why is that all of a sudden a profit center?

It is not really. I mean, it comes down to how we model it and that the central function holds all the digital initiatives in the planning. When we actually are going to execute on it, we are going to allocate the revenues and the costs out to the specific markets.

But how can the EBIT be bigger than the revenues?

It's not bigger than the revenues in the central functions.

So just to clarify for a second, Johan, so our central costs, I think, peaked at about a billion five, a billion six in a year to two years ago in a long-term plan that's having down to like 800, a little bit under 900. What Emil is saying is also today, Ophelos, eCollect slash eNail, as well as all of our data central that's why there's a profit center and center now the reality is over time as our fellows creates revenue and profit in Spain that will accrue to profit to Spain we don't know the distribution yet as we do we will transition that to market by market specific return but today as we model it it's centralized I hope that clarifies what the center is in our model but does that mean that

If that gets allocated out, then the margin, the EBIT margin in servicing needs to be very materially above 25%.

No, that will be one of the contributors to the servicing margin being at 25% or higher, correct?

Okay. Final question, just in terms of the go forward on the interest expense, do you have any comments around how we should think about the cost of the RCF going forward?

I think that you know the pricing of the proposed bonds, and I think you can expect the economics with respect to the RCF to shift as well and align with the markets.

I mean, I think there's going to be an expansion in economics for the RCF. As we've indicated, we are still discussing that with them. They are a first lean. Everyone else is one and a half or second lean. They are going to extend their maturity. it'll be commensurate with that.

Excellent. Thank you very much.

Thank you.

The next question comes from Marcus Sandgren from Kepler. Please go ahead.

Good morning. So I was just thinking, it seems like the basic problem is that you have too much leverage. and the natural solution to that would be a new issue. How are the discussions with the bondholders going? Are they discussing why you don't do a new issue? And secondly, why are they willing to, I mean, I understand that they want or need to prolong their lending, but why are they willing to sacrifice the 10% without any contribution from shareholders in terms of a new issue?

Absolutely. And thank you for the question, Marcus. The reality is that you're 100% right. We do have too much leverage and we have too much leverage today relative to our business today. What is recognized in the nature of the agreement we reached with the bondholders is the business plan, which we fully stand by, creates a significant amount of deleveraging and a significant amount of equity value going forward. This is not a liquidation. This is not a partial or whole liquidation. This is a going concern restructuring. This is an amendment and extension of our capital structure to align with our business plan. In that context and looking to provide a holistic solution, the bondholders agreed to the 10% haircut in exchange for 10% of equity. They've also allowed us to, they've also provided us with new money to go out and further deleverage because deleveraging is good for them. Ultimately, They saw the business plan as credible. They saw a company which they wanted to continue, if not increase their exposure to, but they understood that it needed to be realigned. In exchange, we gave them the 10% equity and we're giving them a lot more current economics. That's the nature of the exchange.

Sorry, but I didn't understand. Why aren't they asking shareholders to contribute?

The shareholders are contributing it. 10% of the equity is being provided to them.

Okay, but I mean, why aren't they asking for a new issue?

They are not asking for a new issue because based on the restructuring, there's no need for a new issue going forward. That doesn't mean in the future we won't contemplate that depending upon the progression of our share price and also the nature of the environment and how we're progressing towards repaying those notes in 27 to 30. But ultimately, today, there isn't a need for a new issue.

Okay, thanks. And then secondly, I was thinking... If that takes place, that will be value transfer from bondholders to equity holders, basically. Will that be taxed?

I don't follow the question. I apologize. Can you repeat it?

Yeah. As you take down the debt, if you write down the debt by 10%, there will be a value transfer to the equity holders. The equity will go up, I guess. Will that be taxed?

You mean we will have an accounting profit on Inter maybe by doing that? Is that what you're looking at? Yes. And in terms of managing the cash, we have some significant tax assets at Inter maybe, so it's not going to impact the tax number significantly.

Okay, good. And then lastly, this quarter the equity is down like 20% because there's a hedge effect. Is that something that's coming back next quarter or is it just... money that disappeared, basically?

No, that is due to the discontinued operation. So effectively, when we sold the backlogged assets, we sold shares. And when we sold shares, we had significant FX gain on those shares because they were denominated in Euro and we acquired the company in 2002. And that's all or where the Swedish krona has deteriorated since then or devalued. So that we had a positive effect on selling the subsidiaries. And on the hedging side, we had debt instruments that had the corresponding values and negative value. And now when we concluded the transaction, the effect is that equity is being reduced by the negative value on the hedging instruments.

Okay, thank you very much.

Thank you, Markus.

The next question comes from Jacob Hesselvik from SEB. Please go ahead.

Good morning, everyone. A couple of questions from my side. The first one, the margin within investing decreased during the quarter. You did mention the challenging collection environments. But when do you expect this to change? Is it already in H2 or first in 2025 when the policy rates have come down further?

Good morning, Jakob, and thank you for your time. I'm actually quite disappointed that you weren't first in line this morning. This is the first time in four or five quarters that you haven't been first. But thank you for your time. I think Emil can address your question, your first question.

Yeah, so I mean, the margin in investing is affected by a couple of items. And if we're looking at the adjusted EBIT margin, we have the effect from the temporarily delayed collections in our JVs in Southern Europe. Also, we have increased costs for collecting and the increased cost comes both from higher activity levels on an aging book. It comes from inflation and there's also some quality investing for future. So in some markets we activate legal collections in one quarter and we collect in a subsequent quarter. So those factors are driving down the margin. Going forward, we don't expect the delayed collections in JV to be a drive on EBIT. But we do work intensively on the book, so that will continue to push down the margins somewhat in the investing, but we don't see that it's going to go higher from here. And the investment, as I said, for future collection, those are made for this year. So we expect those to be stable as well going forward. I think all in all, Looking at investing, I would try to focus a bit more on the cash EBITDA metric than just the EBIT, given that we are cleaning for the non-cash items. And there you see the real margin trend.

Okay, thank you for that. But a follow-up question on the investment side. I mean, you have written that the IR has been at 16% to 18% for years. multiple quarters in a row now, still the ROI in the quarter is just 11%. So could you help us understand why it's not higher?

For the exact, the ROI is just a little bit. And that is impacted by those factors that I just explained. And it's in relation to the average book value.

But I mean, if you're investing at 16% to 18% IR, shouldn't ROI be coming up still? Or... Is inflation such a big headwind for you?

No, but I mean, it's a ramping up. If you look at the history, the investing level hasn't been at 18%. So that is one factor. The second factor is that the portfolios we invest is not in the JV line. So again, if you take the... implied or the metric we looked at before, which was cash return on investments. We looked at the cash debit return and there you don't see the same effect.

Okay, thank you. Then second, on your leverage ratio, how do you forecast your leverage ratio to develop during H2 this year? And is it still in 2026 you expect to reach your target? Also when taking into account the front book partnership with Cerebus a few days ago?

As I said earlier, Jakob, and maybe you weren't on the call at that point, the 3.9 is an artifact of the fact that the trailing 12 months does include the income off of the assets that we sold. We did get that income, but the balance sheet item or net debt that is the denominator, I'm sorry, the numerator is the current moment in time that includes the proceeds. That shows, that's why there's been a step function decline. As that burns off in the coming two to four quarters, fully in four quarters, we will also affect the restructuring, and we will also affect our own organic cash flow. We'll produce our own organic cash flow. As I said earlier, and so did Emil, that'll remain around the 3.9 to 4.0 level into next year, and then we'll resume declining. We still have very much as a target And I think you guys have seen it in the plan that we put out a few weeks ago to get the three and a half and 26 and below that thereafter.

Okay, great. No, I actually missed that comment before. So thank you. And then finally, can you comment anything on how the discussions are going with the banks regarding the proposed restructuring? Are they supportive and when can we expect an answer from them?

No, it's to be very clear, the RCF banks from day one, have stated to us that they are relationship lenders to us. They want to commit to the capital. That's evidenced by the fact that a vast majority of them committed from day one to get to an agreement with us and sign the lockup agreements and not sell their position. I think more than 75% did. It includes your bank, it includes Nordea, it includes mostly Nordic region banks. The discussions have gone well. We still have a few outstanding items. Frankly, the bondholders just moved faster, and we had to agree when we had sufficient levels of bondholders there. We are in active discussions with the RCF, and I suspect that we will reach an agreement in the coming days.

Great. Thank you. And just a very last question on page 19, and maybe I've already commented on it, but the cost in acquired and disposed businesses increased by 400 million when rolling in Q2. Could you comment anything on that number, why it's up?

I mean, it's still a factor of rolling in the M&A activities we did during last year. We acquired and closed the Arrow transaction June and closed the Hyatt transaction in September as of last year. So there's, again, as you said, it's a factor of rolling in the M&A costs and then Post Q3 this year, they will be fully in the comparator number.

That's just a full year reflection versus partial year reflection. And frankly, these cost numbers just indicate to us that we need to continue to be mindful of getting that full 1.5. And if not, and not if not, but in addition, thinking about additional cost cutting measures.

Okay, so we should expect it to increase slightly further in Q3 and then stay flat going forward.

Flat to slightly down. Yes, correct.

Okay, great. Thank you very much. I wish you both a great summer vacation. Thank you. Likewise.

The next question comes from Corinne Cunningham from Autonomous. Please go ahead.

Can you tell us what happens if you don't reach 66%? What would be the plan of action if you don't get majority or more than the majority consent from bondholders?

Well, it's not something that we contemplate. We are already started out at 51%. We have had reverse inquiries of significant amount of note holders who want to sign up to the lock agreement. So it's not something we contemplate. Obviously, we'd have to go back to the drawing board with at least the bondholders who wanted to do our restructuring and find an alternative solution. But it is, in my opinion, and in the opinion of our leading advisors, very unlikely that that would come to pass.

And is it possible to say what that might look like if you didn't get to 67%?

I can't comment on that. I don't know what it would look like, actually. OK.

Thanks very much.

The next question comes from Smarandiawana Morisanu from JP Morgan. Please go ahead.

Hello, thank you for taking my questions too, if I may. You mentioned the 3.9 basically does not X out the benefits from Cerberus. If you were to adjust the RTM cash EBITDA for Cerberus today, where would leverage stand? Just so we get an idea of the improvement that you expect from a performer number today to the four times to 2024 of my first. And the second question would be at the September CMD, you had a servicing top line growth target of 10% with 15 billion SEC in 2026. How should we square that up with the external servicing income target of 15 billion that you see for 2028 as per your 2028 business plan?

So on the first point, to be clear, and I just want to be clear for everyone, the 3.9% is the trailing 12 month, which includes the full perimeter of assets, including the assets that we sold. We did own it during that period for the most part. So it does include the income. And then at today's moment in time, we have received the proceeds. So therefore, it's a lower level of net debt. That's the way we do all of our ratios. We do current moment in time on balance sheet trailing 12 month is inclusive of what we actually reported. If we if we didn't include the the the trailing income and didn't include the leverage. We'd be back to where we were before in the mid to kind of high fours. What we're doing right now is reporting at a 3.9. Going forward over the next six to 12 months, we suspect that that will be flat. Why is it flat? Because the earnings from those assets burn off as we progress over the next four quarters. They'll be fully off four quarters from now. we will continue to progress with organic cash flow and we will affect our restructuring. So when we look at that dynamic equation going forward, it's going to remain around 3.9 to 4.0. Does that answer your question?

Yes, the first question. Thank you.

Perfect. Emil, you want to do the second question? And on the second question, I mean, I'm not fully... see the disjoint between the disclosed materials and the CMD material. We still have a target of a CAGR above 10% in external income growth, and that is consistent across the material.

Just to follow up on that, per the 2024 to 2028 business plan, external servicing income You have it going from 13 billion SEC in 2024 to around 15 billion SEC in 2028.

Yeah, okay, I get it. The baseline for the CMD target was the second quarter in 2023. And that's the CAGR, that's the base number for the CAGR. And then when you expand it beyond our CMD plan, which was in 2026, we have moderated the growth. So you will not get to the same CAGR number as the same deep time, but it's measuring up as it appears.

Yeah, I mean, to be clear, as I showed in my page, which I think was the second to last page, the Q2-23 baseline for our 10% CAGR calculation was 10.6 billion. Now we have an updated and extended business plan, which as you correctly said, goes out to 28. The 10.6 will grow at 10% or more through 26. That was our CMV commitment. Our current updated plan gets there, but then it goes beyond that and it does moderate the top line growth beyond into 27 and 28. So you are comparing a little bit apples and oranges there, but it's not inconsistent.

And the increase in the baseline is due to the acquisitions you've completed, right? So the growth going forward is also impacted by that in the baseline.

Okay. As well as some organic growth, but yes, that's correct.

Okay. Thank you so much.

The next question comes from Wolfgang Felix from Soria. Please go ahead.

Yes, good morning. Thank you for taking my questions. Quickly, on the new Cerberus deal, can I ask what... I mean, this looks very much like Cerberus are looking to stay in this kind of space as opposed to just having a single one-off transaction that will run off to have something that will run, but perhaps more or less in... at the same speed i'm guessing and therefore to maintain maybe their exposure in the space uh is that am i describing that uh relationship there correctly and um i guess is it is it going to be a similar structure to your existing deal or what will be the structure of that deal no it's going to be so let me let me clarify it's a very very good question so

First off, the back book sale was a sale of a fixed perimeter of assets, roughly a billion euros. It was sold at 98%. We hold that, as Emil said, in specific vehicles that were sold to them. That is leveraged and we retained a 35% stake in the equity of that vehicle. And that is a fixed perimeter that will run off over time, throw off cash flow and give us our return and repay the debt. Repay the debt and give us our return in the right order. That is very different than what we're doing going forward. What we're doing going forward is on an annualized basis, jointly identifying, originating, evaluating, and committing capital to investments on a going forward basis that we want to grow. There, we get to keep our share of the investments on an unlevered basis. They get their share of the investments and they can lever them. But that is a dynamic ongoing investment collaboration which does series of investments over the next three years. It is a looking forward and a more dynamic investment. So I think fundamentally your characterization was correct, but I want to just make sure and create that distinction. Historically, it's a fixed perimeter and it's levered and we are in the same vehicle with them. Going forward, that's not the way we're doing this. Going forward, we're going to jointly identify, underwrite, and invest, but then we separate the assets. We're going to keep ours unlevered. They're going to lever theirs. Okay.

Thank you for that. Sounds very exciting. And in terms of fees, how do they differ from, say, the fees that you currently earn on your existing servicing business? And are you looking to do more such deals?

So it's a good question. The fee that is being paid going, well, Depends on the back, on the, on the back book, we formalized a market level set of fees going forward. We're going to be paying a market level set of fees to the servicer as an investor. And ultimately that's going to be comparable to slightly higher than what we are charging internally to ourselves. I don't know if I have a question or not.

Yeah. Just, but when you compare it in terms of, AUM in the servicing business versus AUM under that arrangement, would your fees be similar?

Our fees are going to be similar to higher. They're going to be market level fees, basically. Again, we attempt to have market level fees on our internal book between our servicer and our internal book. We don't always fully capture that because there's lag, there's evolution. Our internal book is also quite an aged book that creates a little bit of non-comparability between fees there than new investments. But ultimately we're going to pay market level fees because we slightly at or above what we pay internally.

Right. Thank you. Um, and then on, um, one more time back to your servicing, uh, margin, um, What is the reason for the sudden growth that we're seeing in the Nordic side of the business? And is that going to be representative, say, of the future distribution of servicing contracts? Or is it perhaps one large client who's giving you more business now? No. I'm sort of surprised to see that... I don't want to call it volatile, but the development to go as quick as it does at the moment, I'd expect. I don't quite know how long term your various contracts are in this space, maybe. I would have expected less of a turnaround there. I mean, it's positive, clearly.

The Nordic or North Europe region, just to level set everyone's information, includes five countries. It includes Finland, Norway, Sweden, Denmark, and Poland. Historically, you're correct. It's been challenged from a top-line perspective. It is also a unique part in that it has the most turnover in our AUM because it's much more invoices as opposed to loans. But fundamentally, it's been broad-based. The improvement has been broad-based. This is not the first quarter that they've had organic growth. They don't have 10% organic growth, but they've had modest organic growth for several of the past quarters. It is a function of several things. Broad-based focus on improving our customer service offering, our service offering to our clients. Change in leadership. We added new MDs in Norway, Sweden, and Denmark about a year and a half ago. And so that leadership is taking effect. And we have one more in the marketplace and that's not just a single client that's giving us more. We've won broadly speaking more in the marketplace than we had previously. All of that is what's going to, what's contributing to what I would call modest organic growth. And I would suspect that will continue. It's not going to grow very, very significantly, but it will grow modestly in my opinion.

Okay. That sounds great. And it, There was a comment made on slide 18. As you work, and I hardly picked it up, but there was some change you were observing as you're working on an aging book. And obviously that'll be the case going forward as you go to an increasingly capital light situation. Can you just repeat what that comment perhaps was?

I mean, I think... I think Emil talked about this, but let me give you some context. We're shrinking our investment business. Whenever you shrink a business, you need to be mindful of shrinking costs at the same time. Sometimes there's some lag there. We are still facing inflation. This is still a human-intensive business. We're also catching up on what servicing costs should be for what is an increasing aging book. So all of that dynamic leads that there are going to be certain timing issues and certain lagging of cost reductions relative to shrinking of perimeter and shrinking of revenue and cash. Now, on a cash basis, it's much less severe than on a book basis. That's somewhat of timing. But Emil can get you a more detailed answer if you'd like.

That'll be fine. I thought it was perhaps a comment on your collection's success or so as you're working on an aging book, but maybe I didn't pay attention correctly.

Sorry if I mumbled a bit. It was more due to the, as Anders described it, as the book gets older, you need to work a bit more and differently on the book, and that drives pricing costs.

Okay, great. And then I have just one final question. Reading through the lock-up agreement and so forth, I understand, or maybe I just don't fully understand, what is As you're looking to bring more of the short end of creditors to sign up, I understand the carrot. What's the stick in your proposal to the short end?

Again, I don't want to comment on carrots or sticks. The carrots, obviously, are the fees. The stick is if we get to two-thirds or above, other people are not going to have anything to say. they're not going to get the fees and they're not going to have a say because it's going to get executed that's really the the dynamic in these processes which is why we believe that we'll get to two-thirds or well above two-thirds okay well i wish you best of luck with that thank you very much the next question comes from robert dinick from carnegie investment bank please go ahead

Hello, thanks for taking my question. Just a few clarifications on the lockup agreement. So you had above 50% initially. Now the 24 euro bonds matured earlier this week. Can you just confirm that you're still above 50%?

Yes, so let me be very, very clear. The agreement is between our bondholders and MTN holders between 2025 and 2028. It did not include the 24 holders. And we did pay the 24 holders, I think, on Monday this week. So the 24s were never part of this. We remain at 50.1 or higher.

Great. And I've been seeing some news on Bloomberg about this alternative bondholder group seem to be dissenting from some of this recapitalization plan. And I think you commented on it as well, André, this morning. Could you provide some more color on that?

Well, I mean, the color is very simple. The bondholders organize in the fashion that the bondholders organize. We have no control over that. There was a short end group that included the 24s and 25s. And then there was a group that looked at more comprehensively our total capital structure between 25 and 28 euro bonds and MPNs. We have committed to the transaction we have announced with the 25 to 28 bondholders and MPN holders. We have a majority of them committed to this deal. the reality is that that's what we're moving forward. And as soon as we get to two-thirds, no one can block this. We are going to get to above two-thirds. I can't speak to other dissenting bondholders or anything like that, but ultimately we're very confident and we're committed to this deal going forward. Understood.

Also, just reading through sort of the lock-up agreement and the new covenant package, which I guess is tighter than the old one, My understanding is that these new Cerberus deals, for instance, they won't be able to raise debt. They will be purely equity funded, so not like the sort of Cerberus transaction that happened. Is that correct understanding, that this new partnership is just pure equity?

Primarily, and just to be very specific on the details on all the basket capacities is not fully negotiated yet. There's still some vulnerability, but we have capacity to invest that fit our future plan, including the investment management business that we have described multiple times.

And just to clarify my earlier question, my earlier response as well, to be clear, because I wasn't clear, the original group on the short end was 24s and 25s. Now the 24s are gone. So it's just the 25s and it's part of the 25s because they are a meaningful part of the 25s that are in our agreement. So to be very clear to the market and to you specifically, we do not need the 25s to affect this transaction.

Unfortunately, we have now run out of time with phone questions. If you wish to ask any further questions, please send them over via email through the presentation page. I now hand the conference back to the speakers for any closing comments. Please go ahead.

Thank you all for listening to us, also for your questions. Obviously, there's a lot of things going on. We've had the back book sale, the lockup agreement, the front book deal. We've also seen very good results from our core servicing business, very good cash results from our investing business. And this is going to continue to evolve going forward. We appreciate you following the company. We appreciate you investing in the company. And ultimately we're here. Anyone who was potentially on the line, wanted to ask a question that didn't get a chance to ask the question please follow up with us separately by email and we can offer we can answer the question by email or even get on the phone with you uh one-on-one so thank you all and have a good day and like jacob said at the end of his commentary i wish you all a wonderful summer