Operator
Hello, everyone. Thank you for joining us and welcome to the Axe Sector ASA presentation of second quarter 2026 results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. If you have logged in via the webcast, please use the Q&A button to submit your questions. I will now hand to the conference over to Johnny Tzolis, CEO at Axe Sector. Please go ahead.
Good morning and welcome to AXActor's second 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 main highlights, then Nina will present the financials before I will go through key focus areas going forward. We will round off with the Q&A session. This time I will focus on the two most important events in the quarter. Firstly, the equity transaction and its main elements, and secondly, the result of the book value assessment that was previously announced. Please move to slide 3. As the main elements in the transaction are well known, I will not spend too much time repeating these, but rather focus on the results and where we stand. We raised a total of 215 million in new equity, divided on 200 million in the private placement and 15 million in a successful subsequent offering. I am happy to say that everyone that subscribed in the subsequent offering got full allocation, including any request for oversubscription. Hence, it is clear that the maximum subsequent offering of $20 million was more than enough to cover all demand from existing shareholders. The co-investment structure with Fortress is now up and running, with the legal structure established and the first investments through the vehicle already closed in July. The sale of the seed portfolio is conducted to a newly established SPV, where Axtractor owns 51%, and we have received the first 50 million euros in proceeds. The remaining will be settled in Q3. Just before summer, we placed a new 100 million euro bond with 4.25 years tenure at Eurobar plus 390 bps margin. This was a record low for Axtractor, confirming the strong market confidence in the company's transformation. During June, the bond ACRO3 was repaid in full, while also parts of ACRO4 was repaid in connection with the latest bond placement. To summarize, we are fully on track on the transaction and we are now ready to focus on investment growth in combination with replacing the current bond structure with new bonds at better terms. Let's have a look at our debt structure on the next page. As a result of the transaction, the net debt has been significantly reduced. This was, in addition to increased investment capacity, the main motivation for the transaction in the first place. Our net debt is now at 559 million euros, down from 837 million euros by the end of Q1. The proceeds from the equity issue and the seed portfolio sale has been used to call the remaining parts of ACRO3 and to reduce the RCF growth. The leverage ratio has been reduced to 2.3 when adjusting for the remaining 50 million euros proceeds from the portfolio sale that will be settled later in q3 we expect to refinance the outstanding part of acr04 in september this year most likely using a combination of existing funds and a new bond placement however the latter is depending on market conditions let's move to the second major highlight from q2 the result of the book value assessment please turn to page five in the presentation. Let me spend one minute on the background. If you look at the curve on the left-hand side and focus on the upper curve which represent our active forecast per 31st of December 2025, you can see that it is increasing before it starts to decrease between 2027 and 2028. In order for us to reach this curve we have anticipated a number of improvements in relevant macroeconomic factors. For example that Germany should be out of recession, interest rates should go down instead of up, inflation down, etc. We had also expected certain regulatory factors to improve. As we moved into 2026, it gradually became clear that these improvements were not materializing as expected, and in Q1, the unsecured NPL collections fell to 89% of active forecasts. Unfortunately, the unsecured NPL collections has continued to fall compared to the active forecast in the second quarter and would bend down to 81% performance in Q2 if no curve adjustments had been done. As we announced in April, we initiated a full assessment of our back book to address the decline in collection performance. During this assessment, we have revised all our underlying assumptions and implemented this into an improved and more data-driven model. This model has been enabled by obtaining more and better collection data as the company has matured over the years the result of the assessment is less expected collections and a differently shaped collection curve as you can see on the graph to the left and the decay rates are aligned with the markets we have also illustrated how the new collection curve looks compared to the actual unsecured collection the last 18 months marked as actual collection. The new curve will obviously translate into a significantly negative revaluation for the unsecured NPL book. I will go through more details on the next slide. The total negative revaluation amounts to 320 million euros corresponding to 33 percent of the unsecured NPL book value. The amount is approximately 10 percent lower than Fortress pricing assumptions in relation to the private placement. If we deep dive a bit more into the vintages affected, pre-2021 vintages and the German 21 vintage counts for 92% of the total revaluation. Norway and Sweden have the largest adjustments both in nominal terms and relative to book value. Spanish secured portfolios are still overperforming and is not part of the process. Unsecured collection performance was lifted to 102% in June after implementing the new curves. AXActor expects future collection to be in line with collection curves and hence no further re-evaluation will be needed. With that I leave the word to Nina for the financial update.
Thank you Jonny. So now I'll take you through the Q2 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 78 million euros in the quarter, down 4% compared to the second quarter of 2025, and as I also explained in the Q1 report in May, the decline is largely due to the portfolio sales in Spain and Germany last year and limited NPL investments. The NPL segment reported a gross revenue of 62 million euros. Excluding the portfolio sold last year, the segment gross revenue decreased 4% compared to Q2 2025. The 3PC segment continued to deliver well, with a solid top line of 16 million euros, up 3% from the second quarter last year. Let's look a bit more into details on each of the business segments, starting with NPL on the next slide. As Johnny explained earlier, the NPL segment was heavily impacted by the negative evaluations of €320 million in the quarter, and total revenue for the segment ended at negative €274 million. The MPL collection performance, including both unsecured and secured portfolios, ended at 93% for the quarter. Please note that the reported collection performance includes the updated curves with effect from June, while April and May are reported based on unadjusted collection curves. While the unsecured portfolios have been underperforming, the secured portfolios continue to perform strongly this quarter. The MPL investments were 19 million euros in the second quarter and 55 million euros so far this year. Portfolio investments are expected to pick up with the significantly improved investment capacity. The higher investment capacity comes from both the proceeds from the equity raise, but also through establishment of the new co-investment structure with Fortress. Please turn to the next slide for comments on the development in the 3PC segment. The 3PC revenues ended at 16 million euros for the quarter, up 3% from the corresponding quarter last year. As for Q1 last year, the second quarter of 2025 also saw positive one-off impacts on a specific contract in Spain, impacting the growth for this quarter. adjusted for this one-off impact the underlying year-over-year growth was five percent the growth is predominantly driven by new contracts in Norway and a strong performance in Germany the Norwegian landmark deal is performing very well but it's experiencing some minor delays in onboarding of certain key segments the contribution margin ended at 36 percent a frontier to one percent in the second quarter 2025. The contribution margin is improving through both the revenue growth along with lower operating expenses. It is important to mention that AXACTO receives excellent feedback from our clients on our tailored high quality deliveries. The pipeline for new clients remains strong across geographies and further growth is expected for a segment going forward. The capitalized servicing will also benefit from both the co-investment vehicle and the seed portfolio sale as AXAFTU retains exclusive servicing rights for both vehicles. Let us move on to the next slide where I present more details on the reported financials for the group. Due to the negative valuation booked this quarter, total revenue at group level ended negative 258 million euros, with EBITDA at negative 290 million euros. The corresponding figures for the second quarter last year were total revenues of 64 million euros and an EBITDA of 33 million euros. The cash EBITDA was at a good level for the second quarter this year, ending at 46 million euros. As a final remark, we have initiated a review of the segment reporting structure the capitalized servicing will now benefit from both the co-investment vehicle and the seed portfolio sale and the segment reporting will be adapted to better reflect the impact of these changes we expect to report according to the new structure from the next quarter with that i'll now hand it back to johnny for some additional comments on the key focus areas going forward
thank you so much nina i would like to wrap up this presentation by emphasizing our key focus areas going forward.
These are, in our opinion, the most important factors to succeed with in order to deliver on our updated financial targets that was presented as part of the equity transaction. I will not go through the financial targets now, but you can find these on page 16 in the presentation. Firstly, we are resuming full focus on building an attractive NPL investment pipeline. The new coin investment structure is in place and now we need to continue to identify and acquire attractively priced NPL portfolios. This is one of the most important value drivers in order to reach the financial targets for 2027 and beyond. Secondly, we will continue to fight for new attractive large-sized bank and finance customers in the 3PC segment. Operational excellence is an important part of securing the top line and to deliver on the active forecast going forward. We will continue to improve cost of funding starting with refinancing of ACR04 in September this year. And lastly we'll work hard to continue to increase efficiency through further automation with support from AI to secure our strong cost position. With that we open up for questions.
Operator
We will now begin the question and answer session. If you would like to ask a question please press start 1 to raise your hand. To withdraw your question press start 1 again. We ask that you pick up your handset when asking the question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. If you have logged in via the webcast, please use the Q&A button to submit your questions. Please stand by while we compile the Q&A roster. There are no questions on the audio line at this time.
I will hand it over to the management scene to address any text-based questions thank you so much the first question is can you give us the updated figure for your investment capacity and details on the size of the July investments the investment capacity depends on a few things in our case specifically how much money we raise in the bond market going forward because we As you all know, we have the ACRO 4 that we can and we will repay now in September. But if we only use our RCF to repay it, of course, that will eat from the investment capacity. But if we do raise bond market and refinance in the bond market, we will have investment capacity to deliver on the financial targets, as we mentioned earlier. which is two to 400 million euros per year and then second question is can you give some more details on the norwegian landmark deal and the delays in onboarding of certain key elements yes i can do that first of all i would like to say that the agreement delivers better than expected on the received volumes the customer has also transferred additional surveillance portfolios That was not part of the original agreement. However, we have a delay on the largest segment. So it will not be transferred before 1st of January 2027 compared to the plan, which was 1st of April 2026. So that unfortunately gives us a delay in TPC growth. Then we have the next question is what type of macroeconomic parameters and regulatory factors were expected to improve in the last ERC? Are there any upsides to the curve? What type of macroeconomic assumptions do you have now? So first of all, I think when it comes to the macro parameters. It's the ones that you know very well. It's interest rate development, inflation, GDP growth, basically all the most common macroeconomic parameters that you will use to describe an economy. I think there will always be upsides and downsides risk in a forecast and we believe it to be balanced. On the regulatory side, that's a very complex question. I think we have to take that offline because uh it's not uh but but it's the normal also what we have described earlier it's um it's payment free months it's uh that that is one thing it's uh like you saw in sweden if if the country is doing something on uh regulatory on if you can deduct interest rates on consumer loans or not that is one thing it's the regular the normal fee and fee regime the development, in what kind of prices can we take from the debtors, etc. It's a long list of different regulatory elements that's included. I don't have the full list in front of me now, unfortunately. Then we have let's see and then the last part of it, what type of macro assumptions do you have now? This is something that we don't disclose. This is competitive sensitive, so I will not move into that.
Then we have let's see what is the investment capacity of start to present potentially throughout 2026 given all refinancing I already answer it and then the next question Nina I will leave for you which is I can read the question why did we not see any tax benefits from the revaluation yes I can answer that one we have in line with also I press a prudent approach when it comes to recognition of tax losses in the balance sheet But as we always do, we also do a full review of the tax position also at the event. But at this point, we have not put any tax losses in the balance sheet.
Very good. And then we have the next one. Can you quantify the existing effects from AI and future expectations? And to be honest, that is also a very complex question. What I can tell you is that we're doing everything in our power to test out. And we have now implemented a new dialer system, which is very suitable for using AI. We are using AI in training. We are using some back office functions. We're also testing it out with different chatbots and so on. and we see effects but we need to we need to develop with the markets as far as i know there's no no one of the large competitors are that are using a out to a large extent and when i mean to a large extent if you really want large effects for our industry or at least for a sector you need to have chatbots that is good enough and you need clients that are ready to use it and then so So you could start reducing substantial number of FTEs in the call centers. That is where we have most of our people. And when we reach that level, you can see substantial effects. But so far, we have not seen massive effects, but we expect them to gradually be implemented over the next quarters. Then we have the next question. When do you expect dividends to be paid to shareholders? And I think this was something that we announced in connection with the equity transaction, that the first possible dividend payment will be in June, July 2027. And that is because we have a bond, ACRO5, and there we have a covenant which limits it. So we need to refinance that bond or ask for a waiver. But in reality, I think we will refinance it before we are ready to pay dividends. Then we have the next question. Having difficulties with the voice dial-in when hitting star one? Okay. Sorry, Kyle, I cannot help you with that. but now that we have the breakdown of where the rights of us are are you able to give a more specific given the more specific on issues in sweden norway pre-2021 and germany 2021 i i we um i think that you know that sweden has been a market that has developed negatively over a long time i i don't want to go into specific details on these countries other than But it's also Germany. You know it has been in recession for a very long time period now. So I don't want to go into more details on that, unfortunately. That was what we had so far. Now I have one more question here. One of your competitors reported high competition across Europe for purchases on debt portfolios. How do you see the competition in the market? And I have to say, yes, we see relatively high competition in several geographies, especially some of the SDR banks. It seems to be very aggressive in their pricing, but we continue to have a disciplined approach. We are still able to invest at satisfying prices in the markets where we have a strong position, which is especially Spain and Norway, and we will not contribute to push market prices to unsustainable levels. yeah I think that was the last question so thank you all for calling in and have a nice day this concludes today's call thank you for attending you may now disconnect
