Hello and welcome to the Axactor presentation of Q4 2024 results. My name is Alex, and I'll be coordinating the call today. Hello and welcome to the Axactor presentation of Q4 2024 results. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished, please press star followed by one on your telephone keypad. I will hand it over to your host, Johnny Tsolis, CEO, to begin. Please go ahead. Good morning and welcome to Axactor's fourth quarter presentation. Together with me, I have our CFO, Nina Mortensen. This presentation will be divided into four parts. First, I will take you through the Q4 highlights. Then Nina will present the financial update before I give an updated outlook. Finally, good morning and welcome to Axactor's fourth quarter presentation. Together with me, I have our CFO, Nina Mortensen. This presentation will be divided into four parts. First, I will take you through the Q4 highlights. Nina will present the financial update before I give an updated outlook. Finally, we'll round off with a Q&A session. Let us move to slide three and have a look at the highlights for the quarter. Gross revenue increased substantially year-over-year compared to Q4 2023, up from EUR 85 million to EUR 161 million in 2024. This large increase is explained by the previously announced portfolio sale that was conducted in Q4. More about that later. Adjusting for this transaction, the revenue declined 4% year-over-year. However, it is worth noticing that the 3PC revenue increased by 10% year-over-year on a like-for-like basis. Cash EBITDA ended at EUR 130 million, up from EUR 55 million the previous year. Again, the main explanation is the portfolio sale. Adjusted for this, the cash EBITDA declined 6%. As most of you remember, we announced already in November that primarily due to the challenging macro environment we saw during the whole of 2024, we will have to do a substantial negative revaluation in Q4. The final number ended at EUR 104 million. Please note that this negative revaluation does not have any cash impact, but will obviously impact financial metrics. Also, the revalued claims remain valid and will continue to accrue interest where applicable. Given this negative revaluation, the return on equity to shareholders ended at negative 19% for 2024. Excluding the revaluation, the return on equity was 6% for the year. Axactor still has a solid balance sheet with an equity ratio of 26% after the revaluation. In addition, we have more than EUR 100 million in available liquidity, so even though the revaluation is, of course, unfortunate, we still have a very strong financial position. Let us move to slide four for more details on the revaluation. Although it's never desired to do a negative portfolio revaluation, sometimes it can be necessary. The size of the revaluation corresponds to 9% of Q3 book value after the Spanish portfolio sale and amortization. Since the reason for the revaluation primarily can be explained by the long-lasting soft macroeconomic environment, it is natural that all Axactor markets are affected by it. However, the largest adjustments are done in Sweden and Germany. As you can see from the graph, our NPL book values are down 14% end Q4 compared to end Q3, with the two main explanations, the Spanish portfolio sale and the revaluation. However, on the positive side, the revaluation will effectively lower our estimated collection curves, which will in turn make sure to improve our collection performance. The adjustment will make sure that the book values are correct, and the improved collection performance will give us very comfortable headroom towards the collection performance covenant on the RCF. As I mentioned in the introduction, despite the revaluation, our balance sheet stands out as very strong. Let's move on to the next slide for more details. I can understand that it can be a bit challenging to evaluate individual company risk for investors in the sector, especially when you're reading about peers in Chapter 11 processes and other types of restructurings. However, I think in order to understand the differences between the companies, it is necessary to dive a bit into the details as the companies are very different in terms of business models, geographical risk, funding structures, etc. A good place to start would be to have a look at the balance sheet. If you do that, you will see that Axactor has a very tangible asset side, probably the most tangible in the industry, where only 5% of the balance sheet is goodwill. Further, close to 90% of the balance sheet is either portfolios, repossessed assets, or cash. Even though a revaluation like the one we announced today has reduced the book value of the NPL portfolios, Axactor still has a rock-solid equity ratio of 26%. In addition, we have more than EUR 100 million in liquidity that could be used for either bond buybacks or portfolio investments. As you can understand, Axactor is in a good position to handle all the coming debt maturities and prolongment of the RCF. We will talk more about that later, but first, a quick reminder about the Q4 portfolio sales on the next page. A part of our deleveraging strategy was demonstrated through the very important portfolio sales we announced in Q4. We sold off the earliest Spanish vintages, representing close to 6% of our total NPL book value, and the transaction generated approximately EUR 80 million in cash. The price was 102% of book value, and it was a true sale to a competitor, hence no continued servicing or servicing fee that impacted the sales price. We believe this transaction visualizes Axactor's valuable and liquid balance sheet. It also shows that we are both willing and able to use the secondary market that has become much more active over the last few years in the Axactor countries. The transaction has several positive effects. Obviously, it gave an immediate improvement on our financial covenants, which was important, especially on ICR and leverage ratio, but it was also important as part of renewing our Spanish NPL book, opening up the opportunity to buy more fresh debt, where we can create additional value by using our platform structure to a larger extent than on an old back book. The transaction gave us improved financial flexibility, as you can see on the next slide. This flexibility we already took advantage of in Q4, as the liquidity gave us the opportunity to start refinancing of our ACR03 bond that matures in September 2026. During Q4, Axactor acquired bonds in the market for approximately EUR 51 million at 94.2% of par. Hence, we achieved a gross gain of close to EUR 3 million due to these buybacks. Axactor now holds approximately EUR 70 million of ACR03. We believe this demonstrates approximately EUR 70 million of value creating transactions such as further accretive bond repurchases and portfolio divestitures. Moving on to the next page for an overview of our current debt structure. It is for the most part self-explanatory, but I would nevertheless give a few pointers. The RCF draw by year-end was EUR 472 million, leaving EUR 73 million in headroom for max draw. The first maturity is in one and a half year, and it is the RCF expiring end June 2026. Total remaining bond debt is now EUR 425 million. Finally, the total outstanding interest-bearing debt by year-end was a little shy of EUR 900 million. Before I give the word to Nina, I would like to just give a few comments on how we are thinking around the upcoming maturities. First up is our RCF. We aim to prolong or renew this during the first half of this year. We will continue to invest in attractive portfolios, but at the same time, have a close eye on the leverage ratio. Given natural seasonality, the first half will show a moderate investment level. Depending on how the bond market develops in general and how the spread specifically for Axactor develops, we expect to refinance ACR03 during 2025. As we have expressed earlier, we will aim for a more diversified maturity profile with smaller bonds, primarily with annual maturities, compared to the current structure where we have some years without any maturities and some with relatively high maturities. This will reduce the point timing risk, which we think is an advantage for both us and the bond investors. As part of the refinancing strategy, we could potentially consider further portfolio sales during 2025. However, there are no ongoing processes at the moment. Nina, with that, I'll leave the word to you. Thank you, Johnny. Now I'll take you through the Q4 financial performance, starting with the overall figures and then a bit more context on what is behind the numbers. Gross revenue for the group almost doubled from EUR 85 million in the fourth quarter of 2023 to EUR 161 million in the fourth quarter of 2024. The high increase in gross revenue stems from the sale of Spanish portfolios for an average premium of 2% over book value. Excluding the sales proceeds, gross revenue was EUR 82 million, equal to a decline of 4%. The NPL segment reported a gross revenue of EUR 144 million. The segment gross revenue, excluding the sales proceeds, was EUR 66 million, a decline of 6% compared to Q4 2023. The 3PC segment delivered revenues of EUR 16 million, up 5% from fourth quarter last year. Let's look a bit more into details on each of the business segments, starting with NPL on the next slide. The NPL segment delivered a negative total revenue of EUR 59 million for the quarter. The negative total revenue is mainly caused by net negative NPL revaluation on revised ERC curves of EUR 104 million. The revaluations came mainly as a result of continued challenging collection environment across all Axactor countries. In the fourth quarter, the overall collection performance ended at 94%, up from 90% in the third quarter. When we sold the Spanish portfolios, we amortized the remaining book value. Thus, the effective amortization rate for the quarter was significantly higher. The effective amortization rate ended at 68% for the quarter, up from 29% in the fourth quarter last year. On the more positive side, we continue to have success with the ongoing cost improvement projects. Total operating expenses for the NPL segment fell 9% to EUR 11 million in the fourth quarter. Please turn to the next slide for comments on the development on the 3PC segment. The 3PC revenues ended at EUR 16 million for the quarter, equal to a growth of 10% if we exclude Sweden and Finland, which were closed down last year. The increase was driven by double-digit growth in Norway, Germany, and Italy, as well as a strong development in Spain. The Norwegian 3PC business is performing particularly well, with solid growth from new sales within the banking and finance segment, a key focus area of Axactor's strategy. The contribution margin is slightly lower this quarter compared to the previous year due to one-off revenue items following in the aforementioned 3PC business closures. This led to a decline in contribution margin from 46% to 44% in the fourth quarter of 2024. The underlying operational profitability is in a positive trend, with the full year margin increasing to 38% from 36% in 2023 without adjusting for the positive one-off items. Let us move on to the next slide, where I'll present more details on the reported financials. If you look at the two charts to the left, you clearly see the impact of the revaluations on the total revenue and the EBITDA for the quarter. Total revenue at group level ended at negative EUR 43 million, while the EBITDA was minus EUR 74 million. Cash EBITDA ended at EUR 130 million for the fourth quarter, up from EUR 55 million in the corresponding quarter last year. The increase was mainly driven by the proceeds from the Spanish portfolio sales. Now, on to the next slide for a look at the development in return on equity. With the adverse impact from the NPL revaluations in the fourth quarter, the return on equity for the full year 2024 ended at -20% on a fully consolidated basis and at -19% for ROE to the shareholders. Despite the negative result for the year, Axactor still has a robust financial position with an equity ratio of 26% and a comfortable liquidity position, with approximately EUR 100 million available in cash and headroom on the RCF. Moving on to the next slide for some comments on the status of the financial targets. Early last year, we communicated our four financial targets for 2026. Firstly, the annual NPL investments for the period 2024-2026 should be in the range of EUR 100-EUR 200 million. In 2024, Axactor invested EUR 128 million, well within the target range. Secondly, the annual dividend payment should be within 20%-50% of reported net profit. As the net profit for 2024 was negative, dividend payments are not applicable for 2024. Next is a target of raising 12% ROE in 2026. Despite the 2024 result, we stay committed to this target. Finally, it is Axactor's ambition to be at or below 3.5% on leverage by the end of 2026. The leverage ratio at the end of 2024 was below target at 2.7%. I'll now hand it back to Johnny for some comments on the outlook. Thank you so much, Nina. Regarding collections, we expect higher collection performance after the negative revaluation in Q4. On OPEX, we continue to have very good cost control and aim to absorb any cost inflation and to keep OPEX flat. Cost of funding will continue to go down due to lower IBOR rates and bond buybacks. Leverage is substantially reduced. On the investment side, we expect to do high-quality investments. However, we believe that this year investments will be in the lower end of the financial target of EUR 100 million-EUR 200 million on an annual basis. Our Pan-European position continues to give us valuable access to attractive NPL markets in Europe. Finally, we expect the 3PC business area to continue to deliver solid growth at healthy margins. With that, we open up for questions. Please press star followed by one on your telephone keypad. If you'd like to remove your question, please press star followed by two. To repeat, if you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, you may press s tar followed by two. As a reminder, if you'd like to ask a question, you can press star followed by one on your telephone keypad. Okay. At this time, we currently have no registered questions, so I'll hand back to Johnny Tsolis. Yes, thank you. We have a few questions on the chat here. I'll start off with the first one. What was the ordinary operating collection for Q4? The number is EUR 65.6 million. You can find that on page seven of the report under the financial chapter, under the revenue under the financial chapter. Second question, what was the non-recurring expenses in the operating expenses in Q4? We do not disclose that number, but it is a relatively moderate one. I'll follow up on this. Was it connected to the portfolio sales? Yes, the vast majority was in connection with the portfolio sales, more specifically advisory costs, most of it. We have a second question here. Could you please give some flavor on the significant shortfall in interest income in Germany before credit loss? I assume that since per definition, it's not possible to shortfall on interest income. I guess it's the shortfall on collection against forecast. The flavor, so to speak, is that this is due to the financial situation in Germany primarily. I believe the country is still in recession. It is worth adding that during 2024, we did substantial cost-cut initiatives in Germany that did create some operational issues that we have been handling during the fall. The situation is now under good control. The question about how will this go forward. We have also adjusted curves in Germany. We now expect in Germany, as for the rest of the countries, to be at 100% collection performance, plus minus, going forward. Is there any risk of covenant breaches now? The short answer to that is no. How did you sell? Who did you sell the NPL portfolio to? That is not disclosed, so that will not be disclosed. I have said earlier that it is a competitor, so it is a true sale. I cannot disclose which one. Hi, could you share the EBITDA generated by the portfolio sold in Q4? No, we do not share that information. Do you have any guidance of potential revaluations for 2025? No. Where do you trend in January on collections? We do not guide during a quarter. You have to wait until the first quarter report to get information on collections for January. Second question, do you know if the RCF lenders wish to be paid down for being extended? The question is no. No, they do not want to be paid down, as far as I know. Can you tell us a little about the outlook for collections in Q1 2025? We don't give more guiding than we already do in the report. We have adjusted the curves, and we are putting in the estimated ERC in the report, so you could find it there. Next question, is there a possibility to increase size of RCF when you extend it? In the documentation today, there is a possibility to extend the RCF by including more banks. It is an option, but that's not something that we are working on currently. Regarding the RCF, we expect to just prolong it more or less exactly as it is today, since we have this option that, of course, requires a credit committee approval. It will be on the same documentation and the same margin levels and so on. Question is, will you do more bond buybacks? Yes, that we have said that in the presentation, like I said, we have more than EUR 100 million available for liquidity. It could be used both to bond buybacks or to buy portfolios. Yes, that was all the questions that we have received. I don't know if the operator has received any incoming calls. Currently, no registered questions. Oh, apologies, we do have one. We have a question from Lars Dueser from Deutsche Bank. The line's now open. Please go ahead. Yeah, good morning. Thank you for taking the questions. First of all, if I look at your Q4 net debt, that benefits from the asset sale proceeds. The cash EBITDA at the same time benefits from the asset sale proceeds, right? Because you are capturing them. It is flowing through the collection number. Okay, fair enough. I can strip out these roundabout EUR 80 million of asset sale proceeds from the reported cash EBITDA. What is the pro forma adjustment for the asset sale itself, given that you now will look at quite a bit less collections from the sale? Do you disclose that? No, unfortunately not. Right. Right. If I look for modeling purposes, if I look at ERC, I see that year one ERC now in Q4 is down to EUR 258 million, which is roughly EUR 70 million lower quarter over quarter. How do you guys try to offset that operating deleveraging this year? Will you step up the purchases? I mean, you guide for a very wide range, right? EUR 100-EUR 200 million. That would be the next question, basically. Regarding the investment level, we have said that we will be in between EUR 100 million to EUR 200 million. I also said during the presentation that this year we will most likely end up in the lower range of the interval. That is because of several of our priorities, deleveraging is vulnerable. We have said that until we have a little bit better control of the ACR03 maturity that matures in September 2026, we will be a little bit careful with investing. We do not know exactly, of course, where we will land. My personal opinion is that I think that we will be able to refinance the bond. We have said that we will do it during this year, most likely just before or just after the summer. I think we will be able to refinance it at attractive margins and that we will roll part of it. That will open up the possibilities to also invest quite substantially more than our replacement CapEx for 2025. Right. On my numbers, I mean, you do not disclose GMM. I think you guide investors to around two times, which is also probably what is implied by the book value at the moment. If you work with that assumption, what do you need to invest to keep your ERC steady year-over-year? I mean, when I think about the ERC bridge, I have the beginning of the period. I then have collections which drive it down, which is obviously the back book, but also any sort of front book. I then have acquisitions or portfolio purchases against that, multiplied by the GMM, basically ERC acquired. Maybe you can help me there, but I get to a level of pretty much the midpoint of your range. You need to invest EUR 150 million or so to keep ERC steady. If you tell us you are now going to the lower end of the range this year, you basically suggest you want to run off this ERC for a bit and the book value for a bit, just to be conservative. Is that correct? To be honest, I haven't been thinking so much in the details. This is a very detailed question. I suggest that you take it offline so we could really understand exactly the question and have some time to think about it. I don't have a clear answer to you on the phone now, unfortunately. Sorry. Right. Right. The next question, obviously, this book write-down, right, was quite large, 10%, give or take. I guess investors want to know now, how confident are you in the marks going forward? Do you really categorically rule out further write-downs at this stage? Will we see performance at 100% throughout the year? Obviously, I appreciate this depends also on macro factors. If macro remains as it is, is that your expectation? Our expectation is to reach, like I said, plus minus 100% collection performance for 2025. That is what we have aimed for. Can I guarantee you that there will not be any write-downs or revaluations, positive or negative? Of course not. Of course not. That is impossible. No one can in this industry. We believe that we have now done, like you say, we have done a substantial revaluation. We believe that it should be sufficient to reach the curves going forward. Got it. Got it. Maybe last but not least, right? I mean, it's obviously the challenge the entire industry is facing. You mentioned that two peers have already gone through A&Es because of that, I guess. If I look at your return of invested capital and I compare it to where the bonds are trading at the moment or in general where such players in that sector can refinance, it looks like your cost of capital or your cost of funding will be above your return of invested capital, right? What makes you confident that you can start again generating excess returns? What makes you confident that you can refinance at attractive margin based on what we are seeing at the moment, basically, right? Do you think we need a rights issue for this? Do you think we need sponsor support? How can you basically get that right that you can create value again going forward? Because clearly, being in runoff is not something I think Johnny will be fond of. Clearly, shareholders want to see some sort of value creation and growth going forward again, right? That question has a lot of elements to it. First of all, we do more than just NPL. If you look at our 3PC business, it grows substantially. We have strong beliefs that it will continue to grow close to double digits in 2025 at attractive margins. That will certainly help. The rights issue, you could just forget about. There is no need for any rights issue. We will have the opportunity to borrow in the market. If you compare to what you do not sit on of information that we have, we see the returns on the different vintages. What I can say is that the last vintages, or 2021 to 2024, have substantially better return than the vintages from 2016 to 2021. We know that the new vintages or what we invest in has much better returns than the average for Axactor. That is why you also can see if you look at the gross IRR, average gross IRR for the company, we have not disclosed it. I do not know if we have it in this presentation, but we are disclosing it more or less on a quarterly basis. You will see that the gross IRR on the backbook has gone from around 15%, and now I think we have reached 19%. This will continue to go up just as we continue to blend the book. I am confident that we will be able to invest in very attractive deals also going forward. Our challenge has been the back book, and we are cleaning up a lot of it with this revaluation. On top of this, we are still, I would say, industry-leading in reducing the cost level. This industry is about a lot of things. Funding cost is one thing, but it is also about operational excellence and keeping the cost level down, where I think we are industry-leading. It is about doing the right valuations and having the access to the most attractive deals, where I think we are in a really good position. If you compare our gross IRRs to the industry, I think you will see that we have access to very attractive deals in markets like especially like Spain and Norway, where we actually invest the vast majority of our CapEx. Right. Right. Look, I just think if this is really now about the front book and the opportunities you speak about there and capturing these returns, the biggest bang on the buck, I guess, you would really get if you would get the cap structure in a better shape, right? Once of a sudden, you have a much lower bar, a much lower cost of capital probably as well. Hence, you're much better prepared to create shareholder value again because, quite frankly, shareholders have gone through a really tough time the last few years. If there is no dramatic change on the capital structure, we are basically left in limbo, right? We really have to hope that the market comes back. I understand, obviously, that you say the servicing business is growing, but then at the same time, we all know it's a very, very small business for you guys, right? It's not like Intrum where you have 50% or so of cash EBITDA coming from servicing. I mean, you guys generate EUR 55 million 3PC revenue or so, right? And we know it's a low-margin business, right? I don't know if servicing here is really the needle for you as a business to really get back to shareholder value creation. It can help a bit, but clearly, it's all about the investing business. For that, I feel like the capital structure maybe could look a bit better to make sure Johnny can make returns again down the line, yeah? Yeah. I did not catch the question there, but yes, I agree. We are working on the capital structure. I think there is still potential to improve. One thing that we do is that we try to split up the maturity profile on the bonds so we could be in a position to, and I think that will help take down the point risk. I think it will also give us better margins. You also have to remember that more than 50% of our capital structure is RCF, which we have really attractive margins on, I think. The mix is not that bad. Of course, I think what will really improve our spreads on the bonds when we need to refinance is that we need to get back to 100% collection performance, which we are now taking the right steps to do. We need to continue to fight on cost. I agree that 3PC is smaller than in Intrum, but it still is close to 25% of our business. I hear that you say that it's a low-margin business. It's not a low-margin business in Axactor. For the market, maybe yes. For the market, the margins are growing. We see that the banks are more and more willing to pay for our services as an industry and for Axactor in particular, I think. I am quite positive on the prospects of the 3PC. We see also increased volumes. I think, yes, it helps. It It could help quite a bit, I think. Yes, you're right. We are not happy with the shareholder return at all. I wouldn't say not just the last two years. I would say the last five years or even more so. We are fighting every day to improve the situation. Yeah. No, thank you. Thank you very much. That was very helpful. Sure. Thank you. We have gotten a few more questions here. We have one on RCF margins. We do not disclose it directly, but I think what we have said earlier is that it is more than competitive. It is competitive. I do not think I could give any more flavor to that. What about dividends in 2025? I think it is quite obvious that there will not be any dividends in 2025 based on 2024 financials. That is according also to our policies. Okay. The last question. Is it true that the portfolio you sold is the worst vintage? What I can say about the portfolio is that it is the earliest vintage. Half of it is 2016 vintage, and then it is approximately 20-25% on 2016, 2017, and 2018 vintages. It is the first portfolios that we acquired in Spain that was booked into separate companies. It is not a cherry-picking deal. It is kind of the first portfolios that we bought. Yes. Yes, we sold about the book value. How did you manage to be industry leader in collection cost in a competitive market like Spain? How do you see the long-standing local players react? If we go back to the very beginning, we did an acquisition in 2015 in Spain, which was definitely the best player in the industry on legal collection. That was the starting point because in Spain, legal collection is extremely important. This was a relatively young company started by two founders, two young lawyers that have spent five years to build up a structure, very cost-efficient but also very effective in legal collection. That was the starting point. We did not buy any other large companies to add on. What we did is that we built it from scratch. We started off by hiring Greenfield and set up a low-cost collection center outside Madrid in a city called Valladolid. We have been really good at just holding back on cost. In Spain, as in all other countries, we very quickly went through the system side and went for standardization. All the systems are off-the-shelf systems. It is no self-developed systems and so on. We have been really careful about not building too much structure. By what I have also now told, there was no legacy structure, so to speak, in Spain. That has been how we have been able to build this position in Spain. The other local players, to be honest, there are not so many local players in Spain. When we compete, we compete mostly against other international players or against investment companies from the U.K. normally. When do you expect dividends? We are not going to guide on dividends, but we have the policy that says that we will pay 20%-50% of the result of the previous year. I assume if we deliver a solid year in 2025, it is up to the board to evaluate if they will pay dividends or not in 2026 based on the 2025. It always depends on several factors. The policy is available for everyone to read. That was the last question we had. With that, I would say thank you all for calling in, and have a great day. Bye-bye. Thank you all for joining. You may now disconnect.