Good afternoon, ladies and gentlemen. Thank you for connecting to KRUK first half results call. The key speaker today is Michał Zasępa, KRUK CFO, who will first run through the corporate presentation that you should have received alongside our last call reminder. The presentation web session, so without wasting any more time, Michał, over to you. Please go ahead. Thank you, Gregos, and good afternoon. Good morning. Thank you for your time and joining this conference. I will be using the presentation as Greg mentioned, I'll be telling you which slide I'm looking at. As an introduction, this is the time of few very important records that the company has beat in publishing its Q2 numbers. If you look at page three, it's number one ever net profit in six months. Number one, cash EBITDA. Number one, level of recoveries, and the portfolio purchases over six months. It's also one of the highest results in terms of return on equity, 27%. We've had similar results in 2011, so more than 10 years ago. We are also the biggest ever with assets at PLN 6.5 billion and debt purchased assets at PLN 0.56 billion. Now, this record result and this record profitability comes at a relatively low in that business level. It's, I think, even better result. The business goes very well, and Q2 has been a very successful time for us. The good information is that if we look ahead, if we look at the metrics in July, August, and some leading indicator telling us what cash to expect in the coming months, nothing indicates today that this is changing, despite this uncertainty that is present nowadays in Europe and some large geographies. Going further, please take a look at slide number five. These record recoveries of PLN 1.3 billion almost are spread around our main countries, and you can see an increasing share of recoveries from foreign countries while Poland remains the biggest country with 50% share in all recoveries. Now, this is going gradually to change as you look at the investments, where the split is quite even between four main KRUK countries. Interestingly, Poland made up less than 20% of so far this year's investment. Now, this is important because it shows you that we are standing not on two, not on three, but on four legs, on which we'll continue to develop the business. Depending where the best returns are, where the biggest supply is, we'll be placing our investment. But most likely, more investments will be outside of Poland than inside Poland, because these markets combined are far bigger than the Polish market. If you look at some other metrics of our results on slide five, again, very good net profits record, net profit made on very strong recoveries, revenues underpinning the high profitability of the back book, well controlled costs, where KRUK is raising salaries to our employees where the inflation is highest, but on the other hand, is working with higher level of effectiveness. We need today less people that we would need for the same exercises, you know, two years ago. Financial costs are going up because we buy more portfolios, we need more capital, but also, and probably more importantly, because the interest rates in Poland have gone up very significantly. At the same time, over the past two months, we have realized a significant cross-currency interest rate swap contracts. It's swapping Polish bond debt into a fixed euro-denominated instrument, changing our net exposures to euro from about between euro and Polish zloty from about PLN 2 billion to PLN 1 billion. And at the same time, as it is close to PLN 860 million of nominal, change the interest rate, the cost of debt from around 10% to about 2%. We achieved two benefits by doing these contracts, and we're very happy with that. All of those contracts are based on the existing Polish debt, so they are done according to accounting rules that allow us to not have their effect in monthly P&L, but only at the end of the contracts. If you look at slide number six, it's showing you a stable balance sheet of a lowly leveraged equity with ample liquidity ready to expand if there is good business and good portfolios. Please remember that in our business, the best returns are done in the times of downturn, in terms of recession or slowdowns, where default rates rise among the banks and that buyers are able to pick good portfolios. We are prepared for that. We're prepared for that better than, I think, most of our competitors because of low leverage level, and high profitability. Actually, if you take a snapshot of the industry in Europe today, KRUK is the third largest company in terms of EBITDA, the most profitable company in the industry, and the least leveraged company in the industry. We believe, slowdown in Europe is an opportunity for us more than it is a threat. We concentrate on internal improvements, and slide seven gives you some idea of what we are doing in terms of technology automation. This is a long-term process, but we, with every quarter, become more focused and more an online-driven company. More automated, able to deal to manage our key processes without much intervention or interaction of our employees, relying more and more on algorithms and automated solutions. This is the future. The dream that we have is that half of the recoveries that we have at some point will be done with a you know push of a button, and the other half will need still some human intervention. We're not there yet, but we are making big progress, and in a few years we hopefully will achieve that target. If you look at the numbers now broken down by the industry, the good information is that on our key business, which is buying and collecting on unsecured consumer debt, we're profitable everywhere and we see stable and very good recoveries and margin. This is the great majority of the business. The only exception is corporate portfolios in Spain. The corporate portfolios which we have bought four or five years ago, which we decided to write down in Q2, as we were hit by negative changes in legislation, after the pandemic period. This I treat as a one-off, as the assets are now negligible, and we also learn from these mistakes. If you take a look at Spanish business, except for the corporate portfolios, it's profitable and growing. Now, going through each of the markets, take a look at slide number 10. The Polish market, in terms of volumes of portfolios we hold, was moderate. We saw better years in 2021 or 2019. Second half may be better. Our market share in that segment was also modest of about 21%. This is a combination of a few portfolios. This is also partly a result of very high investments we've made in Poland in previous year and possibly increased competition who were not satisfied with their investment results in previous year. Now, this is of course strategically very important market for us. I think second half of this market will be better than the first half, but let's see. There's still a significant number of portfolios on the market and the game is on. If you look at the Polish results, they are great. Recoveries are significantly above the accounting forecast. Because of that, you can see significant positive revaluation of the purchased assets. The cash EBITDA at over PLN 500,000,000. Very good profitability at 35%. If you look at Romania, a relatively small market in which KRUK continued to dominate at over 80% market share. That is slide 12. If you look at slide 13, the results, a continuation of excellent results, and but also a very nice level of investments, PLN 160 million. Significantly more than we realized in the first six months of 2021. Very good profitability. High level of revaluation. Expect more in the future and high level of profitability at 47%. If you look at Italy, much bigger market than these two others, in which we possibly for the first time have won more than 30%, which is a mark of an increasing competitiveness of KRUK business in Italy. Likely we are winning more because we are today able to recover significantly more money from the same type of portfolios than we were able a few years ago. So we can afford to pay extra for these portfolios without any compromise on the expected profitability. That allowed us to win a few more portfolios. If you look at slide 15, the results, we already invested over PLN 200 million in portfolios. Some of you may have read that yesterday we announced another significant purchase of portfolio, this one from BNP Group in Italy, which will add significant amount of money in addition to this PLN 200 million. This is very good. It means our position in Italy is growing, the fundamentals are strong. We still have significant upside with the lease based on what we've achieved and what we achieved in other countries with much longer history. Profitability is already decent, only four notches below what you see here, the Polish one and this portfolio profitability measure 31%. There is another quarter of positive revaluation. Look at the table there for quarterly number. It's already the fifth consecutive quarter where we say, "Yes, we have good grounds to raise our accounting forecast," and this is another PLN 19 million of revenues coming out of that. That should be continued in the future. Italy is stronger and stronger and becoming slowly and gradually the second most important market for us in terms of value of opportunities and definitely in terms of the value of portfolio there. We have Spain which also offered quite a few good opportunities to purchase and relatively big markets. You can see here close to PLN 5 billion of NPL volume portfolios. We are quite successful this year in Spain. Take a look at slide 16, 27% market share in those purchases in this supply of portfolios. That again may be one of the best results we've ever had in Spain. It also means that KRUK has become more competitive based on its realized recoveries. We are able now to collect better, and we are able to win more often with the auctions. If you look at the results, they were not satisfactory. There is a loss on EBITDA of PLN 32 million in Q2, but this is solely because of a write down on the corporate Spanish portfolios, which is a one-off event. About PLN 44 million was written down. You can see a revaluation of PLN 39 million, which indicates there was a few million zloty of positive revaluation on other assets which are retained assets. We think starting from Q3, you'll be able to see a positive result from EBITDA and that it should continue, especially that we grew the value of the assets to close to PLN 600 million. We hope that there will be more portfolios to come this year. Last but not least, the other markets, very nice profitability, very good results, relatively small investments, as markets there are not offering a lot of supply. All in all, if you look at over PLN 700 million of investment and you add several portfolios that we already have won but not yet paid for or booked, the target that the equity analysts had for our level of investments of about PLN 1.5 billion seems to be quite realistic, if not conservative. This looks quite good. A short commentary to Wonga results which are visible on slide 19. Wonga has a very good six months. It was able to more than double its EBITDA in this period, as you see here on slide 19. Now if you look at profit and loss at slides 20 and 21, a few more comments. Expect stable trends of strong recoveries in the coming quarters. Expect a continued significant positive revaluation, and significant positive difference between actual and accounting for recoveries. Expect increasing financial costs. However, this increase will be now much lower with this PLN 900 million of swap to fixed rate euro instruments, so calculate that. Also expect this year a relatively low taxation as a percentage of profit as a result of changed investment profile. Just to remind you, KRUK pays taxes, most of its taxes from two investment companies when we transfer the money from those companies to the mother company. We do this if we have excess of money in these two investment funds, in these two investment vehicles, and we need this money in the mother company. We don't do it if we have the possibility to reinvest this money and, if we, for example, issued enough of debt instruments, Polish bonds, for example, to the parent company, which satisfies our cash needs. Now, the change we've seen over the past nine months is that we increase the level of investment, and we also plan to continue to invest more than before. Both on the actual tax paid and on the deferred taxation, we change the outlook for lower transfers and lower tax. This is the opposite of what you've seen in the year 2020 or 2021, where we invested, in 2020 we invested significantly less than expected. As a result, we increased transfers or increased planned transfers, and you could see there was significant taxation. This is a reverse situation. In the growth phase, KRUK starts to pay less tax because it transfers less money to the mother company. The outlook, I believe, is quite stable and good. However, you may of course ask, "Okay, but what does a potential slowdown in Europe means to you?" I don't have an exact answer to this, even though KRUK has spent significant effort on trying to look for statistical relations between the macro environment and our recoveries. These relations, even though they exist, they are very complex and are definitely not direct. For example, in the pandemic period, where the GDP in most of our countries went significantly down, we have not seen a significant negative effect on our recoveries. We saw it because of changes in the legislation. Now, that leads me to an opinion, which is, KRUK, of course, is not immune to recession or slowdown, but possibly much more immune than a typical consumer business or a bank. Why? Well, the reason is, our clients already have a problem. If a banking client stops paying, it's because he lost his job or he needs to pay much more interest for his loan. Now, KRUK client has already lost his job, and his payments to KRUK are not increasing because the interest rates are increasing. The value of the settlement to KRUK directly or to the buyer stays the same no matter what the interest rates are. In this sense, this client does not suffer more from those situations. In addition, most of KRUK's recoveries today are not voluntary. They are enforced recoveries from bailiff execution, which means if you have a job, a portion from your salary will be taken from you. In that sense, you don't have this choice of not spending for vacation or for clothes, like in consumer business. If you have that money, a portion of that will still be collected in the process of legal collection. Of course, if a person does not have money at all, his household does not have any source of revenue. Of course that means also for us that we'll not see that money. Even in that situation, please remember, the debt continues to exist. In most European countries where we operate, the debt value is indexed and is increased year to year by a specific interest rate, which is administratively set. Likely some of this money we will get later in time. Overall, again, I'll tell that as a company which has low leverage and high level of liquidity, we believe that a slowdown in the economy is an opportunity in the mid to long term for us to strengthen our position, get better market share, get higher profitability portfolios, as we saw happened to KRUK in 2010, 2011 after the crisis of Lehman Brothers. Of course, you know, we're careful. We don't. I don't think we buy aggressively. We expect good mid-teen IRRs after direct costs. We're making purchases this year. We're raising our expectations as long as the interest rates go up. Still we're able to put money for, I think, a good return. It looks like another good year. Next year, it will be an interesting year if a slowdown comes or a recession comes, because I believe that will be the time where strong companies are separated from mediocre companies. I believe KRUK will turn out to be a strong and winning company in that scenario. This is maybe one more comment on slide 26. We have good access to that funding. We have secured enough that funding for meeting even ambitious or very ambitious investment plans this year. It will be at the end of this year or throughout the next months, we'll be issuing bonds, but that depends on the outlook for future investments. This situation looks quite stable as well. On slide 28, there is some text on our ESG activities. We are more and more engaged and more and more prepared to be in line with the ESG duties. We have just recently published the first ESG report. We're measuring our emissions. We will be now the first time planning to on the group level to limit them in the next couple of months. We want to be 100% responsible corporate citizen in this area. We will be also more active in meeting investors on slide 21, 29, sorry. You can see a list of events we are planning to attend. Hopefully, on some of them we'll be able to meet face-to-face with me or with the IR team. Thank you for listening and if you have questions, please ask them now. Thank you. If anyone would like to register a question, please press star followed by one on your telephone keypad. When preparing to ask your question, please ensure you are unmuted locally. If you would like to withdraw your question, please press star followed by two. As a reminder, that is star followed by one on your telephone keypad to register a question. Our first question is from Robert Bonte from Millennium. Robert, please go ahead. Your line is open. Good morning, everyone, and congratulations on a very strong quarter. I was wondering if you'd give us a bit of color on, you described in the beginning of your presentation, the competitive landscape. Could you just help us out a bit here? Who would you consider your main competitors? If you can just say what's publicly available about their competitive position right now and how you maybe are different from them. Thank you. There is a number of Pan-European competitors. It's quite easy to look them up and see what position they're in. The list of these competitors, I will name them as Intrum. That's a public company from Sweden. That's the largest company in Europe. It's EOS. It's a German company, but Pan-European, not public, privately owned. It's B2 Holding, a Norwegian company with a sizable company in Poland. It's Hoist, a Swedish company, publicly listed, just as B2 Holding is also a strong presence in our markets, including Poland and Italy. It's Axactor, a Norwegian company, present in Spain. And it's PRA. It's an American company, publicly listed with strong presence in Europe. Those are Pan-European companies. None of those companies is a dominant player. There is a number of local players on each of the main markets. I could give you a few names of Polish companies, of Italian companies, of Spanish companies, and they are quite active. It's still a quite dispersed and numerous group of competitors. All of those Pan-European that I mentioned are, as of today, less profitable and more leveraged than KRUK is. These are our main competitors, plus a few more names on each of the markets. The competition is strong. This industry is quite strong and profitable. However, you know, I think in those times of where the debt becomes expensive, some of those who are very highly leveraged will not have as much flexibility to continue to invest. I believe that this is the reason why we stand a chance, you know, to push our elbows a bit more if more difficult time comes. In addition, I have a sense that we have made a very good improvement of our performance, of our competitiveness, productivity in the new countries in Italy and Spain, which is shown in the, you know, the market share that you saw for this first six months, which we constantly do things right. If we continue on this path, possibly in half a year, a year, two years, we have even stronger, even stronger position. We like this environment because those are the competitors we know well. We compete with them for five, 10, 15 years. At times, you know, we have an edge, sometimes they have an edge. I don't think they have anything that we don't have. It's a tough game in which I believe we stand a chance to win at least some more. Understood. Thank you. Two follow-up questions, if I may. The first one, can you give us a sense of where you see volumes so supply heading and where you see pricing heading for on the purchased debt side and the portfolio side? On the second question, just again, following up on what you stated, can you give us a sense of what your own target leverage ratio is or maybe a range of minimum to maximum that you would feel comfortable with? Thank you. Yeah. On the volume and pricing. Well, the volume, historical volume for the six months and for the past two years, you have in the presentation for each of the markets. Now, we don't have a long visibility on what the supply be other than we think this is a stable business. This supply is not drying up for some, you know, unexpected reason unless there is a pandemic situation and, you know, the business stops for three months, but then later it resumes. You know, the basic assumptions will be if you don't assume a significant slowdown, assume a similar market size in the future, possibly with some, you know, increased by inflation as people will, in inflation environment, will take somewhat bigger loans. That would mean the bigger side of the portfolios. Take a look at the historical results for 2019, 2021 first six months. Don't look so much at 2020, which was an odd year with pandemic freeze on asset sale. This is levels we would expect plus minus, you know, 5%, 10% growth. If there is a scenario that the banks have an increasing problem with NPL as a result of the slowdown in Europe, the market will grow. It can grow by 20%, it can grow by 50%. Nobody knows. That will not translate immediately in our portfolios to be bought, but after a year or two years, more likely. Pricing is dependent always on the quality of what is offered, and it may be very tricky to compare pricing in aggregate year to year as a percentage of the value. Because usually, portfolios have a lot of variation in terms of the quality. We buy portfolios paying EUR 0.05 and buy portfolios paying EUR 0.50. In those two scenarios, we can expect the same rate of return, but the quality of these portfolios will be very different. Please remember that. The second element determining the pricing is of course competition. This competition is strong anyway. I would expect that in the environment of increasing interest rates, we will all be gradually moving to higher IRRs expectations, which is natural because our cost of debt and average cost of capital will increase. I think this has started already, definitely in Poland for the Polish players, Polish funded. Also I see first signs of that in Italy, where also just for some players the cost of debt has already increased. From that point of view, I would expect, you know, pricing with the same quality pricing to go slightly down in the next couple of quarters. Your second question remaining the targeted leverage. You can see that today this leverage is 1.0 net debt to equity. On this measure, we have a covenant of 3.0, so far 2x more than we have. We will or we expect to increase this leverage. How much will depend on the level of opportunities, but don't expect us in the next two to three years to go any year near 2.0. I think if we're at 1.5-1.7, that's probably it. You would really need to see huge opportunities which we don't see now to double our leverage. Likely, of course, this is scenario analysis. You know, I don't give you a guarantee. I'm telling you that in our business plan, we definitely don't reach 2.0. You know, we go to 1.5-1.7. I think it's quite unlikely that we'll exceed that. Understood. Thank you very much for taking the questions. You're welcome. Thank you. As a reminder, if anyone else would like to register a question, please press star followed by one on your telephone keypad. We have a follow-up from Robert. Robert, your line is open. Please go ahead. I didn't wanna hog all the questions here, so I took my place back in the queue. Could you just help us out here on the chart? I have two questions on your P&L in detail. One, can you remind us the one-off in Spain? You said that was on the corporate side. The retail side is- Yes. Doing well. That's why I gather you're investing. What is the problem on the corporate side in Spain? We have bought several midsize and small corporate unsecured portfolios in Spain several years ago. Now, these were the first investments in the asset class, so from that point of view, you know, they were more risky because we lacked so much expertise. First thing that happened is that these assets were just possibly somewhat overestimated at the date of purchase at the investment decision. Second, what happened is that when pandemic situation came to Spain, there was a law enacted that said, bankruptcy procedures are stopped until the law changes. For a good few years, we couldn't work on some of those cases. That, of course, was unforeseen. You know, we have invested. I don't remember exact number, but you know, it was EUR 12 million or a little bit more in these assets. We collected certain amount of money, but after four or five years, we now have a good visibility to say these assets are worth less. We will not get as much money as we initially planned, given the legal status of these cases. We decided to take a deep cut. It's quite a conservative cut. Maybe we could be more optimistic about that. But my opinion was, we don't want to see that problem again. You know, people who manage that business are different people who managed them initially. Let's have a clean slate of paper, and let's finish, you know, this learning exercise that cost us relatively a lot of money. In that sense, it's a one-off because these assets are written down to, you know, by 60%, over 60%. There is not much left on our balance sheet. There is probably more upside. Anyway, it is an insignificant asset. If you look at Spain, the value of our asset there is PLN 580 million. About PLN 25 million of debt is so roughly 5% is our corporate assets today. Okay. Understood. Thank you, Jan. My second question is one about Romania. Now, Romania, if I look at your cash- Mm-hmm. recoveries, which is essentially Yeah. your PD income plus the revaluation gains, I get to- Mm-hmm. I'm not sure if I'm doing this correctly, but I get to, basically you've been the last six quarters or seven quarters, actually, you've been doing PLN 140 million. So 4Q 2020, PLN 145 million, PLN 140 million, PLN 146 million, PLN 136 million, 3Q last year, PLN 145 million, 4Q 2021, PLN 145 million, 1Q 2022 and PLN 142 million, 1Q, 2Q 2022. Is this something that we should care about? Mm-hmm. I mean, it's happening with your. Revenues. You know, with the rising portfolio, you know, rising value of portfolios. Is this something we should worry about? I'm sorry, you were citing the value of total revenues or debt purchase revenues? No. The cash and cash recoveries. The cash and cash recoveries in Romania. The cash revenues- Okay. Okay. Okay. the cash recoveries in Romania. Your cash recovery- Okay. Yeah. Got it. has been flat over the last seven quarters. No. In post-foreclosure terms. This is not a worry. It's a sign of strength. Please, understand this economics. We have a sizable portfolio of around PLN 1.1 billion worth on our balance sheet, which is combined by very high profitability, very high return portfolios, both over the past 15 years. They are amortized at certain point every, you know, day, every month, every quarter, as they are paying off. Now, this portfolio, given the size of this bank book and how much we add each quarter, each half a year, the recoveries, the total recoveries should be trending down because there is so much historical we bought, and every portfolio has a certain curve, which is, you know, in time going down to zero. The strength of this portfolio is such that you actually see that the recoveries are not going down. They are actually keeping the same level for a number of quarters, which is a reason why we need to recognize that they are actually worth much more and you and we need to recognize the, you know, the positive uplift of the forecast, which is, you know, in the line revaluation. Because we don't invest, you know, PLN 300, PLN 400 a year, but less, and what we invest today is at, you know, mid-teen percent IRR, not at 40% or more IRR, which is historical profitability of the bank book. The combined out-recovery curve is what you see. Does it make sense? Okay. That makes sense. Thank you very much. I'm happy to go back in the queue if there's another follow-up question, otherwise I have my own questions, but operator, is there someone in the queue again? We do have another person in the queue. Robert, if we go to them. Perfect. Please push on. Perfect. Please push on. And then I will- I'll go back in the queue as well. Thank you. Brilliant. All right. Thank you. We have a question queued from Radim Kramule from Erste Asset Management. Radim, please go ahead. Your line is open. Yeah, good afternoon. I just wanted to ask you about this, because I was reading some comments recently from analysts about potential new regulation plans for the debt collectors. I must say I haven't really read the details of it, but could you give any color what the Polish are thinking about and what could be the impact on your operations in Poland, please? This is something that was first announced in February 2022 by the Polish Ministry of Justice, where they said, "We want to introduce certain regulations with debt collection industry in Poland in order to increase the protection level for the customers." No details were disclosed at this point, just several, you know, bullet points of the idea. Now then was the six months of silence. Last Friday or Thursday on the website of the Ministry of Justice, a short memo was published with the rationale for the law and with the timetable that this law should be adopted by the government for later parliamentary discussion by the end of this year. Now, I know what is on the government website, and I'll tell you briefly what it is. It says that the proposal is that all debt collection companies are licensed in Poland and the license to be given by the Ministry of Economy. It says that all debt collectors that work in Poland should be licensed, and there will be, you know, rules to be established how these licenses are to be approved by certain authority. There is a call for necessity to document every contact with the customer in the debt collection process to be also shown for scrutiny to the regulator. There will be a formalized procedure for complaints of customers who undergo a debt collection process. There will be a number of criminal offenses in the debt collection process. If committed, they will be punished with the law of imprisonment. This is the most important. Our take on that is great. There will be a better protection of the companies from aggressive or fraudulent companies will not be able to do their business in the country, the debt collection industry, which is great for the big professional, respectful and compliant company like KRUK. What we read there does not scare us at all. However, we don't know the exact wording of the proposal, of the legal proposal because it has not been made available. Once we see the details, we'll be able, you know, to assess it with our, you know, lawyers in more concrete fashion. So far, we say we welcome any reasonable regulation that protects the customer from, you know, aggressive behavior or fraudulent or illegal behavior, obviously, because it's in our interest that such practices are not, you know, doing harm to the reputation of the debt collection industry. I see. Maybe this credit holidays that were introduced in Poland. Mm-hmm. Could it be that there is, there will be lower supply of, let's say, debt books or does it. I always should assume that this helps the households in Poland to, you know Mm-hmm pay back debt and not being in default. Mm-hmm or being late with payment. At the same time Yeah. Maybe they can better, like, repay their older debts, but probably the mortgages are not really the clients that you're- Mm-hmm They stay in your portfolio. Yeah. You know, What's your take there? We don't have, you know, a study proving our point, but my belief is it doesn't really affect us at all. I mean, I think predominant majority of KRUK clients does not have a regular mortgage line. It's not that type of client. We do have business in mortgages, but for those customers who, you know, who has not paid their mortgages and we bought their exposures, but that also, you know, not significant part of our business. I think it's just a different business. I think if anything, the credit holiday can give some extra money to households where maybe somebody else in the household has debt to us and has more money as a consequence. Maybe also, because of credit holidays, banks in Poland have worse balance sheet position and need to sell earlier on because they strive for, you know, for capital. Maybe this would translate in faster sales of portfolios. Maybe. Maybe, maybe not. All in all, I don't think it concerns us, it affects us directly. Fair enough. Yeah, just to the pricing or let's say your Spanish and Italian portfolios. Mm-hmm. Going forward, I've noticed that you're paying like very low percentage of nominal value. Is it because of different regulation that it's really difficult to collect those portfolios? For example Mm-hmm. In Spain, I saw that you were paying like 2% of the nominal value. Well, we, you know, it really depends. Is it really very hard to collect? Yeah. Well, it depends. Unfortunately, the question is it depends. It depends on the particular quality of this very portfolio. Of course, it also to some degree depends on the legal environment and inherent effectiveness and efficiency of the legal process. You know, I would say this legal environment affects the average pricing, but still the range of the prices on every market will be very wide. You know, in Poland, as I mentioned on this call, we would sometimes buy portfolios paying 5% of the nominal price and sometimes 50%. This range will be different. You know, I don't recall anywhere near 50% in Spain or Italy, because yes, on average, these portfolios have relatively lower quality. Maybe it is the case that it's easier and faster to collect in court in Poland or Romania. Still, you'll have very big differences in portfolios. Just remember, take this example. You know, I buy a fresh credit card debt with, you know, the overdue time of, you know, 90 days, and 60% of the people in this portfolio were paying in the past six months. I can pay 45% for such a portfolio because it's easy, fresh, low ticket, people are easily accessible. They usually have, you know, problems which are temporary. I will pay 45% and I will get 100% of that or 90% of that. Take a different example. An auto loan debt, an average ticket of EUR 20,000, which is five years old. The cars are gone. The people are, you know, in trouble. There's no way the most of them will pay half of this debt. I can pay 2% for this debt, hoping I can get 4%. Most of that can be prescribed already, for example, because it's five years overdue. You know, depending on the legal situation, depending on the ticket size, time that has passed, legal status of those cases, the price may vary from, you know, potential to recover a few percent to potential to recover over 100%. Because sometimes in legal costs, with some interest costs, you can, you know, collect 120% or 130% on average on a portfolio. The true answer is, you know, we paid 2% or 22% because this was inherent quality of these portfolios. That's the most important reason. Yeah. Just last question, not really related directly to, but, I've read there was this like unexpected change in the CEO of Intrum. Mm-hmm. This week. Have you seen like Intrum running into some troubles or, have you heard any? No. No. You know, we're too far from that to be knowledgeable about it. On that note, if you look at KRUK, take a look at the fact that in Europe, among the big debt purchasers, we are the only one which is still run by the founder, who owns 10% of the business, is a, you know, wealthy person because he owns so much stock of KRUK, and we have a very stable management team. Team of people whose main assets is the shares of KRUK. We have a very high level of commitment and loyalty also in economic terms to the business. I think in reality, this is one of the reasons why we are the third largest company in Europe now being only in six countries, and not making this growth through some aggressive acquisitions, because we haven't done much of acquisitions at all that added to those profitability. In that sense, I think the profile of people running KRUK in practice generates higher ROE for shareholders than, you know, hired management, which is a typical setup, you know, in case of many of our competitors. We have, you know, an observation. People at the banks change, people at the competition change. The only people who we know work constantly is our management team. I mean, the, you know, top 50 management team or top 100 management in KRUK. Of course, people change too, but much less frequently than everywhere else is our observation. Okay. Thank you very much for the answers. Thank you. Thank you. We have a follow-up from Robert, so I'll open his line. Yeah, thank you very much for taking the follow-up. Again, you know, I'm, you know, we're very impressed by your cash flow generation. Thank you. Again, the consistent delivery that you have in all of your markets, essentially. Again, as you get more experience, I think initially you price carefully, and then we see both in the collections and valuations, as you get more confidence, more information, and you build up a database, which is obviously a great barrier to entry. Given how well things are going and how well you know your big four markets now, and given your balance sheet structure, where you are at a third of your limit, debt to equity, wouldn't it make sense to kind of have a higher dividend policy, given that you have so much flexibility and again, to kind of I guess to reflect you know reflect the strong cash flows? Again, if you're not using the cash on the balance sheet, and you don't see any opportunities to go anywhere close to it over the next several years, it would seem to me that. Mm-hmm. Good for everyone, right? Everyone gets more, including all your managers. You know, higher dividends, essentially are given to your managers, right? Well, you know, the reality looks and gives us a little less of flexibility for the following reason. First, we have hard covenants, which means we cannot get close to 3.0 net debt to equity because we would risk a default or cross default and, you know, lose the business. With this type of covenant we have, we practically don't want, you know, to go anywhere above 2.5x net debt to equity. That's one constraint. The other constraint is that we run a conservative liquidity management for, you know, forever, since ever. What do I mean by that? You know, actually, it's not the balance sheet covenant that is binding me or KRUK. It's the cash flow covenant where I say, with every investment decision I make, every portfolio I buy, I want to make sure I will have enough money in five years' time where my debt commitments are becoming due to repay them from the assets I have. I don't want to be forced to have to refinance debt. I need to assume there will be no more debt funding available for KRUK ever, and I will still not lose the business. This is a conscious choice we've made to keep that policy, and that in practice tells us that this cash flow covenant, which we don't show you, but we measure every, you know, month or with every major decision, is showing a certain limit. Now, I know most businesses and probably all our competitors don't have it, but we want to have it. It's and we want to have it because we value so dearly, you know, the fact the value that we created and the, you know, equity in the company. Another constraint is access to debt funding. Now, if we have increased the dividend policy, dividend payout very significantly, we would need much more debt. That would force us to go outside Poland to raise this debt. Possibly, we would need to raise this debt on the euro market. The terms of debt, we don't like. We don't like the standard terms of the euro bonds. It would mean that we would need to cut on the bank debt, you know, accommodate our documentation, which is much more attractive from the, you know, against safety level to KRUK than the standard documentation. We would significantly increase the average cost of debt. We would, yes, the shareholders would get more, but the business would get much less favorable funding terms that it has now based on the many very good banking relationships we have with international banks in Poland and with the Polish bondholders who treat us as a blue-chip, even though we are not an investment-grade company by European standards because we're too small. That would be a big detriment. I think not worth it. We enjoy, you know, the very good funding situation and position and also flexibility that would allow us to make a big jump if that comes and, for example, close PLN 2.3 billion of investments, not 1.5, if we had very good, you know, terms to do it. From that point of view, you know, maybe we will decide to pay more dividend, but we are not ready to commit to more than 30% as a regular rule. But, you know, shareholders decide every year on the dividend payout. Eventually it's their decision at the shareholder meeting, how much we pay out. Because, you know, you're right, that from the balance sheet position, you could say, well, you could pay, you know, 50% of your dividend or 60%. It's probably not something that we would recommend to shareholders. Not to say that there is not a place to do it once in a while or, you know, in one year more than in another. Yeah. I found in the past that high dividend policies, a couple different things, right? One, it shows the underlying profitability of the business to shareholders, to the market broadly. Two, it requires. Mm-hmm. A bit more capital discipline of management on the management side. Mm-hmm. I mean, you know, it should be kind of a goal that at least it grows with, you know, some visible numbers. Grows with profits or grows with cash flows or some. Mm-hmm. Because low dividend is often, it's a lazy balance sheet, a lazy management team. You folks don't strike me either as lazy on as a management team or lazy on the balance sheet side. Mm-hmm. It's again. Mm-hmm. You use your balance sheet aggressively and I think, you know, there's a limit, there's a range. I mean, again, if your net profits or your cash flow collections grow 20% a year, then why should the dividend not grow 20% a year? Well, you know, as a percentage of profit, of course it will grow. You know, it is, as I told you, in practice with these rules for liquidity management, we have less flexibility than it looks only looking at the balance sheet. But yes, there is still a place to increase the dividend. However, please also note the interest rates were very much up in Poland. In practice, we would add significant amount of Polish zloty-denominated debt if we pay more dividend, and that would have, in today's situation, a significant impact on the company's profitability. I understand, you know, that the shareholders' equity is worth more than 10%, of course. It still makes sense from shareholders' value. In practice, you know, it would limit business possibility, you know, for some bigger players, potentially higher, you know, higher investments in the portfolio purchases. Understood. Thank you very much for taking the question. Congratulations on a very strong result to you and the entire management team, please. Pleasure. Thank you very much. Thank you. Thank you. We have no further questions today, so I'll hand back over to the KRUK team for any closing remarks. Michał, before- Thank you very much for your time. Michal- Oh, sorry, Greg. Go ahead. Michał, before we close the remarks, just, the two quick ones from my side. As we talked about- Please. -revenues, recoveries, valuations, can we touch upon costs? Your operating administrative costs- Yes. -rose like by 24%, which at higher pace than inflation in Poland. What shall we expect going forward? If you can comment on that. The second quick one, we were very positively surprised by lower than expected financing costs. Well done on your hedges. Mm-hmm. What's your hedging policy going forward when current hedges are expiring? Thank you. Yeah. Okay. On the costs, you know, we are, if I look at the budget that we have, we are almost 100% on the cost budget with much more significant increases in salaries than expected, but less by over 130 people than we budgeted. You have two levers. Yes, there is a significant inflation in salaries, especially in Poland and Romania, but also Czech Republic and increasing, unfortunately, in other countries. We need to keep up with that not to lose good people, so we do increase salaries. On the other hand, we make sure we try to do the job with less people. That's not reduction. It's a result of, you know, mid and long-term improvement processes and automation that allows us to not be as big as we plan. Now, on administrative costs, you probably also see option program costs. I don't remember exact number, but probably something around PLN 8 million-PLN 10 million of additional cost comes from that. We don't have a program. Last year we had a program this year that that's a significant cost. Other than that, you know, cost of IT may be going up, but that is more than mitigated than by better recoveries or lower operating costs. In operating costs, you have a significant increase of legal fees, which is an investment really, which will, you know, pay off very nicely in the future with recoveries. Greg, you also asked about hedging policy. Hedging policy that we adopted and was approved by Supervisory Board gives us a firm, you know, range of flexibility. You know, it's worth remembering, we don't hedge our open position in Romanian lei because it's too expensive. We do have some obligations to hedge some positions in euro. If we didn't make these contracts, we would still hedge some of them. Today, we are below this hedging limits. This strategy for hedging is as long as the differential between the interest rates in Polish zloty and euro will be so big, and as long as we still have a net open position on euro, if we issue Polish debt, we will be looking into ways to swap it to euro because it will be beneficial for us. Limiting our exposure to euro, the zloty, foreign exchange risks, and also saving a lot of money on the debt cost. That's something we will do. We will do it unless we are constrained with the banking limit, because each such transaction requires the bank to approve it and it's equivalent of a debt instrument that is approved by the banks' committee. We have significant exposure already with the banks in Poland, so it could be also that at some point we say we'd like to, but unfortunately it's not so easy or not so fast because these banks are already on their limits. Hopefully, that doesn't happen. It's also something we need to do. So far in this presentation, we're writing that a relatively small percentage of our debt is now sensitive to change of WIBOR of the Polish rate after this transaction. Thanks for the explanation. Unless there are any other questions, I think we are good for closing comments. We have no further question. Thank you, Greg. If we have no further question, then thank you very much for your time. We remain concentrated on the business, on improving our processes. That eventually I'm sure will lead to good sustainable profit growth in the future. Thank you, and hope to see some of you at face-to-face meetings later this year. Goodbye now.