Earnings call transcript: Axaktor sees revenue surge in Q4 2024

Axaktor reported a significant increase in gross revenue for the fourth quarter of 2024, largely driven by a portfolio sale in Spain. Currently trading at $18.96, InvestingPro analysis suggests the stock is slightly undervalued. The company's financial performance showed mixed results with some positive operational trends, but challenges remain in the macroeconomic environment. With a market capitalization of $135.8 million, Axaktor has demonstrated strong momentum, gaining over 90% in the past year.

Key Takeaways

• Gross revenue rose from €85 million to €161 million in Q4 2024.
• Organic revenue declined by 4%.
• Cash EBITDA increased significantly, from €55 million to €130 million.
• Return on Equity for 2024 was -19%, excluding revaluation effects.
• The company plans future investments in the range of €100 million to €200 million.

Company Performance

Axaktor's overall performance in the fourth quarter of 2024 showed a substantial increase in gross revenue, primarily due to a strategic portfolio sale in Spain. While organic revenue declined by 4%, indicating challenges in maintaining growth without asset sales, InvestingPro data shows the company maintains a healthy gross profit margin of 46.2%. The company achieved a strong increase in Cash EBITDA, reflecting improved operational efficiency. Trading at just 0.31 times book value, the stock appears attractively valued despite profitability challenges. InvestingPro subscribers have access to 8 additional key insights about Axaktor's financial health and growth prospects.

Financial Highlights

• Gross Revenue: €161 million, up from €85 million year-over-year.
• Cash EBITDA: €130 million, up from €55 million year-over-year.
• Return on Equity: -19% for 2024.
• Equity Ratio: 26%.
• Available Liquidity: Over €100 million.

Outlook & Guidance

Axaktor expects to invest between €100 million and €200 million, although it anticipates operating at the lower end of this range. Analyst consensus from InvestingPro suggests optimism about the company's prospects, with price targets ranging from $18 to $21. The company aims to achieve full collection performance and plans to refinance its ACR03 bond in 2025. Additionally, Axaktor is focused on diversifying its bond maturity profile and continuing cost control initiatives to enhance operational efficiency. For comprehensive analysis of Axaktor's financial health and growth potential, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Yoni Salis noted, "We believe that we have now done a substantial evaluation and we believe that it should be sufficient to reach the curves going forward." He emphasized the company's efforts to improve the situation, stating, "We are fighting every day to improve the situation."

Risks and Challenges

• Macroeconomic pressures in European markets, particularly in Germany, pose a challenge.
• The secondary market for non-performing loan (NPL) portfolios is becoming more active, which could impact pricing and competition.
• The company's negative return on equity indicates ongoing profitability challenges.
• Axaktor faces potential risks in maintaining operational efficiency amidst a challenging macroeconomic environment.

Q&A

During the earnings call, analysts focused on the potential for portfolio write-downs and the company's strategy for future investments. Concerns about the capital structure were addressed, and the improving performance of newer portfolio vintages was highlighted as a positive development.

Full transcript - Acres Commercial Realty Corp (ACR) Q4 2024:

Alex, Call Coordinator: Hello and welcome to the Exacta presentation of Q4 twenty twenty four results. My name is Alex, and I'll be coordinating the call today. And I'll hand it over to your host, Yoni Salis, CEO, to begin. Please go ahead.

Yoni Salis, CEO, Axaktor: Good morning and welcome to Luxor's fourth quarter presentation. Together with me, I have our CFO, Nina Mortensen. This presentation will be divided into four Good morning and welcome to Luxoftur's fourth quarter presentation. Together with me, I have our CFO, Nina Mortensen. This presentation will be divided into four parts.

First, Good morning and welcome to Axoctor's fourth quarter presentation. Good morning and welcome to Luxaktur'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 q four highlights.

Then Nina will present the financial update before I give an updated outlook. Finally Good morning and welcome to Axactors' 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, we round off with a Q and 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 twenty twenty three,

Alex, Call Coordinator: up

Yoni Salis, CEO, Axaktor: from €85,000,000 to €161,000,000 in 2024. This large increase is explained by the previously announced portfolio sale that was conducted in q four. More about that later. Adjusting for this transaction, the revenue declined four percent year over year. However, it is worth noticing that the three PC revenue increased by 10% year over year on a like for like basis.

Cash EBITDA ended at 130,000,000, up from 55,000,000 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 €104,000,000 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 up negative 19% for 2024. Excluding the revaluation, the return on equity was 6% for the year. Axancto still has a solid balance sheet with an equity ratio of 26% after the revaluation. In addition, we have more than 100,000,000 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 evaluation primarily can be explained by the long lasting soft macroeconomic environment, it is natural that all sector 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% in Q4 compared to in 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 restructuring. 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, etcetera. A good place to start would be to have a look at the balance sheet. If you do that, you will see that the sector has a very tangible asset side, probably the most tangible in the industry, where only 5% of the balance sheet is good, though. Further, close to 90% of the balance sheet is either portfolios, repossessed assets, or cash.

Even though revaluation like the one we announced today has reduced the book value of the NPL portfolios, Akstatos still have a rock solid equity ratio of 26%. In addition, we have more than €100,000,000 in liquidity that could be used for either bond buybacks or portfolio investments. As you can understand, Absaxtel is in a good position to handle all the coming debt maturities and prolongments 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 €80,000,000 in cash. The price was 102% of book value, and it was a true sale to our competitor. Hence, no continued servicing or servicing fee that impacted the sales price. We believe this transaction visualizes Axarcto'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 two years in the sub two 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 and build 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 our own backlog. 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 ACR three bond that matures in September 2026. During Q4, Axakta acquired bonds in the market for approximately €51,000,000 at 94.2% of par. Hence, we achieved a gross gain of close to €3,000,000 due to these buybacks. AgSaktor now holds approximately €70,000,000 of ACR03. We believe this demonstrates approximately €70,000,000 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 €472,000,000 leaving €73,000,000 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 (EPA:TTEF) remaining bond debt is now €425,000,000 Finally, the total outstanding interest bearing debts by year end was a little shy of €900,000,000 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, first half will show a moderate investment level. Depending on how the bond market develops in general and how the spread specifically for our sector 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 promo processes at the moment. Nina, with that, I'll leave it over to you.

Nina Mortensen, CFO, Axaktor: Thank you, Johnny. So 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 €85,000,000 in the fourth quarter of twenty twenty three to €161,000,000 in the fourth quarter twenty twenty four. 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 €82,000,000 equal to a decline of 4%.

The NPL segment reported a gross revenue of €144,000,000 The segment gross revenue, excluding the sales proceeds, was €66,000,000 a decline of six percent compared to Q4 twenty twenty three. The triple C segment delivered revenues of €16,000,000, up 5% for 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. NPL segment delivered a negative total revenue of €59,000,000 for the quarter. The negative total revenue is mainly caused by net negative NPL revaluation on revised ERC curves of €104,000,000 Revaluations came mainly as a result of continued challenging collection environment across all ex sector 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. 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 €11,000,000 in the fourth quarter. Please turn to the next slide for comments on the development on the triple C segment. The triple C revenues ended at €16,000,000 for a 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 triple C business is performing particularly well, with solid growth from new sales within the banking and finance segment, a key focus area of Axacto'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 BPC business closures. This led to decline in contribution margin from 46% to 44% in the fourth quarter of twenty twenty four. The underlying operational profitability is in a positive trend with the full year margin increasing to 38% from 36% in 2023 without adjusting for a 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 €43,000,000 while the EBITDA was minus €74,000,000 Cash EBITDA ended at 130,000,000 for the fourth quarter, up from €55,000,000 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, we'll look at the development in the return on equity. With the adverse impact from the MPL revelations in the fourth quarter, the return on equity for the full year 2024 ended at minus 20% on a fully consolidated basis. And at minus 19% ROE to the shareholders.

Despite the negative result for the year, Axapto still have a robust financial position with an equity ratio of 26% and a comfortable liquidity position with approximately €100,000,000 available in cash and headroom on the RCF. Moving on to 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 and bell investments for the period 2024 to 2026 should be in the range of 100 to €200,000,000. In 2024, Axaptor invested €128,000,000 well within the target range.

Secondly, the annual dividend payment should be within 20 to 50% reported net profit. As net profit for 2024 was negative, dividend payments are not applicable for 2024. Next (LON:NXT) is a target of raising 12% ROE in 2026. And despite the 2024 result, we stay committed to these targets. Finally, it is Assaftor's ambition to be at or below 3.5 on leverage by the end of twenty twenty six.

The leverage ratio at the end of twenty twenty four was below target at 2.7. I'll now hand it back to Johnny for some comments on the outlook.

Yoni Salis, CEO, Axaktor: Thank you so much, Zena. Regarding collections, we expect higher collection performance after the negative evaluation 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 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 1 to €200,000,000 on an annual basis. Our pan European position continue to give us valuable access to attractive and tail 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.

Alex, Call Coordinator: Okay. At this time, we currently have no registered questions. So I'll hand back to Jonny Solis.

Yoni Salis, CEO, Axaktor: Yes. Thank you. So we have a few questions on the chat here. So I'll start off with the first one. What was the ordinary operating collection for q four?

And the number is €65,600,000. And you could find that on the page seven of the report under the financial chapter, under the revenue under the financial chapter. Second question, what was the nonrecurring expenses and operating expenses in q four? And we don't disclose that number, but it's a relatively moderate one. And I'll follow-up on this.

Was, was it connected to the portfolio sales? And yes. The vast majority was, was in connection with the portfolio sales. More specifically, advisory cost most of most of it. And then we have a second question here.

Could you please give some flavor on the significant shortfall in interest income in Germany before credit loss? And here I assume that, since it says per definition, it's not possible to shortfall on interest income. But, but I guess it's the shortfall against the on collection, against forecast. And the flavor to, so to speak is that this is due to, the financial situation in Germany, primarily, the, I believe the country is still in recession, but also here it's worth to add that we did during 2024, we did substantial cost cut initiatives in, in Germany that did create some operational issues that we have been handling during the fall and, and, the situation is now under good control. And, also the question about how will this going forward?

Well, we have also adjusted curves in Germany, and we now expect, in Germany as for the rest of the countries to be at 100%, collection performance, plusminus, going forward. Is there any risk of covenant breaches now? And the short answer to that is, no. How did you sell who did you sell the portfolio to that is not disclosed, so that will not be disclosed. But I've said earlier that it is a competitor, so it is a true sale.

So, but I cannot disclose which one. Hi. Could you share the EBITDA generated by the portfolio sold in Q4? No. We don't share that information.

Do you have any guidance of potential revaluations for 2025? No. We don't, where, where do you trend in January on collections? We don't guide during our quarter. So, 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. So no, no, they don't want to be paid down, as far as I know. Can you tell us a little about the output for collections in q one twenty twenty five? We don't give more guiding that we already do in the report.

We have adjusted the curves and we, 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? Well, in the documentation today, there is a possibility to extend the RCF with the by including more, more banks. But, it's, so it's an option, but that's not something that we are working on currently.

So, we expect 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 credit committee approval, but it will be on the same documentation and the same margin levels, and so on. Question is, will you do more bond buybacks? Yes. So that we have said that, in the in the presentation, like I said, we have more than a hundred million euros available for liquidity. It could be used both to bond buybacks or to buy,

Lars Dusser, Analyst, Deutsche Bank (ETR:DBKGn): portfolios.

Yoni Salis, CEO, Axaktor: Yes. That was all the questions that we have received. I don't know if the operator has received any incoming calls.

Alex, Call Coordinator: Currently no registered questions. Oh, apologies, we do have one. We have a question from Lars Dusser from Deutsche Bank. Your line is now open. Please go ahead.

Lars Dusser, Analyst, Deutsche Bank: 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 and the cash EBITDA at the same time benefits from the asset sale proceeds, right? Because you are capturing them, it's flowing through the collection numbers. So okay, fair enough.

I can strip out these roundabout $80,000,000 of asset sale proceeds from the reported cash EBITDA. But then what is the pro form a 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?

Yoni Salis, CEO, Axaktor: No, unfortunately not.

Lars Dusser, Analyst, Deutsche Bank: Right. Right. And then if I look for modeling purposes, if I look at ERC, I see that year one ERC now in Q4 is down to $258,000,000 which is roughly $70,000,000 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 100,000,000 to 200,000,000. That would be the next question basically.

Yoni Salis, CEO, Axaktor: Regarding the investment level, we have said that we will be in between 100,000,000 to 200,000,000. And then I also said during the presentation that this year, we will most likely end up, in the lower range of the interval. And that is because, of several of our priorities, deleveraging is one of them. So we have said that until we have a little bit better control of the ACR03 maturity that matures in September 26, we will be a little bit careful with investing. But we don't know exactly, of course, where we will land.

I think my personal opinion is that I think that we will be able to refinance the bond. And we have said that we will do it during this year. So most likely just before or just after the summer. And I think we will be able to refinance it at attractive margins and that we will roll part of it. And that will open up the possibilities to also invest quite substantially more than our replacement CapEx for 2025.

Lars Dusser, Analyst, Deutsche Bank: Right. So on my numbers, right, I mean, you don't disclose GMM, but 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, right? 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.

And then I have acquisitions or portfolio purchases against that multiplied by the GMM, basically ERC acquired. And maybe you can help me there, but like I get to a level of pretty much the midpoint of your range, like you need to invest $150,000,000 or so to keep ERC steady. And hence, 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?

Yoni Salis, CEO, Axaktor: 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. I'll have some time to think about. I don't have a clear answer to you on the phone now, unfortunately.

Sorry.

Lars Dusser, Analyst, Deutsche Bank: Right. Right. And then 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? Like 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, but like if macro remains as it is, is that your expectation?

Yoni Salis, CEO, Axaktor: 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 or evaluations positive or negative? Of course not. Of course not.

That that's impossible. No one can in the industry, but we believe that we have now done like you say, we have done a substantial evaluation and we believe that it should be sufficient to reach the curves going forward.

Lars Dusser, Analyst, Deutsche Bank: Got it. Got it. And then maybe last but not least, right, I mean it's obviously the challenge the entire industry is facing and you mentioned that two peers have already gone through A and 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 that your cost of capital or your cost of funding will be above your return of invested capital, right? Like what makes you confident that you can start again generating excess returns?

And what makes you confident that you can refinance at attractive margin based on what we are seeing at the moment basically, right? Like do you think like 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, you know, being in runoff is not something I think John will be fond of.

And clearly shareholders want to see some sort of value creation and growth going forward again, right?

Yoni Salis, CEO, Axaktor: Well, that's, that question has a lot of elements to it. So first of all, we do more than just NPL. So if you look at our three PC business, it grows, substantially. For we have strong beliefs that it will continue to grow, close to double digits in, in 2025 at attractive margins. So that will certainly help.

The right issue you could just forget about. There's no need for any right issue. We will have the opportunity to borrow in the market. And if you compare to what what you don't sit on of information that we have is that we see the the returns on the different vintages. And what I can say is that the last, vintages or '21 to '24 have substantially better, return than the vintages from 2016 to 2021.

So we know that, the new vintages or what, what we understand has much better returns than the average for Axaktor. And that is why you also can see if you look at, the the gross IRR, average gross IRR for the company, we haven't disclosed it. I don't know if we have it in this presentation, but we are we are disclosing it more or less, on the quarterly basis. You will see that the gross IRR on the on the back book has gone from 15%, but now I think we have reached 19%. And this will continue to go up just as we continue to blend the book.

So, I'm 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, obviously industry leading in reducing the cost level. So this industry is about a lot of things. Funding cost is one thing, but it's also about operational excellence and keeping the cost level down where I think we are industry leading and it's about doing the right valuations and having the, 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 it's, 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.

Lars Dusser, Analyst, Deutsche Bank: Right. Right. Look, I just think if this is really now about the front book and the opportunities you speak about there 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? And once of a sudden you have a much lower bar, a much lower cost of capital probably as well and 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. And if there is no dramatic change on the capital structure, we are basically left in limbo, right?

And we really have to hope that the market comes back. And 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 interim where you have 50% or so of cash EBITDA coming from servicing. I mean, you guys generate $55,000,000 free to see revenue or so, right? And we know it's a low margin business, right?

So 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, you know, it's all about the investing business. And for that I feel like, you know, the capital structure maybe could look a bit better to make sure John can make returns again down the line. Yeah.

Yoni Salis, CEO, Axaktor: Yeah. Well, that's, I didn't catch the question there, but yes, I agree. We are working on the capital structure. I think we, there's still potential to improve. One thing that we do is that we try to split up the maturity profile on the bonds.

So So we can be in a position to and I think that will help to 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 our staff, which we have really attractive margins on, I think. And so the mix is not that bad, but 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 costs.

I agree that the PPC is smaller than an interim, but it still is close to 25% of our business. And we have I hear that you say that it's a low margin business. It's not a low margin business in Atakkut, but it's, for the market maybe, yes. But also 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 Sartorius in particular, I think.

We see, so I'm quite positive on the prospects of the CPC also increased volumes. So I think, it helps, it could help quite a bit, I think. But yes, you're right. We are not happy with the shareholder return I don't know. I wouldn't say not just the last two years.

I would say the last five years or even more so. So we are fighting every day to improve the situation.

Lars Dusser, Analyst, Deutsche Bank: Yep. No. Thank you. Thank you very much. That was very helpful.

Yoni Salis, CEO, Axaktor: Sure. Thank you. We have got a few more questions here. And we have one RCF margins. We don't disclose it directly, but I think what, what we have said earlier is that, it's in the, it's more than competitive, it's competitive.

So it's, yeah, I don't think I could give any more flavor to that. What about dividends in 2025? I think it's quite obvious that there will not be any dividends, in 2025 based on 2024 financials. And that is according also to our, policies. Okay.

Yeah. And then 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's the earliest vintage. So it's half of it is 2016 vintage and then, it's approximately 25% on six, seventeen and eighteen vintages. It's not, it's, it's the first portfolios that we acquired in Spain that was booked in two separate companies.

So it's not the cherry picking deal. It's kind of the first portfolios that they bought. Yes. And yes, we sold about the book value. How did you manage to be industry leader in collection cost in a competitive market like Spain?

And how do you see the long standing local players to react? So if you go back to the the very beginning, we did, acquisition in 2015 in Spain, which was the, definitely the best, player in the industry on legal collection. So we, so that was the starting point because in Spain, the legal collection is extremely important. And this was a relatively young company started by two, founders, two, two young lawyers that has spent five years to build up a structure, very cost efficient, but also very effective in legal collection. So that was the starting point.

And then we, we did not buy any, other large companies to add on. So we what we did is that we built it from scratch. So we started off by hiring, Greenfield and set up a low, cost collection center outside Madrid in, in a city called Vaya Berlin. And then we have been really good at just holding back on cost. And then, as in Spain, in Spain, as in all of the countries, we very quickly, went, went through the system side and, and went for standardization.

All kinds of all the systems are off the shelf system. It is no self developed systems and and so on. So we have been really, careful about not building too much, structure. And by what I've also now told them there is there is no legacy structure, so to speak, in in Spain. So that has been, how we have been able to build this position in, in Spain.

And, the other local players. To be honest, there's not so many local players in Spain. It's more when we compete, we compete mostly against other international, players or, against, investment, investment companies from, from The UK, normally. When do you expect dividends? So we don't, we're not gonna guide on the dividends, but we have the policy that that says that we will pay 20 to 50% of, of the result of the previous year.

So I assume if we deliver, a solid year in 2025, it's up to the board to evaluate if they will pay dividends or not in '26, based on the '25. But it always depends on, on several factors. But, but this, the policy is, available for everyone to read. So that was the last question we had. So, with that, I would say thank you all for calling in and have a great day.

Bye bye.

Alex, Call Coordinator: Thank you all for joining. You may now disconnect.

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