Unknown Executive
Management
I will share the presentation. This presentation is available on the website. And during my commentary, please ask questions in the question-and-answer section here in this presentation, and I will refer to them after I complete the commentary to the presentation. So let's start. The 6 months of 2026 meant PLN 555 million of net profit, a solid result. However, you see that there is no growth versus 6 months of last year. So the growth we expect will come in the second half of this year. Cash EBITDA grew healthy by 8%. Our recoveries grew by 5%. Our assets grew by 12%, which means there will be more revenue growth from those assets in the future. The business is indebted at similar level like last year, 2.6x to a healthy level for representing still a potential to increase if we need it. So overall, the second quarter and 6 months, we believe was solid results, although we hope for somewhat better results. One of the reasons why this result was not better was depreciation of the Romanian currency versus the euro. Another reason was that we planned somewhat higher recoveries, not significantly, but a small 2% higher recoveries. And there is no one significant reasons why we wouldn't achieve it, but the fact is we missed some of those recoveries. However, if you look at the recovery plan, it was healthy at about 5% of the active forecast, the so-called accounting forecast. So no need to worry about the possible negative revaluation. The question is what is the upside? How much more can we recover above [indiscernible]. If you look at investments, we secured about PLN 860 million of new investments. This is still not even half of what we expect to invest this year. We sustained our expectation that we will be able to deploy about PLN 2.5 billion in portfolio this year. However, with our comment on the market side, the market is competitive. Business results and the dividend payout of about PLN 20 per share meant that the business had a 19% return on equity. You'll see the revenue growth, which is relatively insignificant. But as I said, second half of the year will be better. You see lower costs versus last year. Specifically, legal costs are lower, and this is a consequence of certain life cycle of legal costs where we intensify sending cases to the legal system at a certain point of time of owning portfolio later on recoveries grow or sustained at certain level, the costs drop more cases that are sent to the court and the margin, the EBITDA grows nicely. The financial cost decreased, and this is a result of the effect of the hedging instruments, which played to our advantage in the 6 months, we had a gain of about PLN 53 million. So relatively high [indiscernible]. The business is well capitalized. The indebtedness is contained. The business shows a healthy growth on assets, as you see here on this slide. And just to remind you, apart from business as usual, the company is conducting 2 major transformational projects. One is the replacement of the IT system, which really is about process engineering and IT system replacements. We are advanced more or less as planned in this project. An important milestone was achieved by the company in July when MVP, so minimum viable project product for the new system in Poland was released. So first batches of a few hundred cases went through the process and now we are learning on this on this exercise and improving what needs to be improved. So things are going well, although this is a difficult and very complex project. And the second initiative is our reorganization into becoming alternative investment fund sometime in 2027, possibly second half of this year, and this process is also going on plan. Let's take a look at the results per segment. So this is a summary slide, which shows where we are. In terms of investments, this PLN 864 million is a growth versus last year, but this is somewhat below our expectations. We hope we will be able to achieve much better results in the second half of this year. Therefore, we sustain this guideline of PLN 2.5 billion, but we want to tell you the market remains competitive, especially in Poland and Romania. So the risk is rather on the downside. It's lower -- it's less likely that we will exceed this target and it's somewhat more likely that we will have some shortage versus this target if we decide as we did in the first half of this year, not to compromise on the IRRs on the expected returns on portfolios, which is the [indiscernible]. Recoveries were strong, but we hope there would be a few dozens more than the results you see. The revenue was somewhat negatively affected by the depreciation of [ RON ] that cost us roughly PLN 50 million in revenue [indiscernible]. What I'm very happy about is the significant improvement of recoveries and profitability of the Spanish business in second quarter. I think we've gone a long way from January 2026 to today, the legal process, how we managed the results are much better today than they used to be as expected as we were communicating to you after first quarter of this year. Therefore, we are ready to come back to buying more portfolios in second half of the year. It's also good to see that all of our markets were profitable if you look across the board here on EBITDA. Poland showed a healthy growth. Romania showed good profitability, but depressed by the depreciation of the currency. Italy showed a very nice growth, I mentioned Spain. France is not doing very well after very successful amicable process now the bailiff process continues to be somewhat disappointed with this result. But again, this is early stage. We are learning what to improve when we start to build our operational presence possibly sometime next year in France. The cash flow generation has been very strong as evidenced here by this almost PLN 0.4 billion of cash. Let's look now at the market by market. In Poland, the volume of portfolios offered on the market was relatively small, this PLN 3 billion. However, these were portfolios of high value. So there were not many secondary markets, much cheaper transaction, but more bigger banking type portfolios, which represent high recovery potential and command high prices, but also competition for these portfolios were high, and this is evidenced by this price of 34%. In this quite competitive environment, we did not compromise on the returns, and we decided to give up some of the portfolios. And as a result, our market share is lower than historically. We hope the second half of the year will be better for us in Poland. The results were very good for the business. As you see here, recoveries, revaluation one of the highest in the past couple of quarters, and we're quite happy with the underlying profitability. So it also shows you being a big business in Poland, but also in other markets, we can afford not to participate quarter-to-quarter with cyclical changing competitive environment. We can press the gas pedal in less competitive market and press the brake pedal in more competitive markets. And this is how we optimize deployment of our capital in Q2 as usual. In Romania, the supply was similar to what it was last year. The market also offered usually the big banking portfolios. And again, as similar as in Poland, competition level was quite high. And this is evidenced by this high price versus nominal 46%. We had about 40% share in that market in the 6 months of the first 6 months of 2026. Results were depressed by the depreciation of RON that goes straight into the P&L line as you see here, of course, despite that, the business was still quite highly profitable, but we hope this revaluation, the depreciation of the currencies was a one-off event that happened exactly when the government lost the majority -- lacking from the majority of the parliament. The issue is not resolved yet. We don't know whether we'll be heading towards early elections in Romania or there will be a new majority forming a new government without the elections. We don't expect Romania will appreciate, but we also have no [indiscernible] appreciations will become equally [indiscernible]. Equally, relatively I would say, similar level of supply than in the past years. As you see here, much lower price versus nominal, which is mostly driven by quality of this portfolio. It's lower potential for recoveries, but also to some degree, lower competition on that market. That's our relative assessment compared to Poland and Romania. And you may see that on that market, we took advantage of the benign competitive environment and majority of the market with 3% to 5% market share, and we're very happy with. And the results are solid in terms of recoveries, you can see revaluation, which is relatively high for Italian market compared to previous quarters and also good profitability. In Italy, apart from steady supply on the primary market, we may also look at some secondary market deals, which may be interesting for us. So apart from this relatively stable supply on the primary market, there are also some opportunities for us to increase our deployments to participation in the secondary market. In Spain, in terms of market, it was small. You can see about PLN 300 million deployed in that market in consumer unsecured only, very low prices. So also showing that the portfolio that was sold was rather of low quality. We started to buy some portfolios in Q2, investing there not much and having 80% market share, but we know already we will be more active in the second half of this year after the results improve and we have more credibility now to see that our improvements in the process and if improved, it is still there, it's visible. It's confirmed by 2 quarters of results and also there is more stability in the real system in Spain that we observed. And you can see a nice improvement of results on EBITDA and the gross profit and also steady growth of recoveries in the environment where we didn't add much portfolios and our value of portfolios also did not grow. So hopefully, whatever problems we've had in Spain, the problems are already behind. And if you ask me, can we still improve of the performance in Spain, I would say, yes. There is this potential. I don't know when it will come whether in the next few months or the next few quarters, but we see potential there for further improvement, especially on the deals. And other markets, just to remind you, this is France, the market that we will be developing and this is the remnants of our assets in Czech Republic, Slovakia and Germany in the markets we're exiting or we have already exited. As I mentioned in France after a very good performance on the amicable part, we continue to see relatively weak results on legal process. This is not significant for the results. It's a significant lesson, of course, for the future for what we can improve in the process and what data we collect. But it's hard to say that we'll be able to use much of that knowledge only when we start to build our operational presence in France, which likely will not happen this year, but hopefully will happen in the following year. Our lending business performed relatively well with 27 million of EBITDA. Just to remind you, we have 3 lines of lending business, one line in Poland and one in Romania startup with the lending assets, the little lending assets we had in Romania, and it's now starting on the open market for the first couple of months to an end. We are in the middle of a marketing campaign, and we have good ambitions to grow our business there in Romania, confident copying legal practices from Poland and also adapting to Romania with new conditions. The business is profitable. The Romanian business probably will be loss-making this year as expected as we incur start-up costs and marketing costs. But hopefully, in 2 years, it will be also profitable market [indiscernible]. So overall, good results with some pinch of salt that we did count on them being somewhat better. We expect a better second half than the first half in terms of profitability. But please bear in mind, the biggest sensitivity on whether we'll grow by this or 1% for the full year will be whether our recoveries will be 2%, 3% smaller or higher versus our plans. We will put all the efforts to make the best results possible. The business is well funded with good access to debt. Our dividend policy has in place we are changing our infrastructure and chemical infrastructure, our legal infrastructure to allow the business to continue to grow for the next 5 years. Thank you for listening to this commentary. Now I'll be very happy to take your questions.