B2 Impact ASA ($B2I)

Good morning, everyone. Welcome to the Q1 presentation. Earlier this year, we presented our financial targets, and I'm pleased to announce that Q1 marks another successful quarter, and we are tracking ahead of the targets. The results clearly demonstrate the strength of our strategy, the quality of our portfolios and our disciplined approach to investment and capital allocation. Not at least, it demonstrates the implementation of technology and AI and the strong performance by our operations throughout the group. I would like to repeat the message. We aim to remain a solid company with a well-balanced capital structure. This enabled us to combine attractive dividend yield with solid growth and moderate leverage in our view, an optimal combination Importantly, the market is large, and the strategy gives us the flexibility to continuously prioritize and select tools that fit our business model and meet our return requirements. I would also like to repeat that our strategy places us in a strong position to consider larger opportunities as they arise in the market. We do hope this presentation clearly demonstrates that B2 Impact will continue to deliver high return to the shareholders. We continue to deliver strong momentum across the business. The results that clearly demonstrate the strength of our strategy, the quality of our portfolios and disciplined execution by our teams. Looking at the Q1 highlights, we can present strong results across all our key metrics. Earnings per share growth of 53% and operating expenses down, a strong collection performance of 14% supports a very conservative ERC. High investment activity year-to-date dividend for '25 or NOK 1.9 to be paid out June 30. In summary, strong development in all key financials and up from last year. With this EPS growth, high level of investments and low leverage, we are in a very strong position. The high activity in the first quarter has continued into the second quarter. We have looked NOK 1.8 billion invested and committed year-to-date and we are trending ahead of our full year investment targets. Importantly, the market remains large and attractive across our markets. Our strategy gives us the flexibility to continuously select portfolios with best risk adjusted returns. Our pipeline is diversified and support our full year target. Unsecured ERC growth of 12% is a strong development. With our performance in collections, the action ERC is sustainable, higher, and we remain confident that the real value in our book exceeds what you see in the reported numbers. And that will continue to have a positive impact going forward. The unsecured collection performance of 114% is due to excellent execution and strategy by our teams and operations. We see a significant increase in unsecured collection per FTE year-over-year. Thanks to our focused investments in technology, the number of FTEs is continued -- FTEs continues to trend down. While collection per employee continues to trend up. This positive trend is expected to continue and investments in technology remains 1 of our top priorities. We are accelerating the deployment of AI to corporate automation. The potential significant and B2 Impact is well positioned to adapt to new technology in effective way. The return is highly scalable cost base with the capacity to handle increased portfolio volumes. This is probably the most important development for our business going forward. We wanted to repeat our financial targets and our clear focus on shareholder distributions, combined with a disciplined approach to credit risk. Our financial targets clearly support continued growth in distributions. We are targeting EPS growth of at least 30% over the period return on equity above 60% within the period and a leverage ratio below 2.5, while targeting total investments above NOK 10 billion. Based on these targets and our capital allocation priorities, we expect total dividends of NOK 9 per share for the period, 25% to 28%. This is a clear demonstration a whole strong earnings growth, disciplined risk management and capital efficiency translate directly into attractive and sustainable returns for our shareholders. I will then hand over to our CFO, Andre for more flavor.

Thank you, Trond Andreassen. Good morning, everyone, including all our colleagues listening in this morning. We are pleased to report that we that our financial performance is tracking well ahead of our targets. In the first quarter, we continued to build on the key value drivers we have communicated over the recent quarters. growth in unsecured collection, sustainable, high collection performance, highly scalable cost base and lower cost of funding. Briefly before we go through the financial details, I want to highlight that in the quarter, we saw a negative currency impact on the P&L of around 2%. And close to 6% on the balance sheet following a strengthening of the Norwegian kroner compared to euro and list. Unsecured collection performance improved further in the quarter, coming in at 114%. And we continue to see the same trend also so far in the second quarter SP1 We delivered double-digit growth in both unsecured collection and ERC with 10% growth in collection and 12% growth in ERC or 2 percentage points higher in constant currency. Operating expenses were down 4% despite the 10% growth in unsecured collections and inflationary pressure. This clearly demonstrates the scalability of our cost base and our long-term efforts in driving efficiency through automation. The result of this is an EBIT growth of 24% and an EPS growth of 53% in the quarter compared to the same quarter last year. Interest costs continued to trend down in the quarter, supporting the strong EPS growth. And our solid funding position has been confirmed by an improved credit rating in the quarter, coming in at BB. On the investment side, we have signed NOK 742 million in the first quarter and have, as of today, signed and committed volume for 2026 of NOK 1.8 billion, providing good earnings visibility for the year. Finally, the Board has proposed a dividend for 2025 of NOK 1.9 per share. And I will come back to our expectations for 2026 later in the presentation. We continue to see a positive trend in our unsecured collection performance across our markets. Despite positive revaluations over the recent years, the performance has increased to 114%, demonstrating that the underlying improvement in performance is sustainable. Unsecured collection, again, grew by 10% compared to the same quarter last year. And this is driven by both growth in investments over the period and the improved performance on our back book. Cash collections from secured portfolios were in line with our expectations in the quarter. We made limited new investments in secured portfolios over the recent years. and have focused our capital allocation on unsecured portfolios, where we have high cost scalability and visibility. The REO book value has come down by 35% compared to the same period last year. Following an accelerated period, accelerated activity in terms of sales. Now this reflects our continued progress in monetizing the secured book and reallocating capital into unsecured portfolios to drive earnings growth. Despite the 35% lower book value, we had real sales of NOK 61 million in the quarter, up from NOK 53 million last year. And coming in at a very strong margin of 47% in the quarter. I will provide some more guidance on the full year expectations when we come to the financial section. Cash earnings over the last 12 months demonstrate our ability to grow the business while maintaining a low leverage ratio. We are currently in a very strong position, where our operating cash flow is supporting double-digit collection growth, attractive dividends, high investment activity all while keeping the leverage at a low level. As you can see on the bottom right of the slide, we have a leverage today of 2x the cash EBITDA. Combining that with our operational -- strong operational cash flow and liquidity reserves, we are well positioned to continue our growth trajectory without issuing any new debt. The scalability of our cost base, we mentioned that a couple of times. I just want to highlight that this is one of the most important value drivers for the recent EPS growth. Operating expenses in the quarter were down 4% compared to the same quarter last year, while at the same time, we're growing the unsecured collections by 10%. The underlying operating expense ratio is consequently trending down, reflecting our long-term focus on improving efficiency and driving scalability through automation. Now the group has spent many years automating operations and the outcome that we see today is that the gross return on our new investments is effectively equal to the net return on the P&L. And this is supporting significantly higher EPS growth than collection or top line growth. Investments in the quarter, as already mentioned, came in at NOK 742 million. Now this is a strong number in what is typically a seasonally slower quarter for investment. Majority of investments were unsecured, and the geographical distribution reflects our approach of selecting portfolios where we have the strongest competitive position and cost scalability. I also want to reiterate that the consistent overperformance. I also want to reiterate the consistent overperformance we see in our unsecured portfolios. There is a notable upside in our current E&C that will support our financials through higher collection performance and positive revaluations in the coming periods. We have further strengthened our financial position and reduced cost of debt during the first quarter. We completed a NOK 200 million tap at the credit spread of 3.22%. And the hedging ratio currently stands at 66% with an average duration of around 2.5 years. Also, our credit rating, as mentioned, has been upgraded to BB recognition of the market's confidence in our credit profile and the consistent financial performance over time. In terms of liquidity, we hold a reserve of approximately NOK400 million in addition to operational cash flow, providing capacity to fund our investment targets without issuing new debt. The liquidity, combined with our strong cash earnings provide ample headroom to also accelerate the investments when attractive opportunities arise. So following up on the financial targets already presented by Trond Andreassen. Just a quick recap. We target at least 30% EPS growth in the periods from 2026 to 2028 with investments above NOK 10 billion in the period and the return on equity after dividends above 16% in the period. On this slide, we have broken down the 3-year financial targets to an indicated target for 2026 and an updated estimate for the full year. Our earnings per share in the first quarter was very strong and is tracking well ahead of last year and also above the full year target. So the current outlook based on what we see in the first quarter and expectations for the rest of the year clearly indicates an EPS that's tracking above the full year target. Return on equity adjusted for dividends is also on track to deliver above the target of 14% during this year. and above 16% during the business plan period. On investments, we have already spent and committed NOK 1.8 billion for this year. Now with an active market and a strong pipeline, we expect the seasonal weighting towards the second half of the year to support investments above the full year target and consequently support further earnings growth going into 2027 and 28. The leverage ratio currently stands at 2x cash EBITDA and well within the target of being below 2.5 billion. We also expect real sales this year of around NOK 300 million, providing additional capacity for investment growth, combined with growth in dividends.

Thank you, Andre. We trust this presentation has highlighted our unique position. After another great quarter, I would also like to express my gratitude to all B2 Impact employees for their contribution to our strong results. We are confident in our ability to deliver continued attractive and increasing returns and remaining well positioned to capture opportunities in the market. The drive within our company is strong, and I want to assure all our shareholders that we are not resting on the success we have achieved. Our results only motivators to work even harder going forward. We have a highly committed organization with strong execution capabilities and a clear focus on creating long-term value. So that, we move into the Q&A section. Rasmus?

[Operator Instructions]

Thank you, AI. We will, as usual, start with the live questions, and I will give the word to Rickard Hellman from Nordea. Rickard, the floor is yours. .

Thank you, and I would like to start to discuss a little bit around the OpEx, which is quite impressive that you are lowering that 1 despite the increased collections. But is it possible to distinguish a little bit between what is automation? What is actually lower collection on secured claims, which I believe we will also lower the OpEx. Yes, a little bit around -- and also increased over collection, which probably also are cost light in that end. Do you understand what I'm trying to figure out here a little bit between the different factors affecting the cost.

Of course, regard. And there's no 100% answer to this question. There are quite many variables in play, as you already pointed out yourselves. But the clear takeaway here is that this is improved efficiency through automation. We are taking down costs in the markets where we're not investing any more in secured to mitigate the lower collections. In the other markets, we are also taking down costs, but at the same time, growing investments. So this is I mean, the clear majority of this impact is related to the scalability of the cost base and automation.

Okay. Yes, I see. And that's good, of course. If we look at servicing, which, of course, I mean, have other factors affecting the profitability. But there appears that you have grown your OpEx despite lower volumes. Is there other things that are impacting this profitability?

So you're referring to the segment note. .

Yes, exactly. .

Yes. So I mean, most of what we do is internal servicing. So this is not related to external servicing and cost increasing. So this may vary from quarter-to-quarter. And this is, of course, it's just internal allocation. So this may vary. So looking at the total, as you already pointed out, the costs are down 4%, while at the same time, increasing collections double digit in unsecured. So this is just based on allocation and has no impact on the total picture. .

Okay. But I guess -- I mean, with automation, you should, of course, also even small improve your efficiency in your servicing leg as well. .

Again, this is our internal business. So it's only based on allocation between the business lines. The total cost of operation is down, while collection is up. So the servicing unit, which is servicing our own portfolios has improved its efficiency in the quarter.

Thank you. It looks like we have no more live questions. We will then move to the questions posted in the feed. We'll start with Frederic Starla from ABG. Question is, you mentioned AI earlier. Could you give some examples of how you use it in your day-to-day work today and how you see your use of AI developing going forward? .

That's a very broad question. And to be honest, quite difficult to give a very short answer because it's very many elements, and it differs from market to market. But all we're talking about at the moment is how can we do things with more quality using AI and how can we save caused by automated processes. And that is all over the place and very difficult actually to point out special areas. I think we can -- I mean, you saw the slide of collection per FTE. This is what we have already done based on automation and AI is just accelerating the automation level we can achieve. So it's just building on what we have already done. And hopefully, quicker, faster and cheaper continue the automation trend that we already see in the business.

Okay. Thank you. We will then move to Jakob Sonoskvich from Sberbank Markets. In Q1 '26, secured year fell 5% quarter-on-quarter to look NOK 26.6 billion despite the quarter's high investments. Could you comment on the factors behind this decline? Or is it primarily driven by currency effects?

So the decline from?

Fourth quarter.

Yes. So I mean, I think seasonality-wise, Q4 is by far the most active quarter in terms of investment. So what you normally should see is that Q1 ERC is either flat or trending slightly down compared to Q4. If you take Audi currency impact, in the first quarter because the Norwegian kroner has strengthened significantly versus euro compared to the fourth quarter. The ERC is actually up by 1.2%. .

Very good. That was all for the Q&A. That's probably a sign that the presentation was very clear. Thank you on Trond Andreassen and Andre for a very good presentation. And we can then just remind everyone that we have our AGM tomorrow and Q2 presentation on the 20th of August. So we look forward to see you all again in the near future. .

Thank you.

Thank you.