Good morning, and welcome to Axactor's second quarter presentation for 2021. This presentation will be divided into five parts. We will start by giving a short recap of who is Axactor before we take you through second quarter main events, followed by the financial highlights. We round off with an updated outlook and a Q&A session. As always, you may ask questions live after I'm done presenting or through the available chat function. Let us move to slide three for a short company introduction. Axactor was established in December 2015 with headquarter in Oslo. Our main focus is on collection and acquisition of non-performing loans from financial institutions, meaning we are both buying non-performing loans and do collection on behalf of banks and other financial customers. Axactor operates in six European countries: Spain, Germany, Italy, Norway, Sweden, and Finland, and we are close to 1,100 employees.
The company is listed at Oslo Stock Exchange, our main shareholder, Geveran, owns approximately 44% of the shares. Please move to the next slide for a quick reminder of our main focus areas. The first five years, Axactor focused on aggressive growth to build scale and market entries to get presence and diversification. Establishing effective and efficient IT and operations was important in order to handle own portfolios and third-party clients in the best possible way. Today, the focus is on profitability, operational excellence, and to grow scale and size in existing markets. The goal is to improve return on equity and to create long-lasting competitive cost advantages. Axactor is aiming for dividend payments within the next two to three years. Please move to the next page for more details on our strategic positioning. Axactor is pursuing a niche strategy to disrupt the industry on cost to collect.
The main elements of this strategy are the following. We have carefully selected the six markets where we believe to have the best risk-reward. These markets have well-developed and functioning legal systems for debt collection, an efficient market for portfolio transactions, and financial institutions that are actively using the 3PC market. Main focus is on fresh business-to-consumer unsecured debt within the bank and finance segment. The explanation is high volume in combination with high average claim size, and the financial institutions are willing to pay for the additional value created by the collection companies. Axactor also clearly prioritize the combination of NPL acquisitions and third-party collection. In addition, to be a product area with attractive margins, the strategy gives scale advantages without requiring significant capital. It offers access to relevant data. It has a clear diversification effect and strengthened customer relationships.
As you can see, the result when it comes to the cost position has been satisfying. Here, it is important to focus on the trend as we obviously have higher cost to collect versus income in the first years of operations due to scale disadvantages. We expect the ratio to continue to go down over time as we gain more scale effect, and we consider our cost position to be one of our key competitive advantages also in the future. That was just a short recap of Axactor, and I will now move to slide seven for main events in Q2. As many of you already know, Q2 and Q4 are normally the two strongest quarters from a seasonality point of view. Q2 this year was no exception. We can note positive development in Q2 for both quarter-on-quarter and year-on-year comparison. Especially year-on-year shows significant improvements.
Please bear in mind that Q2 last year was a weak quarter due to high negative impacts from the pandemic. The only figure that is on the low side is the NPL investments. I will come back with more details later in the presentation, but the explanation for the low investment level is twofold. Firstly, there has been a limited number of transactions in the market. Secondly, we have seen examples of price pressure on portfolios in certain markets, particularly in Spain. I would like to underline the strong cash EBITDA level of EUR 66 million, and we are also pleased to deliver a 7% annualized return on equity to shareholders. One-off effects were more or less canceling each other out. On the negative side, we had a EUR 0.9 million in restructuring cost in connection with our cost reduction program.
Further, we had a negative effect of EUR 0.6 million on amortized loan fees in connection with early repayment of the Nomura credit facility, but we also had a EUR 1.5 million gain on unrealized effects. As mentioned during our Q1 presentation, Axactor has been working to establish credit rating. Please move to the next slide for details. We are pleased to announce credit ratings from the two industry leading agencies, Moody's and S&P. For us, this represents a milestone in our financial history, and we believe this is an important stepping stone towards attracting a larger and more international investor base, and by that, further reduce our cost of funding. Moody's ended up at B1 with a positive outlook, and S&P with a B rating with stable outlook. For Axactor, this is just the first step.
We will continue to work on the necessary parameters to improve the ratings over the next years. Please turn to slide nine for details about the Cost Reduction Program that was introduced in December. The program is targeting an annual saving north of EUR 5 million and most of the cost and savings were implemented during first half. We expect full saving impact from Q4 this year. The total cost ambition has been increased slightly from EUR 4.8 million to EUR 5.2 million, and the savings are materializing quicker than first anticipated. The corresponding restructuring costs are estimated to increase by EUR 0.3 million. Two of the most important improvement initiatives implemented during second quarter was outsourcing our car repossession services in Germany and home shoring of back-office functions from the Baltics to Finland. Please move to slide 10, where we will share more details on our gross IRR levels.
As part of our work to increase and improve transparency, we would like to share more details on gross IRRs going forward. Let me start with a short definition. Gross IRR is calculated using estimated monthly cash flows over a 180-month period. Gross IRR is defined at the internal rate of return that makes the net present value of the ERC equal to the NPL book value. The advantage of looking at gross IRR instead of net IRR is that we are clearing out uncertainties regarding cost differences between companies, as it is purely based on the book value and ERC. If we look at Axactor's current NPL book, the gross IRR is 15.8%. The relatively low level is reflecting the fact that Axactor acquired significant volumes in the period 2016-2019, when the market prices on portfolios were historically high.
If we look at the estimated gross IRR for the volumes we have acquired in the first half of 2021, it increases to 22%. If we look at the committed forward flow contract, we expect a gross IRR of 23.2% at a CapEx volume of approximately EUR 160 million. As you can understand, the interesting finding here is a strong improvement from current book to new book, which is actually up 47%. We expect the market prices to stabilize in the area between 18%-22% in our markets, and over time, our book will gradually become more profitable. We hope this new information is useful for investors and will make you more able to understand the future value creation in Axactor. Please move on to slide 11, where I will give a short update on ESG.
As we emphasized in Q1, ESG related topics has a high priority for Axactor. Since then, we have had two developments that we would like to share with you. Firstly, Sustainalytics has ranked Axactor second best out of 151 companies within consumer finance and among top 5% of companies globally. Secondly, we have signed up on UN Global Compact. UN Global Compact is the world's largest corporate sustainability movement. It provides a universal language for corporate responsibility. By signing up, we continue to demonstrate our public commitment towards sustainable development. As I said last time, Axactor is determined to continue to drive ESG improvements and contribute to raise the bar for the industry. This was the last item we had on the main event. Please move to slide 13 for second quarter financial highlights.
If we start with the development in gross revenue, we are pleased to deliver EUR 95 million corresponding to a healthy 34% increase compared to the same quarter last year. Q2 last year was of course challenging with several weeks of lockdown on legal systems in Spain and Italy, in addition to other negative effects from the pandemic. The comparison might not be the best. Although not fully back to pre-pandemic levels, we did see an increase in all three business segments from previous quarter. One last point I would like to mention is that the gross revenue for Q2 is normally seasonally strong, partly because of tax returns for debtors in several of our countries. Let's now look a bit more into detail on each of the business segments, starting in NPL on the next slide.
In Q2, the NPL collections continued to normalize, and we delivered an all-time high gross revenue for the segment. This translates into 27% revenue growth year-on-year, despite the fact that we have a marginally declining book value on NPL. I would also like to underline the fact that the portfolio amortization rate has increased to 40% and the contribution margin was at a healthy 79%. On the next page, we will give more details on which assumptions we are taking regarding the collection curves going forward and show the performance in Q2 versus active forecast. For the second quarter, we performed in line with our active forecast on unsecured NPL and the collection performance came in at 99%. As you can see from the graph, we do expect a lower cash collected in Q3 due to seasonality.
We are, however, satisfied with the accuracy in the actual performance versus active forecast for the quarter. Axactor continues to have a conservative approach when it comes to active forecast and revaluations. On the next page, I will give some more comments to the NPL CapEx deployment. As I said in my introduction, Axactor had, like in Q1, a modest investment level for the quarter. We have earlier stated that we will show capital discipline and not let us be easily carried away in transactions where competitors with high need for refill of volumes are bidding aggressively. Axactor invested more than maintenance CapEx last year.
This, in combination with the fact that we have been able to adjust our cost base, puts us in a position where we don't have an urgent need for refilling volumes, and hence, we will continue to show capital discipline. With that said, our CapEx will increase going forward. We have significant and increasing forward flow commitments for the coming quarters and into 2023. Axactor has maintained the book values over the last 12 months, and we expect that investments will exceed replacement CapEx for the next 12-month period. Please turn to the next slide for further comments on the 3PC development. 3PC revenues reached EUR 30 million for the quarter, slowly ramping up from Q1. We still see negative impacts related to COVID-19, particularly for Spain and Italy. However, customer retention during the pandemic has been high, but the volume has been on the low side.
We expect it to reverse as society reopens in the second half of this year. We have seen a positive change in the banks' willingness to sign new contracts, and during Q2, we did sign several large 3PC agreements. We expect this to flow through from Q4 and onwards. Contribution margins are returning towards pre-pandemic levels, ending at 30%. Please note that the contribution margin in the second quarter was burdened with EUR 0.7 million in restructuring costs. Of course, this is much less than the EUR 3.8 million restructuring costs we had on 3PC in the previous quarter. Please, let's move to the next slide for more details on our run-off segment, REO.
As stated, Axactor is not doing any new investment in REOs and it is a pure run-off segment. Given the fact that we are now in the tail of the portfolio, we are very satisfied with the level of EUR 30 million for the second quarter. As in the previous quarter, the prices were a bit disappointing, taking the contribution margin down to -19%. We sold just north of 360 assets and the inventory is down 42% since Q2 last year. The fully consolidated book value at the end of the quarter was reduced to EUR 55 million. Let's move on to the next slide, where we'll present more details on the reported financials.
Total income came in at EUR 66 million, up from EUR 79 million same quarter last year and also up EUR 5 million from the previous quarter. The reported EBITDA came in at EUR 22 million, corresponding to a margin of 34%. Please note that the EBITDA margin was burdened by EUR 0.9 million in restructuring costs.
Cash EBITDA came in at EUR 66 million, up from EUR 44 million same quarter last year, and also up EUR 14 million from the previous quarter. The next slide, we continue with details on elements below EBITDA. The cost discipline is starting to materialize in lower depreciation. Net financial items are showing positive development, please note the two one-time effects. A positive FX effect of EUR 1.5 million and a negative effect of EUR 0.6 million in relation to repayment of the Nomura credit facility.
Net profit after tax came in at EUR 7 million for equity holders and minus EUR 3 million for non-controlling interest due to a negative margin on REOs. The tax rate is still high, excluding REOs, the tax rate is down to 28%. We are expecting further reduction in the tax rate going forward. On the next page, we will look closer at the return on equity development.
It is well known that the profitability on the REOs has been disappointing since the acquisitions back in 2018. The fact that the return on equity during the pandemic has been weak both for Axactor and the industry as such. As we anticipated in Q1, we have again started to see a gap between the two curves where we compare return on equity including and excluding REOs, and expect this trend to continue over the coming quarters. The return on equity might vary quarter by quarter due to seasonality, et cetera. We definitely expect the trend to be positive year-over-year going forward. As we have indicated earlier, Axactor is aiming for dividend payment as return on equity gradually improves. We have not set a hard date for this ambition. Two to three years should be a realistic timeline for the first dividend.
With that said, let us move to slide 23 for an updated outlook. With the COVID-19 situation a bit more under control due to vaccines, but potentially heading towards a fourth wave in several countries, I would like to partly repeat what we said during the Q1 presentation. We believe that COVID-19 impact on business has stabilized, and we do not expect sudden movement in either direction. The pandemic continue to affect our business negatively. Q3 is normally seasonally weaker than Q2, a trend that we expect to see this year, unlike last year when Q3 outperformed Q2 for obvious reasons. We expect return on equity to increase over time, but with short-term fluctuations. 3PC volumes are expected to gradually return to pre-pandemic levels as societies reopens. Our cost reduction program is ahead on both timeline and estimated cost savings.
Axactor will continue to strictly prioritize NPL deals with satisfying profitability, and we are taking a bit more moderate view on the total investment levels of 2021. We still target a CapEx around EUR 200 million, but this is obviously highly dependent on market activity in Q4, and hence CapEx deployment will be back-end loaded. The credit ratings are expected to reduce interest costs on potential future bonds. This concludes the presentation and we will now open for questions. Please remember that you can find more information in the supporting information and appendix attached to this presentation.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. Just to remind everyone, if you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a further pause while questions are being registered. There are no questions on the line, so I'll hand back to our speakers for any closing comments.
Okay. Thank you very much. This is Johnny Tsolis speaking. I'm sitting here with Investor Relations responsible, Kyrre Svae. We will take your questions. So far, we have only received one. The question goes, "How certain can you really be that the IRRs will stabilize at 18%-22%? Will you be buying below 18% if the portfolio is big enough?" If I start with the first part of the question, now looking at what we see in the market today, we are fairly confident that 18%-22% will be an interval where most portfolios will trade at. We don't see any reason why portfolios should fall below 18%. At least with the information we have today, it's not a very realistic scenario. If it happens, Axactor will not be buying portfolios. That's the current view at least.
Again, highly unlikely scenario that we should fall below 18%, especially on the portfolio level, I would say. But, yeah. That is the only question that we have received so far. I guess we close the call. Again, thank you for attending this second quarter presentation, and we wish all of you a great day. Bye-bye.