Quarterly Report • Apr 27, 2017
Quarterly Report
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Figures in brackets refer to the first quarter 2016 for profit comparisons and to 31 December 2016 closing balance for balance sheet items.
Quarter after quarter, we continue to generate profitable growth. This shows that our business model and disciplined investment strategy provide stability and reliability. Jörgen Olsson
CEO
Hoist Finance AB (publ) (the "Company" or the "Parent ") is the parent company of the Hoist Finance group of companies ("Hoist Finance"). The Company's wholly owned subsidiary, Hoist Kredit AB (publ) ("Hoist Kredit ") is a regulated credit market company. Hence, Hoist Finance produces financial statements in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies. In order to assess the operational performance of the debt purchasing and collection operations and to facilitate comparison with our competitors, Hoist Finance supplements its statutory financial statements with an operating income statement. The operating income statement is prepared based on the accounting and valuation principles used in the statutory financial statements, with no amendments or adjustments thereto.
The information in this interim report has been published pursuant to the EU's Financial Instruments Trading Act and Securities Market Act. This information was submitted for publication on 27 April 2017 at 8:00 AM CET.
2017 started off with another strong quarter for Hoist Finance. Total revenues increased 13 per cent and profit before tax was up 50 per cent compared to the same period last year.
The improvement is an effect of last year's strong portfolio growth, profitability improvements in the UK and France, and the fact that our new markets – Spain and Greece – are now contributing to profit.
Return on equity also exceeds our target level for the first time and totalled 21 per cent during the quarter – a year-on-year increase of 3 percentage points.
Quarter after quarter, we continue to generate profitable growth. This shows that our business model and disciplined investment strategy provide stability and reliability.
Europe's economic recovery is expected to continue, and central banks are starting to see brighter times ahead. Sustained recovery means higher inflation expectations and, hopefully, a movement away from the current low interest rate environment to a more normalised environment.
As an entrepreneur, I would really like to see this happen. When a company is penalised for maintaining a sound financial position with a solid liquidity buffer, something is wrong with the macroeconomic incentive structure.
In the low interest rate setting, new and previously unknown investors have moved out on the risk curve in search of returns. While some have been successful, I'm afraid most will come to realise that structured, systematic work with non-performing loans is something that requires specialisation – and this has been Hoist Finance's sole focus for over two decades. We (and probably many of our well-established competitors) view with confidence a situation where liquidity portfolios yield interest and that there is a cost of capital.
Region West Europe continues to improve its profitability and accounts for the Group's second highest portfolio growth over the past twelve months (17 per cent). The UK is Europe's largest market and represents around one-
A leading partner to international banks and financial institutions
third of total transaction volumes.
During the quarter, UK Prime Minister Theresa May decided to submit a formal application to withdraw from the European Union. In all of the uncertainty associated with Brexit, our current assessment is that it will have only a marginal impact on Hoist Finance as a company and on our operations in the country. As part of our risk strategy we are hedging our currency and interest rate positions on an ongoing basis to protect ourselves against short-term FX and interest rate fluctuations. Our operations in the UK are run locally (i.e., without imports or exports), which reduces our dependence on the country's access to the EU's internal market. Even in the event Brexit leads to an economic recession, our business model of long-term, sustainable payment plans has proven to be resilient – not least during the 2007–08 financial crisis.
The market in Region Mid Europe continues to show a strong growth – particularly in Italy, where the share of non-performing loans in relation to banks' total loan stock is among the highest in Europe. Increasingly more Italian banks are realising the importance of focusing on their core competencies and deciding to transfer non-performing loan management to specialised companies like Hoist Finance.
In Region Central East Europe we are seeing the same trends as in the Italian market, albeit at a slower pace. The work done last year to streamline and improve our procedures and systems will continue in 2017. In order to be a long-term player in our market, we need to make regular investments in systems and infrastructure. The management of non-performing loans has traditionally been characterised by contact with customers via telephone or letter. This will in large part
continue to be our working practice, but our success also requires investments in solutions that allow customers to interact with us in channels of their choosing: by phone, in writing, via text message, online or via live chat. We are therefore in the process of developing our systems, starting in Germany – and we will expand this into our other markets during the next stage.
We have built a strong balance sheet over the past few years. A healthy capital structure with balanced leverage is a key element in our long-term focus. As part of this process, the Board has clarified the definition of our CET1 ratio target: under normal conditions, it should be between 2.5 and 4.5 percentage points above Swedish FSA requirements. This gives us more flexibility, while also allowing us to maintain a healthy buffer that exceeds regulatory requirements.
Our long-term perspective also needs to be balanced with short-term growth, and we will be taking additional steps towards our medium-term profitability targets during the year. Our market continues to grow steadily and we are strengthening our relationships with European banks. Our growth forecast for the year remains in place, and we see continued positive growth opportunities in the years ahead.
Jörgen Olsson CEO Hoist Finance AB (publ)
| SEK million | Quarter 1 2017 |
Quarter 1 2016 |
Change, % |
Full-year 2016 |
|---|---|---|---|---|
| Total revenue | 719 | 636 | 13 | 2,627 |
| EBITDA, adjusted | 812 | 734 | 11 | 2,921 |
| EBIT | 273 | 231 | 19 | 935 |
| EBIT-margin, % | 38 | 36 | 2 pp | 36 |
| Profit before tax | 185 | 123 | 50 | 533 |
| Profit for the period | 145 | 95 | 53 | 417 |
| Basic earnings per share, SEK | 1.66 | 1.17 | 42 | 5.07 |
| Diluted earnings per share, SEK 1) | 1.66 | 1.14 | 46 | 4.97 |
| Portfolio acquisitions | 611 | 648 | –6 | 3,329 |
| SEK million | 31 Mar 2017 |
31 Dec 2016 |
Change, % |
|---|---|---|---|
| Carrying value on acquired loan portfolios 2) | 12,783 | 12,658 | 1 |
| Gross 120-month ERC 3) | 21,297 | 21,375 | 0 |
| Return on equity, %4) | 21 | 18 | 3 pp |
| Total capital ratio, % | 16.79 | 16.76 | 0.0 pp |
| CET1 ratio, % | 12.51 | 12.46 | 0.1 pp |
| Liquidity reserve | 5,671 | 5,789 | –2 |
| Number of employees (FTEs) | 1,268 | 1,285 | –1 |
1)Includes effect of outstanding warrants. Following the 1:3 share split conducted in 2015, each warrant entitles the holder to subscribe for three new shares.
2)Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
4)In conjunction with the December 2016 issue of Additional Tier 1 capital, the definition of ROE was changed to exclude accrued, unpaid interest on AT1 capital and the carrying value of AT1 capital in equity.
Unless otherwise specified, all market, financial and operational comparisons refer to first quarter 2016. The analysis below follows the operating income statement.
Total revenue increased 13 per cent to SEK 719m (636), due mainly to growth in Italy, establishment in Spain and profitability improvement in France. Gross cash collections on acquired loan portfolios increased 12 per cent to SEK 1,186m (1,056). Portfolio acquisitions totalled SEK 611m (648) during the quarter, mainly attributable to significant acquisitions in Italy and the UK. Portfolio amortisation and revaluation increased to SEK 523m (483), with portfolio revaluations accounting for SEK 5m (2) of that amount. Net revenue from acquired loan portfolios increased 16 per cent to SEK 666m (576). Fee and commission income
decreased 29 per cent to SEK 21m (30). The decline is attributable to Poland and the UK and was due to a decrease in the scope of collections on behalf of external parties that were part of earlier acquisitions, which is in line with Hoist Finance's strategy. Profit from participations in joint ventures totalled SEK 28m (29). First quarter 2016 benefited from an increase in value of the assets within Hoist Finance's Polish joint venture, while the current quarter benefited from the receipt of SEK 13m in performance-based remuneration for successful collections during 2016 in Hoist Finance's Greek joint venture.
EBIT and EBIT-margin
Profit before tax
Total operating expenses increased to SEK 446m (405), mainly due to more comprehensive collection activities and the establishment in two new markets during 2016. Operating expenses in the new markets (Spain and Greece) totalled SEK 14m during the first quarter, mainly attributable to Spain. Personnel expenses, which remained unchanged on the whole at SEK 168m (169), increased in Italy and Central Functions but decreased in the UK and France due to efficiency improvements. Collection expenses totalled SEK 169m (130). Other operating expenses totalled SEK 94m (93). Depreciation and amortisation of tangible and intangible assets increased to SEK 14m (13), due mainly to investments in IT systems.
Total financial items as per Hoist Finance's operating income statement totalled SEK –88m (–108). Interest income totalled SEK –3m (–2) due to the current interest rate scenario, under which government bonds and similar securities that comprise most of Hoist Finance's liquidity portfolio no longer offer positive returns.
Interest expense totalled SEK –77m (–70) and is mainly comprised of interest expenses for issued bonds and interest expense related to HoistSpar deposits. Interest expense for HoistSpar deposits decreased due to somewhat lower yearon-year deposit volumes. In contrast, interest expenses for issued bonds increased due to issues conducted during the second and third quarters of 2016.
Net financial income is comprised of several components and totalled SEK –8m (–36) during the first quarter. Market value changes for bonds in the liquidity portfolio (one of the components) were limited during the current and comparative periods. Changes in value for interest rate hedging instruments were also limited during first quarter 2017, but totalled SEK –17m during Q1 2016. For currency risk hedging, Hoist Finance expanded its application of hedge accounting as of 2017 and, accordingly, a larger portion of FX hedging results is reported as other comprehensive income. Currency effects in the income statement totalled SEK –9m (–18) during the first quarter.
Unless otherwise specified, comparisons regarding balance sheet items refer to 31 December 2016.
Total assets remained largely unchanged and declined by SEK –11m as compared with 31 December 2016 to SEK 19,139m (19,150). Treasury bills and treasury bonds decreased SEK –679m. This decrease was offset by an SEK 513m increase in bonds and other securities. Acquired loan portfolios increased SEK 123m, due primarily to acquisitions in Italy and the UK.
Total liabilities totalled SEK 16,065 (16,225). The change is mainly attributable to a decrease in other liabilities where collateral received has been repaid to counterparties.
| MSEK | 31 Mar 2017 | 31 Dec 2016 | Change, % |
|---|---|---|---|
| Cash and interest-bearing | |||
| securities | 5,713 | 5,877 | –3 |
| Other assets 1) | 13,426 | 13,273 | 1 |
| Total assets | 19,139 | 19,150 | 0 |
| Deposits from the public | 11,838 | 11,849 | 0 |
| Subordinated liabilities | 343 | 342 | 0 |
| Senior unsecured debt | 3,144 | 3,126 | 1 |
| Total interest-bearing liabilities | 15,325 | 15,317 | 0 |
| Other liabilities 1) | 740 | 908 | –18 |
| Equity | 3,074 | 2,925 | 5 |
| Total liabilities and equity |
19,139 | 19,150 | 0 |
| CET1 ratio, % | 12.51 | 12.46 | 0.0 pp |
| Total capital ratio, % | 16.79 | 16.76 | 0.0 pp |
| Liquidity reserve | 5,671 | 5,789 | –2 |
| Acquired loans |
| Gross 120-month ERC 3) | 21,297 | 21,375 | 0 |
|---|---|---|---|
| loans 2) | 12,783 | 12,658 | 1 |
| Carrying value of acquired |
1) This item does not correspond to an item of the same designation in the balance sheet, but rather to several corresponding items.
2) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture. 3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
Hoist Finance funds its operations through deposits from the public and through the bond market. Deposits from the public totalled SEK 11,838m (11,849). Of this amount, SEK 4,130m is attributable to fixed term deposits of 12-, 24 and 36-month durations.
As at 31 March 2017, outstanding bond debt totalled SEK 3,144m (3,126), where changes are attributable to revaluation effects of the EUR-denominated senior unsecured debt.
Group equity totalled SEK 3,074m (2,925). The increase is mainly explained by net profit for the period.
The total capital ratio improved to 16.79 per cent (16.76) and the CET1 ratio to 12.51 per cent (12.46). Hoist Finance is thus well capitalised for further expansion.
Hoist Finance's liquidity reserve, presented in accordance with the Swedish Bankers' Association's template, totalled SEK 5,671m (5,789).
Basic earnings per share totalled SEK 1.66 (1.17). Accrued, unpaid interest on AT1 capital is included in the calculation.
Comparative figures refer to first quarter 2016.
| MSEK | Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|---|---|---|---|
| Cash flow from operating activities | 444 | 851 | 2,977 |
| Cash flow from investing activities | –1,116 | –447 | –4,605 |
| Cash flow from financing activities | –9 | –103 | 1,032 |
| Cash flow for the period | –681 | 301 | –597 |
Cash flow from operating activities totalled SEK 444m (851). Gross collections on acquired loan portfolios continued to grow in relation to acquired loan portfolios and totalled SEK 1,186m (1,056).
Cash flow from investing activities totalled SEK –1,116m (–447). Portfolio acquisitions during the quarter are basically on a par with Q1 2016, totalling SEK 611m (648). Net investments of SEK 516m were made in bonds and other securities during the quarter, mainly due to positive results from operating activities.
Cash flow from financing activities totalled SEK –9m (–103) and is attributable to interest paid on capital contributions a somewhat lower HoistSpar deposit volume of SEK –1m (169) during the first quarter. Approximately SEK 130m was reallocated during the quarter from fixed term deposits to non-fixed deposits.
Total cash flow for the quarter totalled SEK –681m, as compared with SEK 301m for first quarter 2016.
Hoist Finance is exposed to a number of uncertainties through its business operations and due to its broad geographic presence. New and amended bank and credit market company regulations may affect Hoist Finance directly (e.g., via Basel IV capital and liquidity regulations) and indirectly through the impact of similar regulations on the market's supply of loan portfolios. Hoist Finance's cross-border operations entail consolidated tax issues relating to subsidiaries in several jurisdictions. The Group is, therefore, exposed to potential tax risks arising from varying interpretation and application of existing laws, treaties, regulations, and guidance.
Due to Hoist Finance's substantial deposits from the public, changes to the deposit guarantee scheme, for instance, may have an impact. In other areas such as consumer protection, new regulations may require adjustments in the way which Hoist Finance operates its collection activities. Acquired loan portfolios are valued based on anticipated future collection levels. Factors that affect the capacity to achieve collection level forecasts sustainably and cost efficiently are therefore uncertainty factors.
Credit risk for Hoist Finance's loan portfolios is deemed to have increased proportionally with the volume of loans acquired during the quarter. Credit risk in the liquidity portfolio remains low, as investments are made in government, municipal and covered bonds of high credit quality.
There were no major changes in Hoist Finance's operational risks during the quarter. The Group works continuously to improve the quality of its internal procedures to minimise operational risks.
Market risks remain low, as Hoist Finance continuously hedges interest rate and FX risks in the short- and medium-term.
Capitalisation for Hoist Finance remains strong. The CET1 ratio exceeds the regulatory requirement by a good margin. Hoist Finance is therefore better able to absorb unanticipated events without jeopardising its solvency, and is well capitalised for continued growth.
Liquidity risk was low during the quarter. Hoist Finance's liquidity reserve exceeds the Group's target by a good margin. Due to its strong liquidity position, Hoist Finance is well equipped for future acquisitions and growth.
Parent Company Hoist Finance AB (publ) reported a profit before tax of SEK 15m (–4) for the first quarter of 2017. Income and expenses are related to the Parent Company's function as a holding and purchasing company in the Hoist Finance Group.
The Parent Company's net sales totalled SEK 78m (38) during the first quarter. Operating expenses totalled SEK 71m (41). The year-on-year increase is attributable to projectrelated expenses regarding new regulations and improvements within internal business processes.
To centralise Group liquidity, Hoist Finance set up a cash pool structure in 2016. Accordingly, the Parent Company (as cash pool owner) is reporting higher year-on-year figures for cash and bank and for current liabilities. All subsidiaries are expected to be connected to the cash pool during 2017.
The nature and scope of related-party transactions are described in the Annual Report. No significant transactions took place between Hoist Finance and its related parties during the first quarter.
Hoist Finance AB (publ), corporate identity number 556012- 8489, is the Parent Company in the Hoist Finance Group. Hoist Finance is a Swedish publicly traded limited liability company headquartered in Stockholm, Sweden. Hoist Finance has been listed on NASDAQ Stockholm since March 2015. The Parent Company serves as a holding and purchasing company for the operating subsidiary Hoist Kredit AB (publ) and its sub-group. The Hoist Kredit Group acquires and holds the Group's loan portfolios and the loans are managed by its subsidiaries or foreign branch offices. These entities also provide management services on a commission basis to external parties. Hoist Finance was granted a licence to conduct financing operations. The licence is part of the process of merging Hoist Finance AB (publ) and wholly owned subsidiary Hoist Kredit AB (publ).
For a more detailed description of the Group's legal structure, please refer to the 2016 Annual Report.
The number of shares totalled 80,719,567 at 31 March 2017, unchanged from the number of shares at 31 December 2016.
The share price closed at SEK 78.50 on 31 March 2017. A breakdown of the ownership structure is presented in the table below. As at 31 March 2017 the Company had 3,176 shareholders, compared to 3,298 at 31 December 2016.
| The ten largest shareholders, 31 March 2017 |
Share of capital and votes, % |
|---|---|
| Carve Capital AB | 9.7 |
| Swedbank Robur Fonder | 9.5 |
| Toscafund Asset Management | 9.1 |
| Zeres Capital | 8.7 |
| Handelsbanken Fonder | 5.1 |
| Jörgen Olsson privately and through companies | 4.1 |
| Carnegie Funds | 3.6 |
| Didner & Gerge Fonder | 3.4 |
| Danske Invest Fonder | 3.2 |
| AFA Försäkring | 3.1 |
| Ten largest shareholders | 59.5 |
| Other shareholders | 40.5 |
| Total | 100.0 |
Source: Modular Finance AB, 31 March 2017; ownership statistics from Holdings, Euroclear Sweden AB; and changes confirmed/registered by the Company.
Pursuant to issued instructions, the Nominating Committee is to be comprised of the three largest shareholders and the Chairman of the Board. Should a shareholder decline to participate in the committee, the next largest shareholder (not already a committee member) is asked to do so. The Nominating Committee is currently comprised of the Chairman of the Board and representatives appointed by Carve Capital AB, Swedbank Robur Fonder AB and Handelsbanken Fonder. The Nominating Committee's term of office extends through the appointment of a new committee. Ahead of the next Annual General Meeting, the Nominating Committee's composition will be based on shareholder data as at the last banking day of August 2017.
This interim report has not been reviewed by Hoist Finance's auditors.
Hoist Finance intends to issue new subordinated bonds and announce a repurchase offer for all subordinated bonds that mature in 2023.
| SEK thousand | Quarter 1 2017 |
Quarter 4 2016 |
Quarter 3 2016 |
Quarter 2 2016 |
Quarter 1 2016 |
|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,186,339 | 1,104,772 | 1,074,719 | 1,075,877 | 1,055,794 |
| Portfolio amortisation and revaluation | –522,624 | –485,532 | –467,240 | –470,902 | –482,533 |
| Interest income from run-off consumer loan portfolio | 1,845 | 1,153 | –1,092 | 3,391 | 2,389 |
| Net revenue from acquired loan portfolios | 665,560 | 620,393 | 606,387 | 608,366 | 575,650 |
| Fee and commission income | 21,145 | 29,513 | 28,451 | 28,983 | 29,870 |
| Profit from shares and participations in joint ventures | 27,662 | 15,222 | 27,479 | 14,636 | 28,705 |
| Other income | 4,640 | 7,110 | 2,437 | 2,235 | 1,869 |
| Total revenue | 719,007 | 672,238 | 664,754 | 654,220 | 636,094 |
| Personnel expenses | –168,463 | –177,988 | –157,894 | –167,241 | –169,232 |
| Collection costs 1) | –169,008 | –145,560 | –171,319 | –149,077 | –129,959 |
| Other operating expenses 1) | –94,160 | –93,170 | –90,130 | –94,224 | –93,258 |
| Depreciation and amortisation of tangible and intangible assets | –13,919 | –13,891 | –12,812 | –13,122 | –12,971 |
| Total operating expenses | –445,550 | –430,609 | –432,155 | –423,664 | –405,420 |
| EBIT | 273,457 | 241,629 | 232,599 | 230,556 | 230,674 |
| Interest income excl. run-off consumer loan portfolio | –3,048 | 700 | –1,074 | –1,231 | –1,678 |
| Interest expense | –76,579 | –79,474 | –77,071 | –73,571 | –70,172 |
| Net financial income 2) | –8,682 | –7,987 | –24,183 | –30,905 | –35,714 |
| Total financial items | –88,309 | –86,761 | –102,328 | –105,707 | –107,564 |
| Profit before tax | 185,148 | 154,868 | 130,271 | 124,849 | 123,110 |
1) Comparative figures have been adjusted due to the reclassification of non-deductible VAT related to collection costs in 2016 from other operating expenses to collection costs (Region Mid Europe). 2) Including financing costs.
| SEK million | Quarter 1 2017 |
Quarter 4 2016 |
Quarter 3 2016 |
Quarter 2 2016 |
Quarter 1 2016 |
|---|---|---|---|---|---|
| EBIT margin, % | 38 | 36 | 35 | 35 | 36 |
| Return on book, % 1) | 11.3 | 11.1 | 10.8 | 11.1 | 10.7 |
| Portfolio acquisitions | 611 | 1,568 | 607 | 507 | 648 |
| SEK million | 31 Mar 2017 |
31 Dec 2016 |
30 Sep 2016 |
30 Jun 2016 |
31 Mar 2016 |
| Carrying value of acquired loans 2) | 12,783 | 12,658 | 11,658 | 11,359 | 11,346 |
| Gross 120-month ERC 3) | 21,297 | 21,375 | 19,450 | 19,230 | 19,221 |
| Return on equity, % 4) | 21 | 18 | 17 | 17 | 17 |
| Total capital ratio, % | 16.79 | 16.76 | 15.45 | 15.73 | 15.25 |
| CET1 ratio, % | 12.51 | 12.46 | 12.63 | 12.87 | 12.34 |
| Liquidity reserve | 5,671 | 5,789 | 6,520 | 6,785 | 5,266 |
| Number of employees (FTEs) | 1,268 | 1,285 | 1,341 | 1,358 | 1,305 |
1) Excluding operating expenses in Central Functions. For information on the calculation of key ratios, see Definitions.
2) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture. For information on the calculation of key ratios, see Definitions.
4) The definition of Return on Equity was revised in conjunction with the AT1 capital issue in December 2016.
Hoist Finance purchases and manages receivables in ten European countries, all of which have different traditions for providing financial services, different legislative frameworks and different attitudes with respect to past due receivables and repayment patterns. 12000 MSEK Förvärv per kvartal och segment
6 000 Operations in Europe are divided into three segments – Region West Europe, Region Mid Europe and Region Central East Europe.
| SEK thousand | Region West Europe |
2014 Region Mid Europe |
2015 Region Central East Europe |
Central functions and Eliminations |
Group |
|---|---|---|---|---|---|
| Net revenue from acquired loan portfolios | 222,982 | 220,881 | 221,697 | – | 665,560 |
| Total revenue | 237,181 | 235,791 Förvärv per segment |
229,917 | 16,118 | 719,007 |
| Total operating expenses | –141,009 | –111,396 | –106,406 | –86,739 | –445,550 |
| EBIT | 96,172 | MSEK 124,395 |
123,511 | –70,621 | 273,457 |
| EBIT margin, % | 41 | 700 53 |
648 611 54 42 |
– | 38 |
| Carrying value of acquired loan portfolios, SEKm 1) | 4,545 | 600 4,473 |
240 3,521 |
245 | 12,784 |
| Gross 120-month ERC, SEKm 2) | 7,821 | 500 7,284 400 |
6,192 | – | 21,297 |
1) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
2) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture. For information on the calculation of key ratios, see Definitions.
The earnings trend for each operating segment (excluding Central Functions and Eliminations), based on the operating income statement, is set forth in the following pages.
Segment overview
Hoist Finance Interim report January – March 2017
France, Spain and the UK
Revenues
Gross cash collections on acquired loan portfolios increased 18 per cent to SEK 356m (302). All markets contributed positively to the improvement. Portfolio amortisation and revaluation totalled SEK 133m (130) during the quarter, in line with last year. Portfolio revaluations totalled SEK 2m (7) during the quarter and are attributable to the UK and France. Fee and commission income decreased in line with the strategy to focus on acquisition and management of loan portfolios.
Total operating expenses decreased 8 per cent to SEK 141m (153) during the first quarter. The decrease is primarily attributable to lower personnel expenses following implementation of efficiency measures via centralisation and process integration.
EBIT The segment's EBIT totalled SEK 96m (38) for the quarter with a corresponding EBIT margin of 41 per cent (20). In addition to the contribution from the Spanish market (added last year), gross collections on acquired loan portfolios increased in both the UK and France while total operating expenses decreased.
The segment's return on book for first quarter 2017 was 8.5 per cent (3.9). All markets contributed with improved year-on-year margins.
The acquisition volume during the first quarter totalled SEK 175m and is mainly attributable to acquisitions in the UK. The lower year-on-year acquisition volume is due to strong first quarter acquisitions in 2016.
The carrying value of acquired loan portfolios increased 17 per cent since the turn of the year to SEK 4,545m (4,522). Gross ERC decreased to SEK 7,821m (7,927) over the same period.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Change, % | Full-year 2016 |
|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 356,304 | 302,429 | 18 | 1,296,766 |
| Portfolio amortisation and revaluation | –133,322 | –130,217 | 2 | –487,587 |
| Net revenue from acquired loan portfolios | 222,982 | 172,212 | 29 | 809,179 |
| Fee and commission income | 14,199 | 18,952 | –25 | 65,629 |
| Total revenue | 237,181 | 191,164 | 24 | 874,808 |
| Personnel expenses | –57,406 | –66,628 | –14 | –231,502 |
| Collection costs | –53,741 | –50,572 | 6 | –246,005 |
| Other operating expenses | –27,206 | –32,328 | –16 | –112,356 |
| Depreciation and amortisation of tangible and intangible assets | –2,656 | –3,503 | –24 | –11,977 |
| Total operating expenses | –141,009 | –153,031 | –8 | –601,840 |
| EBIT | 96,172 | 38,133 | >100 | 272,968 |
| EBIT margin, % | 41 | 20 | 21 pp | 31 |
| Return on book, % | 8.5 | 3.9 | 4.6 pp | 6.5 |
| Expenses/Gross cash collections on acquired loan portfolios, % | 36 | 44 | –8 pp | 41 |
| Carrying value of acquired loan portfolios, SEKm | 4,545 | 3,877 | 17 | 4,522 |
| Gross 120-month ERC, SEKm | 7,821 | 6,899 | 13 | 7,927 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
portfolios increased 20 per cent to SEK 465m (387). The increase is attributable to Italy, where significant portfolio acquisitions were conducted during the current and previous year. Portfolio amortisation and revaluation increased 43 per cent to SEK 244m (171), with the increase attributable to a higher collection rate for acquired portfolios. Portfolio revaluations totalled SEK –8m (–5) and were attributable to the Belgium operations. Profit from shares and participations in joint ventures refer to the Greek operations.
Total operating expenses increased 14 per cent during the first quarter to SEK 111m (98). The increase is mainly due to an increase in collection costs related to the above mentioned Italian portfolio acquisitions.
EBIT
The segment's EBIT totalled SEK 124m (121) for the quarter with a corresponding EBIT margin of 53 per cent (55). EBIT was affected by increased profitability in Italy and Greece with a nearly equivalent decrease in Belgium, due to the fact that last year's profitability was positively impacted by portfolio over-performance during the quarter.
The segment's return on book for first quarter 2017 was 11.3 per cent (13.3). The decrease is mainly due to the fact that the comparative figure was strongly impacted by portfolios in Italy and Belgium that exceeded forecasts for the quarter, and first quarter of 2017 was positively effected by profit from the Greek joint venture.
The acquisition volume during the quarter totalled SEK 394m (93), with the strong growth mostly attributable to the Italian market. The carrying value of acquired loan portfolios increased 3 per cent since the turn of the year to SEK 4,473m (4,331). Gross ERC increased to SEK 7,284m (7,117) over the same period.
Hoist Finance
Through the strategic partnership with the Bank of Greece, operations in Greece received performance-based remuneration during the first quarter based on successful collections during 2016. Hoist Finance continues to strengthen its position in order to enable future portfolio acquisitions.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Change, % | Full-year 2016 |
|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 465,281 | 387,374 | 20 | 1,574,731 |
| Portfolio amortisation and revaluation | –244,400 | –170,640 | 43 | –763,410 |
| Net revenue from acquired loan portfolios | 220,881 | 216,734 | 2 | 811,321 |
| Fee and commission income | 1,100 | 1,144 | –4 | 5,006 |
| Profit from shares and participations in joint venture | 13,282 | – | N/A | 616 |
| Other income | 528 | 447 | 18 | 1,769 |
| Total revenue | 235,791 | 218,325 | 8 | 818,712 |
| Personnel expenses | –29,370 | –24,833 | 18 | –111,301 |
| Collection costs 1) | –67,944 | –53,741 | 26 | –221,228 |
| Other operating expenses 1) | –12,036 | –17,490 | –31 | –53,821 |
| Depreciation and amortisation of tangible and intangible assets | –2,046 | –1,515 | 35 | –7,210 |
| Total operating expenses | –111,396 | –97,579 | 14 | –393,560 |
| EBIT | 124,395 | 120,746 | 3 | 425,152 |
| EBIT margin, % | 53 | 55 | –2 pp | 52 |
| Return on book, % | 11.3 | 13.3 | –2.0 pp | 10.7 |
| Expenses/Gross cash collections on acquired loan portfolios, % | 24 | 25 | –1 pp | 25 |
| Carrying value of acquired loan portfolios, SEKm | 4,473 | 3,606 | 24 | 4,331 |
| Gross 120-month ERC, SEKm | 7,284 | 6,085 | 20 | 7,117 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
1) Comparative figures have been adjusted due to the reclassification of non-deductible VAT related to collection costs in 2016
from other operating expenses to collection costs.
Poland, Germany and Austria
Gross cash collections on acquired loan portfolios totalled SEK 365m (366), on a par with last year. Portfolio amortisation and revaluation totalled SEK 145m (182) during the quarter with the decrease attributable to Poland, which had a periodically lower depreciation rate due to increased collection costs during the first quarter. Portfolio revaluations totalled SEK 11m (0) and are mainly attributable to Germany. Fee and commission income, which mainly relates to the Polish operations, decreased 40 per cent to SEK 6m (10). The decrease in is line with the strategy of focusing on the acquisition and management of loan portfolios.
Total operating expenses increased 29 per cent to SEK 106m (83) during the first quarter. The increase is primarily due to higher collection costs in Poland following increased collection activity that is expected to generate higher collection rates on portfolios that have already been acquired.
The segment's EBIT totalled SEK 124m (116) for the quarter with a corresponding EBIT margin or 54 per cent (58). The first quarter's somewhat higher EBIT is primarily due to a positive revaluation during the quarter. The EBIT margin decreased during the quarter due to higher operating expenses in Poland.
The segment's return on book for the first quarter 2017 was 13.9 per cent (12.9), with the increase mainly attributable to the above mentioned revaluation in Germany.
The acquisition volume during the quarter totalled SEK 42m and was mainly attributable to Germany. The acquisition volume is lower than the previous year, which included significant portfolio acquisitions in the Polish market.
The carrying value of acquired loan portfolios decreased somewhat since the turn of the year, totalling SEK 3,521m (3,564). Gross ERC decreased to SEK 6,192m (6,331) over the same period.
Considerable resources were devoted during the quarter to the development of a new collection system in Germany, part of Hoist Finance's work to modernise IT system and channels for customer interaction.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Change, % | Full-year 2016 |
|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 364,754 | 365,990 | 0 | 1,439,665 |
| Portfolio amortisation and revaluation | –144,902 | –181,676 | –20 | –655,210 |
| Interest income from run-off consumer loan portfolio | 1,845 | 2,389 | –23 | 5,841 |
| Net revenue from acquired loan portfolios | 221,697 | 186,703 | 19 | 790,296 |
| Fee and commission income | 5,846 | 9,774 | –40 | 46,182 |
| Other income | 2,374 | 1,993 | 19 | 14,502 |
| Total revenue | 229,917 | 198,470 | 16 | 850,980 |
| Personnel expenses | –42,638 | –43,335 | –2 | –181,875 |
| Other operating expenses | –47,132 | –25,646 | 84 | –128,682 |
| Other operating expenses | –14,760 | –11,927 | 24 | –49,924 |
| Depreciation and amortisation of tangible and intangible assets | –1,876 | –1,890 | –1 | –7,299 |
| Total operating expenses | –106,406 | –82,798 | 29 | –367,780 |
| EBIT | 123,511 | 115,672 | 7 | 483,200 |
| EBIT margin, % | 54 | 58 | –4 pp | 57 |
| Return on book, % | 13.9 | 12.9 | 1.0 pp | 13.6 |
| Expenses/Gross cash collections on acquired loan portfolios, % | 27 | 19 | 8 pp | 21 |
| Carrying value of acquired loan portfolios, SEKm 1) | 3,521 | 3,627 | –3 | 3,564 |
| Gross 120-month ERC, SEKm 2) | 6,192 | 6,237 | –1 | 6,331 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
1) Including run-off consumer loan portfolio.
2) Excluding run-off consumer loan portfolio.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|---|---|---|---|
| Net revenue from acquired loan portfolios | 663,715 | 573,261 | 2,404,955 |
| Interest income | –1,203 | 711 | 2,558 |
| Interest expense | –76,579 | –70,172 | –300,288 |
| Net interest income | 585,933 | 503,800 | 2,107,225 |
| Fee and commission income | 21,145 | 29,870 | 116,817 |
| Net financial income | –8,682 | –35,714 | –97,529 |
| Other income | 4,640 | 1,869 | 13,651 |
| Total operating income | 603,036 | 499,825 | 2,140,164 |
| General administrative expenses | |||
| Personnel expenses | –168,463 | –169,232 | –672,355 |
| Other operating expenses | –263,168 | –223,217 | –966,697 |
| Depreciation and amortisation of tangible and intangible assets |
–13,919 | –12,971 | –52,796 |
| Total operating expenses | –445,550 | –405,420 | –1,691,848 |
| Profit before credit losses | 157,486 | 94,405 | 448,316 |
| Net credit losses | – | – | –1,260 |
| Profit from shares and participations in joint ventures | 27,662 | 28,705 | 86,042 |
| Profit before tax | 185,148 | 123,110 | 533,098 |
| Income tax expense | –40,338 | –28,351 | –115,949 |
| Net profit for the period | 144,810 | 94,759 | 417,149 |
| Profit attributable to: | |||
| Owners of Hoist Finance AB (publ) | 144,810 | 94,759 | 417,149 |
| Basic earnings per share, SEK1) | 1.66 | 1.17 | 5.07 |
| Diluted earnings per share, SEK1) 2) | 1.66 | 1.14 | 4.97 |
1) Following the 1:3 share split, each warrant entitles the holder to subscribe for three new shares. 2) Includes effect of 164,993 outstanding warrants.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|---|---|---|---|
| Net profit for the period | 144,810 | 94,759 | 417,149 |
| Other comprehensive income | |||
| Items that will not be reclassified to profit or loss | |||
| Revaluation of defined benefit pension plan | – | – | –1,941 |
| Revaluation of remuneration after terminated employment | – | – | –617 |
| Tax attributable to items that will not be reclassified to profit or loss |
– | – | 654 |
| Total items that will not be reclassified to profit or loss |
– | – | –1,904 |
| Items that may be reclassified subsequently to profit or loss |
|||
| Translation difference, foreign operations | 30,519 | –10,243 | –21,872 |
| Translation difference, joint venture | 10,200 | 1,020 | 1,489 |
| Hedging of currency risk in foreign operations | –40,060 | – | – |
| Hedging of currency risk in joint venture | –14,737 | 4,405 | –7,421 |
| Tax attributable to items that may be reclassified to profit or loss | 18,277 | – | 4,803 |
| Total items that may be reclassified subsequently to profit or loss | 4,199 | –4,818 | –23,001 |
| Other comprehensive income for the period | 4,199 | –4,818 | –24,905 |
| Total comprehensive income for the period | 149,009 | 89,941 | 392,244 |
| Profit attributable to: | |||
| Owners of Hoist Finance AB (publ) | 149,009 | 89,941 | 392,244 |
| SEK thousand | 31 Mar 2017 |
31 Dec 2016 |
31 Mar 2016 |
|---|---|---|---|
| ASSETS | |||
| Cash | 3,054 | 3,073 | 198 |
| Treasury bills and Treasury bonds | 1,594,560 | 2,273,903 | 3,046,834 |
| Lending to credit institutions | 1,063,716 | 1,061,285 | 1,182,369 |
| Lending to the public | 33,365 | 35,789 | 68,474 |
| Acquired loan portfolios | 12,508,470 | 12,385,547 | 11,060,117 |
| Bonds and other securities | 3,051,987 | 2,538,566 | 1,090,496 |
| Participations in joint ventures | 245,019 | 241,276 | 235,282 |
| Intangible assets | 243,058 | 243,340 | 233,045 |
| Tangible assets | 40,976 | 40,815 | 42,850 |
| Other assets | 221,004 | 193,470 | 296,439 |
| Deferred tax assets | 42,212 | 47,269 | 64,918 |
| Prepayments and accrued income | 91,991 | 85,593 | 83,874 |
| Total assets | 19,139,412 | 19,149,926 | 17,404,896 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 11,838,319 | 11,848,956 | 12,966,716 |
| Tax liabilities | 70,635 | 52,887 | 52,074 |
| Other liabilities | 267,323 | 432,865 | 238,318 |
| Deferred tax liabilities | 158,127 | 163,264 | 184,128 |
| Accrued expenses and deferred income | 189,664 | 203,442 | 205,035 |
| Provisions | 54,371 | 55,504 | 55,324 |
| Senior unsecured debt | 3,143,670 | 3,125,996 | 986,259 |
| Subordinated liabilities | 342,997 | 341,715 | 338,006 |
| Total liabilities | 16,065,106 | 16,224,629 | 15,025,860 |
| Equity | |||
| Share capital | 26,906 | 26,906 | 27,771 |
| Other contributed equity | 2,073,215 | 2,073,215 | 1,754,418 |
| Reserves | –62,896 | –67,095 | –48,912 |
| Retained earnings including profit for the period | 1,037,081 | 892,271 | 645,759 |
| Total equity | 3,074,306 | 2,925,297 | 2,379,036 |
| Total liabilities and equity | 19,139,412 | 19,149,926 | 17,404,896 |
| SEK thousand | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2017 | 26,906 | 2,073,215 | –67,095 | 892,271 | 2,925,297 |
| Comprehensive income for the period | |||||
| Profit for the period | 144,810 | 144,810 | |||
| Other comprehensive income | 4,199 | 4,199 | |||
| Total comprehensive income for the period | 4,199 | 144,810 | 149,009 | ||
| Closing balance 31 Mar 2017 | 26,906 | 2,073,215 | –62,896 | 1,037,081 | 3,074,306 |
| TSEK | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2016 | 26,178 | 1,755,676 | –44,094 | 551,000 | 2,288,760 |
| Comprehensive income for the period | |||||
| Profit for the period | 417,149 | 417,149 | |||
| Other comprehensive income | –23,001 | –1,904 | –24,905 | ||
| Total comprehensive income for the period | –23,001 | 415,245 | 392,244 | ||
| Transactions reported directly in equity | |||||
| Dividend | –58,974 | –58,974 | |||
| New share issue | 728 | 34,568 | 35,296 | ||
| Additional Tier 1 capital instruments | 283,335 1) | 283,335 | |||
| Warrants, repurchased and cancelled | –2,066 | –2,066 | |||
| Interest paid on capital contribution | –15,000 | –15,000 | |||
| Tax effect on items reported directly in equity | 1,702 | 1,702 | |||
| Total transactions reported directly in equity | 728 | 317,539 | –73,974 | 244,293 | |
| Closing balance 31 Dec 2016 | 26,906 | 2,073,215 | –67,095 | 892,271 | 2,925,297 |
1) Nominal amount of SEK 291 million has been reduced by transactions costs of SEK 8 million.
| TSEK | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2016 | 26,178 | 1,755,676 | –44,094 | 551,000 | 2,288,760 |
| Comprehensive income for the year Profit for the year |
94,759 | 94,759 | |||
| Other comprehensive income | –4,818 | –4,818 | |||
| Total comprehensive income for the year | –4,818 | 94,759 | 89,941 | ||
| Transactions reported directly in equity | |||||
| New share issue | 1,593 | 1,593 | |||
| Warrants, repurchased and cancelled | –1,258 | –1,258 | |||
| Total transactions reported directly in equity | 1,593 | –1,258 | 335 | ||
| Closing balance 31 Mar 2016 | 27,771 | 1,754,418 | –48,912 | 645,759 | 2,379,036 |
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Profit/loss before tax | 185,148 | 123,111 | 533,097 |
| of which, paid-in interest | 1,845 | 2,389 | 5,841 |
| of which, interest paid | –75,548 | –75,185 | –288,713 |
| Adjustment for items not included in cash flow | |||
| Portfolio amortisation and revaluation | 522,624 | 482,533 | 1,906,208 |
| Other non-cash items | 29,991 | 149,881 | 232,902 |
| Realised profit from divestment of shares and participations in joint ventures | –17,350 | – | –42,546 |
| Income tax paid | –10,997 | –4,312 | –49,000 |
| Total | 709,416 | 751,213 | 2,580,661 |
| Increase/decrease in lending to the public | 2,424 | 9,520 | 42,681 |
| Increase/decrease in other assets | –59,787 | 175,886 | 221,233 |
| Increase/decrease in other liabilities | –207,519 | –85,450 | 131,956 |
| Total | –264,882 | 99,956 | 395,870 |
| Cash flow from operating activities | 444,534 | 851,169 | 2,976,531 |
| INVESTING ACTIVITIES | |||
| Acquired loan portfolios | –610,727 | –648,398 | –3,329,382 |
| Investments in intangible assets | –5,606 | –5,138 | –35,756 |
| Investments in tangible assets | –4,165 | –6,588 | –18,360 |
| Investments in/divestments of bonds and other securities | –515,835 | 213,384 | –1,232,503 |
| Investments in subsidiaries | –721 | – | –40,788 |
| Acquired shares and participations in joint ventures | – | – | –74 |
| Divested shares and participations in joint ventures | 20,606 | – | 51,891 |
| Cash flow from investing activities | –1,116,448 | –446,740 | –4,604,972 |
| FINANCING ACTIVITIES | |||
| Deposits from the public | –1,342 | 169,317 | –957,707 |
| Issued bonds | – | – | 2,771,876 |
| Repurchase of issued bonds | – | –272,828 | –976,570 |
| Buy-back of issued bonds | – | – | –58,000 |
| Issued Additional Tier 1 capital | – | – | 285,396 |
| New share issue | – | 1,593 | 35,296 |
| Warrants, repurchased and cancelled | – | –1,258 | –2,066 |
| Interest paid on capital contribution | –7,500 | – | –7,500 |
| Dividend paid | – | – | –58,974 |
| Cash flow from financing activities | –8,842 | –103,176 | 1,031,751 |
| Cash flow for the period | –680,756 | 301,253 | –596,690 |
| Cash at beginning of the period | 3,338,261 | 3,936,624 | 3,936,624 |
| Translation difference | 3,825 | –8,476 | –1,673 |
| Cash at end of the period* | 2,661,330 | 4,229,401 | 3,338,261 |
*Comprised of cash, Treasury bills/bonds and lending to credit institutions.
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|---|---|---|---|
| Net sales | 78,462 | 37,526 | 195,846 |
| Other external expenses | –68,383 | –37,975 | –219,855 |
| Personnel expenses | –717 | –1,621 | –7,100 |
| Depreciation and amortisation | –1,437 | –1,157 | –4,891 |
| Total operating expenses | –70,537 | –40,753 | –231,846 |
| Operating profit | 7,925 | –3,227 | –36,000 |
| Other interest income | 7,610 | –414 | 10,555 |
| Interest expense and similar costs | –926 | – | –1,602 |
| Total income from financial items | 6,684 | –414 | 8,953 |
| Earnings from participations in Group companies | – | – | 210,000 |
| Appropriations (tax allocation reserve provision) | – | – | –36,483 |
| Profit/loss before tax | 14,609 | –3,641 | 146,470 |
| Income tax expense | –3,215 | 777 | –29,150 |
| Net profit for the period1) | 11,394 | –2,864 | 117,320 |
1) Profit/loss for the period corresponds to Comprehensive income for the period.
| SEK thousand | 31 Mar 2017 |
31 Dec 2016 |
31 Mar 2016 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Licences and software | 26,496 | 25,169 | 19,997 |
| Total intangible assets | 26,496 | 25,169 | 19,997 |
| Equipment | 2,106 | 2,417 | 2,985 |
| Total tangible assets | 2,106 | 2,417 | 2,985 |
| Shares and participations in subsidiaries | 1,687,989 | 1,687,989 | 1,687,989 |
| Deferred tax asset | – | – | 778 |
| Total financial assets | 1,687,989 | 1,687,989 | 1,688,767 |
| Total non-current assets | 1,716,591 | 1,715,575 | 1,711,749 |
| Current assets | |||
| Receivables, Group companies | 239,156 | 257,501 | 32,002 |
| Other receivables | 36 | 402 | 2,032 |
| Prepaid expenses and deferred income | 7,715 | 8,506 | 5,562 |
| Total receivables | 246,907 | 266,409 | 39,596 |
| Cash and bank balances | 498,806 | 328,457 | 269,305 |
| Total current assets | 745,713 | 594,866 | 308,901 |
| Total assets | 2,462,304 | 2,310,441 | 2,020,650 |
| SEK thousand | 31 Mar 2017 |
31 Dec 2016 |
31 Mar 2016 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | |||
| Share capital | 26,906 | 26,906 | 27,771 |
| Statutory reserve | 3,098 | 3,098 | 3,098 |
| Development expenditure fund | 3,073 | 1,215 | – |
| Total restricted equity | 33,077 | 31,219 | 30,869 |
| Non-restricted equity | |||
| Other contributed equity | 1,693,638 | 1,693,638 | 1,659,878 |
| Retained earnings | 114,191 | –1,272 | 58,917 |
| Profit/loss for the year | 11,394 | 117,320 | –2,864 |
| Total non-restricted equity | 1,819,223 | 1,809,686 | 1,715,931 |
| Total non-restricted equity | 1,852,300 | 1,840,905 | 1,746,800 |
| Total non-restricted equity | 59,995 | 59,995 | 23,512 |
| Provisions | |||
| Pension provisions | 41 | 24 | 33 |
| Total provisions | 41 | 24 | 33 |
| Non-current liabilities | |||
| Intra-Group loans | 65,000 | 65,000 | – |
| Total non-current liabilities | 65,000 | 65,000 | – |
| Current liabilities | |||
| Accounts payable | 8,913 | 12,863 | 3,302 |
| Tax liabilities | 27,721 | 27,157 | 15,677 |
| Liabilities, Group companies | 439,618 | 298,153 | 227,979 |
| Other current liabilities | 3,864 | 3,506 | – |
| Accrued expenses and deferred income | 4,852 | 2,838 | 3,347 |
| Total current liabilities | 484,968 | 344,517 | 250,305 |
| Total equity and liabilities | 2,462,304 | 2,310,441 | 2,020,650 |
This interim report was prepared in accordance with IAS 34, Interim Financial Reporting. The consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations thereof as adopted by the European Union. The accounting follows the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Reporting Board's RFR 1, Supplementary Accounting Rules for Groups, has also been applied.
The Parent Company Hoist Finance AB's (publ) accounts were prepared in accordance with the Swedish Annual Accounts Act (1995:1554) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Reporting Board's RFR 2, Accounting for Legal Entities, was also applied.
No IFRS or IFRIC amendments that became effective in 2017 have had any material impact on the Group's financial statements or capital adequacy.
Hoist Finance has chosen to expand hedge accounting as from 1 January 2017 to include currency hedges used to hedge net investments in foreign operations. Under this expanded hedge accounting, a larger share of exchange rate fluctuations previously reported as 'Net financial income' will be reported as 'Other comprehensive income'.
Hoist Finance has chosen to present cash flow statements using the indirect method as from first quarter 2017, as this format better reflects the way in which the Group monitors cash flow. Comparative figures for first quarter and full-year 2016 have been adjusted accordingly.
Italian bank charges were reclassified from 'Other operating expenses' to 'Collection costs' as of second quarter 2016. Comparative figures were reclassified pursuant to this change. A total of SEK –4 million was reclassified for first quarter 2016.
The accounting principle under which forward flow contracts were reported as 'Commitments' was revised as from second quarter 2016. The revision stipulates that all forward flow contract commitments are to be reported (as opposed to previous periods, when only commitments arising during the year were reported). The comparative figure for 'Commitments' was adjusted SEK 93 million for first quarter 2016.
A number of new or amended IFRS that will come into effect during the coming financial years were not applied in advance as at the issuance of this interim report. Hoist Finance does not intend to apply new or amended standards in advance. For detailed information see the Annual report 2016.
In all other material respects, the Group's and Parent Company's accounting policies and bases for calculation and presentation remain unchanged from those applied in the 2016 annual report.
| Quarter 1 2017 |
Quarter 1 2016 |
Full-year 2016 |
|
|---|---|---|---|
| 1 EUR = SEK | |||
| Income statement (average) | 9.5051 | 9.3231 | 9.4622 |
| Balance sheet (at end of the period) | 9.5464 | 9.2323 | 9.5669 |
| 1 GBP = SEK | |||
| Income statement (average) | 11.0521 | 12.1042 | 11.5849 |
| Balance sheet (at end of the period) | 11.1273 | 11.6853 | 11.1787 |
| 1 PLN = SEK | |||
| Income statement (average) | 2.1991 | 2.1353 | 2.1688 |
| Balance sheet (at end of the period) | 2.2634 | 2.1652 | 2.1662 |
| Consolidated income statement | Quarter 1 | Quarter 1 | Full-year |
|---|---|---|---|
| SEK thousand | 2017 | 2016 | 2016 |
| Revenues from acquired loan portfolios | 663,715 | 573,261 | 2,404,955 |
| of which, gross cash collections | 1,186,339 | 1,055,794 | 4,311,162 |
| of which, portfolio amortisation and revaluation | –522,624 | –482,533 | –1,906,207 |
| Interest income | –1,203 | 711 | 2,558 |
| of which, interest income from run-off consumer loan portfolio | 1,845 | 2,389 | 5,841 |
| of which, interest income excl. run-off consumer loan portfolio1) | –3,048 | –1,678 | –3,283 |
| Interest expense | –76,579 | –70,172 | –300,288 |
| Net interest income | 585,933 | 503,800 | 2,107,225 |
| Fee and commission income | 21,145 | 29,870 | 116,817 |
| Net financial income1) | –8,682 | –35,714 | –97,529 |
| Other income | 4,640 | 1,869 | 13,651 |
| Total operating income | 603,036 | 499,825 | 2,140,164 |
| General administrative expenses | |||
| Personnel expenses | –168,463 | –169,232 | –672,355 |
| Other operating expenses | –263,168 | –223,217 | –966,697 |
| Depreciation and amortisation of tangible and intangible assets | –13,919 | –12,971 | –52,796 |
| Total operating expenses | –445,550 | –405,420 | –1,691,848 |
| Profit before loan losses | 157,486 | 94,405 | 448,316 |
| Net credit losses | – | – | –1,260 |
| Profit from shares and participations in joint ventures | 27,662 | 28,705 | 86,042 |
| Profit before tax | 185,148 | 123,110 | 533,098 |
| on segment reporting | Quarter 1 | Quarter 1 | Full-year |
|---|---|---|---|
| SEK thousand | 2017 | 2016 | 2016 |
| Gross cash collections on acquired loan portfolios | 1,186,339 | 1,055,794 | 4,311,162 |
| Portfolio amortisation and revaluation | –522,624 | –482,533 | –1,906,207 |
| Interest income from run-off consumer loan portfolio | 1,845 | 2,389 | 5,841 |
| Net revenue from acquired loan portfolios | 665,560 | 575,650 | 2,410,796 |
| Fee and commission income | 21,145 | 29,870 | 116,817 |
| Profit from shares and participations in joint ventures | 27,662 | 28,705 | 86,042 |
| Other income | 4,640 | 1,869 | 13,651 |
| Total revenue | 719,007 | 636,094 | 2,627,306 |
| Personnel expenses | –168,463 | –169,232 | –672,355 |
| Collection costs1) | –169,008 | –129,959 | –595,915 |
| Other operating expenses1) | –94,160 | –93,258 | –370,782 |
| Depreciation and amortisation of tangible and intangible assets | –13,919 | –12,971 | –52,796 |
| Total operating expenses | –445,550 | –405,420 | –1,691,848 |
| EBIT | 273,457 | 230,674 | 935,458 |
| Interest income excl. run-off consumer loan portfolio | –3,048 | –1,678 | –3,283 |
| Interest expense | –76,579 | –70,172 | –300,288 |
| Net financial income2) | –8,682 | –35,714 | –98,789 |
| Total financial items | –88,309 | –107,564 | –402,360 |
| Profit/loss before tax | 185,148 | 123,110 | 533,098 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
Segment reporting has been prepared based on the manner in which executive management monitors operations. This differs from statutory account preparation; the material differences are as follows:
Group costs for central and supporting functions are not allocated to the operating segments but are reported as Central Functions and Eliminations.
A financing cost is allocated to the operating segments based on the acquired loan portfolio assets. The difference between the actual financing cost and the standardised cost is included in Central Functions and Eliminations.
With respect to the balance sheet, only acquired loan portfolios are monitored. Other assets and liabilities are not monitored on a segment-by-segment basis.
| Income statement, Quarter 1 2017 | Region West | Region Mid | Region Central East |
Central Functions and |
|
|---|---|---|---|---|---|
| SEK thousand | Europe | Europe | Europe | Eliminations | Group |
| Gross cash collections on acquired loan portfolios | 356,304 | 465,281 | 364,754 | – | 1,186,339 |
| Portfolio amortisation and revaluation | –133,322 | –244,400 | –144,902 | – | –522,624 |
| Interest income from run-off consumer loan portfolio | – | – | 1,845 | – | 1,845 |
| Net revenue from acquired loan portfolios | 222,982 | 220,881 | 221,697 | – | 665,560 |
| Fee and commission income | 14,199 | 1,100 | 5,846 | – | 21,145 |
| Profit from shares and participations in joint ventures | – | 13,282 | – | 14,380 | 27,662 |
| Other income | – | 528 | 2,374 | 1,738 | 4,640 |
| Total revenue | 237,181 | 235,791 | 229,917 | 16,118 | 719,007 |
| Personnel expenses | –57,406 | –29,370 | –42,638 | –39,049 | –168,463 |
| Collection costs | –53,741 | –67,944 | –47,132 | –191 | –169,008 |
| Other operating expenses | –27,206 | –12,036 | –14,760 | –40,158 | –94,160 |
| Depreciation and amortisation of tangible and intangible assets |
–2,656 | –2,046 | –1,876 | –7,341 | –13,919 |
| Total operating expenses | –141,009 | –111,396 | –106,406 | –86,739 | –445,550 |
| EBIT | 96,172 | 124,395 | 123,511 | –70,621 | 273,457 |
| Interest income excl. run-off consumer loan portfolio | – | –1 | 216 | –3,263 | –3,048 |
| Interest expense | – | –27 | –5 | –76,547 | –76,579 |
| Net financial income1) | –56,512 | –55,271 | –43,823 | 146,924 | –8,682 |
| Total financial items | –56,512 | –55,299 | –43,612 | 67,114 | –88,309 |
| Profit/loss before tax | 39,660 | 69,096 | 79,899 | –3,507 | 185,148 |
| Income statement, Quarter 1 2016 | Region West | Region Mid | Region Central East |
Central Functions and |
|
|---|---|---|---|---|---|
| SEK thousand | Europe | Europe | Europe | Eliminations | Group |
| Gross cash collections on acquired loan portfolios | 302,429 | 387,374 | 365,991 | – | 1,055,794 |
| Portfolio amortisation and revaluation | –130,217 | –170,640 | –181,676 | – | –482,533 |
| Interest income from run-off consumer loan portfolio | – | – | 2,389 | – | 2,389 |
| Net revenue from acquired loan portfolios | 172,212 | 216,734 | 186,704 | – | 575,650 |
| Fee and commission income | 18,952 | 1,144 | 9,774 | – | 29,870 |
| Profit from shares and participations in joint ventures | – | – | – | 28,705 | 28,705 |
| Other income | – | 447 | 1,993 | –571 | 1,869 |
| Total revenue | 191,164 | 218,325 | 198,471 | 28,134 | 636,094 |
| Personnel expenses | –66,628 | –24,833 | –43,335 | –34,436 | –169,232 |
| Collection costs1) | –50,572 | –53,741 | –25,646 | – | –129,959 |
| Other operating expenses1) | –32,328 | –17,490 | –11,927 | –31,513 | –93,258 |
| Depreciation and amortisation of tangible and intangible assets |
–3,503 | –1,515 | –1,890 | –6,063 | –12,971 |
| Total operating expenses | –153,031 | –97,579 | –82,798 | –72,012 | –405,420 |
| EBIT | 38,133 | 120,746 | 115,673 | –43,878 | 230,674 |
| Interest income excl. run-off consumer loan portfolio5) | – | – | 400 | –2,078 | –1,678 |
| Interest expense | – | –15 | –10 | –70,147 | –70,172 |
| Net financial income2) | –49,807 | –46,067 | –43,615 | 103,775 | –35,714 |
| Total financial items | –49,807 | –46,082 | –43,225 | 31,550 | –107,564 |
| Profit/loss before tax | –11,674 | 74,664 | 72,448 | –12,328 | 123,110 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
| Income statement, Full-year 2016 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Gross cash collections on acquired loan portfolios | 1,296,766 | 1,574,731 | 1,439,665 | – | 4,311,162 |
| Portfolio amortisation and revaluation | –487,587 | –763,410 | –655,210 | – | –1,906,207 |
| Interest income from run-off consumer loan portfolio | – | – | 5,841 | – | 5,841 |
| Net revenue from acquired loan portfolios | 809,179 | 811,321 | 790,296 | – | 2,410,796 |
| Fee and commission income | 65,629 | 5,006 | 46,182 | – | 116,817 |
| Profit from shares and participations in joint ventures | – | 616 | – | 85,426 | 86,042 |
| Other income | – | 1,769 | 14,502 | –2,620 | 13,651 |
| Total revenue | 874,808 | 818,712 | 850,980 | 82,806 | 2,627,306 |
| Personnel expenses | –231,502 | –111,301 | –181,875 | –147,677 | –672,355 |
| Collection costs | –246,005 | –221,228 | –128,682 | – | –595,915 |
| Other operating expenses | –112,356 | –53,821 | –49,924 | –154,681 | –370,782 |
| Depreciation and amortisation of tangible and intangible assets |
–11,977 | –7,210 | –7,299 | –26,310 | –52,796 |
| Total operating expenses | –601,840 | –393,560 | –367,780 | –328,668 | –1,691,848 |
| EBIT | 272,968 | 425,152 | 483,200 | –245,862 | 935,458 |
| Interest income excl. run-off consumer loan portfolio | 101 | – | 3,513 | –6,897 | –3,283 |
| Interest expense | –3 | –102 | –1,347 | –298,836 | –300,288 |
| Net financial income1) | –207,219 | –182,721 | –181,453 | 472,604 | –98,789 |
| Total financial items | –207,121 | –182,823 | –179,287 | 166,871 | –402,360 |
| Profit/loss before tax | 65,847 | 242,329 | 303,913 | –78,991 | 533,098 |
| Acquired loans, 31 Mar 2017 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Run-off consumer loan portfolio | 29,782 | 29,782 | |||
| Acquired loan portfolios | 4,544,983 | 4,472,604 | 3,490,883 | 12,508,470 | |
| Shares and participations in joint ventures1) | 244,554 | 244,554 | |||
| Acquired loans | 4,544,983 | 4,472,604 | 3,520,665 | 244,554 | 12,782,806 |
| Acquired loans, 31 Dec 2016 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Run-off consumer loan portfolio | 32,194 | 32,194 | |||
| Acquired loan portfolios | 4,522,429 | 4,331,437 | 3,531,681 | 12,385,547 | |
| Shares and participations in joint ventures 1) | 240,580 | 240,580 | |||
| Acquired loans | 4,522,429 | 4,331,437 | 3,563,875 | 240,580 | 12,658,321 |
1) Refers to the value of shares and participations in joint ventures with acquired loan portfolios and it therfore not equivalent to corresponding item in the balance sheet.
| Acquired loans, 31 Mar 2016 | Region West Region Mid Europe |
Region Central East |
Central Functions and |
||
|---|---|---|---|---|---|
| SEK thousand | Europe | Eliminations | Group | ||
| Run-off consumer loan portfolio | 50,482 | 50,482 | |||
| Acquired loan portfolios | 3,877,221 | 3,605,950 | 3,576,946 | 11,060,117 | |
| Shares and participations in joint ventures | 235,282 | 235,282 | |||
| Acquired loans | 3,877,221 | 3,605,950 | 3,627,428 | 235,282 | 11,345,881 |
The Group uses observable data to the greatest possible extent when assessing the fair value of an asset or liability. Fair values are categorised in different levels based on the input data used in the valuation approach, as per the following:
valued based on quoted prices on active markets for similar instruments, quoted prices for identical or similar instruments traded on markets that are not active, or other valuation techniques in which all important input data is directly or indirectly observable in the market.
Level 3) Based on inputs that are not observable on the market. This category includes all instruments for which the valuation technique is based on data that is not observable and has a substantial impact upon the valuation.
| Group, 31 Mars 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 | |
| Treasury bills and Treasury bonds | 1,594,560 | 1,594,560 | 1,594,560 | 1,594,560 | ||||
| Acquired loan portfolios | ||||||||
| of which, carried at fair value | 1,002,297 | 1,002,297 | 1,002,297 | 1,002,297 | ||||
| of which, carried at amortised cost | 11,506,173 | 11,506,173 | 11,627,936 | 11,627,936 | ||||
| Bonds and other securities | 3,051,987 | 3,051,987 | 3,051,987 | 3,051,987 | ||||
| Derivatives | 363 | 363 | 363 | 363 | ||||
| Total assets | 12,508,470 | 4,646,910 | 17,155,380 | 17,277,143 | 4,646,547 | 363 | 12,630,233 | |
| Additional purchase price liability | 47,761 | 47,761 | 47,761 | 47,761 | ||||
| Derivatives | 51,801 | 51,801 | 51,801 | 51,801 | ||||
| Senior unsecured debt | 3,143,670 | 3,143,670 | 3,290,262 | 3,290,262 | ||||
| Subordinated liabilities | 342,997 | 342,997 | 393,855 | 393,855 | ||||
| Total liabilities | 3,586,229 | 3,586,229 | 3,783,679 | 3,735,918 | 47,761 |
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|---|---|---|
| Treasury bills and Treasury bonds | 2,273,903 | 2,273,903 | 2,273,903 | 2,273,903 | |||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 1,044,660 | 1,044,660 | 1,044,660 | 1,044,660 | |||
| of which, carried at amortised cost | 11,340,887 | 11,340,887 | 11,459,565 | 11,459,565 | |||
| Bonds and other securities | 2,538,566 | 2,538,566 | 2,538,566 | 2,474,849 | 63,717 | ||
| Derivatives | 29,167 | 29,167 | 29,167 | 29,167 | |||
| Total assets | 12,385,547 | 4,841,636 | 17,227,183 | 17,345,861 | 4,748,752 | 29,167 | 12,567,942 |
| Additional purchase price liability | 46,808 | 46,808 | 46,808 | 46,808 | |||
| Derivatives | 5,397 | 5,397 | 5,397 | 5,397 | |||
| Senior unsecured debt | 3,125,996 | 3,125,996 | 3,291,549 | 3,291,549 | |||
| Subordinated liabilities | 341,715 | 341,715 | 398,125 | 398,125 | |||
| Total liabilities | 3,519,916 | 3,519,916 | 3,741,879 | 3,695,071 | 46,808 |
| Group, 31 Mars 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 | |
| Treasury bills and Treasury bonds | 3,046,834 | 3,046,834 | 3,046,834 | 3,046,834 | ||||
| Acquired loan portfolios | ||||||||
| of which, carried at fair value | 1,127,328 | 1,127,328 | 1,127,328 | 1,127,328 | ||||
| of which, carried at amortised cost | 9,932,789 | 9,932,789 | 10,401,750 | 10,401,750 | ||||
| Bonds and other securities | 1,065,496 | 1,065,496 | 1,065,496 | 1,065,496 | ||||
| Derivatives | 67,706 | 67,706 | 67,706 | 67,706 | ||||
| Total assets | 11,060,117 | 4,180,036 | 15,240,153 | 15,709,114 | 4,112,330 | 67,706 | 11,529,078 | |
| Additional purchase price liability | 69,966 | 69,966 | 69,966 | 69,966 | ||||
| Derivatives | 7,224 | 7,224 | 7,224 | 7,224 | ||||
| Senior unsecured debt | 986,259 | 986,259 | 1,006,274 | 1,006,274 | ||||
| Subordinated liabilities | 338,006 | 338,006 | 410,375 | 410,375 | ||||
| Total liabilities | 1,401,455 | 1,401,455 | 1,493,839 | 1,423,873 | 69,966 |
1) Bonds and other securities include SEK 25m in shares. The shares are reported at acquisition cost as there are no quoted market prices, and it has not been possible to estimate a reliable fair value using accepted valuation methods.
Cash flow forecasts are discounted at the market rate when calculating the carrying value of acquired loan portfolios recorded at amortised cost. As regards the market rate, IRR is calculated based on an established WACC (Weighted Average Cost of Capital) model with a final conservative adjustment. For acquired loan portfolios recorded at fair value, the valuation approach, key input data and valuation sensitivity for material changes thereto are described in the Accounting Principles in the annual report 2016.
Treasury bills and treasury bonds, and bonds and other fixed income instruments, are valued based on quoted rates.
The fair value of liabilities in the form of issued bonds and other subordinated liabilities was determined with reference to observable market prices quoted by external market players/places. In cases where more than one market price observation is available, fair value is determined at the arithmetic mean of the market prices.
Derivatives used for hedging were model-valued using interest and currency market rates as input data.
Carrying values for accounts receivable and accounts payable are deemed approximations of fair value. The fair value of current loans corresponds to their carrying value due to the limited impact of discounting.
| Acquired loan portfolios | Group | |||||
|---|---|---|---|---|---|---|
| SEK thousand | 31 Mar 2017 |
31 Dec 2016 |
31 Mar 2016 |
|||
| Opening balance | 12,385,547 | 11,014,699 | 11,014,699 | |||
| Acquisitions | 610,727 | 3,329,382 | 648,398 | |||
| Adjustment of acquisition analysis |
– | –29,536 | – | |||
| Translation differences | 34,820 | –22,785 | –120,442 | |||
| Changes in value | ||||||
| Based on opening balance forecast (amortisation) |
–527,930 | –1,911,916 | –484,784 | |||
| Based on revised estimates (revaluation) |
5,306 | 5,703 | 2,246 | |||
| Carrying value | 12,508,470 | 12,385,547 | 11,060,117 | |||
| Changes in carrying value reported in the income statement |
–522,624 | –1,906,213 | –482,538 | |||
| Of which, designated at fair value | Group | |||||
|---|---|---|---|---|---|---|
| SEK thousand | 31 Mar 2017 |
31 Dec 2016 |
31 Mar 2016 |
|||
| Opening balance | 1,044,660 | 1,177,808 | 1,177,808 | |||
| Translation differences | –2,377 | 52,874 | 13,046 | |||
| Changes in value | ||||||
| Based on opening balance | ||||||
| forecast | ||||||
| (amortisation) | –33,152 | –186,090 | –63,526 | |||
| Based on revised estimates | ||||||
| (revaluation) | –6,834 | 68 | – | |||
| Carrying value | 1,002,297 | 1,044,660 | 1,127,328 | |||
| Changes in carrying value reported in the income |
||||||
| statement | –39,986 | –186,022 | –63,526 |
While Hoist Finance considers the assumptions made in assessing fair value to be reasonable, the application of other methods and assumptions may produce a different fair value. For Level 3 fair value, a reasonable change in one or several assumptions would have the following impact on earnings:
| Group | |||
|---|---|---|---|
| SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
| Carrying value of loan portfolios | 12,515,470 | 12,385,547 | 11,060,117 |
| A 5% increase in estimated cash flow over the 10-year forecast period would increase the carrying value by: |
613,365 | 558,977 | 543,347 |
| of which, valued at fair value | 50,120 | 51,685 | 56,366 |
| A 5% decrease in estimated cash flow over the forecast period would reduce the carrying value by: |
–613,365 | –558,977 | –543,347 |
| of which, valued at fair value | –50,120 | –51,685 | –56,366 |
| Carrying value of loan portfolios acquired prior to 1 July 2011 | 1,002,297 | 1,044,660 | 1,127,328 |
| A 1% decrease in the market rate of interest would increase the carrying value by: | 30,539 | 31,174 | 33,387 |
| A 1% increase in the market rate of interest would reduce the carrying value by: | –28,882 | –29,483 | –31,593 |
| Shortening the forecast period by 1 year would reduce the carrying value by: | –26,383 | –26,534 | –34,386 |
| Lengthening the forecast period by 1 year would increase the carrying value by: | 20,959 | 20,938 | 31,196 |
The Group has chosen to categorise portfolios acquired prior to 1 July 2011 as designated at fair value through profit or loss, as these financial assets are managed and their performance is evaluated on a fair value basis in accordance with the Group's risk management policies. Information on the portfolios is provided internally to Group Management on this basis. The underlying concept for valuation at fair value is to assess the carrying value of an asset by using the best available price for the asset. Loan portfolios are typically not traded publicly and, consequently, there are no market prices available. Most participants in the industry, however, apply similar pricing methods for portfolio acquisitions and calculate the present value of cash flows that correspond to the market value of a portfolio.
The three main influencing factors in calculating fair value are: (i) the gross collections forecast, (ii) the cost level, and (iii) the market discount rate. Each month, the Group looks at the forward ten years'
net collection forecasts for all portfolios and discounts the forecasts to present value, which serves as the basis for calculating the reported fair value for each portfolio.
The insights that Hoist Finance, as one of the industry's biggest players, gains from the many portfolio transactions the Company participates in or has knowledge of form an important component in estimating a market discount rate. The discount rate corresponding to the market's required return is updated regularly and reflects actual return on relevant and comparable transactions in the market. Portfolios are currently valued at an IRR of 12 per cent over a ten-year period.
The estimated market discount rate is only applied to the portion of the portfolios valued at fair value. For the portfolios valued at amortised cost, the IRR at which the original acquisition was carried out is applied and the revenues are expensed at this effective interest rate.
This note provides information required to be disclosed under the provisions of FFFS 2008:25, including applicable amendments, regarding annual accounts for credit institutions and FFFS 2014:12, including applicable amendments, regarding prudential requirements and capital buffers. The information relates to Hoist Finance on a consolidated basis ("Hoist Finance") and Hoist Kredit AB (publ) ("Hoist Kredit"), the regulated entity. The difference in the basis for consolidation between the consolidated accounts and the consolidated situation is that joint ventures are consolidated using the equity method in the consolidated accounts, whereas proportional consolidation is used for the consolidated situation. When establishing the company's statutory capital requirements, EU regulation No 575/2013 and the Swedish law (2014:966) on capital buffers primarily apply.
The table below shows own funds for Hoist Finance and for the regulated entity Hoist Kredit.
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Own funds, SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
| Capital instruments and related share premium accounts | 1,286,805 | 1,286,805 | 1,286,805 | 482,963 | 482,963 | 482,963 |
| Retained earnings | 775,254 | 472,965 | 486,517 | 564,841 | 307,205 | 429,633 |
| Accumulated comprehensive income and other reserves | 335,492 | 331,293 | 353,329 | 1,081,898 | 1,081,949 | 1,062,877 |
| Independently reviewed interim profits net of any foreseeable charge or dividend1) |
– | 292,004 | – | – | 267,191 | – |
| Intangible assets (net of related tax liability) | –243,058 | –243,340 | –233,045 | –33,929 | –37,647 | –40,398 |
| Deferred tax assets that rely on future profitability | –42,212 | –47,268 | –64,918 | –2,746 | –2,734 | –4,589 |
| Common Equity Tier 1 | 2,112,281 | 2,092,459 | 1,828,688 | 2,093,027 | 2,098,927 | 1,930,486 |
| Capital instruments and the related share premium accounts | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 |
| Additional Tier 1 capital | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 |
| Tier 1 capital | 2,491,858 | 2,472,036 | 1,921,688 | 2,472,604 | 2,478,504 | 2,023,486 |
| Capital instruments and the related share premium accounts | 342,997 | 341,715 | 338,006 | 342,997 | 341,715 | 338,006 |
| Tier 2 capital | 342,997 | 341,715 | 338,006 | 342,997 | 341,715 | 338,006 |
| Total own funds for capital adequacy purposes | 2,834,855 | 2,813,751 | 2,259,695 | 2,815,601 | 2,820,219 | 2,361,492 |
1) Regulatory dividend deduction is calculated at 30 per cent of reviewed net profit for the period, the maximum dividend allowed under the Group's internal dividend policy.
The tables below shows the risk-weighted exposure amounts and minimum capital requirements per risk category for Hoist Finance and the regulated entity Hoist Kredit.
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Risk-weighted exposure amounts, SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 | 0 | 0 |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 | 0 | 0 |
| Exposures to institutions | 254,176 | 261,882 | 296,897 | 33,816 | 78,060 | 130,313 |
| of which, counterparty credit risk | 23,742 | 29,036 | 37,233 | 23,742 | 29,036 | 37,233 |
| Exposures to corporates | 188,514 | 199,920 | 180,134 | 10,520,956 | 10,238,303 | 8,674,315 |
| Retail exposures | 22,337 | 24,146 | 37,861 | 22,337 | 24,146 | 37,861 |
| Exposures in default | 13,309,054 | 13,270,498 | 11,416,234 | 2,572,642 | 2,646,432 | 2,710,393 |
| Exposures in the form of covered bonds | 305,199 | 247,485 | 106,550 | 305,199 | 247,485 | 106,550 |
| Equity exposures | – | – | – | 570,759 | 570,038 | 562,572 |
| Other items | 142,231 | 132,315 | 155,583 | 7,032 | 6,116 | 206,926 |
| Credit risk (standardised approach) | 14,221,511 | 14,136,246 | 12,193,259 | 14,032,741 | 13,810,580 | 12,428,930 |
| Market risk (foreign exchange risk – standardised approach) |
44,323 | 28,858 | 28,449 | 44,323 | 28,858 | 28,449 |
| Operational risk (basic indicator approach) | – | – | 2,600,728 | – | – | 755,709 |
| Operational risk (standardised approach) | 2,622,890 | 2,622,373 | – | 893,024 | 893,024 | – |
| Credit valuation adjustment (standardised approach) | 0 | 0 | 0 | 0 | 0 | 0 |
| Total risk-weighted exposure amount | 16,888,724 | 16,787,477 | 14,822,436 | 14,970,088 | 14,732,462 | 13,213,088 |
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Capital requirements, SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
| Pillar 1 | ||||||
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 | 0 | 0 |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 | 0 | 0 |
| Exposures to institutions | 20,334 | 20,951 | 23,752 | 2,705 | 6,245 | 10,425 |
| of which, counterparty credit risk | 1,899 | 2,323 | 2,979 | 1,899 | 2,323 | 2,979 |
| Exposures to corporates | 15,081 | 15,994 | 14,411 | 841,676 | 819,064 | 693,945 |
| Retail exposures | 1,787 | 1,932 | 3,029 | 1,787 | 1,932 | 3,029 |
| Exposures in default | 1,064,724 | 1,061,640 | 913,299 | 205,811 | 211,715 | 216,831 |
| Exposures in the form of covered bonds | 24,416 | 19,799 | 8,524 | 24,416 | 19,799 | 8,524 |
| Equity exposures | – | – | – | 45,661 | 45,603 | 45,006 |
| Other items | 11,379 | 10,583 | 12,446 | 563 | 489 | 16,554 |
| Credit risk (standardised approach) | 1,137,721 | 1,130,899 | 975,461 | 1,122,619 | 1,104,847 | 994,314 |
| Market risk (foreign exchange risk-standardised approach) |
3,546 | 2,309 | 2,276 | 3,546 | 2,309 | 2,276 |
| Operational risk (basic indicator approach) | – | – | 208,058 | – | – | 60,457 |
| Operational risk (standardised approach) | 209,831 | 209,790 | – | 71,442 | 71,442 | – |
| Credit valuation adjustment (standardised approach) | 0 | 0 | 0 | 0 | 0 | 0 |
| Total own funds requirement – Pillar 1 | 1,351,098 | 1,342,998 | 1,185,795 | 1,197,607 | 1,178,598 | 1,057,047 |
| Total own funds requirement – Pillar 2 | 143,150 | 136,891 | 172,974 | 139,044 | 132,785 | 169,634 |
|---|---|---|---|---|---|---|
| Other Pillar 2 risks | 469 | 794 | 24,110 | 469 | 794 | 24,876 |
| Pension risk | 4,106 | 4,106 | 4,106 | – | – | – |
| Interest rate risk in the banking book | 33,090 | 30,000 | 61,127 | 33,090 | 30,000 | 61,127 |
| Concentration risk | 105,485 | 101,991 | 83,631 | 105,485 | 101,991 | 83,631 |
| Total own funds requirements | 1,926,179 | 1,905,945 | 1,731,783 | 1,729,551 | 1,690,465 | 1,563,614 |
|---|---|---|---|---|---|---|
| Total own funds requirement – Capital buffers | 431,931 | 426,056 | 373,014 | 392,900 | 379,082 | 336,934 |
| Countercyclical buffer | 9,714 | 6,370 | 2,453 | 18,648 | 10,770 | 6,607 |
| Capital conservation buffer | 422,217 | 419,686 | 370,561 | 374,252 | 368,312 | 330,327 |
The own funds for the Company's consolidated situation totalled SEK 2,835m (2,814) as at 31 March 2017, exceeding the own funds requirements by a good margin.
Regulation (EU) No 575/2013 of the European Parliament and the Council requires credit institutions to maintain Common Equity Tier 1 capital of at least 4.5 per cent, Tier 1 capital of at least 6 per cent, and a total capital ratio (capital in relation to risk-weighted exposure amount) of 8 per cent. Credit institutions are also required to maintain specific capital buffers. Hoist Finance is currently required to maintain a capital conservation buffer of 2.5 per cent of the total risk-weighted
exposure amount and an institution-specific countercyclical buffer of 0.06 per cent of the total risk-weighted exposure amount. The table below shows CET1 capital, Tier 1 capital and the total capital ratio for Hoist Finance and for the regulated entity Hoist Kredit. The table also shows the institution specific CET1 capital requirements.
All capital ratios exceed the minimum requirements and capital buffer requirements by a healthy margin.
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | ||||||
|---|---|---|---|---|---|---|---|
| Capital ratios and capital buffers, % | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | |
| Common Equity Tier 1 capital ratio | 12.51 | 12.46 | 12.34 | 13.98 | 14.25 | 14.61 | |
| Tier 1 capital ratio | 14.75 | 14.73 | 12.96 | 16.52 | 16.82 | 15.31 | |
| Total capital ratio | 16.79 | 16.76 | 15.25 | 18.81 | 19.14 | 17.87 | |
| Institution-specific buffer requirements for CET1 capital | 7.06 | 7.04 | 7.02 | 7.12 | 7.07 | 7.05 | |
| of which, capital conservation buffer requirement | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 | |
| of which, countercyclical capital buffer requirement | 0.06 | 0.04 | 0.02 | 0.12 | 0.07 | 0.05 | |
| Common Equity Tier 1 capital available to meet buffers1) | 8.01 | 7.96 | 6.96 | 9.48 | 9.75 | 9.31 |
1) CET1 ratio as reported, less minimum requirement of 4.5 per cent (excluding buffer requirements)
and less any CET1 items used to meet the Tier 1 and total capital requirements.
The internally assessed capital requirement for Hoist Finance consolidated situation totalled SEK 1,494m (1,480) at 31 March 2017, of which SEK 143m (137) is attributable to Pillar 2.
This note provides information required to be disclosed under the provisions of FFFS 2010:7, including applicable amendments, regarding the management of liquidity risks in credit institutions and investment firms.
Liquidity risk is the risk of difficulties in obtaining funding, and thus being unable to meet payment obligations, without a significant increase in the cost of obtaining means of payment.
Because the Group's revenues and costs are relatively stable, liquidity risk is primarily associated with the Group's funding which is based on deposits from the public and the risk of major outflows of deposits on short notice.
The overall objective of the Group's liquidity management is to ensure that the Group maintains control over its liquidity risk situation, with sufficient amounts of liquid assets or immediately divestible assets to ensure timely satisfaction of its payment obligations without incurring significantly higher costs.
Funding primarily takes the form of deposits from the public and the issuance of senior unsecured bonds and own funds instruments, as well as equity. The majority of deposits from the public are payable on demand (variable deposits – "floating"), while about 36 per cent (36) of the Group's deposits from the public are tied to longer maturities ("fixed deposits") ranging from 12 to 36 months. About 99 per cent of deposits are backed by the deposit guarantee scheme.
| Funding | Hoist Finance consolidated situation | Hoist Kredit AB (publ) | ||||
|---|---|---|---|---|---|---|
| SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
| Deposits from the public, floating | 7,708,432 | 7,582,909 | 8,786,028 | 7,708,432 | 7,582,909 | 8,786,028 |
| Deposits from the public, fixed | 4,129,886 | 4,266,047 | 4,180,688 | 4,129,886 | 4,266,047 | 4,180,688 |
| Senior unsecured debt | 3,143,670 | 3,125,996 | 986,259 | 3,143,670 | 3,125,996 | 986,259 |
| Convertible debt instruments | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 |
| Subordinated liabilities | 342,997 | 341,715 | 338,006 | 342,997 | 341,715 | 338,006 |
| Equity | 2,694,728 | 2,545,719 | 2,286,036 | 2,191,219 | 2,139,996 | 2,207,754 |
| Other | 740,122 | 907,963 | 734,879 | 470,889 | 632,535 | 205,371 |
| Balance sheet total | 19,139,412 | 19,149,926 | 17,404,896 | 18,366,670 | 18,468,775 | 16,797,105 |
The Group's treasury policy stipulates limits on how much liquidity is to be available and the nature of such liquidity. As 31 March, available liquidity totalled SEK 5,671m (5,789), which is well in excess of the limit.
Hoist Finance's liquidity reserve, presented below pursuant to the Swedish Bankers' Association's template, primarily comprises bonds issued by the Swedish government and Swedish municipalities, as well as covered bonds.
| SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 |
|---|---|---|---|
| Cash and holdings in central banks | 3,054 | 3,073 | 198 |
| Deposits in other banks available overnight | 1,021,112 | 1,036,749 | 1,152,972 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks |
1,170,568 | 1,528,116 | 1,377,805 |
| Securities issued or guaranteed by municipalities or other public sector entities | 423,993 | 745,786 | 1,669,029 |
| Covered bonds | 3,051,987 | 2,474,849 | 1,065,496 |
| Securities issued by non-financial corporates | – | – | – |
| Securities issued by financial corporates | – | – | – |
| Other | – | – | – |
| Total | 5,670,714 | 5,788,573 | 5,265,500 |
Hoist Finance has a contingency funding plan for managing liquidity crises. This identifies specific events that may trigger the contingency plan and actions to be taken.
| Group | Parent Company | ||||||
|---|---|---|---|---|---|---|---|
| SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | |
| Pledges and comparable collateral for own liabilities and for reported commitments for provisions |
239 | 478 | 646 | – | – | – |
| Group | Parent Company | ||||||
|---|---|---|---|---|---|---|---|
| SEK thousand | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | 31 Mar 2017 | 31 Dec 2016 | 31 Mar 2016 | |
| Commitments1) | 1,531,557 | 1,565,944 | 445,956 | – | – | – |
1) Comparative figures have been adjusted due to changed accounting principle for forward flows.
| Return on book SEK thousand |
Quarter 1 2017 |
Quarter 1 2016 |
Full year 2016 |
|---|---|---|---|
| EBIT | 273,457 | 230,674 | 935,458 |
| + Operating expenses in Central Functions | 86,739 | 72,012 | 328,668 |
| EBIT excl operating expenses in Central Functions1) | 1,440,784 | 1,210,744 | 1,264,126 |
| Average carrying value of aquired loans | 12,720,564 | 11,312,251 | 11,968,471 |
| Return on book, % | 11.3 | 10.7 | 10.6 |
1) Calculated on an annualised basis (quarterly) 2) Calculated as average on previous period
| EBITDA, adjusted SEK thousand |
Quarter 1 2016 |
Full year 2016 |
|
|---|---|---|---|
| Profit for the period | 144,810 | 94,759 | 417,149 |
| + Income tax expense |
40,339 | 28,351 | 115,949 |
| + Portfolio revaluations |
–5,306 | –2,246 | –5,703 |
| – Interest income (excl. Interest from run-off performing portfolio) |
3,048 | 1,678 | 3,283 |
| + Interest expense |
76,579 | 70,172 | 300,288 |
| +/– Net result from financial transactions, incl. Net credit losses | 8,682 | 35,714 | 98,789 |
| + Depreciation and amortisation of tangible and intangible assets |
13,919 | 12,971 | 52,796 |
| EBITDA | 282,071 | 241,399 | 982,551 |
| + Amortisation on run-off portfolio |
2,412 | 7,883 | 26,171 |
| + Amortisation on acquired loan portfolios |
527,930 | 484,784 | 1,911,916 |
| EBITDA, adjusted | 812,413 | 734,066 | 2,920,638 |
| Book value of run-off consumer loan portfolio | 29,782 | 50,482 | 32,194 |
The Board of Directors and the CEO hereby give their assurance that the interim financial statements provide a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and Group companies are exposed.
Stockholm, 26 April 2017
Ingrid Bonde Liselotte Hjorth Chair of the Board Board member
Annika Poutiainen Costas Thoupos
Board member Board member
Magnus Uggla Gunilla Wikman Board member Board member
Jörgen Olsson CEO Board member
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
|
|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,186,339 | 1,055,794 | |
| Portfolio amortisation and revaluation | –522,624 | –482,533 | |
| Interest income from run-off consumer loan portfolio | 1,845 | 2,389 | |
| Net revenue from acquired loan portfolios | 665,560 | 575,650 | |
| Fee and commission income | 21,145 | 29,870 | |
| Profit from shares and participations in joint ventures | 27,662 | 28,705 | |
| Other income | 4,640 | 1,869 | |
| Total revenue | 719,007 | 636,094 | |
| Personnel expenses | –168,463 | –169,232 | |
| Collection costs | –169,008 | –117,637 | |
| Other operating expenses | –94,160 | –105,580 | |
| Depreciation and amortisation of tangible and intangible assets | –13,919 | –12,971 | |
| Total operating expenses | –445,550 | –405,420 | |
| Operating profit (EBIT) | 273,457 | 230,674 | |
| Funding | |||
| Interest income excl. run-off consumer loan portfolio | –3,048 | –1,678 | |
| Interest expense | –76,579 | –70,172 | |
| Net financial income | –8,682 | –35,714 | |
| Total financial items | –88,309 | –107,564 | |
| Profit before tax | 185,148 | 123,110 |
| SEK thousand | Quarter 1 2017 |
Quarter 1 2016 |
|---|---|---|
| Revenue from acquired loan portfolios | 663,715 | 573,261 |
| Interest income | –1,203 | 711 |
| Interest expense | –76,579 | –70,172 |
| Net interest income | 585,933 | 503,800 |
| Fee and commission income | 21,145 | 29,870 |
| Net financial income | –8,682 | –35,714 |
| Other income | 4,640 | 1,869 |
| Total operating income | 603,036 | 499,825 |
| General administrative expenses | ||
| Personnel expenses | –168,463 | –169,232 |
| Other operating expenses | –263,168 | –223,217 |
| Depreciation and amortisation of tangible and intangible assets | –13,919 | –12,971 |
| Total operating expenses | –445,550 | –405,420 |
| Profit before credit losses | 157,486 | 94,405 |
| Net credit losses | – | – |
| Profit from shares and participations in joint ventures | 27,662 | 28,705 |
| Profit before tax | 185,148 | 123,110 |
Hoist Finance supplements its statutory presentation of the income statement with an operating income statement in order to assess the operational performance of the debt purchasing and collection operations and to facilitate comparison with our competitors.
The operating income statement does not include any amendments or adjustments as compared with the statutory income statement. The same accounting and valuation principles are applied in both versions.
Hoist Finance regards the acquisition and management of acquired loan portfolios as the Group's core operational activity. Deposit-taking in HoistSpar is thus part of the Group's financing activity.
An outline guide is presented to the left in order to assist understanding of our financial performance presented in the statutory income statement as compared with the operating income statement.
The statutory income statement complies with the Swedish Financial Supervisory Authority's general recommendations FFFS 2008:25.
In an analysis of Hoist Finance's operating profit (EBIT), income and expenses attributable to the acquisition and management of loan portfolios, run-off consumer loan portfolios, fee and commission income, profit from joint ventures as well as general administration are regarded as our operational activity.
Interest expenses for deposit-taking are regarded as financing expenses.
Alternative performance measures (APMs) are financial measures of past or future earnings trends, financial position or cash flow that are not defined in the applicable accounting regulatory framework (IFRS), in the Capital Requirements Directive (CRD IV), or in the EU's Capital Requirement Regulation number 575/2013 (CRR). APMs are used by Hoist Finance, along with other financial measures, when relevant for monitoring and describing the financial situation and for providing additional useful information to users of the financial reports. These measures are not directly comparable with similar performance measures that are presented by other companies. Estimated remaining collections, Return on book and Adjusted EBITDA are three APMs that are used by Hoist Finance. Alternative performance measures are described below.
Total of acquired loan portfolios, run-off consumer loan portfolios and participations in joint ventures.
An acquired loan portfolio consists of a number of defaulted consumer loans or debts that arise from the same originator.
Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the Tier 1 capital.
Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares.
Minimum capital requirements for credit risk, market risk and operational risk.
Capital requirements beyond those stipulated in Pillar 1.
Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council, and other equity items that may be included in CET1 capital, less regulatory dividend deduction and deductions for items such as goodwill and deferred tax assets.
Common Equity Tier 1 in relation to total risk exposure amount.
Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares after full dilution.
EBIT (operating earnings), less depreciation/ impairments and amortisation for run-off consumer loan portfolio and depreciation of acquired loan portfolios.
Earnings Before Interest and Tax. Operating profit before financial items and tax.
EBIT (operating earnings) divided by total revenue.
on acquired loan portfolios
Operating expenses less fee and commission income, divided by the sum of gross cash collections and interest income from the run-off consumer loan portfolios. The expenses related to fee and commission income are calculated with reference to commission income costs related to other income and actual profit margin.
Fees for providing debt management services to third parties.
"Estimated Remaining Collections" – the company's estimate of the gross amount that can be collected on the loan portfolios currently owned by the company. The assessment is based on estimates for each loan portfolio and extends from the following month through the coming 120 months. The estimate for each loan portfolio is based on the company's extensive experience in processing and collecting over the portfolio's entire economic life.
Gross cash flow from the Group's customers on loans included in Group's acquired loan portfolios.
Legal collections relate to the cash received following the initiation of Hoist Finance's litigation process. This process assesses customers' solvency and follows regulatory and legal requirements.
The sum of gross cash collections from acquired loan portfolios and income from the run-off consumer loan portfolio, less portfolio amortization and revaluation.
Sum of Tier 1 capital and Tier 2 capital.
The share of gross collections that will be used for amortising the carrying value of acquired loan portfolios.
Change in carrying value of acquired loans over the last twelve months.
Changes in the portfolio value based on revised estimated remaining collections for the portfolio.
An originator's loan is non-performing as at the balance sheet date if it is past due or will be due shortly.
Number of employees at the end of the period converted to full-time posts (FTEs).
EBIT (operating profit) for the period calculated on annualised basis, exclusive of Central Functions operating expenses, divided by average carrying value of acquired loan portfolios. In the financial statements, calculation of average carrying value is based on opening amount at the beginning of the year and closing amount at the end of the year.
Net profit for the period adjusted for accrued unpaid interest on AT1 capital calculated on annualised basis, divided by equity adjusted for AT1 capital reported in equity, calculated as an average for the year based on a quarterly basis.
The risk weight of each exposure multiplied by the exposure amount.
A company that employs fewer than 250 people and has either annual turnover of EUR 50million or less or a balance sheet total of EUR 43 million or less.
The sum of CET1 capital and AT1 capital.
Tier 1 capital as a percentage of the total risk exposure amount.
Capital instruments and associated share premium reserves that the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the funds.
Own funds as a percentage of the total risk exposure amount.
Total of net revenue from acquired loan, fee and commission income, profit or loss from joint ventures and other income.
Weighted number of outstanding shares plus potential dilutive effect of outstanding warrants.
Hoist Finance's business model is designed to ensure continuity and to deliver both growth and long-term strategic initiatives. Our model is hallmarked by solution-oriented settlements with respect, confidence and trust in everything we do.
Hoist Finance is a trusted debt restructuring partner to international banks and financial institutions. We specialise in purchasing portfolios of nonperforming loans.
To become the leading debt restructuring partner to international banks and financial institutions.
Achieve an operating margin of over 40 per cent in the mediumterm horizon by leveraging our operational scale advantages. By ensuring the right balance between growth, profitability and capital efficiency, we aim to achieve a 20 per cent return on equity in the medium-term horizon.
Under normal conditions, the CET1 ratio should be 2.5 – 4.5 percentage points above the overall CET1 requirements specified by the Swedish Financial Supervisory Authority.
Pursuant to our dividend policy, we will initially pay a dividend of 25–30 per cent of the Group's net profit in the medium-term horizon. In light of the strong cash flow that our business has generated historically, our long-term goal is to pay a dividend of 50 per cent of our annual net profit.
Strategic objectives
| Preferred by customers | Be customer-centric, with a focus on amicable and fair settlements. |
|---|---|
| Preferred partner | Be trustworthy with unparalleled funding capacity. |
| Attractive to investors | Redefine industry standards with our disciplined approach & ambitious targets. |
| Best place to work | Build an extraordinary company with extraordinary people. |
| CSR | Integrate CSR into everything we do and continue to build trust with all our stakeholders. |
| Annual general meeting | 28 April 2017 |
|---|---|
| Interim report Q1 2017 | 27 April 2017 |
| Interim report Q2 2017 | 28 July 2017 |
| Interim report Q3 2017 | 26 October 2017 |
Investor Relations Michel Jonsson Group Head of Investor Relations
Ph: +46 (0) 8-555 177 45 E-post: [email protected] Hoist Finance AB (publ) Corp. ID no. 556012-8489 Box 7848, 103 99 Stockholm Ph: +46 (0) 8-555 177 90 www.hoistfinance.com
The interim report and investor presentation are available at www.hoistfinance.com
Every care has been taken in the translation of this report. In the event of any discrepancy, the Swedish original will supersede the English translation.
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