Annual Report • Feb 9, 2017
Annual Report
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Figures in parentheses refer to Q4 2015.
Figures in parentheses refer to 31 December 2015.
SEK1,105m Gross cash collections on acquired
loan portfolios SEK1,568m Portfolio acquisitions
12.46% CET1 ratio
18% Return on equity
| SEK million | Quarter 4 2016 |
Quarter 4 2015 |
Change, % |
Full year 2016 |
Full year 2015 |
Change, % |
|---|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,105 | 1,032 | 7 | 4,311 | 3,631 | 19 |
| Net revenue from acquired loan portfolios | 620 | 565 | 10 | 2,411 | 2,015 | 20 |
| Total revenue | 672 | 621 | 8 | 2,627 | 2,247 | 17 |
| EBIT | 242 | 211 | 14 | 935 | 675 | 39 |
| EBIT margin, % | 36 | 34 | 2 pp | 36 | 30 | 6 pp |
| Profit before tax | 155 | 132 | 18 | 533 | 285 | 87 |
| Profit for the period | 118 | 107 | 10 | 417 | 231 | 81 |
| Basic earnings per share, SEK1) | 1.41 | 1.32 | 7 | 5.07 | 2.90 | 75 |
| Diluted earnings per share, SEK1) | 1.38 | 1.29 | 7 | 4,97 | 2.84 | 75 |
| Portfolio acquisitions | 1,568 | 1,451 | 8 | 3,329 | 4,370 | –24 |
36% EBIT margin
| SEK million | 31 Dec 2016 |
31 Dec 2015 |
Change, % |
|---|---|---|---|
| Carrying value on acquired loan portfolios2) | 12,658 | 11,279 | 12 |
| Gross 120-month ERC3) | 21,375 | 19,367 | 10 |
| Return on equity, % | 18 | 12 | 6 pp |
| Total capital ratio, % | 16.76 | 15.21 | 1.5 pp |
| CET1 ratio, % | 12.46 | 12.32 | 0.1 pp |
| Liquidity reserve | 5,789 | 5,156 | 12 |
| Number of employees (FTEs)4) | 1,285 | 1,349 | –5 |
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 is such that Hoist Finance is obligated to publish under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was submitted for publication on 9 February 2017 at 8:00 AM CET.
Hoist Finance Year-end report 2016
We have now closed 2016 and Hoist Finance can look back on another successful and profitable year, during which we have continued to strive towards our vision – a leading debt restructuring partner to international banks and financial institutions.
During the year we continued to operate in line with our strategy, gradually strengthening our market presence. Several key milestones on our growth journey were achieved during the year, amongst others our entry into the Spanish market, our strategic partnership with the Bank of Greece, and the establishment of our EMTN programme to diversify and broaden our funding base.
Operating profit (EBIT) increased 39 per cent and profit before tax increased 87 per cent compared to full year 2015.
The fourth quarter showed strong development. Year-on-year, operating profit (EBIT) increased 14 per cent and profit before tax increased 18 per cent. Portfolio acquisitions totalled SEK 1,568 million during Q4, seasonally the strongest quarter for investments. We acquired portfolios for a total value of SEK 3,329 million during the year, in line with investments made during the three preceding years. We continue to consistently invest in accordance with our profitability requirements, with acquisitions at long-term sustainable levels in terms of both profitability and risk. This also enables the generation of stable, predictable and profitable growth for our shareholders going forward.
In Region West Europe, an increased focus on the integration of the 2015 Compello acquisition produced results. The region's EBIT, EBIT margin and return on book improved steadily during the year. The establishment of operations in Spain during the second quarter is already starting to have a positive impact on earnings.
A leading debt restructuring partner to international banks and financial institutions
Region Mid ended the year with major portfolio acquisitions, which included a strengthening of our position in small- and medium-sized enterprise (SME) loans through the acquisition of an SME portfolio from Banco Popolare in Italy. A portfolio was also acquired in Italy from one of Europe's largest consumer banks, the third transaction in which the seller chose Hoist Finance as partner. These acquisitions strengthen our position and broaden our expertise and capacity beyond the consumer segment.
In Region Central East, focus during the year was on optimising operations. Several improvement initiatives have resulted in a maintained operating margin as compared with the same period last year, despite lower acquisition activity. A service contract was also terminated during the autumn, with resources reallocated to our core business.
Looking to next year, we see a continuation of favourable market conditions. Growth is driven by the movement of several markets towards greater market maturity, with NPL sales becoming an increasingly integrated part of the financial ecosystem.
Continued regulatory pressure and profitability problems for banks are also strong drivers for market growth. By selling NPLs, banks can lower their costs, clear their balance sheets and, not least, focus on their core business.
Our partners are to an increasing extent looking for well-known, highly respected purchasers who meet all regulatory requirements and who have a documentd track record of treating customers fairly and respectfully. With our status as a regulated financial institution, our high ethical standards for customer relations, our strong financial position and our geographic presence, we are well positioned for future growth opportunities.
We will continue our efforts to strengthen our position as a leading partner to international banks and financial institutions in Europe. This includes actively evaluating opportunities to enter new geographic markets and, in a disciplined way, continuing to increase our presence in other asset classes such as secured loans and SME loans.
In late 2016 a forward flow agreement was signed for portfolio acquisitions in 2017 valued at SEK 800 million. Along with the strong start to 2017 and the healthy market growth we see ahead of us, this reinforces our ambition to reach our targets.
Jörgen Olsson CEO Hoist Finance AB (publ)
Hoist Finance Year-end report 2016
Unless otherwise specified, all market, financial and operational comparisons refer to the fourth quarter of 2015. The analysis below follows the operating income statement.
Total revenue rose 8 per cent to SEK 672m (621) and gross cash collections on acquired loan portfolios increased 7 per cent to SEK 1,105m (1,032). The increase is mainly due to operations in Italy, the UK and Spain, where significant portfolio acquisitions were made in 2016. Portfolio acquisitions during the quarter totalled SEK 1,568m (1,451) and are mainly attributable to significant acquisitions in Italy, the UK and Spain. Portfolio amortisation and revaluation increased to SEK 486m (469). Adjusted for portfolio revaluations totalling SEK 23m (5) during the quarter, the growth rate is in line with the increase in gross collections. Net revenue from acquired loan portfolios increased 10 per cent to SEK 620m (565) due to volume growth. Fee and commission income declined 25 per cent to SEK 30m (39). The decline is primarily attributable to the UK and is due to a decrease in the scope of collections on behalf of external parties that are part of earlier acquisitions, which is in line with the Company's strategy. Profit from participations in joint ventures, which include the Polish and Greek joint ventures in which Hoist Finance has invested in, totalled SEK 15m (14).
Total operating expenses increased to SEK 431m (410), due primarily to more comprehensive collection activities. Hoist Finance continuously adapts its workforce based on efficiency measures and on the amount of NPLs managed by each individual unit. During 2016 this entailed a 5 per cent reduction in the workforce (FTEs) due to changes in the UK, Poland and Germany. Personnel expenses decreased 5 per cent to SEK 178m (189). Collection costs totalled SEK 146m (107), with the comparative figure affected by the previous reporting of the VAT component of collection costs under Other expenses. Reclassification was conducted as of Q4 2016 and adjusted accordingly for historical figures
for the first three quarters of 2016; this also impacted the comparative figure for Other operating expenses, which totalled SEK 93m (104). Depreciation and amortisation of tangible and intangible assets increased to SEK 14m (12) due primarily to investments in IT systems, including improved support for the internal management of operational risks. Hoist Finance established operations in Spain and Greece during 2016. Operating expenses in the two new markets totalled SEK 5m during the fourth quarter, with most of the amount attributable to Spain.
Financial items as per the Company's operating income statement totalled SEK 87m (–79). Interest income (exclusive of run-off consumer loan portfolio) totalled SEK 1m (6). The negative interest on income is due to the prevailing interest rates, under which Treasury bills and similar securities, which comprise the majority of Hoist's liquidity portfolio, no longer offer positive returns.
Interest expense totalled SEK –79m (–86) and is mainly comprised of interest expenses for issued bonds and interest expense related to HoistSpar deposits. The portion attributable to HoistSpar decreased due to lower deposits volumes and lower interest rates. In contrast, the portion attributable to interest expense for bonds issued during the Q2 and Q3 increased. Hoist Finance regularly hedges interest-rate and currency risks through derivatives. These items are reported under Net financial income, along with changes in the market value of bonds in the liquidity portfolio.
Net financial income during the fourth quarter totalled SEK –8m (0), a reflection of a negative contribution from currency hedging which was partially offset by a positive interest rate hedge result. Results for the quarter regarding changes in the market value of bonds in the liquidity portfolio were neutral.
Portfolio acquisitions Portfolio acquisitions
Unless otherwise specified, comparisons regarding balance sheet items refer to 31 December 2015.
Total assets increased SEK 1,698m to SEK 19,150m (17,451). Bonds and other securities increased SEK 1,235m, due primarily to the contribution from the issue of unsecured bonds. Acquired loan portfolios increased SEK 1,371m, mainly due to acquisitions in Italy, the UK and Spain. Lending to credit institutions rose SEK 203m and the carrying value of participations in joint ventures increased SEK 36m. These increases are offset by a SEK –804m reduction in Treasury bills and Treasury bonds and a SEK –308m reduction in Other assets. The decline in Other assets is primarily due to changes in the market value of currency forwards.
Total liabilities amounted to SEK 16,225m (15,163). The change comprises an increase of SEK 1,888m in senior unsecured debts as the result of buybacks and the issue of senior bond loans, as well as a SEK 117m increase in Other liability items. The increase is offset by a SEK –942m decrease in Deposits from the public.
| SEK million | 31 Dec 2016 | 31 Dec 2015 | Change, % |
|---|---|---|---|
| Cash and interest bearing securities | 5,877 | 5,240 | 12 |
| Other assets1) | 13,273 | 12,211 | 9 |
| Total assets | 19,150 | 17,451 | 10 |
| Deposits from the public | 11,849 | 12,791 | –7 |
| Subordinated liabilities | 342 | 337 | 1 |
| Senior unsecured debt | 3,126 | 1,238 | >100 |
| Total interest-bearing liabilities | 15,317 | 14,366 | 7 |
| Other liabilities1) | 908 | 796 | 14 |
| Shareholders' equity | 2,925 | 2,289 | 28 |
| Total liabilities and shareholders' equity |
19,150 | 17,451 | 10 |
| CET1 ratio, % | 12.46 | 12.32 | 0.14 pp |
| Total capital ratio, % | 16.76 | 15.21 | 1.55 pp |
| Liquidity reserve | 5,789 | 5,156 | 12 |
| Acquired loans | |||
| Carrying value of acquired loans2) | 12,658 | 11,279 | 12 |
| Gross 120-month ERC3) | 21,375 | 19,367 | 10 |
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 11,849m (12,791). Of this amount, SEK 4,266m is attributable to fixed term deposits of 12-, 24- and 36-month durations.
As at 31 December 2016, outstanding bond debt totalled SEK 3,126m (1,238). The change during the year is attributable to Hoist Finance's issuance through Hoist Kredit AB (publ) of a EUR 250m senior bond loan during the second quarter under a newly established EMTN programme. The bond, listed on the Dublin stock exchange, was expanded during the third quarter with the issuance of an additional EUR 50m. In conjunction with the transaction during the second quarter, a nominal amount of SEK 667m in previously issued senior bonds denominated in SEK and EUR was repurchased through a public offering. The remaining portion of the SEK-denominated bond, totalling SEK 58m, matured during the fourth quarter.
Group equity totalled SEK 2,925m (2,289). The increase is attributable to Net profit for the year and Hoist Finance's issuance through Hoist Kredit AB (publ) of EUR 30m in Additional Tier 1 (AT1) capital during the fourth quarter for the purpose of further optimising the capital structure. The instrument, listed on the Dublin stock exchange, has a perpetual maturity with a redemption option after 6.5 years.
The total capital ratio improved to 16.76 per cent (15.21) and the CET1 ratio to 12.46 per cent (12.32). 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 5,789m (5,156).
Basic earnings per share totalled SEK 1.41 (1.32). Accrued unpaid interest on AT1 capital is included in the calculation.
Comparative figures refer to Q4 2015..
| SEK million | Quarter 4 2016 |
Quarter 4 2015 |
Full year 2016 |
Full year 2015 |
|---|---|---|---|---|
| Cash flow from operating activities | –986,090 | –790,903 | –1,247,831 –686,563 | |
| Cash flow from investing activities | –489,431 | 977,720 | –1,340,317 | 512,817 |
| Cash flow from financing activities | 250,376 | –41,358 | 1,989,785 | 501,209 |
| Cash flow for the period | –1,225,145 | 145,459 | –598,363 | 327,463 |
Cash flow from operating activities totalled SEK –986m (–791). HoistSpar deposit volumes decreased SEK –404m (47) during the fourth quarter, largely attributable to the outflow of non-fixed deposits. Cash flow from gross cash collections on acquired loan portfolios increased to SEK 1,075m (1,032) due to the increased volume of loan portfolios during the year. Portfolio acquisitions during the quarter, exclusive of translation differences, totalled SEK 1,568m (1,451).
Cash flow from investing activities totalled SEK –489m (978), primarily as a result of divestments of bonds and other interest-bearing securities to finance the portfolio acquisitions conducted during the quarter.
Cash flow from financing activities totalled SEK 250m (–41) and is attributable to the issuance of EUR 30m in AT1 capital and new share issues of SEK 31m. This is somewhat offset by repayment of the SEK denominated senior bond that matured during the quarter.
Total cash flow for the quarter totalled SEK –1,225m as compared with SEK 145m for the fourth quarter of 2015
Hoist Finance's loan portfolio credit risk is deemed to have increased proportionally with the volume of loans acquired during the quarter. Liquidity portfolio credit risk remains low, as investments are in government, municipal and secured 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 currency risks on a short- and medium-term horizon.
Hoist Finance's capitalisation remains strong. The CET1 ratio was 12.46 per cent (12.32) during the fourth quarter, well in excess of the regulatory requirement. Hoist Finance therefore has good prospects for absorbing unanticipated events without risk to its solvency and is well capitalised for continued expansion.
Liquidity risk was low during the quarter. Hoist Finance's liquidity reserve totalled SEK 5,789m (5,156), which exceeds the Company's target. With its strong liquidity position, the Company's is well prepared for future acquisitions and growth.
The Parent Company, Hoist Finance AB (publ), reported a pre-tax profit of SEK 168m (147) for Q4 2016. Income and expenses are related to the holding and purchasing company function that the Company serves under the Hoist Finance Group.
The Company's net sales totalled SEK 62m (39) during the fourth quarter. Operating expenses amounted to SEK 74m (51). The year-on-year increase is attributable to costs associated with projects and adaptations to new regulations as well as costs related to improvements in internal business processes.
Hoist Finance set up a cash pool structure in 2016 to centralise the Group's liquidity. The Parent Company (as cash pool owner) is therefore reporting higher cash and bank balances and higher current liabilities as compared with last year. All subsidiaries are expected to be connected to the cash pool during 2017.
The Parent Company received a Group contribution in 2016 totalling SEK 210m from subsidiary Hoist Kredit AB (publ).
The nature and scope of related-party transactions are described in the annual report. No significant transactions between Hoist Finance and any of its related parties took place during the fourth quarter.
Hoist Finance AB (publ), corporate identity number 556012- 8489, is the Parent Company in the Hoist Finance Group. The Company is a Swedish publicly traded limited liability company headquartered in Stockholm, Sweden. Hoist Finance AB (publ) 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. Loans are managed by the Group's subsidiaries or foreign branches. These entities also provide management services on a commission basis to external parties. A process to merge Hoist Finance AB (publ) and Hoist Kredit AB (publ) has been initiated.
A Spanish subsidiary (Hoist Finance Spain S.L.) has been established. This subsidiary is also the parent company of acquired company Optimus Portfolio Mgmt S.L. and Greek subsidiary Hoist Hellas S.A. For administrative reasons Hoist Finance has transferred ownership of Hoist Portfolio Holding 2 Ltd (former subsidiary of Hoist Finance UK Ltd) to subsidiary Hoist Portfolio Holding Ltd.
A Greek joint venture (PQH Single Special Liquidation S.A.) was added during the second quarter of the year, under which Hoist Kredit AB (publ), in partnership with Qualco S.A. ("QC") and PricewaterhouseCoopers Business Solutions S.A. ("PWC"), entered into an agreement with the Bank of Greece for the management of a portfolio of NPLs and other assets from 16 Greek banks and financial institutions under liquidation and to supervise the restructuring process and optimisation of these banks.
For a more detailed description of the Group's legal structure, please refer to the 2015 annual report.
As at 31 December 2016, the number of shares totalled 80,719,567, as compared with 78,532,684 at 31 December 2015. During 2016, 728,961 warrants were redeemed for shares, with each warrant entitling the holder to subscribe for three new shares. The share price closed at SEK 84.75 on 30 December 2016. A breakdown of the ownership structure is presented in the table below. The company had 3,298 shareholders at 31 December 2016, compared with 1,523 at 31 December 2015.
| Ten largest shareholders, 31 december 2016 |
Share of capital and votes, % |
|---|---|
| Swedbank Robur Fonder | 9.5 |
| Toscafund Asset Management | 8.8 |
| Carve Capital AB | 8.5 |
| Zeres Capital | 7.2 |
| Handelsbanken Fonder | 6.0 |
| Carnegie Fonder | 4.8 |
| Jörgen Olsson, privately and via companies | 4.1 |
| Costas Thoupos | 3.0 |
| Danske Invest Fonder | 3.0 |
| Svenskt Näringsliv | 2.6 |
| Ten largest shareholders, total | 57.5 |
| Other shareholders | 42.5 |
| Total | 100 |
Source: Modular Finance AB (31 December 2016); ownership statistics from Holdings, Euroclear Sweden AB; and changes confirmed and/or 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 Chair of the Board and representatives appointed by Swedbank Robur Fonder AB, Carve Capital AB and Handelsbanken Fonder. The Nominating Committee's term of office extends through the appointment of a new committee. Ahead of the next AGM, the Nominating Committee's composition will be based on shareholder data as at the last banking day of August 2016.
The Board of Directors proposes that the 2017 AGM approve the distribution of a dividend of SEK 1.30 (0.75) per share, for a maximum total of SEK 105m (58.9) and a record date for the dividend to 3 May 2017.
The proposed dividend payment date is 8 May 2017.
This year-end report has not been reviewed by the Company's auditors.
The AGM will be held on Friday, 28 April 2017, at 11:00 AM at the IVA Conference Centre, Grev Turegatan 16, Stockholm.
| SEK thousand | Quarter 4 2016 |
Quarter 3 2016 |
Quarter 2 2016 |
Quarter 1 2016 |
Quarter 4 2015 |
|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,104,772 | 1,074,719 | 1,075,877 | 1,055,794 | 1,032,221 |
| Portfolio amortisation and revaluation | –485,532 | –467,240 | –470,902 | –482,533 | –469,138 |
| Interest income from run-off consumer loan portfolio | 1,153 | –1,092 | 3,391 | 2,389 | 1,550 |
| Net revenue from acquired loan portfolios | 620,393 | 606,387 | 608,366 | 575,650 | 564,633 |
| Fee and commission income | 29,513 | 28,451 | 28,983 | 29,870 | 39,351 |
| Profit from shares and participations in joint ventures | 15,222 | 27,479 | 14,636 | 28,705 | 13,868 |
| Other income | 7,110 | 2,437 | 2,235 | 1,869 | 2,751 |
| Total revenue | 672,238 | 664,754 | 654,220 | 636,094 | 620,603 |
| Personnel expenses | –177,988 | –157,894 | –167,241 | –169,232 | –186,713 |
| Collection costs1) | –145,560 | –171, 319 | –149,077 | –129,959 | –107,284 |
| Other operating expenses1) | –93,170 | –90,130 | –94,224 | –93,258 | –103,860 |
| Depreciation and amortisation of tangible and intangible assets | –13,891 | –12,812 | –13,122 | –12,971 | –11,704 |
| Total operating expenses | –430,609 | –432,155 | –423,664 | –405,420 | –409,561 |
| EBIT | 241,629 | 232,599 | 230,556 | 230,674 | 211,042 |
| Interest income excl. run-off consumer loan portfolio2) | 700 | –1,074 | –1,231 | –1,678 | 6,223 |
| Interest expense | –79,474 | –77,071 | –73,571 | –70,172 | –85,772 |
| Net financial income2) | –7,987 | –24,183 | –30,905 | –35,714 | 57 |
| Total financial items | –86,761 | –102,328 | –105,707 | –107,564 | –79,492 |
| Profit before tax | 154,868 | 130,271 | 124,849 | 123,110 | 131,550 |
1) Comparative figures have been adjusted due to the reclassification of non-deductible VAT related to Collection costs in 2016 and of banking fees from Other operating expenses to Collection costs in 2015 and first quarter 2016 (Region Mid Europe).
2) Comparative figures have been adjusted due to the reclassification of market value changes from Interest income to Net financial income.
| SEK million | Quarter 4 2016 |
Quarter 3 2016 |
Quarter 2 2016 |
Quarter 1 2016 |
Quarter 4 2015 |
|---|---|---|---|---|---|
| EBIT margin, % | 36 | 35 | 35 | 36 | 34 |
| Return on book, %1) | 11.1 | 10.8 | 11.1 | 10.7 | 11.2 |
| Portfolio acquisitions | 1,568 | 607 | 507 | 648 | 1,451 |
| SEK million | 31 Dec 2016 |
30 Sep 2016 |
30 Jun 2016 |
31 Mar 2016 |
31 Dec 2015 |
| Carrying value of acquired loans2) | 12,658 | 11,658 | 11,359 | 11,346 | 11,279 |
| Gross 120-month ERC3) | 21,375 | 19,450 | 19,230 | 19,221 | 19,367 |
| Return on equity, %4) | 18 | 17 | 17 | 17 | 12 |
| Total capital ratio, % | 16.76 | 15.45 | 15.73 | 15.25 | 15.21 |
| CET1 ratio, % | 12.46 | 12.63 | 12.87 | 12.34 | 12.32 |
| Liquidity reserve | 5,789 | 6,520 | 6,785 | 5,266 | 5,156 |
| Number of employees (FTEs) | 1,285 | 1,341 | 1,358 | 1,305 | 1,349 |
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. 8 000 10 000 12000 Förvärv per kvartal och segment
2 000 4 000 2 194 As from 1 January 2016, Hoist Finance operates under a new structural organisation. Europe is divided into three new segments – Region West Europe, Region Mid Europe and Region Central East Europe. Comparative figures in the report have been adjusted according to the new segments.
| SEK thousand | Region West Europe |
Region Mid Europe |
Region Central East Europe |
Central Functions and Eliminations |
Group |
|---|---|---|---|---|---|
| Net revenue from acquired loan portfolios | 188,430 | Förvärv per segment 215,007 |
216,956 | – | 620,393 |
| Total revenue | 202,513 | 217,388 MSEK |
237,943 | 14,394 | 672,238 |
| Total operating expenses | –129,207 | –113,910 2 000 |
1 451 1 568 –92,912 |
–94,580 | –430,609 |
| EBIT | 73,306 | 103,478 1 600 |
145,031 118 |
–80,186 | 241,629 |
| EBIT margin, % | 36 | 48 | 85 61 |
– | 36 |
| Carrying value of acquired loan portfolios, SEKm1) | 4,522 | 1 200 4,331 |
3,564 | 241 | 12,658 |
| Gross 120-day ERC, SEKm2) | 7,927 | 800 7,117 |
1 053 1 026 6,331 |
Region Central East Europe West Europe – |
21,375 |
1) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
340 397 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.
Carrying value, acquired loan portfolios,
Fördelning per segment Acquisitions by segment
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.
France, Spain and the UK
Gross cash collections on acquired loan portfolios increased 21 per cent to SEK 346m (285). All markets contributed positively, including the Spanish market, which is new in 2016. Portfolio amortisation and revaluation totalled SEK 158m (178) during the quarter, with the decrease primarily attributable to lower revaluations totalling SEK –38m (–73) during the quarter. Fee and commission income, which comprises services offered to third parties, decreased in pace with the strategy to focus on acquisition and management of in-house platforms. The currency trend, with the GBP weakened by 10 per cent since year-end 2015, had a negative effect on Total revenue.
Operating expenses increased 11 per cent to SEK 129m (116) during the fourth quarter. The increase is primarily attributable to collection costs in the UK, where portfolio growth was strong during the year. Personnel expenses and collection costs associated with the newly acquired Spanish portfolios also account
for the cost increased during the period. Total operating expenses are also positively affected by the GBP currency trend.
The segment's EBIT totalled SEK 73m (15) for the quarter with a corresponding EBIT margin of 36 per cent (12). The improvement is primarily due to major negative revaluations during the corresponding period last year and to the Spanish market's contribution during the fourth quarter.
The segment's return on book for the fourth quarter of 2016 was 6.7 (1.6). The improvement is attributable to lower year-on-year revaluations, increased collections in France and entering the Spanish market.
Segment overview
Acquisitions during the quarter totalled SEK 397m, representing an increase as compared with Q4 2015. This is primarily due to portfolio acquisitions in Spain. The carrying value of acquired loan portfolios increased to SEK 4,522m (3,883). Gross ERC increased to SEK 7,928m (6,973) as compared with last year.
Hoist Finance Year-end report 2016
In late 2016 a major forward flow contract for the acquisition of predetermined volumes in 2017 was signed.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Change, % | Full-year 2016 |
Full-year 2015 |
Change, % |
|---|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 346,275 | 285,111 | 21 | 1,296,766 | 935,880 | 39 |
| Portfolio amortisation and revaluation | –157,845 | –177,992 | –11 | –487,587 | –351,476 | 39 |
| Net revenue from acquired loan portfolios | 188,430 | 107,119 | 76 | 809,179 | 584,404 | 38 |
| Fee and commission income | 14,083 | 24,599 | –43 | 65,629 | 114,846 | –43 |
| Other income | – | –81 | –100 | – | 1,152 | –100 |
| Total revenue | 202,513 | 131,637 | 54 | 874,808 | 700,402 | 25 |
| Personnel expenses | –57,771 | –64,351 | –10 | –231,502 | –237,937 | –3 |
| Collection costs | –45,304 | –16,534 | >100 | –246,005 | –214,681 | 15 |
| Other operating expenses | –23,551 | –33,170 | –29 | –112,356 | –102,522 | 10 |
| Depreciation and amortisation of tangible and intangible assets |
–2,581 | –2,181 | 18 | –11,977 | –6,931 | 73 |
| Total operating expenses | –129,207 | –116,236 | 11 | –601,840 | –562,071 | 7 |
| EBIT | 73,306 | 15,401 | >100 | 272,968 | 138,331 | 97 |
| EBIT margin, % | 36 | 12 | 24 pp | 31 | 20 | 11 pp |
| Return on book, % | 6.7 | 1.6 | 5.1 pp | 6.5 | 4.5 | 2.0 pp |
| Expenses/Gross cash collections on acquired loan portfolios, % | 33 | 32 | 1 pp | 41 | 48 | –7 pp |
| Carrying value of acquired loan portfolios, SEKm | 4,522 | 3,883 | 16 | 4,522 | 3,883 | 16 |
| Gross 120-month ERC, SEKm | 7,927 | 6,973 | 14 | 7,927 | 6,973 | 14 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
Hoist Finance Year-end report 2016
Belgium, Greece, Italy and the Netherlands
Gross cash collections on acquired loan portfolios increased 4 per cent to SEK 418m (401) during the fourth quarter. This increase is attributable to Italy, where significant portfolio acquisitions were conducted during the year. Portfolio amortisation and revaluation increased 15 per cent to SEK 203m (176), with the increase attributable to the strong growth seen since Q4 2015. Positive portfolio revaluations totalling SEK 5m (23) was conducted in Q4 and are included in the portfolio amortisation and revaluation amounts reported for the quarter.
Total operating expenses for the fourth quarter increased 12 per cent to SEK 114m (101), primarily due to an increase in collection expenses related to the above-mentioned Italian portfolio acquisitions.
Non-deductible VAT related to collection costs was reclassified during the year and transferred from Other operating expenses
to Collection costs, which impacts the comparative figure for Q4 2015.
The segment's EBIT totalled SEK 103m (126) for the quarter with a corresponding EBIT margin of 48 per cent (55). The decrease is primarily due to the 2015 comparative figure includes high positive revaluations and to VAT recoveries in loan portfolios.
The segment's return on book for the fourth quarter of 2016 was 10.6 per cent (15.4). Comparative figures are affected by positive portfolio revaluations during the fourth quarter.
The acquisition volume during the quarter totalled SEK 1,053m, on a par year-on-year, and is mostly attributable to Italy. The carrying value of acquired loan portfolios increased 19 per cent to SEK 4,331m (3,643) and gross ERC increased to SEK 7,117m (6,179) since last year.
Operations in Greece are proceeding as planned, with only a minor impact on quarterly results.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Change, % | Full-year 2016 |
Full-year 2015 |
Change, % |
|---|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 417,702 | 401,317 | 4 | 1,574,731 | 1,358,389 | 16 |
| Portfolio amortisation and revaluation | –202,695 | –176,263 | 15 | –763,410 | –650,236 | 17 |
| Net revenue from acquired loan portfolios | 215,007 | 225,054 | –4 | 811,321 | 708,153 | 15 |
| Fee and commission income | 1,400 | 1,956 | –28 | 5,006 | 5,892 | –15 |
| Profit from shares and participations in joint ventures | 389 | – | >100 | 616 | – | >100 |
| Other income | 592 | 429 | 38 | 1,769 | 1,385 | 28 |
| Total revenue | 217,388 | 227,439 | –4 | 818,712 | 715,430 | 14 |
| Personnel expenses | –31,920 | –26,139 | 22 | –111,301 | –93,021 | 20 |
| Collection costs1) | –71,878 | –56,189 | 28 | –221,228 | –160,775 | 38 |
| Other operating expenses1) | –8,080 | –17,731 | –54 | –53,821 | –51,014 | 6 |
| Depreciation and amortisation of tangible and intangible assets |
–2,032 | –1,305 | 56 | –7,210 | –6,786 | 6 |
| Total operating expenses | –113,910 | –101,364 | 12 | –393,560 | –311,596 | 26 |
| EBIT | 103,478 | 126,075 | –18 | 425,152 | 403,834 | 5 |
| EBIT margin, % | 48 | 55 | –7 pp | 52 | 56 | –4 pp |
| Return on book, % | 10.6 | 15.4 | –5.2 pp | 10.7 | 12.3 | –1.7 pp |
| Expenses/Gross cash collections on acquired loan portfolios, % | 27 | 25 | 2 pp | 25 | 22 | 3 pp |
| Carrying value of acquired loan portfolios, SEKm | 4,331 | 3,644 | 19 | 4,331 | 3,644 | 19 |
| Gross 120-month ERC, SEKm | 7,117 | 6,179 | 15 | 7,117 | 6,179 | 15 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
1) Comparative figures have been adjusted, as non-deductible VAT related to Collection costs in 2016 and of bank charges in 2015 and first quarter 2016 are now recorded as Collection costs.
Region Central East Europe
Austria, Germany and Poland
Segment overview
Other
Hoist Finance Year-end report 2016
Gross cash collections on acquired loan portfolios increased 1 per cent to SEK 341m (346) during the fourth quarter, with the decrease attributable to Poland and Germany, which is primarily due to somewhat lower acquisition activity during the year. Portfolio amortisation and revaluation during the quarter amounted to SEK 125m (115), with the increase mainly attributable to Poland. Positive portfolio revaluations totalling SEK 55m (54) were conducted in Poland and Germany during the quarter. Fee and commission income increased 10 per cent to SEK 14m (13) and is primarily attributable to Polish operations.
Operating expenses decreased 6 per cent year-on-year to SEK 93m (97), primarily due to lower collection costs in Poland.
The segment's EBIT totalled SEK 145m (151) for the quarter with a corresponding EBIT margin of 61 per cent (61). The fourth quarter's slightly lower EBIT is primarily due to the somewhat lower acquisition activity during the year. The EBIT margin for the quarter is unchanged, as total operating expenses decreased in relation to the change in EBIT.
The segment's return on book for the fourth quarter of 2016 was 16.1 per cent (16.7), with comparative quarters both affected by positive revaluations to some extent.
The acquisition volume during the quarter totalled SEK 118m, with contributions from Poland and Germany. Overall, the acquisition volume for the segment is higher than during the corresponding period last year. The carrying value of acquired loan portfolios totalled SEK 3,564m (3,546) and gross ERC increased to SEK 6,331m (6,215) as compared with last year.
In accordance with Hoist Finance strategy to focus on in-house collection platform, the Company has mutually agreed with external partner to terminate a collection services contract. The contract, which will terminate during the first quarter of 2017, represents a substantial portion of fee and commission income in the Polish market. While Hoist Finance intends to make staffing adjustments, the short- and long-term impact on earnings is expected to be limited. The German operations launched an initiative to upgrade its current collection system during the autumn. The new system is scheduled to be in service during Q4 2017, and the objective is to have the leading collection platform in the German market when the system is fully operational in Q1 2018.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Change, % | Full-year 2016 |
Full-year 2015 |
Change, % |
|---|---|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 340,795 | 345,793 | –1 | 1,439,665 | 1,336,763 | 8 |
| Portfolio amortisation and revaluation | –124,992 | –114,883 | 9 | –655,210 | –624,796 | 5 |
| Interest income from run-off consumer loan portfolio | 1,153 | 1,550 | –26 | 5,841 | 10,176 | –43 |
| Net revenue from acquired loan portfolios | 216,956 | 232,460 | –7 | 790,296 | 722,143 | 9 |
| Fee and commission income | 14,030 | 12,796 | 10 | 46,182 | 45,967 | – |
| Other income | 6,957 | 3,573 | 95 | 14,502 | 12,176 | 19 |
| Total revenue | 237,943 | 248,829 | –4 | 850,980 | 780,286 | 9 |
| Personnel expenses | –48,016 | –48,906 | –2 | –181,875 | –172,412 | 5 |
| Collection costs | –28,378 | –34,561 | –18 | –128,682 | –134,142 | –4 |
| Other operating expenses | –14,667 | –12,052 | 22 | –49,924 | –39,760 | 26 |
| Depreciation and amortisation of tangible and intangible assets |
–1,851 | –1,894 | –2 | –7,299 | –7,195 | 1 |
| Total operating expenses | –92,912 | –97,413 | –5 | –367,780 | –353,509 | 4 |
| EBIT | 145,031 | 151,416 | –4 | 483,200 | 426,777 | 13 |
| EBIT margin, % | 61 | 61 | – | 57 | 55 | 2 pp |
| Return on book, % | 16.1 | 16.7 | –0,6 pp | 13.6 | 12.1 | 1.5 pp |
| Expenses/Gross cash collections on acquired loan portfolios, % | 21 | 23 | –2 pp | 21 | 22 | –1 pp |
| Carrying value of acquired loan portfolios, SEKm1) | 3,564 | 3,546 | 1 | 3,564 | 3,546 | 1 |
| Gross 120-month ERC, SEKm2) | 6,331 | 6,215 | 2 | 6,331 | 6,215 | 2 |
*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 4 2016 |
Quarter 4 2015 |
Full-year 2016 |
Full-year 2015 |
|---|---|---|---|---|
| Net revenue from acquired loan portfolios | 619,240 | 563,083 | 2,404,955 | 2,004,524 |
| Interest income1) | 1,853 | 7,773 | 2,558 | 38,279 |
| Interest expense | –79,474 | –85,772 | –300,288 | –361,370 |
| Net interest income | 541,619 | 485,084 | 2,107,225 | 1,681,433 |
| Fee and commission income | 29,513 | 39,351 | 116,817 | 166,705 |
| Net financial income1) | –6,727 | 57 | –97,529 | –50,941 |
| Other income | 7,110 | 2,751 | 13,651 | 10,629 |
| Total operating income | 571,515 | 527,243 | 2,140,164 | 1,807,826 |
| General administrative expenses | ||||
| Personnel expenses | –177,988 | –186,713 | –672,355 | –651,354 |
| Other operating expenses | –238,730 | –211,144 | –966,697 | –874,016 |
| Depreciation and amortisation of tangible and intangible assets |
–13,891 | –11,704 | –52,796 | –46,866 |
| Total operating expenses | –430,609 | –409,561 | –1,691,848 | –1,572,236 |
| Profit before credit losses | 140,906 | 117,682 | 448,316 | 235,590 |
| Net credit losses | –1,260 | – | –1,260 | –5,298 |
| Profit from shares and participations in joint ventures | 15,222 | 13,868 | 86,042 | 54,839 |
| Profit before tax | 154,868 | 131,550 | 533,098 | 285,131 |
| Income tax expense | –36,758 | –24,600 | –115,949 | –54,609 |
| Profit for the period | 118,110 | 106,950 | 417,149 | 230,522 |
| Profit attributable to: | ||||
| Owners of Hoist Finance AB (publ) | 118,110 | 106,950 | 417,149 | 230,522 |
| Basic earnings per share, SEK2) | 1.41 | 1.32 | 5.07 | 2.90 |
| Diluted earnings per share, SEK2) 3) | 1.38 | 1.29 | 4.97 | 2.84 |
1) Market value changes were reclassified from Interest income to Net financial income as from Q1 2016. Comparative figures have been reclassified pursuant to this change. 2) Following the 1:3 share split, each warrant entitles the holder to subscribe for three new shares.
3) Includes effect of 164,993 outstanding warrants.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Full-year 2016 |
Full-year 2015 |
|---|---|---|---|---|
| Profit for the period | 118,110 | 106,950 | 417,149 | 230,522 |
| Other comprehensive income | ||||
| Items that will not be reclassified to profit or loss | ||||
| Revaluation of defined benefit pension plan | –1,941 | 1,408 | –1,941 | 1,408 |
| Revaluation of remuneration after terminated employment | –617 | 1,606 | –617 | 1,606 |
| Tax attributable to items that will not be reclassified to profit or loss |
654 | –781 | 654 | –781 |
| Total items that will not be reclassified to profit or loss |
–1,904 | 2,233 | –1,904 | 2,233 |
| Items that may be reclassified subsequently to profit or loss |
||||
| Currency translation differences on foreign operations | –21,068 | –29,788 | –21,872 | –35,485 |
| Translation difference, joint venture | –5,956 | –6,237 | 1,489 | –4,948 |
| Hedging of currency risk in foreign operations | 5,075 | 4,762 | –7,421 | –849 |
| Tax attributable to items that may be reclassified to profit or loss | –1,116 | – | 4,803 | – |
| Total items that may be reclassified subsequently to profit or loss | –23,065 | –31,263 | –23,001 | –41,282 |
| Other comprehensive income for the period | –24,969 | –29,030 | –24,905 | –39,049 |
| Total comprehensive income for the period | 93,141 | 77,920 | 392,244 | 191,473 |
| Profit attributable to: | ||||
| Owners of Hoist Finance AB (publ) | 93,141 | 77,920 | 392,244 | 191,473 |
| SEK thousand | 31 Dec 2016 |
31 Dec 2015 |
|---|---|---|
| ASSETS | ||
| Cash | 3,073 | 281 |
| Treasury bills and Treasury bonds | 2,273,903 | 3,077,827 |
| Lending to credit institutions | 1,061,285 | 858,516 |
| Lending to the public | 35,789 | 77,994 |
| Acquired loan portfolios | 12,385,547 | 11,014,699 |
| Bonds and other securities | 2,538,566 | 1,303,214 |
| Participations in joint ventures | 241,276 | 205,557 |
| Intangible assets | 243,340 | 235,632 |
| Tangible assets | 40,815 | 41,623 |
| Other assets | 193,470 | 501,062 |
| Deferred tax assets | 47,269 | 62,688 |
| Prepayments and accrued income | 85,593 | 72,384 |
| Total assets | 19,149,926 | 17,451,477 |
| LIABILITIES AND EQUITY | ||
| Liabilities | ||
| Deposits from the public | 11,848,956 | 12,791,377 |
| Tax liabilities | 52,887 | 21,639 |
| Other liabilities | 432,865 | 357,284 |
| Deferred tax liabilities | 163,264 | 183,999 |
| Accrued expenses and deferred income | 203,442 | 180,941 |
| Provisions | 55,504 | 52,116 |
| Senior unsecured debt | 3,125,996 | 1,238,469 |
| Subordinated liabilities | 341,715 | 336,892 |
| Total liabilities | 16,224,629 | 15,162,717 |
| Equity | ||
| Share capital | 26,906 | 26,178 |
| Other contributed equity | 2,073,215 | 1,755,676 |
| Reserves | –67,095 | –44,094 |
| Retained earnings including profit for the period | 892,271 | 551,000 |
| Total equity | 2,925,297 | 2,288,760 |
| Total liabilities and equity | 19,149,926 | 17,451,477 |
| SEK thousand | Share capital | Other contributed capital |
Reserves/ 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 | 283,3351) | 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.
| SEK thousand | Share capital | Other contributed capital |
Reserves/ Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2015 | 21,662 | 1,003,818 | –2,812 | 374,522 | 1,397,190 |
| Comprehensive income for the year Profit for the year |
230,522 | 230,522 | |||
| Other comprehensive income | –41,282 | 2,233 | –39,049 | ||
| Total comprehensive income for the year | –41,282 | 232,755 | 191,473 | ||
| Transactions reported directly in equity | |||||
| New share issue | 4,516 | 745,5451) | 750,061 | ||
| Warrants, repurchased and cancelled | –842 | –3,177 | –4,019 | ||
| Interest paid on capital contribution | –15,000 | –15,000 | |||
| Acquisition of minority shareholding in subsidiary | –32,584 | –32,584 | |||
| Tax effect on items reported directly in equity | 7,155 | –5,516 | 1,639 | ||
| Total transactions reported directly in equity | 4,516 | 751,858 | –56,277 | 700,097 | |
| Closing balance 31 Dec 2015 | 26,178 | 1,755,676 | –44,094 | 551,000 | 2,288,760 |
1) Nominal amount of SEK 778 million has been reduced by transactions costs of SEK 33 million.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Full-year 2016 |
Full-year 2015 |
|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||
| Gross cash collections on acquired loan portfolios | 1,075,237 | 1,032,220 | 4,281,632 | 3,631,031 |
| Paid-in interest | –4,684 | 4,662 | 12,619 | 35,614 |
| Provisions received | 29,513 | 39,351 | 116,817 | 166,705 |
| Other operating income | 7,110 | 2,751 | 13,651 | 10,629 |
| Interest paid | –124,204 | –156,551 | –285,001 | –338,950 |
| Operating expenses | –415,711 | –369,662 | –1,627,242 | –1,479,862 |
| Net cash flow from financial transactions | –27,837 | 57 | –97,529 | –15,341 |
| Capital gain on redemption of joint venture certificates | 13,839 | 14,441 | 42,526 | 44,404 |
| Income tax paid | –17,582 | –16,572 | –49,602 | –45,453 |
| Total | 535,681 | 550,697 | 2,407,871 | 2,008,777 |
| Increase/decrease in acquired loans incl. translation differences |
–1,470,278 | –1,133,249 | –3,277,061 | –4,054,424 |
| Increase/decrease in joint venture certificates | 2,808 | 4,737 | 9,267 | 15,277 |
| Increase/decrease in lending to the public | 7,132 | 12,610 | 41,421 | 73,940 |
| Increase/decrease in deposits from the public | –403,680 | 46,759 | –957,707 | 1,781,668 |
| Increase/decrease in other assets | 196,374 | –270,466 | 296,511 | –290,002 |
| Increase/decrease in other liabilities | 166,072 | 26,570 | 246,197 | –277,073 |
| Increase/decrease in provisions | –3,053 | –4,131 | 3,388 | –16,588 |
| Change in other balance sheet items | –17,146 | –24,430 | –17,718 | 71,862 |
| Total | –1,521,771 | –1,341,600 | –3,655,702 | –2,695,340 |
| Cash flow from operating activities | –986,090 | –790,903 | –1,247,831 | –686,563 |
| INVESTING ACTIVITIES | ||||
| Investments in intangible assets | –9,846 | –2,862 | –35,756 | –31,584 |
| Investments in tangible assets | –7,270 | –8,538 | –18,360 | –20,123 |
| Investments in business acquisitions | – | – | –40,788 | –50,569 |
| Investments in/divestments of bonds and other securities |
–472,315 | 989,120 | –1,245,413 | 615,093 |
| Cash flow from investing activities | –489,431 | 977,720 | –1,340,317 | 512,817 |
| FINANCING ACTIVITIES | ||||
| Additional Tier 1 capital instruments issued | 285,396 | – | 285,396 | - |
| New share issue | 30,516 | – | 35,296 | 750,061 |
| Warrants, repurchased and cancelled | –60 | – | –2,066 | –4,019 |
| Issued bonds | –7,476 | – | 2,771,917 | – |
| Issued bonds, repurchased and cancelled | – | –33,858 | –976,284 | –229,833 |
| Repayment of issued bonds | –58,000 | – | –58,000 | - |
| Dividend paid | – | – | –58,974 | – |
| Interest paid on capital contribution | – | –7,500 | –7,500 | –15,000 |
| Cash flow from financing activities | 250,376 | –41,358 | 1,989,785 | 501,209 |
| Cash flow for the period | –1,225,145 | 145,459 | –598,363 | 327,463 |
| Cash at the beginning of the period | 4,563,406 | 3,791,165 | 3,936,624 | 3,609,161 |
| Cash at the end of the period1) | 3,338,261 | 3,936,624 | 3,338,261 | 3,936,624 |
1) Consists of cash, Treasury bills/bonds and lending to credit institutions.
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
Full-year 2016 |
Full-year 2015 |
|---|---|---|---|---|
| Net sales | 62,308 | 38,647 | 195,846 | 148,458 |
| Other external expenses | –71,085 | –42,791 | –219,855 | –184,423 |
| Personnel expenses | –1,192 | –5,972 | –7,100 | –8,873 |
| Depreciation and amortisation | –1,276 | –1,750 | –4,891 | –7,170 |
| Total operating expenses | –73,553 | –50,513 | –231,846 | –200,466 |
| Operating profit | –11,245 | –11,866 | –36,000 | –52,008 |
| Other interest income | 7,063 | –470 | 10,555 | –4,457 |
| Interest expense and similar costs | –889 | –214 | –1,602 | –927 |
| Total income from financial items | 6,174 | –684 | 8,953 | –5,384 |
| Earnings from participations in Group companies | 210,000 | 182,890 | 210,000 | 182,890 |
| Appropriations (tax allocation reserve provision) | –36,483 | –22,977 | –36,483 | –22,977 |
| Profit/loss before tax | 168,446 | 147,363 | 146,470 | 102,521 |
| Income tax expense | –33,118 | –34,026 | –29,150 | –24,829 |
| Profit/loss for the period1) | 135,328 | 113,337 | 117,320 | 77,692 |
1) Profit/loss for the period corresponds to Comprehensive income for the period.
| SEK thousand | 31 Dec 2016 |
31 Dec 2015 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Licences and software | 25,169 | 19,475 |
| Total intangible assets | 25,169 | 19,475 |
| Equipment | 2,417 | 3,142 |
| Total tangible assets | 2,417 | 3,142 |
| Shares and participations in subsidiaries | 1,687,989 | 1,687,989 |
| Total financial assets | 1,687,989 | 1,687,989 |
| Total non-current assets | 1,715,575 | 1,710,606 |
| Current assets | ||
| Receivables, Group companies | 257,501 | 209,519 |
| Accounts receivable | – | 55 |
| Other receivables | 402 | 1,015 |
| Prepaid expenses and deferred income | 8,506 | 7,467 |
| Total receivables | 266,409 | 218,056 |
| Cash and bank balances | 328,457 | 125,414 |
| Total current assets | 594,866 | 343,470 |
| Total assets | 2,310,441 | 2,054,076 |
| SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES | ||
| Shareholders' equity | ||
| Restricted equity | 31,219 | 29,276 |
| Non-restricted equity | 1,809,686 | 1,720,053 |
| Total shareholders' equity | 1,840,905 | 1,749,329 |
| Untaxed reserves | 59,995 | 23,512 |
| Provisions | 24 | 35 |
| Non-current liabilities | 65,000 | 40 100 |
| Current liabilities | 344,517 | 241,100 |
| Total shareholders' equity, provisions and liabilities | 2,310,441 | 2,054,076 |
The interim financial statements are presented in accordance with IAS 34 Interim Financial Reporting. The Group's 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 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 Board's RFR 2, Accounting for Legal Entities, was also applied.
No IFRS or IFRIC amendments that became effective in 2016 have had any material impact on the Group's financial statements or capital adequacy.
Market value changes were reclassified from Interest income to Net financial income as from first quarter 2016. Comparative figures have
been reclassified pursuant to this change. SEK –6m was reclassified during third quarter 2015 and SEK –36 million for full-year 2015.
Italian banking fees have been reclassified from Other operating expenses to Collection costs as of Q2 2016. Comparative figures have been reclassified in accordance with this change. SEK –3m was reclassified during third quarter 2015 and –11m for full-year 2015.
The accounting principle of reporting forward flow contracts as Commitments was changed as of Q2 2016 to include all commitments regarding forward flows. Under the previously applied principle, commitments falling within the previous one-year period were reported. Comparative figures have been adjusted accordingly. SEK 159m was adjusted during third quarter 2015 and SEK 167m for full-year 2015.
Hoist Finance has been operating under a new structural organisation as of 1 January 2016. Europe is divided into three new segments – Region West Europe, Region Mid Europe and Region Central East Europe. Comparative figures in the report have been adjusted according to the new segments.
The Group's and Parent Company's accounting policies and bases for calculation, as well as presentation, remain unchanged compared to the 2015 annual report.
| Quarter 4 2016 |
Quarter 4 2015 |
Full-year 2016 |
Full-year 2015 |
|
|---|---|---|---|---|
| 1 EUR = SEK | ||||
| Income statement (average) | 9.4622 | 9.3553 | 9.4622 | 9.3553 |
| Balance sheet (at end of the period) | 9.5669 | 9.1350 | 9.5669 | 9.1350 |
| 1 GBP = SEK | ||||
| Income statement (average) | 11.5849 | 12.8908 | 11.5849 | 12.8908 |
| Balance sheet (at end of the period) | 11.1787 | 12.3785 | 11.1787 | 12.3785 |
| 1 PLN = SEK | ||||
| Income statement (average) | 2.1688 | 2.2372 | 2.1688 | 2.2372 |
| Balance sheet (at end of the period) | 2.1662 | 2.1545 | 2.1662 | 2.1545 |
| Consolidated income statement | Quarter 4 | Quarter 4 | Full-year | Full-year |
|---|---|---|---|---|
| SEK thousand | 2016 | 2015 | 2016 | 2015 |
| Revenues from acquired loan portfolios | 619,240 | 563,083 | 2,404,955 | 2,004,524 |
| of which, gross cash collections | 1,104,772 | 1,032,221 | 4,311,162 | 3,631,032 |
| of which, portfolio amortisation and revaluation | –485,532 | –469,138 | –1,906,207 | –1,626,508 |
| Interest income | 1,853 | 7,773 | 2,558 | 38,279 |
| of which, interest income from run-off consumer loan portfolio | 1,153 | 1,550 | 5,841 | 10,176 |
| of which, interest income excl. run-off consumer loan portfolio1) | 700 | 6,223 | –3,283 | 28,103 |
| Interest expense | –79,474 | –85,772 | –300,288 | –361,370 |
| Net interest income | 541,619 | 485,084 | 2,107,225 | 1,681,433 |
| Fee and commission income | 29,513 | 39,351 | 116,817 | 166,705 |
| Net financial income1) | –6,727 | 57 | –97,529 | –50,941 |
| Other income | 7,110 | 2,751 | 13,651 | 10,629 |
| Total operating income | 571,515 | 527,243 | 2,140,164 | 1,807,826 |
| General administrative expenses | ||||
| Personnel expenses | –177,988 | –186,713 | –672,355 | –651,354 |
| Other operating expenses | –238,730 | –211,144 | –966,697 | –874,016 |
| Depreciation and amortisation of tangible and intangible assets | –13,891 | –11,704 | –52,796 | –46,866 |
| Total operating expenses | –430,609 | –409,561 | –1,691,848 | –1,572,236 |
| Profit before loan losses | 140,906 | 117,682 | 448,316 | 235,590 |
| Net credit losses | –1,260 | – | –1,260 | –5,298 |
| Profit from shares and participations in joint ventures | 15,222 | 13,868 | 86,042 | 54,839 |
| Profit before tax | 154,868 | 131,550 | 533,098 | 285,131 |
| on segment reporting | Quarter 4 | Quarter 4 | Full-year | Full-year |
|---|---|---|---|---|
| SEK thousand | 2016 | 2015 | 2016 | 2015 |
| Gross cash collections on acquired loan portfolios | 1,104,772 | 1,032,221 | 4,311,162 | 3,631,032 |
| Portfolio amortisation and revaluation | –485,532 | –469,138 | –1,906,207 | –1,626,508 |
| Interest income from run-off consumer loan portfolio | 1,153 | 1,550 | 5,841 | 10,176 |
| Net revenue from acquired loan portfolios | 620,393 | 564,633 | 2,410,796 | 2,014,700 |
| Fee and commission income | 29,513 | 39,351 | 116,817 | 166,705 |
| Profit from shares and participations in joint ventures | 15,222 | 13,868 | 86,042 | 54,839 |
| Other income | 7,110 | 2,751 | 13,651 | 10,629 |
| Total revenue | 672,238 | 620,603 | 2,627,306 | 2,246,873 |
| Personnel expenses | –177,988 | –186,713 | –672,355 | –651,354 |
| Collection costs1) | –145,560 | –107,284 | –595,915 | –509,598 |
| Other operating expenses1) | –93,170 | –103,860 | –370,782 | –364,418 |
| Depreciation and amortisation of tangible and intangible assets | –13,891 | –11,704 | –52,796 | –46,866 |
| Total operating expenses | –430,609 | –409,561 | –1,691,848 | –1,572,236 |
| EBIT | 241,629 | 211,042 | 935,458 | 674,637 |
| Interest income excl. run-off consumer loan portfolio2) | 700 | 6,223 | –3,283 | 28,103 |
| Interest expense | –79,474 | –85,772 | –300,288 | –361,370 |
| Net financial income2)3) | –7,987 | 57 | –98,789 | –56,239 |
| Total financial items | –86,761 | –79,492 | –402,360 | –389,506 |
| Profit/loss before tax | 154,868 | 131,550 | 533,098 | 285,131 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs. 2) Comparative figures have been adjusted due to the reclassification of market value changes from Interest income to Net financial income.
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 4 2016 | Region West | Region Mid | Region Central East |
Central Functions and |
|
|---|---|---|---|---|---|
| SEK thousand | Europe1) | Europe2) | Europe3) | Eliminations | Group |
| Gross cash collections on acquired loan portfolios | 346,275 | 417,702 | 340,795 | – | 1,104,772 |
| Portfolio amortisation and revaluation | –157,845 | –202,695 | –124,992 | – | –485,532 |
| Interest income from run-off consumer loan portfolio | – | – | 1,153 | – | 1,153 |
| Net revenue from acquired loan portfolios | 188,430 | 215,007 | 216,956 | – | 620,393 |
| Fee and commission income | 14,083 | 1,400 | 14,030 | – | 29,513 |
| Profit from shares and participations in joint ventures | – | 389 | – | 14,833 | 15,222 |
| Other income | – | 592 | 6,957 | –439 | 7,110 |
| Total revenue | 202,513 | 217,388 | 237,943 | 14,394 | 672,238 |
| Personnel expenses | –57,771 | –31,920 | –48,016 | –40,281 | –177,988 |
| Collection costs | –45,304 | –71,878 | –28,378 | – | –145,560 |
| Other operating expenses | –23,551 | –8,080 | –14,667 | –46,872 | –93,170 |
| Depreciation and amortisation of tangible | |||||
| and intangible assets | –2,581 | –2,032 | –1,851 | –7,427 | –13,891 |
| Total operating expenses | –129,207 | –113,910 | –92,912 | –94,580 | –430,609 |
| EBIT | 73,306 | 103,478 | 145,031 | –80,186 | 241,629 |
| Interest income excl. run-off consumer loan portfolio | – | – | 2,260 | –1,560 | 700 |
| Interest expense | – | –46 | –1,320 | –78,108 | –79,474 |
| Net financial income4) | –55,023 | –49,511 | –46,436 | 142,983 | –7,987 |
| Total financial items | –55,023 | –49,557 | –45,496 | 63,315 | –86,761 |
| Profit/loss before tax | 18,283 | 53,921 | 99,535 | –16,871 | 154,868 |
1) A total of SEK 198m of Region West Europe's revenues is attributable to the UK.
2) A total of SEK 150m of Region Mid Europe's revenues is attributable to Italy.
3) A total of SEK 152m of Region Central East Europe's revenues is attributable to Germany.
| Income statement, Quarter 4 2015 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe1) |
Region Mid Europe2) |
Central East Europe3) |
Functions and Eliminations |
Group |
| Gross cash collections on acquired loan portfolios | 285,111 | 401,317 | 345,793 | – | 1,032,221 |
| Portfolio amortisation and revaluation | –177,992 | –176,263 | –114,883 | – | –469,138 |
| Interest income from run-off consumer loan portfolio | – | – | 1,550 | – | 1,550 |
| Net revenue from acquired loan portfolios | 107,119 | 225,054 | 232,460 | – | 564,633 |
| Fee and commission income | 24,599 | 1,956 | 12,796 | – | 39,351 |
| Profit from shares and participations in joint ventures | – | – | – | 13,868 | 13,868 |
| Other income | –81 | 429 | 3,573 | –1,170 | 2,751 |
| Total revenue | 131,637 | 227,439 | 248,829 | 12,698 | 620,603 |
| Personnel expenses | –64,351 | –26,139 | –48,906 | –47,317 | –186,713 |
| Collection costs4) | –16,534 | –56,189 | –34,561 | – | –107,284 |
| Other operating expenses4) | –33,170 | –17,731 | –12,052 | –40,907 | –103,860 |
| Depreciation and amortisation of tangible and intangible assets |
–2,181 | –1,305 | –1,894 | –6,324 | –11,704 |
| Total operating expenses | –116,236 | –101,364 | –97,413 | –94,548 | –409,561 |
| EBIT | 15,401 | 126,075 | 151,416 | –81,850 | 211,042 |
| Interest income excl. run-off consumer loan portfolio5) | 133 | – | 506 | 5,584 | 6,223 |
| Interest expense | –7 | –16 | –1,485 | –84,264 | –85,772 |
| Net financial income5)6) | –50,504 | –42,054 | –45,232 | 137,847 | 57 |
| Total financial items | –50,378 | –42,070 | –46,211 | 59,167 | –79,492 |
| Profit/loss before tax | –34,977 | 84,005 | 105,205 | –22,683 | 131,550 |
1) A total of SEK 179m of Region West Europe's revenues is attributable to the UK.
2) A total of SEK 108m of Region Mid Europe's revenues is attributable to Italy.
3) A total of SEK 151m of Region Central East Europe's revenues is attributable to Germany.
4) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
5) Comparative figures have been adjusted due to the reclassification of market value changes from Interest income to Net financial income.
| Income statement, Full-year 2016 | Region West | Region Mid | Region Central East |
Central Functions and |
||
|---|---|---|---|---|---|---|
| SEK thousand | Europe1) | Europe2) | Europe3) | 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 income4) | –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 |
1) A total of SEK 789m of Region West Europe's revenues is attributable to the UK.
2) A total of SEK 500m of Region Mid Europe's revenues is attributable to Italy.
3) A total of SEK 474m of Region Central East Europe's revenues is attributable to Germany.
| Income statement, Full-year 2015 | Region | Central | ||||
|---|---|---|---|---|---|---|
| SEK thousand | Region West Europe1) |
Region Mid Europe2) |
Central East Europe3) |
Functions and Eliminations |
Group | |
| Gross cash collections on acquired loan portfolios | 935,880 | 1,358,389 | 1,336,763 | – | 3,631,032 | |
| Portfolio amortisation and revaluation | –351,476 | –650,236 | –624,796 | – | –1,626,508 | |
| Interest income from run-off consumer loan portfolio | – | – | 10,176 | – | 10,176 | |
| Net revenue from acquired loan portfolios | 584,404 | 708,153 | 722,143 | – | 2,014,700 | |
| Fee and commission income | 114,846 | 5,892 | 45,967 | – | 166,705 | |
| Profit from shares and participations in joint ventures | – | – | – | 54,839 | 54,839 | |
| Other income | 1,152 | 1,385 | 12,176 | –4,084 | 10,629 | |
| Total revenue | 700,402 | 715,430 | 780,286 | 50,755 | 2,246,873 | |
| Personnel expenses | –237,937 | –93,021 | –172,412 | –147,984 | –651,354 | |
| Collection costs4) | –214,681 | –160,775 | –134,142 | – | –509,598 | |
| Other operating expenses4) | –102,522 | –51,014 | –39,760 | –171,122 | –364,418 | |
| Depreciation and amortisation of tangible and intangible assets |
–6,931 | –6,786 | –7,195 | –25,954 | –46,866 | |
| Total operating expenses | –562,071 | –311,596 | –353,509 | –345,060 | –1,572,236 | |
| EBIT | 138,331 | 403,834 | 426,777 | –294,305 | 674,637 | |
| Interest income excl. run-off consumer loan portfolio5) | 164 | 38 | 2,120 | 25,781 | 28,103 | |
| Interest expense | 69 | –77 | –1,597 | –359,765 | –361,370 | |
| Net income from financial transactions5) 6) | –157,672 | –147,943 | –179,310 | 428,686 | –56,239 | |
| Total financial items | –157,439 | –147,982 | –178,787 | 94,702 | –389,506 | |
| Profit/loss before tax | –19,108 | 255,852 | 247,990 | –199,603 | 285,131 |
1) A total of SEK 718m of Region West Europe's revenues is attributable to the UK.
2) A total of SEK 374m of Region Mid Europe's revenues is attributable to Italy.
3) A total of SEK 453m of Region Central East Europe's revenues is attributable to Germany.
4) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
5) Comparative figures have been adjusted due to the reclassification of market value changes from Interest income to Net financial income.
| 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 | – | – | – | 240,580 | 240,580 |
| Acquired loans | 4,522,429 | 4,331,437 | 3,563,875 | 240,580 | 12,658,321 |
| Acquired loans, 31 Dec 2015 | Region | Central | |||
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Run-off consumer loan portfolio | – | – | 58,364 | – | 58,364 |
| Acquired loan portfolios | 3,882,889 | 3,643,796 | 3,488,014 | – | 11,014,699 |
| Shares and participations in joint ventures | – | – | 205,557 | 205,557 | |
| – |
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 December 2016 | |||||||
|---|---|---|---|---|---|---|---|
| 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 |
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|---|---|---|
| Treasury bills and Treasury bonds | 3,077,827 | 3,077,827 | 3,077,827 | 3,077,827 | |||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 1,177,808 | 1,177,808 | 1,177,808 | 1,177,808 | |||
| of which, carried at amortised cost | 9,836,891 | 9,836,891 | 10,014,382 | 10,014,382 | |||
| Bonds and other securities1) | 1,278,214 | 1,278,214 | 1,278,214 | 1,278,214 | |||
| Derivatives | 314,680 | 314,680 | 314,680 | 314,680 | |||
| Total assets | 11,014,699 | 4,670,721 | 15,685,420 | 15,862,911 | 4,356,041 | 314,680 | 11,192,190 |
| Additional purchase price liability | 66,489 | 66,489 | 66,489 | 66,489 | |||
| Derivatives | 1,651 | 1,651 | 1,651 | 1,651 | |||
| Senior unsecured debt | 1,238,469 | 1,238,469 | 1,268,327 | 1,268,327 | |||
| Subordinated liabilities | 336,892 | 336,892 | 407,558 | 407,558 | |||
| Total liabilities | 1,643,501 | 1,643,501 | 1,744,025 | 1,677,536 | 66,489 | ||
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.
For acquired loan portfolios, the valuation approach, key input data and valuation sensitivity for material changes thereto are described in the same note.
Derivatives used for hedging have been model-valued using interest and currency market rates as input data.
Treasury bills and Treasury bonds as well as bonds and other securities are valued based on quoted rates.
Fair value of debt in the form of issued bonds and other subordinated liabilities was determined with reference to observable market
| Group Acquired loan portfolios |
||
|---|---|---|
| SEK thousand | 31 Dec 2016 31 Dec 2015 | |
| Opening balance | 11,014,699 | 8,586,782 |
| Acquisitions | 3,329,382 | 4,370,259 |
| Adjustment of acquisition analysis | –29,536 | – |
| Translation differences | –22,785 | –315,835 |
| Changes in value | ||
| Based on opening balance forecast | ||
| (amortisation) | –1,911,916 | –1,587,651 |
| Based on revised estimates (revaluation) | 5,703 | –38,856 |
| Carrying value | 12,385,547 | 11,014,699 |
| Changes in carrying value reported in the | ||
| income statement | –1,906,213 | –1,626,507 |
rates quoted by external market players. In cases where more than one market price observation are available the fair value is determined at arithmetic mean of the market quotes.
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. No transfers between any of the levels took place during the period.
| Of which, designated at fair value | Group | ||
|---|---|---|---|
| SEK thousand | 31 Dec 2016 31 Dec 2015 | ||
| Opening balance | 1,177,808 | 1,460,229 | |
| Acquisitions | – | – | |
| Translation differences | 52,874 | –53 671 | |
| Changes in value | |||
| Based on opening balance forecast (amortisation) |
–186,090 | –167,331 | |
| Based on revised estimates (revaluation) | 68 | –61,419 | |
| Carrying value | 1,044,660 | 1,177,808 | |
| Changes in carrying value reported in the income statement |
–186,022 | –228,750 |
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 Dec 2016 | 31 Dec 2015 |
| Carrying value of loan portfolios | 12,385,547 | 11,014,699 |
| A 5% increase in estimated cash flow over the 10-year forecast period would increase the carrying value by: |
558,977 | 540,638 |
| of which, valued at fair value | 51,685 | 58,890 |
| A 5% decrease in estimated cash flow over the forecast period would reduce the carrying value by: |
–558,977 | –540,638 |
| of which, valued at fair value | –51,685 | –58,890 |
| Carrying value of loan portfolios acquired prior to 1 July 2011 | 1,044,660 | 1,177,808 |
| A 1% decrease in the market rate of interest would increase the carrying value by: | 31,174 | 34,774 |
| A 1% increase in the market rate of interest would reduce the carrying value by: | –29,483 | –32,880 |
| Shortening the forecast period by 1 year would reduce the carrying value by: | –26,534 | –33,073 |
| Lengthening the forecast period by 1 year would increase the carrying value by: | 20,938 | 21,424 |
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 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 | ||
| Capital instruments and related share premium accounts | 1,286,805 | 1,286,805 | 482,963 | 482,963 | ||
| Retained earnings | 472,965 | 316,687 | 307,205 | 232,259 | ||
| Accumulated comprehensive income and other reserves | 331,293 | 361,363 | 1,081,949 | 1,062,749 | ||
| Independently reviewed interim profits net of any foreseeable charge or dividend1) |
292,004 | 161,366 | 267,191 | 190,866 | ||
| Intangible assets (net of related tax liability) | –243,340 | –235,632 | –37,647 | –42,278 | ||
| Deferred tax assets that rely on future profitability | –47,268 | –62,688 | –2,734 | –2,224 | ||
| Common Equity Tier 1 | 2,092,459 | 1,827,901 | 2,098,927 | 1,924,335 | ||
| Capital instruments and the related share premium accounts | 379,577 | 93,000 | 379,577 | 93,000 | ||
| Additional Tier 1 capital | 379,577 | 93,000 | 379,577 | 93,000 | ||
| Tier 1 capital | 2,472,036 | 1,920,901 | 2,478,504 | 2,017,335 | ||
| Capital instruments and the related share premium accounts | 341,715 | 336,892 | 341,715 | 336,892 | ||
| Regulatory adjustments | – | – | – | – | ||
| Tier 2 capital | 341,715 | 336,892 | 341,715 | 336,892 | ||
| Total own funds for capital adequacy purposes | 2,813,751 | 2,257,793 | 2,820,219 | 2,354,227 |
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 |
||||
|---|---|---|---|---|
| Risk-weighted exposure amounts, SEK thousand | 31 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 |
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 |
| Exposures to institutions | 261,882 | 339,617 | 78,060 | 195,897 |
| of which, counterparty credit risk | 29,036 | 89,598 | 29,036 | 89,598 |
| Exposures to corporates | 199,920 | 136,601 | 10,238,303 | 8,789,030 |
| Retail exposures | 24,146 | 43,774 | 24,146 | 43,774 |
| Exposures in default | 13,270,498 | 11,244,739 | 2,646,432 | 2,646,612 |
| Exposures in the form of covered bonds | 247,485 | 126,821 | 247,485 | 126,821 |
| Equity exposures | – | - | 570,038 | 581 973 |
| Other items | 132,315 | 320,316 | 6,116 | 126 006 |
| Credit risk (standardised approach) | 14,136,246 | 12,211,868 | 13,810,580 | 12,510,113 |
| Market risk (foreign exchange risk – standardised approach) |
28,858 | 26,573 | 28,858 | 26,573 |
| Operational risk (basic indicator approach) | – | 2,600,728 | – | 755,709 |
| Operational risk (standardised approach) | 2,622,373 | - | 893,024 | - |
| Credit valuation adjustment (standardised approach) | 0 | 664 | 0 | 664 |
| Total risk-weighted exposure amount | 16,787,477 | 14,839,833 | 14,732,462 | 13,293,059 |
| Hoist Finance consolidated situation |
||||
|---|---|---|---|---|
| Capital requirements, SEK thousand | 31 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 |
| Pillar 1 | ||||
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 |
| Exposures to institutions | 20,951 | 27,169 | 6,245 | 15,672 |
| of which, counterparty credit risk | 2,323 | 7,168 | 2,323 | 7,168 |
| Exposures to corporates | 15,994 | 10,928 | 819,064 | 703,122 |
| Retail exposures | 1,932 | 3,502 | 1,932 | 3,502 |
| Exposures in default | 1,061,640 | 899,579 | 211,715 | 211,729 |
| Exposures in the form of covered bonds | 19,799 | 10,146 | 19,799 | 10,146 |
| Equity exposures | – | – | 45,603 | 46 558 |
| Other items | 10,583 | 25,626 | 489 | 10 079 |
| Credit risk (standardised approach) | 1,130,899 | 976,950 | 1,104,847 | 1,000,808 |
| Market risk (foreign exchange risk-standardised approach) |
2,309 | 2,126 | 2,309 | 2,126 |
| Operational risk (basic indicator approach) | – | 208,058 | – | 60,457 |
| Operational risk (standardised approach) | 209,790 | – | 71,442 | – |
| Credit valuation adjustment (standardised approach) | 0 | 53 | 0 | 53 |
| Total own funds requirement – Pillar 1 | 1,342,998 | 1,187,187 | 1,178,598 | 1,063,445 |
| Pillar 2 | ||||
| Concentration risk | 101,991 | 82,671 | 101,991 | 82,671 |
| Interest rate risk in the banking book | 30,000 | 71,453 | 30,000 | 71,453 |
| Pension risk | 4,106 | 5,358 | – | – |
| Other Pillar 2 risks | 794 | 23,656 | 794 | 24,421 |
| Total own funds requirement – Pillar 2 | 136,891 | 183,138 | 132,785 | 178,546 |
| Capital buffers Capital conservation buffer |
419,686 | 370,996 | 368,312 | 332,326 |
| Countercyclical buffer | 6,370 | 2,456 | 10,770 | 5,876 |
| Total own funds requirement – Capital buffers | 426,056 | 373,452 | 379,082 | 338,202 |
Total own funds requirements 1,905,945 1,743,777 1,690,465 1,580,193
The own funds for the Company's consolidated situation totalled SEK 2,814m (2,258) as at 31 December 2016, 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 0.04 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 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 | |
| Common Equity Tier 1 capital ratio | 12.46 | 12.32 | 14.25 | 14.48 | |
| Tier 1 capital ratio | 14.73 | 12.94 | 16.82 | 15.18 | |
| Total capital ratio | 16.76 | 15.21 | 19.14 | 17.71 | |
| Institution-specific buffer requirements for CET1 capital | 7.04 | 7.02 | 7.07 | 7.04 | |
| of which, capital conservation buffer requirement | 2.50 | 2.50 | 2.50 | 2.50 | |
| of which, countercyclical capital buffer requirement | 0.04 | 0.02 | 0.07 | 0.04 | |
| Common Equity Tier 1 capital available to meet buffers1) | 7.96 | 6.94 | 9.75 | 9.18 |
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 1,480m (1,370) at 31 December 2016, of which SEK 137m (183) 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 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 | |
| Deposits from the public, floating | 7,582,909 | 8,226,925 | 7,582,909 | 8,226,925 | |
| Deposits from the public, fixed | 4,266,047 | 4,564,452 | 4,266,047 | 4,564,452 | |
| Senior unsecured debt | 3,125,996 | 1,238,469 | 3,125,996 | 1,238,469 | |
| Convertible debt instruments | 379,577 | 93,000 | 379,577 | 93,000 | |
| Subordinated liabilities | 341,715 | 336,892 | 341,715 | 336,892 | |
| Equity | 2,545,719 | 2,195,760 | 2,139,996 | 2,037,994 | |
| Other | 907,963 | 795,979 | 632,535 | 555,407 | |
| Balance sheet total | 19,149,926 | 17,451,477 | 18,468,775 | 17,053,139 |
The Group's treasury policy stipulates limits on how much liquidity is to be available and the nature of such liquidity. As 30 September, available liquidity totalled SEK 5,789m (5,156), 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 Dec 2016 | 31 Dec 2015 |
|---|---|---|
| Cash and holdings in central banks | 3,073 | 281 |
| Deposits in other banks available overnight | 1,036,749 | 799,199 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks |
1,528,116 | 1,181,728 |
| Securities issued or guaranteed by municipalities or other public sector entities | 745,786 | 1,896,099 |
| Covered bonds | 2,474,849 | 1,268,214 |
| Securities issued by non-financial corporates | – | – |
| Securities issued by financial corporates | – | 10,000 |
| Other | – | – |
| Total | 5,788,573 | 5,155,521 |
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. These events may include:
An unexpected outflow from HoistSpar of over 20 per cent of total deposits over a 30-day period.
Termination or revocation of funding sources in excess of SEK 50m.
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousand | 31 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 |
| Pledges and comparable collateral for own liabilities and for reported commitments for | ||||
| provisions | 478 | 639 | – | – |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousand | 31 Dec 2016 | 31 Dec 2015 | 31 Dec 2016 | 31 Dec 2015 |
| Commitments1) | 1,565,944 | 651,064 | – | – |
1) Comparative figures have been adjusted due to changed accounting principle for forward flows.
| Return on book SEK thousand |
Quarter 4 2016 |
Quarter4 2015 |
Full year 2016 |
Full year 2015 |
|---|---|---|---|---|
| EBIT | 241,629 | 211,042 | 935,458 | 674,637 |
| + Operating expenses in Central Functions | 94,580 | 94,548 | 328,668 | 345,060 |
| EBIT excl operating expenses in Central Functions1) | 1,344,835 | 1,222,360 | 1,264,126 | 1,019,697 |
| Average carrying value of aquired loans | 12,158,301 | 10,958,586 | 11,968,471 | 10,099,774 |
| Return on book, % | 11.1 | 11.2 | 10.6 | 10.1 |
1) Calculated on an annualised basis (quarterly) 2) Calculated as average on previous period
| Adjusted EBITDA SEK thousand |
Quarter 4 2016 |
Quarter4 2015 |
Full year 2016 |
Full year 2015 |
|---|---|---|---|---|
| Profit for the period | 118,110 | 106,950 | 417,149 | 230,522 |
| + Income tax expense |
36,758 | 24,600 | 115,949 | 54,609 |
| + Portfolio revaluations |
–22,662 | –5,067 | –5,703 | 38,856 |
| – Interest income (excl. Interest from run-off performing portfolio) |
–699 | –6,223 | 3,283 | –28,103 |
| + Interest expense |
79,474 | 85,772 | 300,288 | 361,370 |
| +/– Net result from financial transactions, incl. Net credit losses | 7,987 | –57 | 98,789 | 56,239 |
| + Depreciation and amortisation of tangible and intangible assets |
13,891 | 11,704 | 52,796 | 46,866 |
| EBITDA | 232,859 | 217,679 | 982,551 | 760,359 |
| + Amortisation on run-off portfolio |
6,735 | 12,498 | 26,171 | 60,434 |
| + Amortisation on acquired loan portfolios |
508,193 | 474,204 | 1,911,916 | 1,587,651 |
| Adjusted EBITDA | 747,787 | 704,381 | 2,920,638 | 2,408,444 |
| Book value of run-off consumer loan portfolio | 32,194 | 58,365 | 32,194 | 58,365 |
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, 8 February 2017
Ingrid Bonde Liselotte Hjorth Chair of the Board Board member
Annika Poutiainen Costas Thoupos Board member Board member
Board member Board member
Magnus Uggla Gunilla Wikman
Jörgen Olsson CEO Board member
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
||
|---|---|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,104,772 | 1,032,221 | ||
| Portfolio amortisation and revaluation | –485,532 | –469,138 | ||
| Interest income from run-off consumer loan portfolio | 1,153 | 1,550 | ||
| Net revenue from acquired loan portfolios | 620,393 | 564,633 | ||
| Fee and commission income | 29,513 | 39,351 | ||
| Profit from shares and participations in joint ventures | 15,222 | 13,868 | ||
| Other income | 7,110 | 2,751 | ||
| Total revenue | 672,238 | 620,603 | ||
| Personnel expenses | –177,988 | –186,713 | ||
| Collection costs | –145,560 | –107,284 | ||
| Other operating expenses | –93,170 | –103,860 | ||
| Depreciation and amortisation of tangible and intangible assets | –13,891 | –11,704 | ||
| Total operating expenses | –430,609 | –409,561 | ||
| Operating profit (EBIT) | 241,629 | 211,042 | ||
| Funding | ||||
| Interest income excl. run-off consumer loan portfolio | 700 | 6,223 | ||
| Interest expense | –79,474 | –85,772 | ||
| Net financial income | –7,987 | 57 | ||
| Total financial items | –86,761 | –79,492 | ||
| Profit before tax | 154,868 | 131,550 |
| SEK thousand | Quarter 4 2016 |
Quarter 4 2015 |
|---|---|---|
| Revenue from acquired loan portfolios | 619,240 | 563,083 |
| Interest income | 1,853 | 7,773 |
| Interest expense | –79,474 | –85,772 |
| Net interest income | 541,619 | 485,084 |
| Fee and commission income | 29,513 | 39,351 |
| Net financial income | –6,727 | 57 |
| Other income | 7,110 | 2,751 |
| Total operating income | 571,515 | 527,243 |
| General administrative expenses | ||
| Personnel expenses | –177,988 | –186,713 |
| Other operating expenses | –238,730 | -211,144 |
| Depreciation and amortisation of tangible and intangible assets | –13,891 | –11,704 |
| Total operating expenses | –430,609 | –409,561 |
| Profit before credit losses | 140,906 | 117,682 |
| Net credit losses | –1,260 | – |
| Profit from shares and participations in joint ventures | 15,222 | 13,868 |
| Profit before tax | 154,868 | 131,550 |
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.
Earnings before interest, tax, depreciation and amortisation ("EBITDA"), adjusted by further adding back amortisation on run-off portfolios and amortisation on acquired loan portfolios.
Net profit for the period 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.
Operating expenses less fee and commission income and other 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 and costs related to other income and actual profit margin.
Net profit for the period divided by the weighted average number of outstanding shares after full dilution.
Earnings Before Interest and Tax. Operating profit before financial items and tax.
EBIT (operating earnings) divided by total revenue.
Fees for providing debt management services to third parties.
"Estimated Remaining Collections" is the company's assessment of the gross amount that can be collected on the loan portfolios that the company currently owns. The assessment is based on estimates for each loan portfolio and ranges in duration from the proceeding month to 120 months ahead. The estimates for each loan portfolio are in turn based on the company's extensive experience of actively working and collecting on the loan portfolios during their 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.
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.
EBIT (operating profit) for the period, exclusive of Central Function operating expenses, calculated on an annualised basis, in relation to the average carrying value of acquired loans. In the company's reports, the average value is calculated based on the opening amount at the beginning of the period and the closing amount at the end of the period
Profit for the period adjusted for accrued unpaid interest on Additional Tier 1 capital, calculated on an annualised basis, divided by equity adjusted for AT1 capital reported in equity, calculated 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 sales of EUR 50 million 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 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.
A CET1 ratio in excess of 12 per cent – though we may temporarily fall short of this level due to major portfolio acquisitions or goodwill effects when acquiring businesses.
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.
| 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. |
| The annual report will be published on our homepage at the latest |
23 March 2017 |
|---|---|
| Annual general meeting | 28 March 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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