Alternative performance measures
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 and Return on book are two 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
Acquired loan portfolios
An acquired loan portfolio consists of a number of defaulted consumer loans or debts that arise from the same originator.
Additional Tier 1 capital
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.
Average number of employees
Average number of employees during the year converted to full-time posts. The calculation is based on the total average number of employees per month divided by the numbers of the month.
Basic earnings per share
Net profit for the period divided by the weighted average number of outstanding shares.
Capital requirements – Pillar 1
Minimum capital requirements for credit risk, market risk and operational risk.
Capital requirements – Pillar 2
Capital requirements beyond those stipulated in Pillar 1.
Common Equity Tier 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 ratio
Common Equity Tier 1 in relation to total risk exposure amount.
Cost/Gross cash collections on acquired loan portfolios
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.
Diluted earnings per share
Net profit for the period divided by the weighted average number of outstanding shares after full dilution.
Earnings Before Interest and Tax.
EBIT (operating earnings) divided by total revenue.
Fee and commission income
Fees for providing debt management services to third parties.
Gross ERC 120 months
“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 collections
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 Hoist Finance’s Litigation process. This process assesses those customers with the means to pay and is followed through a regulatory environment and court enforcement process.
Net revenue from acquired loans
The sum of gross cash collections from acquired loan portfolios and income from the run-off consumer loan portfolio, less portfolio amortisation 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.
Return on assets
Net profit for the period divided by average total assets.
Return on book
EBIT (operating profit) for the period, 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 on the basis of the opening amount at the beginning of the period, and the closing amount at the end of the period.
Return on equity
Net profit for the period, calculated on an annualised basis, divided by shareholders’ equity calculated as an average between the value at the beginning of and at the end of the period.
Risk exposure amount
The risk exposure amount is 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.
Tier 1 capital
The sum of CET1 capital and AT1 capital.
Tier 1 capital ratio
Tier 1 capital as a percentage of the total risk exposure amount.
Tier 2 capital
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.
Total capital ratio
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 average number of diluted shares
Diluted weighted-average shares outstanding includes the weighted average number of common shares outstanding plus the potential dilution that could occur if equity awards from the warrants are exercised and converted into common shares.