Interim report Q2 2016
April – June 2016
- Gross cash collections on acquired loan portfolios increased 29 per cent to SEK 1,076m (834).
- Total revenue increased 22 per cent to SEK 654m (537).
- Reported EBIT was SEK 231m (161) and the EBIT margin was 35 per cent (30).
- Profit before tax totalled SEK 125m (52).
- Portfolio acquisitions totalled SEK 507m (665).
- Basic earnings per share was SEK 1.25 (0.53). Diluted earnings per share was SEK 1.22 (0.51).
Figures in parentheses refer to Q2 2015.
30 June 2016
- Carrying value on acquired loan portfolios totalled SEK 11,360m (11,279).
- Gross 120-month ERC (Estimated Remaining Collections) totalled SEK 19,230m (19,367).
- The total capital ratio improved to 15.73 per cent (15.21).
- The CET1 capital ratio was 12.87 per cent (12.32).
Figures in parentheses refer to 31 December 2015.
Events during the quarter
- Moody’s Investors Service assigned Hoist Kredit AB (publ) a Ba2 credit rating, subsequently upgraded to Ba1 with a stable outlook.
- Hoist Finance established a presence in the Spanish market.
- A partnership with the Bank of Greece was entered.
Statement by the CEO
An eventful quarter with establishment in Spain, obtaining a credit rating and a successful issue in the capital market
We have now reached the halfway mark in 2016 and our strong and stable journey continues toward becoming the leading debt restructuring partner for international banks and financial institutions. Compared with the yearearlier period, gross cash collections on acquired loan portfolios increased by 29 per cent, EBIT by 43 per cent and profit before tax by 139 per cent. Exclusive of non-recurrent expenses, net profit totalled SEK 146 million – nearly three times the amount achieved during the same period last year.
Credit rating and successful issue in the bond market
During the quarter, yet another building block was added to our company in the form of a credit rating of Ba1 from Moody’s Investors Service (Moody’s). In Moody’s objective analysis of Hoist Finance, they recognised our extensive experience of debt management in Europe, where we have been operating for over 22 years. They also recognised our stable finances in the form of strong capital adequacy and a favourable liquidity position. The credit rating has enabled us to diversify our financing to a greater extent, and during the second quarter we implemented a successful first issue in the amount of EUR 250m under our newly established EMTN programme. A portion of our outstanding bonds was repurchased in conjunction with this, which was tied to non-recurring costs of about SEK 22m.
Stable development in all regions
On the regional level, all regions reported improved year-on-year EBIT results. In Region West Europe, our increased focus and the activities conducted during the quarter produced results, reflected in improvements to EBIT, EBIT margin and return on book.
Establishment in two new markets
Early in the quarter, we announced our signing of a strategic partnership agreement with Greece’s central bank for the management and administration of assets in 16 Greek banks under liquidation. Under the agreement, we will work with two partners to assist the Greek central bank in recovering overdue loans. During the quarter, we also had the pleasure of announcing our establishment in the Spanish market, which we regard as yet another milestone in our history. Spain is one of Europe’s largest debt markets and a market that we have for quite some time.
High market activity with fewer acquisitions
Acquisitions during the second quarter totalled SEK 507 million, down 24 per cent year-on-year. We are seeing an increase in supply in several of the countries in which we have a presence, while also noting higher price competition. While we are well positioned to grow in this market, we will continue to be one of the industry’s more disciplined players and ensure that we acquire portfolios at attractive levels in terms of both profitability and risk. Through our competitive financing, our geographic presence and our long experience, we are well prepared to acquire major portfolios in the banking and finance sector and we will continue to generate profitable growth for our shareholders. For the full-year, our target of maintaining an acquisition volume in line with the past three years remains in place.
Referendum on the UK’s membership in the EU
During the quarter, a referendum was held on the UK’s membership in the EU. Hoist Finance’s Region West Europe mainly comprises our operations in the UK, and it is difficult to predict how the Brits’ indicative vote will affect us in the long term. Hoist Finance’s operations in the UK generate revenues and incur expenses in GBP, which partly mitigates currency effects associated with a British exit from the EU. We have a strategy of minimising interest-rate and currency risks, and in the immediate horizon, we are hedged against currency and interest-rate fluctuations.
We are maintaining a steady course, and have continued to develop our offering and build our position as the leading debt restructuring partner to international banks and financial institutions. This results in deeper and closer relationships with our partners, whose understanding increases of the expertise that they can get and how we can help them achieve greater returns on non-performing assets. Our success is achieved through our working practices, which provide us with a solid understanding of our customers’ circumstances that allows us to focus on reaching constructive agreements over time.
The quarter’s performance confirms Hoist Finance’s growth aspirations and our ambitious yet attainable targets for the full-year and beyond.
Hoist Finance AB (publ)
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 28 July 2016 at 8:00 AM CET.