Interim report January - March 2015

Transcription

1 Interim report January - March 2015 May 6, 2015 Stable earnings geared for growth

2 Introduction to Hoist Finance Introduction Established in 1994, Hoist Finance is a leading debt restructuring partner to international banks Main focus is the acquisition and management of bank-originated non-performing unsecured consumer loans (NPLs) 20 year track record of successfully acquiring and collecting on more than 1,550 NPL portfolios Amicable collection process striving for sustainable repayment plans Licensed and supervised by the SFSA with access to cost-efficient deposit funding base, HoistSpar, in Sweden (98% of deposits covered by Swedish deposit guarantee scheme) Diversified funding through senior and subordinated unsecured bonds in SEK and EUR Clear focus on debt purchase and FIs 17% Pan-European presence in nine countries Funding operations (HoistSpar) and Headquarter 20% Debt Purchasing and Debt Collection operations 12% Carrying value (1) 8.8bn 24% 27% PRODUCT MIX (2) Revenue Q TYPE OF DEBT (3) Carrying value 31 March 2015 Third-party collections & Other 10% Trade & Other 4% Debt Purchase 90% Financial Institutions (FI) 96% Focus on bank originated debt 1) Including run off portfolio of consumer loans and portfolios contained in joint venture 2) Third-party collections and other ratio defined as revenue from servicing divided by total revenues 3) Financial institutions ratio defined as unsecured B2C FI debt to total. Trade & Other include unsecured B2C Retail, Secured and Other 2

3 Solid business model with over 20 years of experience Hoist Finance acquires non-performing consumer loans primarily from banks which are collected in a responsible manner and provide for stable and predictable cash flows over a long time period 2-3x Loans Loans Loans Loans Loans Loans 1. Contact 2. Open dialogue 5 10% of face value 3. Agreement Purchase price 1-2 years 3-4 years 5-6 years 7-8 years 9-10 years Cash collections Hoist Finance is a leading debt restructuring partner to international banks Optimised model for collections, both in-house and outsourced collection High earnings visibility due to strong track record of collections Portfolios from well reputed international banks Diversified presence we are where our clients are Debt portfolios based on responsible origination Liquidity and economy of scale benefits Focus on compliance, reputation and ethical behaviour Diversified funding 3

4 Amicable settlements AMICABLE AND RESPECTFUL COLLECTIONS Collection model shaped over 20 years of collections on own books Can pay Will pay Process payment Will not pay Legal enforcement Small installments debtors can afford, long term solutions Cannot pay Nominal payment Diarise INSTALMENT PLANS VS. ONE-OFF COLLECTIONS (1) Amicable approach to facilitate better consumer recovery and provide stable cash flows One-off 13% 1. Contact 2. Open Dialogue In-house collection model, complemented by preferred partners in selected markets 3. Agreement Instalment plans 87% Flexible full service offerings adapted to client needs 4

5 Highlights Q1 Key events during the quarter Successful listing on Nasdaq Stockholm with broad interest from Swedish and international investors With substantially improved capital adequacy and strong liquidity we are now well positioned for continued growth Q1 well in line with our expectations with stable earnings Negative impact from one-off items in Q1 costs IPO related cost (SEK 78M, whereof 45M over P&L) Hedging derivatives (SEK 20M) Seasonality effect on portfolio investments Newly acquired platforms in Italy and Poland are well integrated and performing according to plan S 5

6 First quarter key financial highlights Gross cash collections (SEK million) EBIT (adjusted for IPO costs) (SEK million) +33% % Q Q Q Q Total revenue (SEK million) Portfolio acquisitions (SEK million) % % 273 Q Q Q Q

7 Seasonality in portfolio acquisitions Prerequisites Outcome SEK million The timing of our portfolio investments are uneven during the year. In % of our investments came in the fourth quarter of the year This has an impact on collections, cash flow, capital ratios end earnings Therefore we tend to see the highest growth in EBIT in the second half of the year Q1 Q2 Q3 Q4 7

8 Regional overview Germany and Austria Comments SEK million Q Q Change Full year 2014 Gross cash collections % 724 Total revenue % 446 Gross cash collections up 63%. We have successfully realized a sale of a large secured asset EBIT margin down as it suffers from fast amortizing performing book acquired in Adjusting for this the EBIT margin is stable Portfolio acquisitions up from last year EBIT % 195 EBIT-margin, (%) pp 44 Carrying value % month ERC % ) Including run-off portfolio of consumer loans 2) Excluding run-off portfolio of consumer loans 8

9 Regional overview France, Belgium and the Netherlands Comments SEK million Q Q Change Full year 2014 Gross cash collections % 733 Total revenue % 256 EBIT improved by 80% predominantly driven by the Netherlands Restructuring in France running according to plan and cost. Guyancourt site will be closed down mid summer Portfolio purchase down as a large portfolio was acquired in the Netherlands in Q EBIT % 61 EBIT-margin, (%) pp 24 Carrying value % month ERC %

10 Regional overview UK Comments SEK million Q Q Change Full year 2014 Gross cash collections % 527 Total revenue % 458 Cash collections up by 14% as a result of a growing book Increased litigation activities undertaken which will support cash collections going forward however slightly affecting margins short term Slow quarter in terms of purchasing EBIT % 181 EBIT-margin, (%) pp 40 Carrying value % month ERC %

11 Regional overview Italy Comments SEK million Q Q Change Full year 2014 Gross cash collections % 261 Total revenue % 170 EBIT % 64 Gross cash collections up 146% as a result of the strong investment level last year EBIT margin back-on-track following the acquisition of TRC August last year No further acquisitions in Q1 as focus has been on integrating the large portfolio purchased in December last year EBIT-margin, (%) pp 37 Carrying value % month ERC %

12 Regional overview Poland Comments SEK million Q Q Change Full year 2014 Gross cash collections % 296 Total revenue % 279 EBIT % 202 Navi Lex integrated and all contracts managed by external DCAs transferred in-house EBIT margin coming down somewhat as following the acquisition of Navi Lex, but remains at very attractive level Portfolio purchase have marginally increased year on year EBIT-margin, (%) pp 72 Carrying value % month ERC %

13 Financial highlights SEK M Quarter Quarter Change % Gross cash collections Net revenue from acquired loans Total revenue EBIT Costs in connection to the listing in the income statements 45 - n/a EBIT adjusted for costs in connection to the listing EBIT margin adjusted for costs in connection to the listing, per cent pp Financial net - whereof net income from financial transactions n/a Profit before tax Profit before tax, adjusted for costs in connection to the listing Net profit for the period Portfolio acquisitions Return on equity, % pp 31 Mar Mar 2014 Change % Carrying value of acquired loans, SEK M 1 8,827 6, Gross ERC 120 months, SEK M 2 15,238 10, Total capital ratio, % pp CET-1 ratio, % pp Liquidity ratio, % pp 1) Including run-off portfolio of consumer loans and portfolios contained in joint venture 2) Excluding run-off portfolio of consumer loans and portfolios contained in joint venture 13

14 Balance sheet Balance sheet structure Q Balance sheet development SEK million SEK million Q Q Change Cash and interest-bearing securities % Acquired loans % Cash and Interest-bearing Securities % Liquidity Reserve Floating Deposits Other assets % Total % 608 Other Liabilities Deposits % Senior unsecured debt % Acquired Loans % Termfunding Year Deposits Senior Unsecured Debt Subordinated debt % Other liabilities % Shareholders equity % Total % 334 Subordinated Debt Other Assets Shareholders Equity (incl. Tier 1) 1) Including run-off portfolio of consumer loans and portfolios held in joint venture 14

15 Hoist Finance in a low interest rate environment Recent development Impact on financial net Near term outlook Strive for diverse funding, reducing mismatch Hedging strategy Lowering offered deposit rates Net deposit inflows with mix moving towards term deposits EUR-bond issued Falling rates impacting mark- to market valuation We anticipate this effect to unwind in the medium term Instant effect on Flex accounts, gradual effect on term deposits Term deposits in favor of Flex Further bond issues unlikely Periods of deposit outflow would not jeopardize liquidity level Receiving even more modest yield on liquidity Low risk profile Short tenor 15

16 Funding structure, capital- and liquidity ratios Funding structure Capital ratios 13% 2% 9% 8% 3% 7% 21% Equity Subordinated debt Senior unsecured debt 1-3 Year deposits 14,3% 5,7% 15,1% 7,2% 17,1% 9,2% 30% Floating deposits 46% 61% CET 1 ratio Tier 1 capital ratio Total capital ratio Q Q Liquidity ratios Q Q Improved capital ratios 61% 48% Improved maturity matching Strong liquidity ratio Liquidity ratio Q Q

17 Our strategy and financial targets Cornerstones of our strategy Our financial targets TO CONTINUE TO POSITION THE COMPANY AS THE LEADING DEBT RESTRUCTURING PARTNER TO INTERNATIONAL BANKS Strengthen platform in current markets and continue European expansion Maintain business focus and underwriting discipline Optimize collection strategies with primary focus on in-house collections Utilize embedded operating leverage to increase efficiency Maintain solid capital and liquidity positions Profitability Capitalization Dividend policy By utilizing our operating leverage we aim to achieve an EBIT margin of above 40% in the medium term Common equity Tier 1 capital (CET1) ratio to exceed 12% with potential to temporarily go below as a result of large portfolio or goodwill acquisitions As we continue to foresee substantial acquisition opportunities in our markets we will initially aim to distribute around 25 30% of our net profit as dividend over the medium term. Given the historically strong cash flow generation of our business, our long term aim is to distribute around 50% of the annual net profit as dividend 17

18 Outlook Continued focused strategy on profitable growth and geographical expansion Well placed to capture growth opportunities in the market Positive trend with substantial amount of portfolios in pipeline Target for FY 2015: purchase volumes in line with or higher than

19 Key takeaways Q1 well in line with our expectations with stable earnings Seasonality effect on portfolio investments Impact from financial items and one-off cost related to IPO Newly acquired platforms well integrated and performing according to plan Very strong balance sheet 19

20 Appendix

21 Cash flow (incl. Adjusted EBITDA) Adjusted EBITDA reconciliation Adjusted EBITDA development SEK million Q Q Full Year 2014 SEK million Net profit for the period income taxes portfolio revaluations interest income (excl. Interest from run-off performing portfolio) interest expense /- net result from financial transactions depreciation and amortisation EBITDA % + amortisation on run-off portfolio amortisation on acquired loan portfolios Adjusted EBITDA Capital expenditure PPE and IT Operating cash flow Net interest expenses (excl. Interest from run-off performing portfolio) Operating cash flow after financing expenses Q Q Full year 2014 Portfolio acquisitions

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