Interim report January – June 2015

April–June, year-on-year

• Gross cash collections increased 36 per cent to SEK 834m (615)
• Total revenue increased 34 per cent to SEK 537m (401)
• EBIT totalled SEK 161m (132)
• The EBIT margin was 30 per cent (33)
• Profit before tax totalled SEK 52m (56)
• Portfolio acquisitions totalled SEK 665m (897)
• Basic earnings per share totalled SEK 0.53 (0.79) Diluted earnings per share totalled SEK 0.51 (0.66)1)

30 June, year-on-year

• The carrying value of acquired loans2) increased 22 per cent to SEK 9,040m (7,386)
• Gross 120-month ERC (Estimated Remaining Collections) increased26 per cent to SEK 15,316m (12,182)
• The total capital ratio improved to 15.28 per cent (12.74)
• The CET1 ratio was 12.58 per cent (9.24)
• Financial net amounted to an expense of SEK 109m (expense: 76) and was charged with an expense of SEK 4m (expense: 7) related to currency and interest hedges

Subsequent events

• Hoist Finance acquired an extensive and diversified loan portfolio on 1 July 2015 for a total investment of SEK 1,256m

1) Includes effect of 983,913 outstanding warrants.

2) Including run-off consumer loan portfolio and portfolios held in joint venture.

Statement by the CEO

Continued stable earnings trend and high market activity

Hoist Finance continued its stable growth with a good earnings trend during the second quarter of 2015. Gross as well as net revenue from acquired loan portfolios was the highest ever, as was total revenue. EBIT was up 22 per cent year-on-year.

The EBIT margin was impacted by the rise in legal collections during the quarter, particularly in the UK. This has increased costs in the short term according to plan.

High market activity and the single largest acquisition to date

The second quarter was primarily distinguished by high market activity with negotiations and acquisitions in multiple markets, including the acquisitions of loan portfolios in Poland, Italy and Germany. Major efforts were also focused on preparing for the significant Compello acquisition in the UK. All of these portfolios will generate revenue as of the third quarter.

We are very pleased to have completed its single largest transaction to date on July 1st with the acquisition of debt management company Compello Holdings. The acquisition includes a diversified banking portfolio, comprised of over one million overdue loans from 19 financial institutions and an established collection platform with 178 employees. At 30 June 2015 the portfolio had estimated collections (ERC) of approximately SEK 2,823m over 120 months.

This acquisition is highly consistent with our strategy to develop and strengthen our position in key markets. It also enables us to increase our operational capacity and thereby consolidate our market position among core banking customers in the UK.

The acquisition will not give rise to any acquisition goodwill, as the entire purchase price is related to the debt portfolios. The total investment is SEK 1,256 million.

Overall, Hoist Finance has thus far this year acquired portfolios valued at SEK 2.5 billion, including Compello, which is well in line with our target for 2015.

A growing market

The supply of non-performing consumer loans is expected to remain strong due to the growing need of many European banks to divest loan portfolios. Although the market remains competitive, we have not seen any discernible changes in pricing during the year. We have, however, seen greater pricing harmonisation between countries.

Strategy for continued profitable growth

In line with our successful strategy, we will continue to ensure long-term profitable growth. Our strategy is based on wide geographical presence, a focused acquisition model based on well-structured processes, and long-term instalment plans founded on fair and amicable settlements.

As always, we focus on deepening our relationships with partners in existing markets and following them into new markets, while also working to strengthen our position as a permanent work-out unit for the largest international banks. We also actively evaluate various opportunities to enter new European markets.

Another important component of Hoist Finance’s strategy is to have well-diversified financing through deposits from the public as well as the bond market. Hoist Finance’s capital adequacy was considerably strengthened through the new share issues conducted in 2014 and in conjunction with the IPO in 2015.

As a credit market company Hoist Finance is well versed in what it means to operate in a regulated environment with internal governance, risk management and control, and is thus able to meet its partners’ high standards. 

Outlook

With a strong financial position and over 20 years’ experience, and as leading partner to many international banks, Hoist Finance is well positioned to capitalise on the growing market. We also see good acquisition opportunities during the remainder of the year. Accordingly, our assessment is that we will achieve or exceed our indicated acquisition volumes for 2015 – ie, volumes in line with or higher than recent years.

Jörgen Olsson

CEO

Hoist Finance AB (publ)

A teleconference for investors, analysts and media will be held at 09.00 AM (CET).

Jörgen Olsson, CEO and Pontus Sardal, CFO will present and comment the report.

Visit our website: http://ir.hoistfinance.com/ for link to the audiocast and the presentation material.

Dial-in details for the conference call: SE: +46 8 566 426 62 UK: +44 203 428 14 13 US: +1 855 831 59 44

The presentation and the report will be available on www.hoistfinance.com after the publication.

For further information please contact : Anne Rhenman Eklund, Group Head of Communications and IR Hoist Finance Phone: +46 (0)8 555 177 45

The information in this interim report has been published pursuant to the Swedish Securities Market Act and/or Swedish Financial Instruments Trading Act. This information was submitted for publication on 31 July 2015 at 8.00 A.M. (CET).

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 guidance and format set forth in 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.

About Hoist Finance

Hoist Finance AB (publ) is a leading debt restructuring partner to international banks and financial institutions, offering a broad spectrum of advanced solutions for acquisition and management of non-performing unsecured consumer loans. The Company operates through 10 in-house collection centers across Europe, complemented by local external debt servicing partners. The total carrying value of Hoist Finance’s acquired loans was approximately SEK 8.9 bn at 31 December 2014.
Hoist Finance is, through its subsidiary Hoist Kredit AB (publ), a regulated “Credit Market Company” under the supervision of the Swedish Financial Supervisory Authority (Swe. Finansinspektionen). In Sweden, the company offers internet-based savings deposit service HoistSpar, with around 65,000 active accounts. In addition, Hoist Kredit AB has three outstanding series of notes listed on Nasdaq OMX Stockholm.
www.hoistfinance.com