Welcome to the Exactor SC Presentation of Q4 2020 Results. Throughout the call, all participants will be in a listen only mode and afterwards there will be a question and answer session. Today, I'm pleased to present your speakers. Please go ahead with your meeting.
Good morning, and welcome to Oxoctor's Q4 presentation for 2020. This presentation will be divided into 4 parts. Firstly, we will take you through the Q4 financial highlights. Secondly, we will shortly describe the refinancing exercise we announced in December. The transaction will be finalized now in February.
During second half, Akzoctur has revised the company's strategy, and we would like to share a few important elements of this process. As always, we will conclude the presentation with an outlook and summary before we open up for Q and A. Please move to the next slide for financial highlights. Q4 was a quarter significantly affected by one off effects, both positive and negative. I will revert to these later in the presentation.
If we look at the main financial figures, they were in line with our expectations for the quarter. As we mentioned during our Q3 presentation, the Q4 was expected to continue the positive performance trend, But we also underline that we did not expect to see the traditional seasonal increase in Q4 versus Q3. There were several reasons, such as the COVID-nineteen second wave and the challenging environment for closing new third party collection agreement. For the Q4, we delivered €95,000,000 in gross revenue, a total income of €68,000,000 a cash EBITDA of 60 €4,000,000 and a reported EBITDA of €21,000,000 The annualized return on equity to shareholders were 4%. Even though 2020 was a challenging year, we still managed to deliver gross revenue close to €330,000,000 A total income of $205,000,000 and a cash EBITDA of $213,000,000 The reported EBITDA was obviously highly by portfolio revaluations and ended up at $36,000,000 The return on equity to shareholders ended unfortunately in negative territory for the year at minus 5%.
Let's move on to the next slide, where we look closer at the gross revenue development per business segment. All our business segments had a positive gross revenue development in Q4 compared to last quarter. If you look closer at the 3 segments, starting with Entel, we did achieve a gross revenue of €69,000,000 This was mainly a result of normalization towards pre pandemic levels and that we did invest north of €200,000,000 in new portfolios during the year. In other words, we are still in investment mode with increasing book values on portfolios, although at a lower growth level than previous years. Q4 gross revenues also showed year on year growth further underlying this point.
For 3rd party collection or 3PC as we also call it, The gross revenue increased substantially from Q3, up from €11,000,000 to €14,000,000 But unfortunately, we are not back at pre pandemic levels yet. As mentioned during the Q3 presentation, we have experienced that closing of new 3PC contract has taken longer time than what we consider normal, As some customers are postponing the decision regarding new collection partners. Other customers have been holding back on volumes sent to collection, We can now see that these effects are diminishing, and we expect PTC volumes to pick up during 2021 onwards. For our run off segment reals, the sales came in at €12,000,000 which was a positive surprise in our view. The trend from Q3 continued with higher volumes at better prices than anticipated.
However, Rios is only accounting for a small Part of our balance sheet, some 3% of our total book value exposure on portfolios. On the next slide, we can see the So the gross revenue trend is also translating into margin expansion. In this graph, we focus on our core business segments NPL and 3rd party collection. Hence, the RIIO figures are excluded in the illustration. Please note that the figures for Q4 should be good for comparison year over year as the cost base in Q4 is not significantly affected by the pandemic.
The gross revenue for the business areas increased by 7% combined for Q4 2020 compared to same quarter last year. Even more interesting is the development in personnel expenses. For the same comparison period, the personnel expenses are down close to €1,500,000 or 9%. This is crucial for Sutter as one of our main strategic goals is to be industry leading on cost to collect, and personnel costs are a significant part of that equation. Operating expenses are also down but only a moderate 1%.
In Axtraker, we are constantly focusing on our cost position, and we expect to be able to push for further margin expansion going forward. Let's now look a bit more into details on each of the business segments, starting with NPL on the next slide. As you have already seen, the NPL collections has continued to normalize. For Q4, the contribution margin is down 10 percentage points compared to Q3 from 78% to 68%. But here, it is important to note that the regular amortization level is back to a normalized level of 40% for the quarter compared to 34% in Q3.
Furthermore, our sector is taking a negative revaluation on the NPL book of €8,900,000 in Q4, which takes the total income down to €33,000,000 As you probably remember, we also did a negative revaluation of the NPL book of €27,000,000 in Q2 last year. We also commented that we assume curves to be back at pre COVID levels from the start of this year. This negative revaluation It's primarily a result of us not being entirely back to pre pandemic levels yet as anticipated. Hence, We see the need to also adjust the curves for 2021 and first half of twenty twenty two. The revaluation is also partly explained by some underperformance in Q4.
We obviously regret that we must reevaluate, but the fact is that the pandemic situation has lasted longer than what we assume We revised the curves in Q2 of last year. On the next page, we will give more details on which assumptions we are taking regarding the collection curves going forward. As you can see from the graph, our cash collection did not meet our forecast in the Q4, which is shown as the difference between the blue bar marked as Q4 and the green curve line. Our new active forecast, being the curves presented after the negative revaluation of $8,900,000 are now aligned with the current performance and is shown at the orange curve line. There are different ways to implement the curve adjustments.
Axascto takes a prudent approach, and accounting wise, We assume historical underperformance as loss. This is a more conservative approach than one assuming that all All parts of the underperformance can be recaptured in the future. However, it is worth mentioning that this does not necessarily mean that the collections are actually lost As there are not made any adjustments to the claim against debtors and the debt can still be partly or fully repaid. Now turn to the next slide for more in-depth comments on the 3PC development. As already mentioned, the TTC revenues reached €14,000,000 for the quarter, showing that the recapture after the 1st pandemic wave is well underway.
However, the business segment is still burdened by the pandemic as we are down 11% year over year. On the positive note, we are recording the highest contribution margin since Q2 2019 or 44%. The margin expansion is primarily driven by cost reductions. And over time, we also expect scale effects to be a positive contributor to further margin improvements. Let's move to the next slide for more details on our runoff segment, Riaz.
You have already seen the review of financial performance for the quarter, so I will not repeat it. As you probably remember, Astraktar did an impairment accrual of EUR 27,000,000 in the first half of twenty twenty. This was based on the prices and sales volumes that we experienced at the time. We also informed that we have engaged an external Appraiser should provide us with an updated external valuation for the entire portfolio. In Q3, we released approximately €5,000,000 of this accrual due to higher sales volumes and better prices than first anticipated.
The external valuations are now finalized, and they support a higher valuation and what we used in our calculation. This is further backed by the prices and volumes we have seen over the last two quarters. Based on this, we have concluded to book a final impairment of EUR 16,000,000 and hence, further releasing close to EUR 6,000,000 of the initial accrual done in first half of twenty twenty. The fully consolidated book value at year end was €79,000,000 and at SACTRES exposure, it's approximately 40% of this amount due to minority interest in the structure. On the next slide, we will present more details on the reported financials.
If we start with total income, it was obviously burdened with the €8,900,000 negative NPL revaluation ending up at €58,000,000 for the quarter. The reported EBITDA margin came in at 36%, also burdened with the same negative revaluation, but the EUR 5,900,000 accrual release on Rios pulls the EBITDA in the opposite direction. Cash EBITDA came in at €64,000,000 for the quarter. More details on items affecting the quarter will be given in the next couple of slides. Let me start with net profit after tax on Slide 11.
As we saw previously, Axopter reported an EBITDA of €21,300,000 Depreciation and amortization were at an expected level of €3,000,000 However, the net financial items are extraordinarily high With EUR 17,700,000 booked. The reason is that we have included an interest cost write down of capitalized fees of EUR 7,000,000 due to the refinancing of the company. The tax expense came in at €2,700,000 positive as we got a net Tax income from recognition of deferred tax assets in the quarter. This translates into net profit after tax of €3,300,000 with a corresponding 3.6% annualized return on equity excluding non controlling interest. On the next slide, we can try to summarize some significant items On total income, revaluation effects will affect the total income by €10,300,000 Also, gross revenues have been increased by $3,000,000 due to a valuation increase on our forward flow contracts as they are treated as our financial instrument.
Adjusting for these two items, the total income will increase from the reported number of $58,500,000 up to 65,800,000 The RIIO accrual reversal will reduce our RIIO cost of sale and hence increased reported operating expense from €37,100,000 to €43,000,000 Net change on these items gives an EBITDA of €22,800,000 compared to the €21,300,000 reported in the delay. On net financial items, the effects from the capitalized loan fees will be partly netted by a positive currency effect of €3,700,000 In total, these items would bring the profit before tax up to €5,500,000 compared to the 0 point €7,000,000 reported. With this, we conclude the Q4 financial highlights. Let's move to Slide 14 for a recap of our refinancing exercise. As you probably are aware of, in December 2020, we announced a major multistep The transaction consisted of 4 main elements: An equity issue of €30,000,000 that was closed in January this year.
Last week, the subsequent repair offering was also closed, securing another $20,000,000 of equity to the company. Secondly, our unsecured bond was refinanced. We also refinanced our main bank facility with DNB and Nordea. And finally, we rolled out Assakylnet effectively buying around 50% stake in the SEB. At Saxe, we loaned 1 100 percent of Saxe and West, the RCF was merged with our main credit facility, And we also refinanced the methamine loan.
The main motivation for the transaction was to simplify the structure, Extend the maturity on our credit lines and increase investment capacity. We obviously also wanted to reduce our funding costs. This was achieved through better terms and improved structure of the RCF facility. The roll off of the We triggered a mandatory offer from Geviran for 100% of the shares in Axaptur as Geviran exceeded onethree ownership of the company. The mandatory offer is at APNOC, and the Board of Directors in Max Otter has recommended shareholders not to accept.
The full transaction, including the monetary offer from Geviran, will be concluded within Q1. On the next slide, we can see more details on the new maturity profile. As part of the transaction, all the major credit facilities were refinanced and the maturities extended. The RCFs, Inaksoctil and Aksoctil Met, was merged into one credit facility of EUR 620,000,000 with EUR 75,000,000 being an accordion option. The result is that we have no maturities of any significance until January 2024.
On the next Slide, we will share more details on how the transaction affects our balance sheet through a pro form a overview. The transaction has obviously several effects on our balance sheet. The most important are on the asset side, the cash increased by €29,000,000 net of fees. The equity will increase by close to €100,000,000 The equity ratio increases from 28% up to 31%. Non controlling interest will decrease from $74,000,000 to $25,000,000 And also, we will have a reduction of close to $20,000,000 in the interest bearing debt.
All in all, we are very satisfied with the outcome of the transaction and are now looking forward to focus all our resources on improving the business further.
As I
mentioned in my introduction, Axocto has revised its strategy. If we could please move to Slide 18, I will share some of the details from that process. Even though Axaltor has revised the strategy, we will recognize most of the main elements from before. For us, Strategy is simply explained, a tool for us to decide where and how to compete. The 3 pillars in our strategy remains unchanged, But we are doing certain adjustments to meet them in a better way.
I will give you a short recap of the 3. Akstagtir shall focus on the bank financing sector. We would like to be the preferred partner for banks and financial institutions when it comes to collection services and sale of non performing loans. Secondly, we shall pursue profitable organic growth and exploit external economies of scale. And finally, we are using the concept OneLife Software, where we emphasize on building the best debt collection platform in the industry.
Key elements are how to take maximum advantage of the already standardized IT system and infrastructure that all other countries operates on, Cross country collaboration and competence sharing continuously developed our highly skilled employees and alignment of the operational model. If you can move to the next slide, please, we will give some more flavor on how to pursue profitable growth. There are of course several ways to approach the target. When we have evaluated what is important for Exactra, the idea of maximizing the risk reward is key. So when we have concluded on where to compete, it has always been with the risk reward thinking as a foundation.
This is also the reasoning behind our geographical presence. Rather than planting flags in a lot of countries throughout Europe, we have chosen The countries where we believe that will give the best risk reward over time. All other countries has a well functioning legal system, large volumes of NPL transactions And the customers are also outsourcing 3PC volumes at a decent margin in our core segment. This is why we believe that Axocto should target organic growth in existing markets. We still need to increase scale in several of our countries to further reduce our cost to collect, and we don't see any other markets in Europe that could offer more attractive opportunities than what we see in our current markets.
Axapto will obviously focus on purchasing of nonperforming loans, but at the same time, we need to applies more on our high quality debt collection platform. This means more focus on PPC and capitalized business. This will increase volume and bring our contribution margin up over time. This is also why we are putting more efforts into partnerships Where we both service and buy claims from a few banks in every market. In other words, ABSTACTO will prioritize debt that we know well, both from a collection perspective, but also from a compliance perspective, either through previous acquisitions or through 3TC experience on the portfolio.
This will also bring down the pricing risk when we acquire new portfolios. Finally, we will strengthen our focus on the Bank Finance segment. Previously, we have had a broader target in our 3TC sales efforts. But going forward, the focus shall be on bank finance in addition to medium and large accounts in the SME space where the profitability is attractive. We also see a strong link between MPL and PTC as many banks Financial Institutions often outsource portfolios on PPC before they, after some time, choose to sell the portfolio.
The average claim size in the bank finance space is a better match with Axaker's operational setup as we have more capable of handling claims of a certain size and not so much small ticket. Furthermore, we will focus on business to consumer unsecured and then less focused on secured portfolios. Already today, secured NPLs Our very small part of AltaCorp's balance sheet, as you can see, if we move on to the next slide, Slide 20. To continue on the same note, 94% of Axaktru's portfolio book value exposure is within our strategic core unsecured nonperforming loans. The vast majority of these unsecured loans are related to business to consumers.
The remaining 6% is equally split between secured NPLs and reals. The €48,000,000 nominated as non Luxructure exposure is related to minority interest in the real structure. If you turn to the next page, we will show our pro form a graph On how return on equity would that look like excluding the reals? There is no big secret that profitability on Rehos has been disappointing since the acquisitions back in 2018. The return on equity during the pandemic has been weak both for our sector and the industry as such.
But if I can draw your attention to the difference Between return on equity in 2019, you will see that the difference between reported consolidated return on equity and return on equity excluding Realtz is 4 percentage points in Q4 2019. Even more interesting was the underlying development in return on equity for the core segments With strong improvement for several quarters in a row. Unfortunately, the pandemic destroyed the trend, but we strongly believe that we will get back to the same trend as the situation normalizes. This further underlines the strategic choice to focus on NPL and PPC going forward. Axtagtoy also has a clear goal to start paying dividends as the return on equity increases.
We also continue to see factors That will push the return on equity in the right direction. And on Page 23, we will discuss this in more detail. As always, we see positive and negative drivers for return on equity. Luckily, the negative factors are of more short term nature, while the positive has a more sustainable character. On the positive side, we see vaccination normalized working conditions for our employees and normalized debtors willingness and ability to resolve their debt.
We expect increased 3PC volumes and expect Lower NPL prices as part of the COVID-nineteen aftermath. Continued margin expansion as ongoing performance improvement initiatives Materialize as expected. We will have reduced funding costs and increased investment capacity following the refinancing and equity rates. And finally, we expect a gradual normalization of the tax rate towards an estimate of 25%. On the more challenging side, we see COVID-nineteen increased pressure on our employees working on home office.
We also experienced that the pandemic increased pressure on debtors' short term willingness to and ability to pay. And these elements have led to certain operational performance issues as well. Let's turn to the next slide to summarize the Q4. Our stocktor delivered our Q4 that showed a positive gross revenue trend in all segments. However, due to the refinancing of the balance sheet On the pandemic situation, we did experience certain elements that affected the Q4 results, both positive and negative.
The annualized return on equity to shareholders ended at 4% for the quarter. The refinancing exercise was successful and we raised a total of €50,000,000 in fresh equity, extended maturities for 3 years on all main credit facilities and reduced the funding cost for our factors. Our revised strategy is under implementation. The organization is very much aligned and has been involved throughout the whole process. Axocta is carefully optimistic in the short term as the pandemic situation, you said, but we are not 100% in the clear yet.
Curve revisions have been done for 2021 and first half of twenty twenty two, And we will seek to be as transparent as possible with the market regarding the development. Several positive drivers for return equity are definitely present. With that, we conclude the presentation and open it up for Q and A. And also remind everyone that you can find more information in the supporting information and appendix in this
Our first question comes from the line of Hakan Arstrup from DNB Markets. Please go ahead.
Thank you. Thank you for your presentation. Two questions from me. The first one is on investments. You stated the report that You expect NPL investments to be to exceed $200,000,000 this year.
Can you shed some more light on how conservative you are here? Is your base case 205 or is your base case 300, that is the first question. And the second question is on 3rd party collections, you said that prospect looks good for 2021. Should we expect Total revenue on GPC to be above the 2019 level this year? Thank you.
Thank you, Hakan. Yes, thank
you for the questions. Let me start then with the first one regarding the investment Level. You're right. We have stated in the report that this will be north of SEK 200,000,000. I think if you look at our theoretical Capacity, it's obviously much higher.
It's probably in the area of €350,000,000 But what we have said is that it's More important to find the right portfolios with the right profitability than pushing the investment levels too high. So If we have a little bit higher internal ambitions than 200, the answer is yes. But it all depends On the attractiveness of the opportunities coming to the market. If you look at first half, we see that there are some opportunities, but in the one off market, there's not So many, yes. I think we have to wait for second half to really see the large volumes coming to the market, but we are working on Also some bilateral agreement, but we also see that forward flow renewals are definitely being discussed for the moment.
So I think given that we have only committed SEK 14,000,000 in Q1, I think it's fair to have I kind of moderate view on how much we're going to invest in Q1 this year. But for the full year, we are stating that at least 200 Regarding 3PC, I will answer this maybe a little bit broader than what you asked, Hakan, because we have the same I would say Almost the same question from several here. So if we look at 3PC, we saw last year, we saw that during Q2 and Q3, very few new contracts were signed for obvious reasons. So the pandemic in Q3, That's for obvious reasons. So the pandemic in Q1 and partly into Q3, but also the vacation period in Q3 Makes Q3 a bit slower when it comes to new contract signings.
This definitely shifted in Q4 And we have signed a lot of new contracts. And what I think is also good to note is that it's mainly within bank finance. And also it's widely spread across our country. So that is definitely positive. We also see Very healthy pipeline into this year.
But I also have to remember that we also have to remember that the onboarding does Not necessarily start immediately. So even though we sign a contract, the contract needs to be finalized with the current vendor and then we have an onboarding process. So I think that We won't see the higher volume flow through. It will start in Q2 and then we will see the higher volume flowing through In second half of this year. When it comes to terms and conditions on the 3PC contract, which So it's a question from Jonas.
I think that they are not very changed from before. If you remember how this actually works on the See, a lot of the fees are for all practical purposes set by the regulators through fee regimes, especially here in the Nordic. Of course, there could be some differences on fees, on surveillance and other parts On 3PC, but all in all, we have not noted any changes in the terms that such on the 3PC contract that we signed For the moment. Yes, on the last part of your question, Hakan, if we should expect EPC to be Higher than 2019 level. The short answer to that is yes.
Thank you. That was very clear.
And the next question comes from the line of Ulrik Zertzer from Nordea Markets. Please go ahead.
Yes. Thank you for taking my question. I was wondering if you could give some more flavor on the underlying reasons for your revaluation of the The L portfolio change quarter on quarter. And for example, it's like the companies and the household that are doing Worse than expected Q on Q? Is this more related to the bottlenecks in collection infrastructure or the value chain, if you will?
And I have a second question. How does the revised NPL forecast look so far in the quarter? That's my two questions. Thank you.
Yes. So if you look at the reasons for the impairment, I think we Stated also in the presentation. But it's both Underperformance in Q4, which you clearly see on Page 7 in the presentation. So it's there the difference between the green line and the bar. You see this is the actual underperformance in Q4.
And then it's also partly the difference between the active sorry, the active current active forecast And the forecast we have before we did the write down. And the reason for it is, if you remember what we Ted, when we did the write down back in Q2, we said we are adjusting the curves for 2020. And the reason for not adjusting further was that at that point in time, we did have no visibility or very low visibility About the 3 next quarters. And what we have seen over the especially Q4 is that we were probably too Optimistic on that assumption. It was looking good for Q3 and Q2 as such after the adjustment, but for Q4, we did not meet the active And then we are taking the approach that we also look now for the attickers for 2021 and For also partial 2022 and due further adjustments.
So it's a bit maybe a bit, Can I say conservative approach to doing the write downs compared to some of our competitors As we assume that historical underperformance is lost, which we also underlined in the presentation, that's not necessarily the truth, But that's the way we have chosen to look at this? That was the first part of the question. Could you Please repeat the second part. I wasn't able to write it down, Ulrik.
Yes. I was just wondering how the revised forecast looks So on the collection so far in the Q1 of 2021.
Yes, for January, yes, it's probably A little bit on the soft side, but no big deviation.
I was just wondering, just a follow-up to the first part because it seems Like your write downs are very correlated with actual lockdowns in society. And then you might get the idea that The problems are actually more connected to what we can call the infrastructure of like Basically, it's a lockdown that assumes that you can't collect rather than households and companies necessarily having the tip of Long term capability to pay is something that we should take into account or is it just Since you write down it 2022 as well, it seems a bit strange.
Yes. No, it's first of all, I think it's a bit More short term explanation in Q4 and partly what I said when we have soft January. And that is actually Regarding refinancing has shown to be a little bit more cumbersome In the Nordics, that must be expected. And this is not the first time we see this, that the banks Are holding back on the financing around year end. And I'm not sure Exactly why, but the hypothesis is that the budgets are fulfilled and they slow down on handling Applications for the restructuring or refinancing, sorry, in during Christmas time.
And now we see that it starts up again From end of January. So I think that and that actually has a lot to say because we have, as you know, a lot of fresh debt and then you have a lot of fresh debt in your portfolio. You are depending on a certain amount of one off payments of a certain size. So I would say that The refinancing effect is more severe than saying that the debtors are not We're able or willing to pay in the short term, I think.
Thank you for those details. That's all from me.
And we have one more question from the line of Joakim Swinburne from Artech. Please go ahead.
Yes. Good morning and thank you for taking my questions. I was going to ask around the same things that Ulrik asked, but I have a couple of follow ups, if that's okay. Could you perhaps elaborate a bit of the geographies in most affected in the write down and The collection revisions you have done. And the second one is relating to operating expenses, how we should Expect that to develop in the first half of twenty twenty one, given we expected increase in activities and collections.
Thanks.
Yes. As you know, we are not sharing very much details on which countries we are doing write downs. But I think we could say as much as it's related to secured portfolios in Spain. That is a large part of it. Also, we have done some revaluations in Finland.
And also actually a couple of small ones in Sweden due to that we have had these challenges with the Bayless system in Sweden, which has led to underperformance over a relatively long time. We see now that we are recapturing it, But still, we decided to do some adjustments on the Swedish book. And operating expenses, we are constantly looking to reduce it. I think we are now looking to start Or actually, we are working on cost initiatives. We will come back to more details in the Q1 presentation.
But obviously, we now will look at the office structure in Spain, We will look at some other areas as well. We have high hopes to take down The cost level even further in 2021. But we don't have any targets to share with you on that, okay. Yes, that's fine. Thanks.
And as there are no further audio questions, I'll hand it back to the speakers.
Yes. Then we have some questions here that has Come in on email. Let's see here. We have one. How much do you expect to invest?
I think we have answered it. How What is already committed in forward flows? The current commitment is they are in the range of SEK 45,000,000 €50,000,000 And I think you could see more details on this also in the presentation, where we have it on Page 29, where you see the forward flow commitments that we have currently quarter by quarter for 2021. Regarding the tax rates, I think it's we don't give any specific guiding on it. I would then say that we are Continuously working to take it down.
So I think I will have to wait a little There you go on to give more details on it, but we are working on reducing it over time. So if you just take I think we have said that we will try to get it down to 25% Over a period of 3, 4 years. So maybe you could just do a linear assumption and use that as a proxy. Then we have a question here more from Jonas in ABG. Have you received any interest from PE specialized funds in your VO book.
Yes, we have. But the challenge here is that Yes, there are actually been several parties looking at it. But This for us, this has it's related to the lot of sunk cost. And we also still have a Centimeters 1 margin on it. So If we were to sell it now to a specialized fund, we probably have to give them a certain discount.
So we think that The best way for us to manage the tail of the REA book, the way it looks now, is to continue just as we do to sell off At the price levels that we are now assumed and just run off this area. It's now starting to become a very small part of our balance sheet, Some 3% I think it is. And that's the way I think we need to handle this going forward. But if, of course, we receive a bid that we can accept, we are obviously ready to divest the whole book And then we have a question here. How much of underperformance in collection is actually Down to COVID, we did not see significant COVID effects for several of the peers in Q4.
Yes, we don't have a List on the performance. As such, I think I've touched upon some of it. So It's also a little bit hard for you. You probably have both direct and indirect COVID effects. So if you look at the indirect effect, it's hard for us to say how much of the How much has COVID affected the banks when they decide to hold back on refinancing, for example, so which I think which So that is much more severe for us in the short term than the more direct COVID effect you probably think about if you think about Debtors building up an ability to pay.
So it's I have to be quite honest, I don't know exactly Meant the different reasons for the underperformance. But this is obviously on a mix of restructuring. It could be also be that the On some of the portfolios that we have written down in Sweden, these are portfolios we acquired back in 2017. Maybe we were too Optimistic when we set the curve at that point in time. Remember, when we did the first portfolio purchases in 2017 2018, we didn't have That much data as we have today.
And also we acquired portfolios from banks, I would say, of a certain quality that we are not From buying from today. So today, we are buying, I would say, much higher quality. That's what we did in In 2017 2018. And also what I also mentioned earlier, the secured portfolios in Spain, That has been a challenge. And I think there is not so much COVID effect.
It's more the fact that We missed on some of the valuations and probably have been too optimistic on the outcome of those portfolios that we acquired in 2018. That was the last question that I can see here on my screen. So don't know if we have any more questions from the audience.
There are no further questions from the phone.
Okay. Well, then thank you so much for taking the time And participated in this presentation. So I wish all of you a nice day. Bye bye.